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





                H.R. 5772, THE FRANK MELVILLE SUPPORTIVE
                     HOUSING INVESTMENT ACT OF 2008

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 20, 2008

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-123










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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            DEBORAH PRYCE, Ohio
CAROLYN B. MALONEY, New York         MICHAEL N. CASTLE, Delaware
LUIS V. GUTIERREZ, Illinois          PETER T. KING, New York
NYDIA M. VELAZQUEZ, New York         EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina       FRANK D. LUCAS, Oklahoma
GARY L. ACKERMAN, New York           RON PAUL, Texas
BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York           DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas                 WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
RUBEN HINOJOSA, Texas                JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York           GARY G. MILLER, California
JOE BACA, California                 SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
BRAD MILLER, North Carolina          TOM FEENEY, Florida
DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
AL GREEN, Texas                      SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri            GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois            J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin,               JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee             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                KEVIN McCARTHY, California
DAN BOREN, Oklahoma                  DEAN HELLER, Nevada
BILL FOSTER, Illinois
ANDRE CARSON, Indiana

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

                 MAXINE WATERS, California, Chairwoman

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






























                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 20, 2008................................................     1
Appendix:
    June 20, 2008................................................    25

                               WITNESSES
                         Friday, June 20, 2008

Cohen, Ronald S., Ph.D., Chief Executive Officer, United Cerebral 
  Palsy of Los Angeles, Ventura, and Santa Barbara Counties......     9
O'Hara, Ann, Associate Director, The Technical Assistance 
  Collaborative, on behalf of the Consortium for Citizens with 
  Disabilities Housing Task Force................................    10
Paulauski, Tony, Executive Director, The Arc of Illinois.........    13
Randall, Diane, Executive Director, Partnership for Strong 
  Communities....................................................     7
Shelburne, Mark H., Counsel & Policy Coordinator, North Carolina 
  Housing Finance Agency.........................................    12

                                APPENDIX

Prepared statements:
    Cohen, Ronald S..............................................    26
    O'Hara, Ann..................................................    31
    Paulauski, Tony..............................................    37
    Randall, Diane...............................................    43
    Shelburne, Mark H............................................    45

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of the American Network of Community 
      Options and Resources (ANCOR)..............................    49
    Written statement of John Garvin, U.S. Department of Housing 
      and Urban Development......................................    51
Murphy, Hon. Christopher S.:
    Written statement of Mike Fitzpatrick, Executive Director, 
      National Alliance on Mental Illness, in support of H.R. 
      5772.......................................................    55





















 
                     H.R. 5772, THE FRANK MELVILLE
                           SUPPORTIVE HOUSING
                         INVESTMENT ACT OF 2008

                              ----------                              


                         Friday, June 20, 2008

             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., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Waters, Cleaver, Green, 
Clay, Murphy; Capito and Biggert.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order.
    Good morning, ladies and gentlemen. I would like to thank 
Ranking Member Capito, who just came in, and the members of the 
Subcommittee on Housing and Community Opportunity who will join 
me for today's hearing on H.R. 5772, the Frank Melville 
Supportive Housing Investment Act of 2008.
    I am looking forward to hearing from the witnesses today 
because the Section 811 program is such a cornerstone of our 
Federal response to the needs of our Nation's vulnerable 
disabled households. I also want to thank Mr. Murphy for his 
work in crafting H.R. 5772, which is designed to ensure that 
the Section 811 program maintains its vitality.
    Established as part of the Cranston-Gonzalez Affordable 
Housing Act of 1990, the Section 811 program is nearly 
identical to the older Section 202 program, which previously 
provided supportive rental housing for persons with 
disabilities. The Section 811 program is the only Department of 
Housing and Urban Development permanent supportive housing 
program exclusively serving persons with disabilities.
    The Section 811 program has three components: capital 
advances; project rental assistance; and tenant-based rental 
assistance. HUD provides no-interest capital advances to 
nonprofit sponsors to develop rental housing coupled with 
flexible, accessible, supportive services for persons with 
disabilities. A project sponsor does not have to repay the 
capital advance if the project serves very-low-income persons 
with disabilities for at least 40 years.
    In connection with a capital advance, HUD provides project-
based assistance through the Project-Based Rental Assistant 
Contract, or PRAC, which covers the difference between the HUD-
approved operating cost and the amount residents pay in rent.
    The program also provides for tenant-based or mainstream 
vouchers which are available to families who are income-
eligible and enable a person with disabilities to lease private 
rental housing. Although the tenant-based voucher program was 
authorized under the Housing and Community Development Act of 
1992, it was not funded until Fiscal Year 1997, when it became 
a 25 percent set-aside within the annual Section 811 
appropriation.
    The Section 811 program--grants, project rental assistance, 
and mainstream vouchers collectively--was funded at $237 
million in funding year 2008, and the President requested $160 
million for Fiscal Year 2009, a cut we are fighting during this 
appropriations process.
    I am pleased to support H.R. 5772 because the bill makes 
key improvements to this program.
    First, it addresses a long-standing problem in the 
mainstream tenant-based assistance program, namely, that for 
many years HUD had no way to track these vouchers. Many believe 
that, upon turnover, these vouchers were not redistributed to 
disabled persons. The bill would transfer these vouchers to the 
Section 8 Housing Choice Voucher program, with the requirement 
that HUD develop guidance to ensure that existing and future 
appropriated vouchers continue to serve eligible persons with 
disabilities.
    Second, as H.R. 2930, the Supportive Housing for the 
Elderly Act--which this subcommittee considered and the House 
passed last year--did for the 202 program, H.R. 5772 brings 
Section 811 into the modern world of mixed housing finance. To 
date, program sponsors have been unable to take full advantage 
of such finance options due to internal program delays at HUD 
as well as what are often contradictory program requirements.
    Unfortunately, right now, HUD's administration of the 
Section 811 program imposes on potential sponsors all the 
inflexibility and bureaucracy that might conceivably be 
justified in a funding stream that pays the project's full 
freight in a program that no longer does. H.R. 5772 wisely 
delegates grant processing in mixed-finance Section 811 
projects to State housing finance agencies, which have the 
experience necessary to combine different financing streams and 
can more effectively process these grants and allow project 
sponsors to more efficiently bring new projects on line.
    Third, the bill ensures that the physical structure and 
services offered by a project don't deteriorate over time due 
to inflation or escalating cost. H.R. 5772 requires the 
Secretary, upon renewal of a project-based rental assistance 
contract, to adjust the annual contract amount to provide for 
reasonable cost increases, including adequate reserves, 
supportive services, and services coordinators as well as for 
certain emergency situations.
    Finally, the bill authorizes an innovative project-based 
rental assistance demonstration program designed to leverage 
supportive services funding. HUD will award funds to State 
finance agencies to enter into contracts with project owners to 
provide project-based rental assistance for units for persons 
with disabilities.
    Eligible projects are new or existing projects which have 
received capital funds from other private or public funding 
sources and have entered into agreement with the State or local 
agency responsible for health and human services to assist in 
outreach and to make available appropriate services for 
tenants.
    I think this has exciting potential, and I look forward to 
hearing what the witnesses think of it and other elements of 
the bill.
    I would now like to call on Ranking Member Capito for her 
statement.
    Mrs. Capito. Thank you, Madam Chairwoman, and I would like 
to thank the witnesses for this important hearing today.
    I have seen firsthand the good works that this program 
provides in my own district, and I am sure it is the same for 
Members across the Nation. My good friends, Representative 
Chris Murphy and Representative Judy Biggert, should be 
commended for their leadership in introducing this legislation.
    The Section 811 program allows persons with disabilities to 
live independently in the community by increasing the supply of 
affordable rental housing with the availability of supportive 
services. I have visited several facilities.
    As with the only Federal housing program solely dedicated 
to assisting very-low-income people with serious and long-term 
disabilities, Section 811 is considered to be of critical 
importance. In fact, Congress has maintained in previous years 
the same level funding of $237 million for Section 811.
    The Section 811 program does face some programmatic issues, 
and this legislation will restructure Section 811 in a way that 
provides for a continued creation of permanent supportive 
housing and provides rental assistance that would make housing 
affordable for those very-low-income folks with disabilities.
    Included in the bill are: Terminating Section 811's 
mainstream tenant-based rental assistance program and 
transferring the rental vouchers to the Section 8 housing 
choice voucher program and tracking the vouchers to ensure that 
they are issued to low-income people with disabilities; two, 
modernizing the capital advance program; three, establishing a 
project rental assistance demonstration program; four, revising 
the definitions of group home, persons with disabilities, and 
supportive housing for persons with disabilities; and five, 
repealing the authority of the Secretary to waive size 
limitations on group home and independent living facilities.
    I would like to thank our witnesses for taking time from 
their busy schedules to join us and I look forward to hearing 
their input on this legislation.
    I yield back the balance of my time. Thank you.
    Chairwoman Waters. Thank you very much.
    I now recognize Mr. Green for 3 minutes.
    Mr. Green. Thank you, Madam Chairwoman, and I thank the 
ranking member. I also thank Mrs. Biggert for her efforts.
    Madam Chairwoman, I am eager to hear from witnesses because 
I am concerned about the Section 811 recipients who are to 
receive these vouchers possibly being put in a position where 
they are not getting the amount of service and help that they 
merit. Because when the vouchers were reissued, some 
nondisabled persons may have received some of the services 
intended for disabled persons. That is of concern, and I am 
trusting that this legislation will cure these ills that the 
program is suffering from.
    I am also concerned about the gap financing that some of 
the persons who are interested in providing the services are 
having to experience, and the project-based rental assistance-
only demonstration is something that I would like to hear the 
witnesses give us opinions about.
    So I thank you, and I yield back the balance of my time.
    Chairwoman Waters. Thank you very much.
    Representative Biggert for 3 minutes.
    Mrs. Biggert. Thank you, Madam Chairwoman, for holding this 
hearing on a bill that Congressman Murphy and I introduced in 
April to modernize the Section 811 program.
    Let me just start by thanking my colleague, Congressman 
Murphy, for his work on this legislation; and I would urge my 
colleagues to cosponsor the bill.
    I would also like to thank each of our witnesses for 
joining us today. Your appearance here is a testament to your 
dedication to reform the Section 811 program but, more 
importantly, to enhance the quality of life for some of the 
neediest members of our communities. Thank you for what you do.
    Particularly, I would like to single out my constituent and 
witness today, Tony Paulauski from Tinley Park, Illinois; and I 
would also like to thank all of the wonderful people in 
Illinois who work at Trinity Services, Cornerstone Services, 
the State of Illinois, especially those volunteers, parents, 
and other members of the community who have reached out to me 
and expressed their support for this legislation.
    For the past 4 years, this Administration proposed cuts to 
the Section 811 program. I sent letters to the leadership of 
the Appropriations Committee asking them to fully fund it. Why? 
Because Section 811 is the only Federal program that provides 
funding for housing and vouchers for people with disabilities 
seeking to live as independent members of the community.
    Each year, Congress has decided to fully fund the Section 
811 program, but this year is the first time we have gone 
beyond that appropriation funding effort and introduced a bill 
to modernize the program, which hasn't been updated in over 
1\1/2\ decades. And I won't delve into the details of this very 
technical legislation. I will leave that to the witnesses.
    However, I would like to mention that this bill is critical 
to the goal of increasing the number of affordable units for 
people with disabilities. How? It maximizes Federal dollars by 
better aligning the Section 811 program with other Federal, 
State, and local funding sources, allowing nonprofit sponsors 
to more easily leverage additional funding. So the bill 
streamlines the program, and, for example, it tasks HUD with 
simplifying its slightly lengthy guidelines, which are over 400 
pages long. And, in addition, it delegates grant authority to 
States and local housing authorities, which many proponents of 
this bill suggest will make the program more efficient.
    These and many other reforms in the legislation certainly 
will make the program more user-friendly and attractive to 
those nonprofit sponsors that develop permanent housing for 
people with disabilities.
    Finally, I am pleased that the bill allows for a new 
demonstration project that some estimate will allow for the 
development of as many as 3,000 new units of housing for non-
elderly persons with disabilities. That is really the tip of 
the iceberg, but it is a start.
    So, with that, I look forward to hearing from today's 
witnesses, and I yield back.
    Chairwoman Waters. Thank you very much.
    Mr. Clay for 3 minutes.
    Mr. Clay. Madam Chairwoman, I have no opening statement, 
but I would like to yield to Mr. Murphy.
    Chairwoman Waters. Certainly. Our author is here. Mr. 
Murphy.
    Mr. Murphy. Thank you very much, Mr. Clay, and thank you to 
the chairwoman for her great work on bringing this piece of 
legislation forward and especially to my good friend, Mrs. 
Biggert, for her really career-long advocacy on behalf of 
supportive housing. It is an honor to co-sponsor this bill 
today.
    As our witnesses will testify here today, the Section 811 
program is still the only Federal housing construction program 
that helps very-low-income people with serious and long-term 
disabilities live independently in the community.
    Unfortunately, as we will also hear today, the program 
hasn't lived up to its full potential. By some accounts, the 
current Section 811 program is producing less than 1,000 units 
of supportive housing each year, and it is plagued by many 
bureaucratic hurdles which have impeded eligible individuals 
from attaining the services that they deserve.
    Today, we will hear from Diane Randall from Connecticut's 
Partnership for Strong Communities about the specific need in 
Connecticut, underscored by a recent article that appeared in a 
paper in my district entitled, very simply, ``Death at Towers 
Highlights Need for Supportive Housing.''
    Only a few weeks ago, a mentally ill individual living in 
non-supportive senior housing in Meriden, Connecticut, was 
killed after an incident with police. This deeply disturbing 
incident underscored the number of mentally ill individuals, 
non-elderly, living today in a State like Connecticut, 
representative across the country in housing, which simply does 
not have the support to keep them well, and to get them the 
services that they deserve, often with very disastrous 
consequences.
    The need is great, and our challenge is certainly 
significant, but we can't allow this program to continue to 
drift. It can be better, and I think our legislation today, the 
Frank Melville Supportive Housing Investment Act, will make 
significant progress towards addressing these challenges. Our 
reforms here will remove existing barriers in the Section 811 
program, allowing Federal funding to be used to leverage 
additional State, local, and private financing to build even 
more units of supportive housing across this country, in 
addition to making some very important changes within the 
existing voucher program, to free that money up for capital 
costs and, as was mentioned before, putting in place a very 
important demonstration program that will allow dollars to flow 
into State-backed programs as well.
    Lastly, Madam Chairwoman, I would just like to say a word 
about the name attached to this bill today; Frank and Allen 
Melville happened to live in my district in northwestern 
Connecticut, but their reach is national. In fact, at least two 
of the groups represented here today are funded through the 
Melville Charitable Trust, which has made its focus nationally 
reducing homelessness and building more supportive and 
affordable housing.
    Unfortunately, Frank Melville passed away recently. He has 
continued to be survived by his wife, Allen, and it is a 
testament to their work to build an advocacy community, 
represented in part here today, surrounding the issue of 
supportive housing, to have his name associated with it. I 
thank the chairwoman for allowing that to happen.
    I yield back the balance of my time.
    Chairwoman Waters. You are certainly welcome.
    We have no other members with opening statements. I would 
like now to introduce our first panel, and I am going to call 
on Representative Biggert to introduce a very special witness 
who is here today.
    Congresswoman?
    Mrs. Biggert. Thank you, Madam Chairwoman.
    I am honored to introduce a constituent, Tony Paulauski 
from Tinley Park, Illinois. Since 1991, he has served as the 
executive director of The Arc of Illinois, which is a nonprofit 
organization that advocates on behalf of persons with 
developmental disabilities.
    The Arc was founded in 1950 by parents whose children had 
developmental disabilities. It's a one-of-a-kind organization. 
The Arc seeks to ensure stability and supportive services for 
individuals with disabilities.
    During his tenure, Mr. Paulauski has led efforts to better 
educate members of our community about the importance of 
providing support services to people with disabilities, and, in 
addition, he has led efforts on a number of State legislative 
initiatives regarding the waiting list, Emily's Intervention, 
transition, staff wages and benefits, and the elimination of 
the death penalty for the mentally ill.
    Prior to serving as the executive director, he served for 
19 years as executive director of a local Arc of Illinois 
chapter and was a high school special education teacher. He is 
a native of Chicago and graduated from Northern Illinois 
University in DeKalb; and, as I mentioned, he resides in Tinley 
Park, in my district. So I am honored to represent him in 
Congress.
    Welcome, Mr. Paulauski.
    Chairwoman Waters. Thank you very much.
    And now I get the opportunity to introduce Mr. Ronald S. 
Cohen, Ph.D., of United Cerebral Palsy, which is doing great 
work in my home City of Los Angeles. Ronald Cohen has been the 
chief executive officer of United Cerebral Palsy of Los 
Angeles, Ventura, and Santa Barbara Counties since 1987.
    Prior to the CEO position, Cohen served as clinical 
director for UCP. In 1980, he established the first community-
based group homes for non-ambulatory children and adults with 
behavioral disorders in the State of California. Some of the 
first individuals in 1980 leaving the developmental centers are 
being treated in those UCP homes.
    Under Cohen's leadership, UCP has developed 32 homes and 
rent-subsidized apartments consisting of 278 units. A number of 
the tenants came from the State Developmental Centers.
    Mr. Cohen is widely regarded as an expert on developing 
housing for special needs populations. He has testified before 
the United States Congress before, as well as before the 
California State Legislature on alternatives to 
institutionalization.
    Thank you very much for being here today, Dr. Cohen.
    Also, we have serving on the panel today: Diane Randall, 
executive director, Partnership for Strong Communities; Ann 
O'Hara, associate director, The Technical Assistance 
Collaborative; and Mark Shelburne, counsel & policy 
coordinator, North Carolina Housing Finance Agency.
    Welcome, panelists. Thank you for appearing before the 
subcommittee today, and without objection, your written 
statements will be made a part of the record.
    You will now be recognized for a 5-minute summary of your 
written testimony, and we will start with Ms. Diane Randall.

STATEMENT OF DIANE RANDALL, EXECUTIVE DIRECTOR, PARTNERSHIP FOR 
                       STRONG COMMUNITIES

    Ms. Randall. Thank you very much, Chairwoman Waters, and 
thanks to all of the committee for your good work on behalf of 
affordable housing in our country.
    My name is Diane Randall and I am the executive director of 
the Partnership for Strong Communities, which is a Hartford, 
Connecticut, based housing policy and advocacy organization. I 
am very pleased to be here today.
    The changes to the Section 811 program that are proposed in 
H.R. 5772 offer valuable improvements that will have life-
changing benefits for thousands of vulnerable citizens in this 
country. It will create new opportunities for permanent 
supportive housing in mixed-income communities which will 
provide a better life for all of those people.
    In Connecticut, we have a robust and dedicated cadre of 
State agency leadership, housing developers, and social service 
providers who have a demonstrated track record in building and 
managing permanent supportive housing that combines affordable, 
extremely-low-income persons with available social services 
that foster independence through employment and other social 
services.
    We have a Statewide advocacy campaign that our office runs 
called Reaching Home, and that campaign has a goal of creating 
10,000 units of permanent supportive housing in a 10-year 
period. It is an ambitious goal and, because of that huge 
demand, we count on every available resource from the State, 
Federal, and programs like this. The improvements that you are 
making in Section 811 will do a great deal to help us achieve 
that goal.
    I am particularly intrigued by the demonstration component 
of the project-related rental assistance contract. It is an 
effective tool to couple with existing capital resources for 
development, such as low-income housing tax credits and HOME 
funds, in order to provide the operating subsidies that will 
make housing affordable for people who live on very restricted 
incomes.
    I serve as the chair of the mortgage committee of our State 
Housing Finance Agency, and I can tell you that the competition 
for the 9 percent low-income housing tax credit is very fierce. 
We are overprescribed probably three to one on what is 
available, and most of the housing being created under those 9 
percent credits is serving people at the 60 percent of area 
median income. It is very difficult to serve people at 30 
percent or below; and, in fact, anyone who is living on Social 
Security income alone in our State is below 30 percent of 
median income.
    We have successfully used tax credits through some other 
programs, using some State-based rental assistance to combine 
with low-income housing tax credits, to create permanent 
supportive housing. So this new resource that is proposed in 
this bill will be of great assistance to us to keep producing 
even more housing.
    The other component that I think is particularly compelling 
is that this proposed legislation puts the Section 811 program 
in line with best practices in community and housing 
development by promoting housing in mixed-income communities. 
It will include putting people with disabilities and people 
without disabilities in housing together, which is a good 
thing.
    Another important feature is transferring the mainstream 
tenant-based rental assistance vouchers and all of the future 
incremental vouchers for people with disabilities to the 
Section 8 Housing Choice Voucher program.
    I want to just comment on the amendments that clarify 
supportive housing as permanent and clarify the term ``person 
with disabilities'' to be consistent with HUD's definition. We 
have found in our experience that in talking to tenants who 
have been homeless, people who have disabilities, that being 
able to move into housing that is considered permanent has a 
remarkable effect on their stability and their ability to move 
through recovery, particularly for people with psychiatric 
disabilities. In fact, people have a home, rather than a 
transitional type of resting spot, until they achieve some sort 
of additional goal.
    In Connecticut, one of the things that we have seen is that 
the benefits for creating this kind of permanent supportive 
housing are not only for the individual but they also have a 
positive benefit on the public health system. People who have 
access to permanent supportive housing, we have found a 
significant reduction in inpatient Medicaid costs for those 
individuals who have access to housing as opposed to some other 
sort of homeless situation. Obviously, it is less expensive to 
create this kind of housing than it is to have people in 
institutional settings such as jails or prisons or nursing 
homes.
    Finally, I want to thank Representatives Murphy and Biggert 
for naming this effort to increase the supply of permanent 
supportive housing after Frank Melville. It has been my 
privilege to work closely with the Melville Charitable Trust 
for over a decade. Mr. Melville; his wife, Allen Melville; and 
their entire family have dedicated millions of dollars of their 
own wealth in philanthropic giving to ending the root causes of 
homelessness and supporting the type of systemic change that 
allows people with psychiatric disabilities and other chronic 
health conditions to achieve stability and recovery. The Frank 
Melville Supportive Housing Investment Act of 2008 includes 
provisions that are not only significant to making this program 
more workable but also to increasing housing and community 
opportunities for thousands of Americans.
    [The prepared statement of Ms. Randall can be found on page 
43 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Dr. Cohen.

 STATEMENT OF RONALD S. COHEN, PH.D., CHIEF EXECUTIVE OFFICER, 
   UNITED CEREBRAL PALSY OF LOS ANGELES, VENTURA, AND SANTA 
                        BARBARA COUNTIES

    Mr. Cohen. Thank you, Madam Chairwoman, for the opportunity 
to testify on the Section 811 Housing for Persons with 
Disabilities Program and why H.R. 5772 is needed. I am Ron 
Cohen, the CEO of United Cerebral Palsy (UCP) of Los Angeles, 
Ventura, and Santa Barbara Counties.
    UCP has developed 22 HUD projects over the years, and 12 of 
those have been the Section 811 capital advance grants to build 
apartments and homes for persons with significant developmental 
disabilities. Our buildings vary in size from 6 to 24 units, 
and they are integrated in neighborhoods throughout four 
Southern California counties.
    For every project we do, we must raise additional funds to 
fill the gap between the HUD grant and the true cost of 
construction, especially for our units, which are fully 
accessible. If one of our tenants can't hold a key in their 
hand to open their front door, every door is infrared wired. So 
we put a switch on their wheelchair that will coordinate 
whatever part of their body they can voluntarily move, whether 
it be a finger, a toe, a head, a knee, and they hit that switch 
and the doors open and close automatically. We have wide 
doorways. We have roll-in showers. We have tilted mirrors and 
elevators. These units literally change lives.
    Steven S. is 42 years old, and he lived in a State hospital 
since the age of 3; he now lives in a UCP HUD apartment in 
Santa Monica. Thirty-nine years behind institutional walls, and 
today he is making decisions about what he eats for dinner, 
when he eats dinner, and what local neighborhood Starbucks he 
will go to in his power wheelchair.
    We know that housing development takes time, but this 
Section 811 process is over the top. In fact, they built the 
Staples Center in Los Angeles, where the Lakers play, faster 
than I can build a 13-unit HUD apartment complex. That is why 
we need reforms. Our projects, our small Section 811 projects, 
have taken 5 to 8 years to build, and much of that process that 
bogs us down is just moving paperwork.
    One of our projects was funded in September 1995, and was 
not eligible for occupancy until October of 2003, a full 8 
years after receiving the HUD award. The delays cost money. The 
costs of building materials go up, and the charity is the one 
that is left holding the bag.
    For our Burbank project, we submitted what is called a firm 
commitment application. We submitted that 9 months after we 
received the HUD award, and that means we are ready for 
construction. All entitlements have been completed. We have all 
the permits. We are ready to go. We are ready to bring in the 
bulldozers, and we submitted that paperwork to HUD, and 27 
months later, they completed the paperwork.
    Another Section 811 project took 29 months. That is almost 
2\1/2\ years. We were ready to build, and we had to wait 2\1/2\ 
years.
    What that did to the Burbank project, was it increased the 
cost 25 percent on a $4 million project, a million extra 
dollars. We are left again as the deep pockets. For every 
dollar United Cerebral Palsy has to spend on bricks and mortar 
because of the delay, that dollar, that million dollars, comes 
out of program services, comes out of feeding and bathing and 
taking care of people.
    We need to speed up the process. H.R. 5772 will help. It 
changes some program guidance and will help with the red tape 
that we have to go through today.
    There is a critical need for affordable housing all over 
this country, and especially in Los Angeles. But affordable 
housing is becoming unaffordable for the nonprofit developer 
who uses the Section 811 project. We need change. I urge you to 
pass H.R. 5772, and I thank you for your commitment.
    [The prepared statement of Dr. Cohen can be found on page 
26 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Ann O'Hara, from The Technical Assistance 
Collaborative.
    Ms. O'Hara. Good morning.
    Chairwoman Waters. Good morning.

  STATEMENT OF ANN O'HARA, ASSOCIATE DIRECTOR, THE TECHNICAL 
   ASSISTANCE COLLABORATIVE, ON BEHALF OF THE CONSORTIUM FOR 
         CITIZENS WITH DISABILITIES HOUSING TASK FORCE

    Ms. O'Hara. Thank you, Madam Chairwoman, Representative 
Biggert, and all the members of the committee.
    My name is Ann O'Hara, and I am associate director of The 
Technical Assistance Collaborative, a nonprofit organization in 
Boston. I would like to thank you for the opportunity to 
testify today on behalf of the Consortium for Citizens with 
Disabilities Housing Task Force. I am here to strongly endorse 
the Frank Melville Supportive Housing Investment Act which will 
enact new policies and reforms to the Section 811 program.
    The CCD Housing Task Force, which includes national groups 
like the National Alliance on Mental Illness, the Arc of the 
United States, United Cerebral Palsy, the National Disability 
Rights Network, and many other groups, believes this 
legislation is essential to revitalize and improve Section 811, 
a program which in recent years has had many problems and now 
produces only 1,000 or fewer new units each year. In fact, in 
2006, the program only produced 700 new units.
    The program, as you have already heard, is inefficient, 
plagued with red tape, and most importantly, doesn't reflect 
the desire of many people with disabilities to live in 
integrated housing of their choice. It also doesn't reflect 
best practices in current Medicaid and other State-funded 
community support programs.
    The legislation is important also because the need for 
supportive housing has never been greater. TAC and CCD studies 
show that the average one bedroom fair market rent in 2006 was 
more than the entire income of a person with a disability who 
relies on SSI.
    Today, over 4 million adults with disabilities in this 
country rely on SSI and can't afford housing unless they have 
deeply subsidized assistance from the Federal Government. 
Because there is no supportive housing available, these people 
remain unnecessarily in nursing homes, State institutions, and 
many live at home with aging parents who are now in their 70's 
and 80's and have no idea where their adult child will live 
after they can no longer provide housing for them.
    State governments are struggling to meet the mandates of 
the Supreme Court Olmstead decision, which affirmed that States 
must have an effective plan to assist people with disabilities 
who remain unnecessarily in these restrictive settings.
    The Section 811 program is the primary solution to this 
serious housing crisis. This bill will end--or if not end at 
least reduce--the bureaucratic red tape that has damaged this 
program's reputation and will help create many more integrated 
housing opportunities that people with disabilities prefer. It 
will implement an exciting demonstration program that will 
leverage substantial investment of Federal low-income housing 
tax credits and home funding. It will reduce the time it takes 
to get Section 811 units online and, most importantly, could 
create 3 to 4 times the number of units the program is creating 
now.
    It also resolves long-standing concerns with the Section 
811-funded mainstream voucher programs. These 14,000 vouchers 
are administered as Section 8 vouchers primarily by public 
housing authorities and have never been used to create 
supportive housing. The lack of a tracking system means that we 
don't even know if all these vouchers are being used, but 
evidence suggests that at least some of them have been given to 
nondisabled households. And even though these vouchers are 
funded and renewed out of Section 811, many PHAs stopped 
leasing vouchers funded out of Section 811 during the Section 8 
fiscal crisis because they thought the vouchers were funded out 
of Section 8. This bill resolves all those problems by 
permanently transferring these 14,000 vouchers to the Section 
811 Housing Choice Voucher program.
    We are confident that H.R. 5772 will revitalize this dying 
program and stimulate efforts to create needed supportive 
housing throughout the country.
    We are incredibly indebted to the State of North Carolina, 
whom you will hear from in a minute, and also the State of 
Louisiana, that have both already adopted policies that reflect 
the PRAC demonstration program. In Louisiana, with hurricane 
recovery funding, they are well on their way to producing 3,000 
units of supportive housing. So the PRAC demonstration program 
is based on actual experience in several States. It also is 
important to note that already six to eight other States have 
come forward to say that they would be pleased to implement 
this model.
    Finally, I would like to thank you for honoring Frank 
Melville with this bill. We look forward to working with you to 
make this bill a reality, and I thank you for all of your work 
on affordable housing in this country.
    [The prepared statement of Ms. O'Hara can be found on page 
31 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Mark Shelburne, North Carolina Housing Finance Agency. 
Good morning.

 STATEMENT OF MARK H. SHELBURNE, COUNSEL & POLICY COORDINATOR, 
             NORTH CAROLINA HOUSING FINANCE AGENCY

    Mr. Shelburne. Good morning, Madam Chairwoman, and members 
of the subcommittee. Thank you very much for this opportunity 
to speak in support of H.R. 5772.
    My name is Mark Shelburne. I am counsel & policy 
coordinator with the North Carolina Housing Finance Agency, and 
I come today bringing good news.
    The demonstration program in H.R. 5772 is modeled after 
North Carolina's successful approach of leveraging the Federal 
low-income housing tax credit to create permanent, accessible, 
affordable, independent community supportive housing. So why I 
am here today is to describe basically how that works.
    First, let me provide a little bit of background. The 
Supreme Court's Olmstead decision provides a mandate for States 
to serve people with disabilities in the most integrated 
settings possible. A crucial barrier to meeting that duty is 
the lack of affordable housing.
    In North Carolina, supplemental security income provides 
only $637 a month of income. That is not enough to live in any 
affordable housing program, including tax credits.
    Only with supplemental resources like the demonstration 
program in H.R. 5772 is it possible for these mainline 
affordable housing resources to reach people with disabilities, 
and in North Carolina we have proven that it is possible to do 
so by requiring housing credit property owners to set aside 10 
percent of the units in their properties for people with 
disabilities, to have those properties form a connection with 
the local human services community by creating a project-based 
rental assistance program and by working in partnership, very 
close partnership, with our State Department of Health and 
Human Services.
    There is a crucial component of this work that is 
replicated in H.R. 5772 in linking the housing with the 
services. All housing credit property owners have to 
demonstrate a partnership with a local lead service agency, and 
that lead agency has two responsibilities. One is to refer 
prospective tenants to the property and the other is to act as 
a referral agent and/or to coordinate services to be sure that 
these referred tenants have individualized and voluntary 
support that they may need.
    The owners' responsibility is pretty simple. They have to 
keep these units open for these referrals for short periods of 
time. And that's it. They don't provide disability related 
services. They have the same landlord/tenant relationship with 
these individuals that they do with the other 90 percent of the 
units.
    So what have been our outcomes? First is a proven track 
record of success. We have also had tremendous leveraging. The 
best measure of success is the number of people housed. In 7 
years, we have created 1,200 units of permanent supportive 
housing; and of those, well over half are built. The rest are 
under construction, which means 640 households in North 
Carolina with permanent and serious long-term disabilities have 
affordable housing.
    Success is also measured by recognition by others. We have 
received two national awards, and the set-aside has been 
replicated in the policies of three States. The efficiency 
comes from building units that were really going to be built 
anyway and accessing those. We use existing underwriting and 
allocation policies for the tax credit to create those 1,200 
units; and along the way those units have leveraged 
approximately $80 million of Federal equity, Federal housing 
credit equity from investors.
    The operating subsidy program that we operate does require 
some additional funding. However, it is substantially less 
expensive than the alternatives of continued homelessness and 
facility-based residential services. And the average cost to 
the State, which works out to about $215 per unit per month, is 
about two-thirds of the cost of our State-administered project-
based Section 8 portfolio. So the cost there is really a 
tremendous efficiency.
    The other efficiency operates at the property level. These 
tax credit owners and management companies do what they do 
best: They operate and manage property. The services community 
does what they do best: They provide support to individuals and 
families in their properties.
    So the bottom line is that if Congress enacts H.R. 5772, 
our experience in North Carolina shows that it will work.
    Thank you very much, and I look forward to any questions.
    [The prepared statement of Mr. Shelburne can be found on 
page 45 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Tony Paulauski.

  STATEMENT OF TONY PAULAUSKI, EXECUTIVE DIRECTOR, THE ARC OF 
                            ILLINOIS

    Mr. Paulauski. Madam Chairwoman, Representative Biggert, 
and members of the committee, thank you for this opportunity.
    In Illinois, there are 220,000 infants, children, and 
adults with developmental disabilities. Let me tell you a 
little bit about why you need to do this important H.R. 5772.
    We have a number of chapters that are involved with Section 
8 and a few that are involved with Section 811. The ones that 
are involved with Section 811 love the flexibility and the 
opportunity that this program provides for the people who 
reside in these housing situations.
    You know that there is a national crisis here for people 
who are poor and people who have disabilities. We don't have to 
go into that. But, in Illinois, we rank 51st out of 51 in the 
development of small community living arrangements for 6 people 
or less. We need more--as the other panelists said, more 
supports like Section 811. In Illinois, we have 20,000 people 
on a waiting list, 7,000 of whom are looking for housing 
situations. Four hundred caregivers are over the age of 70 and 
in their 80's.
    In order to access housing in Illinois, you have to be in a 
crisis situation, so families have to expose their most 
vulnerable moments and prove that they are desperate to get 
these services.
    Take, for example, what we call the situation with Melanie 
and her daughter Sara. How terminal is terminal? Melanie was a 
single mother in her 50's, the primary caregiver of her adult 
daughter. Melanie and Sara lived in Orland Park. Melanie was 
working with one of our local chapters and was in the final 
stages of cancer. She needed to know that her daughter was 
going to be taken care of. The State was considering placement 
of Sara in some community living situation, but they needed a 
document that this was truly a crisis situation. Finally, the 
State did act, and Sara is in a home, and shortly after Sara 
moved to that home, Melanie passed away. That is the face of 
these important issues that you folks deal with.
    People with developmental disabilities are also very poor. 
They experience a 90 percent unemployment rate. They rely on 
public benefits and community services such as Section 811.
    The majority--there are 30,000 individuals in Illinois who 
are primary caregivers over the age of 60. So the importance of 
this program can't be understated. People who care for these 
children and their adult children at home are true American 
heroes. Families are the major providers of services in not 
only Illinois but the United States. Often, one parent resides 
in the home just to take care of the child or the adult person. 
They give up employment, they sacrifice retirement, and they 
also experience high rates of divorce because of the pressure 
that is put on them to support their children at home.
    There are many success stories. Community services and 
supportive housing such as Section 811 have dramatically 
impacted lifestyles of people with disabilities, as has been 
pointed out here. We ask you, as Members of the Congress, to 
not only pass this important legislation, but to also become 
co-sponsors and show support for your families.
    We love the aspects of the Project Rental Assistance 
Contract and the demonstration program, and the only criticism 
we have is that we need to see more than the 1,000 units that 
are now available, only 33 of which are going to Illinois.
    We also like the capital PRAC funds which are combined with 
the Federal tax credits and create the integrated rental 
projects that we need and all support here. The flexibility, 
the innovation of Section 811 is one that we urge you to 
support by passing this out of committee.
    Thank you so much.
    [The prepared statement of Mr. Paulauski can be found on 
page 37 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I would like to thank each of you for your testimony, and I 
would like to thank you for taking time from your lives and 
your schedules to come to Washington, D.C., to provide us with 
information that will be helpful in passing this most important 
legislation.
    I would like to turn to some questions at this point, but 
let me just say that we did invite HUD to be here today. They 
could not send a witness, but I am going to grant unanimous 
consent to permit HUD to submit written testimony on H.R. 5772, 
and we are asking that they have it in to us within 2 weeks. 
So, without objection, it is so ordered.
    I have a few questions before I turn to the members. Let me 
ask Dr. Cohen about funding. Both the current Section 811 
program and this legislation require nonprofit sponsors to 
finance supportive services outside of Section 811 capital 
advance and project-based rent subsidies. Where do you get 
additional resources to do this?
    Mr. Cohen. For the support services?
    Chairwoman Waters. Yes.
    Mr. Cohen. Well, in the State of California, we have the 
Landerman Act, which creates the regional centers; and I think 
California is the only entitlement State in the country. So our 
folks are entitled to support services, and there are many 
vendors that provide those services, we being one of them, 
also. And the regional center system with State money purchases 
those services, whether it be 5 hours a day that a person might 
need or 24 hours a day like Mr. Steven S. that I mentioned in 
Santa Monica has 24-hour supports.
    Chairwoman Waters. You are absolutely right. I served in 
the State legislature, and I should have remembered the 
Landerman Act and our tremendous services that we provide to 
the developmentally disabled. As a matter of fact, we have and 
I still work with a number of individuals who have small homes 
where they have six, seven, or eight people who live there, and 
they have the regional centers that provide support for all of 
them, and it seems to work very well.
    This legislation would require shifting of underwriting 
from HUD to the State Housing Finance Agency if a Section 811 
sponsor seeks mixed financing. Would this work in California?
    Mr. Cohen. If it can move the process faster, yes. And I 
believe, what I hear, it will move it faster.
    Chairwoman Waters. Have you had any conversations with our 
State Housing Agency about this, and are they willing to work 
directly with the nonprofit disability agencies?
    Mr. Cohen. Our State Housing Agency has been very 
supportive of supporting the development of homes and 
apartments for people with developmental disabilities. In fact, 
we have gotten a number of grants from them. We have one right 
now on a 24-unit project going up in Glendale, which is an 
Section 811 project, yes.
    Chairwoman Waters. That is very good.
    I now recognize Mrs. Capito for questions.
    Mrs. Capito. Thank you, Madam Chairwoman.
    I want to thank the panelists, and I have learned a lot.
    Mr. Cohen, you mentioned in your testimony that the length 
of time to get these projects and to see them to at least 
beginning of completion was excruciating. I can imagine when 
you are looking at different funding sources over the course of 
2\1/2\ years, things really change.
    But I think Mr. Shelburne has talked about the 
demonstration project in North Carolina. Do you think that 
using the model in North Carolina in a national way would help 
to eliminate some of these delays that you have seen and the 
length of the regulatory process at HUD?
    Mr. Cohen. I am not familiar with the model in North 
Carolina. But to move a stack of paper from one--once we give 
it to them, that takes 2\1/2\ years. That's the big delay for 
us, is just moving the stack of paper. And I don't know what 
happens once it goes in the front door. But we sit by our phone 
for 2\1/2\ years waiting for it to come out the back door.
    Mrs. Capito. Mr. Shelburne, in North Carolina, what kind of 
experiences have you had that give us confidence that these 
kinds of reforms are going to work?
    Mr. Shelburne. Well, when you use the Federal low-income 
housing tax credit program, Congress back in 1986 had the 
wisdom to say you have 2 years to build it and--
    Mrs. Capito. Before it goes away.
    Mr. Shelburne. Exactly. And that is an inherent--and what 
you have are owners will look at--for example, if they have a 
12- or 18-month construction schedule, they will get to a point 
where they will realize they are not going to be able to meet 
it, and so they tell the agency they are not going to be able 
to meet it, and they give the resources back to the agency and 
move forward. But that's a rare occurrence. Almost all projects 
do go forward upon getting an award.
    Mrs. Capito. Thank you.
    I have one other question, and anybody can answer this.
    In reading some of the bill's intentions and some of the 
problems I think that have been initiated, what I am asking is 
how large of a problem is it that some of the vouchers that are 
intended for those who have disabilities or low-income 
disabilities move then into the hands of somebody else without 
being tracked? How big a problem is that, and are the solutions 
in this bill something that you think will help address that 
problem?
    Ms. O'Hara. Unfortunately, we don't know the extent of the 
problem. But our concern is that it is a significant problem.
    Mrs. Capito. How does that work? Does that work like the 
family, the person with a disability maybe moves on to a 
different living setting and somebody else in the family can--
    Ms. O'Hara. No. The problem is that these 14,000 vouchers 
are imbedded in the 2 million Section 8 voucher program. And 
unless you have a system at the PHA that tracks those vouchers 
as distinct from Section 8 funded vouchers, and unless you have 
tenant selection of policies that make sure that when a voucher 
does turn over that they reach down into the waiting list to 
find the qualified next person who is disabled, unless you have 
those systems in place, these vouchers are just going to 
whomever is at the top of the list.
    It was a mistake to make this a PHA-focused program. The 
PHAs do not do supportive housing generally; and when you have 
a small drop of water in a big ocean of Section 8, you can't be 
surprised if that gets lost in the big picture.
    Mrs. Capito. That's concerning. I think, obviously, this 
program was created to meet and help a certain segment of our 
population that we all want to reach out and provide not only 
supportive services and housing and all those things and to me 
my hope with this legislation is that we could tighten that 
loophole, because there is obviously a great deal of need. We 
have talked about the people on the waiting list. But for me to 
think that folks who have disabilities, who have so many 
challenges are not able to access the program that is there for 
them is a little discouraging, to say the least.
    So I thank you all very much for your testimony.
    Chairwoman Waters. Thank you very much.
    Mr. Green?
    Mr. Cleaver, go right ahead.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    I only have one question. Frankly, my concerns were 
centered more around HUD, and I am disappointed that they could 
not show up today. I will express my concern; and it is, when 
we are talking about mixed funding, I have some alarm bells go 
off because in my city--I am a former mayor--we ended up in a 
battle with HUD over the fact that the Section 811 program and 
the Section 202 program are so similar that we actually had 202 
projects where they were moving disabled individuals in with 
senior citizens.
    So when you are talking about mixing the funding, I already 
think we have a problem; and I am sure that Kansas City, 
Missouri, is not the only place where that has taken place. I 
want some assurance from HUD--I guess I am talking to the 
walls--that this is not going to take place.
    And I am sure that none of you can answer the question. I 
have expressed it, and I feel better.
    Ms. O'Hara?
    Ms. O'Hara. Yes. In this context, when we speak about mixed 
funding, we are talking about different sources of capital that 
would go to create non-elderly units of supportive housing in 
non-elderly buildings.
    Mr. Cleaver. I understand. And I am saying that HUD has to 
assure us that you are not going to mix the two populations. 
Because they are doing it and creating just unbelievable 
problems.
    You have elderly people, in some instances, trying to deal 
with disabled individuals in the same building. It is a major 
problem. I will take it up with HUD.
    Thank you.
    Chairwoman Waters. Mrs. Biggert.
    Mrs. Biggert. Thank you, Madam Chairwoman.
    Mr. Paulauski, the Administration's budget proposal 
contains a suggested $77 million-dollar reduction in the 
Section 811 funding. I talked about that a little bit earlier, 
that for the last couple of years it has been a reduction. In 
this case, the Administration's proposal calls for establishing 
a leveraged financing demonstration program in order to remove 
barriers, such as duplicative requirements and timelines that 
don't match, and to encourage the use of multiple funding 
sources.
    Could the bill's demonstration program potentially result 
in leveraging sufficient to make up for the reduced funding?
    Mr. Paulauski. I think the simple answer to that is ``no.'' 
I want to point out, thank you for restoring those funds. And I 
understand there is an additional $13 billion that is about to 
be added to that line as well. I don't know if any of the other 
panelists would have a better response to that.
    Mrs. Biggert. Would anybody else like to address that 
issue?
    Ms. O'Hara.
    Ms. O'Hara. I believe that, under the various components of 
this bill, there will be substantial leveraging of funding. I 
think Mr. Shelburne spoke about the extraordinary level of 
funding other than the Section 811 funding that would be used.
    But I must say that with the incredible need that we have 
in this country for supportive housing for the lowest-income 
people, the fact that I know in Illinois there are many people 
in nursing homes who don't need to be there, we need to have 
every penny that we possibly can have in the Section 811 
program, and then we can go out and leverage all of the other 
funds to be able to really increase the number of supportive 
housing units that we are developing around the country.
    Mrs. Biggert. If we really only are serving or have a 
thousand and a little bit more units right now, how long would 
it take to, or how many would be added, let's say, in the next 
year?
    Ms. O'Hara. Well, if this bill is enacted, you could create 
at least 4,000 units with the same amount of money that we are 
now creating 1,000 units.
    But I think what is equally important and what we have 
learned from Louisiana and from North Carolina is that this 
model can also be replicated with State funds, so that I think 
if we can provide the leadership to show that you don't need 
Section 811 funds to create the housing, but Section 811 can be 
a small piece of a much larger financing package, then we could 
create many, many more units over time, and we would see many 
more States step up to the plate to address this issue.
    Mrs. Biggert. Do you have any sense of the number of State 
housing agencies that would be interested?
    Ms. O'Hara. I can give you right off the top of my head 
about 7 States that we know are interested: Illinois; Michigan; 
Arizona; New Mexico; Pennsylvania; Vermont; and Massachusetts. 
Those are places where I just happened to work, and where we 
have already had conversations with housing finance folks about 
this approach.
    There is tremendous excitement because these States have 
been asked by their Medicaid agencies, by their mental health 
agencies, by their developmental disability agencies, for many 
years these housing finance agencies have been asked to help 
deal with the problem of people with disabilities who are in 
institutions and nursing homes, and the housing finance 
agencies haven't had the tools to respond. This bill provides 
them with the tools.
    Mrs. Biggert. Is it anticipated that the processing for all 
projects that include funding from other sources would be 
delegated to a State or local housing agencies?
    Ms. O'Hara. I think that is the proposal, yes. I think that 
with the Section 202 processing, which is also going to be with 
the housing finance agencies, that we will have a critical mass 
of program activity that would be attractive to the housing 
finance agencies to undertake.
     And I agree with Mr. Shelburne that once that happens, we 
will have efficient processing of projects that meet the 
deadlines associated with the tax credit program
    Mrs. Biggert. Thank you.
    Thank you to all the witnesses.
    Chairwoman Waters. Thank you very much.
    Mr. Green.
    Mr. Green. Thank you, Madam Chairwoman.
    Madam Chairwoman, every now and then and again, you just 
have to testify. You just have to kind of let it all out. So 
please forgive me and indulge me, if you would, for just a 
moment because I have this feeling that is overwhelming me.
    I absolutely believe that Mrs. Biggert and Mr. Murphy, that 
they are doing God's work. And I just have to say it. Often the 
well-heeled, the well-to-do, they will always fare well. It is 
the least, the last, and the lost that we really have to work 
hard to help because they don't have the lobbyists, and they 
don't have the support system that others will have. I just 
want to thank the two of them for doing what they are doing 
today because, in my heart, I believe that at some place on the 
infinite continuum that we know as time, we will all have to 
account for our time right here. And I think that you are going 
to get some extra CRA credit for what you are doing today. So I 
thank both of you for what you are doing.
    I would like to address my first question to Mr.--I believe 
it is Shelburne. Is that correct, sir?
    Did you indicate that we are doing this with buildings that 
are already being constructed? Let me just go through this, so 
that I can make what appears to be clear, transpicuously clear. 
You are saying that we have a builder who is already 
constructing apartments, and you will approach this builder and 
say, ``We would like to give you a credit, a tax credit, if you 
will set aside a certain number of units for persons who are 
disabled.''
    Is that the way it is working?
    Mr. Shelburne. Almost. What happens is the developer finds 
a site, for example, and it can accommodate say 64 units, and 
they will then apply to us for the low-income housing tax 
credit to subsidize the construction of those 64 units. And as 
a requirement of receiving those credits, they have to set 
aside 7 of those 64 for people who are referred by the human 
services community.
    Mr. Green. Here is one thing that I suspect you know, but I 
am just picking up. You solve the problem of location when you 
do this. Location has become a real problem in terms of helping 
people with disabilities. For whatever reasons, we have people 
who don't want certain projects in their neighborhood. But by 
placing this within that project, a project that is going to be 
built anyway, you now have the location problem resolved 
because you have it confined within what is a market-based 
venture, generally speaking.
    Has that been your experience?
    Mr. Shelburne. Absolutely. There is still some localized 
opposition to affordable housing in general, but there is never 
any opposition to these 10 percent set-aside units because that 
is never part of the story that is related, because really this 
is just a tax credit property that is providing workforce 
housing.
    So in the event there is localized opposition, you have a 
developer that has the capacity to respond to that.
    Mr. Green. Now, for the record, I would like to do this, 
just so that we will have it in the record. Is it true that 
you, that each of you, that you support this piece of 
legislation? If this is the case, would you kindly extend a 
hand? I don't mean to have you do something so simplistic, but 
I want to be sure we have everybody on record.
    For the record, everyone on this panel supports this piece 
of legislation. I want that to be made known, that we have an 
entire panel. This is a unique occurrence; an entire panel 
supports this piece of legislation, which is important, by the 
way. It is important.
    And, finally, let me just ask this. I know that you have 
given us great information. The insight that you accorded us is 
a blessing. It really is. But is there something more that you 
would have us do, any one of you, to make this piece of 
legislation even better? I think that my colleagues have done 
an outstanding job, but is there something else that anyone 
would want to call to our attention that we might do to tweak 
it. Anyone?
    Yes, ma'am.
    Ms. O'Hara. I would love the report language to make sure 
that HUD throws out all 400 pages of the Section 811 guidance 
that now exists.
    Mr. Green. Report language.
    Ms. O'Hara. Yes. I think that would be very helpful to make 
sure that HUD really does change what their current policies 
are on the processing of these grants.
    Mr. Green. Anyone else?
    Yes, sir.
    Mr. Paulauski. I can't leave it unsaid, more money for the 
program.
    Mr. Green. I think that is a good point.
    I will close with this comment, if I may. Those of you who 
are concerned about 200 pages going in, 2 years to come out, I 
sincerely believe that something will happen in and around 
November of this year that will change that. I just believe it.
    Thank you very much.
    I yield back.
    Chairwoman Waters. Well, Mr. Murphy, in this infinite 
continuum of time, you will be our last questioner.
    Mr. Murphy. I appreciate the points, Mr. Green. I am going 
to need them.
    Let me first, Madam Chairwoman, if I could, just place into 
the record a statement from Mike Fitzpatrick, the executive 
director of the National Alliance of Mental Illness, in support 
of the bill.
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Murphy. Thank you very much.
    Let me first pose a question to Ms. Randall. In 
Connecticut, the Partnership for Strong Communities and through 
the Reaching Home Campaign has put on the table an incredibly 
aggressive goal of, within 10 years, building 10,000 units of 
supportive housing, and you spoke about it a bit in your 
testimony. I just want to step back from the trees a little bit 
to the forest and ask you, from your perspective, a couple of 
years into this campaign, to what you are seeing as the primary 
barriers here. There are a multitude of them, and this 
legislation tries to solve at least a few of them that may 
exist through the Section 811 program, which has limited reach 
as it is today.
    I think it would just be interesting for the committee to 
understand one State's and one advocacy community's experience 
in trying to build out a real network of supportive housing 
units.
    Ms. Randall. Thank you for the question, Representative 
Murphy.
    Let me first start by saying what is working because I 
think that some of the questions that have come previously, we 
also have some experience in Connecticut that is, while we 
don't have a set-aside like North Carolina, we have used some 
State funding coupled with low-income housing tax credits to 
create permanent supportive housing that has been in existence 
for about 10 years. And we have seen remarkable benefit.
    One of the things Connecticut has done is created an 
interagency working group that includes key State human 
services agencies along with our housing finance agency, along 
with the line executive agency that delivers housing services. 
That cooperative relationship has allowed the coupling of 
services with capital financing and with operating subsidies to 
create permanent supportive housing.
    So a program like this refined Section 811 would fit in 
seamlessly. And you should count Connecticut among the housing 
finance agencies that will be also very interested in taking 
advantage of the changes in this program if it passes.
    I think the biggest challenge right now clearly is around 
financial investment in permanent supportive housing. I think 
it is a growing movement. In the next decade, we will see, I 
hope, thousands of units created across this country to address 
not only the needs of people with disabilities or very low 
income, including people who are homeless. I think it will be a 
remarkable change. But it will take a new and significant level 
of investment to both create the housing stock, which 
particularly the demonstration program of this does, but also 
to leverage resources against one another, because I think that 
we can't rely on only Section 811 to create housing for people 
with disabilities.
    It is critical that we use mainstream programs like the 
Section 8 program, the National Housing Trust Fund that is 
currently in the legislation that you are considering through 
the GSE reforms, keep income-targeting to people below 30 
percent of median income. That capital resource could be 
combined with other sorts of, whether it is Medicaid funding or 
some other social service funding, to create permanent 
supportive housing.
    So there are exciting opportunities on the horizon. But 
until that financing and resources come, that won't happen.
    I think the other important work that is happening is the 
kind of technical assistance work that TAC does, that the 
Corporation for Supportive Housing does, that actually helps 
train local providers, the developers, to work with service 
providers, because there is a little bit of effort in there.
    As Mr. Shelburne said, housing developers are good at 
creating houses. They don't manage or they don't provide social 
services. But they do need a working relationship, and that is 
an important factor.
    Mr. Murphy. That actually leads me perfectly into what was 
going to be my second question to Mr. Shelburne on that point.
    You have addressed the financing situation with an 
incredible innovative approach. I am actually interested in 
your testimony that the developers and the financial community 
seem to have not opposed the 10 percent set-aside as you put it 
into place. I would love you to sort of talk a little bit about 
their level of cooperation, but also that point from Ms. 
Randall, because you are relying on developers who may have no 
experience with supportive housing as opposed to the normal 
developer who would, in many cases, be a nonprofit who has some 
social-serving experience.
    I am interested in how you found those set-aside 10-percent 
projects to be from a quality perspective when you have 
developers or owners of the buildings who may not be doing this 
type of supportive housing or social service work in other 
parts of their portfolio.
    Mr. Shelburne. It has really worked out very well.
    The key for getting the development and financial community 
to buy into it, the two keys were, for them, again, to 
understand that their relationship with these units would be 
the same as it is for every other unit. They use standard 
leases. So the tenants have the same rights and 
responsibilities as other tenants in the property. So they knew 
they didn't have to have a different set of systems.
    The other key was of course having the operating subsidy to 
make the units both affordable to the tenants and produce 
enough cash flow for the property to operate.
    The outcomes, in our experience, have been really good. 
What we have seen, and particularly my counterparts at the 
State Department of Health and Human Services have seen, are 
people, when they get into housing, people with disabilities, 
get into stable housing, they do a lot better in many cases 
than their clinicians ever thought they could, just because 
they now have a place that is under their control, that they 
have the same standard lease that anyone in their family has, 
that they really start doing much better.
    If I could add just one quick point in response to that. I 
would be amazed if there are less than 30 States that apply for 
this program, if it is created; it could even be 40 or all 50 
States. Because at every single conference I go to for State 
housing finance agencies, this comes up, every time, in 
multiple sessions. We all want to do this. But what we don't 
have is the operating subsidy to make it work. Because we can 
build the units, but they can't be affordable and also generate 
enough revenue for the owner without some type of operating 
subsidy. That is what we need.
    Mr. Murphy. Well, Mr. Shelburne, I thank you for North 
Carolina's leadership here, and I thank the panel for being 
here, but also being such an integral part of developing this 
legislation. We think we can make it a little better as it 
heads to the Floor, but not much, because you have put so much 
work into it already.
    I thank the Chair for the time.
    Chairwoman Waters. Thank you very much.
    I would like to thank Mr. Murphy and Mrs. Biggert for 
authoring this legislation, and even though I, perhaps, will 
not express it in quite the same manner as Mr. Green, I, too, 
am very appreciative of this legislation, and it will go along 
way toward dealing with helping, I think, some of our disabled 
to live longer and have a higher quality of life.
    As a matter of fact, when Mr. Shelburne mentioned that a 
disabled person could be able, outside of an institution, in 
this independent type living, to be able to decide what they 
want to eat and when they want to eat, it struck me as 
something I had not really thought about. That was a very, very 
pointed, revealing statement.
    I want to thank you all for what you have shared with us 
today.
    Also, I would like to make a correction. Earlier in my 
presentation, I mentioned an amount of money, $160 million in 
the President's budget. That now is $250 million; that has come 
out of our appropriations subcommittee. So I don't want you to 
leave with that misinformation. It is $250 million that has 
been voted out of our subcommittee.
    Having said that, the Chair notes that some members may 
have additional questions for this panel which they may wish to 
submit in writing. Without objection, the hearing record will 
remain open for 30 days for members to submit written questions 
to these witnesses and to place their responses in the record.
    I know that many of the members have already indicated, Mr. 
Murphy and Mrs. Biggert, that they would like to be cosponsors 
on this legislation. So we will make sure that happens.
    This panel is now dismissed. We don't have a second panel 
today. Let me just thank you again.
    Before we adjourn, without objection, ANCOR's written 
statement will be made a part of the record for this hearing.
    I thank you all very much. This hearing is adjourned.
    [Whereupon, at 12:10 p.m., the hearing was adjourned.]

                            A P P E N D I X



                            June 20, 2008



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