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



 
                         REAUTHORIZATION OF THE
                            HOPE VI PROGRAM

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

                                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

                               __________

                             JUNE 21, 2007

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-44



                    U.S. GOVERNMENT PRINTING OFFICE
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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             JIM GERLACH, Pennsylvania
ALBIO SIRES, New Jersey              STEVAN PEARCE, New Mexico
PAUL W. HODES, New Hampshire         RANDY NEUGEBAUER, Texas
KEITH ELLISON, Minnesota             TOM PRICE, Georgia
RON KLEIN, Florida                   GEOFF DAVIS, Kentucky
TIM MAHONEY, Florida                 PATRICK T. McHENRY, North Carolina
CHARLES A. WILSON, Ohio              JOHN CAMPBELL, California
ED PERLMUTTER, Colorado              ADAM PUTNAM, Florida
CHRISTOPHER S. MURPHY, Connecticut   MICHELE BACHMANN, Minnesota
JOE DONNELLY, Indiana                PETER J. ROSKAM, Illinois
ROBERT WEXLER, Florida               THADDEUS G. McCOTTER, Michigan
JIM MARSHALL, Georgia
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                THADDEUS G. McCOTTER, Michigan
BARNEY FRANK, Massachusetts


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 21, 2007................................................     1
Appendix:
    June 21, 2007................................................    43

                               WITNESSES
                        Thursday, June 21, 2007

Cabrera, Hon. Orlando J., Assistant Secretary for Public and 
  Indian Housing, U.S. Department of Housing and Urban 
  Development....................................................     7
Fox, Richard, Executive Director, Stamford Housing Authority.....    24
Kelly, Michael P., Executive Director, District of Columbia 
  Housing Authority..............................................    25
Koo, Doris W., President and Chief Executive Officer, Enterprise 
  Community Partners, Inc........................................    39
Montiel, Rudolf C., Executive Director, Housing Authority of the 
  City of Los Angeles............................................    21
Moses, George, Chairman, Board of Directors, National Low Income 
  Housing Coalition..............................................    37
Popkin, Dr. Susan J., Principal Research Associate, The Urban 
  Institute......................................................    35
Stratford, Yvonne, former resident of Scott/Carver Homes, Miami, 
  Florida........................................................    36
Woodyard, Charles, Executive Director, Charlotte Housing 
  Authority......................................................    22

                                APPENDIX

Prepared statements:
    Cabrera, Hon. Orlando J......................................    44
    Fox, Richard.................................................    54
    Kelly, Michael P.............................................    58
    Koo, Doris W.................................................    72
    Montiel, Rudolf C............................................    80
    Moses, George................................................    83
    Popkin, Dr. Susan J..........................................    89
    Stratford, Yvonne............................................   112
    Woodyard, Charles............................................   116

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Statement of the National Association of Home Builders.......   134
    NAHRO insert.................................................   136
    Statement of the National Association of Realtors............   142
Pearce, Hon. Stevan:
    Response to question submitted to Hon. Orlando Cabrera.......   144


                         REAUTHORIZATION OF THE
                            HOPE VI PROGRAM

                              ----------                              


                        Thursday, June 21, 2007

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Waters, Cleaver, Green, Clay, 
Sires; Biggert, Pearce, Shays, and Miller.
    Ex Officio: Chairman Frank.
    Also present: Representative Watt.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order. Good 
morning, ladies and gentlemen. I would like to thank the 
ranking member, Mrs. Judy Biggert, and the members of the 
Subcommittee on Housing and Community Opportunity for joining 
me for today's hearing on Reauthorization of the HOPE VI 
Program. And I would like to start by noting that without 
objection, Mr. Watt will be considered a member of the 
subcommittee for the duration of this hearing. He is not here 
yet, but I expect he will be shortly.
    Also without objection, all members' opening statements 
will be made a part of the record.
    I am looking forward to hearing from our three panels of 
witnesses on the important issues related to the 
reauthorization of the HOPE VI Program, including one-for-one 
replacement, the right of residents to return to the new public 
housing development, monitoring of displaced residents, and the 
use of green building standards in revitalization efforts. Each 
of these are important issues for the communities where HOPE VI 
projects are envisioned.
    In 1989, the National Commission on Severely Depressed 
Housing found that 6 percent, or 86,000 units, of the Nation's 
public housing units were severely distressed. Residents of 
these units also experienced higher rates of crime, high levels 
of unemployment, and lacked programs and services to help them 
obtain self-sufficiency.
    In response to these findings, Congress created the HOPE VI 
Program in late 1992. To date, 237 revitalization and 285 
demolition-only grants have been awarded through the program. 
With these grants, public housing authorities have demolished 
over 130,000 of the Nation's most severely distressed public 
housing units.
    Given the limited tools available to the Nation's public 
housing authorities to create quality affordable housing, HOPE 
VI has provided resources for Housing Authorities to revitalize 
public housing units that are desperately needed by America's 
poor families, including the elderly and persons with 
disabilities.
    HOPE VI has also been an important tool for Housing 
Authorities to provide much needed services to support 
residents. In many places, HOPE VI resources have been used to 
provide job training, GED classes, and after school programs. 
It is clear that HOPE VI is a major Federal housing program 
that needs to be revitalized simply because of its potential 
for good and for transforming lives and communities.
    However, HOPE VI has had mixed results on the face of the 
Nation's public housing. As severely distressed public housing 
developments are replaced with valuable mixed income 
communities, residents have been displaced, public housing 
units have been lost, and those units that are newly 
constructed have been restricted to a limited group of public 
housing residents. Therefore, in reauthorizing this program, we 
need to consider the following facts of the HOPE VI dynamic.
    First, the HOPE VI Program has directly contributed to the 
loss of over 30,000 public housing units. This is because the 
program does not now require one-for-one replacement of hard 
public housing units. The HOPE VI Program should maintain our 
stock of public housing units, not deplete it. As we consider 
one-for-one replacement of these public housing units, let us 
be clear that it is not the intention of this subcommittee to 
resegregate or to reisolate public housing residents into areas 
with high concentrations of poverty or areas that have suffered 
from historic racial segregation or isolation. We are sensitive 
to this concern and are open to ways of making sure that public 
housing units are rebuilt on a one-for-one basis, and that 
residents have the right to return to those units in a way that 
does not lead to an increase in the area's poverty, 
segregation, or isolation.
    Second, because of the lack of available units and 
sometimes too strict screening criteria, families who want to 
return to the revitalized site are often unable to go back to 
the communities that they called home. Even though these 
families are living in substantially better housing in safer 
neighborhoods, those who are now using Housing Choice Vouchers 
to rent their housing are having difficulty in making ends 
meet. We must carefully consider the impact of HOPE VI on these 
residents, especially those with poor health and those who are 
hard to house.
    Third, in some cases Housing Authorities have not properly 
monitored and tracked the whereabouts of their displaced 
residents. I am pleased that Ms. Yvonne Stratford is here to 
personally testify about her experience with this most 
troubling issue.
    Fourth, another important factor to consider in any 
reauthorization of HOPE VI is the need for green building 
standards in future HOPE VI projects. As energy prices and 
utility costs rise, we need to all do our part to be more aware 
of the impact we have on the environment. It is only prudent 
that these new developments meet these environmentally friendly 
standards.
    Finally, any reauthorization of the HOPE VI Program must 
take into account the underfunding of the Public Housing 
Capital Fund, the recent underfunding of the HOPE VI Program, 
and the resulting increase in the number of severely distressed 
public housing units. This is a program that should be 
reauthorized in an amount sufficient to address the growing 
backlog in much-needed capital improvements and to provide for 
one-for-one replacement of occupied public housing units.
    The Department of Housing and Urban Development has 
asserted that the HOPE VI Program is too costly and too slow. 
However, my colleagues and I continue to believe that--in spite 
of this and other issues--this program is worth reauthorizing.
    Again, I look forward to hearing the witnesses' views on 
this very important program. And now I would like to recognize 
Ranking Member Biggert for her opening statement.
    Mrs. Biggert. Thank you very much, Madam Chairwoman, and 
thank you so much for scheduling this hearing on the 
reauthorization of the HOPE VI Program. I think since 1993 
there has been a lot of progress that has been made in being 
able to replace some of the most dangerous and dilapidated 
public housing in the country with what would be the mixed 
income communities. And while I don't think that there is any 
in my district, certainly Chicago is a place that this has 
really been helped. I have to say that in one of my former 
lives, or several of my former lives, having been in the public 
housing in Chicago, for one, I was chairman of the Visiting 
Nurse Association of Chicago, and one of the things that we did 
was to have--the visiting nurses did a lot of work in some of 
the public housing, like Robert Taylor Homes. One of the things 
that we--the way that we got board members was to have our 
board members go out with these visiting nurses to visit with 
them where they were. And so many of us spent time in the 
Robert Taylor Homes, in particular Cabrini-Green, the Rockwell 
Gardens. And I think to have seen the changes that have taken 
place in those communities has been astounding with the mixed 
level, and taking away the huge building that was just the 
public housing, but to have the mixed units. And I look forward 
to seeing that happen in New Orleans, for example, where we 
have been down with our field hearing to see how that could 
work, and how HOPE VI can really bring a revitalization to 
those communities. It works in Chicago, and I think it can work 
a lot of other places. And it has worked.
    So I look forward to the hearing and to moving forward with 
the reauthorization of the HOPE VI Program, and with that I 
yield back my time.
    Chairwoman Waters. I thank you very much, Ranking Member 
Biggert. I understand that you may have to leave for another 
hearing.
    Mrs. Biggert. That is correct. I do have a markup.
    Chairwoman Waters. A markup, which is really more 
important, so if you have to leave, we understand. And if there 
are other members who are present, they will have an 
opportunity to have opening statements prior to going to our 
witnesses. So thank you very much.
    At this time I would like to recognize the chairman of our 
Committee on Financial Services, Mr. Frank.
    The Chairman. Thank you, Madam Chairwoman. I am pleased, 
once again, to be working with you, and I appreciate your 
leadership on important housing matters. I really believe that 
one result of this Congress is going to be some very 
significant improvements in the housing area, and your work has 
really been exemplary.
    It is good that we are here reporting the bipartisan 
support for HOPE VI. This Administration has kept trying to 
kill HOPE VI, and I appreciate the fact that in a bipartisan 
way we have kept it going. And not just kept it going, but we 
are going to be improving it and working together. We even had 
an unusual degree, as you know, Madam Chairwoman, of 
cooperation with the Senate. We met with our colleague, Senator 
Mikulski. We know, too, that the chairman of the Appropriations 
Subcommittee, my colleague, Mr. Olver of Massachusetts, is 
interested in this, so we are determined to go forward.
    I do want to note that one of the things we are determined 
to do is to correct a long-standing bipartisan, bicameral 
mistake--tearing down more housing for poor people than we 
build. That is something that began with the original urban 
renewal program, and there has been this notion that is 
bizarre, but took root, that if people are living in housing, 
people of low income are living in housing that the rest of us 
don't like, well, one of the nice things we can do for them is 
to tear it down. And it is as if people thought there were a 
lot of poor people who said, ``You know what, I think I will go 
live in a lousy house, because I don't want to live in a nice 
one.'' What ought to be obvious to most rational people is that 
people will want to live in the best housing they can find and 
afford. And if you are tearing down the housing they are 
currently living in because it is not good enough for them, you 
are sending them to worse housing, not better, because they 
have not voluntarily given up better housing for where they 
are.
    That is why starting with the hurricane bill, when the 
chairwoman took very important and very decisive action, and I 
was glad to be supportive, we have set the rule that you should 
not, through the government, tear down more housing than you 
are going to build. Now that has to be done with 
sophistication. Part of the point of HOPE VI is to avoid 
excessive concentrations of people, and we don't want to 
recreate that. But it is clearly within our ability to replace 
housing without recreating ``ghettoization.'' And that is an 
important job, and that is very much reflected in the hard work 
that is going on in this bill.
    We are committed to a HOPE VI Program, and people have 
said, well, you know, the HOPE VI Program is better for the 
communities. That is true. But I think again, we have had this 
error in the past where some people have been allowed to say 
that we are going to improve the community without focusing on 
improving the lives of all of the individuals. I think we are 
going to show that those two are perfectly compatible.
    So I appreciate, Madam Chairwoman, the work you are doing 
here, as in other bills. We are going to show that it is not 
preordained that we have to reduce the amount of housing for 
people with lower incomes. In fact, we need to increase that, 
and this bill, I think, is going to accomplish that. So I am 
very glad that we are going to be able to move on this, and 
people should know that this is a serious effort.
    We are having this hearing, and a lot of important drafting 
is going on. I would think that we would be ready to vote on 
this bill in committee in the month of July when we come back 
before we adjourn for August. We know the Senate is eager to do 
it, and I think we will be able to have a bill on the 
President's desk by the end of this year given the interest 
that is there. We also have an assurance from at least the 
Appropriations Committee on this side, but also Senator 
Mikulski, who is on the Appropriations Committee on the Senate 
side. People should know that this is no idle exercise; I 
believe this is a bill that is going to be passed and be 
funded.
    Thank you.
    Chairwoman Waters. I would like to thank you, Mr. Chairman, 
for all of your leadership and your support and the work that 
you have done to bring us to the point where we are definitely 
talking about one-for-one replacement. You have been very, very 
clear on that and very strong on that, and I appreciate it.
    I now recognize Mr. Cleaver for 3 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. One of the things 
I had planned to do today for this hearing, which you and our 
ranking member are very visionary in calling, is the picture of 
the housing unit, 405B Bailey, which I lived in. And the 
relevancy of the picture of the housing project that I lived in 
is to demonstrate the value of HOPE VI, which I wish had been 
in existence when I lived in public housing. One of the early 
mistakes was Pruitt-Igoe right down the street from Kansas 
City, which you are very familiar with, Madam Chairwoman, in 
St. Louis. It was a mistake because we piled poor people on top 
of poor people. And that in my experiences just won't work. I 
think we went past what HUD had set as a goal, which was 
demolishing 100,000 units; I think we had gone toward 150,000 
units.
    And I think with the one-for-one replacement that you 
support, which I think many of the members on this committee 
support, it is going to be critically important. I think when 
people move out of public housing units, for us to make sure 
that we know where they are going and that we follow them, keep 
up with them and report on it. Because sometimes if we don't do 
that, we are going to lose track of people, and sometimes they 
fall through the cracks. We have to be able, I think, to say 
that we know what happened to the people who moved.
    And the other thing is that I think one of the most 
controversial things that I experienced as mayor is whenever we 
started--and we did one of the first projects, one of the first 
15 projects done in this Nation, Guinotte Manor, you can see it 
from city hall, and one of the problems is of course people 
organize in various parts of the city to say we don't want any 
HOPE VI projects coming into our community. And I do think that 
there is a tiny piece of legitimacy. I do think they ought to 
be dispersed all over the city. And I think it ought to be done 
with great intentionality. And I think the direction we are 
going in is the right direction; I think there are a lot of 
little nuances that we have to consider.
    And I appreciate the opportunity to be a part of this 
committee and to follow your leadership. Thank you.
    Chairwoman Waters. Thank you very much. I recognize Mr. 
Sires for 3 minutes.
    Mr. Sires. Thank you, Chairwoman Waters. I am happy to be 
here to listen to the witnesses today on this program. I am 
somewhat familiar with this program, having been a local mayor, 
so I have a unique perspective on this program. Its impact on 
the community is real and it is positive. Beyond the obvious 
impact of cleaning up distressed public housing units and 
providing people with housing, HOPE VI generates economic 
activity in the community, which I have seen firsthand. New 
housing brings new residents, brings new infrastructure, and 
business needs for those people. They shop and they dine and 
they invest in the community. These new businesses hire 
employees from the area, who also have a positive impact on the 
economy.
    The benefits of this program do not impair. Research 
indicates HOPE VI increases the per capita income of residents 
and decreases the unemployment rate. The same research shows 
that this program decreases the number of households receiving 
public assistance and decreases violent crime in the 
surrounding community. I do not dismiss concerns that the 
program could be better run or more efficiently, but I believe 
strongly that the program should be reauthorized and 
strengthened, not cut.
    I look forward to hearing from today's witnesses, and I 
thank the chairwoman for holding this hearing. Thank you.
    Chairwoman Waters. Thank you very much. I recognize Mr. 
Green for 3 minutes.
    Mr. Green. Thank you, Madam Chairwoman. I greatly 
appreciate your calling this most important hearing, and I also 
thank the chairman of the full committee for his participation. 
The two of you have absolutely made housing a priority for all 
of us, and I thank God that you have done so. I am excited 
about the possibilities. I am excited knowing that we will have 
an opportunity to extend HOPE VI for a significant amount of 
time. I am excited because I understand that HOPE VI brings 
hope to communities. It does more than bring infrastructure, 
and buildings. It causes communities to have better employment 
rates. Crime seems to be impacted by virtue of HOPE VI. Persons 
seem to have a better sense of community, and greater pride in 
the area. HOPE VI really does provide hope. So I am interested 
in HOPE VI and excited about it.
    I would add, as I close, that replacement is important to 
me, right-of-return is important to me, and tracking is 
important to me.
    I yield back the balance of my time.
    Chairwoman Waters. Thank you very much. Mr. Watt, do you 
have an opening statement?
    Mr. Watt. Madam Chairwoman, I am just honored to be here, 
and to be allowed to sit in with your subcommittee. 
Unfortunately, I didn't have the opportunity to get on the 
subcommittee this time, but it is not because of a lack of 
interest in these issues. And certainly I have a very, very 
heavy interest in the HOPE VI Program, and I have always 
wondered why, when everybody has acknowledged the success of 
the program, that the President and this Administration have 
continuously tried to terminate it, when it is clear that the 
original goals of replacing and revitalizing communities in 
which distressed public housing was situated, the list was made 
originally, and we are not anywhere close to being through with 
completing that list. So I never have accepted the proposition 
that the Administration has tried to advance that HOPE VI has 
accomplished its mission. It can't be accomplished until those 
identified public housing communities that were in distressed 
condition are replaced and revitalized.
    So I am just thankful to be here, and I thank the 
chairwoman of the subcommittee, and the chairman of the full 
committee, for their leadership on this issue, and I look 
forward to working with them to come out with a good 
reauthorization bill and, as importantly, to keep the pressure 
on the appropriators to find the money to actually fund the 
programs at a level that will have significant impacts in the 
local communities.
    Thank you. I yield back.
    Chairwoman Waters. Thank you very much, Mr. Watt. And I 
would like to thank you for all of the work that you have done 
on HOPE VI. I know that it is a priority interest that you have 
worked on for quite some time, and I appreciative your getting 
us to this point where we can have a reauthorization bill that 
takes into consideration all of the things that you have 
learned needed to be addressed.
    With that, now I would like to introduce our first panel, 
which consists of the Assistant Secretary for Public and Indian 
Housing for the U.S. Department of Housing and Urban 
Development, Mr. Orlando Cabrera. Assistant Secretary Cabrera, 
I would like to thank you for appearing before the subcommittee 
today. And without objection, your written statement will be 
made part of the record. You will now be recognized for a 5-
minute summary of your testimony.

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

    Mr. Cabrera. Thank you, Madam Chairwoman, Ranking Member 
Biggert, and members of the subcommittee. Madam Chairwoman, I 
ask that my written testimony be accepted and entered into the 
record.
    Chairwoman Waters. Without objection.
    Mr. Cabrera. Thank you. My name is Orlando Cabrera, and I 
am Assistant Secretary for Public and Indian Housing at the 
Department of Housing and Urban Development. Thank you for 
inviting HUD to present its views on issues relating to the 
HOPE VI Program. Our written statement sets forth many of our 
thoughts on the HOPE VI Program. This oral statement will focus 
on hope for HOPE VI.
    No HOPE VI deal gets done simply on its own as a Federal 
grant. Many other levels of financing need to be brought into 
the HOPE VI transaction for that transaction to work and to 
produce housing. We believe that HOPE VI is hard enough to use 
and, if the program would be reauthorized by Congress, that the 
path to success is greater simplicity and not additional 
complexity.
    For example, many States struggled in their policy decision 
on how to treat HOPE VI deals because of the complexity of HOPE 
VI deals that prolong the development process, causing the low 
income housing tax credit to go stale, if you will, thereby 
hurting States in two ways.
    First is lost opportunity; namely, HOPE VI transactions 
historically demand a lot of tax credits, and so other low 
income housing tax credit units were not built because a tax 
credit was committed to the HOPE VI transaction.
    And second, often, and particularly early on, the HOPE VI 
Program applicant was a PHA with scant or no development 
experience, meaning that the allocation would go unutilized or 
underutilized because of capacity issues. The good news is the 
second prong has been remedied in many instances. PHAs have 
become better applicants and better economic partners. 
Unfortunately, the first prong has not progressed much. One 
reason for that is that HOPE VI deals are very complex. As was 
previously noted, no HOPE VI deal can be funded on its own.
    One thought we would suggest in the process of your 
consideration of the HOPE VI legislation is that simplicity, 
wherever possible, be the mantra, and to remember that every 
time something outside of a housing context is added to a HOPE 
VI deal that deal's viability decreases because its costs are 
increasing. We would suggest that encouraging certain policy 
prerogatives would make sense, but that such policy 
prerogatives be accompanied by answering the following 
questions.
    If we add this requirement, will it make a HOPE VI 
transaction less viable because it has added costs? And has 
adding the policy prerogative made the HOPE VI transaction less 
competitive when it is postured for competition for tax 
credits, private activity bonds, and/or, if one would want to 
delve this far down, other State subsidy? This is what we 
suggest would help the viability of HOPE VI.
    My written statement sets forth many of the issues that 
have most hampered HOPE VI. If and when Congress acts to 
reauthorize HOPE VI, we believe the approach proffered in this 
testimony would add value to the program, and accordingly offer 
it respectfully.
    Thank you once again for your invitation to testify before 
the committee. I would be happy to answer any questions you may 
have.
    [The prepared statement of Assistant Secretary Cabrera can 
be found on page 44 of the appendix.]
    Chairwoman Waters. Thank you very much. Members, we are 
going to go right to the questioning. I understand that votes 
will be taken up on the Floor very shortly, and when we finish 
this round of questioning, there may be time to break. Did I 
hear that they had called the vote? So how many minutes do we 
have? We have 10 minutes left? I think I will start with my 
questions, and then we will break and go to the Floor following 
that.
    Mr. Secretary, I would like some discussion from you on 
one-for-one replacement. What do you really think about it? 
What has been your experience in the past? What difficulty do 
you see with one-on-one replacement? And do you support it?
    Mr. Cabrera. I do not support one-for-one replacement of 
public housing units for the reasons already articulated. It 
would actually be counterproductive in terms of the original 
legislative intent of HOPE VI. The original legislative intent 
of HOPE VI was to avoid concentration, and that might produce 
concentration.
    That said, one-for-one replacement of affordable units, I 
think, is a viable thing. What does affordable units mean? 
Affordable units is something that I believe in this industry, 
and those who produce units for low income Americans, they 
would categorize in the following way: Units that are produced 
using low income housing tax credit that serve the bandwidth 
between 0 and 60 percent of area median income, units that are 
produced by the private activity bond program that do the same 
thing, and units that are produced by State programs that do 
the same thing. That would broaden the pool, and preserve the 
original intent of the legislation. But I don't believe that 
would be the only thing. One of the things that I think would 
help would be--and this is not the subject matter of this 
committee, but I offer it just as a thought; I testified to 
this 2 weeks ago--would be to create a different indicia of 
ownership for units that are market rate in nature than those 
that are affordable in nature. And the reason is because at 
that point you can better strip away and attract capital into 
HOPE VI deals, and frankly into other affordable deals in order 
to make them more viable.
    The big challenge with HOPE VI comes when you deal with 
units that are public housing in nature, and for those that 
develop, that means those that are subject to an annual 
contributions contract, is that it requires a deep operating 
subsidy. Just building those units is not enough. You have to 
also figure out how all of the moving parts are going to 
function. They don't function well if they are all ACC units 
for a variety of reasons.
    So our suggestion would be to amplify the term not one-for-
one replacement of public housing units, but one-for-one 
replacement of affordable units, which from a policy 
perspective largely accomplishes the same thing.
    Chairwoman Waters. And I want to be clear about the 
affordable units that you are alluding to, that would come 
under the definition of one-for-one replacement. You are 
talking about affordable units that are built by other 
entities, State housing agencies, etc., who would be considered 
providing units for one-on-one replacement, but they would not 
be public housing units?
    Mr. Cabrera. No, let me clarify it another way.
    Chairwoman Waters. Okay.
    Mr. Cabrera. A public housing authority, when it undertakes 
a HOPE VI, with or without a partner, is essentially acting as 
a developer. So the first presumption in the statement that I 
made is that the public housing authority is the developer or a 
co-developer. They are the owner. The next presumption is that 
the unit that is developed is being developed with some kind of 
pot of money. It is either being developed with capital fund 
money, HOPE VI money, with low income housing tax credit, or 
private activity bonds, or some State money, or HOME, if that 
were possible in this deal. And so the developer, the public 
housing authority, would automatically under statute be 
obligated to offer those units for a period of time. The period 
of time under the tax program is 15 years for those folks at 0 
to 60 percent of AMI. Most folks undertaking development under 
those circumstances don't usually get a 15-year affordability 
period in this climate. Those resources are very scarce. They 
are very valuable. And most housing finance agencies that 
allocate the low income housing tax credit are demanding much 
longer periods of affordability.
    So what you are doing is preserving units that are 
affordable that meet the spectrum of affordability that I think 
we are all concerned about, accomplishing the objective of HOPE 
VI, and making sure--and this is for those who develop the most 
critical part--making sure the units actually get built.
    Chairwoman Waters. And then these units would be managed 
and supervised by the housing authority?
    Mr. Cabrera. Or whoever the housing authority contracts 
with, yes. Housing Authorities also contract with private--
    Chairwoman Waters. I know, but the idea is that they would 
still be under the supervision of the housing authority, with 
all of the services that go along with them.
    Mr. Cabrera. Yes. They would be the owner.
    Chairwoman Waters. All right. Thank you very much. At this 
time I think what we are going to do is we are going to break. 
I would like to ask you, Mr. Secretary, if you have about 
another half hour?
    Mr. Cabrera. Yes.
    Chairwoman Waters. Thank you very much. We will come back 
as quickly as we complete this set of votes on the Floor, and 
complete your panel. We have members here who have some 
questions for you. And then we will move onto the second and 
third panels. I appreciate your patience.
    Mr. Cabrera. My pleasure, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    [Recess]
    Chairwoman Waters. The subcommittee will come to order. I 
would like to thank you, Mr. Cabrera, for remaining. We were a 
little bit longer than we thought we would be.
    I have completed my questions, and I would now like to go 
to Mr. Shays, who is going to serve as our ranking member.
    Mr. Shays. Madam Chairwoman, I am happy to wait, because I 
think some of my colleagues have been here and have heard the 
testimony. So I am more than happy to wait and it will give me 
a chance to catch up, so if one of your colleagues wants to go.
    Chairwoman Waters. That is fine. We will go right down to 
Mr. Cleaver for questions.
    Mr. Cleaver. Thank you, Madam Chairwoman. Mr. Cabrera, 
thank you for being here. There are a number of issues I would 
like to raise, but let us focus on the unspent funds. The 
question of whether or not those unspent funds should be made 
available has been the subject of a great deal of discussion. 
What is the most recent figure for the amount of HOPE VI 
unspent funds? And what are the plans for those funds that HUD 
has put forth or made--perhaps I am begging the question--has 
HUD made any plans for the unspent money?
    Mr. Cabrera. Of the $5.8 billion that has been granted 
through the HOPE VI process, as of June 9th of this year, $1.4 
billion remains unspent. And of the $1.4 billion, approximately 
$500 million, in fact, over $500 million--almost $600 million--
are for grants that were issued between 1994 and 2001. When I 
was confirmed, that number was actually $2.4 billion. And so in 
the last approximately 18 months, the focus for the Office of 
Public Housing Investment, which is essentially the body within 
Public and Indian Housing that deals with HOPE VI, has been 
encouraging grantees to move forward as quickly and as 
efficiently as possible. That will continue. The act does not 
provide much room for HUD to do what one might want to be done.
    I have been asked previously by this committee on this 
issue why, for example, we couldn't recapture, and the issue is 
we don't have the authority to recapture, and that might be one 
of the things that the committee may want to think about.
    Mr. Cleaver. Well, that was one of the questions that I 
have for you was whether or not this committee needs to 
reprogram those dollars, those unspent dollars, and reprogram 
in terms of complying with what I think the spirit of this 
committee is in terms of one-for-one replacement.
    Mr. Cabrera. I think my visceral reaction would be sure, 
you can do that. Here is the problem. There are grants 
currently, and there is always--each grant you have to deal 
with individually. There are some grants, for example, that 
have been the subject of a lot of litigation, and they tend to 
slow up the development process. So trying to say you are going 
to recapture them is kind of tough. For those grants where 
there has been no movement at all and there has been no 
litigation, I would say sure. For those that have actually had 
pretty valid reasons not to move forward, I would say 
absolutely that this committee should probably think about 
giving the Secretary the authority to revisit that, and I mean, 
one of the things that we would propose, I suppose, or one that 
could be proposed that could be recaptured and put back into a 
pot and then be reallocated.
    Mr. Cleaver. What is your best estimate, and I will 
conclude, your best estimate, Mr. Secretary, of the dollars 
that are not being contested or in litigation?
    Mr. Cabrera. Congressman, I can't give you that information 
right now because I don't know it. But I am happy to have that 
research and provide that answer to you for the record.
    Mr. Cleaver. Well, the total would be, I think, important 
if this committee is going to take some kind of action.
    Mr. Cabrera. No. I agree but I just don't know, can't 
answer the question.
    Mr. Cleaver. If you could get that--
    Mr. Cabrera. Absolutely.
    Mr. Cleaver. Thank you.
    Chairwoman Waters. Thank you. Mr. Pearce, for 5 minutes.
    Mr. Pearce. Thank you, Madam Chairwoman. Mr. Cabrera, I 
would like to focus not on the unspent funds but on the spent 
funds. If we get a sense--on your testimony, page 2, you are 
talking about $10 billion over the life of the project and $5.8 
billion as of June 9th. What is the difference in those two 
figures? What is--
    Mr. Cabrera. Congressman, may I have a moment? I am trying 
to refresh my recollection.
    Mr. Pearce. The note probably just says, amount and type of 
financial assistance. You were awarded $5.8 billion in HOPE VI 
revitalization funds, and then HOPE VI grants received $10.3 
billion. Tell me a little bit about the difference in those. 
Which means what?
    Mr. Cabrera. ``Other sources'' is a reference to any and 
all subsidy that was used in order to develop, so that could 
include private activity bonds, and low income housing tax 
credits.
    Mr. Pearce. Excuse me. So $10.3 billion is actually the 
figure of dollars cost?
    Mr. Cabrera. The leverage number, yes, that is the leverage 
number of what was drawn in.
    Mr. Pearce. Now when I am looking at what we got for that, 
these numbers up in the top paragraph on the second page, 
63,885 households that relocated, 87,000 adult supportive 
services, 62,000 employment preparation, is that correct? Is 
that--
    Mr. Cabrera. The original legislative intent of HOPE VI was 
the demolition of public housing.
    Mr. Pearce. I just want to know about your numbers, not the 
law. I want to know if these numbers are what occurred for $10 
billion. These numbers.
    Mr. Cabrera. Congressman, yes. This is one of the things 
that occurred.
    Mr. Pearce. So if we were to go back to page 1, and we read 
that the four areas are household relocation, units demolished, 
units completed, and units occupied. If those are the four 
areas that you are basically dealing with, then we have a 
summation, that it cost us $10 billion to get 63,885 households 
relocated, 87,235 support services, 62,000 employment 
preparation placement programs, 11,600 enrolled in 
homeownership counseling. Did we get anything else for the 
money that we have spent?
    Mr. Cabrera. Well, I don't think it is $10.3 billion.
    Mr. Pearce. Okay. Fine. Let's just use $5.8 billion then. I 
don't care what number we use. I want to see what we get for 
what we have spent. That figure seems to be dismally small.
    Mr. Cabrera. I don't know if I was unclear. But the $5.8 
billion, it was leveraged to be $10.3 billion inclusive of all 
that.
    Mr. Pearce. So $5.8 billion is the--
    Mr. Cabrera. $5.8 billion, excuse me.
    Mr. Pearce. That is still a very large expenditure to 
counsel 11,600. Is that the period of 10 years? How long did we 
counsel them?
    Mr. Cabrera. That depends on the grant agreement in terms 
of--
    Mr. Pearce. This is a summation of the whole program, 
right?
    Mr. Cabrera. It is a summation of the general parameters of 
the program.
    Mr. Pearce. How many years of counseling are involved to 
get 11,600 homeowners counseled?
    Mr. Cabrera. It would depend on the grant agreement. Not 
all components of HOPE VI include homeownership counseling.
    Mr. Pearce. You don't think that is an accountability that 
you probably ought to know?
    Mr. Cabrera. Well, I am sure we can answer the question.
    Mr. Pearce. But you as a manager, you don't care how many 
people get counseled? We have 300 million people in the country 
and we counsel 11,000. I don't know how many poor people we 
have, but we have a significant number. And we counsel 11,600 
people. We are spending billions of dollars here. I am not sure 
what we are getting. If you would like to tell me what we are 
getting that substantiates--I think we appropriate money and we 
expect to get things out that are valuable. We offer services.
    Mr. Cabrera. Well, Congressman, you said I could use my 
metrics. $5.8 billion essentially demolished 150,000 public 
housing units and rebuilt approximately--
    Mr. Pearce. If I do the math, 5 million divided by 78,000, 
divided by 64,000, and I know that it is not the only thing it 
is used for, but let's just take it if it were, that is $78,000 
to demolish each one, which is a very high figure. I know the 
$5.8 billion--
    Mr. Cabrera. We also built 503,000 units.
    Mr. Pearce. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. Mr. Clay for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman. And Mr. Cabrera, 
welcome back to the committee.
    Mr. Cabrera. Thank you.
    Mr. Clay. Let me say that HOPE VI has been a slow vehicle 
for revitalizing public housing. I do not agree, however, with 
the notion that the program should be abolished. The HOPE VI 
program has yielded many positive results in redeveloping 
communities. St. Louis is one example. I do have questions 
about the implementation of the program, and my first pertains 
to the City of New Orleans.
    My understanding is that funds are disallowed for community 
and supportive services or human capital services in New 
Orleans. We have kids walking around with guns in their belts, 
and their parents are working and living in Houston or Dallas 
or some other city. These same kids saw the system fail them 
and were traumatized watching deaths occur all around them 
during the terrible storm and the tragedy there. Do you not 
agree that counseling is needed for these kids?
    Mr. Cabrera. Congressman, I think the amounts or the moneys 
that you are referring to are Community Development Block Grant 
moneys and not HOPE VI moneys. Those moneys that are being 
allocated--I hate giving this answer but it is the only one I 
can legitimately give. I don't have an idea of what the 
parameter is for the allocation of that money or the use. So 
within the context of the Community Development Act of 1974, if 
that is what it requires, I really can't speak to that. I don't 
think that is HOPE VI grant money though.
    Mr. Clay. But not asking you to do anything that is not 
consistent with the law, but also looking at what the immediate 
needs of a community are.
    Mr. Cabrera. Congressman, I don't maintain that you are 
telling me to or asking me to. What I am saying is I can't 
answer the question because it is a wholly different program 
that is not under the public--
    Mr. Clay. The funds are allowed for services in cities 
other than New Orleans. And without these services, don't you 
think that these efforts are doomed for failure in a couple of 
years because of the lawlessness and crimes that are committed?
    Mr. Cabrera. In the case of HOPE VI, there is a CSS 
component, which is community supportive services, and that 
basically deals with many of the issues that you were just 
talking about, homeownership counseling, other elements that go 
with the HOPE VI grant, in the HOPE VI program. That already 
happens. That happens nationwide. That has not been disallowed 
in the case of New Orleans. New Orleans has a HOPE VI, and it 
wasn't disallowed then.
    So the reason that I am answering in the way that I am 
answering is because the funds that you are alluding to are 
funds that are outside of Public and Indian Housing, and I 
honestly just don't have knowledge of those programs to give 
you any kind of indication one way or the other.
    Mr. Clay. Okay. Hypothetically then, if the HOPE VI is 
approved to revitalize the destroyed areas, then those funds 
can also be used--
    Mr. Cabrera. That is already the case. That is the case 
nationwide now. It was the case in New Orleans and Florida.
    Mr. Clay. Right now?
    Mr. Cabrera. Yes. That is already happening. It has been 
happening for quite a while.
    Mr. Clay. Okay. Thank you. I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    Mr. Miller.
    Mr. Miller. Thank you, Madam Chairwoman. Mr. Cabrera, I 
enjoyed your talk. And when you said the authority--you don't 
have the authority to recapture many units, to guarantee one-
for-one. I looked at your statement and you say that the 
Department is open to suggestions on how to redefine public 
housing revitalization in a matter that is cost effective and 
efficient in terms of producing units. And I think a lot of 
times we put ourselves in a box. Now I admit my colleagues--I 
think HOPE VI has worked, but it has taken a long time to bring 
very few units on the marketplace. And if you look at the 
situation, we understood that there are a whole lot of 
nonprofits out there that are building public housing, and 
there is a growing role of these nonprofit developers because 
they can leverage private money into communities either as well 
or better than PHAs, but PHAs are the only ones who are 
currently competing for HOPE VI funds. Don't you think there, 
instead of only using HOPE VI rehabilitated parts of the 
community owned by PHA, can't we take and look on as an 
integrated approach where cities, nonprofit housing developers 
can include a larger area around those PHAs to bring more units 
online, that we don't have a displacement problem as we do when 
we are trying to tear down units that a PHA owns and put people 
out and then bring them back when it is completed. We can do 
better than a one-to-one. We could actually come back with a 
two-to-one because you bring additional units in by using HOPE 
VI dollars to supplement what they can leverage in the private 
sector, guaranteed units to be served for the same purpose as 
the PHA.
    What is your opinion on that?
    Mr. Cabrera. Congressman, to a large degree that is what 
happens now. What happens within the context of a HOPE VI is 
there is a HOPE VI component and generally there are other 
phases to it where you have other subsidies that folks use to 
develop units.
    Mr. Miller. But only with PHAs.
    Mr. Cabrera. I think if I understand your question 
correctly, and please correct me if I am wrong, what you are 
saying is why are PHAs the only applicants for HOPE VI grants?
    Mr. Miller. Why can't a nonprofit come in and compete for 
those HOPE VI dollars on a competitive basis? One could look 
and say yes, it is a reasonable approach, and they could use 
those dollars and use private funds that they borrow or that 
they have to create more units.
    Mr. Cabrera. I think the reason is because public housing 
authorities are State creatures, they are not Federal 
creatures, and they own their own real property. They actually 
own title to them. Most PHAs that compete for HOPE VI grants, 
whatever the grant might be, whether it is demo only and demo 
and construction, they are usually now these days joint 
venturing with someone, and that joint venture usually does 
contain either a nonprofit or for profit. Some PHAs are 
developing on their own, but at the end of the day the net 
result I think that you seek is actually already occurring, and 
that has mostly occurred since 2002.
    So I think there is another reason for that, and that is 
that PHAs are property managers on the whole. They are not, as 
I call them, natural developers. That sounds more organic than 
it is intended. But at the end of the day, what we are 
beginning to see is PHAs are in many cases developing 
development capacity.
    So the short answer is, anything that could be done to 
encourage development by PHAs in conjunction with the private 
sector, I think, would be a good thing.
    Mr. Miller. But what would be wrong with a nonprofit that 
builds and retains housing for the same purpose a PHA does--and 
you know these are not the same individuals--that I have seen 
some in the marketplace out there do phenomenal amounts of 
housing with very few Federal dollars invested, yet those units 
are restricted for a certain purpose, and the nonprofit manages 
those units.
    Mr. Cabrera. The distinction would be in the case of those 
units, usually they are single asset entities owned by a 
nonprofit for a for profit. And that is the exact distinction 
here. These are public housing-owned--public housing authority-
owned property using public housing money that is going to 
support the units that are being built.
    Mr. Miller. But if you could do the same things on 
properties contiguous to PHAs in the same neighborhoods that 
need revitalization, then you could have a nonprofit come in to 
compete for the same dollars and generate additional units, in 
many cases rapid fashion. I see people behind you going like 
this and panicking because it is a new thought that takes it 
out of government directly. But there is a guarantee on those 
units that they are going to be serving the people we need to 
serve. Why wouldn't we do that?
    Mr. Cabrera. My sense is that the people who are doing that 
are doing it for a reason, and it is not an issue of government 
and private sector. The issue is that once those units are 
built, there is an ACC placed on them, or there is an 
affordability component to them. In the case of those units 
that have an ACC placed on them, it means they are receiving 
operating funds under section 9 of the Housing Act of 1937. 
Those aren't funds that nonprofits can compete.
    Mr. Miller. But you can do that without receiving those 
operating funds the private sector is doing today. Madam 
Chairwoman, I think we should look at opportunities to help 
people in need in these neighborhoods. We need to bring 
additional units on, too. I think this is a viable opportunity 
for us to at least research it and check it out and debate it 
further.
    Mr. Cabrera. Madam Chairwoman, may I be indulged for a 
minute to explain something really quickly? The Congressman 
wasn't here when we addressed this. One of the things I 
mentioned earlier, Congressman, was that the issue for anybody 
trying to develop affordable units is to define affordable 
units. So for purposes of this, what you are thinking is 
exactly correct in our view, which is, you want to create a 
wider menu of what affordable units are. So they are going to 
be units that are going to be financed on the operating side, 
not the construction side, with annual contribution contracts 
and those that won't. Those that do tend to serve folks of 0 to 
30 percent--usually really a little more--of area median 
income. And those that don't, those tend to be low income 
housing tax credit units, and those are the units that you were 
referring to that are around the development. The issue becomes 
as part of the development plan when you are doing phased 
development, that that be married well. And as I understand 
you, that is what you are proposing.
    Mr. Miller. I propose that we can do what a PHA does 
through the private sector, and I will talk to the chairwoman 
later when I have more time. Thank you.
    Chairwoman Waters. Thank you. Mr. Green.
    Mr. Green. Mr. Miller, would you like for me to yield a 
minute to you?
    Mr. Miller. I appreciate that. I have heard this debate so 
often, and I have heard members on my side say that HOPE VI 
didn't work. I think HOPE VI worked. I think we just were not 
creative enough with the concept of HOPE VI to make it work 
today. And if we look at what has happened with the HOPE VI 
Program, so few units are developed and many of them are 
developed so slowly that people on both sides are saying, 
something is wrong here. We have to--we have an opportunity 
with the program that we have seen benefit from but the benefit 
is not being created as rapidly as we should be. In some cases 
it is because we have restricted what we have before us to so 
few people rather than going out and being creative because I 
have watched this industry change with the nonprofits in recent 
years, and I have seen more and more nonprofits being started 
by good people trying to serve the same people that PHAs are 
trying to serve, and they are doing it with far less government 
dollars than we ever dreamt about doing it with, and they are 
managing these units, they are keeping these units online and 
they are maintaining these units, and it is working. And all I 
am saying is from our perspective, if we are looking at a HOPE 
VI Program, we are trying to create opportunity for depressed 
areas and for people to have affordable housing in these areas 
like PHAs do, why not look at options available around those 
PHAs that the private sector would love to get involved with, 
and let's see if there is some way that we can do a situation 
where it is a partnership, you know, HOPE VI coming into some 
funds, lenders are coming in with some funds but we are 
creating lenders out there that are serving the people we would 
like to serve.
    Mr. Green. I reclaim my time.
    Mr. Miller. I would be happy to yield back. Thank you, sir.
    Mr. Green. Let's go to the right to return, Mr. Secretary. 
What is your opinion with reference to the right to return in 
terms of persons having to have employment?
    Mr. Cabrera. Again, Congressman, it already exists. The 
right of return for someone who is in public housing already 
exists for those who are relocated subject to Federal law. And 
Federal law says if something happens in the interim, if you 
are a convicted felon between the time that you were relocated 
and the time you come back, then you cannot relocate. But aside 
from that, the opportunity to relocate for those who choose to 
relocate exists, and in fact in most cases folks do relocate 
back to the HOPE VI developed unit.
    Mr. Green. My understanding is that in some units persons 
are not allowed to return unless they have employment. You can 
leave without employment but you can't come back unless you 
have employment.
    Mr. Cabrera. I don't recall that being a component, and I 
am not going to say that is not the case, but that is not my 
understanding. If it is the case, I am happy to answer that as 
being a possibility. But I don't recall that being the case.
    Mr. Green. Finally, with reference to the demolition only 
grants.
    Mr. Cabrera. Congressman, you mean the community service 
component? Or do you mean actual employment?
    Mr. Green. No. No. Actual employment.
    Mr. Cabrera. Okay.
    Mr. Green. But let's come to the demolition only grants. 
Your thoughts on those, please.
    Mr. Cabrera. Most PHAs that are undertaking a HOPE VI grant 
I believe would say that--and you will have one PHA come up in 
just a little bit. I think they would say that demolition only 
is an indispensable part of HOPE VI because very often they 
can--all they really need is help demolishing an obsolete 
development, and they will use other pots of money to develop 
units there, not necessarily HOPE VI money. And the reason that 
they think that or they want that is because it is a much 
faster development for them. HOPE VI and marrying HOPE VI with 
different pots of money tends to add time to development. Time, 
adding time to development is what kills developments. That is 
what makes developments not go up. So essentially limiting or 
actually prohibiting demo only would be an imposition to public 
housing authorities trying to develop affordable units 
generally.
    Mr. Green. Thank you. I think my time has expired. I yield 
back.
    Chairwoman Waters. Thank you very much. Mr. Shays.
    Mr. Shays. Thank you. Mr. Green, you were so generous with 
my colleague. I am not going to use my full 5 minutes. Would 
you like to ask another question?
    Mr. Green. I thank the gentleman, but I yield back.
    Mr. Shays. Thank you for your graciousness. I just wrestle 
with one thing. I understand it takes a long amount of time 
with the HOPE VI grant. But in the end, isn't the product 
pretty impressive?
    Mr. Cabrera. When it gets built.
    Mr. Shays. So what is the negative of it taking long? Is 
money getting wasted?
    Mr. Cabrera. No. People are unwilling to invest. The 
negative is that when you have a HOPE VI grant and then you 
have a PHA compete for tax credits, because of the rules in 
section 42 of the Internal Revenue Code, you only have so much 
time to get your last unit, not your first unit, your last unit 
placed in service. You only have so much time to get your first 
takedown. It is a very time constrained system. So most housing 
finance agencies really don't have a lot--they don't have the 
warm fuzzies about HOPE VI because they consume a lot of tax 
credit and they don't get product, which means they have lost 
the opportunity to develop a unit somewhere else. And what 
winds up happening if you don't use your tax credits is they 
wind up in a national pool, and they can be distributed to all 
the other States except you.
    Mr. Shays. The people who are putting out, if they don't 
want it, no one makes someone apply for a HOPE VI. So if it 
takes longer and they risk losing tax credits, it is still, you 
know, as grownups their decision. But it gives them an option.
    Mr. Cabrera. The party that is losing--the party that is 
losing most there isn't--well, it is the PHA that doesn't get 
the unit, and it is also the folks in the community who don't 
get a unit. That is who loses really the most. But one 
important part--
    Mr. Shays. Somebody is getting it. It is not like from a 
national.
    Mr. Cabrera. No, no. Someone is getting it somewhere else.
    Mr. Shays. Yes. But they are. And the community is willing 
to take the risk because the payback is so significant. I mean, 
for me, I have seen--and admittedly, maybe some communities 
benefit more than others. But we have seen part of Stamford, 
Connecticut, transformed by Federal dollars and private 
dollars. We are seeing kids basically--and when they see 
someone driving a Mercedes or BMW for a deal, it is not a drug 
deal. It is they are going to UBS. We are having young kids be 
in a facility that has not just moderate income or upper 
moderate income or--we are seeing some pretty wealthy people 
staying at an exact same unit. We are seeing kids in swimming 
pools who are swimming right next to someone who is paying 
market rent, and making a significant sum of money. So I look 
at the result and I say, this is awesome. You are telling me it 
takes time. Then I respond and say, yes. It takes time. And 
then some lose, and the community, and it goes somewhere else. 
But the community is willing to take that risk.
    Mr. Cabrera. No, not the HOPE VI goes somewhere else. The 
other resources that are married to the HOPE VI.
    Mr. Shays. I understand. That is their decision.
    Mr. Cabrera. No, Congressman. But that is the problem. If 
you have one area of Connecticut that absorbs an enormous 
amount of tax credits, that means someone else in the State of 
Connecticut--
    Mr. Shays. You are talking about a different issue. You are 
talking about it takes a lot of tax credits. That is a 
different issue than saying that--I think it is a different 
issue, isn't it?
    Mr. Cabrera. No. I think that is one of the issues. I think 
one of the things that I suggested earlier when I provided my 
oral statement was, the issue here would be simplicity and ease 
of marriage with the other--
    Mr. Shays. Well, let me just with the remaining time I 
have, let's deal with simplicity, let's deal with making this 
program better. But I would tell you on a scale of 1 to 10, 
these HOPE VI grants have been a 10 for the community. I have 
been in public life for 32 years, and it is one of the best 
programs I have seen, despite the fact it may take longer than 
what you or I want.
    Mr. Cleaver. Mr. Shays, would you yield for a moment?
    Mr. Shays. Absolutely.
    Mr. Cleaver. I know that you didn't mean to imply that drug 
dealing and public housing are synonymous. But as a resident of 
public housing who can stand up, you know, on national TV and 
say I have never used drugs and never worried about being--
    Mr. Shays. Let me be clear, and if you would indulge me, 
because I want to be very clear. In our public housing, we 
basically had poor folks. We didn't have people who worked, 
they were basically not working, and kids were being raised by 
parents who did not have regular jobs. So no, I said pretty 
much what I meant, at least in our area. But we have 
transformed it, and we have public housing integrated with 
market-rate housing and it has made a world of difference.
    Chairwoman Waters. Thank you very much.
    Mr. Watt?
    Mr. Watt. Madam Chairwoman, I have one question. Is the 
Department planning to support the reauthorization of HOPE VI?
    Mr. Cabrera. No. Congressman, when I started the oral 
statement, I essentially said that the Administration does not 
support the reauthorization of HOPE VI. But in light of the 
fact that this Congress is considering it, these would be some 
thoughts that we had.
    Mr. Watt. I yield back. Thank you.
    Chairwoman Waters. Thank you very much. Mr. Secretary, we 
would like to thank you for your patience and for your presence 
and for your participation. The Chair notes that some members 
may have additional questions for you, which they may submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to this 
witness and to place responses in the record. This panel is now 
dismissed, and I would like to welcome our second panel.
    Thank you very much.
    Mr. Cabrera. Thank you very much.
    Chairwoman Waters. I would like to introduce our 
distinguished second panel, and I will start with our first 
witness, someone whom I know, Mr. Rudy Montiel, executive 
director of the Housing Authority of the City of Los Angeles. 
Since his appointment as executive director at the end of 2004, 
Mr. Montiel's leadership has been instrumental in the financial 
turnaround of the Housing Authority of the City of Los Angeles. 
Under his guidance, the Housing Authority has turned a $25 
million operating loss at the end of 2004 into net operating 
income in 2005. Prior to coming to Los Angeles, he successfully 
led the Housing Authority of the City of El Paso for 3 years. 
His strong private sector experience includes engagements with 
Fortune 500 companies such as General Motors, Delphi, and the 
IT group. He is a licensed professional engineer in Texas and 
sits on the boards of the Housing Authority Insurance Group, 
the Public Housing Authority Directors Association, the Council 
of Large Public Housing Authorities, and the Hispanic Engineers 
National Achievement Awards Corporation.
    Thank you, and welcome, Mr. Montiel.
    Mr. Montiel. Thank you, Madam Chairwoman.
    Chairwoman Waters. Mr. Watt, I see there is someone here 
you may want to introduce, Mr. Woodyard.
    Mr. Watt. Thank you, Madam Chairwoman. I am pleased to be 
able to introduce Charles Woodyard, who is the CEO of the 
Charlotte Housing Authority, which is in my congressional 
district. I am hesitant to say all of the good things I could 
say about him for fear it will expose him on a national basis, 
and he will be secreted away from us to some other part of the 
country. But I will say that he has his bachelor of arts degree 
in political science and his master's degree of public 
administration from the University of North Carolina at Chapel 
Hill. He has been in public service for 20 years: 13 of years 
with the City of Charlotte; 2 years prior to that with the City 
of Greensburg, which is also in my congressional district on 
the northern end. And he has been with the Charlotte Housing 
Authority for 7 years, first as vice president for planning and 
development, and then as chief operating officer in November of 
2000, acting chief executive officer in April of 2002, and 
finally, chief executive officer since October of 2002. We are 
honored to have him. He has done a great job, and been an 
important part of my congressional district and our local 
community, and we welcome him here.
    I appreciate the chairwoman allowing me the honor of 
introducing him.
    Chairwoman Waters. Thank you very much. And now Mr. Shays, 
I understand that you have someone that you would like to 
introduce.
    Mr. Shays. Thank you, Madam Chairwoman. I would just like 
to welcome Richard Fox, who is the executive director of the 
Stamford Housing Authority. He was the assistant executive 
director in Trenton, New Jersey, the executive director in 
Carteret, New Jersey, and the executive director in Plainfield. 
Since 1980, he has been in this business and was educated at my 
alma mater at New York University Grad School of Public 
Administration and Rider College and he has just been a 
wonderful addition to the Fourth Congressional District in 
Stamford. He has made me a real believer, he and his team, in 
HOPE VI grants. I am delighted, Madam Chairwoman, that you 
invited him to testify.
    Chairwoman Waters. Thank you very much. And the next 
gentleman on our panel with us today is Mr. Kelly, who is 
executive director of the District of Columbia Housing 
Authority, and I do know that he is a member of the same 
organization as Mr. Montiel, the Council of Large Public 
Housing Authorities, and I have had an opportunity to interact 
with him, and had the opportunity to speak before that group 
not so long ago, and I welcome him here today.
    Thank you very much. All right, Mr. Montiel. We will start 
with you. You may proceed with your testimony for 5 minutes.

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

    Mr. Montiel. Madam Chairwoman, Ranking Member Biggert, and 
members of the committee, thank you for the invitation to speak 
before this House subcommittee on such an important issue as 
HOPE VI reauthorization. What I would like to do first of all 
is sketch a broad vision of the affordable housing crisis that 
we have in Los Angeles today, and then lead into how HOPE VI 
reauthorization, and the activities that we would like to 
pursue in Los Angeles, would help address that situation.
    First, some general remarks about Los Angeles and the 
affordable housing crisis; it is arguably the most challenging 
in the United States. Skyrocketing rental costs--a majority of 
Angelenos families today spend more than 40 percent of their 
income for rent. Increasing population--whereas many cities in 
the Nation have actually reduced in size in the last decade, 
Los Angeles continues to grow. Today, there are over 4 million 
people living within the City limits. Lengthy commutes--Los 
Angeles is known for traffic, and those lengthy commutes have 
impact not only on quality of life but on quality of life for 
the people who live in the City, vis-a-vis pollution and other 
aspects. Occupancy rates--the recent USC Casden forecast on the 
multifamily situation in Los Angeles shows us that today in Los 
Angeles, the City is occupied at 97.5 percent in every 
submarket. That means that Los Angeles is full from a rental 
housing market, whether it is Brentwood to Boyle Heights and 
from Westwood to Watts. Against this backdrop, the City of Los 
Angeles has 8,000 public housing units, a very small public 
housing inventory when compared to much smaller cities 
throughout the country. And we have those in primarily 16 large 
family sites, although we also have some senior units.
    Interestingly, the situation, the physical condition of our 
public housing stock shows that we have about a $500 million 
backlog in deferred capital needs. But this only speaks to the 
easy part of resolving our public housing situation, and that 
is fixing the buildings, fixing the real estate. That is really 
the easy part. The much tougher problem is how do we transform 
the lives of the roughly 8,000 families who live in public 
housing today? Our occupancy rate is 99 percent plus. And we 
are talking about the opportunity for HOPE VI to represent 
filling that vital self-sufficiency gap for those families 
trying to fight their way out of poverty against incredible 
obstacles.
    Let the numbers tell the story. Residents of public housing 
in Los Angeles make on average about 18 percent of area median 
income in one of the wealthiest cities in the country. Some 
public housing communities have an unemployment rate of 85 
percent. Graduation rates from high school are less than 50 
percent, and the children who live in public housing face some 
of the most daunting challenges when it comes to their personal 
safety.
    There is inadequate health care, inadequate child care, and 
inadequate elder care, in our public housing. But there is 
hope. And we believe that we have a window of opportunity today 
in Los Angeles to begin a citywide redevelopment effort, but we 
will definitely need HOPE VI to make it a success.
    Our mayor, Antonio Villaraigosa, is an ardent proponent of 
transforming public housing. The councilmen and women with 
large public housing developments in their districts are very 
supportive of redevelopment. And even our congressional 
representatives will support redevelopment if it is done right. 
And what does that mean? In Los Angeles it means that we 
redevelop with mixed income and mixed use. It means a one-to-
one public housing replacement.
    Yes, this is challenging. Yes, this will require additional 
subsidy and additional capital moneys. But it is the only right 
thing to do in a city that has only 8,000 public housing units 
to serve a population of 4 million. Transit-oriented where 
possible. We have public housing developments that are within 
walking distance, of very short walking distances of the green 
line, the blue line, these are Metro lines, and would be ideal 
places for transit-oriented development. What does right mean? 
It means that residents in general will not face forced 
relocation and will have the right to return after 
redevelopment.
    It means significant investment in jobs. Yes, you may have 
local hiring agreements. You want to have the opportunity to 
hire as many local residents as you can, working closely with 
the unions to get these young men and women into apprenticeship 
programs. It means family self-sufficiency and homeownership 
opportunities. It means partnering with educational 
organizations to improve the educational quality as well. And 
finally, it means for our City, redeveloping not just on the 
south side but also on the east side. The leadership of our 
board of commissioners and Chairperson Bea Stotzer, the board 
has set the bar high.
    Chairwoman Waters. I am sorry. Your time is up.
    Mr. Montiel. Thank you.
    Mr. Shays. She is tough.
    Chairwoman Waters. Not really.
    [The prepared statement of Mr. Montiel can be found on page 
80 of the appendix.]

 STATEMENT OF CHARLES WOODYARD, EXECUTIVE DIRECTOR, CHARLOTTE 
                       HOUSING AUTHORITY

    Mr. Woodyard. Good afternoon, Chairwoman Waters, Ranking 
Member Biggert, and members of the subcommittee. First, allow 
me to thank you for the opportunity to give testimony on the 
benefits of the HOPE VI Program and to present compelling 
reasons why the Program, with some refinement, should continue.
    The HOPE VI Program's original mandate of eliminating 
distressed units of public housing across the Nation and 
replacing them with mixed income communities represents a 
formidable task. Add to that task the additional goal of 
deconcentrating poverty, plus eliminating urban blight, and you 
have a complicated public policy goal that impacts real people 
and the health of American cities.
    To the extent that cities are a collection of people and 
commercial economies that thrive or suffer as a result of 
market forces and government intervention, HOPE VI can be seen 
as an attempt to grow and stabilize America's economy. To the 
extent that cities are a collection of diverse people, diverse 
cultures, and children who are the foundation of the country's 
future, HOPE VI can be seen as an attempt to raise the minimum 
standard of living for more Americans.
    Whatever your take on HOPE VI as a public policy might be, 
it is important to understand that the public policy must also 
have a measurable impact on the lives of Americans and the 
health of American cities. With this in mind, it would be 
helpful to understand the nature of Charlotte, North Carolina 
and how HOPE VI is used as a growth strategy, a community 
building strategy, a way to impact the self-sufficiency efforts 
of very low income families. Charlotte's real estate market is 
one of the most vibrant in the country. Unemployment is low, 
home prices are rising rapidly despite the national trend, but 
income increases are not quite keeping pace with housing and 
energy cost increases. The result is that over 11,000 very low 
income families in the community either live in substandard 
housing or pay more than 30 percent of their income for 
housing.
    In short, Charlotte is suffering from growing pains. A 
major catalyst for the idea of a new way of providing 
affordable housing as a growth strategy was the City's first 
HOPE VI grant. Earle Village was a 400-plus unit public housing 
complex in the heart of uptown Charlotte. This low income 
housing community dominated the entire quadrant of the uptown 
area and was a major source of crime, the perception of crime, 
the lack of housing development in uptown and the suppression 
of property values in uptown. The award of the City's first 
HOPE VI grant meant that mixed income housing and mixed use 
development would be the norm for development in our City. The 
HOPE VI site was transformed into a diverse community with 
different housing types and incomes nearly along the entire 
spectrum of incomes.
    The next logical question then is what happened to all 
those families in Earle Village and the other families in HOPE 
VI communities? The Charlotte Housing Authority has received 
four HOPE VI revitalization grants and one demolition grant for 
a total of over $122 million. The five communities directly 
impacted by the HOPE VI grants total over 1,500 units of 
severely distressed crime-ridden apartment homes that were 
breeding grounds for social disorder. The HOPE VI grants 
eliminated those distressed communities and replaced them with 
13 mixed income family communities, 5 public housing senior 
communities and 474 Section 8 vouchers. These new communities 
contain 1,366 public housing units, 974 affordable moderate 
income units, and 978 market-rate rental units, along with 85 
homeownership units that were developed on the original HOPE VI 
sites for former public housing families. All told--and this is 
the transformation summary--1,531 housing opportunities for 30 
percent AMI and below families were transformed into 1,729 
housing opportunities in mixed income environments or Section 8 
vouchers in neighborhoods of the family's choice.
    I mentioned earlier that Charlotte was experiencing growing 
pains. And according to our own local research, the affordable 
housing problem in Charlotte impacts low income families more 
than any other income level. The need for 11,000 additional 
units in Charlotte for families earning at or below 30 percent 
of AMI is the only income level in the City that demonstrates a 
shortage of units. In a city with this demography, one-for-one 
replacement is essential public policy. Charlotte's Housing 
Authority is subjected to tremendous local pressure to commit 
one-for-one replacement when vitalizing our community under 
HOPE VI. And as a part of the community's initiative, we are 
replacing more than one-for-one.
    [The prepared statement of Mr. Woodyard can be found on 
page 116 of the appendix.]
    Chairwoman Waters. Thank you very much. Mr. Fox.

STATEMENT OF RICHARD FOX, EXECUTIVE DIRECTOR, STAMFORD HOUSING 
                           AUTHORITY

    Mr. Fox. Thank you, Madam Chairwoman. My name is Richard 
Fox, and I serve as the executive director of the Stamford 
Housing Authority. My testimony today is in support of the 
renewal of the HOPE VI Program. I would like to thank Chairman 
Barney Frank and Chairwoman Maxine Waters as well as Ranking 
Members Baucus and Biggert for the opportunity to speak today. 
I would also like to thank and commend Representative 
Christopher Shays for his commitment to the HOPE VI Program and 
for the actions he has taken to ensure its continued success.
    Stamford Housing Authority is a progressive medium sized 
public housing authority located in a city of 120,000 residents 
in southwestern Connecticut. In its evolution as a successful 
sponsor and developer of mixed income housing, the Stamford 
Housing Authority and the community that it serves have 
benefited substantially from the HOPE VI Program. This program 
has enabled the authority to create various development models 
that are uniquely suited to the needs of the City.
    Based upon my experience with the program, I would like to 
offer comments on two features of the proposed reauthorization, 
the right of return provision and one-for-one replacement 
provision. The Stamford Housing Authority believes that the 
right of return for residents of the original site is an 
important program element. However, returning residents should 
have a one-time opportunity to reoccupy the development, 
providing they meet locally established rehousing criteria. 
Once a resident has selected his/her housing option, a person 
on the waiting list who does not have housing should be offered 
the opportunity to move into the subject property. In addition, 
it is important to recognize that residents often wish to make 
other housing choices which may be of benefit to them, as well 
as to the broader community.
    The Stamford Housing Authority has achieved success with 
assisting public housing residents to become first-time home 
buyers. We anticipate placing more than 150 working families 
into their own permanent homes. This transition serves a dual 
benefit by also making the rental unit available to a new 
family, thus freeing up a unit of affordable housing.
    Stamford's landmark one-for-one replacement ordinance, 
passed in 2001, grew in large part out of a local affordable 
housing crisis and was precipitated by resident fears of 
displacement. The Stamford Housing Authority helped to craft 
this ordinance, and by standing alongside residents 
successfully promoted its passage. The Stamford one-for-one 
replacement initiative was instrumental in building essential 
trust and cooperation between public housing residents and the 
Stamford Housing Authority, enabling us to become a successful 
HOPE VI practitioner.
    We feel that the provision of one-for-one replacement 
should receive consideration in any proposed bill. However, it 
should not be required of every HOPE VI development. A 
community may not support a HOPE VI development that must have 
one-for-one replacement, thus foregoing an opportunity for the 
residents. This provision should be fully vetted in the 
community. A one-for-one replacement requirement on all HOPE VI 
developments will mean that individual HOPE VI grant amounts 
need to be significantly increased in order to maintain the 
desired mixed income nature. While increasing the number of 
public housing replacement units, we would need to add market-
rate units. This will require more land and financial 
resources. The need to acquire property for offsite development 
will add complications and potential delays to already complex 
projects.
    In any event, a requirement to increase the number of 
replacement units must include the ability to deliver them 
through non-ACC funding mechanisms such as project-based 
Section 8 units. Replacement units should further the objective 
of deconcentrating poverty consistent with fair housing laws.
    The overwhelming success of the HOPE VI Program has been to 
promote mixed income communities wherever practical. The 
Stamford Housing Authority is in support of the reauthorization 
of HOPE VI through 2015. It is perhaps the best program in the 
Nation for addressing the accumulated capital needs of the 
public housing program, which was estimated at $20 billion in a 
study commissioned by HUD. By leveraging Federal funds with 
private and other public capital, usually on a four-to-one 
basis, HOPE VI has proven to be an effective catalyst in the 
redevelopment process.
    Thank you.
    [The prepared statement of Mr. Fox can be found on page 54 
of the appendix.]
    Chairwoman Waters. Thank you very much. Mr. Kelly.

STATEMENT OF MICHAEL P. KELLY, EXECUTIVE DIRECTOR, DISTRICT OF 
                   COLUMBIA HOUSING AUTHORITY

    Mr. Kelly. Good afternoon, Chairwoman Waters, Ranking 
Member Biggert, and other members of this very important 
subcommittee. My name is Michael Kelly, and I am executive 
director of the District of Columbia Housing Authority. I am 
also the vice president of the Council of Large Public Housing 
Authorities, the vice chairman of the National Organization of 
African Americans in Housing, and I serve on the Housing 
Committee of the National Association of Housing and 
Redevelopment Officials. I am honored to have an opportunity to 
join you today to discuss the housing authority here in the 
District's HOPE VI efforts.
    As a housing authority, our core mission is to care for and 
manage 8,000 units of public housing and administer over 12,000 
vouchers. We carry out this mandate with the quiet confidence 
that only skill and the many years of collective experience 
bring. Given the substantial funding cuts to the National 
Public Housing Program, the District of Columbia has to 
struggle to maintain basic property management services to our 
clients. We are most thankful to your leadership and the 
leadership of Congress for securing additional resources for 
public housing this year, and I ask for that support to 
continue.
    The housing authority is fortunate to have six HOPE VI 
grants totaling over $160 million. These grants have leveraged 
an additional $695 million in other public and private funding. 
These sites, combined with our other redevelopment efforts, 
have generated about $2 billion worth of economic development, 
and we have increased the number of low income families served 
at these sites from about 2,400 in 1995 to over 4,000 today. Of 
our six HOPE VI sites, two are complete, one is 50 percent 
complete and occupied, and three are in various stages of 
construction.
    Every HOPE VI plan includes a community of support of 
service program designed to meet the unique needs of our 
households. Our approach to supportive services had a real 
impact on the economic and social well-being of our families. 
Many have received job training and job opportunities, some are 
now homeowners, and families now live in a safer, more livable 
environment.
    There is one common thread that runs throughout each of our 
sites, and it is the fundamental reason for our success in the 
District in HOPE VI, and that is the participatory approach to 
redevelopment. From the first days of our planning process, the 
housing authority places a premium on the input and realtime 
feedback of our residents and the community.
    For example, before submitting our HOPE VI application for 
East Capitol, we held over 100 community meetings and resident 
training sessions. Our process is transparent and inclusive. We 
encourage thoughtful discourse and we are responsive to the 
needs of the community. Our residents also play a role in 
determining the re-entry criteria at each of our sites. Each 
HOPE VI site has a government steering committee composed of 
key stakeholders, including the residents. This committee 
opines on many policy issues, including the re-entry criteria. 
This criteria covers areas such as credit, criminal activities, 
and basic tenant activities, such as the payment of rent and 
housekeeping habits. While the criteria has been slightly 
different for each site, the common goal has been creating 
parameters that will promote the return of former residents, 
while still cultivating a healthy and vibrant community.
    Several years ago, the District Housing Authority decided 
to build back every unit of low income housing we demolished. 
This commitment to one-for-one replacement was first manifested 
in our Capper/Carrollsburg site, which is near the new baseball 
stadium here. We will be able to achieve the one-for-one there 
because of the value of the land, given its location, the 
City's aggressive housing market, and our capacity to greatly 
expand the density of the site which we need to truly create a 
truly mixed income community. The HOPE VI grant will pay for 
the replacement of the public housing units.
    We are fortunate to bring these units back, but it is 
important to note that this policy may not be possible at other 
HOPE VI sites throughout the country, given the potential 
weaker market conditions, impediments to replacement of 
housing, and HOPE VI grant amounts.
    Our job is far from over, though. The housing authority has 
embarked on an aggressive plan to reposition our developments 
to be viable into the future. We secured over $80 million 2 
years ago in bond funding to address the long-term maintenance 
and system needs at 31 of our sites. But despite our successful 
HOPE VI efforts and this bond modernization work, there are at 
least 14 sites, 14 developments that still have comprehensive 
physical and social needs. We simply do not have the money to 
revitalize these sites, so the need for HOPE VI continues.
    Madam Chairwoman, I am sure you have seen HOPE VI sites 
throughout the country, particularly those piloted by my able 
colleague from Los Angeles, who is here today. But I invite you 
and your staff and other members of this committee to tour the 
housing authority sites right here in the District as you 
consider the reauthorization program that has changed the 
landscape of urban America.
    Thank you again for this tremendous opportunity to testify 
before you. I request that my written testimony be submitted 
for the record, and I am available to respond to any questions 
that the committee may have.
    [The prepared statement of Mr. Kelly can be found on page 
58 of the appendix.]
    Chairwoman Waters. Thank you very much. I would like to 
begin the questioning by first stating--rather than starting 
with a question, I would like to state that resident 
involvement is very, very important to me and to a number of 
other members of this committee. And I am very pleased to hear 
Mr. Kelly talk about the 100 meetings or so that they held 
prior to your development of the HOPE VI project.
    I would like to ask each of you about resident involvement. 
Do all of you feel the same way? Do you have other ways by 
which you have accomplished making sure the residents are 
involved?
    If so--Mr. Fox, what do you do?
    Mr. Fox. We started with, of course, a series of hearings 
prior to the application in the neighborhood, and soliciting 
residents who live in the complex--neighbors and also the 
political representation of the neighborhood--and we actually 
had them participate in committees that helped in the design of 
HOPE VI, consultation about the architectural aspect, 
consultation about the management plan, and consultation about 
how we would effectively also lobby together for funds, State 
funds to help the HOPE VI Program. We have State funds in it.
    Chairwoman Waters. Thank you very much.
    Let me just get to Mr. Woodyard before my time is up.
    Mr. Woodyard. Thank you. We do all of those things, Madam 
Chairwoman. And we also have the residents participate in the 
design charrette, where they have given us great ideas on how 
to design the community from a public safety standpoint, child 
care standpoint, a transportation standpoint, and an economic 
development standpoint.
    We also have currently on our board--our resident 
representative is a member of our latest HOPE VI community, and 
she has been invaluable in giving us feedback about our 
revitalization efforts.
    Chairwoman Waters. All right. Let me just quickly ask about 
some of these local requirements for getting back into the HOPE 
VI developments. What is this about credit checks? Is that 
true?
    Mr. Woodyard. That is one of our requirements.
    Chairwoman Waters. Why do you require a credit check?
    Mr. Woodyard. We have a requirement for a family self-
sufficiency program in our HOPE VI sites, and we actually 
repair a family's credit. We help repair the credit if they do 
not meet the credit requirements initially.
    So typically what we do is put the person in a credit 
repair program, and before they get back into our communities--
it could take a year or two, and we may have to relocate the 
family more than one time, but we get them ready to get back 
into the community.
    Chairwoman Waters. Why is it important for you to do that?
    Mr. Woodyard. We believe that public housing is 
transitional. And one of the things that we found out about our 
private partners is that the mixed income approach works better 
when we have families actively engaged in self-sufficiency 
activities.
    As a matter of fact, we have had a good success rate with 
repairing credit, and we have--
    Chairwoman Waters. Do you think that you are keeping people 
out who may not be able to get in for a year or two while you 
do the repair?
    Mr. Woodyard. They will be living in public housing.
    Chairwoman Waters. Let me just ask you this. There are 
people who perhaps, you know, lose their jobs--
    Mr. Woodyard. Yes.
    Chairwoman Waters. --and they may have been working, they 
may have been middle class. They fall on hard times. They need 
public housing because they have fallen on hard times, and 
usually when you fall on hard times, you can't pay your bills--
    Mr. Woodyard. Right.
    Chairwoman Waters. --and you have to, you know, get 
yourself back together. So they need public housing.
    How is it that someone who may be in difficulty, who has 
fallen on hard times, can't pay their bills, needs to get into 
public housing, how is it you keep them out because they can't 
pay their bills right now?
    Mr. Woodyard. We don't keep them out of public housing. 
They are in public housing or have a Section 8 voucher, but in 
order to return to a mixed income HOPE VI community, we attempt 
to help them repair their credit.
    Chairwoman Waters. Does anyone else do that?
    Mr. Fox. We do something different.
    Chairwoman Waters. What do you do?
    Mr. Fox. What we designed with the residents association is 
a Family First Program which--a key component of it is 
education, where we let residents know all of the educational 
facilities.
    Chairwoman Waters. But do you let them in with bad credit? 
Do you check their credit first?
    Mr. Fox. No. They are already residents. They are already 
residents.
    Chairwoman Waters. Well, that is the right of return. But 
what I am hearing is, in this so-called ``right of return'' 
they may be stopped in your project, Mr. Woodyard, because they 
don't have good credit.
    Is that true with you, Mr. Fox?
    Mr. Fox. No. They are not stopped from coming in, but we do 
have an educational program--
    Chairwoman Waters. Okay.
    Mr. Fox. --to try to improve it. Also to make the family 
aware of what educational facilities are available for 
children.
    Chairwoman Waters. That is good.
    Mr. Kelly, in your project, if someone who is sitting on 
the panel to determine whether or not the people can get back 
in the HOPE VI, do they all have good credit?
    Or what happens if they fall on hard times and their credit 
is bad? They are sitting in judgment. How do they do that?
    Mr. Kelly. Well, the credit repair effort begins on day 
one. It actually begins early on. Much as there is the 
participatory approach in the design effort, the community 
supportive service component begins long prior to the actual 
building being done.
    So the timeframe is such that we recognize--we tell 
everybody on the front end, this is a new dawn. We are really 
looking for folks to take advantage of the convenience and 
supportive service component of it, and credit repair is an 
important component of it.
    No one is displaced by bad credit. And the credit standard 
that we have here is actually lower than the credit standard 
that our private partners have in the same development.
    Chairwoman Waters. All right. I am going to have to cut you 
off now. My time is up.
    And I am going to go to Mr. Shays.
    Mr. Shays. I am happy to yield to one of my colleagues, and 
then I will be happy to go.
    Chairwoman Waters. All right. Would you like to go, Mr. 
Cleaver?
    Mr. Cleaver. Thank you, Madam Chairwoman. Mr. Cabrera is 
gone, but maybe your expertise can assist me.
    I looked at the HOPE VI statute, and it says if a guarantee 
under this section does not proceed within a reasonable 
timeframe, and there is a determination of the Secretary, the 
Secretary shall withdraw any grant amount under this section.
    It goes on and says, the Secretary shall redistribute any 
withdrawn amounts to one or more other applicants eligible for 
assistance under this section. And my understanding from the 
Assistant Secretary was that wasn't possible. Maybe I just 
didn't read this in a way that wouldn't confuse me.
    So I am wondering, in your PHAs, have you spent all of your 
HOPE VI money that was allocated? And if not, do you have any 
idea of what has happened to it?
    Mr. Woodyard. Congressman, we have spent all of our 
original grant, which was a 1993 grant. The other three grants 
that are revitalization grants are on schedule, and our funds 
are being expended according to the schedule that we agreed to 
with HUD. So we are not in danger of having any funds 
recaptured.
    Our latest grant, the latest guidelines say that you have 4 
years, and we are on schedule and actually a little under 
budget in our expenditures right now.
    Mr. Kelly. If I can, sir, a recognition: I think it is 
important for the committee to note that from the time of 
appropriations to the time of award to the time the housing 
authority is actually getting the dollars, there is quite a bit 
of time that runs where the authority doesn't even have the 
dollars to deal with it. So I just want to add that to the 
discussion, the research, when you talk about the timeframe of 
it.
    And if I can, one other important note for the committee's 
consideration, the District of Columbia Housing Authority was 
under some criticism for not meeting a timeline benchmark at 
one of our sites. And our position was, that is okay, because 
we were dealing with a very humanistic approach to relocation. 
And if we were to be dinged by HUD because of an arbitrary 
benchmark on time, it was something--we felt it was something 
worthy.
    Because, I tell you, at the end of the day, there were no 
lawsuits. We had an opportunity for folks who wanted to return 
to express that opportunity, for the community buying into it; 
and at the end of the day, that is much more valuable than 
arbitrary timeframes.
    Mr. Fox. Let me mention that we are meeting all of our 
benchmarks, and meeting them on time. However, it is a 
substantial challenge to meet them because we are juggling 
about five grants at one time.
    You bring on the HOPE VI Program, you have to get the tax 
credit within the cycle of the State tax credits. You also have 
to apply for debt with your housing finance agency. You are 
working with the city to bring on grants, and they have 
timetables. And you are also working with homeownership 
programs and with syndicators.
    All those items have to be balanced--and deliver the 
construction on time, and still facilitate excellent 
communications with the neighborhood; and that sometimes--by 
having those excellent communications and not going faster than 
the people are ready for, for the next phase, that can slow you 
down.
    But even with all of that, we have been able to meet our 
benchmarks, stay on time, expend the money, and be in the 
correct phases.
    But it is a challenge in the HOPE VI Program, because you 
are leveraging the HOPE VI money, which may be around $20 
million, two, three and four times which, in private industry 
that isn't always done. But we in public housing, remarkably, 
are quite often able to leverage our money three and four times 
in the real estate community at large. That is excellent.
    Mr. Montiel. Congressman, in Los Angeles we only have one 
open grant, and we are about halfway done with that. The other 
grants have been closed, finished out.
    Mr. Cleaver. Mr. Miller is not here now, but he had 
mentioned or suggested that there were private developers who 
would be anxious to do this. We did four HOPE VI projects in 
Kansas City when I was mayor, and maybe I overlooked the 
private developers who were beating on the door to get in.
    Are you finding that the private developers are hounding 
you about participation?
    Mr. Fox. We have found that we have had excellent 
participation with private developers where we have been the 
asset manager, and also where we have jointly been co-
developer. And I want to say that we have also had nonprofits 
actually put proposals in to us to do a certain phase of the 
development where, under our asset management, they will manage 
the property and receive certain fundings; so that there is a 
partnership already in the public housing program with private 
developers and with nonprofits.
    Chairwoman Waters. Thank you very much.
    Mr. Shays?
    Mr. Shays. Thank you. I would like to ask each of you to 
add to the Secretary's testimony any response to any questions, 
anything that each of you would like to just highlight as 
something you agree or disagree with, to start.
    Mr. Montiel. I think what I agree with, Congressman, is 
that in Los Angeles, we will have nonprofit and for-profit 
partners, and we will seek to triple the number of units by 
adding a workforce and market rate component to our public 
housing component.
    Mr. Woodyard. The only thing I would add is a partial 
answer to Congressman Cleaver's question, and that is that 
there are not private developers clamoring to do HOPE VI 
without a public housing authority partner.
    And that is a segue to this comment: that the body of 
regulations and bureaucracy associated with the HOPE VI grant 
process is extremely complicated. It is not just the financial 
mechanism. So the idea of jumping through the regulatory hoops 
is something that most private sector partners do not want to 
do, and we would suggest that the program be simplified.
    Mr. Shays. Thank you.
    Mr. Fox. I heard the Secretary say that this program should 
not be funded. I find that hard to understand. With HUD's own 
study of a $20 billion backlog of modernization needs in the 
public housing of America and HUD's own study, out of the 80 
million renters in America, 5.9 million, as reported in the New 
York Times the other day, are distressed in that they live in 
substandard housing or housing where they pay more than 50 
percent of their income. This is an excellent model to go 
forward and have a housing production program in America.
    Could I point out to the Congressmen and Congresswomen 
today that we don't have a production--a housing production 
program for affordable housing in America other than the tax 
credit program.
    Mr. Shays. Thank you.
    Mr. Kelly.
    Mr. Kelly. If I can echo my colleague's comments of a 
moment ago, it is worth it. The Secretary talked of simplicity, 
and I totally concur.
    The Secretary also referenced the community-supported 
service component of it. That is critically needed, especially 
in light of the loss of the Public Housing Drug Elimination 
Program funding. And here in the District and, I think, across 
the country, the capital grant dollars--not enough; the 
development program--not in existence.
    Without this program, there is still very much a gap 
between what we have done and what we still need to do. And I 
think--the colleagues that I have across the country have now 
developed the expertise, we have developed the relationships 
with the private development community in terms of respect and 
the ability to do this stuff. And we really just need to have a 
program like HOPE VI reauthorized to get it done.
    Mr. Shays. The thing that just kind of confuses me a bit is 
that my Republican colleagues talk about how we should have the 
private sector, and we don't want a government program running 
things. And this is this magnificent program that marries 
everyone together and eliminates what I think is the worst part 
of the traditional public housing, where we just warehouse the 
poor.
    And so at every level it would seem to me that 
instinctively my Republican colleagues would be the most 
enthusiastic about this program. Besides that, they are not 
saying the program doesn't run well, they are not saying there 
is a lot of waste; they are just saying that it takes too long. 
That is their one criticism.
    So I appreciate all of you staying with it, and I yield 
back my time.
    Chairwoman Waters. Thank you very much.
    Mr. Green?
    Mr. Green. Thank you, Madam Chairwoman.
    It seems to me that the Administration doesn't want a HOPE 
VI Program. They would like to have a Hope Zero Program, 
because zero is the amount of money that they proposed to 
allocate for the program. And that is very unfortunate, it 
really is, because I think by most standards this program has 
been a success. And most of the people who are where the rubber 
meets the road would like to see the program continue and 
expand upon the program.
    I question where the Administration acquires its 
intelligence such that it concludes that this program is not 
worthy of continuation. It really is something that baffles me.
    But the good news is, we have a chairman who believes in 
the program, and we have a subcommittee chairwoman who believes 
in the program. I am just grateful that these persons are in 
place, and hopefully, with them, we will move forward in a 
positive direction.
    Now, having said that, Mr. Woodyard, and I appeal to you, 
because when the Chair addressed the question of credit, I too 
was baffled as to how is it that a person can be creditworthy 
for a Section 8 voucher, but not creditworthy for a HOPE VI 
dwelling. I don't see the connectivity.
    I don't see the nexus between the credit and living in the 
HOPE VI project.
    Mr. Woodyard. For Charlotte, HOPE VI is synonymous with an 
effort to move towards self-sufficiency. So by its very nature, 
in our City, once you become a nonsenior resident of a HOPE VI 
community, you have made a commitment to, in 5 to 7 years, move 
up and out of public housing. So it really is a push to move 
people toward self-sufficiency.
    Now, if the credit ratio doesn't meet our standards, or 
whatever the index is for credit doesn't meet our standards, we 
work with them strongly for credit repair. So their credit may 
be okay for public housing in a 100 percent public housing 
community or a voucher community, but you have not committed 
to, in those cases, a movement toward self-sufficiency.
    So we work with you, because at the end of the day, we have 
a Homeownership Institute for our families; and we have a 
success rate that we are very proud of--when people graduate 
from our institute, and are living in a HOPE VI community, they 
are mortgage-ready and going to buy homes. So that is our goal, 
not just to house them, but also to move them out of public 
assistance.
    Mr. Green. And you have statistical information to validate 
a success ratio that you--
    Mr. Woodyard. I do. It is not in my written testimony, but 
I can provide that.
    Mr. Green. I would be interested in seeing your statistical 
information, the empirical data that supports your contentions.
    Mr. Woodyard. Yes.
    Mr. Green. Now one more thing. I understand that some 
housing projects require persons to be employed before you can 
re-enter as well. If you have such a requirement, would you 
kindly extend your hand into the air?
    Mr. Woodyard, let us talk about the employment facet.
    Mr. Woodyard. It is actually the same answer as the credit 
repair answer.
    Mr. Green. All right. Thank you, Madam Chairwoman. I yield 
back.
    Chairwoman Waters. I am sorry, we were back here commenting 
on the credit problem. So I am going to move to Mr. Watt now 
for 5 minutes.
    Mr. Watt. Thank you, Madam Chairwoman. And I really would 
like not to take 5 minutes, but I do want to explore one aspect 
of what we are trying to do, something that Mr. Fox and Mr. 
Kelly touched upon in their comments; and I know that it is an 
issue that all of us are wrestling with. That is the issue of 
one-for-one replacement.
    I think Mr. Fox and Mr. Kelly both indicated that it may 
not be possible in every one of these to provide for one-for-
one replacement. I am not sure that I think that is an option. 
But I do want to assure them that we are very seriously 
concerned about how this one-for-one replacement issue plays 
out.
    We know that, for example, in Charlotte, if we play it out 
in the way that would require constructing the one-for-one low-
income replacement unit in every community that is a HOPE VI 
community we would run afoul of some litigation that has taken 
place there, because the courts have prohibited--because of 
concentrations of public housing, they have prohibited 
constructing more public housing in some sections of our city 
until that is spread around, which is consistent with our 
public policy to spread poverty and public housing around to 
other parts of the community.
    It is not because people don't want it in their backyard, 
it is because we know that we have to force some people on the 
opposite side of town to take it in their backyard, whether 
they want it or not.
    We know that, as either Mr. Fox or Mr. Kelly indicated, it 
is also a function of the amount of the HOPE VI grant and the 
size of the project, because if you are taking out 100 public 
housing units, it may be easier to put 100 public housing units 
back in a 500- or 400-unit development, HOPE VI development. 
But if you are able to put back in only 100 units, all you have 
done is reconcentrated poverty, and that undermines the 
original objective.
    So I am not sure we can get where Mr. Fox and Mr. Kelly 
said we might need to get on this as a public policy issue, 
where you don't require one-for-one replacement. I think a 
number of us are absolutely unequivocally committed to that.
    But it may be possible to define one-for-one replacement in 
different ways, not necessarily in the HOPE VI redevelopment 
itself, in a larger community context, maybe some consideration 
of Section 8 vouchers in appropriate circumstances. But the 
wording of that has to be very carefully crafted, and maybe, in 
some extreme circumstances where a housing authority could 
justify not doing one-for-one replacement, some kind of waiver 
system that once they demonstrated that it is entirely 
impossible or inconceivable to do one-for-one replacement in a 
reasonable timeframe.
    But the bottom line is, I have invited a number of people 
to try to craft language that encapsulates all of those things. 
And I hope you will be actively encouraging people within the 
next day or so to give us that language, because we are at a 
critical juncture in this process now. And it gets more 
difficult to change the language once it is in a bill and the 
bill has been introduced than it is to try to get it right in 
the original bill.
    So I hope you all will aggressively push to come up with 
some language that would meet all of the considerations that I 
have just outlined to you here, and invite you to do that.
    I thank the chairwoman and I yield back.
    Chairwoman Waters. I thank you very much, Mr. Watt. And I 
would like to thank our panel for coming today and providing us 
with such valuable information. I want to thank you for your 
patience also.
    And I think Mr. Watt's advice about getting information to 
us that you think would be important to make this a stronger 
bill is very important. Let me just add a little bit of a 
warning on this; and that is that one-for-one, as Mr. Watt 
said, is extremely important to many of us. And number two, I 
don't think that I am working hard on HOPE VI just for people 
who are employed and have good credit. So be careful with that. 
Thank you.
    Some members may have additional questions for this panel 
which they 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. And thank you again.
    On our next panel, we will have Dr. Susan Popkin, principal 
research associate at the Urban Institute; Ms. Yvonne Stratford 
of Miami, Florida--Ms. Stratford is the leader of Low Income 
Families Fighting Together, and a former resident of the Scott/
Carver Homes Public Housing Development, a HOPE VI grant site--
Mr. George Moses, chair of the board of directors of the 
National Low Income Housing Coalition; and Ms. Doris Koo, 
president and CEO of Enterprise Community Partners. So, without 
objection, your written statements will be made a part of the 
record, and you will now be recognized for a 5-minute summary 
of your testimony.
    With that, we will go to our first witness, Dr. Susan 
Popkin.

STATEMENT OF DR. SUSAN J. POPKIN, PRINCIPAL RESEARCH ASSOCIATE, 
                      THE URBAN INSTITUTE

    Dr. Popkin. Chairwoman Waters, and members of the 
committee, thank you for inviting me to testify at this hearing 
on the proposed reauthorization of the HOPE VI Program.
    My remarks today are based on findings from the Urban 
Institute's HOPE VI Panel Study. This research is the only 
national study of outcomes for HOPE VI families, and addresses 
basic questions about where residents move and how HOPE VI 
affects their wellbeing overall. This study has tracked the 
experiences of a sample of about 900 residents from five 
developments across the country that were slated for 
redevelopment in 1999 and 2000; I am going to give you some of 
the highlights.
    First, most of the residents in our study have not yet 
moved back. The largest number, 43 percent, have received 
Housing Choice Vouchers. Another third have moved to 
traditional public housing developments. Some of those are 
still in their original development. And only 5 percent are 
living in mixed income communities. These sites are not yet 
complete, and the number of returning residents will likely 
increase over time. But there are simply fewer public housing 
units for them to return to, and some sites have imposed 
screening criteria that exclude some former residents.
    On the positive side, many of the residents who have moved 
on are satisfied with their new housing, and are not interested 
in returning. Voucher movers and those in mixed income 
communities report substantial improvements in housing quality 
and are living in lower poverty neighborhoods. They are living 
in conditions that are far safer than their original 
developments.
    Nearly all of them reported big problems with crime and 
drug trafficking before they moved; only 16 percent of them 
report such problems now. These improvements in safety have had 
a profound impact on their quality of life. They can let their 
children play outside, they are sleeping better, and are 
feeling less worried and anxious overall. There is no question 
that the enormous improvement in safety and reduction in fear 
of crime has been the biggest benefit for most moves.
    Children who have moved to these safer neighborhoods are 
also doing better in important ways. However, those who have 
been left behind in traditional public housing, especially 
teenage girls, are struggling and increasingly likely to be 
involved in delinquent behavior.
    While residents who have moved with vouchers are doing well 
overall, many are having trouble making ends meet, and are 
struggling to pay their utilities. Poor health is an extremely 
serious problem for these residents. They suffer conditions 
like hypertension, diabetes, and depression at rates more than 
twice the average for black women nationally. And the death 
rate of HOPE VI residents far exceeds the national average for 
black women, with the gap increasing dramatically at older 
ages. Residents' health problems impede their ability to work.
    Because of these barriers, we find HOPE VI had no impact on 
employment rates overall. Indeed, helping residents manage 
their health challenges could be a more effective self-
sufficiency strategy than job training or job placement alone.
    Hope IV did not increase homelessness. Less than 2 percent 
of these residents experienced homelessness at some point 
during the 4 years that we tracked them. Another 5 percent were 
precariously housed, which means they were doubled up with 
friends or family. These figures are comparable to those from 
other studies of public housing populations.
    And, finally, HOPE VI is not a solution for the hard-to-
house--families who are coping with problems such as mental 
illness, severe physical illness, substance abuse, poor work 
histories, and criminal records. Hard-to-house families are 
more likely to end up in traditional public housing than the 
private market, and so are little better off than they were 
before HOPE VI revitalization.
    Housing authorities should offer meaningful relocation 
counseling to help residents make informed choices and should 
provide long-term support to help more families succeed in the 
private market or return to mixed income housing. Housing 
authorities should provide effective case management and better 
supportive services for the most vulnerable residents--
children, the elderly, and those with health problems--during 
and after relocation.
    In conclusion, HOPE VI has done much to improve the living 
condition of many former residents, but there are still tens of 
thousands of public housing units that are severely distressed. 
The families who live in these developments face the same daily 
fears and threats as those in the Hope VI Panel Study who have 
not been able to move on. These findings clearly indicate the 
need to continue to fund revitalization of the remaining stock 
of distressed public housing.
    [The prepared statement of Dr. Popkin can be found on page 
89 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Stratford?

STATEMENT OF YVONNE STRATFORD, FORMER RESIDENT OF SCOTT/CARVER 
                     HOMES, MIAMI, FLORIDA

    Ms. Stratford. I would like to thank Chairwoman Maxine 
Waters, Ranking Member Biggert, and the other members of the 
subcommittee for inviting me to testify on HOPE VI.
    My name is Yvonne Stratford, and I am a resident of Annie 
Coleman's Public Housing Project in Miami, Florida. I have been 
living there for 5 years. I am here as a LIFFT member--Low 
Income Families Fighting Together--a nonprofit organization and 
grass-roots organization of public housing and other low-income 
residents in Miami.
    LIFFT members have a very personal experience with HOPE VI. 
I am one of many members who lived in Scott/Carver Public 
Housing Project, an 850-unit project that was demolished in 
2003 as part of a HOPE VI project. My family was one of the 
first ones to be forced out.
    As a result of our experience with the Scott/Carver HOPE VI 
Project, we have very serious concerns with the program. Our 
HOPE VI Project is supposed to better our lives, but it has 
failed us. It failed the 1,178 families who were moved out. 
Many were made homeless, and no new public housing has been 
built. I have still have not been able to return home. After 
all of us were relocated in 2002 and 2003, the building was 
demolished, and nothing was built for years.
    The Scott/Carver HOPE VI Project is only going to replace 
80 of 850 units of public housing, so many people cannot go 
back. As you can see, the HOPE VI Program did not work for us.
    But the new leaders of the Miami-Dade Housing have changed. 
They have agreed with LIFFT's suggestions. I am glad that they 
are working with us, with the former Scott/Carver residents. 
They are putting the people back into houses.
    What we learned from HOPE VI in Miami allowed us to make 
suggestions for a better HOPE VI around the United States. 
First, LIFFT believes that HOPE VI must require replacement of 
all public housing units with new public housing. Second, we 
believe that the residents who lived there before should be 
able to return without new requirements. Third, we believe that 
the homes should be rebuilt in phases, and people should be 
able to move back in over time. Also, replacement houses should 
be built before all housing is torn down, so that families are 
not lost while they are waiting to return to their 
neighborhoods. Finally, we believe that the residents who do 
take Section 8 should get a lot of help in relocation.
    We understand that the committee is considering these 
requirements, and we want to thank you and urge you to include 
them.
    Thank you again for inviting me to testify, and I would be 
happy to answer any questions that you have.
    [The prepared statement of Ms. Stratford can be found on 
page 112 of the appendix.]
    Chairwoman Waters. Thank you very, very much.
    Next we will hear from Mr. Moses.

   STATEMENT OF GEORGE MOSES, CHAIRMAN, BOARD OF DIRECTORS, 
             NATIONAL LOW INCOME HOUSING COALITION

    Mr. Moses. Good afternoon. I would like to thank Chairwoman 
Waters, Ranking Member Biggert, and the rest of the 
subcommittee for inviting me here today.
    My name is George Moses, and I am chairman of the board of 
directors for the National Low Income Housing Coalition. The 
Coalition is dedicated solely to ending the affordable housing 
crisis. I have served as board chairman since 2006. I am also 
on the board of directors of the Housing Alliance of 
Pennsylvania, which is a statewide housing organization 
dedicated to homes within reach for all Pennsylvanians, and I 
am a member of the Southwestern Pennsylvania Alliance of HUD 
Tenants. That is a tenant organization that provides good 
information to project-based housing coalitions and also public 
housing communities.
    I am here today to talk about the HOPE VI Program in 
Pittsburgh, Pennsylvania. There are three HOPE VI Projects in 
Pittsburgh. The two I will reference are called Aliquippa 
Terrace, now known as Oak Hill, and Bedford Dwellings, now 
known as Bedford Hill, both located in the historic Hill 
District of the City of Pittsburgh.
    The residents at the beginning were not engaged in the 
planning process. The housing authority already brought a plan 
to them and said, let's do this plan. They were told that there 
would be no one-for-one replacement, and if they took a Section 
8 voucher, they would not be able to return to the property. In 
the case of Aliquippa Terrace, now known as Oak Hill, 400--let 
me say that again--400 persons vanished. They don't even know 
where they are to this day.
    And furthermore, the Oak Hill Resident Council had just 
sued the Housing Authority of the City of Pittsburgh to 
complete the HOPE VI deal that was promised in 2000. Therefore, 
we approached the possibility of reauthorization of the HOPE VI 
with considerable caution.
    We very much appreciate the subcommittee's intentions to 
improve the HOPE VI Program, and we will work with you to make 
that happen. I lived in project-based Section 8 housing on and 
off from 1990 until last year. One of the places I lived was 
Federal American Properties, located in the East Liberty 
section of Pittsburgh. The owners of these properties were from 
Fort Lauderdale, Florida. We called them absentee landowners.
    After being frustrated in attempts to organize those 
residents to stand up and fight for their rights, I moved. That 
hurt, and it was a big mistake. We were viewed by many 
officials--property owners, managers, and local HUD--as a bunch 
of complainers. When the property eventually fell into complete 
disrepair, HUD foreclosed and sold to a nonprofit. The 
nonprofit they sold it to was not the nonprofit that the 
residents had selected to buy the property and be their 
partners.
    When this project is completed, there will be a number of 
units rebuilt, but not in the amount that were there when the 
project was foreclosed upon. There is a shortage of over 10,000 
housing units in the City of Pittsburgh, as I speak.
    People in public housing have experienced the same things 
that these people have experienced, not being part of the 
process, not being given good information about housing 
choices, no one-for-one replacement, and not being able to 
return to the development. The National Low Income Housing 
Coalition urges a major reform to the HOPE VI Program, and I 
have outlined those in my recommendations and the testimony I 
submitted.
    We believe that resident participation is crucial to the 
process, and it must begin at the beginning, before the plan is 
even submitted. We believe that there should be one-for-one 
replacements, because if you take a Section 8 voucher in 
Pittsburgh and you try to move to a nonracial-impacted 
neighborhood, you can't. You are therefore forced to move back 
to another racial-impacted neighborhood, limiting your choices, 
and the ability of your kids to move on to a better life. 
Overall, public housing is in desperate need of additional 
funding.
    I originally came here yesterday to participate in a rally 
for more capital and operating funds for public housing 
authorities, and many people came from the State of 
Pennsylvania, as well as all over. The rally was intended to 
urge and gather more funding for public housing operating and 
capital funding.
    I thank you for giving me the opportunity to speak to you 
today, and I will be available for questions afterwards. Thank 
you.
    [The prepared statement of Mr. Moses can be found on page 
83 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Doris Koo.

   STATEMENT OF DORIS W. KOO, PRESIDENT AND CHIEF EXECUTIVE 
          OFFICER, ENTERPRISE COMMUNITY PARTNERS, INC.

    Ms. Koo. Thank you, Chairwoman Waters, and distinguished 
members of the House Financial Services Committee for the 
opportunity to speak before you today. My name is Doris Koo, 
and I am president and CEO of Enterprise Community Partners.
    We are a national nonprofit that brings development capital 
and expertise into helping build low-income housing. In the 
last 25 years, we have built 215,000 units of housing, 
investing about $8 billion in grants, loans, and equity. Our 
investment portfolio includes more than 20 HOPE VI developments 
across the country.
    Before I joined Enterprise, I was deputy director of the 
Seattle Housing Authority, and we took on four HOPE VI 
developments of our public housing complexes. Seattle Housing 
Authority was unique in the sense that we were one of the few 
housing authorities that voluntarily committed to one-for-one 
replacement housing and full residents opportunities to return. 
We replaced all of the housing that had been torn down since 
1994. Every one of them had been replaced, both on and off-
site, in scattered sites, in partnership with the private 
sector, nonprofit sector, and faith-based developers. We 
leveraged $135 million in HOPE VI dollars into $600 million in 
private investment.
    We are now trying to do the same and replicate these 
principles and best practices in New Orleans with a partner to 
rebuild the Lafitte Public Housing. As you have heard, HOPE VI 
is a principle, but the implementation is subject to the skill 
set and the commitment of housing authorities all around the 
country. So it will be advisable to have in the reauthorization 
some stronger policy guidance on four principles, and I can sum 
them up as follows: equity; opportunity; sustainability; and 
preservation.
    The first principle has to be ensuring equity and fairness 
in the redevelopment. Residents must be full partners in the 
HOPE VI process before, during, and after. They must have 
access to adequate and appropriate support services, from 
relocation counseling, health care, job training, child care. 
They be must be apprised of their choices, housing options, and 
provided an opportunity to return if they so choose. And to the 
greatest extent possible, residents must be given the assurance 
that they have the ability to come back to a vibrant community, 
as opposed to in those situations that we heard, scattered to 
other impacted communities.
    Secondly, opportunity. We feel that from our experience 
that schools serving these communities' children must be of 
high quality. We know that better schools attract families to 
neighborhoods and boost property values. But better schools are 
needed for our own public housing residents, who need that 
opportunity to get up and out of poverty by accessing quality 
education. Again, in some of the HOPE VI projects that we have 
taken on, we have included an alignment with local public 
housing and local school systems so that you work in sync to 
support both improved schools as well as improved communities.
    Third is the question of sustainability. HOPE VI promises 
to create mixed income viable and sustainable communities. They 
provide the best possibility for incorporating design, support 
services, as well as long-term green building practices. Energy 
costs rise very high and fast, especially for low-income 
households, who spend a disproportionate amount of their income 
on paying energy bills, and also suffer disproportionately 
illnesses such as asthma and lead poisoning.
    If you think of HUD's energy budget, it is $4 billion in 
utility allowances every year; 10 percent of its budget is 
spent on utility allowance. If we can just save 5 percent of 
that spending, in 5 years we would have saved a billion dollars 
of new investment for one-for-one replacement housing. I can 
talk more about those examples that we have, but we have at 
least two HOPE VI projects that are done, fully compliant with 
green standards.
    Finally, the whole question of preservation and one-for-
one. One-for-one must not be done to further impact 
concentration of poverty. So the principle of one-for-one is to 
preserve affordability as opposed to just the physical location 
of units. We have good examples that we can share with the 
committee how to replace affordable units in partnership with 
others throughout the city and in different developments.
    So, in conclusion, these four principles--equity, 
opportunity, sustainability, and preservation--must be embedded 
in policy recommendations and strictly adhered to as we 
reauthorize the HOPE VI Program. And we strongly recommend full 
reauthorization of the HOPE VI Program with these principles 
embedded. Thank you very much.
    [The prepared statement of Ms. Koo can be found on page 72 
of the appendix.]
    Chairwoman Waters. Thank you very much.
    I appreciate the time that you have put in today and your 
patience. Let me begin again with a statement.
    It has taken me some years to basically believe that HOPE 
VI was going to be the kind of program that I could support. I 
have always been worried about HOPE VI, and at times I thought 
that it was a program that was designed to get rid of so-called 
``problems'' in public housing, to thin out public housing and 
to basically have a development that is problem free and would 
make life a lot better for the public housing authorities.
    I have since come to believe that we can make HOPE VI work. 
And it is not simply the way I thought of HOPE VI in the 
beginning. I am committed to the proposition that we can have 
HOPE VI, and it can be the kind of a program and development 
that should do what was intended for people who are low-income, 
people who are in need of support from their government, people 
who may not be working, people who may have had some problems 
in the past, people who want to get their lives together. And I 
think that whether we are talking about public housing as we 
know it, or HOPE VI, we should not lose sight of the mission 
for public housing.
    I think that none of it works without the support services, 
and we have not had the support services in public housing that 
are needed traditionally. And HOPE VI certainly holds out great 
possibilities for having that kind of support.
    But again, I am going to reiterate--and my public housing 
directors, I really want them to hear this--I am not about to 
work to develop letter-perfect HOPE VI Programs that house 
employed people and people with good credit and people with no 
problems, because maybe they don't need public housing in the 
way that people who are unemployed, who have had some problems, 
and who have bad credit may need public housing.
    So I have some real problems with what appear to be 
regulations or policies that are being developed at the local 
level about who can and who cannot live in HOPE VI projects. 
And I am wondering whether or not we are going to have to spend 
some more time writing into our bill some protections against 
some of the policies and practices that I am hearing.
    One of the things I am sure I am going to try and do is to 
write more specificity into resident involvement. It seems to 
differ all over the place. And some people think resident 
involvement is a public meeting where you have as many people 
as you can get to come out, and you kind of tell them what you 
are going to do, and then you just go about your business and 
do it.
    Other people believe that it is a series of meetings, with 
as much involvement as you can get, that it is not a one-time 
thing, that it is really involving people in design and other 
kinds of policies, and I tend to believe that.
    I am not one who is fooled by hand-picked resident councils 
or boards that are the favorites of the directors who do what 
they are told. I am really, really--I know the difference. I 
have worked with public housing long enough to know that.
    So I am really thinking about what we can do to develop 
some guidelines for some real resident involvement. And of 
course I will be talking with my colleagues about the 
elimination of some of the policies that others will argue that 
the residents would like to have.
    I just think that requiring good credit before you can live 
in HOPE VI projects flies in the face of trying to help people 
when they need you most. So I just want to say, so that word 
will get out that Maxine Waters said some things, and that some 
people may not like it, and there are going to be problems, and 
all of that. But I do wish to be as honest and as frank as I 
can possibly be about my very strong feelings about some of 
that.
    And having said that, I have gone way over my time, and I 
will call on Mr. Cleaver.
    Mr. Cleaver. Madam Chairwoman, thank you. The hour is late, 
and I know some of you have better things to do than to talk to 
me, and it won't hurt my feelings.
    But if we had sufficient time--and I think we are going to 
have a vote in few minutes--Ms. Koo, I would really like to 
have some discussion with you about the greening of HOPE VI. 
And actually--I mean, we need to--I hope PHA chairs will start 
becoming intentional about hiring green PHA directors. If we 
don't do that--I mean, one of the criteria ought to be, you 
know, in the qualifications ``green thumb.'' I mean, if we 
don't have a green thumb director in 2007, it means that the 
poorest people are going to live in the most costly units for 
energy, and the Federal Government is a participant.
    So I thank all of you for all of the time and effort you 
put into coming here to be with us. It is very helpful as we 
are trying to formulate this legislation. And I will, for good 
or bad, be with Chairwoman Waters in this legislation. Thank 
you.
    Ms. Koo. Thank you, sir.
    Chairwoman Waters. I would like to thank you very much. And 
I thank again this panel for being here. I know that some 
members may have additional questions for this panel that they 
will submit in writing. And without objection, the hearing 
record will remain open for 30 days for members to submit 
written questions to the witnesses and to place their responses 
in the record.
    I would like to now say to you, please feel free to contact 
me, or to contact our staff. We want to work with you. We want 
your ideas. We want your input. And let's see if we cannot work 
together to get a bill that will help satisfy the concerns from 
different ones of us. I thank you very much for being here.
    We need unanimous consent to submit all of the written 
statements into the record. With that, the panel is dismissed. 
And thank you very much.
    Ms. Stratford. Excuse me. Could I give you this? Because 
there is some stuff that I did leave out of here. Because as of 
now we are still finding people. We found the people, my 
organization. They lost 116 people--
    Chairwoman Waters. Okay.
    Ms. Stratford. --the county. And we had to go in the street 
and find those people.
    Chairwoman Waters. Well, that is exactly what we want to 
prevent. And we don't want the kind of policies, like I said, 
that are designed to lose people, to thin it out, or to get rid 
of people. So, yes, leave your statement with us, and we will 
put it in the official record. Thank you very much.
    [Whereupon, at 5:31 p.m., the hearing was adjourned.]


                            A P P E N D I X



                             June 21, 2007


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