[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
----------
U.S. GOVERNMENT PRINTING OFFICE
52-443 PDF WASHINGTON : 2010
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]