[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
AFFORDABLE HOUSING PRESERVATION:
LESSONS FROM STARRETT CITY
=======================================================================
FIELD 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
__________
JULY 10, 2007
__________
Printed for the use of the Committee on Financial Services
Serial No. 110-47
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38-387 PDF WASHINGTON DC: 2007
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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
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Page
Hearing held on:
July 10, 2007................................................ 1
Appendix:
July 10, 2007................................................ 43
WITNESSES
Tuesday, July 10, 2007
Arriaga, Frederick C., Counsel, Borough of Brooklyn.............. 24
Cestero, Rafael, Senior Vice President, Enterprise Community
Partners, Inc.................................................. 30
Donovan, Shaun, Commissioner, New York City Department of Housing
Preservation and Development................................... 21
Montgomery, Hon. Brian D., Assistant Secretary for Housing-
Federal Housing Commissioner, U.S. Department of Housing and
Urban Development.............................................. 8
Pazant, Shirley, ACORN member.................................... 32
Perine, Jerilyn, Executive Director, Citizens Housing and
Planning Council............................................... 28
Purnell, Marie, President, Starrett City Tenants Association..... 26
VanAmerongen, Deborah, Commissioner, New York State Division of
Housing and Community Renewal.................................. 18
APPENDIX
Prepared statements:
Velazquez, Hon. Nydia M...................................... 44
Arriaga, Frederick C......................................... 49
Cestero, Rafael.............................................. 54
Donovan, Shaun............................................... 60
Montgomery, Hon. Brian D..................................... 67
Pazant, Shirley.............................................. 71
Perine, Jerilyn.............................................. 75
VanAmerongen, Deborah........................................ 78
Additional Material Submitted for the Record
Waters, Hon. Maxine:
Statement of David Bistricer................................. 85
Statement of Disque D. Deane................................. 91
AFFORDABLE HOUSING PRESERVATION:
LESSONS FROM STARRETT CITY
----------
Tuesday, July 10, 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 10 a.m., at
the Brooklyn Sports Club, 1540 Van Siclen Avenue, Brooklyn, New
York, Hon. Maxine Waters [chairwoman of the subcommittee]
presiding.
Members present: Representatives Waters, Velazquez,
Ellison, and Shays.
Also present: Representatives Towns and Clarke.
Chairwoman Waters. Good morning. First, I would like to
thank you for your patience. We are getting started a little
late; however, we are excited about being here, and we thank
you for waiting past the 10:00 to get started. I think we are
going to have some good news for you today.
This hearing of the Subcommittee on Housing and Community
Opportunity will come to order.
Ladies and gentlemen, I would like to thank first Mr.
Edolphus Towns for requesting this hearing on the preservation
of Starrett City out of his concern about the loss of this
development as affordable housing.
Let me just share with you that when I first learned about
this, I was in California--I think we may have been on break--
and I got an urgent call from Mr. Towns, and I have talked with
him every day since that call, assuring him that we would be
here today and we would have this subcommittee hearing.
So, I know that you just gave him a round of applause. We
are going to break all the rules. Give him another round of
applause.
I would also like to thank Congressman Christopher Shays,
who went to a great deal of trouble to be here today. He did
not get in until after 1:30 this morning, but he wanted very
much to be here because he sees this as an opportunity for us
to learn about what we can do, not only here at Starrett, but
with other, similar developments across the country.
Another New Yorker who has been very concerned about this
project, and despite the fact that she probably should be at
the doctor right now, she said that she had to spend the time
here, because this is so important not only for Brooklyn and
this area, but for all of New York, Congresswoman Velazquez.
And, we will probably be joined a little bit later by
another member of the committee--all right. We are going to
talk a little bit louder, with the microphone a little bit
closer.
I want to make sure that you understand that Mr. Shays and
Ms. Velazquez are members of the Subcommittee on Housing and
Community Opportunity, and we will probably be joined by one
other member, Mr. Keith Ellison, and another New Yorker, Ms.
Yvette Clarke. They will perhaps be joining us this morning.
I would like to start by noting--and I have to do this for
the record--that without objection, Mr. Towns and Ms. Clarke,
who are not members of the committee, will be considered
members of the subcommittee for the duration of this hearing.
Also, without objection, all members opening statements will be
made a part of the record.
Ladies and gentlemen, we are here today at Starrett City,
the largest federally subsidized, affordable housing
development in the United States, in order to discuss
preserving its affordability for current and future tenants.
In February, Starrett City Associates sold this development
to Clipper Equity for $1.3 billion. However, the Department of
Housing and Urban Development and the New York State Division
of Housing and Urban Renewal rejected that sale due to a lack
of a clear plan as to how the development would be kept
affordable.
In March, Clipper Equity submitted a second plan to HUD.
This plan relies heavily on enhanced vouchers which protect
most tenants from rent increases, but does not make the
development affordable after tenants move out. Perhaps more
troubling is the fact that not all tenants will receive
enhanced vouchers, and some of those who receive them will
still see their rents increased. There are also unsubsidized
tenants at Starrett who will see their rents increase under
Clipper Equity's plan.
Although Clipper Equity says it will phase this increase in
over 3 years, the rise in rent could cause a hardship for these
working families. However, there have been concerns raised also
about the financial feasibility of this plan, and I certainly
shared those concerns once I reviewed the plan.
However, I am pleased to announce that the Department--that
is, HUD--has rejected the plan a second time. I was informed of
the Department's decision yesterday, and I would like to take
this moment to commend the Secretary of HUD, Secretary Jackson,
for recognizing the infeasibility of Clipper Equity's plan.
In a letter dated July 9th, Secretary Jackson stated that
Clipper Equity has failed to demonstrate that it has the
organization or financial capacity to follow through with its
plan. In addition, Secretary Jackson notes that Clipper Equity
has not provided a full management plan to preserve long-term
affordability of Starrett City. The message from HUD is very
clear: This plan simply is not financially feasible.
And this rejection signals that the sale of affordable
housing resources like Starrett City is to be held to the
highest scrutiny.
I share Secretary Jackson's concerns about the financial
infeasibility of the plan submitted by Clipper Equity. In
addition, I am very concerned about the suitability of David
Bistricer as a manager of affordable housing, given the
numerous housing code violations at Flatbush Gardens and his
department by the State of New York from converting rental
housing into condominiums or cooperatives.
The New York State Division of Housing and Community
Renewal has also rejected Clipper Equity's plan for a second
time. Yesterday, DHCR announced that they, too, were rejecting
the plan for affordability submitted by Clipper Equity.
So, right now, this is a victory for the tenants.
We have worked to keep Starrett affordable, and Mr. Towns'
role in requesting this hearing, which has clearly prompted
these decisions from HUD and DHCR, should not be forgotten.
We are very pleased with this announcement that Starrett
City will remain affordable. In his written testimony to this
subcommittee, Disque Deane states that it is time for his
patient and long-term investors to move on from Starrett City,
and that the application of housing subsidies does not
transform his privately owned asset into a public work.
To that, I say to Mr. Deane, your first obligation is not
to your investors or to your stakeholders, but to the families
and communities who make Starrett City so valuable. All of
these families are worth more than $1.3 billion, and Mr. Deane,
I believe, should recognize that. Any plans for the sale of
this development must be undertaken in a clear and transparent
manner, with input from residents and government officials, and
must, absolutely must take pains to keep this development
affordable.
I am disappointed that Mr. Bistricer and Mr. Deane have
chosen not to testify at these proceedings, or to make a
representative available to testify on their behalf. However,
Mr. Bistricer and Mr. Deane have submitted written testimony to
this subcommittee, and it will be entered into the record,
without objection.
Affordable housing preservation is a national issue. From
1995 to 2003, this country has lost 300,000 federally assisted
affordable housing units. This loss in affordable housing comes
at a time when more and more families are struggling to pay the
rent; 17 million of the Nation's renters have housing cost
burdens, paying over 30 percent of their income in rent. Of
this number, 8 million have severe housing cost burdens, paying
over 50 percent of their income in rent. Low-income families
with severe housing cost burdens often spend substantially less
on food, clothing, and health care. It is hard for these
families to make ends meet, because their incomes have
stagnated while rents have risen.
This means that rental housing is increasingly out of reach
for America's working families. When renters only earn an
average of $13 an hour, but really need to earn at least $16.31
an hour to pay the rent on a two-bedroom apartment, the need
for affordable housing preservation is very clear.
But, it simply isn't enough to retain each unit of
affordable housing. We must also create new units. For every
two units of affordable housing lost, only one affordable unit
is built. It is clear that we need to do more to increase the
supply of the Nation's affordable housing.
This is why I am honored to be an original cosponsor of
H.R. 2895, the National Affordable Housing Trust Fund Act of
2007. The goal of the Trust Fund is to preserve, rehabilitate,
and produce 1.5 million more units of affordable housing over
the next 10 years, without increasing government spending or
adding to the Federal deficit.
The sale of affordable housing resources like Starrett City
is about more than bricks and mortar. It is about lives and
communities, and anybody should clearly demonstrate to the
government how it will protect those lives and communities.
I believe that the witnesses gathered here can help this
subcommittee understand the importance of the continued
affordability of Starrett City.
I would now like to recognize Congressman Shays for his
opening statement. Thank you very much.
Mr. Shays. Madam Chairwoman, thank you for holding this
hearing. I am here because Chairwoman Waters and Representative
Towns said, ``Be here.'' We could not have a more caring
chairwoman than Chairwoman Waters or a more caring and
effective Representative than Ed Towns.
I appreciate the interest all the stakeholders have taken
in this issue--HUD, the Governor, the Mayor, the borough
president's office, the property owners, and, most importantly,
the tenants who live here, all of you.
For better or worse, the Federal Government has removed
itself from owning and managing affordable and public housing.
Because of this evolution, the Government is captive to the
costs of renting housing from private owners.
Today, we will examine how we can best preserve our
affordable housing stock nationwide, and what some of the
challenges are as the value of affordable units becomes so
attractive in the private real estate market.
While today's hearing will focus on preserving access to
affordable housing in Starrett City, we know the outcome of the
proposed sale would have a profound impact on the marketplace
nationwide. In coming years, as more owners of affordable
housing communities consider the desirability of maintaining
their investment, a sale to private developers is more and more
likely.
Although it is not the situation in Starrett City, in some
cases, the need for capital improvements to the property is so
great that the owner has no choice but to sell all or part of
the property. The greatest risk when interested parties
improperly intervene in the sale or transfer of a property is
that the owner loses all interest in the future of the property
and simply sells to the highest bidder, losing the affordable
units altogether.
We know that as Starrett City goes, so will go many future
developments in the affordable housing marketplace. Owners,
prospective buyers, State and local governments, tenants, and
advocates are all watching closely. And we need to be concerned
that a negative outcome will stifle future investment, and
interest in affordable housing will continue in the private
marketplace.
We need to find a resolution that, first and foremost,
protects the families who live here, and also takes into
account the needs of the owners to maintain this very
successful private and public partnership.
I am grateful that HUD has examined this issue so closely.
It did not hesitate to rule that the initial proposal
threatened the preservation of affordable housing for those who
need it most, the families of Starrett City, and how it has
done the same again.
Under the leadership of Secretary Jackson, HUD's commitment
to preserving the affordability of these units is real, and it
is appreciated by all of us.
Madam Chairwoman, thank you again for your leadership on
this issue. I look forward to the testimony.
I also want to convey my appreciation for the friendliness
of this place; I had bumped into Ms. King in Apartment 3-B, and
she invited me up to her unit.
Chairwoman Waters. Thank you very much.
I would now like to recognize Congresswoman Velazquez.
Ms. Velazquez. Good morning, everyone. Thank you,
Chairwoman Waters, and Mr. Shays, for convening this important
hearing and leading this discussion on the dire need for
affordable housing in our City and across the United States.
I also want to thank the City administration, particularly
HPD, and the State government and HUD, for coming together in
addressing such an important issue. Whatever happens at this
development will be a defining point for the rest of the
country. And what it shows is how we can bring positive results
when different levels of government come together. Despite the
fact that we have a Republican Administration, on this issue, I
have to say that you have been responsible in making sure that
working families who are working two and three jobs have a roof
over their heads.
And I say thank you to Mr. Shays for your sensitivity, to
Mr. Towns for your commitment to preserve affordable housing,
but most importantly, to the tenants of Starrett City for your
activism, and your commitment and your drive to preserve
affordable housing.
So, in light of the issue at hand and in light of the heat,
I will ask unanimous consent that my entire statement is
admitted into the record.
Chairwoman Waters. Without objection.
Ms. Velazquez. And, with that, I just am eager to hear the
good news from the Honorable Brian Montgomery. Thank you.
Chairwoman Waters. Thank you very much.
And now I will call on the gentleman who has talked to me
every day until we got here, Congressman Edolphus Towns.
Mr. Towns. Thank you. Thank you very much.
Let me begin by thanking the chairwoman, Congresswoman
Maxine Waters, who came 3,000 miles to be with us this morning.
Let's give her a big round of applause. We thank her for her
commitment and her dedication. And, of course, we welcome her
to Brooklyn.
I would also like to thank the Secretary of HUD, who made
two visits to Starrett City--not one, but two. And then, of
course, after making his visit, he then ruled, which means that
he understands Starrett City. He had an opportunity to talk to
the residents of Starrett City before he made his decision. So
I want to thank Secretary Jackson for his commitment and his
dedication.
I want to thank HPD, and I also want to thank State Housing
for all of their visits to Starrett City. Let me tell you that
anybody, anywhere that I have met, I told them about what was
happening at Starrett City, and they needed to assist us in
doing a good job.
I am delighted to be joined by my colleague, Nydia
Velazquez, who has worked with me on this issue. And, of
course, I have gotten everybody involved. Yvette Clarke, who is
my next-door neighbor, we have her here. We want her to hear
what is going on.
And, of course, this is the largest subsidized housing in
the country, and we should not forget that. And, of course, the
way Starrett City goes is the way the Nation is going to go, so
we want to make certain that we learn as much as we can from
you, as to what we might be able to do from this day on.
A few years ago, the American Heart Association ran a
successful series of public service announcements to raise
awareness of the perils of high blood pressure. The spots
labeled the disease the silent killer. Today, the Nation faces
a public policy challenge that reminds me of how blood
pressure, acute, growing, and deadly, yet for most Americans,
unknown, the issue is affordable housing. The escalating rents
and deplorable housing conditions for tens of thousands of
Brooklyn residents are familiar to us all.
You know, they talk about enhanced vouchers. Well, enhanced
vouchers really are not a solution to our problem, you see,
because the voucher is tied to the individual, and not to the
apartment. So, if the person moves out, then they just can
raise the rent in the apartment, because that enhanced voucher
is gone.
So we need to make certain that we don't listen to the
tricks. We have to learn today to make certain that we ask the
right questions. Because in order to get the right answer, you
must phrase the question properly.
We don't want to be like the old man who was sitting on a
bench, and not too far from him was a dog. Two young fellows
were playing around, and they asked the old man, ``Will your
dog bite?'' And the old man said, ``No, my dog will not bite.''
The young fellow went over to pet the dog, and the dog took a
hunk of meat out of his hand. He said, ``I thought you said
your dog wouldn't bite.'' And the old man said, ``That is not
my dog.''
So we need to make certain that we phrase the question
properly, so that we will be able to get the right answers. And
that is the reason why I am so happy that we have the
chairwoman of the committee here, and all the others here
today, to try to see if we can't phrase the right question to
be able to get the right answers.
You can be assured that Ed Towns is not going to go away.
Now, I understand that somebody has tried to run, and the
purchaser said, ``Well, we wish Ed Towns would go away.'' Well,
I want to let you know that I am not going away. As long as the
people in this development are affected by what they decide to
do, I will not go away.
A lot of us have heard the record from hundreds of
residents who believe this transfer in ownership will result in
significantly higher rents, a reduction of services, and undue
pressure for tenants to relocate. This deal has already been
rejected twice. How many times do they have to reject it before
they get the message that this pig will not fly?
While housing policy is often complicated, housing itself
is very simple. Everyone needs a decent place to live and the
ability to pay for it. This is the social minimum. It is a goal
we can achieve, and a goal we must set if we expect families to
succeed and our neighborhoods to flourish.
So I thank the committee for coming to Brooklyn to hear
firsthand what the residents of Starrett City and Spring Creek
and Brooklyn have to say about the issue of affordable housing.
Let me assure the residents of Starrett City that you are not
alone in this fight. Ed Towns will say it, as long as my tongue
clings to the roof of my mouth, affordable housing must be
kept.
Thank you so much.
Chairwoman Waters. Thank you very much.
Ladies and gentlemen, we have been joined by another New
Yorker, Congresswoman Yvette Clarke.
Ms. Clarke. Let me just start by thanking the distinguished
chairwoman from California, young Maxine Waters, for coming
across the country to be here in Brooklyn, New York, where the
Nation really, truly is.
Let me just say that I have found, in my short tenure in
the U.S. House of Representatives, that all that we have heard
and all that we have read about Maxine Waters remains true,
remains vibrant, and ever vigilant on behalf of the people of
the Nation. And so we owe her a debt of gratitude, and it is
certainly my honor and my privilege to serve with her.
To my colleague, Congressman Ed Towns, my partner who I--we
have adjoining districts. When I hear about a struggle
happening in the 12th Congressional--and to my colleague, Nydia
Velazquez, who sits on the other side of my district, and I
hear about a struggle happening in her district, the 10th
Congressional, it has a profound impact on the people of the
11th Congressional District. And so I am moved to be where
these Members are, to stand up for each and every one of you
who make our civil society just that, a civil society.
Affordable housing is instrumental to so many New Yorkers
and working families in our community, and when we turn our
backs at this juncture in our history, we are saying that we do
not embrace the value of this Nation. It has been families like
yours and like mine who have made America what it is today.
We have an obligation not only to wage this battle and win,
but we have an obligation to leave a legacy for those who are
coming behind us. If we lose this battle of affordability, of
our humanity, and just being humane around how we will support
housing for our people, then we are saying that we give up on
the future of this Nation. When we win here in Brooklyn, New
York, they will win in New Orleans, Louisiana.
I am committed, as are my colleagues, to diligently pushing
for a better agenda that will protect our diminishing supply of
affordable housing and push forward forcefully for increased
affordable housing in this Nation, in this City, and in this
State. If not, we know what the consequences are; we will
continue to see a separation between the haves and the have-
nots. The have-nots will continue to labor in vain, and their
American dream will not be attained. I cannot stand by for
that.
Let me just close by saying that I want to thank the
Honorable Brian Montgomery for taking the time to be here with
us. It is a lovely facility here in Starrett, and we want to
make sure that the residents who have been the stewards of this
place continue to receive the respect and the dignity that they
deserve.
Today, we send a signal to all working people throughout
this City, and throughout this borough, that we stand together
in unity, understanding that a roof over one's head is an
indication of growth, of development, and that when we fail to
make sure that our people are housed, we have failed in our
civil society.
Let me thank HPD--I see so many of my friends here; You
know, I was a Council member just 6 months ago--and I thank
DHCR for their vigilance in this matter. I look forward to
partnering with my colleagues, and with each and every one of
you, as we are victorious in making sure that affordable
housing is truly affordable, and that it remains a fact of the
foundation of our community.
Mr. Towns. As I pass the microphone back to the chairwoman
of the committee, let me just ask that all the able-bodied
stand and give seats to our seniors. We have some seniors who
are standing. And, of course, we hope that you would do that. I
mean--so think about it, and see if you can't help me out.
Thank you so much.
Chairwoman Waters. Thank you very much.
I would now like to introduce our first panel, which
consists of the Assistant Secretary for Housing for the United
States Department of Housing and Urban Development, Mr. Brian
Montgomery. Assistant Secretary Montgomery, thank you for
appearing before the subcommittee today. And, without
objection, your written statement will be made a part of the
record.
You will now be recognized for a 5-minute summary of your
testimony.
STATEMENT OF THE HONORABLE BRIAN D. MONTGOMERY, ASSISTANT
SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER, U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Montgomery. Good morning. Thank you very much,
Chairwoman Waters, Chairman Towns, and distinguished members of
the Subcommittee on Housing and Community Opportunity. On
behalf of HUD Secretary Alphonso Jackson, thank you for
inviting me and the Department to testify here today. We
appreciate the opportunity to provide the committee with our
position on Starrett City, as well as our commitment to the
preservation of affordable housing across the Nation.
Starrett City has been a model housing effort. The
development has allowed low-income families to find affordable
housing in the City, to remain part of the City, to feel a
sense of community and to grow within the community. It is for
these and other reasons our Administration and HUD remain
committed to preserving this affordable housing.
With more than 16,000 residents, Starrett City is the
largest federally subsidized development in the country and is
an essential affordable housing resource for the entire area.
We believe the proposed transaction threatens New York City's
affordable housing market and those most in need of the
housing. At HUD, we recognize that this sale is expensive to
the developer and that rents will have to be increased to cover
the debt service. As a result, the sale could quickly displace
most, if not all of the residents, who will have few housing
options left in this tight market.
As you are aware, the Department rejected the initial
request from Clipper Equity due to the lack of information
needed to make an informed decision as to their capacity and
their experience to operate a development of this size. And the
Department has recently reviewed a revised proposal and
yesterday, yes, HUD Secretary Alphonso Jackson rejected this
proposal, as well.
We at HUD continue to have serious concerns regarding
Clipper Equity's organizational and financial capacity, as well
as their ability to sustain the development as affordable
housing for the long term.
As you know, the Secretary also met with more than 100
residents of Starrett City in Washington a few months ago. He
wanted to listen, and he heard the concerns. And from day one,
the Secretary has made it clear that HUD's number one priority
is preserving Starrett City as affordable housing. This remains
our goal, and we will not waiver from it.
The need for preservation of our existing affordable
housing stock cannot be overstated. In addition to the aging of
the physical structures, preservation is challenged by a number
of things, including escalating market rents in some areas,
including up here, rapid increases in operating expenses, and
regional demographic shifts that include our aging populations
and persons with disabilities.
To date, HUD has preserved the affordability of more than
250,000 units nationwide. But to assist us in doing more, our
industry partners and elected officials from around the country
have put forth legislation to address affordable housing
preservation.
One proposed legislation is H.R. 647, introduced by
Chairwoman Waters and Deborah Pryce, and S. 131, introduced by
Senators Allard and Reed of Rhode Island. These will further
HUD's opportunities to strengthen and advance our preservation
efforts. This legislation reauthorizes the Mark-to-Market
program that has preserved more than 125,000 units to date. If
reauthorized for another 5 years, we can expect to preserve
approximately 50,000 additional units.
In May of this year, we also sponsored a national
affordable rental housing symposium, Preservation: Now and in
the Future. We covered many topics and had a very productive
dialogue with preservation experts and housing advocates, with
more than 250 in attendance. Some key issues discussed were the
section 202 refinancing rules and the need for clarification to
have it be a more effective tool. We also discussed the one-
for-one unit replacement policy and when it should be required,
as well as the need for resources--private, local, State, and
Federal--to work together to preserve projects and mortgages
that are maturing with no long-term affordability or tenant
protections.
We are also pleased to report that a revised section 202
refinancing notice is in its final stage of completion. We are
also working on policy regarding the conversion of units from
efficiencies to one-bedrooms, and how to use the one-for-one
replacement when redeveloping and preserving a project. Both of
these notices, I am pleased to report, should be published
within 90 days.
It was also collectively concluded that we need to
establish more incentives for owners to maintain the housing as
affordable for the long term. This will be after mortgages
mature or rental assistance contracts expire.
Lastly, the Department is also committed to increasing the
supply of affordable housing in this country. The majority of
affordable housing projects built today are financed through
the Low-Income Housing Tax Credit. We have begun an initiative
to identify and address ways in which HUD's financing
programs--FHA, and section 202, and section 811--can work more
effectively and more efficiently with the Low-Income Housing
Tax Credit program. We are streamlining our subsidy layering
procedures and processing procedures in order to improve the
timing of HUD approvals to meet the tax credit program
deadlines.
But we are committed also to working with the Department of
the Treasury to achieve better coordination between the two
agencies in administering these very successful affordable
housing programs.
In closing, I would like to reiterate the Administration
and HUD's commitment to the development and preservation of
affordable housing, including, of course, Starrett City. I
enjoy visiting such vibrant communities as I found here in
Starrett City, and preserving these kinds of communities is our
top priority at HUD.
Thank you, again, Madam Chairwoman. This concludes my
testimony. I would be happy to respond to any questions you may
have at this time. I would also like to thank the residents
here for hosting this day, as well. Thank you.
[The prepared statement of Assistant Secretary Montgomery
can be found on page 67 of the appendix.]
Chairwoman Waters. Thank you. Thank you for your testimony,
Assistant Secretary Montgomery.
I would like to begin the question period with a few
questions you raised in my mind.
I have been told that Mr. Bistricer will not go away, that
he is going to come back with another proposal. I have been
told that the seller is interested in selling, and if not to
Mr. Bistricer, perhaps someone else will come with a proposal.
I heard your commitment for reviewing any proposal in the
way that you have reviewed this one, to make sure that it is
financially sound and that the management capability is well
documented. So are you telling the residents here that should
there ever be a sale, it would essentially be seamless, that
there should not be a lot of waivers and other kinds of
subsidized support from the Federal Government, or anything
that would increase the rents, and displace people?
Would you please just talk to us a little bit more about
what happens if there is a continued attempt to purchase.
Mr. Montgomery. I will give you a short answer.
Chairwoman Waters. Say it loud.
Mr. Montgomery. Unless a proposal keeps this facility
affordable--
Chairwoman Waters. I am sorry. They can't hear you in the
back.
Mr. Montgomery. Unless a proposal keeps this facility--a
Starrett City proposal keeps this an affordable property, we
are not interested in such a proposal.
Chairwoman Waters. Thank you.
And secondly, Mr. Secretary, I would like to ask you, have
we learned very much, looking at this proposal, that will help
us as we view attempts to purchase these kinds of developments
all over the country? Have we learned some lessons here?
Mr. Montgomery. Absolutely. And I want to paraphrase
something that Chairman Towns said. It is fortunate--
Mr. Towns. They can't hear you in the back.
Mr. Montgomery. I am paraphrasing what Chairman Towns said.
It is fortunate in this case that the tenants here, that the
residents here, led by Ms. Marie Purnell and others, asked the
right questions. They united as a voice. The two parties--in
reference to bipartisanship in this, we worked together. I want
to say that we knew the principles and we did the right thing.
So the lessons learned: Obviously, we need to define
exactly what is in the proposal--I am just reiterating what I
said earlier. We are not interested in entertaining other
proposals that remove the affordability from this property.
Chairwoman Waters. Thank you very much.
So, in essence, what you just said was the activism, the
concerns of the residents here, organizing, asking the right
questions, making sure that everybody understood what their
concerns were certainly did help you in reviewing this project
and understanding what had to be done.
Is that what you are telling us?
Mr. Montgomery. Absolutely. Having a clear and united
voice, hearing your concerns. In speaking for the Secretary, he
made two visits up here. He personally heard many of those
concerns firsthand. And I can't say enough how much that played
in making his decision.
Chairwoman Waters. All right. The power of the people.
Okay. Thank you.
Next, I will call on my colleague from Connecticut, Mr.
Shays, for his questions.
Mr. Shays. Madam Chairwoman, with your permission, I will
yield my time to Congressman Ed Towns with regard to this.
Chairwoman Waters. Oh, thank you very much.
Mr. Towns?
Mr. Towns. Let me thank my colleague, Congressman Shays,
for yielding to me. And of course, I am delighted that he is
here in Brooklyn; he is our next-door neighbor, as you know,
from Connecticut.
Let me just begin by asking a question in terms of the word
``incentive'' that has been used. What kind of incentives do
you think might be used to keep Starrett City affordable?
Mr. Montgomery. Well, I will give you an answer not just
for Starrett City, but as to all these properties, the
thousands of them across the country that have mortgages on
them. And part of those mortgages--
Mr. Towns. I am sorry. They can't hear you in the back.
Mr. Montgomery. Here we go.
Mr. Towns. Okay.
Mr. Montgomery. A lot of properties across the country,
including Starrett City, have mortgages, and these mortgages
will eventually mature in time. It is critical that before
mortgages mature, we offer incentives, whether we restructure a
financial transaction, whether we provide more rental
assistance, that we give the right incentive to the property
owner to keep it affordable.
And so as the population is growing and the demographics
are changing, we have to be very aware in following those
changing demographics, to make sure that we have more
affordable housing.
We can speak a lot for the production of new affordable
housing, but I promise you that we are going to be doing
everything we can to hold on to what we have.
Mr. Towns. Yes, let me be--enhanced vouchers have been used
in terms of ways and methods so that it will stay affordable.
But my understanding of enhanced vouchers is that it is tied to
the tenant, and that if the tenant moves--and I am not sure
exactly the number of people who move out of Starrett per year,
but what happens if the person who moves has an enhanced
voucher? Does that voucher stay with the apartment, or does it
go with the person?
Mr. Montgomery. Yes and no. It depends on whether it is a
project-based property or a tenant-based property.
But let me add one thing to your point, if I could, Mr.
Chairman, and that is, many times the families will take a
voucher because someone says, ``Well, here, take a voucher. You
can choose the apartment you need.'' In the same way, maybe
they are working and living downtown, and maybe they work in a
hospital, or maybe they are a school teacher, and the housing
market is so dense and tight in the downtown area that the only
option that they have now is to move way out into the suburbs.
And they may not want that. So now they are spending more time
and more money in commuting.
And my personal opinion is, there is a good place for
vouchers, enhanced or not, but it is not a cure-all, in many
cases, for particular family situations, especially when they
have to move way out of the city's central area.
Mr. Towns. Let me make sure that I phrase this properly,
that--you know, sometimes we have owners who will give poor
service to try and force tenants out. And once they force them
out, then they can increase the rent for that apartment.
So they are saying, if I don't give them services, and I
don't give them heat, then they will move, and when they move,
then I can get more money for the apartment.
What do you have to guard against that kind of activity?
Because we know of things like that here in the Borough of
Brooklyn.
Mr. Montgomery. Well, I have to say that we have a very
good staff at HUD who look out for that sort of activity. We do
not allow that. And there have been cases where that has
happened, where property owners purposely let projects run
down, and then they say, look how bad the property is here. I
need more money to rehab, or whatever, and then they are trying
to raise the rent on folks. That just doesn't make sense to us.
So working with our fair housing staff, working with our
field office staff, we try to enforce those rules, to make sure
that doesn't happen. But of course, you are right; it does
happen.
Mr. Towns. Let me--and you might not be able to answer this
on the spot, but I would like to have it answered at some
point.
How much would it cost the government to replace the
current subsidies with enhanced vouchers here at Starrett City?
How much would that cost? Do you have any idea?
Mr. Montgomery. Mr. Chairman, I do not have that off the
top of my head, but I can get that for you.
Mr. Towns. We would like to know that.
So, Madam Chairwoman, on that note, I will yield back. And
I would like to thank the gentleman from Connecticut for
allowing me to go first, not being a member of the
subcommittee. Thank you for your courtesy that you have
extended to me.
Mr. Shays. Thank you.
Chairwoman Waters. Next, I will call on Congresswoman
Velazquez for questions.
Ms. Velazquez. Thank you, Madam Chairwoman.
Mr. Montgomery, I want to ask you the right question. And
that is, yes, you are saying that, for a second time, this sale
has been rejected by HUD. But yet the New York Times, in an
article that appeared today, said that the owners of Starrett
City have announced that they will pay the mortgage to withdraw
from the Mitchell-Lama program.
If that happens, then what? Where do we go?
Mr. Montgomery. I just want to reiterate my previous
warning: People can talk all they want. They can say all they
want, the New York Times and others. Unless, whether it is the
current Clipper Equity, or someone in the future, unless they
bring a proposal to us that keeps this property affordable, we
are not going to entertain that proposal.
Ms. Velazquez. How could you prevent them from paying or
withdrawing from their mortgage?
Mr. Montgomery. Well, at some point, there will be,
certainly, a mortgage on the property. At some point, it will
mature. And let me say that this is happening to properties all
over the country, but more than 90 percent of owners elect to
stay in the program. We are embarking on a way to provide those
tools to keep the property affordable, to keep the rents
affordable.
If and when that ever happens here--it could be 10 years,
50 years, or whatever--I can't speak for who may be in HUD, but
it will be our goal to keep this affordable for the long term.
Ms. Velazquez. Assistant Secretary Montgomery, HUD has not
issued clarified regulations on the administration of enhanced
vouchers, especially in terms of the owners' obligation to
accept the voucher, and family unit size mismatches.
When is HUD planning to announce a clarification to the
regulation, especially since the owner of Starrett City relied
heavily on enhanced vouchers? And if there is a third proposal,
will it rely again on enhanced vouchers?
Mr. Montgomery. Congresswoman, that program is administered
through another office and not through mine. But I can
certainly get the answer to that question.
Ms. Velazquez. Well, I don't want an answer, Mr.
Montgomery. I want HUD to understand that this is a very
important issue, if we want to keep affordability.
Mr. Montgomery. Yes, ma'am.
Ms. Velazquez. That is it for now. Thank you.
Chairwoman Waters. Thank you very much. I would like to
turn to Congresswoman Yvette Clarke for questions.
Ms. Clarke. I would like to thank the gentleman from
Connecticut for yielding his time to another nonmember of this
committee, and to just ask a couple of questions of the
Assistant Secretary.
Mr. Montgomery, you mentioned that in order to sort of
prevent this type of occurrence around the Nation in urban
areas, there is a way that we could monitor more centrally. I
want to ask whether the establishment of that practice has been
embedded at HUD yet.
And have you put a mechanism in place that would actually
monitor maturing mortgages to expedite negotiation and
intervention, so that we can mitigate any practices of
predatory speculation?
You know, when I was on the New York City Council, we had
the unfortunate incident of a huge sale of affordable housing,
called Stuyvesant Town and Peter Cooper Village. That sent a
chilling effect to working people in the City of New York. And
then, on the heels of that, we have this struggle out here at
Starrett City.
My concern is that the Agency itself recognize that we are
in a totally new climate and that best practices are embedded
in the agency itself, so that we don't come to the table like
this 3 years from now or 5 years from now.
Would you speak to that, sir?
Mr. Montgomery. Well, I am sure this won't surprise you,
but we are not perfect at that by a long stretch. And
referencing affordable housing proposals made over the last
month, and obviously someone who attended that spoke to your
staff, that this issue was front and center among three or four
presentations that day.
Yes, we do a much better job monitoring those mortgages
that are close to maturing, to make sure that we don't reach
within the last 3 or the last 6 months. We have been working, I
think, with a group representing the tenants, the folks in
these apartments, to make sure that we can have a better early
warning system to do everything we can--and it may be that the
owner wants to get out after the mortgage matures--so that we
could be doing a better job to make sure we get to the owners,
so that we can keep them.
As I mentioned before, we have a pretty good success rate
at keeping that property affordable.
Ms. Velazquez. Sir, are you saying that HUD is committed to
establishing a unit within the bureaucracy that will be focused
on this?
Mr. Montgomery. Whether it is called a unit, or an office
or staff, we are committed to doing a much better job of doing
this. And as I said, we got an earful of all those various
things, those subjects last month, so--
Ms. Velazquez. Yes. Will there be a point person that we
can turn to, who would have their finger on the pulse of what
is happening, not only in Brooklyn, but in Detroit, in Oakland,
and in Minneapolis?
Mr. Montgomery. Well, right now, we are able to do it, but
not probably as well as you are envisioning. But we do commit
to you that we will do a much better job of organizing that, in
an effort within our multifamily office.
Ms. Velazquez. Thank you very much.
Madam Chairwoman, I would like to suggest that we sort of
pursue this particular issue, and hold these folks accountable
for not getting to the point where we want to go forward and
not be ready.
So I want to thank you, once again, for having this
hearing.
Chairwoman Waters. Thank you.
Ladies and gentlemen, I mentioned that another member of
the committee would be joining us. He has joined us. Please
welcome for questions Mr. Keith Ellison from Minnesota, one of
our newer members.
Mr. Ellison. Thank you, Madam Chairwoman.
It is an honor and a pleasure to be here with you at this
important subcommittee hearing. It is also wonderful to be in
Brooklyn. I am honored to be on this panel with my colleagues,
and very, very honored to be here with all of you.
No doubt about it, your excellent attention to affordable
housing is going to radiate throughout the country. And no
question about it, coming out, standing up, sticking close to
the issue is going to send a signal throughout the entire
country, and let everyone know, even as far as Minnesota, that
Brooklyn is setting a good pace for affordable housing in the
United States.
So, again, thank you all for your attention--everyone, one
and all.
Mr. Montgomery, I would like to ask you just a few
questions. Given that the attempted sale at the Starrett
housing development, given that it is the largest housing
development in the United States, how does the effort to
maintain housing affordability here impact the rest of our
country?
Mr. Montgomery. I think that the key thing is in reference
to what Congresswoman Clarke said, a better job on an early
warning system. And we do know how many properties now are in
our inventory. But the key thing is that we, as a Department,
have triage efforts. Many of these properties do have mortgages
that aren't maturing, so that we can get to the owner or owners
who have fulfilled their obligation to the government, by the
way. They have had these mortgages 20 or 30 or 40 years that
they have been paying on, and many of these owners just want to
get out of the business.
Preservation is one of our top priorities now. This is the
Mark-to-Market program. This will be in connection with keeping
these properties affordable, especially in high-cost markets
like we have up here.
Mr. Ellison. Can you talk about the importance of programs
that have helped people stay in their homes, such as rent
assistance programs, Section 8 programs, that have helped
supplement people's incomes, so that they could stay in their
homes?
And what do you believe is the future of these programs?
What is HUD's commitment to maintaining the subsidy programs
that help people maintain their status in their homes?
Mr. Montgomery. There is a wonderful Federal program that
we are all familiar with, called the Low-Income Housing Tax
Credit. It has been around since 1986. A bipartisan group
passed that legislation 21 years ago.
Now, while it is good at helping some families, some
moderate and lower-income families, to have a roof over their
heads, for those families with lower income--30 percent of
median, 40 percent of median--it is not enough to have the
subsidy to construct the property. We have to have the rental
assistance. For many of the families, they have to have the
rental assistance.
The same is true for our section 202 program for elderly
housing, and our section 811 program for persons with
disabilities. We have to have at least those two programs to
continue. If the only program is the tax credit, and we are
going to help extremely lower-income people, we have to have
the rental assistance as well.
Mr. Ellison. Can you talk a little bit about the importance
of senior housing? How much of the housing in the Starrett
project is senior housing, and what are you doing to help our
seniors maintain themselves in their homes here?
Mr. Montgomery. I am not aware of the exact number, but I
know that it is in the hundreds, not the thousands, of seniors
who live here. By the year 2030, it will 25 percent. Think
about that; one out of four Americans will be over 65. And this
is one issue I talk about a lot. John McCain talks about it,
ultimately, so we can work to improve it.
And when you think about it, not every senior is wealthy.
You know, we have a great program for seniors who may be house
rich but cash poor, a reverse mortgage. But there are a lot of
low-income seniors who rely on affordable rental housing.
The section 202 program, we think, will make a provision,
so as to marry that better with the Low-Income Housing Tax
Credit program. A lot of States have--not enough, but many
States have figured out how to do this on their own.
We, as the Federal Government, are working--in fact, we
have, as part of our retirement project, to marry those
resources together so that HUD is not paying 100 percent of the
cost of it. We may be paying 30 percent or 60 percent; the tax
credits or States are making up the balance of it. And guess
what happened? We were able to produce more housing. And that
is something that we are working on very hard as part of our
overall projects, the pilot program to do that for 202.
Mr. Ellison. Madam Chairwoman, I just want to thank you
again for holding this committee hearing. I am looking forward
to more dialogue.
And I just want to congratulate the residents again for
their active participation, because, when people get involved,
that is when changes happen. When politicians feel the heat,
they see the light, and I think that this kind of hearing does
that very well.
Thank you.
Chairwoman Waters. Thank you very much.
The Chair notes that some of us may have additional
questions.
Yes. I am sorry. Mr. Shays.
Mr. Shays. Thank you. I do want to get to the next panel,
but I wanted to ask you a few questions.
Starrett City worked because there was a mortgage paid,
financed by the Federal Government; there were tax incentives,
write-offs, and there was rental assistance. And it seems to
me, what gives you the power to reject this agreement was, in
part, that there are still obligations that the owner has under
existing requirements.
That is not true in some instances, because in some cases,
you may just have a mortgage. Or you may just have tax write-
offs, or you may have rental assistance, but not all three.
Congresswoman Velazquez asked a question that I need you to
get into a little more deeply. In this case, you have a number
of years where you have some leverage over the owners. In some
places, in Connecticut and elsewhere, you are losing all that
leverage. Now, one of the ways you are trying to keep this in
affordable housing is in Mark-to-Market; that is one of your
programs.
But tell me, what tools do you need in order to be able to
add other units still in affordable housing?
Mr. Montgomery. I will give you another example. We may
have another--again, it is there approximately for 30 years--to
fulfill these obligations. They have a new owner identified.
The property is 30 years old and needs some rehab, it needs
some updating; it may not have dishwashers, or whatever.
The new owner comes in and has a very fair proposal. Also,
he needs some equity, cash to help him with the rehab. He needs
or she needs to raise those rents below--not a lot--to a level
to offset the cost of that, but that has a cost to it. And it
pains me when we have to turn down those sorts of budget-based
rent increases because we can't even afford to cover a modest
increase in the amount of rent.
Now, despite having said that, again a lot of owners are
opting to stay in the program. But I believe, in my heart of
hearts, you know, there has to be more for us, looking at the
shift in demographics, the aging population. It has been a sort
of a patchwork of programs now that has kept it together, but
there is more that we have to be doing.
And that is just one example right now.
Mr. Shays. I want you to react to something I am going to
say.
It seems to me that what we should be doing is actively
going to all the owners, particularly those that still have 5,
10, or 15 years, and say, ``We would like to renegotiate now. I
will give you an opportunity to have a little better terms, put
something in place, but have a guarantee that you will be in
this market much, much longer.''
Is that a part of the strategy of HUD, to go to these
owners before we have lost all leverage with them?
Mr. Montgomery. Absolutely. And in the case of the
properties that offer fair market rent, in the Mark-to-Market
program. On the other side of that coin, with the other market
programs, we protected some 100,000 units of housing.
It worked well in that instance, but in the instance where
you don't have those sorts of plans in place yet, we need to be
doing, as I referenced earlier, a better job of identifying
those properties in the market 5 or 10 years down the road, so
we can maintain those affordable units.
Mr. Shays. Thank you.
Let me just conclude by thanking you for being here, and
thanking Secretary Jackson for listening first to the tenants,
showing, as a Republican, it is very important to lead, to see
an Administration that is responsive to this.
So I am particularly grateful to the Secretary and to you
also for listening to our chairman and working so closely.
My understanding is that Ed Towns can be a pain, but I
wouldn't describe our chairwoman that way. I understand that
she has weekly visits with the Secretary. I have seen that
occur.
Thank you very much.
Chairwoman Waters. That is called ``keeping it real.''
The Chair notes that some members may have additional
questions for this witness which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days for members to submit written questions to this
witness, and to place his responses in the record.
This panel--Mr. Montgomery, thank you so very much--is now
dismissed. And I would like to welcome our second panel. Thank
you very much. Thank you.
I am pleased to welcome our distinguished second panel. Our
first witness will be Ms. Deborah VanAmerongen, commissioner,
New York State Division of Housing and Community Renewal.
Our second witness will be Mr. Shaun Donovan, commissioner,
New York City Department of Housing Preservation and
Development.
Our third witness will be Mr. Frederick C. Arriaga,
counsel, Borough of Brooklyn.
Our fourth witness will be Ms. Marie Purnell, president,
Starrett City Tenants Association.
Our fifth witness will be Ms. Jerilyn Perine, executive
director, Citizens Housing and Planning Council.
Our sixth witness will be Mr. Rafael Cestero, senior vice
president, Enterprise Community Partners.
And our final witness will be Ms. Shirley Pazant, Starrett
City resident and ACORN member.
Without objection, your written statements will be made
part of the record.
I will now recognize each of you for a 5-minute summary of
your testimony. And we are going to go back to Ms.
VanAmerongen.
Tell me how to pronounce your name.
Ms. VanAmerongen. It is van-amer-on-gen.
Chairwoman Waters. VanAmerongen. We will start with you.
Thank you very much. You are recognized for a 5-minute summary.
STATEMENT OF DEBORAH VANAMERONGEN, COMMISSIONER, NEW YORK STATE
DIVISION OF HOUSING AND COMMUNITY RENEWAL
Ms. VanAmerongen. Thank you, Madam Chairwoman, and
distinguished members of the subcommittee, particularly our
Representatives from here in New York State, Congresswoman
Velazquez, Congressman Towns, and Congresswoman Clarke. And I
would like to thank you for your leadership on these issues in
Washington.
It is a pleasure to provide testimony regarding Starrett
City and New York State's efforts to preserve affordable
housing opportunities for our citizens.
My name is Deborah VanAmerongen, and I am the commissioner
of the New York State Division of Housing and Community
Renewal. We are an agency that is dedicated to developing
partnerships and supporting community efforts to provide equal
access to safe, decent, and affordable housing.
The State Division of Housing administers housing
development and community preservation programs, oversees and
regulates the State's public and publicly assisted rental
housing, administers the rent regulation system in the City of
New York and surrounding counties, and also oversees the
Mitchell-Lama housing stock.
Prior to becoming commissioner of the State Division of
Housing, I was a HUD Director of Multi-Family Housing for the
New York City Region. From there, I oversaw the portfolio of
federally financed affordable housing the New York City area.
And in my role at HUD, I became very familiar with Starrett
City and its unique character.
I am both humbled and honored that Governor Spitzer
selected me to serve the people of the State of New York as
commissioner of DHCR. I am humbled to be charged with the
responsibilities of this position at a time when we face a
critical shortage of affordable housing. And I am honored to be
part of an administration that clearly recognizes the
significance of our existing affordable housing stock, and is
committed to preserving it.
There is no doubt that housing is vital to the future of
our Nation. And as Governor Spitzer has stated, the
affordability crisis we face threatens to, as he stated,
strangle future economic growth and crush the dreams of
families, young and old.
The Mitchell-Lama program, of which Starrett City is a
part, has helped us address this problem, and has provided
affordable housing opportunities to hundreds of thousands of
middle-income families.
Mitchell-Lama was established in 1955 to serve low- and
moderate-income New Yorkers. It was named for the legislation's
sponsors, Senator Mitchell and Assemblyman Lama, and it serves
as a national model for successful affordable housing.
Despite its successes, the Mitchell-Lama program now faces
grave threats that demand creative solutions. From the original
portfolio of 270 State-financed Mitchell-Lama developments, 190
remain under DHCR's supervision. Many of these are in dire need
of costly repairs, updates, or major overhauls of heating
systems, roofs, or elevators.
The maelstrom that resulted over Clipper Equity's proposed
sale of Starrett City is a perfect illustration of the
challenges we face. We cannot build our way out of our housing
crisis. We must maintain and preserve what we have.
It was in my first week as Commissioner that Clipper Equity
signed its contract to purchase Starrett City. The purchase
price, an astronomical $1.3 billion, raised immediate concerns
that the purchaser would be unable to retain Starrett City's
long-term affordability and continue the high-quality
maintenance of the complex.
As a regulating agency, DHCR was asked, along with HUD, to
review Clipper Equity's proposal and approve the sale and the
refinancing of Starrett City, making us a central figure in the
battle to protect Starrett City's residents and keep its nearly
6,000 units affordable.
DHCR concluded that in addition to a purchase price that
was far too high to support the mortgage at current rent
levels, the plan failed to adequately ensure long-term
affordability at Starrett City. We therefore rejected the
proposal and have not been approached again, thank you.
Perhaps the most significant lesson that we learned from
Starrett City is that when various levels of government speak
with one voice to protect the public, we can accomplish great
things.
DHCR, HUD, the New York State Housing Finance Agency, which
holds the mortgage on Starrett City, and the New York City
Department of Housing Preservation and Development, under the
leadership of Shaun Donovan, mobilized together to communicate
the importance of Starrett City's long-term affordability to
the community, the owners, the prospective buyer, and the
tenants. I am convinced that this unprecedented level of
cooperation and coordination was a major factor in our success
in keeping Starrett City as viable, affordable housing.
I am equally confident that this experience will serve to
make us an even stronger force together in the face of any
future challenges to our affordable housing stock.
I have to thank Senator Schumer for his steadfast support
and commitment to preserving Starrett City and protecting its
residents. He was instrumental in this effort. Senator Schumer,
along with Congressman Towns, City Council President Quinn,
Assemblyman Lopez, and Councilman Barron really provided
extraordinary leadership, and they led the charge to rally the
tenant organizations in opposing the sale. Their support was
invaluable.
I also have to acknowledge the extraordinary leadership of
Marie Purnell of the Tenants Association and of ACORN. They
worked together to organize an extremely effective campaign to
oppose this sale.
As DHCR forges ahead with our mission to provide access to
safe, affordable housing, we do so with renewed energy and a
clear mandate for change. Governor Spitzer has declared the
preservation of affordable housing a top priority of his
administration. Our agency is now proactively engaged in a
long-term strategy to seek and develop opportunities for
preservation.
New York State has been a leader in the creation of
affordable housing, and now we must lead the way towards its
preservation for the future. I would like to briefly share with
you some of the things that we are doing at the State level to
answer the Governor's call.
We are working closely with the Housing Finance Agency to
assess the State's Mitchell-Lama portfolio. And I think this
goes to some of the conversations you were just having with
Assistant Secretary Montgomery. We are trying to take a
proactive approach to our Mitchell-Lama housing stock, and to
look at those developments before a sales contract is entered
into. Before we hear about something in the newspaper, we are
reaching out to the owners of those developments to say we want
to talk to you about preservation, about what tools we can
bring to the table.
We are collaborating to find the most effective
preservation tools to encourage those owners to remain in our
affordable housing programs.
We are also in the process of closely reviewing the
properties financed in the early years of the Low-Income
Housing Tax Credit program. We currently have more than 2,000
units that are beyond their first 15 years of occupancy, and
another 15,000 set to pass that mark in the next 5 years. We
are looking closely at this portfolio, as well, to determine
which of those properties may need rehabilitation or should be
targeted for other preservation efforts.
Chairwoman Waters. I am sorry. The time has expired.
Ms. VanAmerongen. Okay.
Chairwoman Waters. We have to make sure we get all of our
panel in today.
Ms. VanAmerongen. All right. Thank you.
Chairwoman Waters. So we have to move on. Thank you very
much.
[The prepared statement of Ms. VanAmerongen can be found on
page 78 of the appendix.]
Chairwoman Waters. Next, Mr. Shaun Donovan. Commissioner,
thank you. We are going to ask you to keep your testimony to 5
minutes.
STATEMENT OF SHAUN DONOVAN, COMMISSIONER, NEW YORK CITY
DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT
Mr. Donovan. Good morning, Chairwoman Waters, and members
of the subcommittee. I am Shaun Donovan, commissioner of the
New York City Department of Housing Preservation and
Development, or HPD, and I appreciate the opportunity to
testify today about affordable housing preservation, and
Starrett City, in particular.
It is a testament to the subcommittee's commitment to
affordable housing preservation, and to the advocacy of our
wonderful New York City delegation, that you are here today.
HPD's mission is to promote quality housing and viable
neighborhoods for New Yorkers. As the Nation's largest
municipal housing development agency, we partner with private,
public, and community stakeholders to strengthen the
neighborhoods of our City.
To meet that challenge, Mayor Bloomberg has undertaken the
10-year New Housing Marketplace Plan to fund the construction
and rehabilitation of 165,000 affordable apartments and homes
by 2013. We have already reached almost 40 percent of our goal.
Nearly 65,000 new or preserved units of affordable housing have
been funded, as of the end of June.
Keeping Starrett City affordable is a priority for Mayor
Bloomberg and the City of New York. Starrett City is one of the
most complex and heavily subsidized properties in the country,
and there are many lessons to be learned here.
Nearly three-quarters of the units in Starrett City receive
a J-51 property tax exemption from the City, which supported
rehabilitation of the property and makes the units subject to
rent stabilization if the complex were to buy out of the
Mitchell-Lama program. That is something that hasn't been
mentioned before today, that I think is extremely important.
Given all of the public investment in Starrett City, the
number of units in the development, and the strong desire on
the part of the current residents to remain here, it is easy to
see why so many public officials support keeping Starrett City
affordable. While HPD does not have the same right of approval
for a potential sale of Starrett City as the State and Federal
housing agencies, we have been working closely with our
governmental partners to evaluate the potential sale. This has
been an ongoing and particularly effective collaboration and is
a great example of the impact that various levels of government
can have when we work together, as Congresswoman Velazquez
stated earlier.
We are very concerned that there is no viable way for
Starrett City to remain affordable and well-maintained at the
proposed sale price of $1.3 billion. This view is reinforced by
Clipper's own plan for the property. They are asking to raise
the rent above what is allowed by current regulations, despite
the fact that the large majority of the units are covered by
the J-51 program that I mentioned, which requires them to
remain at affordable Mitchell-Lama rents or in rent
stabilization. At the same time, they are asking for a
continuation of the $50 million tax abate--property tax
abatement from the City.
In short, the only way for this proposal to work is for the
proposed buyer to obtain rents that are market rate, and to
obtain a maximum infusion of subsidies from the Federal, State,
and city governments. This will not occur. Clipper Equity's
proposal is a mistake for affordable housing and a mistake for
taxpayers.
We are extremely pleased with HUD Secretary Jackson's
decision to deny Clipper Equity the right to buy the
development and the similar determination by the New York State
Division of Housing and Community Renewal to reject it, as
well. And let me say, I am particularly encouraged by the new
focus on preservation that the Spitzer administration has
brought, and Deborah VanAmerongen has brought.
I also would have to say that HUD has been an absolutely
critical partner in New York City's preservation efforts, as
Assistant Secretary Montgomery talked about in his testimony.
Yet, we believe there are many more opportunities for
cooperation, especially if Congress were to pass affordable
housing preservation legislation.
As I mentioned, over 2,300 units in Starrett receive rental
assistance payments, or RAP, which pay the difference between
what a low- or moderate-income tenant can afford to pay and the
actual contract rent paid to the owner. RAP, along with its
counterpart program, rent supplement, or Rent Supp, is decades
old and antiquated.
There are more than 35,000 RAP and Rent Supp units
nationwide, across 34 States. Unlike the newer, project-based
Section 8 program that replaced them, RAP and Rent Supplement
contracts can be terminated at any time and are not renewable.
The RAP contract ends at Starrett in 2016, along with the
guarantee of affordable housing for 2,300 families.
A solution would be legislation that allows owners with RAP
or Rent Supp contracts to convert to project-based Section 8.
There are benefits to both owners and tenants. Owners get the
option of getting fair rents from HUD at no cost to the tenants
and the option to renew the contract, a very appealing option
in strong markets such as New York and California. Tenants get
better protection, because there are greater incentives for an
owner to continue in the Federal program, and should the owner
choose to leave the program, the tenants are guaranteed a
housing voucher that allows them to stay in their home.
Converting the RAP contract at Starrett to a project-based
Section 8 contract is, in my view, the single most effective
way to preserve affordability at Starrett City.
While opt-outs pose a major threat to the Federal stock of
affordable housing in strong market areas, there is also the
problem of HUD-insured distressed housing in danger of
foreclosure. While, in the past, units of local government were
able to exercise their statutory right of first refusal to
purchase these properties from HUD and maintain them as
affordable housing, changes in HUD's property valuation
methodology have effectively suspended the program.
HUD is interpreting language in the Deficit Reduction Act
of 2005, the DRA, as requiring them to disregard the repair
needs of a property when valuing it for a right of first
refusal. This change has meant that HUD is asking above market
price for properties. As a result, no properties have been sold
under right of first refusal in the entire country since
passage of the DRA. Legislation, as contained in Congresswoman
Velazquez's bill, H.R. 44, and in H.R. 1852, is needed to
require HUD to fairly value properties when selling to units of
local government.
And let me just take a moment to compliment Congresswoman
Velazquez for her focus on housing preservation and
affordability. Senator Schumer has also been very helpful in
trying to find a solution to this problem in the Senate. In New
York City alone, we believe we can preserve thousands of units
of affordable housing if the right of first refusal were
reinstated.
There are a number of other potential preservation measures
that we recommend in my written testimony, and I will leave
those for the record later.
In closing, I would like to thank you for the opportunity
to testify and for prioritizing affordable housing
preservation. The subcommittee's leadership has been crucial to
the success we have had in developing and preserving affordable
housing in New York City, and across the Nation.
Thank you.
[The prepared statement of Mr. Donovan can be found on page
60 of the appendix.]
Chairwoman Waters. Thank you very much. Thank you,
Commissioner.
Mr. Arriaga?
STATEMENT OF FREDERICK C. ARRIAGA, COUNSEL, BOROUGH OF BROOKLYN
Mr. Arriaga. Thank you. Good morning, Chairwoman Waters,
members of the subcommittee, and Members of Congress.
My name is Frederick C. Arriaga. I am counsel for Brooklyn
Borough President Marty Markowitz, and I am here on behalf of
Borough President Markowitz, to read the following testimony:
Thank you for holding this hearing at Starrett City, which,
as we know, is the epicenter of the fight to preserve
affordable housing in New York City and America.
Starrett City is the epitome of successful, modern,
diverse, and affordable urban living anywhere. And make no
mistake, as Starrett City goes, so goes affordable housing in
this Nation.
Starrett City has over 16,000 tenants, 5,881 units in 56
buildings on 153 acres of land. In fact, the development is so
large that it has its own security force, and publishes a
newspaper called The Spring Creek Sun.
And yet, Starrett City's immensity is humanized by its
remarkable sense of community. Every day in Starrett City,
thousands of tenants of different races, religions,
ethnicities, national origins, and incomes live peacefully,
side-by-side.
Starrett City is an example of how partnerships between
tenants and government agencies can build, maintain, and
preserve quality affordable housing.
And by the way, the Starrett City Tenants Association and
its President, Marie Purnell, are to be commended for their
tireless efforts to preserve affordable housing and to improve
our quality of life.
We are here today because the very existence of Starrett
City and other affordable housing developments is threatened.
Seven months ago, when Starrett City was put up for sale, I
joined a group comprised of residents, housing advocates and
elected officials at every level of government to learn more
about the proposed sale and what its impact would be on
residents and the future of the development.
We were dismayed that the sale would be conducted through a
secret bidding process in which bidders signed confidentiality
agreements with the seller. Without transparency, there was no
way to communicate to the prospective bidders the importance of
maintaining Starrett City as affordable housing.
We were shocked when we learned of the winning bid, since
we knew that the final bid of $1.3 billion would threaten the
long-term affordability of the development. Fortunately, the
Federal and State governments agreed with that conclusion and
rejected the proposed sale.
By the way, I commend and offer my continued support to HUD
Secretary Alphonso Jackson and New York State Division of
Housing and Community Renewal Commissioner Deborah VanAmerongen
for their decisive action to reject the proposed sale.
While the successful bidder has made assurances that
Starrett City will remain affordable, I cannot help but join
residents who are concerned about the realization of those
assurances in the future. We all fear that Starrett City will
not be affordable for our children or our children's children.
The proposed sale of Starrett City has taught us the
following:
Voluntary plans to keep housing affordable do not guarantee
affordability. When the homes of people who have resided in
them for 30 years are at stake, we need laws that determine
affordability, not just the promises of developers.
Government and regulatory agencies must continue to be
vigilant in scrutinizing proposed sales of developments in
affordable housing programs like Mitchell-Lama, both here in
New York State, and in the project-based Section 8 program
nationwide.
HUD, DHCR, and other State housing agencies must retain
oversight and regulatory jurisdiction over affordable housing
programs. In fact, the scope of that jurisdiction needs to be
expanded and strengthened, so that owners comply with all
affordable housing regulations. Furthermore, Federal and State
government agencies must be given a mandate, and must have the
authority to guarantee that owners provide tenants with not
only affordable housing, but housing that is also clean, safe,
and secure.
We need legislation on the books to protect tenants in
buildings whose owners do leave Mitchell-Lama and project-based
Section 8 programs. Long-standing tenants should not be
subjected to market rate rents if their developments opt out of
an affordable housing program.
With regard to vouchers, while enhanced vouchers allow
eligible tenants to pay rent increases after a development opts
out of a program, vouchers present three significant
deficiencies:
Vouchers do not guarantee that the unit remains affordable
for future tenants when the voucher is issued to the current
tenant and is portable.
And even tenants who are eligible for enhanced vouchers may
lose their vouchers for failing to certify, a complicated and
often harrowing process. Other tenants may run the risk of
losing their eligibility because of the dizzying variety of
factors that affect that eligibility.
And the third deficiency regarding vouchers is the fact
that they are subject to funding. What happens if funds for
enhanced vouchers are reduced or eliminated? How will tenants
pay the increases that result from their development, leaving
the Mitchell-Lama program?
Until these issues regarding enhanced vouchers are
addressed, tenants in Mitchell-Lama developments who face
potential buyouts are not fully protected.
And finally, in closing, New York's booming real estate
market has made affordable housing very appealing to real
estate developers. Many developers pledge that the buildings
will remain affordable after purchase, but we cannot rely
solely on those promises. There is too much at stake.
Starrett City is the pride of Brooklyn, and I applaud the
Congress Members' efforts to preserve affordable housing.
Thank you.
[The prepared statement of Mr. Arriaga can be found on page
49 of the appendix.]
Chairwoman Waters. Thank you.
Next, we will hear from Ms. Marie Purnell, the president of
the Starrett City Tenants Association.
STATEMENT OF MARIE PURNELL, PRESIDENT, STARRETT CITY TENANTS
ASSOCIATION
Ms. Purnell. Good afternoon, Chairwoman Waters. Thank you
so much for coming to Starrett City, and I also thank all of
the members of your board. I can't read all the names, so I am
just going to leave it at that, and thank you from the bottom
of my heart.
Chairwoman Waters. You are welcome.
Ms. Purnell. My testimony is a little different from the
ones you have been hearing. It is more of a human nature type
of thing.
I have lived in the East New York section of Brooklyn for
about 50 years. I lived in the Cypress Hills city projects for
about 20 years. I remember that letters had gone out to check
for the public's interest if a condominium or cooperative
development were to be built on the vacant land by Jamaica Bay.
Eventually, the decision was made to build affordable housing,
Starrett City.
My son, who had seen the Starrett development go up, asked
me why we couldn't live there. I told him that it was not
affordable for us. At the time, my rent at Cypress Hills was
$155 a month. Moving to Starrett would have cost $285 for a
two-bedroom apartment with a terrace.
I knew I had to do what was necessary, so I saved and cut
corners to make sure that if the interview process was
successful, I would be able to manage this. I saw the model
apartments in 1975, and in 1976, my son and I moved into the
development.
Starrett City is my home, plain and simple. My family has
always been happy and content here. My son grew up, got
married, and moved into his own apartment in Starrett, where he
raised his daughter. As a teenager, my granddaughter got her
first job at Starrett City, and I got involved in all the
activities, such as the Judo Club, the teen basketball club,
the Lions Club, and within 5 years, I became involved with the
Starrett City Tenants Association, Inc.
Coming to Starrett in my mid-40's let me feel like I had a
second chance at providing a good lifestyle for my family, and
30 years later, I feel that I have succeeded. I was working
full time at Chase Manhattan Bank, where I eventually became an
assistant treasurer, and I was able to commute to work on a
private bus line, now being run by the MTA bus service, to
Manhattan. Shopping was convenient. I felt that I was providing
properly for my family and the quality of life was great. My
son and I knew that once we crossed Flatlands Avenue into
Starrett, we were safe, thanks to the private security in place
at Starrett City.
When I retired from the bank, I became more active in the
Tenants Association and took the position of building rep at my
building where I live.
My main concern with the sale of Starrett City is the
changes that clearly will have to occur. I don't see how the
rent would stay affordable. I am concerned about services that
are in place, such as maintenance, security, and the
accessibility to management.
My neighbors have expressed the same concern. There are
many unknowns, and that makes people nervous, resistant, and
apprehensive. It is very difficult to engage with such an
audience.
My quality of life is excellent, as I have indicated
before. Something as simple as a terrace and a garage to park
safely give me so much pride. And I am renting, but I feel like
an owner. I am concerned about the services being cut,
particularly security and maintenance. If one needed repairs
within the apartment, a simple phone call to the maintenance
office was all that had to be done.
Public Service, as we are now calling our security, is also
on call for all situations of unbelievable occurrence. I recall
having a personal medical situation, and before EMS could
arrive on the scene, Starrett's security officers were with me,
comforting me, and I felt so much safer knowing that this was
possible because of where I lived.
To further the quality of life issue, I think that the
relationship among the tenants should be noted. Again, I had a
personal experience tied to my medical emergency that I had
just spoken of, where I was bedridden for approximately 3
months. My next-door neighbor, who has roots back to Russia,
literally prepared and fed me breakfast for my entire time of
disability. She cared for me every single day, among other
tenants. This type of country-like atmosphere can only be
fostered in a neighborhood where the tenants truly care for
each other and will step up and treat each other with the
respect and dignity that one would find in a family.
As far as the sale is concerned, I don't see how a $1.3
billion price tag could not affect the quality of my life.
Where is the money coming from to pay for the services if so
much money is being paid for the development? How many people
will be forced to move, thus changing the entire mission of the
Starrett community?
I have to believe that I will definitely get a rent
increase. Depending on the percentage, it is doubtful that I
could remain here. I am already paying 30 percent of my Social
Security and retirement income. A high increase will definitely
affect my ability to reside in the home that I have been in for
over 30 years.
I think that there will definitely be a change to the
subsidies. I don't have enough detail about Mitchell-Lama, but
the owner opting out of the program clearly cannot be
beneficial to the tenants who are participating in the program.
I am currently a participant in the RAP program and do not know
if this program will stay in effect.
As far as prepaying the mortgage, I don't have enough
information--I have it now, though--to testify to this. Truth
be told, I do not know who holds the mortgage right now. We
were thrown into a situation, and we are learning day-by-day as
to the rules, regulations, and repercussions behind the sale,
housing laws, etc.
Management did assure us, however, that Starrett would not
be sold back in September 2006. They also said that 90 percent
of the tenants would not be affected. However, in December
2006, just before the holidays, we learned on the news that a
deal was being made to sell the development. We had three
meetings at this time with Carol Deane, representing her
husband/owner, Disque Deane, their nephew, Kurt Deane, who is
apparently managing the business operations and--
Chairwoman Waters. Ms. Purnell? I am so sorry. Your time
has expired. Could you wrap it up for us?
Ms. Purnell. Yes, I can.
A single meeting, which basically consisted of a meeting
that we had of a PowerPoint presentation by Clipper, ACORN, and
the Office of the City Council. Clipper, however, didn't say
much of anything which would yield any constructive information
in the opinion of the STA, but they did promise future
meetings, none of which materialized.
They would not give the STA Board clear answers, and this
is why we turned down the tenants' meeting. Tenants were really
feeling concerned about the information we were receiving.
The first thing that is pertinent to the tenants is the
immediate end of the secrecy by owners and potential buyers.
Transparency is critical. There should be notices available to
tenants, just like we have right now, when they want to inform
us of rent increases. The Starrett Tenants' Association is
willing to work with management to keep tenants in the loop.
We should acknowledge that the sale will go on, no matter,
to someone. It should be expected that some things will change.
What we in Starrett have grown used to will change.
Chairwoman Waters. Ms. Purnell?
Ms. Purnell. However, retention of all subsidy programs
should be a priority.
Chairwoman Waters. Ms. Purnell, we are going to have to
hear the rest of--we will get your testimony, and we will
insert it in the record.
Ms. Purnell. Okay.
Chairwoman Waters. We got the point. You did it well. Thank
you very, very much.
Ms. Purnell. Okay. Thank you.
Chairwoman Waters. Next, we will hear from Ms. Jerilyn
Perine, executive director, Citizens Housing and Planning
Council.
STATEMENT OF JERILYN PERINE, EXECUTIVE DIRECTOR, CITIZENS
HOUSING AND PLANNING COUNCIL
Ms. Perine. Good morning. My name is Jerilyn Perine, and I
am the executive director of the Citizens Housing and Planning
Council, one of New York City's oldest civilian research and
policy organizations. Thank you so much for giving me the
opportunity to testify. And I particularly would like to
welcome our members from outside of New York to Brooklyn.
The sale of Starrett City raises a primary public policy
issue. What is the role of government when government-financed
programs come to the end of their term?
In Starrett City, and in many other projects, there is a
widespread concern that the proposed purchase price is simply
too high to allow for proper capital investment, maintenance,
and the operation, raising questions about the intent of the
proposed new owners and the future of the project's physical
and financial viability. Starrett City is but one example of a
growing trend of high-cost purchases which raise grave
questions as to the continued viability of such housing.
In the case of Starrett City, as many as 20,000 people may
bear the consequences. As this phenomenon grows, many more
people are facing the same problem.
Starrett City is the largest subsidized housing development
in the United States, and has achieved affordability through a
cornucopia of subsidy programs from every level of government.
As a result, 62 percent of the households in Starrett City
currently receive direct rental assistance. Another 1,600 of
the apartments are restricted to households earning less than
80 percent of the area median. In total, 88 percent of Starrett
City's households earn less than 80 percent of the HUD area
minimum.
While it is clear that the government has a valid interest
in this project, unfortunately most regulations are not
currently designed to prevent potentially bad owners from
purchasing such projects, nor do they mitigate against highly
speculative prices which may call into question the future
viability of the projects. And while Starrett City shows
clearly what can happen when tenants are organized and can
mobilize political pressure, legislative changes are required
to ensure that the sale of all projects which were the
beneficiary of significant government investment are properly
reviewed and protected.
That review should have two objectives: One, to evaluate
the track record of the proposed purchaser; and two, to
determine if the sale price is based on sound financial
principles.
Currently, HUD does have a process for that review. And in
this case, they have determined that the proposed purchase
would threaten the project's future affordability. However, the
review process is flawed.
HUD currently reviews the new owner's participation in
other HUD projects, whether they are debarred by the Federal
Government, whether they have been convicted of a crime, or
whether they have defaulted on Federal or local housing finance
agency loans. There is, however, a need to go further. And by
going further, this needs to be codified in law and in rule.
Congress did make some changes in 2004. However, they did
not mandate a similar review where HUD-financed projects, not
just HUD-owned projects like this one, were transferred from
one owner to another. Congress should require such a review.
Without such a mandated review, projects without the attention
that Starrett City received will continue to be subject to a
case-by-case review, sometimes with a good outcome, but not
necessarily so.
In New York City, as a result of an extremely hot real
estate market, we have seen numerous purchases of rental
housing, both regulated and unregulated, at prices that raise
serious questions about the continuing viability of the
buildings.
Owners of subsidized projects such as Starrett City have a
right to ask that the governments live up to their original
deal, allowing an end to the restriction periods that were
originally agreed to. At the same time, it is not unreasonable
for the government to seek to ensure that its considerable
investment remains financially and physically viable into the
future. If additional affordability is desired, owners should
be compensated.
The State of New York is considering legislation to make
reforms to their process. The details are in my written
testimony.
At the Federal level, Congress should mandate that the
review of purchasers of federally subsidized housing should
include the track record of the new owner beyond HUD-subsidized
housing. The new owner's performance on housing maintenance and
construction should be reviewed by HUD in concert with local
authorities, prior to HUD approving any such purchase. HUD
should also review the purchase price to ensure that it is
based on a reasonable expectation of rental income and future
capital appreciation.
This principle has been included in H.R. 44, introduced by
Congresswoman Nydia Velazquez in January of this year. Congress
should pass it and the President should sign it.
Last and most important, it is time to consider how to
reconfigure some of our rent and tax subsidy programs, to
target assistance to tenants in projects that may be sold. The
Section 8 enhanced voucher program does this in part. However,
it should be expanded to non-federally assisted projects such
as Mitchell-Lama. The City and State should also consider real
estate tax abatement programs that are geared to rewarding
owners for keeping rents affordable.
We are hopeful that your interest in the sale of this
project will extend to all federally funded projects, and that
you will pass H.R. 44.
Thank you.
[The prepared statement of Ms. Perine can be found on page
75 of the appendix.]
Chairwoman Waters. Thank you.
Mr. Rafael Cestero, senior vice president, Enterprise
Community Partners.
STATEMENT OF RAFAEL CESTERO, SENIOR VICE PRESIDENT, ENTERPRISE
COMMUNITY PARTNERS, INC.
Mr. Cestero. Thank you, Chairwoman Waters, and
distinguished members of the committee, for the opportunity to
speak to you today.
My name is Rafael Cestero, and I am the senior vice
president for field operations and program support at
Enterprise Community Partners.
Enterprise is a national organization, founded in 1982,
that works with thousands of nonprofit organizations, local
governments, financial institutions, and private corporations
around the country to create and preserve over 215,000 homes,
and has invested over $8 billion in communities across the
country in the last 25 years.
The past decade has not been friendly to preserving
affordable housing. Approximately 170,000 public housing units
have been lost to neglect and deterioration, while much of the
remaining public housing stock is in need of substantial
renovation and rehabilitation. At the same time, 1.4 million
units of privately owned, federally subsidized housing face
preservation and rehabilitation challenges.
The loss of affordable housing units is primarily due to
owners who choose not to renew subsidized contracts,
gentrifying markets, a continued uncertainty over tenant and
project-based Section 8 appropriations, and tax depreciation
recapture issues faced by many investors.
However, despite these obstacles, Enterprise is committed
to finding solutions to preserve affordable housing nationwide.
In 2006 alone, we have refinanced over 30 properties that had
HUD financing or subsidies. These properties will now remain
affordable for another 30 years, and the proceeds from
refinancing will allow additional capital investment, increased
support services, and are used to create more affordable
housing units.
Our experience shows that it costs much less to preserve
than to replace. We estimate that the tax credit equity needed
to rehabilitate an apartment is half of that needed to create a
new one.
We have also created partnerships with local, State, and
Federal Government, which are making great strides towards
preserving housing in those cities and States.
Six years ago, only six States set aside 9 percent Low-
Income Housing Tax Credits for affordable housing preservation.
Today, 46 States set aside credits in their qualified
allocation plans. New York State and New York City allocate
significant amounts of the 9 percent tax credit allocation in
their tax-exempt bond volume cap to preserve affordable
housing. And over the last several years, this has led to the
preservation of 40,000 units in New York City.
One of the most crucial elements in preserving affordable
housing is the ability to find capital to acquire property. To
meet these needs, we have launched acquisition funds in New
York City, the District of Columbia, and hope to close funds
soon in Los Angeles and Atlanta, to allow nonprofit
organizations to acquire affordable housing projects.
In the District of Columbia Preservation Fund is an
acquisition loan product which is strictly for preserving
multifamily housing. This $28 million fund, with a combination
of private and public funds, provides acquisition and
predevelopment financing for nonprofit sponsors. To date, this
fund has preserved 600 units of housing in the District of
Columbia.
As in the District of Columbia, the affordable housing
challenge in New York City has never been more severe than
today. While unsubsidized rents and affordability restrictions
in programs like Mitchell-Lama are ended, the housing stock is
quickly trending to rates only the wealthiest can afford. In
2004, Enterprise pledged $1 billion to create and preserve
15,000 homes by 2008, in support of Mayor Michael Bloomberg's
New Housing Marketplace Plan. We are now more than halfway
there.
Enterprise is committed to doing all it can to preserve
such affordable housing complexes like Starrett City. We
conducted an analysis in partnership with ACORN that is in my
written testimony, that shows very clearly that $1.3 billion is
not supported.
We urge the passage of H.R. 44, as other members have, as
well as the Federal laws that have been talked about in other
testimony presented today.
Chairwoman Waters. I am sorry. Your time has expired.
Mr. Cestero. Thank you.
Chairwoman Waters. Thank you very much.
[The prepared statement of Mr. Cestero can be found on page
54 of the appendix.]
Chairwoman Waters. Representing ACORN, Ms. Pazant.
STATEMENT OF SHIRLEY PAZANT, ACORN MEMBER
Ms. Pazant. Thank you, Chairwoman Waters, Members of
Congress, Congressman Towns, and members of the committee. I
thank you so much for the opportunity to testify today about
the affordable housing situation in Starrett City.
My name is Shirley Pazant, and I am a retired nurse. I have
lived in Starrett for 8 years, and I am a very active member of
the Association of Community Organizations for Reform, known as
ACORN, and also a member of the Starrett City STA.
I had attempted to move into Starrett City for 10 years,
and when I finally got the call and I was able to move in, I
was very, very happy. As a woman living on a fixed income, I
feel it is safe and secure living here. I know that if we--
whoever has to move, there will be nothing out there that will
be as beautiful as Starrett, and nothing that would work for
our income level.
My grandchildren, and my great-grandchildren, look forward
to coming to visit from Bed-Stuy because of the safe places
available for them to run around and be children; that is
really hard to come by in their home neighborhoods.
Starrett City is truly our home. The neighbors come
together as one big, happy family, regardless of race and
culture. We have built a home here that could not be duplicated
any other place. The community is a wonderful place not only
for those of us who have retired here, but for every person at
any stage of their life.
So affordability has allowed parents to save for their
children to go to college. Affordable rents and a welcoming,
diverse community benefits everyone who has the pleasure of
calling Starrett City their home.
My testimony today will focus on the community's concern
with Clipper Equity as a potential owner of Starrett,
especially in regard to affordability, as well as our group's
recommendations to local, State, and Federal representatives.
Whether it be Clipper or another owner, many of our concerns
are constructive as we look forward to what we will have to
miss.
The cornerstone of all of this is affordability. Ninety
percent of the tenants here rely not only on low rent, but on
the variety of rental assistance programs that have been
available all these years. I am currently enrolled in the
Section 8 program, as are other residents, many of whom are
seniors. As seniors, we are very troubled by the idea that
someone could come in here and displace our community by
pricing us out.
The research that ACORN and its partners have conducted
shows that in order for Clipper Equity to keep Starrett
affordable, they would have to receive huge additional
government subsidies, reduce service, and raise rents. This is
not a solution at all as far as we tenants are concerned.
When it was announced that Clipper Equity would be buying
Starrett, we decided to gather research on Clipper's other
complex in Brooklyn, the East Flatbush Gardens, better known as
Vanderveer. We looked at the buildings' department records for
any violations, and we knocked on doors and talked to tenants.
We got information about complaints about the lack of heat and
hot water, holes in the ceilings, and unsanitary living
conditions.
In the process of our work, we discovered that Flatbush
Gardens had almost 8,106 building code violations, and over
1,400 new violations logged in since Clipper took the property.
I have copies here of a PowerPoint presentation about what we
found, if anyone would like them.
Starrett City is special not only because it is affordable,
safe, and diverse, but because the grounds and buildings are
beautiful and well maintained. If something goes wrong in our
apartments, it gets fixed right away. This is clearly not the
case at Clipper's other properties.
We know that there are economically viable and profitable
solutions to keep Starrett City affordable that will not
overburden the government and, more importantly, will allow the
tenants to keep our homes, continue to receive key maintenance
services, and maintain the economic diversity of Starrett City
into the future.
ACORN and the Starrett City Tenants Association stand
united in our fight to make sure that Starrett City remains
affordable, especially for future generations.
Over the years, government has stepped in through a
patchwork of subsidies that have allowed this development to
develop into a place with such economic and racial diversity.
Now, right now, we need local, State, and Federal legislation
to protect tenants like us all around the country. We need you,
and we need you now, to protect not only this generation of
tenants, but also future generations from developers looking
only to make a profit off of the communities.
Chairwoman Waters. Ms. Pazant--
Ms. Pazant. We have asked New York State to pass
legislation so that any--
Chairwoman Waters. Ms. Pazant--
Ms. Pazant. --owner opting out of the Mitchell-Lama program
be coupled by rent regulation--
Chairwoman Waters. Ms. Pazant, I am sorry. Your time has
expired. You did a great job. Thank you very, very much. And
thanks to ACORN all over the country. You are doing a fabulous
job.
Ms. Pazant. I want to thank you for taking the time to
listen to me and those I represent, ACORN, Starrett City, and
the people who have worked hard all our lives.
Thank you.
Chairwoman Waters. Thank you.
[The prepared statement of Ms. Pazant can be found on page
71 of the appendix.]
Chairwoman Waters. Now, I want to take most of my 5 minutes
to thank each of you. This has been an extraordinary example of
what cooperation can and will do.
And I think that you mentioned in your testimony, Ms.
VanAmerongen--I am going to get this right--
Mr. Towns. VanAmerongen--
Chairwoman Waters. --you mentioned in your testimony that
this was a baptism by fire.
Ms. VanAmerongen. Yes, it was.
Chairwoman Waters. It was in your written testimony,
rather, but you alluded to the fact that this overall proposal
was really trying to get you to act beyond your statutory
authority.
Could you just give us an example of what that means,
quickly?
Ms. VanAmerongen. What we found in the Clipper Equity
proposal was that they were suggesting that we should allow
them to call themselves Mitchell-Lama and claim to be
maintaining affordability, to actually treat it differently
than any other Mitchell-Lama, or differently than what we
believe our statutory authority allowed us to do.
So, for instance, every Mitchell-Lama has to go through a
budget-based rent increase process, and a review of the
operations of the building, to try to keep the rents as low as
possible, but provide enough money for them to operate. They
wanted to have all of the rents set at market, and then subject
to rent-stabilized, guarantee-type increases going forward.
So those are the kinds of things that they were asking us
to do, so that they continue to claim their real property tax
benefits from the City of New York, and to say that they are
maintaining affordability, call themselves a Mitchell-Lama, but
they really would not have been.
Chairwoman Waters. Thank you very much.
Mr. Donovan, I know you are going to have to leave by 1:00,
but you mentioned something that I think we certainly should be
paying attention to as far as legislation, the conversion of
RAP to Section 8.
I didn't realize we had such a program where there was some
difference being paid between what was afforded by the tenant
and the market rate in some way. It certainly should all be one
program, and there may be some room for legislation here.
Do you want to expound on that, before you go?
Mr. Donovan. Absolutely. And I would say, in deference to
HUD, one of the most effective things that they have done in
New York City--and Deborah at the New York local office was
instrumental in doing this--thousands of units of HUD housing
have been preserved around New York City by the Mark-to-Market
program.
That program is only available to project-based Section 8
properties; it is not available to RAP and Rent Supp
properties. So it is not just critical that the conversion of
these old, antiquated--they really were the predecessors to the
project-based Section 8 program, and it was fixed decades ago
by inventing the new project-based Section 8 program. But these
two dinosaurs, really, are still around.
Not only can they not be renewed, as I said, so once it is
gone, it is gone, and there is no chance for long-term
preservation of the property for low-income people; in addition
to that, there are all kinds of preservation opportunities
available to project-based Section 8 properties that could help
not only stop the Clipper proposal, but in fact, could for the
current owner, or any new owner, make it more attractive
financially to remain a low-income property than to convert to
market rate.
So again, I think that is particularly important. With this
flexibility, the owners could win and the tenants could win, by
continuing with the affordability of the property.
Chairwoman Waters. Thank you so very much. And thank you
for being here today. The cooperation between you and the State
and the Feds is wonderful. We know you have to leave, but we
really appreciate your presence. Thank you.
Mr. Donovan. Thank you. And let me compliment you and your
staff on all the hard work you have been doing around the
country.
Chairwoman Waters. Well, you are certainly welcome.
Mr. Donovan. Thank you.
Chairwoman Waters. Well, again, I will wrap up by thanking
each of you. You see the power of the residents and the
tenants, and because you decided to take leadership, you made
something happen here. You should be very, very proud of that.
So, Ms. Purnell and Ms. Pazant, I want to thank you very
much.
To our others who are represented here today, I want to
mention to you--I don't know if it was you, Mr. Arriaga, who
mentioned that part of this agreement was supposedly
confidential, and we didn't know who the other buyers were.
We should wipe that out. We should not allow that to happen
on these kinds of proposed sales. We want to know who it is who
is supposedly buying these. And so maybe that has some room for
legislation, too, and I want to thank you very much for that.
Again, here, we have the cooperation of a nonprofit in the
business of providing affordable housing. Enterprise, you are
showing up everywhere. You are showing up good. We thank you
very much for your participation.
Again, the residents are primary in everything. So thank
you all very much, and I just appreciate your participation.
Thank you.
And I will turn to my colleague, Mr. Shays, for questions.
Mr. Shays. Thank you, Madam Chairwoman.
I do not have any questions, but I want to thank the
government officials for being here. And I thank those in the
community for coming to testify.
I was struck by the fact that all the presentations were
informative, they were forceful, and they were kind. It is very
clear to me that Starrett City is a lovely place to live.
I wanted to particularly thank you for the gentleness with
which you are talking about a very emotional issue. That is a
much better way to communicate and to make your points, and so
I found that tremendous.
I enjoyed talking with three young men who were sitting on
the floor--one was in 2nd grade, one was in 4th grade, and one
was going into 5th grade--and they just told me how much they
love living in this wonderful community. You clearly are a
family, and I look forward to seeing this family have a long
and prosperous life. So thank you for having me.
And thank you, again, Madam Chairwoman. And Mr. Towns, and
to my other New York colleagues, congratulations on a job well
done.
Chairwoman Waters. Thank you so very much, Mr. Shays, for
being here. It shows you that we have cooperation on both sides
of the aisle. We don't always get along on everything, but on
Starrett City, we are together.
All right. We are going to turn to Mr. Ellison for
questions.
Mr. Ellison, yes.
Mr. Ellison. My question for Mr. Cestero is this:
Obviously, while Starrett City is the largest federally
subsidized community, there are others around the country. What
are your recommendations going forward?
As we go forward, and we see that other such communities
could be purchased, what are some of the things that we need to
bear in mind? What are some of the proposals that you have to
make sure that we can maintain affordability?
Mr. Cestero. It is quite clear, as you look around the
country--and you have heard it here today--that Starrett City
is a unique property in many ways: It is unique in its size; it
is unique in the kind of community that it is; and it is unique
in the myriad of subsidies that have all come together in one
place.
But I do think that there are some lessons that we can
learn from this and that we can learn from preservation
activity that has happened in this State, in this City, and
across the country. One I talked about in my testimony, which
is access to acquisition capital. The reality is that nonprofit
affordable housing groups around the country that are
interested in preserving these types of properties don't have
the same access to capital that private owners do, so we need
to continue to make that capital available.
There are a number of proposals that have been put forth in
Congress that I would urge you to consider, because they would
have an enormous effect on preservation around the country. The
restoration of a grant program, the Section 8, the project-
based Section 8 that Commissioner Donovan spoke about, is
incredibly important.
And the early warning system that was talked about earlier
is also incredibly important, so that we know what the
properties are and when they are coming up.
Mr. Ellison. What about the proposal for a housing trust
fund in the legislation chiefly authored by Congresswoman
Waters? Have you thought about that? And what sort of help it
could be to maintain affordability?
Mr. Cestero. There is no question that at the end of the
day, more money makes the difference. And so the trust fund
proposal that is put forth would bring more resources to the
preservation of these projects; it can't be done without an
infusion of additional capital.
And, in particular, the smaller properties are often in
need of more rehabilitation, which means that we need
additional subsidy dollars to be put on the table up front, in
the form of a capital subsidy, that a trust fund would do.
We are lucky in New York State. In New York City, we have a
City government that puts an enormous amount of money into
affordable housing. We have a State government that has been at
the table and a leader in the affordable housing movement. For
the rest of the country, that don't have access to those
resources, the national trust fund would provide more of those
opportunities.
Mr. Ellison. Well, Madam Chairwoman, I just want to thank
you again for allowing me to be a part of this important
subcommittee hearing. Your leadership--you amaze me every
single time I see you, Madam Chairwoman.
And I just want to thank my colleagues, as well. And on my
first trip to Brooklyn, I have had a great time so far. Thanks,
everybody.
Chairwoman Waters. Thank you.
Mr. Towns. Thank you, everybody.
Let me again begin by thanking the chairwoman for this
hearing in Brooklyn, and to say to Congressman Ellison that I
am proud that I was a part of the history, in terms of bringing
him to Brooklyn.
And I would just share one other first with you. I also was
the first one to bring Bill Clinton to Brooklyn. I want you to
know that, too.
Let me direct my questions to, of course, Deborah
VanAmerongen. I know you have been involved in housing for a
number of years, and you have done great things. And some of
the things we are talking about today that have sort of helped
us along the way, are things that you have put in place.
And let me ask you this: What do you suggest, as Members of
Congress--let's say we reverse positions, you know, for a
moment--what do you think that we need to do, as Members of the
United States Congress, to bring about affordable housing? To
make certain that we keep affordable housing, what can we do?
Ms. VanAmerongen. I appreciate your compliment,
Congressman, and it has been a pleasure working with you on
many developments here in Brooklyn over the years, both at HUD
and now at the State Division of Housing.
I think a lot of the legislative initiatives we have heard
discussed here today would be of tremendous importance in being
able to preserve housing. As Commissioner Donovan talked about,
and it is something that, while I was at HUD, I talked to a lot
of people about as well, the conversion of the older contracts
to project-based Section 8.
Addressing some of what the problems are in the HUD
programs, in terms of the up-front grants, and the sale of HUD
foreclosed properties, would be--as you know, we have had a
number of those go through foreclosure, which is great that HUD
is aggressively going after bad owners to try to take
properties away from them. But we have to work to ensure that
they end up with people who are going to be responsible owners
and maintain them as affordable housing.
And as the Congresswoman was talking about, the housing
trust fund, which obviously we are very supportive of--and
don't mistake what Rafael said in saying that New York doesn't
need it. We need it, too.
Chairwoman Waters. We know that.
Ms. VanAmerongen. Even though we have great State and City
programs, we would love to see a national housing trust fund be
brought to our State, as well.
I would like to see the work that HUD is talking about in
terms of integrating their programs better with other programs.
Getting section 202 and section 811 to work with the Low-Income
Housing Tax Credit program is something that I am committed to
doing, from the State perspective, as an administrator of the
Low-Income Housing Tax Credit program. And the New York
Regional Office has been in direct contact with us, and we have
been talking about how to make that work here in New York.
But there is--it could be done on the national level, and
it would make it easier, but we would have to do a State-by-
State solution to overcoming those kinds of problems.
So again, keep working with HUD, bring in whatever
resources you could to the table in advance, and some of those
legislative initiatives that have been discussed would all be
of great importance here in New York.
Mr. Towns. Let me--just to bring my colleagues up to date.
The State had a hearing, as well, which I insisted they have.
The State had the hearing here, had 10 members of the Assembly,
you know, in this room, talking about housing.
The one thing that came out of that, which I thought was
quite interesting--and I want to take comments very quickly--
they indicated that if a person is wanting to sell, they should
give at least a 3-year notice. Now, I would like to just run
down the line real quickly, on a sort of yea or nay, you know,
type of thing.
Do you think that that might help the problem? Because what
they said, basically, is that if the seller gives notice, then
the various agencies would have an opportunity to put things in
place that would protect the tenants.
Because what happens now, with the fact that there is no
transparency, is that the only time you know about what is
happening is when somebody has already made a bid. So--and that
doesn't give the agencies a lot of time to be able to correct
or to make certain that people are protected.
We have people in Starrett who have been there for over 30
years--senior citizens, many of them on disability, who are
scared to death, and can't sleep at night, because they are
concerned about the fact that their apartments might not be
there.
Ms. VanAmerongen. I had not heard of the 3-year proposal.
One of the things that I know people are giving some thought to
currently is, if you wanted to opt out or buy out of the
program, you must give a 1-year notification, which is State
law. And I think that it would be appropriate to look at
whether we should apply that same notification to sales, as
well.
And I think, again it goes to what I was talking about in
terms of us being proactive as agencies, though, in doing the
outreach to owners. It is something that I didn't have a chance
to insert into my testimony, but it came up earlier, so I
wanted to mention it, in terms of the mention in the New York
Times today about what might happen if this sale does not go
through.
I think what we have--the word proactive isn't just talk.
We have reached out to the owners of Starrett City, and have
said, you know, the time under their existing contract--they
had 6 months to get government approvals on this sale. So that
time has almost elapsed; early August is the end of that 6-
month period.
What we have done is reached out to them proactively, to
say, before you make any other decisions about the future of
this development, come and talk to us. Don't make up your mind
and go and sell it to somebody else, and we will have to go
through this whole mess again. We want to be at the table,
engaged in those conversations, address the needs of tenants,
and that is--we have--that is the same thing we have to do with
other owners in our portfolio. And as I said, we are reaching
out proactively to many of them to talk about the future of
their developments.
Mr. Towns. Thank you very much, Madam Chairwoman.
And on that note, let me just thank all of you for your
testimony. I really appreciate, you know, being allowed. I know
I had asked the question earlier down the line, but I am going
to have to pass on it. The chairwoman gave me a look, so--
Chairwoman Waters. Next, we will hear from our other
Congresswoman, who came here today to give support to you in
this district in what you are doing, Congresswoman Yvette
Clarke.
Ms. Clarke. Let me first thank you, Madam Chairwoman, again
for coming. And let me say that Congressman Towns is truly a
visionary. He has brought Keith Ellison here for his first
visit. He brought Bill Clinton. He leads the fight. He is
certainly a visionary, and I am just hitching my star to his
wagon.
But let me say this, that when Maxine Waters comes to
Brooklyn, you know it is about to be something.
I wanted, first of all, to congratulate you, Commissioner.
Ms. VanAmerongen. Thank you.
Ms. Clarke. This is my first opportunity to actually meet
you and to hear you, and I am encouraged.
One of the things that I kind of get hung up on, being a
new Member, is how ``yesterday'' the rules and regulations are
in governing our lives and the way that we go about doing
business in the United States of America. There is a lot of
drag back into the 20th century, and I am glad to see the type
of innovation and enthusiasm you have in terms of making the
transition which is in keeping with how modern we are as a
society.
I wanted to ask you, because I have heard over and over
again--and I have tried to distill best practices--I have
heard, you know, from my constituents, from housing advocates,
that there is a lot of pull in project-based Section 8.
Can you give us any indication of where the State is going
with respect to how it will be rolled out? What type of
assistance you would need from the Federal Government to really
embed that as the way for us to get out of the old traditions
that are no longer applicable for community preservation and
affordable housing?
Ms. VanAmerongen. I am not sure. Are you asking about how
we would use project-based Section 8 to preserve our housing?
Ms. Clarke. We talked about the fact that RAP and--
Ms. VanAmerongen. The Rental Assistance Program.
Ms. Clarke. Right. It is antiquated?
Ms. VanAmerongen. Yes.
Ms. Clarke. --and that we want to look at how we can do
these conversions, and I don't think you alluded to that point.
Have you successfully done that already? Is there something
that we need to do in Congress to make this happen? Because it
is older cities, like New York City and some of the oldest
cities around the Nation, that are stuck in between right now.
Ms. VanAmerongen. Yes. Thank you for the clarification.
It actually was done once before. In the beginning years of
the project-based Section 8 program, HUD offered owners who had
those older forms of subsidies that they could convert, and
many of them took them up on the offer. But project-based
Section 8 was new, and I think some of them weren't sure about
exactly what it meant and how it would work, so some of them
didn't do it.
Ms. Clarke. Yes.
Ms. VanAmerongen. What they are saying, what we are saying
now--and it would require congressional action to allow HUD to
do that conversion, and it would reach out to the owners of
those buildings; it would have no impact on the tenants--the
rents of the tenants are set the same way under those older
programs as they are in the project-based Section 8, and
tenants pay 30 percent of their income.
But what it would give HUD the opportunity to do--and all
of us are working to preserve this housing stock--is the
opportunity to reach out to those owners proactively and say,
here are the preservation tools we have available under the
project-based program, and we want to talk to you about how to
do a long-term extension of that, mark the project up, do a
restructure of the mortgage, whatever needs to be done.
Ms. Clarke. Thank you. I think that is a strategy that we
have to aggressively pursue, as we look at the erosion.
I heard the gentleman from Enterprise talk about
Washington, D.C., and as a new resident, I know exactly what
the people of Washington, D.C., are going through right now in
their housing market, and we see that increasingly here in New
York City.
Let me just close by saying to everyone here, specifically
to the tenant leadership, how very proud I am to be here with
you as a witness, as an advocate with you. I can see this going
forward, how children will be able to talk of the day when you
women and men took the time to sacrifice for them, to make your
voices heard, to let people know that there are people who have
made the sacrifice, and who have given their time, time and
time again, and all they request is housing with dignity.
You all have done that in royal style. I am so very proud
to be here, and I will be here until the end.
Thank you very much, Madam Chairwoman.
Chairwoman Waters. Thank you.
The Chair notes that some members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 30 days for members to submit written questions to these
witnesses and to place their responses in the record.
Before we dismiss the panel, I would like to acknowledge
Mr. Earl Williams and Ms. Jean Holden--where are you--and all
of the staff at the Brooklyn Sports Club for your assistance in
making this hearing possible.
Also, before we adjourn, the written statements of the
following individuals will be made part of the record of this
hearing:
Mr. David Bistricer, on behalf of Clipper Equity, and Mr.
Disque Deane, on behalf of Starrett City Associates.
To the residents, thank you for understanding your power.
Thank you for having good representation in Mr. Towns and Mr.
Schumer and others. Thank you for having great leaders in the
agencies from the City, from the State, and of course, from the
Federal Government, who have come together and cooperated to
make all of this happen.
This is what I like to see, when government is using its
power to assist people in the way that we should be doing. I
feel so very good about being here. This is a beautiful
development. You are wonderful representatives. We are
dedicated and committed to the proposition that we can do this
not only here at Starrett, but all over the country.
Thank you very much.
The meeting is adjourned. Thank you.
[Whereupon, at 1:05 p.m., the hearing was adjourned.]
A P P E N D I X
July 10, 2007
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