[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                    THE SECTION 8 VOUCHER REFORM ACT 

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2009

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 111-40

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

52-396 PDF                     WASHINGTON : 2009 

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) 512-2250 Mail: Stop SSOP, 
Washington, DC 20402-0001 















                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York         PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina       RON PAUL, Texas
GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California             WALTER B. JONES, Jr., North 
GREGORY W. MEEKS, New York               Carolina
DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West 
WM. LACY CLAY, Missouri                  Virginia
CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
JOE BACA, California                 SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
AL GREEN, Texas                      TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
CHARLES A. WILSON, Ohio              KEVIN McCARTHY, California
ED PERLMUTTER, Colorado              BILL POSEY, Florida
JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
JACKIE SPEIER, California            LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York

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

                 MAXINE WATERS, California, Chairwoman

NYDIA M. VELAZQUEZ, New York         SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
EMANUEL CLEAVER, Missouri            THADDEUS G. McCOTTER, Michigan
AL GREEN, Texas                      JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              GARY G. MILLER, California
KEITH ELLISON, Minnesota             RANDY NEUGEBAUER, Texas
JOE DONNELLY, Indiana                WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
PAUL E. KANJORSKI, Pennsylvania      ADAM PUTNAM, Florida
LUIS V. GUTIERREZ, Illinois          KENNY MARCHANT, Texas
STEVE DRIEHAUS, Ohio                 LYNN JENKINS, Kansas
MARY JO KILROY, Ohio                 CHRISTOPHER LEE, New York
JIM HIMES, Connecticut
DAN MAFFEI, New York












                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 4, 2009.................................................     1
Appendix:
    June 4, 2009.................................................    49

                               WITNESSES
                         Thursday, June 4, 2009

Bazzie, Tony, Executive Director, Raleigh County Housing 
  Authority......................................................    32
Couch, Linda M., Deputy Director, the National Low Income Housing 
  Coalition......................................................     6
Fischer, Will, Senior Policy Analyst, Center on Budget and Policy 
  Priorities.....................................................     7
Hiebert, P. Curtis, President, the Public Housing Authorities 
  Directors Association..........................................    29
Houghton, Ted, Executive Director, Supportive Housing Network of 
  New York.......................................................    13
Montiel, Rudolf C., P.E., President and CEO, the Housing 
  Authority of the City of Los Angeles...........................    28
Newsome, Karen, Vice President, WinnResidential, on behalf of the 
  National Affordable Housing Management Association (NAHMA).....    37
Robinson, Gloria J., Tenant Organizer, Organizing Neighborhood 
  Equity DC (ONE DC), and Housing Choice Voucher Recipient.......    11
Roman, Nan, President and Chief Executive Officer, National 
  Alliance to End Homelessness...................................     9
Rooker, Renee, President, National Association of Housing and 
  Redevelopment Officials........................................    33
Zaterman, Sunia, Executive Director, Council of Large Public 
  Housing Authorities (CLPHA)....................................    35

                                APPENDIX

Prepared statements:
    Bazzie, Tony.................................................    50
    Couch, Linda M...............................................    60
    Fischer, Will................................................    70
    Hiebert, P. Curtis...........................................    86
    Houghton, Ted................................................    96
    Montiel, Rudolf C............................................   102
    Newsome, Karen...............................................   106
    Robinson, Gloria J...........................................   113
    Roman, Nan...................................................   116
    Rooker, Renee................................................   120
    Zaterman, Sunia..............................................   136

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Letter to Chairwoman Waters and Chairman Frank from various 
      undersigned organizations..................................   143
    Letter from the California Housing Partnership Corporation 
      and various undersigned organizations......................   149
    Written statement of the National Leased Housing Association.   151


                    THE SECTION 8 VOUCHER REFORM ACT

                              ----------                              


                         Thursday, June 4, 2009

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Waters, Velazquez, Lynch, 
Cleaver, Green, Clay, Ellison, Driehaus, Himes, Maffei; Capito, 
Biggert, Putnam, Jenkins, and Lee.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order. Good 
morning, ladies and gentlemen.
    I would like to thank our ranking member, Shelley Moore 
Capito, and other members of the Subcommittee On Housing and 
Community Opportunity for joining me for our second hearing on 
the Section 8 Voucher Reform Act (SEVRA).
    At our first hearing, we were joined by HUD Secretary Shaun 
Donovan, who testified about the need for this legislation and 
its importance in protecting the continued viability of the 
Section 8 Program which provides housing assistance for 2 
million low-income families nationwide.
    Today, we will hear from residents, housing advocates, 
housing authorities, and the housing managers who deal with 
this Program on a day-to-day basis, and will be directly 
affected by this legislation.
    This is legislation that has broad support, including the 
support of 72 housing and redevelopment stakeholders in 
California, and the California Housing Partnership. These 
groups have sent a letter of support, which I would ask 
unanimous consent to enter into the record.
    It also has broad bipartisan support, passing the House in 
2007 on a vote of 333 to 83.
    Over the years, the Section 8 Program, which pays the 
difference between 30 percent of a tenant's income and the fair 
market rent, has become increasingly complicated for residents 
and the PHAs that administer the Program. Residents must 
routinely re-verify their income, through a time-consuming, 
error-prone process.
    As we will hear from Ms. Robinson, the inspections process, 
although well-intended, can actually prevent a tenant from 
leasing a unit if it needs minor repairs.
    The proposed bill would simplify these processes by 
streamlining the rent determination process requiring 
certifications less often, and improving inspections by 
allowing PHAs to perform some repairs.
    The proposed bill also addresses the funding formula for 
the Section 8 Program. Because of a drastic Bush Administration 
change to how vouchers were funded, over 150,000 vouchers were 
lost. I agree with the assessment of Secretary Donovan, who 
testified that the changes to the funding formula contributed 
to a slide in funding utilization.
    In fact, in order to make up for lost funding, PHAs limited 
services to residents and even began to restrict or deny moves 
to higher-cost areas.
    While the Democratic Congress has corrected this funding 
formula, the Program has still not achieved the same leasing 
levels as it had before the formula change.
    In short, the voucher program serves fewer people today 
than it did in 2004. Last year, only 90 percent of authorized 
vouchers were under lease. In 2004, 96 percent of vouchers were 
under lease.
    The legislation before us would establish a sustainable and 
transparent formula that would stop the reductions in voucher 
use and actually increase the number of families assisted 
through the program.
    The draft we will be discussing today does not include the 
Moving To Work Program, which allows about 30 PHAs to waive 
most of the rules that govern public housing and Section 8.
    As I stated in our first hearing, Chairman Frank and I have 
agreed that there will be a Moving To Work component to this 
bill,
    I would like to reiterate the concerns I have about the 
Moving To Work Program:
    First, I'm deeply concerned about the imposition of time 
limits and work requirements by Moving To Work agencies. 
Second, I'm aware that there has been a substantial decrease--
by one estimate 24,000 vouchers have gone unused--in the number 
of vouchers issued by Moving To Work agencies. Finally, there 
has never been a thorough evaluation of the Moving To Work 
Program.
    So I look forward to hearing from our witnesses on these 
very important issues, and I would now like to recognize 
Ranking Member Capito for her opening statement.
    Mrs. Capito. Thank you, Madam Chairwoman.
    I would like to yield to my colleague, Ms. Biggert, because 
she has time constraints, let her make her statement first, and 
then make mine second. Thank you.
    Chairwoman Waters. Without objection.
    Mrs. Biggert. Thank you very much, Ranking Member Capito, 
and thank you, Madam Chairwoman, for holding this hearing 
today. I would also like to thank all of the witnesses. And 
many of them worked on this with us in the last draft, in the 
last passage of this bill, and I think that, so they bring real 
expertise, and hopefully, we can get the Senate to move a bill 
this year, after we finish this one.
    There seems to be something that happens in that rarified 
air over in the Senate that sometimes the bills just sit there, 
and I think this is a very important bill, this is a very 
important hearing, and I hope that we will be able to do it 
expeditiously, and then the Senate will take it up.
    I thank you for talking about the Moving To Work, because I 
do think that is a very important component of this bill for 
those who are able to move expeditiously, and hopefully we will 
be able to work out something that will be of benefit to all of 
us.
    And I would also like to thank you for having the family 
self-sufficiency bill that I worked on early on in this bill.
    So again, thank you very much for holding this hearing, and 
I look forward to the witnesses.
    I yield back.
    Chairwoman Waters. Thank you very much.
    Mr. Lynch.
    Mr. Lynch. Thank you, Madam Chairwoman. I appreciate you 
holding this hearing, and all your good work on this issue.
    As someone who grew up in Section 8 housing, project-based 
Section 8 housing--I lived there for 15 years with my mom and 
dad when I was growing up--I understand how important this 
program is to a lot of families, especially now. In tough 
economic times, when people may have been able to rent in the 
private market or maybe they were forced out of their homes 
because of foreclosure, this is becoming a more important 
program to a lot of families.
    The Section 8 Housing Choice Voucher Program provides 
monthly rental assistance to about 2 million low-income 
households every year. Nearly 2,500 public housing agencies 
administer the program at the local level across the country.
    During the past two sessions of Congress, under the great 
leadership of Chairwoman Waters, this committee has completed a 
great deal of work on this issue, and I'm pleased to help in 
the effort to bridge those efforts to this Section 8 Voucher 
Reform Act of 2009.
    As we know from our past work, however, the Section 8 
Program has encountered structural inefficiencies and 
challenges that do affect the ability of public health 
authorities to effectively administer the Program.
    We know, from a 2003 HUD quality control study, that there 
have been high error rates in the subsidy calculations. A study 
released in 2004 also found that 40 percent of the subsidies 
were erroneously calculated. These high error rates are not 
acceptable, and formulas must be simplified to avoid those 
errors.
    We have also heard from public housing authorities that 
many times there are not sufficient staff and resources to 
perform inspections to certify Section 8 housing stock. 
Especially in the Northeast, in my area, notably in the 
district of Boston, where the housing stock is older than in 
many parts of the country, additional inspections are necessary 
to ensure tenant safety and proper allocation of Federal 
resources.
    The Section 8 Voucher Reform Act of 2009 addresses a lot of 
these issues, and it puts in place needed reforms to this 
essential program that play an important part in our 
communities.
    I look forward to the testimony from all of our witnesses 
on both panels, and I thank you for the courtesy, Madam 
Chairwoman, and I yield back the balance of my time.
    Chairwoman Waters. Thank you.
    Ranking Member Capito.
    Mrs. Capito. Thank you, Madam Chairwoman, and thank you for 
holding this hearing on the Section 8 Voucher Program, as you 
said in your opening statement, the second hearing on this 
subject following Secretary Donovan's appearance before the 
committee.
    We're going to hear from witnesses who interact with this 
program every single day, and I look forward to their 
assessment of the program, and ways in which we can make 
improvements.
    As has been stated before, this program is already, the 
Federal housing voucher program, assistance program, is helping 
approximately 2 million low-income families and individuals 
each year, administered by 2,500 public housing authorities.
    The Section 8 Program provides families and individuals 
with the flexibility to choose where they want to live and 
tailor their housing to their needs, rather than being 
designated to public housing, and the freedom and mobility of 
this program, I think, are two of the key benefits.
    But the Section 8 Program does face, I believe, significant 
challenges.
    The program already consumes over 40 percent of HUD's 
budget and it is overly complex and burdensome to administer. 
This program is in need of some fundamental reform that revises 
the funding formula, reduces the administrative cost, 
simplifies the rent calculation, and levels the playing field 
for those working families in rural America.
    We have tried to reform this program since the 108th 
Congress, and it is my hope we will be successful this time.
    I look forward to working with Chairwoman Waters to improve 
the Section 8 Program for Americans living in both urban and 
rural areas. Today's witnesses will give us valuable input on 
how to best reshape this program.
    I would also like to introduce a gentleman on the second 
panel, from West Virginia, Mr. Tony Bazzie, who is a friend of 
mine, and he has been working with the public housing authority 
in Raleigh County for 29 years, so I think, I know he has seen 
it inside and out, so I look forward to hearing his experience 
and his unique perspective on the second panel, and I welcome 
the other panelists, as well.
    Thank you.
    Chairwoman Waters. Thank you very much.
    Mr. Cleaver.
    Mr. Cleaver. Thank you, Madam Chairwoman, and Ranking 
Member Capito.
    And I apologize. At 10:30, I will have to go get another 
meeting started, and I will rush back to this committee, 
because this is a very personal issue with me.
    As did my colleague, Mr. Lynch, I, too, lived in public 
housing, and in those tough days when my mother, father, 3 
sisters, and I lived in public housing, I never thought the day 
would come when I would actually be in charge of public 
housing, but when I became Mayor of Kansas City, I walked into 
a buzzsaw, because our housing authority was in receivership, 
and I had to work to get that taken care of, and having lived 
there, I understood a lot of the problems that the people 
faced.
    And it pains me that we failed in the 109th and 110th 
Congresses to do the Section 8 reform. I agree with my 
colleague that we did our part under the leadership of 
Chairwoman Waters to get legislation from this subcommittee 
through the full committee to the House Floor and over to the 
Senate, where all good legislation goes to die.
    And we hopefully will be able to do this reform, because 
it's more needed now than ever.
    I just read yesterday that the foreclosure rate is not 
dropping, that people are continuing to lose their homes, and 
when you look at all of the GM and Chrysler workers, not the 
CEOs, the workers who will lose their jobs, which means that in 
many instances, they will lose their homes, we're going to need 
to make sure that this program is inclusive and that the reform 
will allow us to address the housing needs that we have in this 
country.
    I was hurt over the fact that the President, for the last 4 
years, zeroed out the public housing, because we already had a 
terribly underfunded program, and now we have to restore not 
only the units, but some credibility to the program.
    And so I appreciate this hearing. We have not only 2 
million people who are currently using the program who 
desperately need to see this reform, but I think the people who 
are going to be lined up at public housing doors, local public 
housing authority doors, trying to get vouchers.
    So, Madam Chairwoman, thank you very much for all the work 
that you have done on this issue, and I stand ready to be of 
continuous support to you. Thank you.
    Chairwoman Waters. Thank you very much.
    Mr. Maffei?
    Mr. Maffei. No statement.
    Chairwoman Waters. No statement?
    Then we will go right to our panel. And I am very pleased 
to welcome our distinguished first panel.
    Our first witness will be Ms. Linda Couch, deputy director, 
National Low Income Housing Coalition.
    Our second witness will be Mr. William Fischer, senior 
policy analyst, Center On Budget and Policy Priorities.
    Our third witness will be Ms. Nan Roman, president and 
chief executive officer, National Alliance to End Homelessness.
    Our fourth witness will be Ms. Gloria Robinson, a Section 8 
voucher holder, from Washington, D.C., who will be testifying 
on behalf of the National People's Action.
    And our fifth witness will be Mr. Ted Houghton, executive 
director, Supportive Housing Network of New York. Mr. Houghton, 
we were told by Ms. Velazquez that, if she were present, she 
would want to introduce you. She's not here yet, so please feel 
welcome.
    I would like to thank you all for appearing before the 
subcommittee today, and without objection, your written 
statements will be made a part of the record.
    You will each be recognized for a 5-minute summary of your 
testimony.
    We will start with our first witness.

STATEMENT OF LINDA M. COUCH, DEPUTY DIRECTOR, THE NATIONAL LOW 
                    INCOME HOUSING COALITION

    Ms. Couch. Chairwoman Waters, Ranking Member Capito, and 
members of the subcommittee, thank you for the opportunity to 
testify today on draft legislation to stabilize and expand the 
Section 8 housing choice voucher program.
    The National Low Income Housing Coalition does not 
represent any sector of the housing industry. Rather, we work 
on behalf of and with low-income people who need safe, decent, 
and affordable housing, especially those with the most serious 
housing problems.
    On behalf of the Coalition, I would like to thank you for 
your work on the draft bill, which is testament to the 
subcommittee's commitment to the Nation's housing programs for 
the lowest-income people.
    Nationally, more than 70 percent of extremely-low-income 
renters, those with incomes below 30 percent of area median, 
pay more than half of their incomes toward rent.
    Our analysis of the latest American community survey data 
finds that half of the 9 million renter households in the 
United States spent a stunning 80 percent or more of their 
incomes on housing in 2007.
    The voucher program, which targets 75 percent of its 
assistance to extremely poor households, addresses these most 
significant housing affordability challenges.
    We applaud the bill's authorization of 150,000 new 
vouchers. At least this many are needed. Vouchers can prevent 
homelessness and allow severely cost-burdened families to 
rebalance their lives with affordable housing.
    We hope that the voucher program can be doubled in size, to 
serve 4 million families over the next 10 years, and that the 
number of authorized vouchers in the bill can be increased as 
the legislation moves forward.
    We also congratulate the subcommittee on developing a bill 
that simultaneously achieves several important rent-setting 
policy goals, assuring tenants will have affordable rents, 
simplifying public housing agencies' administrative burdens, 
and encouraging increased earned income, among others.
    Affordable rent is one of the voucher program's most basic 
benefits. Without affordable rents for each household, vouchers 
would quickly lose their ability to correct the significant and 
severe housing cost burdens faced by the Nation's lowest-income 
households lucky enough to access them.
    The Coalition, however, does not support the ability 
provided in the bill that allows housing agencies to establish 
alternative rent structures for public housing residents, even 
though the bill includes a provision requiring the new rent 
structure not to result in rents higher than a household would 
pay under the normal rent structure. This sounds like double 
work for agencies that are asking for less paperwork.
    It is our firm belief that the innumerable benefits the 
Brooke Amendment has brought to low-income people with housing 
assistance should continue to be guarded with great fervor.
    We commend the bill's several provisions that expand the 
ability of voucher holders to live in neighborhoods of their 
choosing by improving how fair market rents are set, directing 
HUD to improve the portability of vouchers, and allowing higher 
payment standards where a high rate of voucher concentration 
exists.
    The bill would also provide important protections for 
tenants in other federally-assisted housing programs, improve 
the inspection process for voucher units, and encourage the 
expansion of the family self-sufficiency program.
    The draft bill provides significant efficiencies for the 
voucher and public housing programs without compromising on 
which income groups are served or how deep their subsidies are.
    We do not believe that providing greater flexibilities from 
the program's core goals by expanding and extending the 
existing Moving To Work demonstration program to more housing 
agencies should be included in this bill as it moves forward.
    Such flexibilities are not a correct counterbalance to the 
ongoing and historic underfunding of public housing. Increased 
funding for public housing and vouchers is among the 
Coalition's highest priorities.
    We are certain that some agencies have used Moving To 
Work's flexibilities to provide more housing to more people in 
more communities. We are equally certain that some agencies 
have done quite the opposite.
    Federal housing policy should not gamble on most agencies 
doing the right thing.
    We feel it is the responsibility of Federal housing policy 
to ensure to the greatest extent practical that Federal housing 
programs will do the right thing. Without such assurances, the 
Coalition worries that future funding for vouchers and public 
housing will be jeopardized.
    Given the lack of thorough evaluation and several scathing 
HUD Inspector General reports on agencies' use of Moving To 
Work's flexibilities, we believe Moving To Work should not be 
expanded or extended until we can assess what has occurred, 
move forward with the good, and leave behind that which has 
harmed residents with time limits, fewer housing options, and 
unaffordable rents.
    Thank you for considering our views on these issues. We 
look forward to working with you all to improve and expand 
HUD's affordable housing programs.
    [The prepared statement of Ms. Couch can be found on page 
60 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Fischer.

  STATEMENT OF WILL FISCHER, SENIOR POLICY ANALYST, CENTER ON 
                  BUDGET AND POLICY PRIORITIES

    Mr. Fischer. Madam Chairwoman, Ranking Member Capito, and 
members of the subcommittee, I am Will Fischer, senior policy 
analyst with the Center on Budget and Policy Priorities. It's a 
privilege to testify before you today.
    The main point of my testimony is to commend the committee 
for considering SEVRA and to emphasize the important benefits 
that the bill would provide for housing agencies, for private 
owners, but particularly for the low-income families who 
receive housing assistance or are on waiting lists around the 
country.
    I also want to urge caution concerning any expansion of the 
Moving To Work demonstration.
    First, I will talk some about the benefits of the bill.
    Overall, it is a package of important, timely, carefully 
crafted improvements that would strengthen and update the 
housing voucher program, which is already a highly effective 
form of housing assistance. SEVRA's most important provisions 
would establish a stable, fair, efficient voucher funding 
system, and this is important because, as the Chair noted, the 
program has come out of a period of instability in funding 
policy from 2003 to 2006.
    Appropriations legislation changed the voucher funding 
policy every year, and this led to the decline, to close to 
150,000 vouchers being taken out of use.
    The improvements that Congress made in 2007 and in 2008 
restored about a third of those vouchers to use, and there's a 
graph on Page 3 of my testimony, my written testimony, that 
shows that trend. SEVRA would build on that with the 
improvements to funding policy, and put more vouchers to use 
serving needy families.
    Importantly, SEVRA's renewal funding provisions would do 
this without increasing costs. They would provide a series of 
tools and incentives for housing agencies to serve as many 
families as possible with the resources that are provided to 
them.
    SEVRA's funding provisions are important under any 
circumstances, but they take on particular urgency during this 
period of an economic downturn, when rising poverty and 
unemployment are increasing homelessness and the need for 
housing assistance.
    The sooner that SEVRA is enacted, the sooner it will extend 
voucher assistance to more people who would otherwise be 
homeless or at risk of homelessness.
    Another improvement in SEVRA would be the provisions which 
simplify the rules for setting tenant rent payments, although 
we share some of Linda's concerns about the provisions allowing 
alternative rent structures in public housing.
    Other key improvements in the bill would streamline the 
housing inspection system, strengthen work incentives, and 
allow expanded use of project-based vouchers. And project-based 
vouchers, because they can be tied to particular buildings, can 
be used to preserve and develop affordable housing.
    The bill's project-based voucher provisions could be 
strengthened further by allowing some public housing 
developments to be converted to project-based vouchers to 
support their revitalization.
    I will turn now to our concerns about Moving To Work.
    The Moving To Work demonstration is intended to support 
experimentation with housing policies by allowing housing 
agencies to operate their programs without regard to many 
Federal statutes or regulations.
    The demonstration has allowed some housing agencies to test 
innovative and promising policies, but at the same time, it 
does allow many harsh measures, as has been mentioned, 
including sharp increases in tenant rents and time limits on 
assistance, even for working poor families who cannot afford 
housing without help.
    Importantly, the demonstration has not been subject to any 
rigorous evaluation, so it's simply not known what the effects 
of these measures have been, and there also has not been any 
adequate monitoring of people after they leave the program in 
situations where you have rent increases and time limits.
    In addition, there's the issue that Moving To Work allows 
housing agencies to shift funds around and to accumulate very 
large reserves in ways that are prohibited for other housing 
agencies.
    Close to $1 billion just from 2005 to 2008 has been 
diverted out of the voucher program, either for other purposes 
or into large reserves, and that is money that could have been 
used to assist tens of thousands of families.
    As a result, those families went without assistance, even 
though Congress had provided money specifically for that 
purpose.
    If an expansion of Moving To Work is included in the bill, 
it's important that it be of limited scope, that it have strong 
tenant protections, rigorous evaluation and transparency 
requirements, and that it have strict prohibitions on the 
diversion of voucher funds.
    Thank you for the opportunity to testify, and I would be 
pleased to take any questions from the committee.
    [The prepared statement of Mr. Fischer can be found on page 
70 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Roman.

STATEMENT OF NAN ROMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
             NATIONAL ALLIANCE TO END HOMELESSNESS

    Ms. Roman. Chairwoman Waters, Ranking Member Capito, and 
members of the subcommittee, I am honored that you have invited 
the National Alliance to End Homelessness to testify before you 
today.
    Section 8 is probably the most important government 
resource to prevent and end homelessness. If we had an adequate 
supply of Section 8 vouchers, there would be virtually no 
homelessness in our Nation, and the Alliance commends the work 
that the committee has done to stabilize, simplify, and expand 
the program.
    With respect to the connection between housing and 
homelessness, people's lack of housing is what defines them as 
homeless. However, their need for housing plays out in 
different ways.
    About 80 percent of individuals, and well over 90 percent 
of homeless families, are homeless for economic reasons. If 
they had affordable housing, while they might still be poor, 
they would not be homeless.
    Research has consistently shown that a Section 8 voucher 
allows virtually everyone to exit homelessness and never become 
homeless again.
    The remainder of homeless people need permanent, supportive 
housing. This includes people with disabilities, about 50,000 
veterans, and the increasing number of elderly homeless people. 
Tenant and project-based Section 8 have proven to be effective 
in providing permanent, supportive housing.
    In terms of preventing homelessness, Section 8 is also 
effective. There is a much larger pool of extremely poor people 
and doubled-up people from which the homeless population 
emerges. Some 16 million people live at half of the poverty 
level, and as many as 10 million live below the poverty level 
and are doubled up. Only a handful of these people would become 
homeless if they had affordable housing.
    In summary, housing is the key intervention in ending and 
preventing homelessness, and Section 8 is the linchpin to 
providing that housing.
    It is for this reason that we're so grateful to the 
subcommittee for its work to stabilize the Section 8 housing 
choice voucher program. The draft SEVRA bill improves Section 8 
in several ways that will specifically help to end 
homelessness.
    It makes the program more reliable. Landlords, developers, 
and tenants must have confidence in the Section 8 Program, in 
how it operates and in what resources it can deliver.
    By settling basic questions of funding distribution in ways 
that incentivize full utilization of authorized vouchers, SEVRA 
accomplishes this goal. This will encourage landlord 
participation, sometimes a challenge in housing homeless 
people, and it will increase the number of families who are 
assisted.
    Project-based Section 8 is essential for the creation of 
permanent, supportive housing for disabled and elderly homeless 
people, including veterans. SEVRA takes a much-improved 
approach to project basing, and this will have a positive 
impact on communities' efforts to end homelessness among people 
with special needs.
    SEVRA's simplification of rent calculations and inspections 
makes an important contribution, as well. This simplification 
will encourage more landlords to participate and make the 
program easier for tenants to understand.
    To maximize the impact of the Section 8 Voucher Program, we 
offer the following suggestions:
    Distributing scarce resources across a wide variety of 
eligible populations has little impact, while tightly targeting 
distribution can drive toward solutions. Section 8 is a rich 
resource, and it should be targeted to those who need it most 
in order to maximize its impact. In particular, targeting to 
people with mental illness, veterans, and families with 
children in foster care should be retained.
    Further, given the extensive unmet need for affordable 
housing among very poor people, we can see no situation in 
which it would be reasonable to waive or raise income 
eligibility. Income targeting should be retained.
    In the recovery legislation, Congress recently passed the 
Homelessness Prevention and Rapid Rehousing Program, HPRP, to 
ameliorate recession-related homelessness. This Program 
provides short- to moderate-term rent assistance to people who 
are threatened with homelessness, or who are homeless.
    HPRP should work well for a lot of people. However, there 
are some people who need longer-term assistance, such as people 
with disabilities, and we need to figure out how to make a 
linkage between HPRP and Section 8.
    The Housing Trust Fund is a key piece of legislation to 
develop affordable housing. We thank you very much for creating 
it. However, to reach the target population of that program, 
operating subsidies will be required. When the Trust Fund is 
resourced, it is also going to be important to consider how 
Section 8 can best be linked with it.
    Section 8 should be a vehicle for exiting homelessness, not 
a vehicle for entering homelessness. A small percentage of 
people become homeless while receiving Section 8. The reasons 
tend to be administrative. PHAs should be given the resources 
to solve such problems before eviction, and in particular, we 
recommend that PHAs report their termination rates on a regular 
basis, including whether or not people terminated end up 
homeless.
    On behalf of the board of directors of the National 
Alliance to End Homelessness, we support your efforts to try to 
improve the Section 8 Program. We hope that they will 
eventually lead to an adequate supply of Section 8 vouchers to 
meet the needs of all people who need them.
    Thank you very much.
    [The prepared statement of Ms. Roman can be found on page 
116 of the appendix.]
    Chairwoman Waters. Thank you.
    Ms. Robinson.

 STATEMENT OF GLORIA J. ROBINSON, TENANT ORGANIZER, ORGANIZING 
  NEIGHBORHOOD EQUITY DC (ONE DC), AND HOUSING CHOICE VOUCHER 
                           RECIPIENT

    Ms. Robinson. Thank you, Chairwoman Waters, Ranking Member 
Capito, and members of the committee for inviting me to testify 
on the draft of SEVRA.
    My name is Gloria Robinson, and I work for Organizing 
Neighborhood Equity, or ONE DC, which is a member of the 
National People's Action Network. I am also a housing choice 
voucher holder.
    In the past year, there has been a great deal of dialogue 
about the ailing economy, the housing and mortgage crisis, and 
its devastating effects on middle-class America.
    I'm pleased to be a part of a dialogue that addresses 
another population, a population that often seems to exist 
beneath the radar screens of lawmakers and politicians. This is 
a population for which little has changed as a result of the 
economic downturn and the mortgage and foreclosure crisis.
    Many of us were poor, living in substandard housing, or 
homeless way before this conversation began to take place. I 
was part of this population.
    In 1994, I entered a transitional housing program, and was 
placed on the waiting list for subsidized housing. Fifteen 
years later, I have still yet to receive the letter informing 
me that my name had reached the top of that list.
    The D.C. Housing Authority has over 26,000 households 
waiting. That number is growing steadily.
    Without the 750,000 vouchers proposed by SEVRA over the 
next 5 years, they will continue to wait. They will wait in 
substandard housing, and they will wait on the streets. Some of 
them will die waiting for decent, affordable housing. It is 
essential that SEVRA gets introduced and passed through the 
House with this provision in place.
    I became a housing choice voucher holder in June of 2008, 
not because of any movement on the waiting list, but because 
there was an opt-out at the project-based subsidized property 
where I was renting.
    Over 2,000 affordable housing units have been lost in 
Washington, D.C., since 2000, and the rent burden carried by 
thousands of low-income tenants continues to grow. For this 
reason, I applaud the proposal to increase the number of 
vouchers made available, and the continued funding for the 
current housing choice vouchers.
    I'm concerned about the sometimes prohibitive background 
checks required of voucher applicants. For example, outstanding 
or delinquent student loans would negatively affect an 
applicant's credit score. These debts may be decades old, but 
their negative impact is current.
    Generally, low-income people are going to have weaker 
credit histories, because the reality is that it's more 
expensive to be poor in this country. For that reason, an 
applicant's credit history shouldn't be considered when they 
apply for a voucher, unless there is overwhelming evidence that 
they will not be able to pay rent.
    D.C.'s Housing Authority requires criminal background 
checks for all household members over the age of 18. I would 
like to see SEVRA include language that limits criminal 
background checks to certain felonies that have occurred within 
the past 2 years.
    I don't know if it's still the case now, but the Chicago 
Housing Authority used to only screen for drug offenses and 
violent crimes, such as rape or murder.
    Although there is a law in D.C. that is supposed to protect 
tenants from being discriminated against based on the source of 
income, I was told on more than one occasion that the property 
did not accept vouchers.
    There needs to be a provision added to SEVRA that expressly 
prohibits discrimination based on source of income at the 
national level. There also needs to be a mechanism put in place 
to enforce this provision.
    I am happy that SEVRA addresses the issue of inspections, 
especially failed inspections that result in delayed lease-ups 
where there are no life-threatening reasons for the failure.
    When I located an apartment and was approved on August 2nd, 
7 weeks later, the inspections were done, and the unit failed, 
the first time, for one bedroom window that had been painted 
shut, and the second time for a shower pole missing in the 
master bathroom--not life-threatening issues. Each time the 
unit failed, it went to the end of the inspection list.
    While housing authorities should withhold rents from 
landlords who don't make necessary repairs within 30 days, non-
life-threatening issues should not delay the occupancy of an 
otherwise habitable unit.
    I was finally able to lease up and move in on November 3, 
2008, after sitting in overflowing waiting rooms every week, 
sometimes from 7:30 a.m. to 3:00 p.m.
    Every employed housing authority client doesn't have the 
luxury or flexibility to spend 6 to 8 hours away from their 
jobs every week, without seriously jeopardizing their 
employment status.
    Finally, I agree with Secretary Donovan's opinion on the 
Moving To Work Program.
    Because housing authorities were not required to collect 
any data, there is no empirical evidence to show that the 
program has been effective. Extensive data needs to be 
collected, and that data thoroughly analyzed before the program 
is expanded.
    Thank you for the opportunity to submit this testimony on 
behalf of SEVRA.
    [The prepared statement of Ms. Robinson can be found on 
page 113 of the appendix.]
    Chairwoman Waters. Thank you.
    Mr. Ted Houghton.

   STATEMENT OF TED HOUGHTON, EXECUTIVE DIRECTOR, SUPPORTIVE 
                  HOUSING NETWORK OF NEW YORK

    Mr. Houghton. Thank you, Madam Chairwoman, Ranking Member 
Capito, and members of the subcommittee. I am glad to be here.
    I want to say that the Supportive Housing Network, which 
represents 180 nonprofit providers and developers of supportive 
housing across New York State supports all of these comments 
that our national advocacy partners and Ms. Robinson have made.
    There is an awful lot of consensus on this bill. You guys 
have done a terrific job of listening to people and crafting a 
very strong bill that not only provides additional resources, 
but also makes some very smart decisions and makes some 
efficiencies and gets some incentives in there that are going 
to really help this program along.
    But I can't help but emphasize that the most important 
thing here is that we're going to get more vouchers. There is 
such a great need both in urban areas and in rural areas for 
more housing assistance.
    We have 34,000 people living in homeless shelters each 
night in New York City right now. It's one of the highest 
levels ever. And we really have not been able to address that, 
because we don't have the long-term rental assistance available 
to us in the numbers that we need.
    Not only that, but if we can get these vouchers, we will be 
able to not only create housing stability for the families who 
need them, but it will also create community stability, 
neighborhood stability, as we are able to maintain housing in 
good condition.
    And that's going to also help create jobs in maintaining 
this housing. It also creates housing stability. That helps 
people concentrate on getting jobs.
    We use the supportive housing network, and our partners in 
government use the Section 8 Program as a means to leverage 
other resources to build supportive housing for people with 
special needs, and the Section 8 Program is one of the most 
important sources of that. There's just not nearly enough 
shelter-plus-care vouchers under the McKinney Program to build 
the amount of supportive housing that we need in New York City.
    We are about to open up our 40,000th unit of housing in New 
York State for people with special needs. We're very proud of 
that. But we could be doing much more if we had the ongoing 
rent subsidies to serve the extremely-low-income people who 
live in our residences.
    A person on SSI in New York State gets $8,000 a year. You 
cannot fund housing and the ongoing need to maintain that 
housing and pay for oil and heat and all those other things 
with that level of money. You need to have Section 8 in 
addition to that.
    We use that, in New York City, we take tenant-based Section 
8s and we put them in supportive housing. What happens, though, 
is that there is so much administrative burden in inspections 
and certifications.
    And try to inspect an apartment or get a signature on a 
certification from a mentally ill tenant who is paranoid, who 
has had all sorts of troubles working with authorities over the 
years. It's very difficult. And sometimes what happens is, we 
lose the Section 8, but we continue to keep the tenant, and we 
end up paying for that.
    Because of late Section 8, our members are losing millions 
of dollars a year because we rent to people, they apply for 
Section 8, and then we wait as long as 11 months, maybe 18 
months, before that Section 8 certificate comes through.
    And so what happens is that we lose money and we still 
serve the people, but the buildings struggle to maintain 
themselves.
    There are a lot of great things in this bill. We're very 
happy about it. What we would like to see is improvements in 
the prioritization, so that we're not just stuck with homeless 
prioritization, but we're also able to prioritize people who 
are just about on the edge of homelessness, and get them, and 
we can hook that up with HPRP and will be able to do that, and 
also to work with the project basing.
    What happens is, there's a disincentive for localities to 
project-base because if they give out a Section 8 to a tenant-
based, they know that they will just have to pay for that one 
tenant-based Section 8. If you do a project-based, the person 
is allowed to move in a year, and they go to the front of the 
line and get a tenant-based. Then the next person comes in, and 
they move a year later, and they get another tenant-based. So 
you start generating more and more.
    So if we could create a national pool of tenant-based, to 
help people moving on from supportive housing that is project-
based, I think that would be a very helpful thing, because then 
we would be able to project-base more and help people move on 
to independence.
    Thank you very much. I think that I have used up my time. 
I'm open to any questions.
    [The prepared statement of Mr. Houghton can be found on 
page 96 of the appendix.]
    Chairwoman Waters. Thank you very much for your testimony.
    I will now recognize myself for 5 minutes for questions.
    I want to talk a little bit about Moving To Work, because, 
as you can imagine, this becomes kind of a hot political issue.
    There are members who believe that somehow the Moving To 
Work Program will make you, if you're in it, more deserving, 
that somehow, if we have rules that dictate your life in some 
way, that this is what you deserve to have happen in exchange 
for being able to receive government support or live in public 
housing.
    Ms. Couch, in your testimony, you state that Moving To Work 
should not be expanded unless there is a thorough evaluation of 
existing sites.
    Could you explain how Moving To Work has had a negative 
impact on residents and communities? How can Moving To Work be 
reformed so that residents are protected from harmful policies, 
such as time limits or work requirements? I mean, would you 
give me your thoughts on this?
    Ms. Couch. Sure. Thank you for the question. And it is 
truly an honor to be here today to testify before you.
    I wish I could tell you a lot more about the Moving To Work 
Program, but the truth is, we don't know very much. We don't 
know very much about the residents going into Moving To Work 
Programs and the housing agencies participating in the 
demonstration, and we don't know very much about what has 
happened to them at a national level.
    Our concerns, I think, are your concerns that you have 
expressed, that there is some data that show that resident rent 
burdens have increased from pre-Moving To Work participation to 
participating in the Moving To Work Program after a few years, 
because housing authorities in the Moving To Work are given the 
ability to divorce rents from incomes, and the Brooke 
Amendment, which housing residents have today, says that rents 
have to be about 30 percent of a resident's income.
    With the ability of Moving To Work to divorce rents from 
income, rents can be what housing agencies think might be a 
good deal, and it seems to us frequently that the Moving To 
Work aspect of the program is simply ratcheting up rents in 
such a way that people would be compelled to get higher earning 
jobs, but when they can't find those higher earning jobs, their 
public housing or their voucher assistance becomes unaffordable 
to them.
    Some of the more troubling aspects of Moving To Work, from 
our perspective, are the ability to change the income targeting 
of the program. The public housing, in particular the voucher 
program, are deeply income targeted.
    Under Moving To Work, housing agencies can allow 90 percent 
of their assistance to serve residents up to 60 percent of area 
median, and in many, many communities across the country, you 
would be hard-pressed to find severely cost-burdened residents 
at 60 percent of area median income, which is precisely why the 
public housing and voucher programs are targeted so deeply. So 
income targeting, we think, must be maintained at least at 
today's current standards.
    And again, as I said in our testimony, the ability of 
residents to know that in a Federal housing safety net program 
like public housing or the voucher program, their rents will be 
affordable, is critical, and we must have national standards 
that ensure affordable rents. Time limits, work requirements, 
other social policies or the contracts associated with the 
Moving To Work Program we think are troublesome.
    We do think that there have been some goods, some 
flexibilities that have allowed more supportive services in 
Moving To Work agencies, but we just don't know, and we think 
it would be quite troubling to expand the Moving To Work 
Program to more agencies until we have a solid sense of what 
has been demonstrated, so we can really move forward with what 
has worked and leave behind that which has harmed not just 
housing residents, but the health and the financial health and 
the physical health of the housing stock.
    Chairwoman Waters. Thank you very much.
    Ms. Robinson, I wanted to talk with you or get you to 
answer some questions about background checks.
    Ms. Robinson. Sure.
    Chairwoman Waters. Now, Ms. Robinson, politically here in 
the House of Representatives, we have members who say we must 
keep all criminals out of public housing, we must have these 
background checks so that we can make sure that these bad 
people don't move into public housing.
    But you're saying that there are people who would otherwise 
be eligible, and you alluded to the fact that there may be 
people who are excluded because they have been in trouble, they 
were not felonies, they were more minor crimes.
    Can you talk a little bit about that?
    Ms. Robinson. Yes, absolutely.
    Except for the more serious crimes, the drug offenses--and 
even with the drug offenses, if an applicant is completing some 
sort of treatment program and really trying to get well, they 
should have the opportunity, if there's a need for assisted 
housing.
    In cases where applicants or members of their family who 
are over 18 have served their time and completed their 
sentences, their families and they should not be prohibited 
from getting the assistance for housing.
    If they do, then essentially, they're back on the streets, 
which opens up the door for more criminal activity.
    So I believe that within the 2-year period, you know, if 
there is no significant criminal activity, then they should be 
able to receive the assistance as any other low-income person.
    Chairwoman Waters. Thank you.
    Ms. Capito, for questions.
    Mrs. Capito. Thank you, Madam Chairwoman.
    I would first like to ask unanimous consent to enter into 
the record the National Multi-Housing Council's comments on the 
proposed Section--
    Chairwoman Waters. Without objection, it is so ordered.
    Mrs. Capito. Thank you.
    This is a question for whomever wants to answer on the 
panel.
    In recent years, Congress changed the way the voucher 
program was funded, moving from a formula-based on the number 
of units that a PHA has under contract with HUD at their 
current per-unit cost, to a dollar-based formula established by 
the number of units under lease on a given date adjusted by an 
inflation formula.
    Has this change proven to be more cost-effective, and what 
further improvements would you recommend be made?
    Will anyone take that?
    Mr. Fischer?
    Mr. Fischer. I think the change has, certainly the cost of 
vouchers has fallen during this period. The average cost of a 
voucher, I think it hasn't necessarily been reflecting 
increased efficiency.
    In a lot of cases, housing agencies have ratcheted down the 
cost of vouchers, in some cases excessively, so they don't 
cover rents in an adequate range of areas.
    And I think that the changes in the formula, the way they 
have been done, and particularly the fact that they have--the 
formulas have changed, or did change significantly from year to 
year during this period from 2003 to 2006, made it difficult 
for housing agencies to manage their program, and contributed 
to a really big loss in the number of vouchers that were in 
use.
    Agencies took those vouchers out of use, in some cases 
because they didn't have enough funding to cover them in the 
current year, but sometimes also because they didn't know how 
much funding they would receive the next year.
    I think SEVRA, what SEVRA does is it builds on that system, 
it builds on the change that you mentioned. It sticks with a 
system that's not--it provides funding based on the vouchers in 
use in the previous year, but it doesn't actually, on an 
ongoing basis, fund every voucher at its current cost.
    But it builds on that by establishing a stable funding 
system year after year, and creating a series of incentives for 
agencies to use more vouchers. It allows reserves that let them 
plan their programs better.
    And I think it really does start from the change that you 
were talking about going to a dollar-based system, then improve 
on its strengths, and strengthen it in a way that will make the 
program work better going forward.
    Mr. Houghton. And if I can add--
    Mrs. Capito. Yes.
    Mr. Houghton. --that uncertainty is a big cause for a lot 
of the delays in payments, because the PHA is wondering how 
much Section 8--
    Mrs. Capito. Let me just clarify. Uncertainty as to what's 
going to be coming down the pike?
    Mr. Houghton. Yes.
    Mrs. Capito. Okay.
    Mr. Houghton. Yes. Because you don't know how much you're 
going to get this year, and so you don't know whether you can 
release enough tenant-based Section 8s to cover our 
developments and make sure that they're running well. And so 
that has been very important for us, if we can get that change 
in there.
    Mrs. Capito. Okay. I have a question that, we're talking 
about redoing the rent calculations and the problems of income 
verifications that everybody has, and the reason this kind of 
caught my attention is, certainly we have learned through the 
subprime lending debacle that the income verification was 
either: (a) non-existent; or (b) extremely inadequate.
    What kind of improvements can be made for income 
verifications? Do you think we address that, that this is 
addressed in this bill, and is that sort of a moving target, I 
think, that presents more difficulties in, I don't know, in 
this day and time?
    Ms. Couch. Well, I think that this is a great question for 
the public housing agency administrators, as well, but I would 
just say that the bill's simplification of rents is going to 
help a lot, but it's my understanding that what is in place to 
certify incomes could work well if the housing authority staff 
had enough funding and enough staff to implement what's there 
as far as certifying incomes.
    It's extremely important that we have an accurate 
understanding of what incomes are, and it's my sense that what 
is in place now works, but we just have to make sure we comply 
with what is in place.
    Mrs. Capito. I think some of the studies that were out 
showed that, and it was a rather large percent, maybe 30 
percent, under or over--
    Ms. Couch. Right, and I think that's because there are 
inconsistencies with how the rules that exist are implemented.
    Mrs. Capito.Does anyone else want to--
    Mr. Houghton. I would say that the--a lot of Section 8s are 
now used to support tax credit projects, where the income 
verifications are very strict, and so we're able to do it well 
there.
    I think with the additional administrative fees that are, 
the administrative costs that are covered under SEVRA, we will 
be able to do a better job at the PHAs, as well.
    Mr. Fischer. I think that's absolutely right, that the 
administrative funding in SEVRA would give PHAs more ability to 
manage their programs well, including income verification.
    There are also several provisions in SEVRA that make it 
both simpler, the system simpler so it's easier to verify, and 
there are also things that directly help with verification, and 
one example of that is that the bill allows housing agencies to 
rely on verifications from other public assistance programs, so 
a housing agency could set up a system with a food stamp agency 
that would let them avoid duplicating all the work that the 
food stamp agency does, and that, I think, could help a lot.
    Mrs. Capito. Okay. One final question. And this is sort of 
at the 30,000-foot level.
    Ms. Couch, in your written statement, you mentioned that 
you hoped the voucher program could be doubled in size to serve 
4 million families over the next 10 years.
    What effect do you think that could have, doubling the size 
of that, on other discretionary programs? I mean, it's like 
putting air in a balloon. You only have so much. And we have 
other great programs under HUD's jurisdiction, the homeless 
program being one, disabled housing, elderly, and others.
    Do you have a comment on that?
    Ms. Couch. Well, we think it would greatly increase the 
cost of the Section 8 voucher program over the years, but we do 
think that we do need to put significant new resources into new 
vouchers.
    Unless and until we do that, we will not address our 
Nation's homelessness problems, we will not address the number 
of families of all types living with severe housing cost 
burdens.
    As you well know, housing programs are not an entitlement, 
and it's estimated only 1 in 4 families eligible for them 
actually receive them.
    We would like to see a rebalancing of where we put our 
resources, and the Nation has long supported financially 
people's ability to enter into homeownership, and we would like 
to see a commitment at the national level to also support 
people's ability to rent homes that are affordable to them.
    So I guess what I'm saying is that we would anticipate that 
a doubling of the voucher program would greatly increase the 
cost of the voucher program to the Federal Government, but we 
think that the society's benefits to those costs would greatly 
outweigh them.
    Ms. Roman. If I could just add one thing to that, I think 
one of the lessons from the homelessness field is that there 
are a lot of costs associated with not housing people.
    There are increased health care costs, there are education 
costs, there are law enforcement costs and corrections costs, 
and the costs of unemployment.
    So while that might not be within the HUD budget, I think 
that we have to look at cost offsets in other programs when we 
talk about housing people.
    Housing stability seems to be a necessary bedrock upon 
which a lot of other things rest, and if you don't have it, you 
pay in other ways.
    Mr. Houghton. I'm sorry--
    Mrs. Capito. Go ahead.
    Mr. Houghton. To add onto Nan Roman, in New York City, we 
discovered, and this is 10 years ago, a homeless mentally ill 
person costs $40,000 a year, because of their use of emergency 
rooms, shelters, and all those other things. And once you place 
them into supportive housing, it reduces it so much that it 
pays for almost all of the cost.
    And we have gotten very good at targeting the housing to 
the most needy, and really been much more cost effective.
    So I think this is a very good investment. It will rise, 
but I think the costs that you spend on homelessness dwarf any 
increase that would happen in the Section 8 Program.
    Mrs. Capito. Thank you.
    Chairwoman Waters. Thank you very much.
    Ms. Velazquez.
    Ms. Velazquez. Thank you, Madam Chairwoman.
    Ms. Couch, I heard what you were saying about your concern 
regarding the changes to the Moving To Work Program, and one of 
them is the lack of data and evaluation.
    Can you tell us what are some of the critical resident 
protections that must be included in any program expansion?
    Ms. Couch. Well, we would start with income targeting. We 
think at least the current income targeting standards must be 
maintained.
    The current rent structures, we think that giving 
flexibility to divorce rents from incomes for households or for 
tiers of households is a mistake that could lead to harm to 
residents.
    We think an important protection would be an inability of 
housing authorities to impose time limits. I think the HUD data 
show that most people who can move out of the housing 
assistance programs when they're able to, and those who don't 
would be the ones most likely to be harmed under time limits.
    We also think that there has to be a strong evaluation 
component and that the data have to be evaluated regularly, you 
know, at 2 years, at 4 years, at--you know, so that we can not 
just collect that data, but evaluate it, so that HUD could have 
the authority and Congress could step in to make sure that 
those housing agencies which are obviously harming residents or 
harming the physical or financial health of their own housing 
agencies would be directed to change their policies because the 
demonstration wasn't working in the best interests--
    Ms. Velazquez. Thank you.
    If any of the other members of the panel would like to 
comment, I would like to ask you where and how should we focus 
our evaluation efforts regarding the Moving To Work Program, 
since we know that there is such a strong push to allow more 
housing authorities to participate?
    Ms. Robinson?
    Ms. Robinson. Yes. My concern with the Moving To Work 
Program is the quality of work that participants would have the 
ability to get.
    With employment rates being in the double digits, I'm 
concerned that folks won't be able to find work that preserves 
some human dignity, you know. If people are going to be forced 
to work in order to receive housing assistance, where are they 
going to work? Will they be sweeping streets?
    You know, I'm just concerned with any measure that makes it 
mandatory that you work in a climate of unemployment. And 
that's my comment.
    Ms. Velazquez. Mr. Fischer?
    Mr. Fischer. I think I agree with both of the comments that 
we heard before.
    I think it's also very important in order to have adequate 
tenant protections in Moving To Work, in order to avoid 
exposing tenants to unnecessary risk to limit the scope of any 
expansion. I think Moving To Work's purpose should be research, 
it shouldn't be something that's just meant to give general 
flexibility to agencies.
    If there are statutes or regulations that are too 
burdensome or too complex, it's something that Congress should 
look at nationally and see if there are ways to improve that, 
and SEVRA does that in a whole range of areas.
    But the purpose of Moving To Work should be targeted on 
testing particular policies and should only be expanded to 
cover a limited number of agencies to do that.
    Ms. Velazquez. And how do we measure success?
    Mr. Fischer. Well, I mean, I think that the--I will give 
you an example of something where experimentation might make 
sense, is rent policy. I think that there are a lot of ideas 
out there about changes that could be made to rent policy.
    I think it would be important to narrow the scope and look 
at things that protect the lowest-income tenants and make sure 
that you're not putting people out on the streets because 
you're charging excessive rents.
    But there is some experimentation that could be done that 
would be effective, and I think that if the Moving To Work 
demonstration should only allow experimentation on rents, it 
should be focused on that.
    It should be just the relatively small number of agencies 
that would be needed to do that, and it should have controlled 
experimental evaluation so that you have--so that you don't go 
through, like you have with the current demonstration, where 10 
years later, or 13 years later, you don't know what exactly 
happened.
    Ms. Velazquez. Thank you.
    Mr. Houghton, you spoke about homelessness that is on the 
rise due to the economic downturn. And in this draft, we have 
an appropriation for 150,000 incremental vouchers.
    Given the circumstances that we are facing today in our 
Nation, are the proposed levels sufficient, and if not, what is 
an appropriate level to have a real impact?
    Mr. Houghton. Well, I think Nan Roman could speak to the 
national level, but I think in general, New York State often 
gets about 10 percent of housing assistance because of need and 
population, and so that would be about 15,000 vouchers a year, 
and we could use that very, very quickly. We have 125,000 
people on the waiting list for Section 8, and we have 34,000 
people in the shelters, as I said.
    When you talk about the number of people who are homeless 
each night, you're not capturing the entire group of people. 
Five percent of all people living under the poverty line in New 
York City are going to end up in the shelter at one time during 
the course of a year. So it goes on. There's shifting through.
    And so when you have those homeless episodes again and 
again, especially when you're hitting children with this, you 
have these long-term effects that really end up costing in 
educational attainment, in employment prospects, in health, and 
all those things cost us in all these other different systems. 
This investment is really what we need to do.
    So I think that if you took a look at the total cost of 
what homelessness does, you could very well justify a much 
larger investment, and I could certainly find the people to get 
these vouchers to them. So, if you can do that.
    Ms. Velazquez. Thank you. Thank you.
    Chairwoman Waters. Thank you very much.
    Mr. Lee?
    Mr. Lee. Thank you.
    Just a few brief questions.
    I am one of the newer Members here in Congress, and I have 
tried to learn as much as I can about this program, and I know 
in two of my counties, it is very much needed. In fact, there 
is a 5-year backlog in terms of a wait period.
    The part that I'm troubled with, because it is a very good 
program, I have heard a lot of positives, the other issue, 
though, is the reality of the fact that we have limited dollars 
and the fact that this program has continued to take an 
inordinate amount of the entire HUD budget, and eventually, you 
know, we're going to run out of dollars. Look at our current 
fiscal situation.
    So my concern is making sure we use these dollars most 
effectively. The little research that I have done shows that, 
on average, an individual who is in this program is in it for 
up to 8 years, an 8-year average, while you have other people 
who are waiting 4 or 5 years to get in, and that, to me, is a 
concern. How do you equitably try to incentivize individuals 
to--because this was supposed to be a helping hand to get them 
out of trouble, but ultimately, it's not a long-term solution. 
It's to ultimately let them be self-sufficient.
    I would be interested to hear any ideas on ways to promote 
or ultimately move people off this, so that you can--those in 
need can get on, because right now, on an 8-year average, that 
means only 12 percent of the people are getting out of this 
program a year, which is a fairly small number.
    Does anybody have a comment on any concepts or ideas?
    Mr. Houghton. We serve an awful lot of people who are on 
SSI and SSD, supplemental security income for people with 
disabilities, and that, as I said, is about $8,000 a year, 
about almost $700 a month.
    They're not going to get off that. They're disabled. And 
it's not enough to pay for the rent.
    And so getting them Section 8 and having them on, it's 
akin, I think the corollary might be health care reform. We're 
trying to figure out ways to reduce emergency room spending by 
increasing primary care.
    And this is the same thing. We're trying to get--we're 
willing to make the investment in subsidizing the rent for this 
group in order to reduce the amount of spending, and it is an 
inordinate amount of spending that we spend on emergency 
shelter, on repeated detoxes, and psychiatric hospitalizations, 
and all the other costs that are going.
    Now, that's one part of the population, but the fact is 
that we are targeting, I think, better and better, within the 
housing world, because we have been able to use data and really 
be able to figure out who needs it and be able to track 
income--
    Mr. Lee. I agree, those individuals, that data can be 
separated out, but again, that might skew the numbers somewhat, 
but on average, you have people there for 8 years.
    What other way--to do this in a way that incentivizes 
people to ultimately be self-sufficient, are there any concepts 
or ideas for those individuals who have been on it for a long 
time?
    Mr. Houghton. In supportive housing, which has services 
attached, our average is about 5\1/2\ years, and then people 
move on to independence, where they probably take a Section 8 
with them, but they're not using the services in the level that 
they were. So there is some independence and there is some 
lowering of cost.
    But I'll give it over to--
    Mr. Fischer. I'm not familiar with the 8-year average. The 
numbers I had heard you know, either median or average, were 
move in the 3- to 5-year range for the voucher program.
    But I think regardless, it's important to have, as you're 
saying, incentives, ways to encourage people to increase their 
income to a point where they don't need housing assistance 
anymore.
    And this bill does some really important things to do that. 
The rent provisions would provide a new earnings incentive that 
would--an earnings deduction that would count less of earned 
income towards the rent, so there would be a little bit more of 
a--less of a rent increase when your earnings go up.
    Probably the most important provision is that it would 
strengthen the family self-sufficiency program, which is a 
program within both vouchers and the public housing program 
that provides employment counseling to tenants and it also 
gives a work incentive, where tenants, if they have--if they 
are following a self-sufficiency plan that they come up with, 
with their employment counselor, then their increases in 
earnings will go into an escrow account that then they can use 
for purchasing a home or starting a business or an education or 
things along those lines. That provides both support and 
incentives for people to increase their earnings, and SEVRA 
would provide a dedicated source of administrative funding for 
employment counselors under that, and would also provide a 
better source of funding to cover these financial incentives, 
and I think that really would go a long way towards furthering 
the goals that you're talking about.
    Ms. Robinson. Statistics have shown that in the D.C. area, 
a resident would need to earn at least $21 an hour to afford a 
one-bedroom market rent apartment.
    So we would need better quality jobs to increase the 
incomes of these Section 8 voucher holders.
    Ms. Couch. And I would just like to chime in and say that 
the data that I have seen show that about 54 percent of voucher 
holders cycled out of the program within 5 years, and so it 
would be good if we all got on the same page on the data.
    But I would strongly agree with Will that the bill does 
several things to encourage increased earned income of voucher 
holders and of public housing residents.
    And the gap today between what people are earning at the 
lowest income levels and what rents are is so broad that you 
will have to do what Ms. Robinson said, get those higher-paying 
jobs and make them available, or we're going to continue to 
have to subsidize people's rents if we want to bolster their 
ability to have stable housing.
    Mr. Lee. Thank you.
    Chairwoman Waters. Thank you very much.
    Mr. Driehaus?
    Mr. Driehaus. Thank you, Madam Chairwoman.
    I would like to continue the conversation that Congressman 
Lee has initiated.
    And I'm struck by the last figure, Ms. Couch, that you 
give, about 54 percent of the people cycling off the program 
within 5 years.
    It's the 46 percent who stay longer than 5 years that 
concern me, and it goes back to Ms. Robinson's comment about 
the waiting list.
    And, you know, the fact is that, the more people we have on 
the program for a longer period of time, the longer that 
waiting list becomes.
    I think all of us believe very strongly in emergency 
housing, and we believe very strongly in providing housing for 
people with disabilities, for people who have lost their jobs. 
But I think we have to have the courage to have a conversation, 
a serious conversation, about dependency.
    My background is in international development. We talk a 
great deal about dependency, and creating dependent situations.
    And that number, that 46 percent who are over there, over 5 
years, that's a big number. That's no small number.
    And so when we talk about Moving To Work, just not having 
enough data for it, you know, that really doesn't make me very 
comfortable, that we shouldn't be working on programs such as 
that because there's not enough data.
    Sometimes I feel as if we look at this equation, and we 
think, well, there are a lot of people who need housing, so we 
should provide more housing.
    I look at the equation and say, there are a lot of people 
in poverty. They need housing. So we should try to get them out 
of poverty.
    You know, and I think too often we look at our housing 
program in the wrong way, in that rather than building the 
capacity of individuals on the program, especially those prone 
to long-term times on the program, we look at continuing and 
expanding the number of vouchers.
    So I would really like you to explore a little further, you 
know, how we might do a better job of building the wealth of 
families.
    You know, we embarked initially on things like IDAs through 
the Congress, individual development accounts, to help build 
the wealth and build the capacity of families to achieve self-
sufficiency.
    So I would like you to explore a little further with me how 
we might do a better job of working with that 46 percent, 
because that's a big number, in my mind.
    Ms. Couch. My first response is that, let's say the number 
is 54 percent are on for less than 5 years, and then we have 
that balance of that 46 percent.
    What Mr. Houghton is saying happens in New York, is also 
the case nationally, that a large percentage of the people in 
voucher assisted households are people who are elderly or 
disabled and on fixed incomes, whose incomes won't be 
increasing to the point that we can count on that they'll be 
able to enter. And so I think that they take up a large 
majority of that balance.
    Mr. Driehaus. Do you know how much--and I'm with you there, 
and I don't think any of us are talking--
    Ms. Couch. Forty percent.
    Mr. Driehaus. --about people with disabilities or who fall 
into those situations.
    Ms. Couch. Right.
    Mr. Fischer. In the voucher program. It is closer to 30 
percent in public housing.
    In project-based Section 8, it is much higher, but it 
varies. But it is a substantial--when you look at people who 
are on for longer lengths of time, a lot of those people are 
elderly or people with disabilities.
    Mr. Houghton. I would say that also a large number of them 
are children who are getting educations and growing up in a 
stable environment.
    The one thing that I think it's important to talk about 
with Section 8 is that, while it may be framed as dependency, 
it does not disincentivize work.
    You pay 30 percent of your income, and the fact is, many, 
many people are working who receive Section 8. I don't know if 
you have statistics, but I know that, within our residences, 
people who are struggling with disabilities, we have 25 to 40 
percent of them are getting jobs of some kind.
    The fact is, though, that it's very difficult for them to 
live completely independently with the levels of income that 
they're earning.
    And we get into a problem of markets. The job market has 
depressed wages and the housing market has made it very 
difficult to build enough housing where it's needed.
    When you try to build--I spend most of my time talking 
about developing housing and representing nonprofit developers. 
When you try to site buildings in an urban area, it takes years 
to get all the approvals and zoning regulations and everything 
like that.
    And because of those pressures, housing has gotten much 
more expensive, and at the same time, globalization and other 
pressures have lowered wages, and so we have a very big gap 
that we're trying to fill. Section 8, I think, is one of the 
best, most efficient targeting of trying to address that gap.
    Mr. Fischer. I think the other point to remember, or 
another thing to be aware of in looking at these length of stay 
numbers is that they vary enormously from one part of the 
country to another, and in places like New York City, it tends 
to be much longer, because you can be a person who is working 
and climbing the ladder in New York City for a long time before 
you can afford an apartment, or in a place like San Francisco, 
whereas in places with lower housing costs, the costs tend to 
be lower.
    And as we heard, the majority of people who are not elderly 
or not disabled in the voucher program do work. They do have 
some kind of employment.
    But I think what needs to be done is we need to look at 
things to build their assets, build their--give them incentives 
to work more.
    And I mentioned this before, but I think it's important, 
this family self-sufficiency program within the housing 
assistance programs is one of the largest asset development 
programs out there.
    It's a major work incentive, and it just has been underused 
so far because it hasn't had the resources, it hasn't had the 
funding, and SEVRA would make enormous progress in changing 
that.
    Chairwoman Waters. Thank you very much.
    Mr. Clay?
    Mr. Clay. Thank you so much for holding the hearing, and 
thank you all for being here.
    Let me kind of follow up on Mr. Driehaus' line of 
questioning, and what you just mentioned, Mr. Fischer, about 
employment assistance, Section 3, and just what we should do, 
or should that be part of this restructuring or new law that 
would allow people who live in economically-socially 
disadvantaged communities in Section 8 housing to seek and 
capture gainful employment, especially when we do these 
projects in these communities.
    Just panel-wide, give me your impression of what you think 
could make Section 3 more effective and how we could actually 
connect the people who live in these communities with 
meaningful employment opportunities.
    I represent Missouri, and we have two different strategies 
going now between Kansas City and St. Louis, and the whole 
Section 3 issue. Kansas City seems to do it a little better 
than St. Louis when it comes to employment opportunity.
    So can I start with you, Ms. Couch, and get your impression 
of how we can improve a program like Section 3, so that it 
actually provides meaningful employment opportunities to 
people?
    Ms. Couch. Sure. The Section 3 Program could be a very 
important way to help residents increase their earned income.
    I would say off the cuff that the new HUD could do a better 
job in clarifying and making very clear to housing agencies 
what the rules are with Section 3, to make sure that everyone 
is on the same page with educating resident advisory boards and 
tenant councils about what they should be expecting as far as 
Section 3 notices and what the work opportunities are.
    You know, the Nation, I think, was very grateful for the 
stimulus money for public housing that's pushing a lot of new 
capital funds down to the local level, and that $4 billion in 
new public housing capital funds I think is a great place to 
test new mechanisms to make sure that housing agencies are 
implementing Section 3, and that Section 8, or that public 
housing tenants and low-income people get some of those jobs.
    Mr. Clay. Thank you for that response.
    Mr. Fischer, anything?
    Mr. Fischer. Just on the issue of voucher holders and 
Section 3, Ms. Velazquez has a bill that would do that, would 
expand the Section 3 preferences to cover voucher holders. That 
improves the ability of voucher holders to benefit from jobs 
under Section 3, so that's sort of something that's going 
forward and that there could be progress on.
    Mr. Clay. And where do you think the disconnect is as far 
as having an effective program and having something written on 
a piece of paper and saying it's law but not really 
implementing it? Where is the disconnect?
    Mr. Fischer. Well, I think there has to be HUD enforcement, 
HUD monitoring of it, in order to make sure that people really 
are getting the jobs that they should be getting.
    Mr. Clay. I see.
    Ms. Roman, anything there?
    Ms. Roman. Well, I'm not an expert on Section 3, but I will 
say that people's need for training is an issue that comes up a 
lot around Section 3. Also, there is a tremendous opportunity 
moving forward with the Administration's goals around energy 
and green construction, to create a highly trained new 
workforce. And therefore, there is an opportunity to use 
Section 3 and train Section 8 and public housing residents in 
these new skills.
    Mr. Clay. Okay. Thank you.
    Ms. Robinson?
    Ms. Robinson. I agree with Ms. Roman. There does need to be 
training. But not only for the participants of Section 3, but 
also for the local public housing authorities.
    And then there ought to be some monitoring in effect to 
make sure that the program is being implemented as established.
    Mr. Clay. Thank you.
    And Mr. Houghton.
    Mr. Houghton. I would echo the connection Section 3 to 
development.
    The National Housing Trust Fund in addition to the Federal 
stimulus money, the National Housing Trust Fund will also drive 
development of housing and there are a lot of opportunities 
that maybe we can try to focus, that we try to get jobs to 
people like that.
    In New York right now, we are struggling with an issue of 
prevailing wages and affordable housing. My members build about 
half their housing with prevailing wage, and we do a very good 
job with that, and then we also do the other half with non-
prevailing wage. It's still very good money. It's better than 
what our case managers get. But the fact is that it's--and the 
end result is the same.
    But there is talk now, there are two bills in the State 
that are going to look at making all affordable housing 
construction prevailing wage.
    One of our concerns is that when we go into a community, 
one of the things we're able to give in return for their 
approval of our siting our building is that we will hire 
locally, and in prevailing wage, that's not always possible, 
because often the unions don't always hire from the minority 
neighborhoods that we often--
    Mr. Clay. Thank you. And I do understand. And thank you for 
that response.
    And before I close out, Madam Chairwoman, I don't know if 
Section 3 fits on this legislation, but I'm really interested 
in it, and hopefully we can shed some light and have a 
discussion about that as a committee.
    Chairwoman Waters. Thank you very much, Mr. Clay.
    I will talk with you and work with you to see what we can 
do to maybe include some more definitive ways by which we can 
offer opportunities for work and be of assistance to the 
housing authorities.
    Mr. Clay. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. You're welcome. Thank you very much.
    The Chair notes that some members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to these 
witnesses and to place their responses in the record.
    This panel is now dismissed, and I would like to welcome 
our second panel. Thank you very much.
    Ladies and gentlemen, I get to introduce our first witness. 
Mr. Rudy Montiel happens to be the executive director for the 
Housing Authority of my City, the City of Los Angeles.
    Since his appointment as executive director, at the end of 
2004, Mr. Montiel's leadership has been instrumental in the 
financial turnaround of the Housing Authority of the City of 
Los Angeles.
    Under his guidance, the housing authority has turned a $25 
million operating loss at the end of 2004 into net operating 
income in 2005.
    Prior to coming to Los Angeles, he successfully led the 
Housing Authority of the City of El Paso for 3 years.
    His strong private sector experience includes engagements 
with Fortune 500 companies such as General Motors, Delphi, and 
the IT Group Shaw Companies.
    He is a licensed professional engineer in Texas and sits on 
the boards of the Housing Authority Insurance Group, the Public 
Housing Authority Directors Association, the Council Of Large 
Public Housing Authorities, and the Hispanic Engineers National 
Achievement Awards Corporation.
    I thank you for joining us today. Welcome, Mr. Montiel.
    Mr. Montiel. Good morning.
    Chairwoman Waters. Our second witness will be Mr. Tony 
Bazzie, executive director of the Raleigh County Housing 
Authority, which I will turn to my ranking member, Ms. Capito, 
for an introduction.
    Mrs. Capito. Thank you. I am very pleased that Mr. Bazzie 
is joining us here today.
    As I mentioned in my opening statement, he has been in this 
field for 29 years, and I can personally attest that he is a 
forceful advocate, as I see him and many others in the group 
that he comes with every year to tell their story and to make 
improvements and to serve as many people as possible with good 
quality housing.
    So thank you, Tony, for joining us, and I appreciate and 
look forward to your comments. Thank you.
    Chairwoman Waters. Thank you very much.
    Our third witness will be Mr. Curt Hiebert, president of 
the Public Housing Authorities Directors Association.
    Our fourth witness will be Ms. Renee Rooker, president of 
the National Association of Housing and Redevelopment 
Officials.
    Our fifth witness will be Ms. Sunia Zaterman, executive 
director, Council of Large Public Housing Authorities.
    And our sixth witness will be Ms. Karen Newsome, vice 
president, WinnResidential, on behalf of the National 
Affordable Housing Management Association.
    Without objection, your written statements will be made a 
part of the record. You will now be recognized for a 5-minute 
of your testimony.
    Mr. Montiel.

 STATEMENT OF RUDOLF C. MONTIEL, P.E., PRESIDENT AND CEO, THE 
          HOUSING AUTHORITY OF THE CITY OF LOS ANGELES

    Mr. Montiel. Good morning, Chairwoman Waters, and Ranking 
Member Capito. My name is Rudolph Montiel, and I come to you 
from Los Angeles, the Nation's second-largest city and the city 
with the largest homeless population on any given night in this 
country.
    In 2004, L.A. was near receivership and close to 
bankruptcy. Today, we are HUD-certified high-performance 
Section 8. We have over 50,000 units, 100 percent leased up, 
and this year we'll complete expending all of our net 
restricted assets. We are running the program the way the 
program should be run.
    Over the last 3 to 4 years, we have experienced significant 
innovation and development utilizing Section 8 funds.
    We have instituted a permanent supportive housing program 
in Los Angeles that has created over 700 units in close 
partnership with the City of Los Angeles.
    We have a homeless set-aside that today serves almost 9,100 
families in Los Angeles, families and individuals.
    And most importantly, we are embarking on a redevelopment 
of Jordan Downs in Watts with one-to-one public housing 
replacement for a 2,100 mixed-income unit development that will 
be the start of redevelopment of public housing citywide.
    But there is a price to pay for this success. The price is 
that today we are fully utilized. Today, we cannot serve 
additional homeless families. Today, we cannot serve additional 
low-income working families. And, in order to be able to do 
more, we need additional resources.
    We need stable funding. We can no longer, as Secretary 
Donovan said in one of his presentations, operate under a binge 
and purge scenario for Section 8 funding. It needs to be 
predictable. We need to know how many families we can serve 
year-to-year.
    We need to reallocate resources in this country. If there 
are areas of the country that are not using the resources, and 
yet there are areas of the country that have desperate need, 
then we should be able to reallocate those resources 
nationally. In Los Angeles, when we open our wait list next 
year, we expect fully 300,000 households to apply for Section 8 
assistance.
    And we need to provide flexibility when it comes to 
converting tenant-based vouchers to project-based vouchers, 
especially in redevelopment of public housing or in development 
of permanent supportive housing or other affordable units.
    I think it is widely accepted now that the project-based 
voucher represents a hard unit.
    We are also in support of MTW, and I prefer the name 
housing innovations program, HIP, when it comes to 
redevelopment and creation of new hard units, with a focus on 
that, and not necessarily a focus on somehow disenfranchising 
tenant protections. We believe that we should focus on 
incentives to Moving To Work, and not so much exclusions or 
requirements.
    That is my testimony, and I again applaud your leadership 
for bringing this very important hearing forth, and this very 
good piece of legislation. Thank you.
    [The prepared statement of Mr. Montiel can be found on page 
102 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Our next witness is Mr. Curt Hiebert.

 STATEMENT OF P. CURTIS HIEBERT, PRESIDENT, THE PUBLIC HOUSING 
               AUTHORITIES DIRECTORS ASSOCIATION

    Mr. Hiebert. Thank you, Chairwoman Waters, Ranking Member 
Capito, and subcommittee members.
    My name is Curt Hiebert and I am president of the Public 
Housing Authority Directors Association, which, as another 
acronym, I'll refer to as PHADA in the interest of time, as we 
go on.
    Our Association was founded in 1979 and represents over 
1,900 housing authority chief administrative officers. A 
significant proportion of PHADA members administer small or 
medium-sized agencies that operate a mixture of assisted 
housing programs.
    Some operate public housing, some the housing choice 
voucher program, many operate both programs, and a number of 
members operate assisted, financed with HOME, CDBG, low-income 
housing tax credits, Department of Agriculture, and other non-
Federal support.
    We're very grateful that you're investing the committee's 
resources to address this assisted housing reform initiative. 
Many provisions contained in the draft bill are attractive to 
PHADA and its members.
    Some may reduce administrative requirements for program 
sponsors, or program intrusiveness into participants' personal 
affairs, such as reducing the frequency of housing choice 
vouchers subsidized unit inspections, reducing the frequency of 
some household income recertifications, and other things.
    However, other provisions may have some significant cost or 
revenue implications for housing authorities and some may 
introduce new, more complex administrative requirements, such 
as new asset eligibility standards may require new inquiries 
into real estate ownership and its availability to applicants 
and participants.
    Of particular concern to us are provisions that may 
diminish potential rent revenue in public housing when the 
Congress faces significant budget challenges, which they shall.
    The public housing program lacks cost-reducing mechanisms 
that are available in various Section 8 Program components.
    The bill, however, permanently restores the housing choice 
voucher funding allocation protocol based on units in use and 
actual cost.
    The bill also establishes an administrative fee that is 
based on vouchers in use.
    Such funding mechanisms are critical to the program's 
stability, permit sponsors to build HCV utilization, and 
provide ways for program sponsors to accommodate local market 
variability.
    In the interest of full disclosure, Madam Chairwoman, as 
you could probably tell from the horns I wear, and I am 
carrying a pitchfork, the Keene Housing Authority is an MTW 
agency, and has been since 1999.
    While I applaud the intentions of the concerns about MTW, I 
do have a couple comments about that portion of the bill.
    Unlike the previously passed version of SEVRA, the proposed 
bill does not yet include provisions concerning the housing 
innovation program, HIP, or other permanent authorization for 
Moving To Work.
    We believe the committee should include HIP or another MTW 
authorization provision as it considers a revised SEVRA bill.
    We urge the committee to include provisions that: make the 
MTW demonstration permanent; moderately expand the MTW program; 
assure a robust evaluation process focused on the effects of 
local flexibility on program participants and applicants; offer 
reasonable protections for applicants, tenants, and 
participants; and continue existing MTW agencies' 
participation.
    I agree with the sentiments of the previous panel, in that 
tenant protections are vital, and the effects on our tenants 
are vital, as well, and as a matter of fact, I don't think they 
go far enough.
    I think it is wrong to just insist on protecting our 
tenants. They are not our children, and also, MTW is not just 
an experiment.
    I can speak from personal experience. What we were doing 
was working with our community, working with our residents, 
working with the people on our waiting list, to find problems 
that were exigent in Keene, New Hampshire.
    It's wonderful if we develop a program that may work in 
Detroit or Kansas City or wherever, but the circumstances are 
entirely different there.
    The flexibility to allow dealing with local conditions, 
demographics, employment circumstances, opportunities for 
training, education, and everything else is vital for housing 
authorities. It would be a mistake to make a ``one-size-fits-
all'' program again. I urge the continuation of the MTW 
Program.
    I do know that we have a very transparent process. We go 
through a long process every year of saying what we're going to 
be doing the following year.
    There are public hearings. There are opportunities for our 
stakeholders to be part of that entire process.
    And at the end of every year, we report back to our 
community, not only to HUD, but to our community, to our 
residents, to our participants, to our waiting list. Okay, what 
happened with last year's program? Did it work? Did it not?
    In our case, we have actually increased the utilization of 
Section 8. We now range between 105 and 110 percent 
utilization. We house more people than we would under the 
normal program.
    Other MTW programs have used vouchers to support homeless 
participants' transition to permanent housing in ways that 
aren't permitted presently; have implemented homeownership 
initiatives that enhance Section 8 ownership; and encourage 
landlord participation in increased housing choice.
    PHADA has participated in the development of the HIP 
provision in the previous version of SEVRA passed by the House 
during the last Congress, and we strongly urge the committee to 
include a similar section in the version of SEVRA under 
consideration.
    SEVRA is a complex statute with many provisions that will 
have unanticipated and anticipated outcomes. The bill includes 
many provisions that PHADA has supported and it includes some 
provisions that PHADA has opposed.
    On balance, we believe that this bill represents a very 
positive step for the Section 8 Program and for public housing.
    However, we are concerned that the bill lacks authorization 
and modest expansion of the MTW demonstration.
    [The prepared statement of Mr. Hiebert can be found on page 
86 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Hiebert. Thank you.
    Chairwoman Waters. Now, Mr. Bazzie.

 STATEMENT OF TONY BAZZIE, EXECUTIVE DIRECTOR, RALEIGH COUNTY 
                       HOUSING AUTHORITY

    Mr. Bazzie. Thank you, Chairwoman Waters, Ranking Member 
Capito, and members of the subcommittee.
    My name is Tony Bazzie, and I have been the executive 
director of the Raleigh County Housing Authority in Beckley, 
West Virginia, for the past 29 years.
    My agency assists nearly 1,300 families in a 6-county area 
of our State. Due to the time constraints in addressing you 
today, I certainly cannot touch upon a number of the topics 
included in the draft legislation, so I would encourage you to 
read the lengthier written testimony that has been submitted to 
you.
    I do thank the members of the subcommittee for all the work 
that has been done thus far in the draft legislation, as it 
seeks to bring about changes that will make the housing choice 
voucher program more inviting to landlords, ease the 
administrative burden on housing authorities, and better assist 
low-income families in their quest for decent, safe, and 
affordable housing.
    For the most part, housing authorities in West Virginia are 
small and medium-sized, but yet all are hopeful for the changes 
that will ensure the continued viability of the voucher program 
which assists families in every county in my State.
    I and others in West Virginia support many of the proposed 
changes, including one that will allow HUD-funded rental 
assistance to begin from the date of the initial inspection, so 
long as there are no life-threatening HQS violations.
    One agency in West Virginia, the Charleston-Kanawha Housing 
Authority, which is in your district, Ranking Member Capito, 
has determined that, on average, 18 days elapse between the 
initial failing inspection and a date that the unit does meet 
HQS. Removing this obstacle, as this bill would, will provide 
an incentive for more landlords to participate in the program, 
in addition to getting families into units much sooner.
    Likewise, I support the biennial inspection option as a 
change that would be cost-efficient for many housing 
authorities.
    In West Virginia, a number of agencies administer the 
program in multiple counties. My agency administers the voucher 
program in 6 counties, with more than 3,350 square miles, a 
geographic area larger than the States of Rhode Island and 
Delaware combined.
    The annual inspection process is a major program expense, 
ranging from staff salaries to vehicle maintenance to postage 
for mailing notification of inspection results.
    While I do support the goal of trying to keep low-income 
families from having to relocate as much as possible due to HQS 
violations, I do not favor the provision in this bill whereby a 
housing authority can use the abated HAP funds to make or cause 
to be made repairs to a landlord's unit.
    My agency and many others in West Virginia are ill-equipped 
to administer such a provision, and in my opinion, this would 
have the negative consequence of keeping landlords from 
participating in the voucher program, as they would view this 
as an intrusion into their private property.
    The rent reform and simplified reporting provisions in 
SEVRA are a welcome change that will encourage work on the part 
of assisted households and relieve housing authority staff of 
many verification and processing tasks.
    For example, in 2008, again, the Charleston-Kanawha Housing 
Authority conducted approximately 1,200 interim reviews in 
addition to over 2,400 annual re-exams. Undoubtedly, many of 
these interim adjustments would be eliminated through the 
provisions that would no longer require examinations for 
increases in earned income.
    Also, the provision that allows for 3-year recertifications 
for fixed-income households will provide much relief.
    In recent years, the uncertainty of the renewal funding 
process has made the management and operation of the voucher 
program a difficult challenge. The goal of any housing 
authority is to maximize its leasing to the baseline.
    Unfortunately, with constant formula changes and delays in 
the annual budget process, many agencies have been hesitant to 
issue vouchers.
    In closing, Madam Chairwoman, and Ranking Member Capito, 
let me thank you again for your work.
    However, I would caution that a number of the proposed 
changes in this bill, such as increased deductions for earned 
income, elderly and disabled, and child care, and applying HAP 
dollars towards relocation, while they certainly will provide a 
benefit to the families we serve, they will increase the 
overall HAP costs and, as I'm sure you know, I know Ms. Capito 
knows, there already exists a serious situation being 
encountered by housing authorities in that net restricted 
assets, which can be used to cover increasing and unfunded HAP 
costs, are dwindling.
    For example, my agency will be losing at least 26 families 
per month for the next 6 months this year, just due to 
inadequate funding in HAPs by the Federal Government.
    Overall, I'm very confident that the proposed changes to 
the program will make it more attractive to private property 
owners and increase the available housing stock.
    Reducing the reporting burdens and providing incentives for 
work will make the program more accommodating to low-income 
families.
    I also trust the provisions related to administrative 
simplification will produce more customer-oriented agencies 
throughout the State.
    [The prepared statement of Mr. Bazzie can be found on page 
50 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Renee Rooker, president, National Association of 
Housing and Redevelopment Officials.

 STATEMENT OF RENEE ROOKER, PRESIDENT, NATIONAL ASSOCIATION OF 
              HOUSING AND REDEVELOPMENT OFFICIALS

    Ms. Rooker. Chairwoman Waters, Ranking Member Capito, and 
members of the subcommittee, my name is Renee Rooker. I am the 
executive director of the Walla Walla, Washington, Housing 
Authority. I'm pleased to be here today in my capacity as 
president of the National Association of Housing and 
Redevelopment Officials, representing the Association's 23,000 
agency and individual members.
    NAHRO is the Nation's oldest and largest nonprofit 
organization representing public housing authorities and 
redevelopment agencies.
    This year, we are celebrating our 75th anniversary. NAHRO 
agency members administer more than 80 percent of the vouchers 
under the Section 8 housing choice voucher program.
    The need to advance voucher reform legislation in this 
Congress is unquestionable. We applaud you for holding this 
hearing today to move this process forward.
    Madam Chairwoman, there is much about SEVRA, as it has 
matured to date, that is extremely positive, including a sound 
distributional funding formula, the ability to retain and use 
unobligated fund balances, authorization to undertake maximized 
leasing with funds available, a reallocation provision to 
provide, among other things, funding to housing authorities 
with high budget utilization rates and a need for additional 
voucher assistance to increase leasing rates, and housing 
quality standard inspection reforms.
    My written testimony goes into greater detail on these and 
other SEVRA reforms that we like and can support.
    I would like to highlight this morning our more significant 
comments on the current discussion draft of the legislation.
    First, regarding the inspection of dwelling units, there is 
much in the draft that we support.
    I agree with my colleague, Mr. Bazzie, that it would be a 
hindrance to the program to have housing authorities do the 
repairs on owner units, and it would disincentivize landlords 
from participating in the program.
    With regard to income reviews and rent determinations, 
NAHRO recognizes that efforts to address rent simplicity are 
difficult. We applaud the effort in the discussion draft to 
simplify some administrative elements in the rent and income 
calculation process.
    We do have some concerns, and we suggest that the Secretary 
be given the discretionary authority to address increases in 
rent for elderly or disabled families and for families with 
dependent children whose rent has increased due to changes in 
the allowable exclusions for medical or disability expenses, or 
child care expenses enacted in this Act. I refer you to my 
written testimony for further recommendations.
    We appreciate that the draft bill demonstrates an 
understanding that the rent and income provisions in SEVRA may 
have an unintended and negative impact on housing authorities' 
rent revenue and public housing program.
    In this regard, we suggest that language be included in the 
bill to compensate housing authorities, through increased 
operating funds, the same year that they go into effect and 
thereafter. Improvements to the portability feature of the 
voucher program through regulation are welcome.
    We support the provision on portability that provides 
tenant mobility, reduces or eliminates interagency billing, and 
gives the ability for local agencies to address their wait 
list.
    NAHRO has consistently recommended that the Secretary 
administer funding for portability adjustments, primarily 
through a central fund.
    NAHRO continues to recommend that funding structured to 
support the administrative functions necessary to help families 
succeed and to enforce housing quality standards should be 
stabilized by the Congress, and not left open to change by the 
executive branch.
    Additionally, we suggest modifying the Housing Act to 
provide affirmatively that the same administrative fees shall 
be paid with respect to housing authority-owned units assisted 
by the program, as is paid to non-owned units.
    Currently, housing authority-owned and operated units 
receive 60 percent less in administrative fees than vouchers 
leased in the private sector.
    However, because housing authorities must contract out for 
inspections of their units and for the rent reasonableness 
determination, the case can be made that fees for housing 
authority units exceeds non-owned units.
    In closing, we understand the subcommittee is considering 
the possible inclusion of language regarding the housing 
innovation program in the version of SEVRA you intend to move 
forward in this Congress.
    NAHRO has long advocated for greater program flexibility 
that brings innovation and expanded the Moving To Work 
demonstration, and urges you to include provisions previously 
contained in H.R. 1851.
    This concludes my testimony, and NAHRO looks forward to 
continuing to work with you and other members for the passage 
of this important bill, and I would be happy to answer any 
questions that you or the members have.
    [The prepared statement of Ms. Rooker can be found on page 
120 of the appendix.]
    Chairwoman Waters. Thank you very much.
    The committee will stand in recess. We have about 5 minutes 
to get to the Floor. We have a series of votes which are going 
to take us about half-an-hour. I would suggest you stretch your 
legs. We will be back as quickly as possible.
    [recess]
    Chairwoman Waters. The committee will come to order, and we 
will resume our testimony from our witnesses. My page has been 
turned, and I think we were--Ms. Zaterman. Okay.

  STATEMENT OF SUNIA ZATERMAN, EXECUTIVE DIRECTOR, COUNCIL OF 
            LARGE PUBLIC HOUSING AUTHORITIES (CLPHA)

    Ms. Zaterman. Chairwoman Waters, Ranking Member Capito, and 
members of the subcommittee, my name is Sunia Zaterman, and I 
am the executive director of the Council of Large Public 
Housing Authorities, comprised of nearly 60 of the largest 
public housing authorities in the country, in virtually every 
major metropolitan area. These agencies serve over 1 million 
households under the public housing and Section 8 programs.
    We thank the subcommittee for holding this hearing, and the 
opportunity to present CLPHA's views on the Section 8 Voucher 
Reform Act.
    In some respects, this hearing today has a deja vu quality 
to it. As you well remember, this committee worked hard on the 
passage of H.R. 1861, the 2007 version of SEVRA, and CLPHA 
applauds the subcommittee for once again continuing with 
efforts to reform and improve this much-needed program.
    We are pleased that this bill will stabilize the funding of 
voucher renewals. With a permanent statutory formula, PHAs will 
be able to plan for the future, taking steps to increase 
utilization, reduce costs, eliminate inefficiencies, and 
improve service delivery.
    An adequate and stable reserve is the bedrock of any well-
run enterprise. While we would prefer a higher level of 
allowable reserves, for example, at least 1 month of funding, 
we appreciate that the bill allows agencies to retain not less 
than 5 percent of their allocation, allowing the Secretary to 
determine when a higher amount is needed.
    This provision could be especially helpful when renewal 
funds must be pro-rated and agencies need more reserves to 
maintain their program.
    CLPHA recommends that reserve amounts be based on formula 
eligibility rather than funding allocations, so that agencies 
do not have to wait for HUD to determine their pro-ration 
before knowing the amount of their allowable reserves, or 
alternatively, the higher of the formula eligibility or funding 
allocation.
    We applaud the commitment to increase the supply of tenant-
based subsidies; 150,000 incremental vouchers annually for the 
next 5 years is sorely needed to move families off waiting 
lists and into decent, affordable housing.
    The provision allowing agencies to lease more vouchers than 
their specific authorized level is one we have sought for 
years. We strongly support removing the authorized caps to 
allow housing authorities to fully utilize their funding 
allocation.
    We are very pleased that the bill increases the cap on 
project-based vouchers, and al lows PHAs to project base 
vouchers in their own buildings without going through a 
competitive process. This provision eliminates a significant, 
unnecessary administrative burden.
    Further, we urge greater flexibility in using project-based 
vouchers to preserve and replace public housing that would not 
be subject to this cap.
    We appreciate the program simplification measures in SEVRA, 
particularly those allowing biennial inspections and triennial 
income recertification.
    We commend the committee for taking important first steps 
in rent reform. However, during the first year of 
implementation of SEVRA's public housing rent reforms, housing 
authorities may receive substantially less rental income than 
anticipated by their operating fund formula allocation. We 
believe that the Secretary should be directed to provide 
funding adjustments in such cases.
    Once again, we are concerned that the bill authorizes 
agencies to take on the role of private landlords and make 
repairs and pay for utilities in units where the actual 
landlord is neglecting his or her duties.
    Though understandably well-intentioned, these provisions 
will open PHAs to many legal, administrative, and liability 
issues. We recommend removing this language from the bill.
    Expansion of Moving To Work is a high priority for us. H.R. 
1861, renamed MTW the housing innovation program and expanded 
it to 60 PHAs and another 20 PHAs granting funding fungibility, 
in what was called HIP Lite. It also included provisions that 
provided for rigorous program evaluation and strong tenant 
protections.
    While this bill does not yet include the MTW provisions of 
HIP provisions, we are hopeful that it will included the HIP 
provisions from H.R. 1851.
    Adding HIP from the 2000 SEVRA is a well-reasoned approach, 
as these provisions represent policies and principles that were 
already vetted through a full airing of the issues, and they 
were achieved through the consensus building amendment process 
at the subcommittee, full committee, and House considered 
levels.
    Under HIP Lite, work requirements and time limits are 
prohibited and rent reform initiatives are limited. What 
remains under HIP Lite is the funding fungibility, flexibility, 
and innovation that PHAs desperately need to undertake 
redevelopment and expansion activities. We recommend that HIP 
Lite be expanded.
    We urge you also to consider a preservation proposal that 
would allow the conversion of public housing subsidies to 
project-based voucher assistance under Section 8.
    In addition, we propose linking the award of project-based 
vouchers for public housing preservation activities with the 
award of low-income housing tax credits in order to facilitate 
greater leveraging of resources and public housing.
    In closing, we appreciate the subcommittee's dedication to 
reshaping the voucher program through the initiatives included 
in SEVRA. We look forward to continuing to work with you and 
with HUD on refining these proposals for reform and developing 
additional improvements.
    Thank you again for the opportunity to testify.
    [The prepared statement of Ms. Zaterman can be found on 
page 136 of the appendix.]
    Chairwoman Waters. Thank you.
    Ms. Newsome.

STATEMENT OF KAREN NEWSOME, VICE PRESIDENT, WINNRESIDENTIAL, ON 
     BEHALF OF THE NATIONAL AFFORDABLE HOUSING MANAGEMENT 
                      ASSOCIATION (NAHMA)

    Ms. Newsome. Thank you, Chairwoman Waters, and good 
afternoon, Ranking Member Capito, and members of this 
distinguished subcommittee.
    My name is Karen Newsome. I'm here on behalf of the 
National Affordable Housing Management Association, NAHMA. I'm 
also the vice president of administration for WinnResidential.
    NAHMA strongly supports the Section 8 Housing Choice 
Voucher Program, and we look forward to working with this 
subcommittee to improve this program, as well as the project-
based Section 8 Programs administered by HUD's Office of 
Housing.
    My written statement has been submitted for the record, and 
I would like to summarize that testimony by focusing on the 
positive results that can be achieved by creating a more 
efficient voucher inspection process, authorizing a limited 
English proficiency technical assistance program at HUD, and 
expanding the project-based and enhanced voucher programs.
    I would also like to express NAHMA's strong support for 
authorizing a stable voucher renewal funding formula and 
providing 150,000 new incremental vouchers for each of Fiscal 
Years 2010 through 2014.
    And finally, I would like to thank Chairwoman Waters and 
the subcommittee for the strong leadership you provided in 
stabilizing the project-based Section 8 funding.
    SEVRA proposes common-sense reforms to the inspection 
requirements that will help expedite the lease-up process for 
voucher holders.
    NAHMA strongly supports provisions in SEVRA which will 
permit housing authorities to approve lease-ups in properties 
which pass inspections under a program with standards at least 
as stringent as HQS, such as the home or tax credit program, to 
provide residents with housing sooner and to reduce lost income 
for owners, to allow minor repairs to be made after the tenant 
moves into the apartment, and to give public housing agencies 
the discretion to inspect units occupied by voucher holders 
every other year, rather than annually, for the term of the HAP 
contract.
    The streamlined inspection process proposed in SEVRA would 
remove a major obstacle for voucher holders in tight rental 
markets.
    NAHMA strongly supports Section 17 of the SEVRA draft, 
which allows HUD to better serve persons with limited English 
proficiency, LEP, by providing technical assistance to 
recipients of Federal funds. In the last Congress, this 
language was included in both the House and Senate versions of 
SEVRA.
    HUD's LEP guidance became effective on March 7, 2007. The 
guidance states that recipients of HUD funding, including 
affordable rental housing providers, have an obligation to 
provide translated documents and oral interpretation services 
to persons who have difficulty communicating and reading in the 
English language.
    Originally, HUD provided no additional funding for 
affordable housing providers to offset the costs of providing 
language services, nor did they identify a specific list of 
documents housing providers would be expected to translate.
    In the summer of 2007, a coalition of multi-family housing 
representatives and civil rights advocates proposed the LEP 
language which is included in language. Our compromise 
addresses the cost and vagueness concerns raised by housing 
providers, and it will provide greater assistance to our 
residents and applicants with LEP.
    NAHMA is especially interested in the provisions which 
create a task force of industry and civil rights stakeholders 
to identify vital documents, require HUD to translate the vital 
documents within 6 months, create a HUD-administered 1-800 
hotline to assist with oral interpretation needs, and 
authorized appropriations.
    In Fiscal Year 2008 and Fiscal Year 2009, Congress 
appropriated funds for HUD to provide LEP technical assistance 
and document translations. So far, HUD has used this funding to 
translate the four multi-family model leases and other 
important documents into 12 languages.
    We appreciate HUD's progress, but we strongly believe the 
authorization language is still necessary.
    First, it reaffirms Congress's commitment to provide 
consistency in the level of service for individuals with LEP, 
but NAHMA is concerned by HUD's budget request to consolidate 
the account. We fear eliminating the LEP line item will make it 
more difficult to secure funding for future translations or to 
update current translations as the documents change.
    Project-based vouchers are an important tool for expanding 
the supply of affordable housing, particularly when used for 
the tax credit program. NAHMA welcomes the new project-based 
preservation vouchers which will protect residents while 
ensuring that actual units are preserved as affordable.
    In July 2004, GAO released a report on the options for 
protecting tenants in properties with expiring HUD mortgages, 
noting that mortgages on more than 2,300 subsidized properties 
will reach maturity through the year 2013.
    In many instances, rents in these developments were kept 
low by subsidizing the mortgage and limiting the rents that 
could be charged, and on several occasions, NAHMA has called on 
Congress to provide enhanced vouchers to tenants whose rent 
would be unaffordable after the HUD mortgage reached maturity 
when affordability requirements expire. We are pleased that the 
SEVRA draft authorizes enhanced vouchers for low-income and 
certain moderate-income tenants who live in properties with 
expiring mortgages under the Section 221 and 236 Programs.
    Thank you for allowing NAHMA to comment on the draft SEVRA 
bill, and we look forward to working with you to improve what 
works about the Section 8 Program and to reform the areas that 
need attention.
    Thank you.
    [The prepared statement of Ms. Newsome can be found on page 
106 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I will now recognize myself for 5 minutes to raise a few 
questions.
    How many people feel--well, let me ask how the credit 
reports work. If you have a tenant, or a would-be tenant 
applying, and they meet all the criteria except for credit 
reports, could they be denied Section 8 or rentals in public 
housing? I mean, how does it work?
    Mr. Montiel. In Los Angeles, they would not be denied that 
assistance.
    Furthermore, we would go on record, Madam Chairwoman, 
indicating that we believe that minimum credit scores, 
especially in a redevelopment right to return situation, don't 
make sense, in the sense that if people have minimum credit 
scores, or good credit scores, they probably would not require 
our public housing assistance to begin with.
    Chairwoman Waters. Does anyone feel differently about 
credit scores?
    [no response]
    Chairwoman Waters. Okay. Mr. Montiel, you talked about a 
different way of dealing with Moving To Work, and you talked 
about incentives.
    Can you give us some idea of what you were talking about?
    Mr. Montiel. Indeed. And we have seen many aspects of that, 
Chairwoman Waters, in our redevelopment efforts in Jordan 
Downs.
    Incentives could be things such as linking people to jobs, 
for example, skilled trades jobs, to take advantage of massive 
redevelopment efforts that will take place, but then, to keep 
those people engaged with unions, so that they can move up, if 
you will, the income ladder without necessarily leaving their 
unit. They can go from a public housing unit, then it is a 
workforce housing unit, and then it is a market rate unit, then 
maybe even to homeownership, without ever having moved.
    Incentives also become--
    Chairwoman Waters. Would you pay initially, like union 
initiation fees?
    Mr. Montiel. Initiation fees, it could be things such as 
helping a person who wants to become a carpenter but doesn't 
have the GED and algebra skills, getting them the assistance, 
so that they are then prepared to enter the job market in the 
apprenticeship program.
    Chairwoman Waters. And let me just ask, it has been brought 
up several times that perhaps the role of the housing 
authorities should not include, I guess hiring a workforce to 
do repairs when the owners of our Section 8 units are not in 
compliance, that this somehow creates, what, additional 
responsibility?
    Didn't we say something about limiting the liability or 
making sure that you would not be held responsible for repairs 
in some way? Does that not satisfy your concerns? Or is it 
something else you would like to tell us about that?
    Yes, Ms. Rooker?
    Ms. Rooker. Chairwoman Waters, yes, in the bill it does 
limit the liability issues to the housing authority. I'm not 
clear that it even goes far enough.
    But one is, it's the property that's owned by the landlord, 
and in the experience in the Walla Walla Housing Authority, 
landlords are not particularly in favor of other people 
touching their property and abating those issues, and they want 
to take ownership. It's their property. They want to maintain 
it as they see fit.
    Maybe we could have more discussion of how we can encourage 
them to do that in some rental markets that are very tight, how 
to do that, but it is private ownership that is so important, 
and it is for them to deal with that, and I think there's other 
incentives we could look at.
    Chairwoman Waters. Another way of looking at this may be 
that the owner who is in noncompliance could be asked, what 
contractors, what handymen, what--who do they use, and then we 
could--you could utilize those persons, because they're 
familiar with the building or the units, etc., and then the 
owner could be billed by the housing authority for that work, 
or something like that?
    Ms. Rooker. That may entail more legal aspects, so if the 
owner didn't pay you, and you were already out that money, then 
you'd have to go through a whole collection process.
    But I think there are opportunities to further discuss this 
in more detail, that there could become some resolution so that 
there are more units opening up for families.
    Chairwoman Waters. Despite the fact that we have a housing 
shortage and we need units, do we have landlords who are 
constantly in violation, who do not do the repairs, and who may 
be troubled even in another way, that we attempt to do it, that 
we could just exclude from the program?
    Mr. Montiel. I think that's an approach that could possibly 
work, Chairwoman Waters, and keep in mind that many, certainly 
all the large urban areas--New York, Chicago, Los Angeles--have 
very appropriate code enforcement areas, so that's one way of 
tying it to having landlords meet their obligation for safe, 
decent, and affordable housing, is many times just meeting the 
strict code enforcement requirements of the city.
    Ms. Rooker. And also, for example, in some rural areas, if 
that housing is on the substandard side, landlords can make 
more money renting to non-voucher holders, because they will 
allow doubling-up in their units, especially with agricultural 
workers, and they'll charge a rent per head.
    So they don't want to make the repairs. Unless it's a court 
enforcement issue within that particular community, they can 
just make more money.
    Chairwoman Waters. Lastly, are any of our housing 
authorities dealing with the cities about their codes and code 
enforcement, so as to eliminate your having to even get into 
all of that?
    Mr. Hiebert. Yes, Madam Chairwoman.
    It's an ongoing conversation, in a lot of smaller to 
medium-sized communities, about formulation of codes and how 
they affect, and it really is an ongoing discussion, 
particularly in areas such as our community, which is also a 
college community, which we have the same problem with 
landlords can very often make more money by renting to a number 
of college kids instead of a family.
    So we're constantly having conversations, both with groups 
of landlords and with the city inspection group.
    Chairwoman Waters. All right. Thank you very much.
    Ms. Capito?
    Mrs. Capito. Thank you.
    Mr. Bazzie, in your statement, your verbal statement, you 
mentioned that your PHA is going to be losing 26 families a 
month. Could you expound on that, why that is, and just, I know 
you gave a brief explanation, but I would like a fuller 
explanation for that. And do you think that's a trend 
nationwide?
    Mr. Bazzie. I know that it is definitely a trend in West 
Virginia, and I would expect that it's a national problem.
    The funding that our housing authority received this year, 
based on past numbers, has just not been adequate to cover our 
increasing costs to house a family.
    As a result, we're using what's called net restricted 
assets, or money that had been in reserve for some time, to 
cover those costs, and in my county, in my county housing 
authority, our HAP costs are exceeding our funding by about 
$100,000 a month now.
    So we're able to use that net restricted asset to cover 
those costs. However, come next month, that money is gone, and 
if we continue to lease at our current leasing rate, by the end 
of the year, we'll have a large 70-some thousand dollar 
deficit.
    So to not have that deficit, where we have no money in the 
bank to pay landlords, we're going to have to start decreasing 
the number of families who are receiving assistance by at least 
28 per month, which comes out to about 150-some at the end of 
the year, just to have enough HUD HAP money to pay landlords.
    Mrs. Capito. How are you going to pick which 28 are the 
ones that don't--
    Mr. Bazzie. That's going to be the difficult question 
towards the end of this year. We do have a certain amount of 
attrition each month--
    Mrs. Capito. Right.
    Mr. Bazzie. --maybe 20, 25, sometimes more, sometimes less, 
so come November or December, I don't know what we're going to 
do to--are we going to have to decide who on our program must 
come off? And that's a conference call I have scheduled with 
HUD Baltimore come next week.
    Mrs. Capito. What kind of notification do you have to give 
of the non-renewal? Is it 30 days or 60 days? Thirty?
    Mr. Bazzie. The notification for--
    Mrs. Capito. Non-renewal of your voucher.
    Mr. Bazzie. You know, because this has never been a problem 
before, I'm not sure, but I would think that it is probably a 
30-day notice, but we would definitely want to give a family as 
much possible notice as we can.
    Mrs. Capito. Right.
    Mr. Bazzie. Because the rent from then on is up to them.
    Mrs. Capito. You also mention in your written testimony 
some issues concerning the utility allowances in rural areas. 
Has that been a problem for you?
    Mr. Bazzie. It is somewhat of a problem. The requirement is 
that each year, housing authorities update their utility 
allowances so that the family is not paying more than 30 
percent of their income towards rent and utilities.
    So for every--
    Mrs. Capito. So utilities are included in that, right?
    Mr. Bazzie. Yes.
    Mrs. Capito. Okay.
    Mr. Bazzie. So for every dwelling unit that is rented, 
we'll make an individual determination of an estimated utility 
cost.
    In order to come up with that estimate, we have to contact 
every utility company within our jurisdiction, and in a 6-
county area, that's hundreds, when you include all of the water 
and sewer public service--
    Mrs. Capito. Right.
    Mr. Bazzie. --districts, gas.
    HUD is already determining estimated utility costs for 
every fair market area. They have to, in order to come up with 
this fair market--
    Mrs. Capito. Right.
    Mr. Bazzie. So my suggestion in the written was that this 
may be one area that SEVRA will explore, because it's not in 
there now, is to allow housing authorities to use this HUD data 
if they so desire.
    Now, a smaller community, it may not be a problem. In West 
Virginia, the average housing authority is covering three 
counties. So it is very staff-intensive and time-consuming when 
the information is already there.
    Mrs. Capito. Okay. I would like to ask whoever wants to 
answer this question, are any of your housing authorities or 
the folks that you interact with daily, are you all receiving 
any money from the stimulus package?
    Could you just briefly tell me how much and what you're 
using it for, just really quick, because I don't have much 
time.
    Mr. Montiel. $25 million in Los Angeles for rehab of vacant 
units and for public safety cameras in public housing 
developments.
    Mr. Bazzie. In Raleigh County, approximately $100,000, 
$120,000 we're going to receive, really just to make additional 
repairs to our public housing units.
    Mr. Hiebert. I'm extremely envious of the $25 million 
figure. We got $400,000, which is used for roofs and siding 
that we hadn't been able to do in the last 20 years.
    Ms. Rooker. And in Walla Walla, we're getting $245,000, 
we'll deal with energy upgrades.
    Ms. Zaterman. Every one of our members is using their 
stimulus money, a lot of the money focused on upgrades that 
have been in their 5-year plans for more than 5 years.
    Many housing authorities are using it to fill a credit gap 
on deals that were stalled or the value of the tax credit 
dropping, so they can move forward with expanding the supply of 
affordable housing.
    And many of them are very focused on green energy 
efficiencies and upgrading properties, not just on reducing 
energy conservation, but looking at the surrounding sites to 
how they impact climate change.
    Ms. Newsome. And the $2 billion in project-based Section 8 
funding to fund the gap has helped all of the members of NAHMA.
    Mrs. Capito. Thank you.
    Chairwoman Waters. Thank you.
    Mr. Cleaver?
    Mr. Cleaver. Thank you, Madam Chairwoman.
    I would like to focus on the rent structure. And this 
probably is a question that I should have asked the Secretary 
when he was here on this same subject a couple of weeks ago.
    Where do we get the 30 percent of the adjusted income from? 
I mean, do any of you know?
    Ms. Rooker. The Brooke Amendment.
    Mr. Cleaver. Yes, I know. But I mean, where did it come 
from? I mean, what is it based on? How was it designed? Was it 
just a figure that was just pulled out of the air?
    Ms. Rooker. It was negotiated by Congress, and this is 
where we're at today.
    Mr. Cleaver. Well, you're not suggesting we did that 
technically and that we actually thought deeply about it?
    Ms. Zaterman. It began at 25 percent, and it has been 
raised to 30 percent, so there has been a second look. We have 
looked at the percentage before, and in terms of the 
development.
    Mr. Cleaver. Well, do you believe that--do any of you 
believe that in this legislation, that maybe we ought to look 
at a flat rate? Do any of you have difficulty with a flat rate?
    Mr. Hiebert. I think that may be something that can be done 
on a case-by-case basis in different areas, depending on their 
local community and their residents and their waiting list. I 
think that ought to be part of the discussion that they have, 
and that's why we're recommending the housing innovations 
program.
    That's the sort of thing that they can take a look at, 
rather than making one decision here, allowing that local 
flexibility to be able to work it in a particular community or 
region.
    Ms. Zaterman. And Congressman Cleaver, I would like to add 
also that if we look at the current MTW agencies, they submit 
annual plans every year, and report on what they have 
accomplished each year.
    A number of housing authorities are looking at rent reform 
policies, not just flat rents, but reducing the percentage of 
the rent to income to 28 or 27 percent, and eliminating 
deductions.
    I think this is a very strong argument for the housing 
innovations program, where you continue to have tenant 
protections and a rigorous evaluation, because we need to look 
at what the impact actually is on residents, both in the 
incentives for work, the amount of disposable income available 
for education expenses and transportation, work-related 
expenses.
    So this is really the time we should be looking at what 
current MTW housing authorities are doing in rent policy, 
because I think we will find some very interesting results, and 
contrary to early testimony, they are required to report on 
their activities and the outcome of their activities.
    But we do currently have data that we can look at, and we 
should expand our experimentation in this area.
    Mr. Cleaver. So all of you would then support the 
flexibility to modify the rent subsidy?
    I mean, you talked about, Ms. Zaterman, the--you know, 
someone who has to, you know, ride the bus each day and who has 
to pay for child care, may need a greater level of help, and 
maybe 30 percent is too high, compared to someone who works 
around the corner, they walk around the corner, and they can 
drop their kids off at Grandma's.
    Ms. Zaterman. I think the other case is for households who 
are increasing their income, that every additional dollar that 
they earn goes into an increased rent payment.
    The thinking behind flat rents for some housing authorities 
who are interested in this is, it is an incentive for work, in 
that your rent does not go up when your income goes up, and 
that you can budget and plan in terms of your expenses and not 
be subject to rent increases every time your income goes up.
    Mr. Cleaver. Well, the previous HUD Secretary--well, not 
the--Mr. Jackson had supported the flat rate, which caused me 
to not want to support it, but the--that was not nice--but he 
pushed that, and I just recently started looking more 
thoroughly and deeply at it, and if we can achieve what a flat 
rate would do by making adjustments, then that certainly ought 
to be something that we would include in the legislation. I'm 
assuming all of you would agree with that.
    Mr. Montiel. Yes.
    Mr. Bazzie. Mr. Montiel?
    Mr. Montiel. Yes.
    Mr. Bazzie. Yes.
    Mr. Hiebert. Yes, I very strongly agree with that. Also, 
Congressman, in the original legislation of MTW and also 
contained in the new contracts, is public housing, and our 
programs have often been referred to as a safety net.
    We have to have a safety net within that safety net. Nobody 
fits the entire mold of any program. So we do take into account 
somebody who has different circumstances and can't afford 
whatever innovative program is being tried. So that is 
contained in every HIP or Moving To Work Program.
    Mr. Cleaver. Ms. Rooker?
    Ms. Rooker. I would agree, and just on the administrative 
side, it's just very complicated to deal with rent 
calculations, and, you know, error rates, all the exclusions, 
and NAHRO has done some modeling and studies as to what those 
exclusions cost and then where that percentage goes to be able 
to react to this bill, and hopefully be informative.
    Mr. Cleaver. Ms. Newsome?
    Ms. Newsome. NAHMA would definitely welcome looking into 
how rents are calculated. In our written testimony, we also 
brought up the issue of the fact that many of our residents we 
pay a check to, to live in our communities.
    Mr. Cleaver. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Mr. Driehaus?
    Mr. Driehaus. Thank you, Madam Chairwoman.
    I would like to pursue a little further the issue of rent, 
but from a different perspective, and that is rent 
reasonableness. And I'm interested in your perspectives.
    We talked a little bit about HIP and MTR and the 
flexibility that local housing authorities might want or should 
have with regard to those programs, but I also find, certainly 
in Cincinnati, we have seen that there are restrictions placed 
upon local housing authorities when it comes to rent 
reasonableness studies.
    And at times, it has caused a reconcentration of pockets of 
poverty in neighborhoods, because we see certain neighborhoods 
where the rents are so high and landlords are not willing to 
accept vouchers, that they're essentially closed off.
    And so where that rental reimbursement is rather 
significant relative to the market rate, and where the greatest 
profit margin exists, we see landlords flocking into those 
neighborhoods, especially to purchase very affordable single-
family homes, and then, you know, an introduction of 
significant numbers of vouchers into those neighborhoods, 
thereby reconcentrating pockets of poverty.
    You know, the idea initially of the voucher program was to 
deconcentrate poverty, not to reconcentrate it. And I'm 
interested in your perspectives in terms of the flexibility 
given to local housing authorities when it comes to rent 
reasonableness and whether or not you are limited in your 
ability to achieve the objective of decentralizing poverty.
    Mr. Hiebert, maybe you could offer some perspective?
    Mr. Hiebert. Yes. The original intent was very good, to 
make sure that program participants weren't overpaying for 
housing.
    Our program in Keene exactly went through that thought 
process you were just talking about. It makes allowance for 
somebody to make a choice, if they would like to live closer to 
their school, where they're working, closer to public 
transportation. For instance, if they did that, maybe they 
wouldn't have to have a car, wouldn't have to pay for parking, 
wouldn't need insurance.
    And even the housing industry, in looking at the magic 30 
percent figure, and looking at, for instance, if somebody is 
qualified for a mortgage, goes beyond that, and looks at what 
other debts do they have, do they have a car payment, do they 
have insurance, and that sort of thing.
    If somebody would like to pay a little bit more to get 
closer to their school or work of whatever, or a nicer 
neighborhood, they should be able to have that choice. That's 
what it's all about.
    So yes, I would certainly like to see that added 
flexibility, which is not actually contained in the Section 8 
Program now, but is during, again, in my mantra, in the Moving 
To Work Program.
    Mr. Driehaus. Mr. Montiel?
    Mr. Montiel. Yes. I think your comments are very well 
taken, and whether definitely would benefit from the 
flexibility, as would the clients that we serve.
    In Los Angeles, we have our council district of 15 in the 
city that has 25 percent of our 50,000 vouchers, Councilman 
Parks.
    And whereas, I'm not one to advocate that everyone should 
live in Brentwood, that would be great, but that's really not 
what the program is designed for, it's obvious that, as you get 
into better neighborhoods, you have a double bottom, or triple 
bottom line, more jobs, better transportation, and better 
schools.
    So anything that we can do to help the families get into 
situations where they can become more self-sufficient quicker, 
I think is a good thing, and that flexibility would certainly 
be welcome.
    Mr. Driehaus. Do you feel that there are restrictions right 
now placed upon you in terms of your ability to adjust 
reimbursement rates in given neighborhoods?
    Mr. Montiel. Absolutely. We have a maximum of 100 percent 
that we can provide of the FMR for any particular neighborhood 
in Los Angeles, and to go past 110 percent, you have to get HUD 
approval.
    I'll give you an example. Right next door in Santa Monica, 
they have gotten a HUD waiver because their minimum is 147 
percent of the FMR, just because of the markets.
    So yes, right now, we have a cap of 110 without approval.
    Mr. Driehaus. Ms. Rooker?
    Ms. Rooker. One item that may be of assistance is that HUD 
bases the fair market rent at 40 percent of the percentile 
within your market. Some markets have been raised to the 50th. 
And it used to be at the 50th.
    And raising the amount of rental stock available within 
your fair market rent and your payment standard, whether it 
goes to 110, opens up what I think you're trying to achieve, is 
deconcentration, so the more rental units.
    But that has a cost to the program, and that's why HUD 
decreased the fair market percentile to the 40th versus keeping 
it at the 50th, which provides more rental options within your 
community, and then you get deconcentration.
    Mr. Driehaus. Thank you, Madam Chairwoman. I yield back the 
balance of my time.
    Chairwoman Waters. The Chair notes that some members may 
have additional questions for this panel, which they may wish 
to submit in writing. Without objection, the hearing record 
will remain open for 30 days for members to submit written 
questions to these witnesses and to place their responses in 
the record.
    Now, this panel is dismissed, but before we adjourn, the 
written statements of the following organizations will be made 
part of the record of this hearing: The National Leased Housing 
Association; the Poverty and Race Research Action Council; and 
the California Housing Partnership.
    I would like to thank our witnesses for being here today, 
for their patience while we had to go to vote. We appreciate 
the work that you are doing.
    And this hearing is now adjourned.
    [Whereupon, at 1:08 p.m., the hearing was adjourned.]







                            A P P E N D I X



                              June 4, 2009

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
