    [Senate Hearing 110-979]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-979

    AFFORDABLE HOUSING OPPORTUNITIES: REFORMING THE HOUSING VOUCHER PROGRAM

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

                                    HEARING

                                   before the

                                SUBCOMMITTEE ON
               HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT

                                     OF THE

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

     EFFORTS TO REFORM THE HOUSING VOUCHER PROGRAM, INCLUDING S. 2684, THE
                    SECTION EIGHT VOUCHER REFORM ACT (SEVRA)

                                   __________

                           WEDNESDAY, APRIL 16, 2008

                                   __________

      Printed for the use of the Committee on Banking, Housing, and Urban
                                    Affairs

          Available at: http: //www.access.gpo.gov /congress /senate /
                                senate05sh.html

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    52-443 PDF                       WASHINGTON : 2010

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                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                   CHRISTOPHER J. DODD, Connecticut, Chairman
    TIM JOHNSON, South Dakota            RICHARD C. SHELBY, Alabama
    JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
    CHARLES E. SCHUMER, New York         WAYNE ALLARD, Colorado
    EVAN BAYH, Indiana                   MICHAEL B. ENZI, Wyoming
    THOMAS R. CARPER, Delaware           CHUCK HAGEL, Nebraska
    ROBERT MENENDEZ, New Jersey          JIM BUNNING, Kentucky
    DANIEL K. AKAKA, Hawaii              MIKE CRAPO, Idaho
    SHERROD BROWN, Ohio                  ELIZABETH DOLE, North Carolina
    ROBERT P. CASEY, Pennsylvania        MEL MARTINEZ, Florida
    JON TESTER, Montana                  BOB CORKER, Tennessee

                          Shawn Maher, Staff Director
            William D. Duhnke, Republican Staff Director and Counsel

                        Jennifer Fogel-Bublick, Counsel

                           Dawn Ratliff, Chief Clerk
                          Shelvin Simmons, IT Director
                              Jim Crowell, Editor

                                     ------

       Subcommittee on Housing, Transportation, and Community Development

                     CHARLES E. SCHUMER, New York, Chairman
                       MIKE CRAPO, Idaho, Ranking Member
    DANIEL K. AKAKA, Hawaii              ELIZABETH DOLE, North Carolina
    ROBERT P. CASEY, Pennsylvania        MEL MARTINEZ, Florida
    JACK REED, Rhode Island              WAYNE ALLARD, Colorado
    THOMAS R. CARPER, Delaware           MICHAEL B. ENZI, Wyoming
    SHERROD BROWN, Ohio                  CHUCK HAGEL, Nebraska
    JON TESTER, Montana
    ROBERT MENENDEZ, New Jersey

                         David Stoopler, Staff Director
                  Gregg A. Richard, Republican Staff Director

                                C O N T E N T S

                                  ----------

                           WEDNESDAY, APRIL 16, 2008

                                                                       Page

    Opening statement of Chairman Schumer............................     1

    Opening statements, comments, or prepared statements of:
        Senator Crapo................................................     2
        Senator Obama
            Prepared statement.......................................    20

                                   WITNESSES

    Shaun Donovan, Commissioner, New York City Department of Housing
      Preservation and Development...................................     4
        Prepared statement...........................................    22
    Curt Hiebert, Chief Executive Officer, Keene Housing Authority of
      New Hampshire and Senior Vice President of the Public Housing
      Authorities Directors' Association.............................     6
        Prepared statement...........................................    28
    Barbara Sard, Director of Housing Policy, Center on Budget and
      Policy Priorities..............................................     8
        Prepared statement...........................................    37
    George Moses, Secretary, Housing Alliance of Pennsylvania,
      representing the National Low Income Housing Coalition.........    10
        Prepared statement...........................................    62
    Jack Murray, Edgewood Management Corporation, representing the
      National Affordable Housing Management Association and the
      National Leased Housing Association............................    12
        Prepared statement...........................................    75

                  Additional Material Supplied for the Record

    Letters and list of support for S. 2684, the Section Eight
      Voucher Reform Act (SEVRA).....................................    82
    Prepared statement of Roy A. Bernardi, Deputy Secretary,
      Department of Housing and Urban Development....................   128

    AFFORDABLE HOUSING OPPORTUNITIES: REFORMING THE HOUSING VOUCHER PROGRAM

                                  ----------

                           WEDNESDAY, APRIL 16, 2008

                               U.S. Senate,
       Subcommittee on Housing, Transportation,
                             and Community Development,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The subcommittee met at 2 p.m., in room SD-538, Dirksen
    Senate Office Building, Hon. Charles E. Schumer (Chairman of
    the Subcommittee) presiding.

            OPENING STATEMENT OF CHAIRMAN CHARLES E. SCHUMER

        Chairman Schumer. The hearing will come to order. And
    because we have a vote coming up shortly, we are going to try
    to move as quickly as we can.
        First, I want to thank our witnesses. I want to thank
    Senator Crapo for being here. And we are here to talk about
    reforming the Section 8 voucher program.
        The Section 8 Voucher Reform Act, which Senator Dodd and I
    introduced with several of our colleagues last month, has been
    endorsed by all of the major groups involved in the Section 8
    voucher program. Owners, tenants, and voucher administrators
    all stand to benefit from the improvement that this bill makes
    to the program.
        The Section 8 program is one of this nation's most
    important affordable housing programs, serving around 2 million
    households each year. Studies have shown that Section 8 program
    reduces homelessness, overcrowding, and frequent apartment
    moves. The stable affordable housing afforded by the Section 8
    program helps families move to neighborhoods where there is
    less concentration of poverty, which often means better
    schools, lower crime rates, and more opportunities for economic
    advancement.
        So, despite these obvious successes during the last several
    year, HUD action and changes in the formula for funding Section
    8 have undermined the program, making it more difficult to
    administer. As costs escalated earlier this decade, Congress
    made changes to the Section 8 funding formula that attempted to
    control costs in the program. The changes enacted created an
    inefficient system, where some agencies were given funds they
    could not legally use, while others were left with too little
    funding to serve even those families already on the voucher.
        The Center on Budget and Policy Priorities estimates that
    150,000 vouchers were lost, as public housing authorities
    scrambled to adapt funding formulas that changed every fiscal
    year. With a reasonable and efficient formula, 150,000
    additional families could be assisted. In Fiscal Years 2007 and
    2008, Congress reversed the formula changes and again began
    funding public housing authorities based on the actual costs of
    running their programs. Although the restoration of the earlier
    funding formula does allow PHAs to offer additional vouchers,
    it doesn't address the costs and administrative issues still
    affecting the Section 8 program.
        The bill before the subcommittee today addresses the
    challenges faced by Section 8 in a number of ways. The bill,
    first, stabilizes funding. The bill establishes a stable
    funding formula that ensures PHAs will receive funding to cover
    all of the vouchers in use. To help control rising costs,
    agencies are encouraged to lower the cost per voucher in the
    new funding formula, helping create efficiencies in the
    program. It encourages employment. The bill provides a
    standardized earning disregard each year, and provides other
    incentives for families to increase earning in savings.
    Additional earnings by tenants will reduce voucher costs for
    the government.
        It ensures the housing is safe, decent, and adequate. It
    requires effective voucher administration, biannual assessments
    of local voucher programs to ensure they're operating
    efficiently, and also requires fair market rents to be set
    based on smaller geographic areas so that in large metropolitan
    areas tenants have the opportunity to live in all of the areas'
    communities. It encourages housing development and preserves
    affordable housing. It streamlines the requirements and does
    many other good things.
        Before I conclude, I would also like to take a moment to
    address the Moving-to-Work program. I know this has been a
    source of some controversy in the past. While administrators
    feel that the flexibility that the program provides will help
    them control costs, tenants are concerned that the many
    protections provided in abrogated rules and restrictions will
    be lost. In New York, we have organized a series of roundtable
    meetings involving tenants, owners and administrators to
    develop an agreement on the provisions for this bill that all
    sides could support. The continuation of the Moving-to-Work
    program is an important part of the agreement, so I look
    forward to working with Chairman Dodd, Ranking Member Shelby,
    Ranking Member Crapo, and the rest of my colleagues on the
    committee to find a compromise that continues the program but
    creates a new degree of evaluation and accountability.
        I'm now going to turn things over to Senator Crapo, but
    first I would first like to ask unanimous consent that a list
    of supporters and letters of support from a number of
    interested groups be entered into the record.
        Without objection.
        Chairman Schumer. I would also like to thank our witnesses
    again for appearing, and turn it over to Senator Crapo.

                    STATEMENT OF SENATOR MIKE CRAPO

        Senator Crapo. Thank you very much, Mr. Chairman. I
    appreciate the opportunity to work with you and to help find
    ways to improve Section 8 housing voucher programs.
        I would like to see the Section 8 voucher rental assistance
    program be in better position to provide the long-term
    assistance to those who are without other options. I hear a lot
    of frustration from the public housing authorities in Idaho
    about the fact that they don't have the flexibility to move
    families toward self-sufficiency and provide help where it is
    most desperately needed. These public housing authorities do an
    amazing job with scarce resources, an I believe is important to
    understand that one size does not fit all, and that a local
    community should be able to adjust the dollars in programs to
    deal with local situations.
        I also appreciate your attention, Mr. Chairman, to the
    Moving-to-Work program. This is a very popular program in
    Idaho, and I intend to push--to expand the number of public
    housing authorities who are able to participate in the Moving-
    to-Work program. Moving-to-Work provides the flexibility for
    housing authorities to adjust to their local conditions, and to
    make the Federal programs work more effectively and efficiently
    in their own communities.
        The stated intent was for four goals to be met by
    encouraging the design and implementation of innovative local
    strategies, to reduce costs and achieve greater effectiveness
    in housing programs, to increase housing choices for families,
    to move families toward self-sufficiency while protecting
    extremely low- or fixed-income families or the elderly, and to
    allow for flexibility in funding and programs.
        Senator Sununu has been a strong champion of expanding the
    number of public housing authorities able to participate in the
    Moving-to-Work program, and I appreciate the fact that he's
    here today to talk about this issue and introduce Curt Hiebert,
    who is the CEO of the Keene New Hampshire Housing Authority.
        And, finally, I think it's important to recognize that,
    although there is a lot of support for reforming the Section 8
    voucher program to serve more low-income families, there has
    been some disagreement over the best way to achieve this.
        At this time, I would like to insert into the record HUD's
    written statement; for the record, S. 2664.
        Chairman Schumer. Without objection.
        Senator Crapo. And I want to thank our witnesses for coming
    here today and also for your involvement in this important
    issue.
        Chairman Schumer. Well, thank you.
        I will introduce the four other witnesses, but I will first
    turn it over to Senator Sununu to introduce Mr. Hiebert.
        Senator Sununu. I thank you very much, Senator Schumer,
    Senator Crapo. It is a real pleasure to be here to introduce a
    good friend, Curt Hiebert, who has been a true leader in
    affordable housing, but has been the CEO of the Keene Housing
    Authority for 20 years. He's been active in the affordable
    housing area for much longer than that, longer than I'm sure he
    wants me to relay in any real detail, but he's been just a
    stand-up advocate for doing the right thing, for making sure
    that the ideals you both spoke about--flexibility, innovation
    at the local level, serving tenants--are all priorities, not
    just in his housing authority in Keene but across the State of
    New Hampshire and across the country.
        Curt has participated at a senior level in the National
    Association of Housing Directors, PHADA, who I know has
    testified before this committee before on a range of issues.
    The Moving-to-Work program in particular is a great area of
    expertise for Curt. He has had great success in designing and
    innovating and moving the work program in New Hampshire, and
    has worked very hard on making sure that the goal of
    accountability remains even as we give more flexibility and
    ability to innovate to housing authorities and housing
    directors across the country. Moving-to-Work, I think, has
    great potential because it really does allow different
    solutions to be tailored to local needs, local tenants, local
    economy, local housing situation, and I think it's absolutely
    imperative that the committee find a way to strengthen and
    expand Moving-to-Work.
        I'm pleased to have Curt here to be able to testify not
    just on his experience with Moving-to-Work but also his
    experience with the Section 8 voucher program and other housing
    initiatives in New Hampshire that I think the Members of this
    Committee and the Senate can learn a great deal from.
        Thank you very much for being here, Curt. Thank you,
    Senator Schumer and Senator Crapo.
        Chairman Schumer. Thank you, Senator Sununu.
        Let me introduce our other four guests.
        Shaun Donovan was appointed Commissioner of the New York
    City Department of Housing Preservation and Development in
    March 2004. As Commissioner, Mr. Donovan manages the largest
    municipal developer of affordable housing in the nation, and
    oversees the fourth-largest Section 8 voucher program in the
    country with 27,000 vouchers under management.
        Barbara Sard has been the Center's Director, the Center on
    Budget and Policy Priorities, Director of Housing Policies
    since 1997. Her work focuses on low-income housing policy,
    particularly housing voucher programs and admissions to
    subsidized housing.
        George Moses is the Secretary of the Housing Alliance of
    Pennsylvania and Chairman of the Board of the National Low-
    Income Housing Coalition. Mr. Moses has been active in
    advocating for housing policy for the last decade.
        And, finally, Jack Murray is President and Chief Executive
    Officer of Edgewood Management Corporation. He has over 30
    years' experience in the field of property management, and
    oversees a portfolio of over 24,000 units that include private-
    market and federally assisted housing.
        Each of your statements, guests, will be read into the
    record. We are going to try to limit you to 5 minutes each so
    we can finish the opening statements before the vote, then
    break for the vote and come back and ask questions.
        So, Commissioner Donovan, you may proceed.

        STATEMENT OF SHAUN DONOVAN, COMMISSIONER, NEW YORK CITY
           DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT

        Mr. Donovan. Good afternoon, Chairman Schumer, Ranking
    Member Crapo, and members of the Committee. I'm Shaun Donovan,
    Commissioner of the New York City Department of Housing
    Preservation and Development. HPD is the largest municipal
    developer of affordable housing in the nation, and also
    administers the fourth-largest Section 8 program in the
    country. Together with the New York City Housing Authority,
    whose program is the largest in the country, we administer
    vouchers for over 112,000 families in the five boroughs.
        Section 8 is integral to our affordable housing efforts in
    New York, so I'm very happy to be here to testify on S. 2684,
    the Section 8 Voucher Reform Act. I think I speak for the
    entire affordable housing community when I say ``thank you''
    for taking up this critical and complicated program for review.
    We are in the fifth year of Mayor Bloomberg's New Housing
    Marketplace Plan, a 10-year $7.5 billion dollar plan to create
    affordable housing for over 500,000 New Yorkers. Since Mayor
    Bloomberg came to office, the city has funded over 88,000 units
    of affordable housing, including the 70,000 units started under
    the New Housing Marketplace Plan. Of course, we couldn't have
    had such success without the partnership of the Federal
    Government and the unflagging advocacy of Senator Schumer and
    our great congressional delegation.
        Unfortunately, the last few years have not been good ones
    for our Section 8 program. Yearly changes in the way Section 8
    voucher funding is allocated to HUD to PHAs has made
    administering a Section 8 program very challenging. Funding
    uncertainty, combined with large increases in our enhanced
    voucher program, have led to large swings in the size of HPD's
    program. At this point, we're utilizing about 93 percent of
    authorized vouchers when only 2 years ago we were using city
    funds to supplement our program because we were at 102 percent
    utilization.
        SEVRA's greatest result, therefore, will be restoring
    predictability to the way in which Section 8 funds are awarded.
    Under SEVRA, a PHA's voucher funding will be based on actual
    costs in the preceding year. In a much-needed reversal, PHAs
    would now be able to count on the fact that vouchers leased
    this year will be renewed next year. Predictability will allow
    PHAs to maximize use of limited resources, an imperative in a
    market such as New York City's, with a 3 percent vacancy rate.
        In tight markets such as New York City's, project-based
    vouchers could be an important tool for increasing the supply
    of affordable housing, but there are barriers within the
    current structure to making the program work.
        This bill makes three critical changes to the program.
    First, it allows 40 percent of units in a project in tight
    market areas to be project-based rather than the current 25
    percent. This is important because finding buildings in which
    to project-base vouchers in New York City is a significant
    obstacle to success. Second, your bill allows project basing in
    cooperatives and buildings with elevators. And, third, it
    changes the initial contract term to 15 years so that the
    project-based contract runs concurrently with the Low-Income
    Housing Tax Credit compliance period.
        The bill also provides common sense administrative
    flexibilities that cash-strapped housing authorities will
    benefit from. Sixty-two percent of HPD's Section 8 families are
    on a fixed income. By changing the requirement for income
    certifications for this population to once every 3 years from
    once every year, we will be able to save on administrative
    costs. In 2007 alone, HPD performed over 43,000 inspections on
    Section 8 units. With the passage of SEVRA, our inspection
    workload will decline considerably because we will be able use
    to inspections already performed that are equivalent to the
    voucher program inspection standards. This administrative
    streamlining will allow PHAs to make more efficient use of lean
    budgets.
        There are many other provisions in SEVRA that we believe
    will make the Section 8 program more effective, but in the
    interest of time I will submit them for the record.
        There is one thing not in the Senate Bill, however, that I
    hope will be added, and that is the Housing Innovation Program,
    or HIP, the House bill's name for the current Moving-to-Work
    program. New York City is not a Moving-to-Work site, but we
    believe we are a good candidate for an updated version of the
    program, one which balances the need for PHA flexibility and
    tenant protections.
        In September and October of last year, as Senator Schumer
    mentioned, HPD and NYCHA held roundtables with representatives
    from the Section 8 tenant advocacy and owner communities. The
    full recommendations of that group, which the committee very
    generously considered when drafting this bill, are submitted
    for the record. The group agreed that designating New York City
    as a HIP-lite site would give us much needed budget
    flexibility. NYCHA has an operating shortfall of $195 million
    in 2008 and last month had a reduction in force of 427
    employees. The budgetary fungibility that HIP-lite allows would
    permit NYCHA to spend money where it is needed most and balance
    priorities. However, flexibility mustn't come at the expense of
    tenants; and we believe that tenant protections, such as
    organizing participation and hearing rights, need to be
    codified in the HIP provisions, should they be added to the
    bill.
        Thank you for the opportunity to testify before you today.
    I'm happy to answer any questions you have.
        Chairman Schumer. Thank you, Commissioner.
        Mr. Hiebert.

       STATEMENT OF CURT HIEBERT, CHIEF EXECUTIVE OFFICER, KEENE
    HOUSING AUTHORITY OF NEW HAMPSHIRE AND SENIOR VICE PRESIDENT OF
         THE PUBLIC HOUSING AUTHORITIES DIRECTOR'S ASSOCIATION

        Mr. Hiebert. Thank you, Mr. Chairman, Ranking Member. I'm
    Curt Hiebert. I'm CEO of the Keene New Hampshire Housing
    Authority, and I do appreciate this opportunity to discuss this
    legislation with you. My testimony is in support of this bill,
    and I urge you to support it as well. I would also like to
    thank Senator Sununu for his most gracious introduction.
        I'm here representing the Keene Housing Authority, but I
    also have the honor of serving as a Senior Vice President of
    the Public Housing Authority Directors Association, which
    represents over 1,900 Housing Authorities across the United
    States. I participated over the past several years in
    developing industry rent reform proposals and positions, and
    have participated in discussions of many provisions in the
    Housing Innovation Program contained in the House version of
    SEVRA.
        The Keene Housing Authority was one of the original 24
    Housing Authorities that were designated as Moving-to-Work
    demonstration sites, and we continue to operate all of our
    public housing in Section 8 under that program. The flexibility
    that was granted under that program has made some dramatic
    differences in our community, which I will itemize later. Our
    participation in this program has allowed us to work better
    with our community and with our residents and to provide a
    program that serves the neediest of our region, providing
    stability to those on fixed incomes and yet providing a system
    that encourages families to move toward self-reliance. This
    bill, as it stands now, misses an opportunity to authorize and
    modestly expand this program, which is an innovation engine for
    the public housing and Section 8 programs.
        SEVRA does contain a large number of detailed provisions,
    many of which are very attractive to housing sponsors, tenants
    and participants, but there are a couple of items that are also
    missing. Some of the needed and welcomed provisions, the rent
    and income provisions, allowing biannual inspections, and the
    FSS fee entitlement and Housing Choice Voucher program, and
    enshrining a rational renewal and administrative fee funding
    system that has been dealt with chaotically in the past through
    appropriations and regulation interpretation.
        However, the Senate version of SEVRA also includes some
    problematic provisions. Imposing a permanent cap on vouchers in
    use of 103 percent of the sponsor's authorized units. Though
    absorption of incoming portable tenant-based vouchers is an
    acceptable solution to a long-standing problem, the method
    described is cumbersome and needs refining. And authority for
    the Secretary of HUD to redefine the basis for voucher
    administrative fees is a problem.
        Most importantly, though, there are two omissions: The
    Senate bill does not include authority to establish alternative
    rent structures and assisted housing; and the Senate bill, as
    has been mentioned several times, does not include permanent
    authorization of the Moving-to-Work demonstration. Although
    ongoing discussions of problematic provisions in the Senate
    version are important--and we expect to resolve a number of
    these concerns--the omissions are particularly troubling.
        The discussions that produced the provisions of the Housing
    Innovation Program and the House SEVRA bill involve significant
    give and take on the part of a number of stakeholder
    communities, and these provisions should form the foundation
    for MTW or HIP authorization. These provisions should provide
    for, one, a modest expansion of the number of agencies under an
    MTW or HIP agreement; assurance that newly participating
    agencies will reflect the diversity among local housing
    authorities as to size and location; and a new status called
    ``HIP-lite,'' which provides funding but not policy
    flexibility.
        Also important is an application of a number of tenant
    protections to participates at MTW or HIP participating
    agencies, elimination of the uncertainties about the--by the 30
    current participants concerning the future of their MTW status.
        To give you an example, the MTW program in Keene and many
    of the other participating housing authorities have had some
    strikingly successful changes in their communities. In 1999, 47
    percent of the heads of household in the families of the Keene
    Housing Authority were working full time. Last year, 65 percent
    were working full time. In that same period of time, average
    income for families increased by over 30 percent. In part, this
    was because our system did not discourage increase in income
    but actually rewarded it. Our system of rent steps and the
    vital service coordination that we provide does not penalize
    rises in income, but instead our program encourages job skills,
    education, financial competency, and ambition.
        At the same time, those neediest are protected by our
    Safety Net provisions in our program. The key is our program
    would not work everywhere--the program that works in Keene
    would not necessarily work in other communities--but the
    flexibility contained in Moving-to-Work, we were able to make a
    program that is good for our residents and our stakeholders.
    Other communities and housing authorities should have the same
    opportunity.
        Please make sure that a provision in SEVRA is for the
    Moving-to-Work or HIP program that would, one, make the program
    work; two, grandfather the existing MTW agencies that are in
    compliance with their agreements; three, modestly increase the
    number of agencies; and, four, ad an effective and easily
    administered mechanism to evaluate the program.
        Thank you very much for this opportunity, and I will be
    glad to answer any questions.
        Chairman Schumer. Thank you, Mr. Hiebert.
        Ms. Sard.

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

        Ms. Sard. Thank you, Chairman. My name is Barbara Sard. I'm
    the Director of Housing Policy at the Center on Budget and
    Policy Priorities. My testimony today first will briefly review
    why the Section 8 Voucher Reform Act enjoys unusually broad
    support, and then will address why it is important for the
    Banking Committee to approve S. 2684 promptly so that final
    legislation may be enacted this year.
        As the chairman mentioned in his opening remarks, SEVRA, as
    passed by the House and as introduced recently in the Senate,
    is supported by a full spectrum of organizations that represent
    stakeholders in the Section 8 Housing Choice Voucher program.
    Unfortunately, as a member of that housing advocacy community,
    I can confess that such unity in our community is rare, and I
    think we should applaud the fact that this is such a common
    sense bill that it has appealed to such a broad range of
    stakeholders.
        There are many provisions in the bill, but to make them
    kind of simple to understand, I have put them into three
    categories: The first is common sense reforms to reduce
    administrative burdens for everyone. For example, changes to
    the rules governing inspections and rent policies will benefit
    owners, families, and public housing agencies alike by reducing
    the frequency of required actions, and allowing Housing
    Authorities to rely on inspections or income verifications
    performed by other agencies, and simplifying the Rules for
    setting tenant rents. Changes to portability policies, the
    rules that allow someone to take a voucher from one community
    and use it to live in another, will substantially reduce the
    administrative cost was such moves. And SEVRA accomplishes such
    increased efficiency while retaining key tenant protections,
    which is a measure of the balance in the bill.
        In addition, SEVRA makes a number of changes that will
    support work. As the Ranking Member mentioned, increased self-
    sufficiency is one of his goals, and I think this bill goes a
    long way to address these goals. It has a new earnings
    disregard, and other aspects of the rent policy also create a
    financial incentive for families to work, and the changes in
    the Family Self-Sufficiency program in terms of how
    administrative fees are allocated and how the funding policy
    works better with FSS will make it much easier and create an
    incentive for more agencies to have FSS programs.
        Second, SEVRA will update key policies in the program which
    haven't been comprehensively addressed in the last 10 years.
    There are many examples of this, but just a few. The bill takes
    advantage of new data sources to produce fair-market rent
    figures for smaller areas that can be more accurate and,
    thereby, be more efficient in the allocation of funds. SEVRA
    uses new rent and income information that agencies already
    submit to HUD to report on rent burdens, and recent data
    indicate that rent burdens in the program have gotten
    excessively high.
        And SEVRA will also update the Rules that govern the
    project-based voucher program that was addressed by Congress in
    2000, but, as Mr. Donovan mentioned, some changes are needed to
    better coordinate the program with the low-income housing tax
    credit, work better for supportive housing for the homeless, et
    cetera.
        But perhaps most importantly, SEVRA creates new flexibility
    for all agencies. It will help vouchers be a Preservation tool
    for housing that is privately owned and being lost. It will
    help respond to the current foreclosure crisis by creating
    mechanisms for housing agencies to help tenants in buildings
    where the owners are financially troubled and have been
    struggling to make utility payments.
        And perhaps most importantly, it will help the program
    better respond to growing housing needs. Escalating
    foreclosures and the softening economy are exacerbating the
    need for rental assistance, and the utilization of already
    authorized vouchers has been substantially decreased. In 2007,
    we were using only 91 percent of the vouchers that Congress has
    authorized; in 2004, we were using 98 percent. Many agencies
    are doing better in this last year because of funding
    improvements which Congress made in 2007 and 2008, but to
    continue those improvements, they need a permanent change in
    authorizing law.
        On Moving-to-Work, you have heard people talk about a
    modest expansion; I want to underscore that. Already under the
    House provision, one-third of assisted families can be in
    Moving-to-Work agencies. That is far more than is needed to
    learn new lessons from local experimentation and, as Mr.
    Donovan and Mr. Hiebert mentioned, protecting tenants from
    overly harsh changes in policy while those changes are being
    made, and we learn through an improved evaluation method are
    also vital.
        Thank you very much, and I look forward to answering any
    questions.
        Chairman Schumer. I think we only have about 3 minutes left
    to the vote, so we are going to break, and we will come back as
    soon as possible and hear from Mr. Moses and Mr. Murray and ask
    questions. So, the hearing is temporarily in recess until we
    return.
        [Recess.]
        Chairman Schumer. The hearing will come to order.
        And, Mr. Moses, your entire statement will be read into the
    record, and you may proceed.

       STATEMENT OF GEORGE MOSES, SECRETARY, HOUSING ALLIANCE OF
      PENNSYLVANIA, REPRESENTING THE NATIONAL LOW INCOME HOUSING
                               COALITION

        Mr. Moses. Chairman Schumer, Ranking Member Crapo, and
    other members of the subcommittee, thank you for inviting me to
    testify here before you today on proposals to reform the
    Housing Choice Voucher program.
        I am George Moses. I am Chair of the Board of Directors for
    the National Low-Income Housing Coalition, which I'm
    representing here today. I'm also on the Board of Directors of
    the Housing Alliance of Pennsylvania.
        I lived in project-based Section 8 properties between 1990
    and 2006. I was elected Chair of the National Low-Income
    Housing Coalition in 2006, and I am the first tenant
    representative to serve in that role.
        The National Low-Income Housing Coalition strongly supports
    the Housing Choice Voucher program, and we are pleased that the
    subcommittee is having hearings on this critical program. We
    are particularly pleased that the bill adopts virtually all of
    the recommendations that came from the 2005 voucher summit
    sponsored by the National Low-Income Housing Coalition,
    including recommendations on income targeting, funding,
    inspections, portability, rent simplifications, project-basing
    vouchers, and enhanced vouchers.
        My written testimony provides comments on these and other
    aspects of the Section 8 Voucher Reform Act, S. 2684. During
    this time, I would like to highlight a couple of the points.
        We are, of course, pleased that the bill fixes the voucher
    funding distribution system. In 2004, HUD declared the voucher
    program broken and then proceeded to break it. This bill would
    correct those actions which prevented 150,000 families with
    children, people with disabilities, senior citizens, and others
    from becoming housed in a safe, decent, affordable way. This
    bill would restore reliability and credibility to the voucher
    program.
        The bill encourages increased income and provides much
    needed simplification to rent-setting policies, things that
    residents and housing agencies have long sought. These
    important reforms are done while maintaining the broad standard
    that tenants claim no more than 30 percent of their adjusted
    income for their housing. It is critical that the rents be
    connected to the incomes of the individual households so that
    one basic principal of assisted housing is preserved:
    Affordability.
        Mobility is another cornerstone of the voucher program.
    Vouchers should not lock families into certain neighborhoods or
    communities. The current system for porting vouchers from one
    administration's agencies geographical area to another is
    broken and is in need of urgent repair for the sake of both
    tenants and administrative agencies. With some safeguards for
    lack of funding, S. 2684 would require receiving agencies to
    absorb incoming vouchers. The phasing in of this requirement is
    prudent and would hopefully result in a reliable long-term
    portability mechanism.
        The inclusion of 20,000 new vouchers a year for the next 5
    years is also welcome. However, the broad improvements of this
    bill should allow for a much larger expansion of the voucher
    program. The National Low-Income Housing Coalition supports
    100,000 new vouchers a year for the next 5 years at such a
    level new vouchers could significantly impact the nation's
    housing crisis. And we say this because most of the PHAs across
    the country waiting for Section 8 vouchers are closed;
    therefore, many tenants cannot get a voucher.
        Finally, we are glad that S. 2684 does not provide for an
    expansion of the Moving-to-Work program. The failure of HUD to
    establish a program with an adequate data collection system has
    meant that no one, neither HUD, Congress, the HUD Inspector
    General, or tenants living in the projects subject to the
    Moving-to-Work accesses the effectiveness of the program at
    meeting its goals of reducing costs, promoting tenant self-
    sufficiency, increasing tenants' housing choices.
        But what we do know about the program is troublesome. For
    example, the Housing Authority of the city of Pittsburgh, my
    home town, was found by the HUD Inspector General to have
    stockpiled more than 81 million of HUD funding during the first
    4 years of its Moving-to-Work status, all completely legal
    under the Moving-to-Work Rules. Meanwhile, the Pittsburgh
    Housing Authority Agency did not modernize its 6,700 public
    housing units and failed to serve 3,000 families waiting for
    vouchers. HUD's Real Estate Assessment Center at the time said
    30 percent of Pittsburgh's developments had a physical
    inspection score below 70 out of a possible 100. According to
    the HUD's Inspector General, the relaxation of the requirements
    under Moving-to-Work allowed the housing authority to plan and
    execute a minimal modernization plan without penalty. The only
    thing that the community and the residents wanted from this
    Moving-to-Work program was an evaluation, tell us what you did,
    who you serve, how many people improve lives with this, and we
    never got that information.
        Again, we believe that S. 2684 is an extremely important
    bill, and we urge swift enactment. We would also like you to
    take up the National Affordable Housing Trust Fund Act of 2008,
    S. 2523. This legislation would create an off-budget housing
    trust fund to produce and preserve housing for our nation's
    lowest-income people. The bill was introduced in December, and
    we hope that it will move quickly forward. We urge all Senators
    to join Senators Schumer, Reed, and Menendez of this
    subcommittee in cosponsoring this legislation.
        Again, I thank you for giving me the opportunity to testify
    before you today, and I will be available for questions.
        Chairman Schumer. Thank you, Mr. Moses.
        Mr. Murray.

      STATEMENT OF JACK MURRAY, EDGEWOOD MANAGEMENT CORPORATION,
        REPRESENTING THE NATIONAL AFFORDABLE HOUSING MANAGEMENT
        ASSOCIATION AND THE NATIONAL LEASED HOUSING ASSOCIATION

        Mr. Murray. Thank you, Chairman Schumer; and thank you,
    Ranking Member Crapo for the time that you are giving us on
    these issues. My name is Jack Murray. I'm here representing two
    very good trade associations: The National Affordable Housing
    Management Association and the National Leased Housing
    Management Association. The National Leased Housing Association
    represents interests of owners and developers and lenders and
    managing agents, and has over 500 organizational members that
    all work with Section 8, both project-based and vouchers,
    across the nation. National Affordable Housing Management
    Association is a trade association which represents multifamily
    property managers and owners whose mission is to provide
    quality affordable rental housing. Likewise, NAHMA is the voice
    in Washington for 20 regional affordable housing management
    associations.
        We commend both of you for your leadership, and thank you
    and the committee members for your valuable work addressing the
    nation's need for affordable rental housing. We are pleased and
    honored to present our views on the Section 8 Voucher Reform
    Act, SEVRA.
        The Section 8 program has long served as America's primary
    rental subsidy program, and we believe it has been largely
    successful in achieving the goal of assuring decent, safe, and
    affordable housing for low-Income families and the elderly. We
    do not believe that the Housing Choice Voucher program is in
    need of a major overhaul, but are convinced that it can be
    improved upon with the changes outlined in the SEVRA
    legislation. The bill has the broad support of so many national
    housing organizations as outlined in the attached letter to the
    committee. The groups include the National Multihousing
    Council, the National Association of Realtors, Home Builders,
    National Apartment Association--we could go on and on.
        Our testimony will focus on three particular interests to
    NAHMA and National Leased Housing: Inspections.
        The success of the voucher program is dependent on the
    willingness of owners and landlords to accept voucher tenants.
    These organizations have worked over the years to convince the
    professional apartment managers to participate in the voucher
    program, and many have; but there are a number of program
    requirements that give landlords pause, particularly with
    regard to the inspection standards. Renting to a voucher holder
    should not cost a landlord more than what it does to rent to an
    unsubsidized resident, but it often does due to the duplicative
    inspection standards. Before a Section 8 voucher holder can
    rent a specific apartment, the administering agency must first
    inspect the unit and confirm it complies with Housing Quality
    Standards. Such unit-by-unit inspections cause intolerable
    delays and do not necessarily satisfy HUD's objective of
    protecting residents since many of these properties already
    inspect other Federal programs.
        And I would depart from my testimony to say this really is
    needed in the cities like D.C. and New York City and other
    places because of the tight market there. If they've got a
    choice of a person coming in with a check in their hand or
    person coming in with a voucher, they're going to take the
    check every time because they don't know when they are going to
    be able to move into the voucher holder until after an
    inspection.
        Delays caused by the initial inspections and related
    processing delays cause apartments to remain vacant. The
    apartment industry relies on seamless turnover to meet its
    overhead costs, and the financial implications of such delays
    are enough to deter many owners from participating in the
    program. NAHMA and National Lease Housing strongly support
    SEVRA's provisions that address current redundancy in Federal
    inspection programs by permitting housing agencies to approve
    the lease-up of apartments that have recently been inspected by
    FHA, home or the low-Income housing tax credit program. The
    residents were provided much-needed housing sooner, and the
    owners are not losing income due to delayed move-ins. Under the
    bill, housing agencies will continue to inspect the units but
    will do so within 30 days after the tenant moves in. Further,
    SEVRA recognizes that minor repairs can be made after the
    tenant moves in, a provision supported by our organizations.
        SEVRA also permits housing agencies the discretion to
    inspect apartments occupied by ongoing voucher residents every
    other year instead of annually. We support that provision for
    professional landlords but recommend that small apartment
    properties, maybe 20 units or less that are not generally
    professionally managed, might be inspected every year.
        NAHMA and National Leased Housing are especially pleased
    that SEVRA incorporates Senator Menendez's legislation 1218,
    Limited English Proficiency, which allows HUD to better serve
    persons with limited English proficiency by providing technical
    assistance to recipients of Federal funds. HUD's Limited
    English Proficiency guidelines became effective on March 2007.
    The guideline states that recipients of HUD funding, including
    affordable housing providers, have an obligation to provide
    translated documents and oral interpretation services to all
    the many different languages that are in that area.
    Unfortunately, HUD provided no additional funding to provide
    the offset of the cost of providing those services. Another
    major concern with the guidance was HUD's failure to identify a
    specific list of documents housing providers would be expected
    to translate.
        Last summer, a coalition of multifamily housing
    representatives and civil rights advocates proposed the LEP
    language which is included in SEVRA. Our compromise addresses
    the cost and the vagueness. SEVRA's LEP language is strongly
    supported by NAHMA and National Leased Housing.
        Project-based vouchers, if I can just finish up. Our
    members are actively involved in the operation and development
    of affordable rental housing. We are particularly pleased that
    SEVRA would provide flexibility and consistency with regard to
    use of vouchers with low-Income housing, particularly expanding
    the contracts from 10 years to 15 years, and allowing the
    housing agencies to move from 20 percent to 25 percent is
    project-based. All of these things help both the landlord and
    the residents.
        At the request of a property owner, they would also allow a
    PHA to provide existing residents with project-based vouchers
    in lieu of enhanced vouchers when owner opts out of any
    federally subsidized program. This option will protect the
    residents while ensuring that the actual units are preserved as
    affordable.
        Conclusion: Affordable housing is sorely lacking in
    America. According to Harvard, 35 million households spend 30
    percent. . . .
        Chairman Schumer. You know you could finish your sentence
    or so.
        Mr. Murray. Oh, that's OK, you know where I'm going.
        Chairman Schumer. Thank you. We do, indeed. And thank you
    for your excellent testimony, Mr. Murray, all the testimony was
    very good.
        I'm going to defer to Senator Crapo who has another
    appointment to which he must go, and then I will ask my
    questions. So, Senator Crapo, take as much time as you need.
        Senator Crapo. Well, thank you very much, Mr. Chairman, for
    your kind accommodation. I just have one question.
        As I indicated in my opening remarks, I'm very interested
    in the Moving-to-Work program. I would like to see my state,
    Idaho, have the opportunity to participate in this program. But
    as I look at the numbers, it kind of looks daunting. Right now,
    there are about 30 Moving-to-Work programs authorized, and
    about 20 of those, I think, are actually in effect and
    operating. Just to give you some statistics--and these are
    rough, at least as to the national numbers--there is about 2
    million vouchers in the country; in Idaho there is 6,500. There
    is about 3,000 agencies in the country; in Idaho, there is
    five.
        So, as I look at trying to get two or three of my agencies
    access to the Moving-to-Work program with those kind of
    statistics, it becomes evident that I want to see a big
    expansion of the opportunity to get into the Moving-to-Work
    program.
        So, really, the question I have is, if the housing
    authority already operates a successful family self-sufficiency
    program and has a satisfactory or higher CEMAP rating for the
    previous 3 years, then one would assume that that Housing
    Authority is able to meet their and their community's and HUD's
    expectations. Why shouldn't we provide an avenue for these
    housing authorities to be given the discretion to elect to move
    into the Moving-to-Work program and then tailor the Section 8
    programs to the local needs as opposed to the less flexible
    requirements that they otherwise deal with? In other words, why
    shouldn't we just open this up?
        I throw that out to the whole panel.
        Mr. Hiebert. I would be glad to jump on that, Senator. Part
    of it is the balance that you need to maintain. Part of it is
    accountability of HUD being able to administer varying
    programs. You're preaching to the choir, if you're talking to
    me about expansion of this program. I think it's--the future of
    public housing and Section 8 is that exact flexibility that
    you're talking about.
        A lot of things that have been done in 1999 and 2000 in the
    Moving-to-Work program, some of them have already been
    initiated in the general program because they proved not to be
    effective.
        There is concern that, if some innovations are administered
    and they don't turn out to be good, you don't want them
    replicated. However, I think that the accountability, if it is
    there, it should be expanded to as many housing authorities as
    possible. And in the original HIP, in the House bill, there is
    a suggestion that the distribution be equitable geographically
    and size of housing authorities, both.
        Senator Crapo. Thank you.
        Ms. Sard.
        Ms. Sard. Just to add to that, the important thing in
    authorizing law, I think, is to take advantage of the lessons
    learned and spread them to everyone and not make it a
    privileged few; and to do that, we need to, yes, allow
    experimentation, but to do it in a way that we can actually
    learn something and make reasoned conclusions about what works
    and what ought to be expanded. And in order to do that, the
    experiment can't be too large, or managing the gathering of
    data and the assessing of it becomes expensive and unwieldy.
        And if we give in again, as we did in the first stage of
    MTW, and say, ``Well, it's just going to be too expensive and
    too difficult to learn anything from this, so let's just let
    people do it,'' we will end up in the same bind where agencies
    that should be allowed to benefit from flexibility and new
    lessons won't get that opportunity. So, I think that, in order
    to achieve your goal, we have to take this in measured steps.
        I would add that the House bill does not necessarily give
    preference to high-performing agencies to be selected for MTW,
    and that is a change that, if the Senate wanted to consider--
    there may be differences of opinion on that on the panel, but
    I, for one, would support it, so I think that's important.
        But I think it's important to recognize that the changes
    that SEVRA would make would increase flexibility across the
    board for agencies. So, while I appreciate your concern for
    MTW, I think it's really important to recognize a lot of the
    goal you're seeking is achieved by enacting SEVRA.
        Senator Crapo. Well, thank you.
        Mr. Chairman, from what I hear, I'm going to continue to
    advocate for ways to get Idaho agencies to have the flexibility
    to be involved, but maybe what we will need is an earmark in
    the bill to designate the Idaho agencies as part of the study.
    How would that work?
        Chairman Schumer. I, for one, have nothing against earmarks
    as long as they are public, debated, and honorable.
        Senator Crapo. I agree with you.
        Chairman Schumer. OK.
        Mr. Moses. Mr. Chairman, if I might----
        Chairman Schumer. Yes, Mr. Moses.
        Mr. Moses. To come back and answer Senate Crapo's question,
    we are not just only talking about self-sufficiency in those
    programs. We are talking about an ability to change rent
    standards. Example. In Pittsburgh, we just learned through,
    unbeknownst to publications, that they were raising the rent to
    the minimal rent to $150, and we went to the public housing
    communities, and we asked, did you know these changes were
    taking place? And they said no, we were never conferred, talked
    about it, doing it like this.
        And as you said in your opening statement, sir, this could
    not be just as all housing authorities can be judged to be the
    same because there are so many of them, and they do things so
    differently across the country.
        So, in looking at this, we must be able to look at what's
    done, ask for a good evaluation, as Ms. Sard said about
    collecting data and information, that we can then make a good
    determination on what's good and what's bad because, in
    Pittsburgh, when we asked for that sort of evaluation, we were
    told, ``Well, it's not in the rules, so we don't have to do
    it.''
        Senator Crapo. Thank you very much. I appreciate all these
    perspectives.
        And again, thank you, Mr. Chairman, for allowing me to do
    this, and I apologize I will have to slip out.
        Chairman Schumer. No problem. Thank you, Senator Crapo, for
    coming to this hearing, and now I will go on with my questions.
        First. Mr. Murray, as you say in your testimony, the
    success of the voucher program is dependent on landlord
    participation. What are the largest barriers to landlord
    participation, and are we moving in the right direction with
    the Section 8 Voucher Reform Act?
        Mr. Murray. Yes, sir. Yes, sir, I think we are moving in
    the right direction with this.
        Chairman Schumer. Mr. Moses was moving in the right
    direction with pushing the button for you.
        Mr. Murray. Yes, absolutely, yes, sir.
        Getting these inspections so that you don't have to hold up
    the move-in of a resident so that the vacancy is kept less will
    help a number of properties, but will also help the owner to
    want to take these vouchers because, right now, many of them
    don't want to because they don't know when the inspection's
    coming or what the problems are going to be, and this helps get
    beyond that. I think that's very good.
        Chairman Schumer. Good.
        Mr. Donovan, I'm troubled by your testimony that
    congressional interference with the voucher funding formula has
    led to a decrease in the number of families being served. How
    many more families in New York City could have been served over
    the past few years if the funding formula had been stable and
    predictable? And will the reform act help stabilize funding so
    you can serve those additional families?
        Mr. Donovan. Currently, I would estimate that roughly
    10,000 more families could be served, if we had not had the
    uncertainty and the ups and downs that we have had over the
    last few years.
        And I would just emphasize that this has been both ups and
    downs. As I mentioned in my testimony, because of the
    unpredictability and the changes in the formula over the last
    few years, we have actually gone from being underutilized to
    overutilized to underutilized in a very short period of time,
    and so that piece is incredibly important.
        What I would also mention about the formula as well is
    that, in some ways, the budget-based formula we have lived with
    over the last few years has been the worst of both worlds. It
    has gone to a budget-based system which was intended to
    encourage savings yet, on the other hand, has not allowed us to
    go above a hard cap on the number of vouchers utilized. And one
    of the very positive things about your bill would be to lift
    that cap.
        Just to be clear, any savings we could have achieved would
    not have allowed us, under the prior formula, to actually serve
    more families. What this would allow us to do and what it would
    give us is a real incentive for the kind of savings and
    efficiencies that I think were intended all along, but frankly,
    because of the flaws in the formula, were never able to be
    achieved----
        Chairman Schumer. Sounds like a free-market solution, to a
    government agency.
        Ms. Sard, do you want to comment on that? Are you the same
    Ms. Sard I went to law school with?
        Ms. Sard. I'm glad you remember that.
        Chairman Schumer. How do you like that.
        Ms. Sard. We were even in the first section in our first
    year.
        Chairman Schumer. Our contracts teacher just passed away--I
    just read it in the paper--but he was a great teacher.
        Ms. Sard. We analyzed data for agencies throughout New York
    State as well as for the states represented by other members of
    the Banking Committee, and New York is an unfortunate example
    of the typical pattern. In 2004, agencies in the state were
    using 98 percent of their authorized vouchers; by 2006, that
    had gone down to 87 percent, and it improved somewhat last
    year. And we estimate that, in New York State, nearly 27,000
    additional families could be served this year with the money
    that agencies have, but it's very risky for agencies to put
    those vouchers out on the street. It's risky for landlords to
    agree to accept them, unless Congress passes a law that makes
    clear that the funding policy will provide funds for those
    vouchers the next year.
        Chairman Schumer. Right.
        And let me just, you know, the statement the administration
    submitted said that PHAs in the present law are provided
    incentives to increase costs under the bill. They also say that
    we should rebenchmark every 3 years.
        Can you comment on this? And then Mr. Hiebert and Mr.
    Donovan as well.
        Ms. Sard. I think it is--perhaps they fail to understand
    how the bill would work because it's just false to say that
    costs would increase.
        It is important to look at--there are two types of costs in
    the voucher program. There is the cost of the program overall,
    and then there is the cost per voucher. The costs of the
    program overall remains absolutely within the control of
    Congress. The appropriators decide how much they are going to
    spend. If there is not enough to fully fund the program, then
    payments are prorated to the remaining agencies. So, that's
    just false.
        Chairman Schumer. Right.
        Ms. Sard. On the per-voucher cost, your bill creates a
    complex balance of different forces so that, on the one hand,
    it allows agencies to pay more in order for families to move to
    more expensive areas. It also, by fixing the fair market rents
    for smaller areas, would reduce some payments.
        And as Mr. Donovan said, by allowing agencies to go over
    the cap, it creates an incentive for agencies to keep each
    voucher costing less so they can serve more people. It creates
    the right balance of incentives in a complex program.
        Chairman Schumer. Right.
        Comments from Mr. Hiebert.
        Mr. Hiebert. Yes, Senator, I would agree with Barbara on
    that, but also I would like to add something. The additional
    flexibility under the Moving-to-Work program with our Section
    8, we were able to have utilization rates upwards of 108 to 110
    percent, to be able to serve up to 10 percent more people than
    otherwise would have been allowed.
        Also different populations that are not presently allowed
    under the Housing Choice Voucher program are available also
    under the MTW program.
        Mr. Donovan. Senator, one final point I would make on that
    as well, one of the key issues, I think, has been that there
    are programs, much as we might not like to admit it as people
    who manage voucher programs, there are programs around the
    country that are not being well managed. And currently, under a
    formula, or historically under a formula that used a 3-year-old
    or a 5-year-old benchmark for how budgets were set, there was
    really no incentive there from a funding basis to get out of
    that cycle of mismanagement.
        This funding formula would move to a system where, if you
    don't fully utilize your funds, they could be taken away, and
    that is both overall the potential for cost savings but, on an
    individual basis for those housing authorities, an incentive to
    better manage the program. I think something we could all agree
    is a positive thing.
        Chairman Schumer. One gets the feeling that much of the
    administration's view was motivated by spending the least
    amount of money possible, no matter how many fewer people are
    served, and no matter how less efficient the program is.
        Would either of you, Mr. Murray or Ms. Moses, disagree with
    what I have to say?
        Mr. Murray. I wish I could.
        Chairman Schumer. How about you, Mr. Moses?
        Mr. Moses. No comment.
        Chairman Schumer. No comment. OK.
        Finally, Mr. Donovan, HUD submitted a statement for today's
    hearing that says this bill would result ``in a more
    complicated and less effective program than we have today.''
        I take it you very much disagree with that, from your
    previous comments?
        Mr. Donovan. Well, I would go back to the discussion we had
    with Senator Crapo when he was here, and I think the important
    thing to recognize here is that, while we can discuss whether
    it's in HIP or HIP-lite, which we certainly support the
    availability of and the ability to do that. The fundamental
    purpose to this bill, and I think why there is such broad
    support across so many stakeholders, from owners to advocates,
    et cetera, as well as those of us who run the programs is that
    this bill does lead to fundamental simplification of the
    program. Administrative reforms, reforms around eligibility and
    rent setting, the inspection protocols, all of those things
    will lead to a simpler program to administer, to live with, if
    you're a resident, or to live with if you're an owner.
        So, I think that's why there is such broad support for many
    of these fundamental common sense reforms.
        Chairman Schumer. Anyone else, final comments?
        Well, then, I can assure all of you that Senator Dodd and I
    are going to try to move this legislation which seems to meet
    with your approval, whether you're a big authority or a small
    authority, whether you represent tenants or you represent the
    landlords. Seems to be pretty good. I would say to the
    administration, ``You're odd man out; better get with it.''
        Anyway, I thank everybody for being here.
        The hearing is adjourned.
        [Whereupon, at 3:27 p.m., the hearing was concluded.]
        [Prepared statements and additional material supplied for
    the record follow:]

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