[Senate Hearing 111-983]
[From the U.S. Government Publishing Office]
S. Hrg. 111-983
Senate Hearings
Before the Committee on Appropriations
_______________________________________________________________________
Departments of Transportation
and Housing and Urban
Development and Related
Agencies Appropriations
Fiscal Year
2011
111th CONGRESS, SECOND SESSION
H.R. 5850/S. 3644
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
DEPARTMENT OF TRANSPORTATION
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)
NONDEPARTMENTAL WITNESSES
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY
Departments of Transportation and Housing and Urban Development, and
Related Agencies Appropriations, 2011 (H.R. 5850/S. 3644)
S. Hrg. 111-983
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
ON
H.R. 5850/S. 3644
AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF TRANSPORTATION AND
HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2011, AND FOR OTHER PURPOSES
__________
Department of Housing and Urban Development
Department of Transportation
National Railroad Passenger Corporation (Amtrak)
Nondepartmental witnesses
Washington Metropolitan Area Transit Authority
__________
Printed for the use of the Committee on Appropriations
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COMMITTEE ON APPROPRIATIONS
DANIEL K. INOUYE, Hawaii, Chairman
ROBERT C. BYRD, West Virginia THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin JUDD GREGG, New Hampshire
PATTY MURRAY, Washington ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
DIANNE FEINSTEIN, California SAM BROWNBACK, Kansas
RICHARD J. DURBIN, Illinois LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota SUSAN COLLINS, Maine
MARY L. LANDRIEU, Louisiana GEORGE V. VOINOVICH, Ohio
JACK REED, Rhode Island LISA MURKOWSKI, Alaska
FRANK R. LAUTENBERG, New Jersey
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
JON TESTER, Montana
ARLEN SPECTER, Pennsylvania
Charles J. Houy, Staff Director
Bruce Evans, Minority Staff Director
------
Subcommittee on Transportation and Housing and Urban Development, and
Related Agencies
PATTY MURRAY, Washington, Chairman
ROBERT C. BYRD, West Virginia CHRISTOPHER S. BOND, Missouri
BARBARA A. MIKULSKI, Maryland RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin ROBERT F. BENNETT, Utah
RICHARD J. DURBIN, Illinois KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota SAM BROWNBACK, Kansas
PATRICK J. LEAHY, Vermont LAMAR ALEXANDER, Tennessee
TOM HARKIN, Iowa SUSAN COLLINS, Maine
DIANNE FEINSTEIN, California GEORGE V. VOINOVICH, Ohio
TIM JOHNSON, South Dakota THAD COCHRAN, Mississippi (ex
FRANK R. LAUTENBERG, New Jersey officio)
ARLEN SPECTER, Pennsylvania
DANIEL K. INOUYE, Hawaii (ex
officio)
Professional Staff
Alex Keenan
Meaghan L. McCarthy
Rachel Milberg
Dabney Hegg
Jon Kamarck (Minority)
Ellen Beares (Minority)
Rachel Jones (Minority)
Administrative Support
Michael Bain
C O N T E N T S
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Thursday, March 4, 2010
Page
Department of Transportation: Office of the Secretary............ 1
Thursday, March 11, 2010
Department of Housing and Urban Development: Office of the
Secretary...................................................... 61
Thursday, April 29, 2010
Department of Transportation: Federal Railroad Administration.... 121
National Railroad Passenger Corporation (Amtrak)................. 145
Thursday, May 6, 2010
Department of Transportation: Office of the Secretary............ 179
Department of Housing and Urban Development: Office of the
Secretary...................................................... 191
Thursday, May 13, 2010
Department of Housing and Urban Development: Federal Housing
Administration................................................. 225
Wednesday, May 19, 2010
Washington Metropolitan Area Transit Authority................... 285
Nondepartmental witnesses........................................ 345
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
THURSDAY, MARCH 4, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:31 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray, Kohl, Specter, Bond, and Collins.
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
STATEMENT OF HON. RAY LaHOOD, SECRETARY
ACCOMPANIED BY CHRIS BERTRAM, ASSISTANT SECRETARY FOR BUDGET AND
PROGRAMS AND CHIEF FINANCIAL OFFICER
opening statement of senator patty murray
Senator Murray. Good morning, the subcommittee will come to
order.
This morning, we're going to be holding our first hearing
on the President's budget request for the Department of
Transportation.
I want to welcome Secretary Ray LaHood. Thank you so much
for being here today.
The transportation budget that we have before us today is
important for families, commuters, communities across the
country, and it's about more than just dollar amounts and more
than just the sum of the programs and provisions; it really is
a statement of values and a reflection of priorities. It's an
issue that touches every American, every day. It affects the
men and women who commute to work and need safe roads or new
public transportation options, it affects the parents who strap
their young kids into the back seat of the family car and need
to be confident that their government has the resources to make
sure that passenger vehicles used by American families are
safe. It affects communities around the country that are facing
immense fiscal challenges and depend on Federal resources to
maintain and improve their transportation infrastructure.
The transportation budget has a real impact on real people,
people who are struggling in these tough economic times. Last
year, we passed a recovery package that is now working to
create jobs and rebuild infrastructure and lay down a strong
foundation for long-term economic growth. It was a good start,
but we cannot stop working until our economy is steadily
growing again and any American who wants a job can find one.
That's why we are building on the Recovery Act with new
targeted jobs bills to help workers get back on the job and
make investments that strengthen our competitiveness in the
long term, including investments in transportation. And its
why, as we examine this budget request, we need to make sure
that it builds on those efforts and continues moving us
forward, creating jobs, and investing in our communities, long
term.
Today's hearing comes shortly after the Senate passed an
extension of the surface transportation programs. But,
unfortunately, as we know, this extension was not passed in
time and almost 2,000 DOT employees were furloughed without pay
for the first half of this week. The gap in funding didn't just
hurt those Federal employees, it also left State governments
wondering about the future of funding that they desperately
need. In my home State of Washington, a reimbursement payment
of $13.5 million for federally-sponsored projects, that was due
on Tuesday, was left in limbo.
Seeing these programs shut off, even just for a short time,
is especially troubling since Senator Bond and I have worked so
hard to bring stability to the highway safety and transit
programs authorized under SAFETEA-LU. Two years ago, we
included a transfer of funds to prevent the Highway Trust Fund
from going bankrupt. Last year, we provided an additional $650
million for the highway program, an increase of $400 million
for transit, despite the absence of a new authorization law to
provide for such increases.
And now, when our communities need jobs and Federal
investments in infrastructure more than ever, they're facing
shutdowns of the highway and transit programs and instability
in their funding streams. The uncertainty of this brings--
undermines essential planning by our States and local
jurisdictions. That's why we need to move quickly toward a
long-term authorization of the highway, safety, and transit
programs, one that brings solvency to the Highway Trust Fund
and stability to our States and communities, and I am committed
to getting that done in the near future.
Before I get to the budget request, I want to take a few
minutes to commend Secretary LaHood and the DOT on meeting some
significant challenges this past year. Immediately after the
Recovery Act was enacted, the Department began working to
distribute highway and transit grants to State and local
governments. The law set very aggressive deadlines for all of
the programs it funded, and to its credit, the DOT has met each
one and it has worked hard to help our State and local
governments meet their deadlines, as well. That was absolutely
critical as we worked to create jobs, invest in our
infrastructure, and accelerate economic recovery. I was very
happy with the DOT's work on two programs, in particular, the
Inner-City and High-Speed Rail Grants, and TIGER, the program
that I helped create, that supports significant projects across
almost every mode of transportation. I fought to include those
programs in the Recovery Act, because I know that getting
commerce and commuters moving is an important part of our
recovery efforts. I was proud that my home State of Washington
received $590 million for high-speed rail upgrades along the
Pacific Northwest Cascades Corridor. And I recently was out in
the State and visited the North-South Freeway in Spokane, and
the Mercer Street Corridor in Seattle; both projects had been
awarded TIGER grants.
The project in Spokane will create about 100 jobs, and the
Seattle grant is the final piece required to finish a project
that will create thousands of jobs. These are projects that
will help families and small businesses in their communities,
get workers back on the job, and help lay the foundation for
long-term economic growth. And I'm sure Secretary LaHood has
seen plenty of great projects like that that are in the works,
helping communities across the country.
This subcommittee included an additional $600 million in
the fiscal year 2010 bill to continue provided Federal
resources to support these types of regional transportation
investments, and I look forward to working with the Department
as it moves forward in the coming year to get to a new round of
investments out of the door.
But, now, as we look toward this year's budget, it's clear
that the DOT is going to have to find ways to do more with
less, especially given the President's announcement of an
overall cut in nondefense, domestic discretionary spending.
But, even in this challenging environment, I'm encouraged by
many of the items I do see in the budget request. The request
includes increased funding for safety inspectors for aviation,
rail, and pipelines, an investment of $1.1 billion for NextGen
efforts at the Federal Aviation Administration, another $1
billion in grants for inter-city and high-speed rail, and
continued investment infrastructure to support our airports,
roads, bridges, highways, transit systems, and Amtrak.
I still have some questions about some of the decisions
reflected in this budget request. I'm certain Senator Bond has
some of his own, as well. For example, why is it necessary to
create a new agency at the Department for awarding multimodal
grants, especially when we have seen DOT agencies work together
on the TIGER grants? And why did the administration choose not
to request any funding for positive train control? PTC is an
important technology for preventing rail collisions and
derailments.
But, the biggest question on my mind, and on the mind of
many families I hear from, is whether the Department has been
doing enough to oversee the safety of our cars and our trucks.
The American people deserve to have faith in the safety of the
cars and trucks they drive to work, to school, to soccer
practice with their kids every day. Questions have been raised
about whether the National Highway Traffic Safety
Administration has adequate expertise and resources to
investigate safety defects among the 246 million passenger
vehicles--246 million passenger vehicles--in the United States.
Given that NHTSA opened and closed four narrowly-focused
investigations into sudden, unintended acceleration in Toyota
vehicles between 2003 and 2006 without a significant finding of
a defect trend, I question whether additional resources would
have resolved consumer complaints of sudden, unintended
acceleration. NHTSA must ensure the industry is honest in
disclosing defects, and timely in alerting drivers,
particularly when these defects can result in fatal accidents.
To do this, they need to be more strategic about their
workforce and use the expertise of their employees more
effectively.
NHTSA finally does have strong leadership in place, with
the recent confirmation of Mr. Strickland, as well as from you,
Mr. Secretary. I am hopeful that you will reenergize the
agency's vehicle safety mission to focus on enforcement and
strengthen its electronic expertise. Families across America
rely on the DOT to be a leader in improving transportation
safety and to provide expertise on what safety issues need to
be addressed.
I'm also glad to see a request for additional resources to
allow the Federal Transit Administration to oversee transit
safety. However, this activity is not yet authorized; and,
importantly, the FTA's proposal to oversee transit safety came
out only after severe deficiencies were found in the safety of
the Washington Metro system, right here in our backyard.
I look forward to hearing from you, Mr. Secretary, on where
the greatest risks exist in rail transit and what steps the
Department can take to make transit safer for the millions of
Americans who rely on it for their daily commutes.
Unfortunately, too much of the Department's work is initiated
in reaction, now, to a crisis situation. We've seen this
before; most recently, the Federal Aviation Administration
revisited its safety standards after the tragic crash of the
Colgan Air flight, a year ago.
The DOT is doing good work in so many areas, but we can
never ignore the core mission of this agency: to make sure the
safety of our Nation's transportation system is there for all
of our families. Over the course of this hearing this morning,
we'll have an opportunity to discuss all of these issues in
more--greater detail.
But, Mr. Secretary, thank you again for your participation
today, and I look forward to your testimony.
With that, I'd like to turn it over to my partner, Senator
Bond, ranking member, for his opening remarks, as well.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you very much, Madam Chair.
And welcome, Mr. Secretary. I'm pleased to join with the
chair and Senator Collins in welcoming you to testify on the
Department's 2011 budget.
There are plenty of people in Washington who don't think
transportation spending is glamorous. They'd rather spend money
on anything else other than roads, bridges, and infrastructure.
But, in my way of thinking, ensuring America has an updated
transportation infrastructure is a key responsibility of
government. And I--it's no secret that I am a huge proponent of
spending to improve our transportation spending and create jobs
and get the infrastructure we need; but it has to be done well.
It's an economic climate where we need to invest our scarce
resources in areas, like infrastructure, that will not only
build roads and bridges, but help rebuild our economy.
But, while investing in our transportation infrastructure
is critical, we can't just wish it to be. With a $12 trillion
and growing deficit, we cannot continue to throw Federal funds
at projects, willy-nilly. We need a clear-cut, coherent, and
detailed blueprint, detailing how taxpayer dollars will be
spent to reach our transportation infrastructure goals.
Unfortunately, the administration proposal misses this
mark, once again. In fact, there is little ``print'' in the
administration's supposed ``transportation blueprint.'' As I
said earlier this year, this budget is making me feel a lot
like Bill Murray in ``Groundhog's Day.'' Instead of a serious
plan to tackle our Nation's transportation policy challenges,
the administration is repeating last year's mistake.
We're facing the same issues, Mr. Secretary, which we faced
last year when you came before the subcommittee. I understand
there are many difficult transportation challenges facing our
Nation, but refusing to deal with them, or putting off the
tough choices, is not a responsible way to go about it.
Once again, the budget assumes an extension of SAFETEA. We,
once again, need to bail out the Highway Trust Fund with
general revenue to get us through the fiscal year, much less
get us through fiscal year 2011. And, once again, we have to
bail out the mass transit account with general funds to get us
through fiscal year 2011.
There are no broad reauthorization proposals or solutions
to any of these challenges. Instead, this budget actually adds
to our already daunting challenges by including various pet
project initiatives that would wait, like everything else, for
a full reauthorization to occur.
In addition to a lack of realistic decisionmaking, this
budget adds to our challenges by failing to provide a national
rail plan and a cost-to-complete estimate of what we are trying
to accomplish with the $10.5 billion we've already
appropriated, much less the additional billions, which I fear
will be in the hundreds and hundreds of billions of dollars,
this budget requests. Where are we going to spend all of that
money? Where are we going to get all of that money? What's it
going to do?
Finally, we have another $4 billion request for what, this
year, is called the National Infrastructure Innovation and
Finance Fund. Last year, it was called the National
Infrastructure Bank. You might have changed the name of the
program, but the details remain the same. By that, I mean there
are no details, once again, no legislative language about the
specifics of this $4 billion proposal.
I also must point out what is a general theme of this
budget: a continuation of the American Recovery and
Reinvestment Act and its broad--and I mean very broad--
grantmaking authorities and requests. Your budget asks for
Congress to write you a blank check, to the tune of $527
million in grants, under a new Office of Livability. Your
budget also asks Congress to write you another blank check for
$53 million in greenhouse gas and energy reduction grants. Your
budget asks Congress to write you another $1 billion check for
high-speed rail. Do you really want us to give you another
bunch of pots of money from which to make earmarks, with no
accountability? I want to know where is Congress' role in
deciding how these tax dollars will be spent.
As you will recall, Mr. Secretary, Congress gives the--is
given, by the Constitution, the responsibility to appropriate
money. Why should all of the decisions about spending our
scarce Federal resources be made by unelected and unaccountable
bureaucrats with no involvement of the representatives of the
people in Congress or a full disclosure to them?
Equally important, where is the transparency in the
process? I thought I heard the clear, unambiguous promise that
this administration would be the most transparent ever. I've
continued to ask questions on exactly how the administration is
making their earmark decisions, awarding these transportation
grants, what criteria are being used. I continue to get no
answer.
It's critical that the process be transparent so Congress,
and the taxpayers we serve, knows how taxpayer dollars are
being used. It's essential that we shine needed sunlight on the
funding of transportation projects to date, and it hasn't
happened.
Mr. Secretary, I believe that if this grantmaking process
is continued in our bill, it needs to be done in a far more
transparent and accountable way. Grants that are applied for by
communities and States should be posted on the Internet for
every taxpayer to see and evaluate, not just delivered by a
lobbyist to the Department of Transportation, with no
transparency. Cost shares, the leveraging of funds, should be
readily available on the Internet so that we, and our
constituents, have access to information about other sources of
Federal, State, or private funds that may be used to augment
these grant awards.
We have continued to demand that Congress be notified of
award decisions 3 days prior to the Department of
Transportation's announcement, with backup material and
information on the methodology of award selections, including
information on how the selected projects fit into our
transportation goals. We have not been getting that, and it is
very awkward to have to tell our constituents that you didn't
even bother to tell us where the grants are going, why they are
going there, and how they were selected.
Now, it's unclear to me the extent to which the Department
is funding projects for which there are no traditional sources
of funding, as you indicated was the priority for the TIGER
funds when you testified before our subcommittee last year. Mr.
Secretary, last year when I asked you what Congress' role in
all of this, you indicated that, ``Congress' role ended when
the check was signed.'' I think the American taxpayer deserves
more, deserves better. The administration has pledged to
provide transparency, lobbying reform across all programs. This
commitment must extend to the billions of taxpayer dollars
spent on our transportation projects.
Our transportation infrastructure, like our highways,
roads, and bridges, are the lifeblood of our economy and key to
future economic growth and economic recovery. We cannot afford
to pass the buck on difficult challenges; we cannot afford to
spend billions of dollars, with no transparency, oversight, or
accountability, if we are to create a modern transportation
infrastructure, new jobs in our community, safer travel for our
families, and economic development across the Nation.
For many of these challenges, there are no easy or popular
solutions, but we cannot afford to keep putting the problems
down the road, or there won't be a road to drive on.
Mr. Secretary, obviously I look forward to your testimony.
Senator Murray. Thank you, Senator Bond.
Senator Collins, do you have an opening statement?
STATEMENT OF SENATOR SUSAN COLLINS
Senator Collins. Thank you, Madam Chairman.
First, let me thank you and the ranking member for your
strong leadership on this subcommittee, and your advocacy.
I do have an opening statement which I'm going to submit
for the record, but I did just want to take a moment to talk
about the TIGER grants that were authorized in the Recovery
Act.
It's my understanding that the Department of Transportation
received nearly 1,400 TIGER grant applications, totaling $56.9
billion. The Recovery Act included $1.5 billion for TIGER
grants. I think this--the figures show what an overwhelming
demand there is for infrastructure spending along the lines
that both of you have outlined.
A project submitted in the State of Maine, alone, totaled
$236.2 million. Obviously, due to the high volume of
applications, the vast majority of these projects were not able
to be funded. There were two in Maine that were of particular
importance. One, I'm going to discuss when the questions come
around; it has to do with more than 200 miles of track in
northern Maine that the railway in question is seeking to
abandon, which would be devastating for northern Maine.
The second is a very innovative program that New Hampshire
and Maine have come together on, and that is to repair a major
bridge that links the two States. And that, too, is an
innovative project that I hope might be able to secure future
funding.
But, again, it just is evidence of the overwhelming need
for investment in infrastructure. And I look forward to working
with you and the ranking member, both of whom are such
effective advocates in this area, and as well as with the
Secretary.
Thank you.
[The statement follows:]
Prepared Statement of Senator Susan Collins
Our Nation continues to face serious economic challenges and the
transportation sector is certainly not immune to these hardships.
During consideration of the American Recovery and Reinvestment Act, I
advocated for a strong investment in transportation funding.
Unfortunately, our investment came up short. While we secured over $48
billion for all modes of transportation, this funding represented less
than 7 percent of Recovery Act spending. I find that troubling as
investments in transportation infrastructure are strongly needed in all
States and a sure way to create good-paying jobs.
Maine was the first State in the Nation to obligate 100 percent of
its Recovery Act highway funds. I applaud the quick action of my State
to get Recovery Act funds out the door and create much needed jobs. I
often hear from my constituents in the construction industry that the
investments we made in transportation funding saved the industry from a
dismal year and significant lay-offs.
As many of the Recovery Act funds are now spent, the transportation
industry faces difficult times ahead if we do not act to make the
necessary investments in our transportation infrastructure.
I am particularly pleased that the administration has taken steps
to invest in projects of regional and national significance through the
creation of a National Infrastructure Innovation and Finance Fund. The
high number of applicants for the Transportation Investment Generating
Economic Recovery (TIGER) Grant program funded by the Recovery Act
shows the need for continued investments in this area.
The Department of Transportation received 1,381 TIGER grant
applications totaling $56.9 billion. The Recovery Act included $1.5
billion for TIGER grants. The need for funding is great. Projects
submitted in Maine alone totaled $236.2 million. Due to the high volume
of requests, most of these projects were funded.
One project in particular that did not receive a TIGER grant is the
Montreal, Maine and Atlantic (MMA) Railway in northern Maine. Because
of the economic downturn, it is not financially viable for MMA to
operate its full 745 miles of rail line, and the company, therefore,
has filed to abandon 233 miles in Aroostook County. This will be
devastating for Maine's economy. Once a rail line is abandoned, it is
almost impossible to bring that line back into service. I look forward
to working with the subcommittee and the Secretary to ensure that Maine
has the resources we need to maintain our transportation
infrastructure.
Senator Murray. Thank you very much, Senator Collins.
Mr. Secretary, again, welcome to this morning's hearing,
and I will turn it over to you for your opening statement.
STATEMENT OF HON. RAY LAHOOD
Secretary LaHood. Thank you very much, Madam Chair, Ranking
Member Bond, Senator Collins, for the opportunity to discuss
the administration's fiscal year 2011 budget request for the
U.S. Department of Transportation.
I've traveled to more than 32 States and 72 cities in the
last year, and I've seen firsthand how much our citizens depend
on a safe, modern, and reliable transportation system to access
jobs, healthcare, and other essential services.
The President's request for next year totals $79 billion, a
$2 billion increase over fiscal year 2010 levels. These
resources will support the President's and DOT's top
transportation priorities for safety on the roads, in the air,
and also making communities livable and sustainable, and
modernizing our infrastructure.
Safety is our highest priority at DOT. Our leadership
campaign against the perils of distracted driving, which kills
thousands of Americans every year, has been very effective.
It's critical we continue to lead the charge on this; that's
why we're seeking $50 million for the National Highway Traffic
Safety Administration to develop an incentive-based grant
program encouraging more States to pass laws prohibiting the
unsafe use of cell phones and texting while driving. The
President is also asking for 66 additional personnel assigned
to highway and vehicle safety at NHTSA.
Turning to aviation, the President's plan includes $1
billion for next-generation technology, the program to
modernize our air traffic control system. That's a $270
million, or 32-percent increase, over fiscal 2010 levels. These
funds are essential for transitioning from a ground-based radar
surveillance system to a more accurate satellite-based one.
This system is already in use in the Gulf of Mexico, and we
look forward to working on building on our success.
Our groundbreaking investments in high-speed passenger rail
service, which have generated tremendous excitement around the
country, will go a long way to enhance livability in many
communities. Our budget seeks $1 billion to continue the 5-
year, $5 billion pledge made in this year's budget. I want to
thank Congress for its commitment and leadership on high-speed
rail; the $2.5 billion provided to the Department for high-
speed rail grants last year, combined with $8 billion we
announced recently, brings us closer to ushering in a new era
for passenger rail service in this country.
In the area of transit safety, we're seeking $30 million to
establish a new rail transit safety oversight program within
the Federal Transit Administration. This program will carry out
a comprehensive safety oversight strategy by establishing
common safety standards nationwide, as envisioned in the
administration's transit safety bill. This is an important step
forward for the rail transit industry, which has suffered
recent accidents in Washington, DC, Boston, and San Francisco.
This is unacceptable, and we must put strong remedies in place
as soon as possible. I urge Congress to pass this legislation
this year.
Going forward, we must find new ways to finance
infrastructure. We're requesting $4 billion to establish a new
Infrastructure Innovation and Finance Fund. These first-year
funds would be used to invest in multimodal transportation
projects of regional and national significance. Our
crosscutting, outcomes-based approach to funding will enable us
to move away from the silo mentality that has long hindered our
ability to respond to local and regional needs.
On authorization, the President proposes to continue
spending levels with $42.1 billion for highway and bridges, and
$10.8 billion for transit. This request includes $150 million
to enable the Washington Metropolitan Area Transit Authority to
address much-needed safety-related infrastructure improvements.
Transportation must not only be safe, but also contribute to
livable, sustainable neighborhoods. The President's plan
provides record-level investments to make our communities more
livable.
Specifically, we're seeking $527 million for Livable
Communities, which will help us build on the tremendous
successes we have achieved through our sustainable partnership
with HUD and the EPA. Together, we're helping State and local
governments make smarter investments in their transportation,
energy, and housing infrastructure, with better outcomes for
our citizens.
Finally, we're seeking $30 million to make long-overdue
infrastructure improvements at the Merchant Marine Academy,
which our Nation depends on to educate and train a new
generation of military and civilian maritime leaders. I've been
to Kings Point a number of times, and I know these investments
will have a lasting, positive effect on this institution.
I look forward to your questions.
[The statement follows:]
Prepared Statement of Hon. Ray LaHood
INTRODUCTION
Chairman Murray, Ranking Member Bond and members of the
subcommittee, thank you for the opportunity to appear before you today
to discuss the administration's fiscal year 2011 budget request for the
U.S. Department of Transportation.
The administration's fiscal year 2011 budget request for the U.S.
Department of Transportation reflects the importance of strengthening
our Nation's transportation system. In my first year as Transportation
Secretary, I have travelled throughout the country and I know first-
hand how important a safe and reliable transportation system is to all
Americans. The President's request totals $79 billion, a nearly $2
billion increase over fiscal year 2010 levels. These resources will
support the President's top transportation priorities: improving
transportation safety, investing for the future, and promoting livable
communities.
HIGHWAY SAFETY
Safety is and will continue to be our top priority, and reducing
highway fatalities is one of the Department's High Priority Performance
Goals. The budget contains a number of new initiatives to increase
road, transit, and aviation safety. One of the most serious issues
facing drivers today is distracted driving. We must end the dangerous
practice of unsafe cell phone use or texting while driving. Too many
lives have been lost already due to distracted driving. Working
together, I believe that we can stop this dangerous practice--and save
lives. The President's budget requests $50 million for the National
Highway Traffic Safety Administration's (NHTSA) for a new incentive
grant program to promote State laws to curtail unsafe cell phone use
and eliminate texting while driving. Today, our children don't think
twice when they ``buckle up''--and our goal is that tomorrow, our
future generations won't think twice about putting down their cell
phone so that they can drive safely. This new program will work
alongside NHTSA's other highway safety programs in making our highways
safer for everyone. The President is also asking for funds to support
66 additional personnel for NHTSA to be assigned to highway and vehicle
safety issues, and $7 million for the Federal Motor Carrier Safety
Administration for 118 new truck safety personnel.
NEXTGEN
The future of aviation is in our hands. The President's fiscal year
2011 plan includes over $1 billion--an increase of $275 million over
the fiscal year 2010 levels--for ``NextGen''--the program to modernize
the air traffic control system. Currently, the Federal Aviation
Administration is undertaking a long-term effort to improve the
efficiency, safety, and capacity of the aviation system. But while we
are talking about the future of aviation, I'm pleased to report that
it's happening now. The funds requested under the fiscal year 2011
budget request will support the transformation from a national ground-
based radar surveillance system to a more accurate, satellite-based
surveillance system. This system is already being used in the Gulf of
Mexico, which is improving the safety and accuracy of air traffic
services in the gulf. We will be building on the successes of our
research and development, to improve capacity to the flying public. We
will be developing more efficient routes through the airspaces, and
improving aviation weather information. As always, as we launch these
critical new applications, we will continue to keep our strong focus on
safety. Under my budget request, our vision of a modernized air traffic
control system is becoming a reality.
HIGH SPEED RAIL
The budget also continues President Obama's vision to better
connect communities with a new, high-speed rail network. The budget
includes an additional $1 billion for High Speed Rail. This request
builds on the historic $8 billion down payment provided through the
Recovery Act, and continues the 5 year, $5 billion pledge made in the
fiscal year 2010 budget. The $2.5 billion provided to the Department
for high speed rail grants last year along with our recent
announcements of the first awards of the High Speed Rail Program will
put us one step closer to making High Speed Rail a reality.
This is an exciting time for the Nation. Looking ahead, high-speed
rail will one day provide the traveling public with a practical
alternative to flying or driving, particularly in highly congested
areas. With trains efficiently connecting city and business centers,
travelers will enjoy a new level of convenience not available in many
parts of the country today.
RAIL TRANSIT SAFETY
The President's request also includes resources to address rail
transit safety. While rail transit is safe, we must take substantive
steps now to make it even safer for the future. We are all well aware
that rail transit has the potential for catastrophic accidents
resulting in multiple injuries, considerable property damage, and
heightened public concern. Following the recent tragic accidents in
Washington, DC, Boston, and San Francisco, it is clear that we need to
strengthen the safety oversight of transit rail operations. Our budget
requests $30 million to establish a new transit safety oversight
program within the Federal Transit Administration, which has never
before been granted safety oversight authority. This program will
implement a comprehensive safety oversight strategy, as proposed in the
administration's transit safety bill, to establish common safety
standards nationwide and to ensure the safety of our Nation's transit
riders.
INVESTING IN TRANSPORTATION INFRASTRUCTURE
As we continue to focus on improving transportation safety, we must
also rethink the way we invest in our future transportation
infrastructure. That is why the President's plan includes $4 billion to
establish the new National Infrastructure Innovation and Finance Fund
(Infrastructure Fund). This is the first year of a 5-year plan to
capitalize the fund with $25 billion. This fund will invest in projects
of regional or national significance, and marks an important departure
from the Federal Government's traditional way of spending on
infrastructure through mode-specific grants.
Instead, the Infrastructure Fund will directly provide resources
for projects through grants or loans, or a blend of both, enabling us
to effectively leverage non-Federal resources, including private
capital. The projects funded under the Infrastructure Fund will be
based on demonstrable merit and analytical measures of performance.
Only the most worthwhile projects from around the Nation will be
selected. Projects eligible for funding from the Infrastructure Fund
consist of multi-modal projects that include highway, transit, rail,
aviation, ports and maritime components. This marks a bold new way of
thinking about investments in our transportation infrastructure and
will become a key component of the administration's future surface
transportation proposal.
The reauthorization of the Nation's surface transportation programs
is complex and has critical long-range implications for the future.
While the President and the Congress continue to work on a long-term
strategy for surface transportation, the President's plan continues the
current levels of spending: $42.1 billion is proposed for highways and
bridges and $10.8 billion for transit. Within this funding, $1.8
billion is included for ``New Starts'' and ``Small Starts'', and $150
million to enable the Washington Metropolitan Area Transit Authority to
focus on badly needed safety-related infrastructure improvements.
Reauthorization is a challenging issue facing our Nation and I look
forward to working with the Congress to design a new Federal surface
transportation program that leads to higher performing investments,
increases transportation options, and promotes a sustainable
environment.
LIVABILITY
The President's plan also provides a record investment to make our
communities more livable. Our budget request allocates over $500
million toward investments that support the President's multi-agency
Partnership for Sustainable Communities. We have joined with the
Department of Housing and Urban Development and the Environmental
Protection Agency to stimulate comprehensive regional and community
planning efforts that integrate transportation, housing, energy and
other critical investments. Together, we will help State and local
governments make smarter investments in their transportation
infrastructure, to better leverage that investment and advance
sustainable development.
RECOVERY ACT
February 17 marked the 1-year anniversary of the Recovery Act and I
am pleased to report that much has been accomplished to improve
transportation infrastructure throughout the Nation. Overall, the
Recovery Act provided $48.1 billion for transportation programs to be
used for improvements to our Nation's highways and bridges, transit
systems, airports, railways, and shipyards. To date we have obligated
$36 billion on more than 13,700 projects nationwide.
In addition, section 1512 of the legislation calls upon Recovery
Act fund recipients to report on the number of jobs created on
individual projects. We have now completed two rounds of recipient jobs
reporting. Based on the recent October-December 2009 reporting period,
we have created about 41,000 direct full time equivalent jobs for
transportation programs nationwide. I want to emphasize that the jobs
estimates included in this report are only those directly associated
with the individual transportation projects and do not include the many
other jobs created due to increased demand on supply chains and other
supporting services. When these indirect jobs are also taken into
account, it is clear that the Recovery Act resources have made a
significant impact on jobs and we expect these numbers to hold steady
as some of the larger transportation projects continue to come on-line.
CONCLUSION
Finally, I am proud of the proposed investments the President's
budget makes in the U.S. Merchant Marine Academy--one of our Nation's
five service academies. I have visited the young men and women at Kings
Point, and I'm greatly concerned about the conditions of their
facilities. They are old and badly in need of basic repair. The
President's plan includes $26 million to make long overdue capital
improvements that will help ensure midshipmen have a positive learning
environment.
Thank you for the opportunity to appear before you to present the
President's fiscal year 2011 budget proposal for the Department of
Transportation and discuss some of the successes of the Recovery Act.
This plan supports our Nation's key transportation priorities, and
makes investments that will benefit all for years to come. I look
forward to working with the Congress to ensure the success of our
newest initiatives.
I will be happy to respond to your questions.
TOYOTA RECALLS
Senator Murray. Secretary, thank you very much.
Let me begin with the safety aspect that I talked about in
my opening remarks, which is what Americans really count on to
know what is happening. And I'm concerned that, despite the
recall of 6 million vehicles here in the United States and 8\1/
2\ million now worldwide, it's likely that engineers have not
yet discovered the problem with the sudden, unintended
acceleration in Toyotas. There is speculation that another
problem may be in Toyota's electronics or software that manage
the throttle operations. And I realize that Toyota and NHTSA
are now investigating those possible causes, but I'm concerned
because today I'm seeing another news articles that some Toyota
owners say they're still having trouble with unintended
acceleration after their recalled cars were repaired.
Now, I know this isn't an easy issue, but I want to be sure
that we understand how you are making the American people aware
of what the problems are, and which problems the recalls can
actually resolve, and what issues still need to be resolved.
And I wanted to ask you this morning, what advice do you have
today for consumers?
Secretary LaHood. Well, first of all, they should look at
our Web site, DOT.gov. We list all of the cars that have been
recalled by Toyota, and every other manufacturer; and if their
car is on that list, they should return it to the dealer and
have the car repaired.
I don't think we would have had the kind of testimony
before the Senate or the House if it hadn't been for our people
holding Toyota's feet to the fire. I personally requested Mr.
Toyoda come to America, talk to Members of Congress, talk to
its customers. I had a personal meeting with him.
We have held Toyota's feet to the fire on these safety
issues, and we will continue to do that. We're not going to
rest until every Toyota is safe to drive. That's our pledge,
because safety is our No. 1 priority.
Senator Murray. Well, if the new stories are accurate and
the reports are accurate, that the fix is not working,
Americans who went online, saw that their car was supposed to
go back in, took it back in, and they're still out there
driving it, and that didn't work. What are we doing now to fix
the problem?
Secretary LaHood. We're suggesting to people, if your car
is not working properly, take it to the dealer and have them
address or fix----
Senator Murray. But, that's what they did. They took it in
and had it fixed----
Secretary LaHood. They need to take it back. They need to
take the car back if it's not running properly.
And on the electronics issue, Madam Chair, I want you to
know that, we did look into that, and we've listened to Members
of Congress and from testimony that was given, both in the
House and Senate. We are doing a complete review, looking at
every aspect of the electronics in Toyota.
Senator Murray. How long will that take?
Secretary LaHood. It'll take some time, because we want to
look at some studies that were previously done. We want to get
the best experts we can; we want to get the best electrical
engineers. I don't want to put a time on it, because we want to
do it right, we want to do it thoroughly, and we want to make
sure that, when we produce answers, it's done with the best
possible research and background and review that we can do.
Senator Murray. Well, I know it's not an easy problem, but
it is very challenging to somebody who owns a car, did the
right thing, took it in for a recall, and now they're hearing
that perhaps that fix didn't work for them, and now they're
sitting there with a car in a driveway and kids waiting to take
to school. I mean, they're----
Secretary LaHood. Yes.
Senator Murray [continuing]. Concerned about it.
Secretary LaHood. Well, I want you to know that we're not
sitting around on our hands; we're addressing this. There was a
woman that testified, at a House hearing, about a Toyota that
she owned. We have purchased that vehicle, because she believed
the electronics were what caused her to accelerate to a very
high speed. We have purchased that vehicle, and we're going to
do everything we can to investigate, look into, and check out
the electronics on that car.
NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION BUDGET REQUEST
Senator Murray. Okay. Well, the President's budget
requested 46 positions for vehicle safety. How many of those
positions will be used to hire software engineers?
Secretary LaHood. Well, the President is requesting 66 new
positions, which will all come to NHTSA. I'll get back to you,
for the record.
If the Congress passes our budget, we're going to see where
these experts are needed. We know they are needed in our
opportunity to really look at cars and complaints and really
make sure we have the right staff and also the right
professionals to handle the kind of complaints that we're
receiving from people.
[The information follows:]
Of the 66 additional personnel requested in the President's fiscal
year 2011 budget, 46 positions (46 full time positions-FTPs; 23 full
time equivalents-FTEs) would support electrical vehicle safety, light
vehicle and heavy duty truck fuel economy and labeling standards, and
import surveillance of automotive equipment coming into the United
States from foreign countries. NHTSA retains outside experts in
electronics and other fields as necessary to supplement its permanent
Federal workforce. NHTSA is still assessing the agency's needs to
determine what additional staff with expertise in electronics, computer
science, or other areas of specialization are needed.
Senator Murray. Okay. Also, are you going to be expanding
your staff with expertise in electrical and computer
engineering for both vehicle safety investigations and
regulations?
Secretary LaHood. Yes.
Senator Murray. You are. Okay.
Secretary LaHood. Yes. We do have some electrical engineers
on staff, but we feel, now that this issue of the electronics
has been raised, more resources are needed. While you all are
working on our budget, we may look for some outside help on
this, for some electrical engineers who can really help us with
this.
Senator Murray. Okay. The issue of sudden and unintentional
acceleration in Toyotas has focused attention on the actions of
Toyota and NHTSA officials, and the relationship between the
two entities. Safety advocates have been complaining that NHTSA
officials failed to push Toyota to find the root cause of this
problem, and worked with vehicle manufacturers to
inappropriately limit investigation. Now that you have new
leadership at NHTSA, which I'm pleased to see, what actions are
being taken now to ensure that there's a strong enforcement
where culture exists and is encouraged?
Secretary LaHood. There are laws on the books that prohibit
former employees of NHTSA working on matters where they were
intimately involved at NHTSA. We've checked out the two
individuals, and we've determined that they did not come back
to us and were involved on issues that they worked on in the
Department.
But, I've said at other hearings, Madam Chair, I think this
law needs to be tightened up. I think the appearance of it
causes great concern for people, and I'm willing to work with
Congress to tighten that kind of exiting of employees. I'm
willing to work on tightening that up.
But, I will tell you this, it was our people who went to
Japan and met with Toyota, because we thought they were a
little safety deaf in Japan. We knew their people here in North
America were making recommendations, but apparently they
weren't hearing it in Japan. That's the reason I got on the
phone with Mr. Toyoda and talked to him. I met with him when he
came here. I think they get it now, I think they understand
they have serious issues.
The perception is that many of their cars, particularly the
ones that are listed on the recall list are not safe. There've
been some improvements in communication, thanks to the diligent
effort of our people at NHTSA, to hold their feet to the fire.
Senator Murray. Yes. And, I do understand that NHTSA has
widened its investigation and requested documents about how and
when Toyota learned of the defects. When do you expect NHTSA to
complete that inquiry?
Secretary LaHood. It'll be several months. I mean, we've
asked for a voluminous amount of material to make sure that
what they told us in 2004, 2005, 2006, and even prior to that,
was everything they should have told us. The only way we can do
that is to look at documents that they have. It's going to take
us a while to pore through these documents.
Senator Murray. Do you think the Department's authority to
level civil enforcement penalties is sufficient?
Secretary LaHood. I do.
CHILDREN IN AIR TRAFFIC CONTROL TOWER
Senator Murray. All right. Well, we'll be following that
very closely. But, before my times up, I wanted to ask you
another question on safety. And I, for one, was very disturbed
about the report yesterday about a young child who was allowed
to direct traffic at the Air Traffic Control Center at New
York's Kennedy Airport, apparently speaking with pilots and
clearing flights for takeoff. This subcommittee spent a lot of
time talking with DOT, and you, and the Federal Aviation
Administration about the FAA's culture of safety. How does this
incident reflect on the FAA's culture of safety?
Secretary LaHood. Well, this is a stunning example of a
lack of professionalism, not following the rules, not using
common sense. The air traffic controller and his supervisor are
on administrative leave, and we are doing a thorough and
complete investigation. The idea that a young child would be
directing planes in and out of an airport is totally
unacceptable. It's an abuse of all of the rules that----
Senator Murray. Are there rules in place that children
cannot be allowed in control towers?
Secretary LaHood. There are, today.
Senator Murray. Were there, yesterday? Just out of
curiosity.
Secretary LaHood. Yes, but they weren't followed.
Senator Murray. Yes. Well, I think this is extremely
disconcerting. I know during the Nisqually earthquake in
Seattle, when air traffic controllers immediately had an
emergency where they had to land every single airplane; after
9/11, when we had a serious----
Secretary LaHood. Right.
Senator Murray [continuing]. Emergency; or a plane goes
down--I think every one of the flying public, and all of the
public, wants to know that those air traffic controllers' minds
are on their jobs. This is extremely demanding, challenging,
important safety aspect of our FAA, and I'm hopeful that this
will be followed up.
Secretary LaHood. Yes. I, too, want to congratulate NATCA.
The head of NATCA, which is the union that represents air
traffic controllers, spoke out very strongly on this being a
violation of every rule and regulation that any controller has
been taught.
Senator Murray. Okay. Thank you very much, Mr. Secretary.
NATIONAL INFRASTRUCTURE INNOVATION AND FINANCE FUND
Senator Bond.
Senator Bond. Mr. Secretary, I have a lot of questions
about details, as I indicated. And let's start with the
National Infrastructure Innovation Finance Fund Policy Board.
Who's going to be appointed? What's the process? Who will be
the selections? Will they come before the Senate for
confirmation?
Secretary LaHood. You know what, Senator Bond? I don't know
all the answers to that. I know that the idea of an
infrastructure bank, as it was commonly referred to earlier on,
has been kicked around Congress for a long time. The Department
of Transportation is trying to find ways to do all the things
that we all want to do.
Senator Bond. Right.
Secretary LaHood. And without raising the gasoline tax. We
feel that the Infrastructure Fund is a way to do that.
Specifically, I'll get back to you.
But, if this is enacted into law, and if this comes about,
we will work with, obviously, members of this subcommittee and
Congress on the way forward for the implementation of it.
[The information follows:]
The details of the National Infrastructure Innovation and Finance
Fund's (I-Fund) policy and investment council are still being
finalized. The Department will soon issue proposed statutory language
for the I-Fund that will include details on the composition of this
council.
Senator Bond. Well, I appreciate that, Mr. Secretary, but
let me just say, I'm from the ``Show Me'' State. And before I
can support this, I want to know: Who's going to be on it?
Who's going to appoint them? What the criteria will be for
selecting them? Will Congress have a role? Will they be
available for comment on--the people on the board? What are the
criteria on which these grants are going to be made?
And just to make it simple, so we don't get any confusion,
I am not going to vote for it until I have that path laid out,
because if we're going to try to fund that board with $4
billion, I think that--we have had real problems knowing how
money is going out the door, and I am not excited about sending
any money--more money out the door unless I know, in advance,
how it's going to go.
I don't disagree with you. We need funding--infrastructure,
bonding issues--there are a lot of--private-sector
cooperation--there are a lot of good ideas, and we will work
with you on those ideas. And we have seen where there are a lot
of ways--toll roads are very controversial, but a lot of places
are getting--they're getting badly needed highways built by
toll roads. We want to see those ideas, and work with you on
those. But, for my part, no blank checks until we see what
you're going to do. And we'll be happy to work with you----
Secretary LaHood. Thank you.
Senator Bond [continuing]. But we need to know in advance.
And as I said--I've mentioned earlier--I think, when the
administration prepares to make these grants, it would be
appropriate for the administration to follow the same policy
that Congress makes when we select some things. Posting--for
example, posting all of the applications on the Internet, along
with the cost shares, funds leveraged. What are the metrics and
evaluation criteria on how the projects will be selected?
Congress has, rightly, reformed our earmarking process, and
we've tried to make it as transparent as possible. Do you agree
it's time for the administration to have the same kind of
transparency?
Secretary LaHood. Well, Senator, I would say this. I've
been around 30 years--I served in Congress for 14, and I was a
staffer for 17; I served on the Transportation and
Infrastructure Committee. I don't know of a more transparent
administration than this one. If there's information you want,
Senator, we'll be helpful in getting it to you.
HIGH SPEED RAIL
I will tell you this, Senator, when it comes to the ``Show
Me'' State, high-speed rail did very well; TIGER grants did
very well. I was in a room with over 200 people, in Kansas
City, announcing a TIGER grant; I heard not one word of
complaint about the 40--or about the $50 million that went to
Kansas City for a project that everybody in that room, in that
region of your State, was very much for. I heard no complaining
about the high-speed rail money that's going to connect Chicago
to St. Louis to Kansas City. High-speed rail is coming to
Missouri, thanks to the Economic Recovery Plan, and thanks to,
I think, a lot of good staffwork with people in Missouri who
want this. I think we've been very transparent about this.
Senator Bond. Mr. Secretary, I've never had a problem being
well received when I brought money. Only thing better is if
you're bringing a free lunch and some beer. And they'll not
object to you coming in when you bring the money. But, what I'm
saying is that all of us need to know--and as far as I can
tell, there's been--there has been an almost complete absence
of transparency--how you're selecting them, where are you
going? All right, great, it comes down like a gift from Santa
Claus. And, sure, my State got some, every State gets some, but
we have a right, these days, to know: What were the criteria?
What were the applications? Whose were the ones who were
disappointed? Who did not get it? How were they selected?
I mean, no question, when you throw money into
infrastructure projects--everybody likes money in
infrastructure projects. But, we need to see how the process
works. And I'll be damned if I can figure out how that process
worked. That's what I'm just saying. You know, we work very
hard to find out what the priorities are, and when we come
before our colleagues in Congress to present them, we lay out
the--who has applied, we go on the floor and debate them. And
I've had a lot of debates on why these are good projects--
before they ever get the money. But, you know, you come in
and--well, I'll get around to high-speed rail a little bit
later on. But, before we put money into these things, we'd like
to know that there is going to be advance information; there's
going to be disclosure of--I mean, you don't let lobbyists in,
but obviously they prepare the information, and they bring
applications to you. When those applications come in, maybe
there are some applications--if you're going to be making the
earmarks, maybe we would like to comment, say, ``Here, you've
got 12 applications from my State, or 250 applications from our
intelligence and investigation. Here are several that really
meet the needs, and we can tell you why.'' We----
Secretary LaHood. Well----
Senator Bond [continuing]. We didn't know where they were
going.
Secretary LaHood. Okay. Well, let me respond to some of
this. Because----
Senator Bond. Sure.
Secretary LaHood. The truth is we put guidance up for the
$1.5 billion, look on our Web site. It's up there now. We have
another $600 million that you all provided to us, thankfully,
in our budget. We're going to put guidance up.
So, the guidance is up there. Everybody knows what the
criteria are and then people begin to submit applications. I
don't know of one lobbyist that darkened our door with an
application. I don't know of one lobbyist that came to our
office with the idea that they were going to have some kind of
an edge because they're a lobbyist.
Okay. So, we put the guidance up, and then we took time to
review them all. I'll be honest with you, Senator, we heard
from a lot of Senators and Members of the House, who called me
and said, ``How many applications from my State? What are
they?'' and we heard from Governors, too. So, the idea that
nobody weighed in on this from Capitol Hill is not accurate. I
got phone calls every day from House Members, from Senators,
from Governors, saying: How many applications did you receive
from my State? What are they? How much are they for? What are
they going to do?'' We shared all that information.
Senator Bond. Well, it would be very easy, if you'd just
put it on the Web site, save you all those calls.
Secretary LaHood. Well, I would have been happy to take a
call from you, Senator, about anything in Missouri. And on
the----
Senator Bond. Well, I----
Secretary LaHood [continuing]. High-speed rail--let me tell
you about the high-speed rail. There is a rail plan. We put a
rail plan together before we decided to go out and figure out
what we were going to do with our $8 billion. We funded 13
regions in the country. Missouri did very well, by the way,
because you're going to be connected with some other States.
Then we received these applications, we evaluated them, we met
with the people, and we awarded $8 billion. Thanks to all of
you, we have an additional $2.5 billion this year. If anybody
in Missouri had questions about high-speed rail, we sat down
with them, we answered them. I talked to your Governor on
several occasions about high-speed rail. So, the idea that
people don't have access to information is absolutely not
accurate. It's not. I'll give you a list of my phone log and
show you how many Members of Congress have called me, and how
many Governors.
Senator Bond. Well, I remember talking to you back in June.
I said, ``How are you going to spend the money that you got in
the ARRA?'' If I remember correctly, you said, ``You gave us
some money, and we'll spend it.'' That's what----
Secretary LaHood. Well----
Senator Bond [continuing]. We heard.
Secretary LaHood [continuing]. You know what, Senator, I'll
look back on the record----
Senator Bond. Well----
Secretary LaHood [continuing]. But, I doubt if I put it
that way.
Senator Bond. Well----
Secretary LaHood. We'll get a copy of the record and see.
Senator Bond. Well, this----
Secretary LaHood. You know----
Senator Bond [continuing]. This is----
Secretary LaHood [continuing]. Look it----
Senator Bond [continuing]. This is----
Secretary LaHood [continuing]. I have----
Senator Bond [continuing]. This is the----
Secretary LaHood [continuing]. Very----
Senator Bond [continuing]. Question we had----
Secretary LaHood [continuing]. High regard----
Senator Bond [continuing]. In the S. 128.
Secretary LaHood. Okay. Well, look I have a very high
regard for Members of Congress, having been one, and I----
Senator Bond. I--and I----
Secretary LaHood [continuing]. I don't think----
Senator Bond [continuing]. Have a high regard for you, sir.
Secretary LaHood [continuing]. And I----
Senator Bond. But----
Secretary LaHood [continuing]. Don't take----
Senator Bond [continuing]. I'm just saying----
Secretary LaHood [continuing]. Lightly questions----
Senator Bond. Yes.
Secretary LaHood [continuing]. From Members----
Senator Bond. There's no information----
Secretary LaHood [continuing]. Of Congress.
Senator Bond [continuing]. On the waiting. You've got some
big, broad--I'm going to ask you how you define livability and
all those things. I mean, wow. You know, it's like saying we're
going to oppose pornography. What are you going to oppose? How
are you going to support livability? We'll get into that in the
next round.
I have a great personal admiration for you; we've been good
friends for a long time.
Secretary LaHood. Yes, sir.
Senator Bond. I'm just saying, the system is not working,
and I need to know, before we put more money in. And more
questions to follow.
Thank you.
Senator Murray. Do you need some more coffee, Senator?
Senator Bond. No.
Senator Collins. I--we could offer to get you some.
Senator Bond. Thank you, it's working.
Senator Murray. Senator Collins.
FREIGHT RAIL
Senator Collins. Thank you Madam Chairman.
Mr. Secretary, I want to take advantage of this opportunity
to bring to your attention, and the attention of my colleagues,
a very serious problem that we're facing in northern Maine. And
the best way for me to do this is to refer to a map that we're
providing to each of the members and to you. Thank you, I'm
glad that you have it.
First, let me tell you a little bit about the geography.
The area in question in Maine includes the largest county east
of the Mississippi in our country. And it is facing the
imminent loss of virtually all the freight rail service for
this area. The Montreal, Maine, and Atlantic Railway has filed
with the Surface Transportation Board to abandon 233 miles of
rail. It's signified on the map by the red line. And, as you
can see, it's an enormous area. In fact, the only freight rail
that would remain is a little strip at the very northern border
between Madawaska and Van Buren.
This area of our State has an unemployment rate that is
almost 10 percent. It's higher than the national average, and
it's higher than Maine's overall rate of 8.3 percent. If this
rail line is abandoned, it will be devastating to the economy
of northern Maine. There are about 20 major shippers that rely
on this line. That includes a major paper mill that is in
Madawaska; it includes a potato processing plant; and there are
a variety of smaller shippers that also rely on the line.
I want to read to you a quotation from the Maine
transportation commissioner, because it sums up well just how
important this is. ``The Maine Department of Transportation
feels very strongly that we cannot allow this line to be
abandoned. It is inconceivable that the largest county east of
the Mississippi''--this is Aroostook County, it's my home
county in Maine--``a county whose economy is primarily
manufacturing and agrarian-based, would be completely cut off
from rail service. That would truly be unprecedented. The
outright abandonment of freight rail service would have an
immediate and direct negative economic effect on the
companies''--and I would add, all the employees--``that are
located in this county.''
Everyone, Mr. Secretary, is trying to work together--the
State, the shippers, the local officials, county officials,
State officials--but, it's obviously going to take an
investment of capital to save this service. I am so committed
to saving freight rail service for northern Maine. As you can
see, it's an enormous area of our State. And I want the
chairman of this subcommittee, and the ranking member, to
understand that a contribution of Federal funding is going to
be essential in saving this line. It's going to be one of my
top priorities for the bill that we worked so hard on.
Mr. Secretary, I know that the decision on whether or not
to allow abandonment does not fall to you, it falls to the
Surface Transportation Board. However, the Department does have
funding options. And today I'm asking you to work with me, to
work with this subcommittee, to work with the State of Maine to
come up with a solution. We simply cannot allow 233 miles of
line to be abandoned, when there's no other freight service for
this large area of Maine. It would have a devastating impact on
the economy, an economy that is already very fragile.
So, today I'm asking you to work with me to try to identify
solutions where the Federal Government can be a partner in
trying to save this necessary freight service.
Secretary LaHood. Well, Senator, thank you for your
leadership on this. Freight rail is very, very important. It's
a big, big component of our transportation system around
America, and I know it is for Maine. You'll have my full
commitment. What I'd like to offer up is for our rail
administrator to go to Maine, as quickly as possible, to meet
with all of the stakeholders and all of the people that are
involved, and we'll figure out some kind of a funding
opportunity to make sure that this line is not closed down,
because, it's like an interstate system. You can't close down a
part of the interstate that connects so many other parts of the
State.
We get it. I'm committed to helping you. I'll have our rail
administrator in Maine, whenever we can get all the
stakeholders together, and we will work with you on a plan to
get this funded.
SAFETEA-LU
Senator Collins. Thank you so much. It's so important, and
I very much appreciate your commitment.
I want, next, to discuss an issue that my colleagues have
talked about, and that is the expiration of the 2005 highway
reauthorization law. I'm very proud of the fact that Maine was
the first State in the Nation to obligate all of the funding
provided by the Recovery Act. That is a credit to Governor
Baldacci, to State officials, but it also shows you what an
overwhelming need that there is for funding for infrastructure
in my State.
And it was brought home recently when a construction
company executive came to meet with me. He talked about the
fact that he had hired 150 workers as a result of the funding
from the stimulus bill, but he's very concerned that there's no
long-term highway funding plan on the horizon.
Given the unfortunate reality that it looks unlikely that
Congress will pass a highway reauthorization bill this year,
what actions are the administration taking to ensure that the
Highway Trust Fund has adequate funding?
Secretary LaHood. Well, actually, the bill that you all
passed--that's pending in the House today, and I think there'll
be a vote on it--which extends our program through the end of
the year, is an enormous help to the States. These 30-day
extensions do them no good. As a matter of fact, States begin
to lose money, and it's impossible to hire contractors. I mean,
we like the bill that you all passed, and we're encouraging the
House to pass it today, because it takes us right up to the end
of the calendar year. It gives us time to work with all of you
on another authorization bill, to find the money to do all the
things we want to do. That bill, alone, is an enormous lift for
all of these States.
Senator Collins. I couldn't agree with you more that it's a
real problem that we're passing just these short-term
extensions. I supported and helped advance the bill----
Secretary LaHood. Thank you.
Senator Collins [continuing]. In question, because--the
contractors simply can't plan. And the State does not dare
enter into contracts if it's not assured that funding is going
to be forthcoming.
And finally, Mr. Secretary, I do want to mention the TIGER
grant applications. The demand was enormous for that funding,
as you know even better than I--nearly 1,400 applications were
submitted, including several from Maine. We're grateful for the
port funding that we received. But, there are other projects
that are so important--the rail project that I just mentioned--
but also what I believe is an innovative project that Maine and
New Hampshire brought forth, to rebuild the bridge from
Kittery, Maine, to Portsmouth, New Hampshire. The two States
collaborated on a TIGER grant application. It has unanimous
support from both the Maine and New Hampshire delegations, both
of our Governors. And I hope, as you do the second round of
TIGER grant applications--I believe it's $600 million----
Secretary LaHood. Yes.
Senator Collins [continuing]. More that you have available
this year----
Secretary LaHood. Yes.
Senator Collins [continuing]. That you'll take a hard look
at that application. This is a major thoroughfare connecting
our two States. It's important for commerce, for tourism, for
day-to-day travel by residents. And I urge you to take a close
look. It's unusual for two States to collaborate together in
filing an application, but that's what we've done.
Secretary LaHood. Yes. Senator, let me just suggest that
maybe we could work with your staff and get the stakeholders
from both of the States together. We could review their
application, in anticipation of us posting up our guidance for
the next round, and that may be helpful to them. If we could
work with your staff to get a few of those people gathered
together, we can talk about the previous application and the
way forward.
Senator Collins. Thank you very much, Mr. Secretary.
Thank you, Madam Chairman.
Senator Murray. Thank you, Senator Collins.
PENNSYLVANIA EXPRESSWAY
Senator Specter.
Senator Specter. Thank you, Madam Chair, and good morning,
Mr. Secretary.
Secretary LaHood. Good morning.
Senator Specter. Thank you for accepting the position in
the administration to provide a breath of bipartisanship. We
can use it around here. And thank you for being so accessible
and the many trips you have made to Pennsylvania to take a look
at our needs that come within the purview or your Department.
As I have mentioned to you in our private conversations, I
think that Pennsylvania ought to be getting more on the next
round of disbursements. I understand the problems you've had,
but the fraction allocated to my State has been relatively
small.
Picking up on some of the specifics, a very important
project in Pennsylvania is the Mon Valley Expressway, and it
connects Uniontown, in Fayette County, to the city of
Pittsburgh, and is indispensable for economic growth in that
area, an area which has been really hard hit with steel and
coal, et cetera.
PENNDOT requested some $401 million from the stimulus high-
speed, but no funding was awarded. And we're searching for the
concerns which the U.S. Department of Transportation has. And
this is a matter which has to be worked out at the staff level,
but I want to make the request, to you, to use the power of
the--your office to see if we can't move that along so that
we're in a position to answer whatever questions there are.
That--the Mon Valley Expressway is really of critical
importance to southwestern Pennsylvania.
Turning now to the so-called Lackawanna Cutoff between
Scranton and Hoboken, New Jersey, to establish a line which
would set the stage for a Wall Street West, which would be very
important for Wall Street and very developmental for New Jersey
and also for northeastern Pennsylvania, the request was made
for $401 million from Stimulus High-Speed. And, here again, we
do not know what the problems were, and I'd like to get that
worked out, at the staff level, so we can figure out to----
Secretary LaHood. Yes, sir.
Senator Specter [continuing]. Correct whatever problems you
see.
The Schuylkill Valley Metro is a project you know, because
you came to Norristown and graciously participated in a meeting
out there. We have received substantial funding over the years,
but it hasn't gone forward. But, there is a fund of $24 million
which has not been obligated. And I wrote you, back on December
23, asking you not to reprogram the money, and I'd appreciate
your taking a look at that and honoring our request, because
that really is vital to take pressure off the Schuylkill
Expressway. And one day we're going to get it worked out with
existing sector rail lines called R6 and other lines which can
be used to work all the way up to Reading.
The Maglev issue has been on the table for a long time, and
there have been plans to allocate $90 million--half in the west
and half in the east. And finally, yesterday--and I thank you--
there was a release of the $950,000 which you and I talked
about a long time ago. It was reduced to $889,200, but thank
you for liberating it.
Secretary LaHood. Thank you for jogging my memory on it.
Senator Specter. Well, I'm glad you have a memory, once
jogged, and even gladder, if there is such a word, that we got
some of that money.
Mr. Secretary, without carrying on a monologue, where do
you see Maglev heading, what kind of a timeframe do you see for
a decision to make an allocation of the $45 million to
Pennsylvania?
Secretary LaHood. Maglev is very expensive, Senator, and we
really need to sit down with the stakeholders and look at their
plans and determine what kind of commitment there will be from
others. To be honest with you, it is a very expensive project,
and we just need to make sure we know where all the money is
going to be coming from, and that the plans are in place so
that if somebody makes a decision to go ahead with this, that
the commitments will be there, not only from us, but from those
that want to implement this program.
Senator Specter. Mr. Secretary, whom are you looking toward
to be at the table? Because I'd like to move ahead, and I would
certainly take the lead in organizing the meeting. Who----
Secretary LaHood. Well, I think we need to get people in
the State that are interested in this program, and members of
your delegation who have expressed an interest, together and
have a meeting. We'd be happy to help you organize that--or if
you want to take the lead. I think we should do that.
Senator Specter. Well, I'd be glad to take the lead, and I
will follow up with you on that. Maglev is present in other
countries. I've rode on a pilot project in Hamburg; it must
have been a decade ago. The train is designed to run close to
300 miles an hour. You go from Philadelphia to Pittsburgh in 2
hours and 7 minutes, with intermediate stops in Lancaster,
Harrisburg, Altoona, Johnstown, and Greensburg. And you
wouldn't have to take your shoes off to get on the train. It
would cut down on a lot of vehicular traffic and have all the
ingredients we talked about on high-speed rail--high-speed
travel. And I think it is a technology which is expensive, but
I think it would be worth it. But, let's pursue the----
Secretary LaHood. Yes, sir.
INFRASTRUCTURE FUND
Senator Specter [continuing]. The dialogue we've had.
We're working, on the Environment and Public Works
Committee, on the highway bill--highway and transit--and we're
talking about a figure of $600 billion. Is that realistic, from
the point of view of the administration? I hope so.
Secretary LaHood. Well, if you look at the bill that's been
put together in the House, it's about a $450 to $500 billion
bill. Everywhere I've gone, I've said the President wants a
robust, comprehensive transportation program. We need to find
the money to do it. One of the ways that the President
suggested, in the budget that you're all considering, is an
infrastructure fund. Some people like it and some people don't,
but it would be a fund that would allow for significant
outstanding projects around the country.
We need to think outside of the box. The President is not
for raising the gasoline tax when unemployment, nationally, is
just below 10 percent. So, the Highway Trust Fund is not
sufficient to do all the things we all want to do, and we need
to think about an infrastructure fund, we need to think about
tolling, we need to think about alternatives that help us do
the things that we all want to do.
Senator Specter. Mr. Secretary, what would the source of
the revenue be for the so-called infrastructure fund? Would
there be bonds? How would we----
Secretary LaHood. That is correct.
Senator Specter. How would you--put a little flesh on the
bones. How would you proceed on it?
Secretary LaHood. There are big, significant projects
around the country that people don't have the money for,
whether it's a bridge between two States, an interchange, or an
extension of an interstate system to connect one State to
another. The way I envision it, if Congress allowed this kind
of a fund, to receive proposals for significant projects and
then work with the States on the cost. The bonds would allow
the money, then, to begin to flow, over a period of time.
Senator Specter. Well, it certainly would be a----
Secretary LaHood. I can tell you this, Senator. The Buy
America Bond Program is wildly popular, oversubscribed. This is
not exactly the same thing, but I'm just saying alternative
funding is what we really need to think about, because there's
just not enough money in the Highway Trust Fund.
Senator Specter. Well, I've given you some homework, and
you've given me some homework. And I'll proceed to look at
that. It's the kind of legislation that I would favor and would
be inclined to introduce, and we'll proceed.
Well, my red light just went on.
Thank you very much for your----
Secretary LaHood. Thank you, sir.
Senator Specter [continuing]. Service, Mr. Secretary.
Thank you, Madam Chair.
Senator Murray. Thank you, Senator Specter.
HIGH SPEED RAIL
Senator Kohl.
Senator Kohl. Thank you very much, Senator Murray.
Secretary LaHood.
Secretary LaHood. Yes, sir.
Senator Kohl. On January 28, the White House announced the
recipients of $8 billion in high-speed rail grants, including
two projects, as you know, in Wisconsin.
Secretary LaHood. Yes.
Senator Kohl. Connecting Wisconsin's major metropolitan
areas through high-speed rail will yield both immediate and
long-term benefits. Ultimately, this link will help develop
both Madison and Milwaukee's economies, creating long-term
growth for each city, as well as the cities in between.
In the short-term, the projects will create thousands of
jobs, and Wisconsin is anxious to get started, as I'm sure you
can well understand. My understanding, Mr. Secretary, is that
the Wisconsin Department of Transportation is ready to assign
contracts next month, and could begin construction this coming
fall. If our goal is quickly creating jobs, then getting money
out the door seems to be the most important and the most
effective thing that we can do.
I'd like to ask you what the Federal Railroad
Administration's timeline is for getting this funding to the
States. Will the FRA be able to get the funds to Wisconsin in
time for our fall construction season?
I want to be clear, Mr. Secretary, this is about jobs--we
all understand that--now and in the future. And I'd like to
hope that you will do everything you can to make sure that this
process is well expedited and that transportation departments
are able to put people to work quickly. Do you have some sense
or knowledge about how the FRA might be able to act quickly on
the Wisconsin----
Secretary LaHood. We want to enter into agreements with
these regions, of which, obviously, Wisconsin is ready to go,
as quickly as we can so that people can begin working on high-
speed rail and Americans can begin to see the results of this
economic recovery. Our plan is to do that very quickly, sign
these agreements with the States, and begin as soon as the
States are ready to go. Our people are, right now, putting
together documents and will meet with the stakeholders, like
the State of Wisconsin, very, very soon, like within the next
10 days or 2 weeks, to begin to say, ``Here are the documents,
here's what we think needs to be signed so that you can
begin.''
Senator, let me just say something that I talked to you
about privately. I want to compliment your Governor. I think
the reason that Wisconsin is in the high-speed rail business is
because Governor Doyle stepped up, a year ago. He came to see
me and said, ``How do we get into the high-speed rail business?
This is something we've been planning.'' Thanks to the
leadership of your delegation and your Governor, you all are
going to be at the forefront of the Midwest Region by
connecting your State with other States that are in that
region. I want to compliment, not only you and Senator Feingold
but also Governor Doyle, because he was early at the starting
gate on this. We want to make it happen quickly, because we
know there'll be thousands of jobs provided when they start
building the train sets and the infrastructure and all the
things that will be needed.
Senator Kohl. Well, that is really encouraging to hear.
And, of course, you are right about Governor Doyle. He has been
out front and has exhibited the foresight to see this coming
down the road and seeing that Wisconsin was there in time,
fully planned and organized to take advantage. It's nice for me
to know that you are fully aware of it and that you want to
expedite----
Secretary LaHood. Yes, sir.
Senator Kohl [continuing]. You know this particular project
just as quickly as you can. I know he'll be happy to hear it. I
think people all over our State will be happy to hear it, and I
express my appreciation to you.
Secretary LaHood. Thank you.
Senator Kohl. Thank you.
TIGER PROGRAM
Senator Murray. Thank you very much, Senator Kohl.
Mr. Secretary, DOT has, as you know, recently awarded
grants under the TIGER program that we funded under the
Recovery Act. And, under that, it was necessary to give
priority to projects that could be completed over the next few
years. However, the funding that we provided for fiscal year
2010 has a new set of requirements, and it can be used for
longer-term projects. I know there are a lot of projects across
the country that need this funding. I've talked to you about
one in Washington State, the Columbia River Crossing Project
that's so important for mobility for cars and trucks and
transit and bicycles and pedestrians; it's one of the worst
bottlenecks we have on the I-5 corridor.
I wanted to ask you, this morning, how will the different
requirements for the 2010 funding affect the kinds of projects
that you'll be able to fund under the TIGER program?
Secretary LaHood. Right now, Madam Chair, we're probably
looking at the same guidance that we provided for the other
TIGER grants. And, frankly, we'd like to try and get some of
this money out the door this year, so we can continue the
progress that we've made with our economic recovery. We know
that the $600 million will provide jobs. That's our goal.
That's the reason you put this money in the bill, so people
could go to work.
I don't think the guidance will be that much different. We
also will probably look at some applications that were very
close in the first competition. The projects that if we'd had
more than $1.5 billion, they would have gotten funded. We're
advising----
Senator Murray. You don't expect to see new requirements,
even though we have said this funding can be for longer-term
projects.
Secretary LaHood. I want to try and get the money out the
door as quickly as possible so we can provide jobs.
RAIL TRANSIT SAFETY
Senator Murray. Okay. The budget that you submitted
includes $24 million and 100 positions to establish a new Rail
Transit Safety Oversight Program. That proposal, obviously,
follows on the heel of rail transit accidents in Boston and San
Francisco and, tragically, here in Washington, DC, and supports
the legislation the administration transmitted to Congress in
December. I know you're hopeful that Congress will approve that
legislation this year. In the meantime, I wanted to ask you
what you've been able to do, within your current authority that
you have, to make sure transit systems are safe without that
legislation.
Secretary LaHood. We're prohibited by law from doing that,
Senator. That's the reason we proposed to all of you a bill.
Because the law says we can't do it. For some strange reason--I
guess it was because, years ago, people thought since we were
divvying up the money, we shouldn't have the responsibility for
the safety aspect of it.
Senator Murray. Can you provide training or technical
assistance?
Secretary LaHood. Peter Rogoff, our transit administrator,
is looking at best practices from around the country, and then
trying to make sure that transit systems know what that is.
But----
Senator Murray. So you really need that legislation.
Secretary LaHood. We do, absolutely. We need the legal
authority that only a law can give us, to really get into this
up to our eyeballs, and really do a good job in making sure
that these transit systems are safe.
POSITIVE TRAIN CONTROL
Senator Murray. Okay. Positive train control is an
important new technology that will help, we believe, and
prevent some of these train-to-train collisions and
derailments. Recognizing the safety benefits of this
technology, the NTSB included positive train control on its
most-wanted list for 18 years, and they took it off the list
only after Congress mandated its use. For fiscal year 2010,
this subcommittee provided $50 million for a new program that
would support the development of positive train control, but
you've requested no funding for the program this year. Can you
explain to the subcommittee why the budget request doesn't
include any funding?
Secretary LaHood. Well, we have a rule pending. We believe
positive train control is something that is absolutely critical
to safety. I'm going to ask Chris--you all know Chris Bertram,
go ahead.
Mr. Bertram. Yes. We did not include any funding for that.
There is, as the Secretary mentioned, a rule pending at OMB
that would mandate positive train control.
Senator Murray. But, you've requested no funding.
Mr. Bertram. Correct.
Senator Murray. And you don't believe it needs any funding?
Mr. Bertram. I think the FRA will take a look at the money
that Congress provided, and evaluate the effectiveness of that.
Senator Murray. From last year.
Mr. Bertram. From last year, yes.
Senator Murray. Okay. Well, I may submit another question
on the record on that.
FERRY FUNDING
I wanted to ask you about ferry systems. As you know,
ferries are, just, a critical part of transportation systems in
my home State, connecting communities between Puget Sound and
across the Columbia River system. In fact, the ferry system in
my home State is the largest ferry system in the United States,
with over 40 percent of U.S. ferry passengers, and about three-
fourths of the vehicles, carried nationwide. Last year, I
introduced legislation to reauthorize the Federal Ferryboat
Discretionary Program and expand the Federal investment in our
Nation's ferry system, and that legislation built directly on
what we did in SAFETEA-LU to give priority to ferry systems
that carry the most passengers and most vehicles and have
access to critical areas. I wanted to ask you, Mr. Secretary,
this morning, if I have your commitment to work closely with
us, following that directive in SAFETEA-LU, to allocate ferry
funding in 2010.
Secretary LaHood. Absolutely. I had the privilege, when I
was in Seattle, to use the ferry system. I know how important
it is as a part of the overall comprehensive transportation
system in the Northwest, and you have my commitment.
Senator Murray. To work on the criteria.
Secretary LaHood. Absolutely.
MEXICAN TRUCKS
Senator Murray. Great, one last question for you. I wanted
to ask you a question on a topic that we talked about at this
hearing last year: cross-border trucking with Mexico. Last
year, you talked about the work you were doing with the various
departments to craft a plan to resume cross-border trucking
with Mexico in a way that would address the safety concerns
raised during the pilot and in the tariffs that have now been
imposed by the Mexican Government. Those tariffs were imposed
on over 90 U.S. products and they undermine the competitiveness
of many agricultural products in my home State of Washington.
If we're not able to find a path forward with Mexico on this
issue, these tariffs are going to send American jobs north to
Canada as our growers and our processors and our packers are
being forced to relocate, and it is threatening the livelihood
of many communities in my State.
Now, I appreciate there's a lot of concern about
implementing this cross-border trucking, but we've got to work
with Mexicans to address this impasse and move forward. I met
with Ambassador Kirk a few weeks ago. I wanted to ask you, this
morning, to give us an update on your discussions with the
administration and with Mexico, to give us a sense of when we
will see the plan from the administration.
Secretary LaHood. We are finalizing a plan. The reason it's
taken so long is because there's a lot of different moving
parts, including about five different Cabinet officials. Every
time we make a tweak or a change, everybody has to sign off on
it. But, we're very near a proposal that we think will meet all
of the safety concerns that I heard when I talked to 25 Members
of Congress. We're close to talking to all of you about what we
think are----
Senator Murray. Okay, well, we're----
Secretary LaHood [continuing]. Our way of addressing the
safety concerns that Congress brought to us.
Senator Murray. Okay, Mr. Secretary, I appreciate that. And
you and I have had this discussion; I know you're working on
it. This is critical to a number of our agricultural industry
now in my State. Would you please tell the folks you're talking
to in the White House, and others, that we need to get this
done?
Secretary LaHood. I will.
Senator Murray. Thank you, Mr. Secretary.
Secretary LaHood. Thank you.
Senator Murray. I'm going to turn this over to my ranking
member, Senator Bond. I have to get to another hearing. He has
kindly agreed to be very nice to you. No.
Secretary LaHood. Thank you, Madam Chair, for all of your
leadership on transportation. We really appreciate your
forward-looking on transportation issues, and it's a joy to
work with you and your staff on these things that we all really
want to get done. So, thank you for your leadership.
Senator Murray. Thank you, Mr. Secretary.
I will turn this over to Senator Bond. He is going to ask
his questions and recess the meeting for me. And I really
appreciate your doing that.
Thank you.
LIVABILITY
Senator Bond [presiding]. Thank you, Madam Chair. If you
will continue to keep the E&W meeting going, I will look
forward--I'd have some friendly questions to ask Secretary Chu.
But, Mr. Secretary, let's go back to a couple of the
questions we were talking about, about the standards. The TIGER
grants, you said, the strategic plan is for safety, economic
competitiveness, state of good repair, and livability. What's
livability?
Secretary LaHood. Communities where people have access to
many different forms of transportation and affordable housing
and the ability to really have access to all of the things that
are important to them, whether it's a grocery store, a drug
store--access. It's not dissimilar to the neighborhood, for
example, that the Department of Transportation is located in.
After the ballpark went there, there was a Metro stop, there
were new bus stops, there are new condominiums, there's access
to affordable housing. What it is, Senator, it's an opportunity
for people who want to live in neighborhoods--maybe they don't
want a car--so they can walk to work, they can take mass-
transit to work, they can take a bus to work, they can go to a
grocery store. These are communities and neighborhoods where
people want to live, where they have access to all the things
that they want.
Senator Bond. Well, I mean, how do you measure that? I
mean, the--I don't think the Department of Transportation is in
the business of determining the state of the communities. We
do--we try to help build community plans that are locally based
community plans, that come to the request from HUD for
neighborhood stabilization, economic development; and the plans
must come from the localities. And I've supported access--
transportation access--the BRT program in Kansas City--bus
rapid transit--it's been very important. But, that supplements
a local plan, where transportation is just one part of it,
where there is a much broader plan for the housing, the
facilities, and what the State is doing. And livability, to
me--you know, I've got a lot of constituents for whom
livability means having a decent highway. They've got to drive
on the highway because they live in a rural area and they've
got to drive from one town to another town or maybe from one
town to a city. And we are killing those people on the roads.
We have--we lose three people a day on highways, in Missouri,
and at least one-third of those deaths are due to poor highway
conditions. This is not a question of convenience; this is a
question of staying alive.
So, livability, in some areas, has a different meaning. And
I just question--if we're building--if we're looking at all
these dollars to go in and build urban livability sections, I
think there needs to be broader criteria, as well. That's why
I'm questioning----
Secretary LaHood. Well, Senator, let me just give you an
example in your home State. The $50 million that we gave to
Kansas City is for some of the simplest things that you and I
take for granted. In this neighborhood--it's a 150-block
neighborhood, in your colleague Congressman Cleaver's district.
That money is going to be used to do simple things, like make
sure people have a sidewalk to walk on, and to make sure that
there are curbs. Now, that may sound silly to you----
Senator Bond. No, it's not--it's----
Secretary LaHood [continuing]. But when I went there for
the announcement, I took a tour with Mr. Cleaver, and what we
found was an abandoned neighborhood, because there are no
sidewalks, there are lousy streets, and people can't even drive
down the streets. So, what Congressman Cleaver and a whole
group of community people did is put together a plan--$50
million of our money and some HUD money--to build affordable
housing so that people that want to stay in this neighborhood
can stay in the neighborhood. That's what Livable Communities
is all about.
Senator Bond. Mr. Secretary, I have the highest respect for
Congressman Cleaver. A former mayor I've worked very closely
with. I don't know what's going on in Kansas City. But, when
did it become the responsibility of the Federal Department of
Transportation to build sidewalks?
Secretary LaHood. When you all put it in the----
Senator Bond. I think that----
Secretary LaHood. No. When you all put it in the
transportation bill for the amenities for neighborhoods,
whether----
Senator Bond. This is----
Secretary LaHood [continuing]. Its streetscape or medians,
or whatever it is, you all did it. I was a part of it. I was a
Member of Congress that did it, too.
Senator Bond. To go in and be building sidewalks, when
there is a--there are such transportation needs. You--I know
that heel-and-toe is transportation, but what I'm saying is,
there are other priorities that I think come ahead of that. And
I just question how much money is going to be spent on
sidewalks, when we need highways and we need bridges. That's
where--and I--any--this is a----
Secretary LaHood. Senator, if you look at----
Senator Bond. It's a question of priorities.
Secretary LaHood. If you look at our portion of the
economic recovery--you all provided $48 billion--the lion's
share of it went to highways--$28 billion; $8 billion for
transit, $8 billion for high-speed rail, $1.5 billion for so-
called TIGER grants, $28 billion for highways. That's----
Senator Bond. That is----
Secretary LaHood. That's your priority.
Senator Bond. Well, unfortunately----
Secretary LaHood. That's where the lion's share of the
money went.
Senator Bond [continuing]. It was a drop in the bucket--out
of $787 billion----
Secretary LaHood. I'm talking about----
Senator Bond [continuing]. That was far too little--no, but
I'm--I think we might be on the same side, on that one. I think
it was far too little, because we could have used a whole lot
more for highways and bridges.
But, my problem is that every dollar we're spending in that
stimulus bill, and a lot of other things we're doing, is going
on the deficit. We are borrowing from our children and our
grandchildren. And I am kind of embarrassed to tell my son
and--if he and his wife have children, tell my grandchildren--
``Oh. I'm sorry. We've been spending--we spent your--we spent
on your credit card.'' And I think there is a growing
realization that we need to get these deficits under control,
and spend only on things that we can justify to our children
and grandchildren. That's the problem.
And high-speed rail, again--I don't know if you saw it, but
the Wall Street Journal had a--had an article by Wendell Cox,
on January 31 called the ``Runaway Subsidy Train.'' Did you see
that?
HIGH SPEED RAIL
Secretary LaHood. No, sir.
Senator Bond. I'll give you a copy of it.
Secretary LaHood. Okay.
Senator Bond. It's very critical, and I think raises
questions that need to be answered. It says, ``Proponents claim
that high-speed rail is profitable, but this is off the mark.
Internationally, only two segments have ever broken even--Tokyo
to Osaka and Paris to Lyon.'' And they did that because they
had $4 gasoline--equivalent of $4 gasoline and highway tolls of
$40 to $100, respectively. If that--if you want to make it
profitable, you have to have those kinds of tolls.
It--the question that I have, generally, about high-speed
rail is what's going to be the total cost? I know that--let's
see, I guess the estimate in California is that--let's see--
California high-speed rail, Los Angeles to San Francisco, $40
billion to $60 billion. Totally taxpayer subsidized taxpayer
money. Same time, we've got airlines flying there that are not
flying on the--they're not being subsidized by the taxpayer
dollar. The people who drive on the roads are paying taxes that
not only pay for roads, but also help subsidize high-speed
transportation. I want to know what the total cost of all these
wonderful high-speed rail plans are and what is the
justification. How is it going to be--how are we going to know
that these are valuable? There seems to be--there are many,
many questions about why--whether some of these routes are
going to be much faster than when the trains were, back in the
1930s and 1940s. I know we got $34 million in Missouri. That's
nice. That will probably provide some amenities, like extra
sidings for trains to--freight trains, or even passenger
trains, if needed, to pull off so they can get passed. But,
what are the projections for ridership between St. Louis and
Kansas City? How many billions of dollars is it going to cost
to build a high-speed rail through there? Can we justify that
to the taxpayers--not just to Missouri, but to the Nation--for
what we'd have to spend? These are questions I think we have a
responsibility to ask when we are working in a deficit
situation.
And even if--you know, always glad to see money in
Missouri. But, before we continue to spend that money, I want
to make sure we're spending it properly. That's the big concern
I have. Are we spending it properly?
I'll give you that and--we had another couple of Wall
Street Journal editorials that I think----
Secretary LaHood. You want me to answer these for the
record, Senator, or----
[The information follows:]
Ensuring proper use and distribution of funds remain high
priorities for the Department of Transportation. As the Department
moves forward in the development of each of the State corridors, we
will be working with our State partners to develop reliable cost
estimates for programs to develop specific high-speed rail corridors
recognizing the challenges associated with predicting costs for
projects that might span decades. We will also be looking for the
States and other interest parties to become part of both the planning
and corridor development process.
Each program will include several projects. As we move to project
level decisions that involve commitment of funds for construction, we
will be refining cost estimates, refining ridership and benefit
estimates, and refining commitments from stakeholders and interested
parties. In this merit-based competitive program, those corridor
projects that move to construction are the ones that are expected to
generate the largest benefits to the U.S. taxpayers.
Senator Bond. Oh, I----
Secretary LaHood [continuing]. Do you want me to answer
them?
Senator Bond [continuing]. Well, yes, answer these for the
record. Or, I mean, if you've got any comment----
Secretary LaHood. Okay, all right.
Senator Bond. I'll let you----
Secretary LaHood. I know you want to go to another
committee meeting, so I'll answer them for the record for you.
Senator Bond. Okay. And if you have any comments on my
comments, I'd welcome those now. I mean----
Secretary LaHood. Of course, I have comments. Yes. I didn't
know if----
Senator Bond. Good. No, I----
Secretary LaHood [continuing]. You wanted to go on to
another hearing, or not.
Senator Bond. But, this is important, so--but I mean----
Secretary LaHood. Yes.
Senator Bond [continuing]. For these things I gave you, if
you may want to look at them and have----
Secretary LaHood. Okay.
Senator Bond [continuing]. Indepth comment, but----
Secretary LaHood. Yes.
Senator Bond [continuing]. You--I want to let you----
Secretary LaHood. No, look it----
Senator Bond [continuing]. Have an opportunity----
Secretary LaHood. Senator, you know----
Senator Bond [continuing]. For anybody who's still
listening, I want you to make sure you have your time to----
Secretary LaHood. Sure.
Senator Bond [continuing]. Express your view.
Secretary LaHood. I appreciate that.
Senator Bond. Sure, no. That's----
Secretary LaHood. No, I appreciate that.
When President Eisenhower signed the Interstate Highway
bill, nobody knew where all the lines were going to go, and
nobody knew how we were going to pay for all of it. So, I'm not
going to sit here and tell you I know where all the money's
going to come from for high-speed rail. I know this: Americans
want high-speed passenger rail. We did not have one of the 13
regions turn us down in their opportunity to receive some of
the $8 billion. There are so many people around America that
want good passenger rail transportation. I can tell you, when
the announcement was made in Missouri, there was a big hue and
cry that went up. I didn't hear one word of criticism about it
from your Governor or any of the elected officials there,
because it's going to connect opportunities for people.
You know this as well as I do, Senator. If you build it,
they will come. The interstate system is an example of that.
What an economic engine the interstate system has been for
places all over America. What's happened in Europe and Asia,
their governments have made a huge investment and these
corridors have become a huge economic engine everywhere that
they are.
I can cite chapter and verse. You build a transit line, you
build a busline, you build an interstate or a--improve a
street--you build it, and they will come.
I know this. There's going to be a lot of private
investment. We had a meeting with all of the companies that
build train sets, not only in Europe, but in Asia. And we had
them come to the Department, and what we said to them----
Senator Bond. Oh man, they--I mean, they--they love it.
They're the ones who are going to build it. They're going to--
yes, that--they're----
Secretary LaHood. Yes, but they're also going to make an
investment of some of their money, because they know this is an
opportunity to get into the high-speed, inner-city rail----
Senator Bond. Yes, right.
Secretary LaHood [continuing]. Business in America.
Senator Bond. Now, they're going to make some money off of
it, but how much----
Secretary LaHood. They're going to invest----
Senator Bond [continuing]. Is it going to cost--how much is
it going to cost----
Secretary LaHood [continuing]. The money too, Senator.
Senator Bond [continuing]. The taxpayer?
Secretary LaHood. They're going to invest a lot of money,
too, Senator----
Senator Bond. And where they do----
Secretary LaHood [continuing]. The way they have in
Europe----
Senator Bond [continuing]. They're going to invest in----
Secretary LaHood [continuing]. And in Asia.
Senator Bond [continuing]. Where they get some money out of
it.
Secretary LaHood. The----
Senator Bond. I--I've talked to the people who are building
toll roads, and they love it, because they know they are going
to make money. But, here, as I said, two rail--two high-speed
rail lines are profitable--I will--as Governor, I supported
Amtrak. I started subsidizing Amtrak, and we could--the State
of Missouri, I think, is still subsidizing Amtrak. But have
they come in large numbers? No. I've--I rode it, and I've seen
how a few people are on it. We have Amtrak from--between Kansas
City and St. Louis. Yes. I'd like to see that. But, am I
willing, on the thought that they will come, to spend billions
of dollars more? I haven't seen it, so far.
And to make that into a high-speed----
Secretary LaHood. Well, you were willing to put----
Senator Bond [continuing]. Rail----
Secretary LaHood. As Governor, and certainly, as a Senator
here, you've been willing to stake a claim on the idea that if
we build a bridge between Illinois and Missouri, people are
going use it.
Senator Bond. I will put a whole lot more money on that
one----
Secretary LaHood. I know you will; you already have.
Senator Bond [continuing]. Than on spending billions on--
spending billions on high-speed rail. You and I both need that
bridge. We want you----
Secretary LaHood. The principle is that----
Senator Bond. We want you Illinois people to come over and
watch the Cardinals. We're not----
Secretary LaHood. Well, I'm looking forward to being with
you to dig the first spade of dirt. But, I'm----
Senator Bond. Yes.
Secretary LaHood. Senator, you know this. When that bridge
is built, people are going to use it. You build it and they
will come. I don't think you would have staked a claim to that
unless you thought people were going to use it and that it was
needed. And I can----
Senator Bond. We've seen the projection----
Secretary LaHood. The same principle is true for high-speed
inter-city passenger rail.
Senator Bond. I'm sorry, I believe we have an experience
with the highways. We know how important they are. We have a
good track record. The track record, unless you're looking at
Tokyo to Osaka, or Paris to Lyon, is not that good. So, I just
would like to know the total estimated cost, where the funding
is going to come from to ensure the things you are starting
now, and what commitment, by State, localities, and private
companies, are going to meet the required need, before we
invest--before we commit to--I don't care whether it's St.
Louis to Kansas City, St. Louis to Chicago, Chicago to
Milwaukee, or Portland to Seattle--how much is it going to
cost? What do you project the ridership? How much is that
ridership going to be per person? Sometimes those numbers are
pretty scary, because it's the taxpayer dollar that we're
putting at risk. Well----
Secretary LaHood. Those are all very good questions----
Senator Bond. Yes.
Secretary LaHood [continuing]. And I'll do my best to
answer them.
[The information follows:]
The administration's support of the high-speed rail program
highlights the significance that this intercity passenger rail
initiative is expected to have on American way of life and our economy.
This initiative will help relieve congestion, is environmentally sound,
and ultimately promotes more livable communities across the country.
Although the cost of a national high-speed rail system is unknown at
this time, the closest analogy that we can make is the Interstate
Highway program, which began in 1956. DOT did not estimate the cost to
complete the Interstate System, but the benefits to the United States
were immeasurable.
The $8 billion appropriated under ARRA, as well as the $2.5 billion
that was appropriated in fiscal year 2010, and the $1 billion requested
in fiscal year 2011 President's budget, are reflective of the
administration's commitment to advance the building of the
infrastructure necessary to make high-speed intercity passenger rail
transportation a reality. These resources are the down payment for this
long-term infrastructure effort. We are working closely with the States
and the rail industry to develop preliminary estimates and longer-term
infrastructure requirements and plans. We commit to keep the
subcommittee informed as we validate requirements and assemble more
tangible plans.
Senator Bond. Good, good. And I--and I--those are--that's
what I'm asking, because this is not like--we all know what--
when you build a highway, when you build a bridge--and you and
I know that a good friend of ours, when I was fighting for the
highway bill and I proposed a bridge, he complained that there
was a--``You should not be using highway money to build a
bridge.'' Well he happened to come from a very dry State, and I
explained to him, ``In the Heartland, highways don't work
unless you have a bridge across the river.'' So, I fought--I've
fought that battle. I know----
Secretary LaHood. I know.
Senator Bond [continuing]. That battle.
Secretary LaHood. I know.
Senator Bond. I know it from both sides. That's why I raise
it.
CYBER SECURITY
Now, I've got a very--one very serious question that we are
not going to discuss at length in a--in an open hearing. You've
got $30 million for cybersecurity. I'm not going to ask you to
go into the threats. I'm on the Intel Committee, and I know
what the threats are. Do you have a plan for how that money is
being spent?
Secretary LaHood. Yes, sir. I'll be happy to come up and
brief you on that.
Senator Bond. Okay.
Secretary LaHood. I'd like to do that.
Senator Bond. We would like--I think Chairman Feinstein and
I, on the Intel Committee, are also----
Secretary LaHood. Yes, sir.
Senator Bond [continuing]. On Appropriations. If you would
arrange to send your staff up--is the plan completed?
Secretary LaHood. It is.
Senator Bond. And who was responsible for preparing it?
Secretary LaHood. We have hired a very, very experienced
person to deal with this issue.
Senator Bond. Has it been completed, in cooperation with
other agencies?
Secretary LaHood. Absolutely. It's being coordinated with
other agencies, of course.
Senator Bond. Has it--have you coordinated with NSA?
Secretary LaHood. Of course.
Senator Bond. Okay. Let me just say--I was hoping that they
would be here, but my--all right. Lewis Tucker, on my staff,
and David Grannis, on Chairman Feinstein's staff, would like to
work with you to prepare a full staff briefing, and then we
would like to have an opportunity--Brian Smith, from the Budget
Office, in the Intel Committee. This is a very, very important
investment, and we want to work with you on it to make sure----
Secretary LaHood. Yes, sir.
Senator Bond [continuing]. It is done--that the money that
you need is available, that it's well designed, and it's----
Secretary LaHood. Yes, sir.
Senator Bond [continuing]. Well carried out, because this
is----
Secretary LaHood. We will do it.
Senator Bond. No further comments on that one, here, but
just know that we appreciate how serious it is.
Secretary LaHood. Yes, sir.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bond. And we'd work with you to make sure it's
done. At this time I would ask the subcommittee members to
submit any additional questions they have for the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Patty Murray
Question. Mr. Secretary, your budget request includes $4 billion
for a new agency at DOT--the Infrastructure Fund, or I-Fund. This
proposal goes beyond the TIGER program that we funded in the Recovery
Act and the regular 2010 bill. The I-Fund would not only evaluate
project applications, but it would also look for projects to fund,
whether or not the project even considered applying to DOT.
Giving this authority to DOT would be granting the Department an
unprecedented amount of discretion over taxpayer dollars.
Senator Bond and I are both responsible for making sure that DOT
conducts its programs with a fair and open process.
Mr. Secretary, how would this kind of authority be consistent with
running the Department with transparency and accountability?
Answer. At the Department of Transportation, we are absolutely
committed to accountability and full transparency, and the operations
of the National Infrastructure Innovation and Finance Fund (NIIFF)
would be handled in the same manner. The Infrastructure Innovation Fund
would take a relatively small portion of the overall Federal
expenditure for transportation infrastructure and focus on funding
projects of national and regional significance that help us achieve our
national goals, such as economic competitiveness and livability. The
ability to dedicate a portion of Federal transportation resources to
fund these projects through a merit-based process, based on performance
and outcomes of the projects, is an important part of our overall
approach to address our most critical transportation infrastructure
needs. We have been clear about the criteria we have established to
evaluate these projects and about the analysis that we expect
applicants to prepare to support them. We would be happy to work with
you and your staff to develop appropriate ways of achieving the
transparency and accountability that we all agree will be essential in
this program.
Question. Why should such an ambitious program be considered before
we even know what is in the administration's reauthorization proposal?
Answer. The Department has committed to releasing principles for a
reauthorization bill as soon as they are ready. We hope to use the time
between now and the end of the year, when the current extension of the
surface transportation program runs out, to make progress in developing
long-term legislation. The I-Fund's merit based evaluation process will
be an important part of our overall approach to address the most
critical transportation infrastructure needs. Every project selected
through the TIGER discretionary grant and the National Infrastructure
Investment (TIGER II) grant process will require specific performance
measurements so we can track actual outcomes against the estimates
provided in the submitted applications. This will provide a new
knowledge that will help inform the Department's other surface
transportation programs, as we work to better identify the highest-
priority needs, and how to address them, through the Reauthorization
process.
Question. In any competitive program, there will always be
questions about how funding decisions were made. And the TIGER program
was the Department's first experience running a discretionary program
of that size.
Mr. Secretary, as you go through the process of awarding TIGER
grants funded in 2010, how will you ensure the Department follows a
fair and open process?
Answer. DOT has made a significant amount of material available to
the public about the criteria used to select projects, description of
the process used to evaluate applications and list of the applications
received. More than just making information available, DOT has
aggressively reached out to the Congress and public to answer questions
about the TIGER process, through webinars, conference calls and face-
to-face meetings.
The fiscal year 2010 appropriations act provided $600 million to be
awarded by the Department of Transportation for National Infrastructure
Investments (``TIGER II Discretionary Grants''). To ensure a fair and
open process, the TIGER II Discretionary Grants will be awarded on a
competitive basis by measuring grant applications for eligible projects
against the selection criteria specified in the program's Federal
Register notice (an interim notice was published on April 26 and a
final notice was published on June 1).
The ``Primary Selection Criteria'' include:
--Long-term Outcomes.--The Department will give priority to projects
that have a significant impact on desirable long-term outcomes
for the Nation, a metropolitan area, or a region.
The following long-term outcomes will be given priority:
--State of Good Repair.--Improving the condition of existing
transportation facilities and systems, with particular emphasis
on projects that minimize life-cycle costs;
--Economic Competitiveness.--Contributing to the economic
competitiveness of the United States over the medium- to long-
term;
--Livability.--Fostering livable communities through place-based
policies and investments that increase transportation choices
and access to transportation services for people in communities
across the United States;
--Environmental Sustainability.--Improving energy efficiency,
reducing dependence on oil, reducing greenhouse gas emissions
and benefitting the environment; and
--Safety.--Improving the safety of U.S. transportation facilities and
systems.
--Job Creation & Economic Stimulus.--While the TIGER II Discretionary
Grant program is not a Recovery Act program, job creation and
economic stimulus remain a top priority of this administration;
therefore, the Department will give priority (as it did for the
TIGER Discretionary Grant program) to projects that are
expected to quickly create and preserve jobs and stimulate
rapid increases in economic activity, particularly jobs and
activity that benefit economically distressed areas.
The ``Secondary Selection Criteria'' include:
--Innovation.--The Department will give priority to projects that use
innovative strategies to pursue the long-term outcomes outlined
above.
--Partnership.--The Department will give priority to projects that
demonstrate strong collaboration among a broad range of
participants and/or integration of transportation with other
public service efforts.
The Department will give more weight to the Long-term Outcomes and
Job Creation & Economic Stimulus criteria than to the Innovation and
Partnership criteria. Projects that are unable to demonstrate a
likelihood of significant long-term benefits in any of the five long-
term outcomes will not proceed in the evaluation process. For the Job
Creation & Economic Stimulus criterion, a project that is not ready to
proceed quickly is less likely to be successful.
Pursuant to the fiscal year 2010 appropriations act, the Department
will also strive for an equitable geographic distribution of funds, an
appropriate balance in addressing urban and rural needs and investment
in a variety of transportation modes.
The June 1, 2010, notice published in the Federal Register provides
additional guidance on how the Department will apply the selection
criteria.
Question. The Rail Safety Improvement Act of 2008 mandates that
railroads implement positive train control over large areas of their
track by the end of 2015. Such widespread use of Positive Train Control
will require a large investment by the public sector, as well as
significant investments by the Federal Government. Mr. Secretary, what
are you doing to make sure that railroads are able to meet this
mandate?
Answer. The Department has taken a number of steps to assist
railroads in meeting the December 31, 2015 mandate. The Federal
Railroad Administration (FRA), in partnership with its Railroad Safety
Advisory Committee (RSAC), published a final rule on January 12, 2010,
that addresses the requirements of the Positive Train Control (PTC)
mandate.
A critical step in achieving PTC implementation was the requirement
that each applicable railroad submit a PTC implementation plan (PTCIP)
by April 16, 2010. Each PTCIP was to map out: (1) the railroad's lines;
(2) the lines meeting the criteria requiring PTC; (3) the manner in
which the railroad will provide for interoperability within its PTC
system of movements of trains of other railroad carriers over its
lines; and (4) implementation of PTC on its line segments prioritized
by areas of greater risk to areas of lesser risk. FRA received 40
implementation plans and has assembled a team of subject matter experts
and is on target to complete the review and approval of the plans
within 90 days. To support railroads during their PTC system testing
and implementation phase, FRA's PTC Specialists will oversee the
testing and implementation and otherwise address PTC-related issues.
The PTC Specialists will be further supported by FRA Signal Engineers
and Specialists, as well as a small cadre of Senior Engineering staff.
To minimize duplication of effort by railroads and vendors, and
facilitate PTC system certification, FRA established a process where
railroads may share common PTC system information. For example,
railroads using the same PTC product only need to provide railroad-
specific information necessary to certify the PTC product on their
property.
To address technical issues and facilitate interoperability, in
fiscal year 2010, FRA is targeting the $50 million available under the
Railroad Safety Technology Grant Program to address common PTC
interoperability questions. This decision maximizes the utility of
these limited resources by making investments in projects that benefit
the railroad industry, verses using these grant resources to procure
PTC equipment for few individual railroads.
Finally, FRA is supporting the railroads and their suppliers by
actively participating in meetings, reviewing draft documents, and
providing feedback on the implementation of PTC. FRA, with the support
of the Railroad Safety Advisory Committee, has crafted regulations that
limit the scope of PTC implementation to a level consistent with
enhancing the safety of railroad employees and the general public.
Individual stakeholders may have strong feelings regarding the most
appropriate way to achieve this goal. Consequently, FRA has provided
mechanisms to allow individual railroads to demonstrate that the
railroads' proposed actions provide an equivalent level of safety for
employees and the public.
Question. Mr. Secretary, your budget request redirects $200 million
from the regular highway program, and puts that money into livability
grants that would help transportation planning organizations.
I understand the need for these planning grants, but I also believe
that we need to invest in our Nation's highways. This past year,
Senator Bond and I worked hard to provide an increase of $600 million
for the Federal highway program.
I don't know if that is something we'll be able to do again this
year. The budget resolution hasn't been developed, and the subcommittee
does not have its allocation yet.
Mr. Secretary, can you please explain your decision in funding
livability grants out of the highway program?
Answer. The President's budget marks a bold new way of thinking
about investments in our transportation infrastructure and will become
a key component of the administration's future surface transportation
proposal. The President's budget requests $200 million to fund a
competitive livability program within FHWA, which is compatible with
the legislative intent of the Federal-aid Highway Program (FAHP). This
benefits State and local governments, helping to modernize outdated
planning and regional models and improve data needed to make
transportation investment decisions. Because of competition for scarce
resources, sometimes innovative solutions can take a back seat to the
more pressing needs of maintenance and repair. By targeting some
investment funding, DOT hopes to demonstrate that smart investment up
front can save communities tax money over time by strengthening
communities and lowering infrastructure costs.
The $200 million request to leverage a proportional takedown from
funding authorized for FAHP activities is a wise and much needed
investment that will allow for the better leveraging of public funds
for future transportation investments. This program will provide
transportation practitioners with the tools, resources, and capacity
they need to develop transportation systems that provide transportation
choices, save people money, protect the environment, and efficiently
move goods.
Question. The Department is also requesting a new office within the
Office of the Secretary. You are also requesting additional OST staff
to work on livability issues, but they would not be a part of this new
office.
Congress is working on the reauthorization of most transportation
programs. This legislation will also take a look at the Department's
overall structure.
Mr. Secretary, why is it necessary to create a new office at this
time?
Answer. The Partnership for Sustainable Communities and the DOT's
livability initiative are a high priority for this administration.
Because this is a new emphasis for the Government, however, there is
substantial analysis and policy-making required to remove barriers and
align the Federal programs and funding requirements to support the
principles of livability. The Livable Communities Program within the
Office of the Secretary will house full time employees that support
this initiative. The Office will coordinate livability programs across
DOT's operating administrations and assess the effectiveness of various
programs in supporting livability. It will also assist in coordinating
interagency efforts for the Partnership for Sustainable Communities,
lead in developing metrics and performance measures for livability, and
assist in the selection and management of grant and technical
assistance programs for seeking greater input and buy-in from the
public.
Question. Mr. Secretary, you have spoken many times on the topic of
livability. Often, you talk about the importance of giving our
communities a variety of transportation options. And how people
shouldn't be forced into driving a car wherever they want to go.
But the biggest initiatives in your budget for livability don't
focus on funding specific projects. Instead, your new initiatives are
about giving planning organizations access to better data and
analytical tools, supporting public outreach efforts, and providing
technical assistance.
In the end, different communities will have their own definition of
what is livable. For some it's a traditional road that just happens to
include room for bicycles and pedestrians. For others, it's nothing
short of a new transit line.
How important is the planning process to DOT when it evaluates the
livability of a transportation project?
Answer. A livable community is one with transportation choices,
housing choices and destinations located close to home. Because
coordinating transportation with other investments like housing, water
infrastructure and economic development initiatives is at the heart of
creating a livable community, a strong planning process is essential to
generating the sorts of projects that improve livability. However,
these kids of comprehensive planning efforts require good data, tools
and staff, and often this is difficult for struggling communities in
difficult budget times.
USDOT is, therefore, proposing to provide communities with the
resources necessary to take a comprehensive look at their land-use
decisions in conjunction with their housing, transportation, and
environmental infrastructure plans. The result will be projects that
provide a higher return on investment to the Federal taxpayer.
Question. What standards is the Department using now to judge the
livability of transportation projects?
Answer. While the Partnership is working to determine performance
measures that can be used for livability projects, the current
standards used are those listed in the Notice of Funding Availability
(NOFA) for TIGER and TIGER II grants. The livability of transportation
projects is judged by: enhanced mobility by creation of more
transportation options; improved connectivity; increased accessibility
to economically disadvantaged populations, non-drivers, senior
citizens, and persons with disabilities; and the result of a planning
process which coordinated land use and transportation planning
decisions and involved community participation in the project.
Question. DOT's budget request includes $527 million for new
initiatives that would support community livability.
In addition, the Department of Housing and Urban Development is
requesting $150 million as part of the administration's sustainability
initiative. This request builds on the funding this subcommittee
provided HUD for fiscal year 2010.
Mr. Secretary, I am glad to see that over the past year, DOT has
worked hard to coordinate with HUD and the EPA on matters of livability
and sustainability. However, it is still unclear how your livability
requests fit with the work that HUD started this year.
Can you explain to me how your new initiatives on livability will
work with HUD's ongoing livability program?
Answer. In the fiscal year 2011 budget request, the three agencies
divided up the roles in order to reduce overlap and redundancy and save
taxpayer money. The focuses of the agencies represent which agency will
act as the lead on this topic. DOT's program will focus on capacity
building. The goal is to increase capacity at all levels of government
to integrate transportation, housing, economic development and water
infrastructure investments in urban and rural communities. The funds
could be used to improve modeling and data collection, provide
training, fund household transportation surveys, and support
organizational changes to better reflect integrated planning.
On the other hand, HUD's program has a focus on planning. Their
goals are to improve regional planning efforts that integrate housing
and transportation decisions, and update land use plans and zoning
codes. They will be able to award funds to housing, transportation, and
environmental stakeholders who are focused on planning efforts.
Without the support to build institutional capacity to do the sort
of comprehensive planning that HUD is promoting, communities may simply
find an outside contractor to develop the plan without having the
internal capacity to implement it and adjust it in the long term. DOT
and HUD's programs rely on one another to reach the highest levels of
success.
Question. The relationship between DOT and HUD is an important one,
and Federal departments should coordinate and work together--whether
it's on livability or any other issue area. But we need to make sure
that this relationship is sustained by more than the force of
personalities.
Mr. Secretary, what are you doing to make this new relationship
between DOT and HUD something that will live beyond the current
administration?
Answer. Ensuring that this Partnership continues in the long-term--
beyond the term of this administration--is a top priority. We are
working together to institutionalize changes that will support this
priority. We have begun this effort by creating offices at DOT, HUD,
and EPA to head up the important work of encouraging livable
communities. Our initial goals include joint NOFAs for planning grants
and joint funding application review, evaluation and award processes.
We also have been identifying institutional barriers and addressing
them, such as HUD's ban on multi-family housing on a cleaned up
brownfield or replacing the New Starts cost-effectiveness review for a
more broad cost-benefit analysis that includes economic development,
housing and environmental impacts.
Question. The DOT budget request includes $1.1 billion for the
FAA's effort to modernize the air transportation system--called
``NextGen''. And an essential part of NextGen is the replacement of
radar surveillance with satellite-based technology.
However, for this program to work, each aircraft that uses the air
traffic control system must be equipped with compatible technology. The
FAA has mandated such equipage by the year 2020, but there is no
guarantee that airlines will be able to meet this mandate.
Mr. Secretary, your budget proposal includes no funding to support
NextGen equipage.
Do you believe that the airlines can afford to meet the mandate on
their own?
Answer. The FAA has not currently mandated any NextGen equipage by
aircraft owners and operators. We are in the final stages of
considering industry comments on a proposed rule that would mandate
Automatic Dependent Surveillance-Broadcast (ADS-B) ``Out'' in certain
airspace by 2020. The final rule is expected to be published soon. ADS-
B is one of several components of NextGen and is capable of
broadcasting (``Out'') and receiving (``In'') information regarding the
location of other aircraft. Equipage mandates generally require
following rulemaking procedures, including cost benefit analysis and
public comments.
The administration has been exploring various options to
incentivize NextGen equipage prior to any mandatory due dates. The
primary focus of our work has been to accelerate equipage above that
which may occur naturally. Operational incentives for early adopters
(``best equipped, best served'') could help to alleviate concerns
regarding the financial ability of aircraft owners and operators to
equip their aircraft with NextGen technologies in the near-term.
Question. Secretary LaHood, I appreciate the work we've done
together to promote sustainable communities and address climate change.
As you may know, about one-half of the emissions in my home State of
Washington come from the transportation sector--which is much higher
than the national average. So it's really important to me to work to
address this important issue.
That's why I created the Transit Investments for Greenhouse Gas and
Energy Reductions in the Recovery Act. The program was such a huge
success and we were able to include fiscal year 2010 funding as well.
Secretary LaHood, can you tell me what lessons have been learned in
establishing this new program?
Answer. There is a great deal of interest and demand for such
programs and assistance. The Federal Transit Administration (FTA)
received over 560 project proposals and reviewed more than $2 billion
in applications for the $100 million made available through the
American Recovery & Reinvestment Act (ARRA) of 2009. Forty three
proposals were selected from across the country as part of a nationwide
competition, which rated projects on such factors as readiness to
implement, applicant capacity, degree of innovation and national
applicability.
We also learned that there are a wide variety of technologies or
operational efficiencies that can be implemented to reduce the energy
and/or greenhouse gas emissions of our transit agencies. For example,
among the projects funded within this competitive environment, Alabama
will replace gasoline and diesel buses with electric hybrids,
Massachusetts will construct wind energy generation turbines and
Vancouver, Washington, will install solar panels at transit facilities.
Ultimately, there are many innovative ideas that need to be researched
and actions that can be taken to assist our transit agencies become
more efficient as well as sustainable.
Question. What lessons have been learned from projects selected for
Grant Agreements?
Answer. Due to the great variety of selected projects, we are just
now beginning to understand some of the challenges we will need to
address going forward such as how to more accurately calculate and
document energy use and savings claims. We have learned, for example,
that transit agencies need help measuring their carbon footprint, and
that the source of their energy is ultimately a factor in moving the
country forward toward sustainability.
Question. Washington State is very appreciative of the $590 million
you have approved for the NW High Speed Rail Corridor projects in
Washington State. As a State, we've put a lot of investment into this
corridor and these funds are going to help build on this to
dramatically improve passenger service.
Our State has nearly $280 million in projects that can turn dirt
and put nearly 2,000 people to work during the 2010 spring and summer
construction season. This includes a lot of work that is ready to begin
within 60 days.
However, Washington State DOT is waiting for approval from FRA to
proceed, and it's unclear how long this approval process may take. It
is very important we get these WA projects underway as well as others
around the country and put people to work during this upcoming
construction season.
I'd like your commitment to have your staff look into this and work
with the Washington State DOT on an acceptable schedule.
Answer. The Federal Railroad Administration (FRA) is working
closely with Washington State DOT to implement these projects as
quickly as possible. Among the things FRA is collaborating on is
completion of the environmental review required under the National
Environmental Policy Act (NEPA) and other laws. These environmental
approvals are necessary before FRA can complete and execute the grant
agreement. FRA is also working with Washington to finalize the scope,
schedule, and budget of each of the large projects planned as part of
the anticipated $590 million in infrastructure improvements.
The Department understands the urgency of beginning construction as
soon as possible. As a result, FRA has reached out to Washington and
the host railroads (BNSF and Sound Transit) to provide them guidance on
the appropriate ways in which they might begin construction of certain
projects in advance of the signed grant agreement with the goal of
maximizing the likelihood that the State and host railroad could be
reimbursed later with grant funds. FRA looks forward to continued
progress in our productive on-going collaboration with Washington
State.
Question. Two projects in Washington State--the North-South Freeway
in Spokane and the Mercer Street Corridor in Seattle--have been awarded
TIGER grants recently.
They are both great projects. The project in Spokane will create
about 100 jobs--and the Seattle grant is the final piece required to
finish a project that will create thousands of jobs.
Would you please comment briefly on the role of infrastructure
investment in supporting local and regional economies?
Answer. Infrastructure spending has an immediate, primary, impact
in creating employment in the communities while the infrastructure is
being built. We estimate that the $48.1 billion in infrastructure
investment funded by the Recovery Act will produce 523,000 job-years of
employment, many of which take the form of jobs produced when increased
employment at construction sites leads to increased spending at local
and regional businesses producing consumer goods and services.
In the longer run, transportation infrastructure investment helps
to shape communities' economic options. Manufacturers of high-value,
high-volume semiconductors or electronics depend on air shipments to
move their products to markets around the globe. Commodity agriculture
or raw materials producers depend on access to bulk freight
transportation infrastructure. Manufacturers of complex, high value
products like automobiles depend on multi-modal freight links.
Equally important are the benefits that good personal
transportation options can confer on communities in the era of a
global, knowledge-based economy. Livable communities are better able to
attract clusters of high-skill, high-paying knowledge-based industries
and workers, to the benefit of residents, communities, and the U.S.
economy as a whole. Building livable communities requires collaboration
across levels of government and between the public and private sector.
One of my highest priorities is to work closely with Congress,
other Federal departments, the Nation's Governors, and local officials
to help promote more livable communities through sustainable surface
transportation programs.
Question. In September 2009, the Department of Transportation
Inspector General issued a Management Advisory to PHMSA raising strong
concerns with the management and processing of special permits to
transport hazardous materials. PHMSA developed an action plan and began
a process to review the fitness of special permit holders to rectify
the agency's fundamental failure to appropriately review: (1) an
applicant's safety history; and (2) an applicant's proposed alternative
safety packaging and transport plan.
How many special permits have been reviewed to date? Of those
special permits reviewed, how many have been suspended, revoked, or
denied?
Answer. From November 1, 2009 to May 11, 2010, there have been
1,155 Special Permit applications reviewed. Of those reviewed, 10 were
terminated and 12 were denied.
Question. What is your projected caseload for the processing of
special permit applications in fiscal year 2011?
Answer. PHMSA expects a significant increase in the projected
caseload of special permits and approvals applications in fiscal year
2011 due to policy changes for trade associations.
PHMSA is in the process of modifying (or terminating when
appropriate) special permits and approvals granted to association
members collectively. For any special permit issued to association
members collectively, PHMSA has started the process of providing notice
of modification or termination to the association and each individual
member whose name and address is on file with PHMSA. This notice
provides information for the individual members to determine whether
the activity authorized by the special permit or approval will
eventually be incorporated into the regulations or will continue to
need a special permit or approval.
When a special permit or approval is not incorporated into the
regulation, the individual members must submit an application for a
special permit or approval. This will result in an increase in the 2011
caseload that could be up to 20,000-30,000 applications.
As of April 2010, PHMSA has approximately 6,000 pending
applications, which include applications received more than 180 days
ago in addition to applications received less than 180 days ago. The
6,000 applications on file are divided into 2 categories--Approvals
(5,400) and Special Permits (600).
Question. In the President's proposed budget for fiscal year 2011,
you are eliminating $900,000 for contractor support to assist in
executing the agency's full-scale review of existing special permits to
fulfill the IG's recommendations.
With this proposed cut in funding, will you have the resources
necessary to appropriately process the estimated 5,500 special permit
holder's requests for approvals consistent with the new PHMSA action
plan guidelines and Inspector General recommendations?
Answer. PHMSA's 2011 budget request included $1.5 million to
annualize 20 positions enacted in fiscal year 2010 in support of the
special permits and approvals action plan to enhance management and
oversight of this hazardous materials safety program.
Question. The Department of Transportation Office of Inspector
General is due to issue a second management advisory to PHMSA regarding
the review and authorization of explosive classifications and
insufficient oversight of the four labs authorized by PHMSA to examine
and test explosives.
When will PHMSA be providing its personnel with the necessary
guidance for classifying and approving explosives?
Answer. PHMSA has formed a cross-functional team to review all
previous guidance, both formal and informal, and existing regulatory
provisions for classifying and approving explosives. The team has
developed a draft guidance manual that covers three separate audiences:
(1) guidance for persons applying for an explosive classification
recommendation; (2) guidance for the authorized explosive test
laboratories for testing and examination; (3) Standard Operating
Procedures for PHMSA related to approving authorized test agencies, and
evaluating and approving explosive classifications. This guidance
manual is under review and will be formalized by September 2010.
Question. How many explosives classifications and approvals has the
agency processed annually for the past 5 fiscal years?
Answer. See table.
----------------------------------------------------------------------------------------------------------------
2010
Approval Type 2005 2006 2007 2008 2009 (YTD)
----------------------------------------------------------------------------------------------------------------
Explosives.................................... 733 1,626 1,752 1,930 1,681 1,364
Fireworks..................................... 505 5,201 4,933 4,599 2,579 2,265
----------------------------------------------------------------------------------------------------------------
Question. What processes and internal certifications will you
develop to ensure that all authorized testing labs comply with PHMSA
guidance for classifying and approving explosives?
Answer. As of March 2010 PHMSA requires on-site inspections by
PHMSA for all new and renewal approvals applications for all
certification agencies. The on-site inspection will determine whether
the certification agency, including explosive testing labs, is fit and
capable of operating in accordance with the specifications outlined in
the approval. The inspection will include review of the specific
requirements and criteria under the requested special permit or
approval, including:
--Test procedures and equipment
--Internal quality assurance/control measures
--Spatial Requirements
--Security policies/procedures
--Personnel and subcontract qualifications
--Employee training and certifications
--Independent and impartial operations
The four PHMSA authorized explosive examination laboratories were
inspected between March and April 2010. The PHMSA inspection team found
all four laboratories fit to perform the examination and shipping
classification recommendation functions authorized under approval. Some
minor violations related to training, marking, labeling, and reporting
were noted, which the audit team determined not to adversely impact
their fitness capability under the approvals.
Question. How are you improving your oversight of PHMSA's approved
explosives testing labs and who specifically will be accountable for
the lab's safety reviews, fitness inspections, and regulatory
compliance?
Answer. The Special Permits and Approvals Office is responsible and
accountable for certification agency oversight. PHMSA is developing
more detailed application, inspection, reporting, and accountability
provisions to ensure impartial and quality performance of the
laboratories. We plan to require each laboratory to reapply under these
new terms. These guidelines require an initial inspection from PHMSA
staff prior to issuing the approval, and compliance inspections by our
enforcement staff.
Question. Please use the attached table to provide a complete
listing by year of employees who received retention bonuses during the
years 2006-2010. For each year, please include each employee's name,
title, grade, salary, and retention bonuses.
Answer. The information for fiscal year 2007-2010 is provided
below. Data prior to fiscal year 2007 is not readily available due to
FAA's conversion to the Delphi accounting system in 2006.
Some employees have more than one entry for a given fiscal year.
Since retention bonuses are calculated using base salary, if that
changes during the course of a year then separate retention bonus
amounts must be calculated against each separate base salary. Adding
the multiple retention bonus amounts listed equals the employee's total
retention bonus earned for that year. The amounts in the ``Salary''
column, however, are not additive.
----------------------------------------------------------------------------------------------------------------
Retention
Employee Name Title Grade Salary Bonus
----------------------------------------------------------------------------------------------------------------
Fiscal Year 2007:
BORO, THOMAS R................. SUPV PERSONNEL J..................... $104,500 $8,068.20
MANAGEMENT SPEC. 106,200 22,408.60
CLAYTON, ROBERT J.............. SUPV PERSONNEL K..................... 127,000 15,877.40
MANAGEMENT SPEC.
DIX, MARY E.................... DEP ASST ADMIN FOR HR 02.................... 146,193 2,849.76
MGMT. 148,678 9,660.00
GIBSON, VENTRIS C.............. ASST ADMIN FOR HUMAN 01.................... 155,653 11,592.00
RESOURCE MGMT.
GOMES, GARY R.................. SUPV AVIATION SAFETY K..................... 124,800 556.80
INSPE. K..................... 124,800 2,153.28
SUPV AVIATION SAFETY
INSPECTOR.
JUBA, EUGENE................... SR VICE PRESIDENT FOR 01.................... 164,100 11,592.00
FINANCE.
KERWIN, PETER J................ SUPV AVIATION SAFETY K..................... 127,000 16,279.20
INSPECTOR.
MINIACE, JOSEPH N.............. DEP ASST ADM STRATEGIC 02.................... 145,785 3,864.00
LABOR MGT REL.
PUNWANI, RAMESH................ ASST ADMIN FOR 01.................... 161,400 11,082.40
FINANCIAL SERVICES. 164,100 30,590.00
RITMAN, ALLISON W.............. SUPERVISORY ACCOUNTANT K..................... 127,000 2,771.20
SUPV ACCOUNTANT....... K..................... 124,792 674.48
127,000 519.60
WILLETT, ANTHONY J............. PROGRAM MANAGER....... K..................... 127,000 2,771.31
WILLIAMS, CLIFFORD J........... AIRWAY TRANSPORTATION H..................... 61,335 11,254.00
SYS SPEC.
WILLIAMS, HAROLD F., III....... AIRWAY TRANSPORTATION H..................... 78,657 14,433.00
SYS SPEC.
----------------------------
Fiscal Year 2007 Total....... ...................... ...................... ........... 178,997.23
============================
Fiscal Year 2008:
AMANN, GORDON K................ AIR TRAFFIC CONTROL LH.................... 110,711 3,527.82
SPEC (C).
ANDERSON, THEODORE H........... SUPV AIR TRAFFIC LJ.................... 148,960 920.16
CONTROL SPEC (C).
ANGLE, THEODORE W.............. AIR TRAFFIC CONTROL LH.................... 133,122 3,268.44
SPEC (T).
AUSTIN, THOMAS P............... AIR TRAFFIC CONTROL LH.................... 133,625 4,139.19
SPEC (C).
BACILE, MICHAEL J.............. AIR TRAFFIC CONTROL KH.................... 120,165 3,910.20
SPEC.
BAHLER, GARY C................. AIR TRAFFIC CONTROL LH.................... 126,402 4,027.86
SPEC (T).
BALL, RANDALL R................ AIR TRAFFIC CONTROL LH.................... 140,319 3,445.26
SPEC (T).
BARBIERI, JOHN R............... AIR TRAFFIC CONTROL KH.................... 120,165 3,910.20
SPEC.
BEADLE, MARK R................. AIR TRAFFIC CONTROL HH.................... 91,568 1,417.98
SPEC (T).
BERRA, PATRICK M............... AIR TRAFFIC CONTROL FH.................... 90,802 2,068.08
SPEC (T).
BIGGERS, JACK H................ AIR TRAFFIC CONTROL KH.................... 120,165 2,346.12
SPEC.
BLACK, NELSON K................ AIR TRAFFIC CONTROL FH.................... 74,705 2,187.54
SPEC (T).
BLAIS, MICHAEL J............... AIR TRAFFIC CONTROL LH.................... 126,400 6,265.56
SPEC (T).
BLITTERSDORF, JEFFREY E........ AIR TRAFFIC CONTROL GH.................... 83,814 1,908.90
SPEC.
BOELTER, TIMOTHY T............. AIR TRAFFIC CONTROL LH.................... 126,402 4,027.86
SPEC (C).
BONE, MICHAEL D................ AIR TRAFFIC CONTROL LH.................... 129,524 3,094.98
SPEC (T).
BORO, THOMAS R................. MANAGER, LABOR & J..................... 106,200 1,179.40
EMPLOYEE REL BRACH. 109,000 23,278.80
SUPV PERSONNEL J..................... 106,200 8,255.80
MANAGEMENT SPEC.
BOWE, JOHN R................... AIR TRAFFIC CONTROL LH.................... 126,402 4,475.40
SPEC (C).
BOYLE, DANIEL P................ AIR TRAFFIC CONTROL LH.................... 129,524 4,088.88
SPEC (T).
BROKER, BARBARA A.............. AIR TRAFFIC CONTROL LH.................... 119,178 3,797.82
SPEC (T).
BURTON, CARL JR................ SUPV AIR TRAFFIC KJ.................... 141,029 460.08
CONTROL SPEC.
BURZYCH, CRAIG A............... AIR TRAFFIC CONTROL LH.................... 126,402 1,342.62
SPEC (T).
BUSSE, JUDITH A................ SUPV AIR TRAFFIC LJ.................... 140,908 460.08
CONTROL SPEC (T).
BYRNE, JOHN J.................. SUPV AIR TRAFFIC LJ.................... 142,230 2,760.48
CONTROL SPEC (C).
BYTHEWAY, DAVID L.............. AIR TRAFFIC CONTROL HH.................... 104,010 3,745.80
SPEC (T).
CARMICHAEL, DAVID L............ AIR TRAFFIC CONTROL LH.................... 133,122 3,238.62
SPEC (C).
CARVER, STEVEN T............... SUPV COMPUTER SPEC.... K..................... 115,015 21,187.20
CATOE, RALPH D................. AIR TRAFFIC CONTROL IH.................... 102,216 1,995.48
SPEC (T).
CERAMI, JOSEPH S............... AIR TRAFFIC CONTROL LH.................... 130,011 4,137.39
SPEC (C).
CLAYTON, ROBERT J.............. SUPV HUMAN RESOURCES K..................... 130,000 24,096.00
SPECIALIST. K..................... 127,000 10,103.80
SUPV PERSONNEL 130,000 6,024.00
MANAGEMENT SPEC.
CLEAVER, MICHAEL D............. SUPV AIR TRAFFIC KJ.................... 139,353 1,360.26
CONTROL SPEC. 141,030 3,671.04
COLFER, STEVEN L............... AIR TRAFFIC CONTROL LH.................... 133,625 5,978.83
SPEC (C).
CONTRERAS, CARLOS.............. AIR TRAFFIC CONTROL LH.................... 115,783 3,689.82
SPEC (C).
COPPA, MICHAEL F............... AIR TRAFFIC CONTROL HH.................... 102,216 4,320.00
SPEC (T).
DOBRINICH, DAVID A............. SUPV AIR TRAFFIC LJ.................... 147,123 460.08
CONTROL SPEC (T). 148,893 3,680.64
DOEGE, BLANE S................. AIR TRAFFIC CONTROL LH.................... 125,928 1,719.60
SPEC.
DRESSLER, ROBERT K............. AIR TRAFFIC CONTROL LH.................... 122,788 5,651.88
SPEC (T).
DRISCOLL, CHARLES F............ AIR TRAFFIC CONTROL LH.................... 126,402 4,922.94
SPEC (C).
DYER, STANLEY J................ SUPV AIR TRAFFIC LJ.................... 144,045 2,970.36
CONTROL SPEC (T).
EWING, MICHAEL L............... AIR TRAFFIC CONTROL LH.................... 133,122 3,268.44
SPEC (T).
FRAWLEY, EDWARD J.............. SUPV AIR TRAFFIC LJ.................... 160,414 1,980.24
CONTROL SPEC. 162,344 3,960.48
FREDRICKSON, THOMAS E.......... AIR TRAFFIC CONTROL KH.................... 128,892 1,677.60
SPEC (T).
FUNKHOUSER, BRADLEY C.......... AIR TRAFFIC CONTROL JH.................... 120,954 1,574.16
SPEC (C).
GALASSINI, DEBRA A............. AIR TRAFFIC CONTROL LH.................... 122,788 3,912.84
SPEC (T).
GIBBS, BRENDA E................ AIR TRAFFIC CONTROL KH.................... 120,165 3,910.20
SPEC.
GIBSON, VENTRIS C.............. ASST ADMIN FOR HUMAN 01.................... 155,653 6,762.00
RESOURCE MGMT. 159,544 7,920.96
GISH, EDMUND C................. SUPV AIR TRAFFIC LJ.................... 164,168 920.16
CONTROL SPEC (T).
GOODNOUGH, DAVID W............. AIR TRAFFIC CONTROL GH.................... 90,802 609.96
SPEC (T).
GRATYS, JOHN G................. SUPV AIR TRAFFIC LJ.................... 140,908 2,760.48
CONTROL SPEC (C).
GRIFFIN, CHARLES W............. AIR TRAFFIC CONTROL LH.................... 118,733 1,249.38
SPEC (T).
GRIMM, CYNTHIA J............... AIR TRAFFIC CONTROL LH.................... 121,658 6,030.36
SPEC (T).
GROENE-BRASS, LISA C........... AIR TRAFFIC CONTROL HH.................... 92,617 2,109.66
SPEC (T).
GROFF, BRYAN W................. AIR TRAFFIC CONTROL LH.................... 133,122 4,626.60
SPEC (C).
HAGEN, SHAWN C................. AIR TRAFFIC CONTROL LH.................... 61,328 860.40
SPECIALIST (T).
HALL, MICHAEL A................ AIR TRAFFIC CONTROL LH.................... 133,122 1,400.76
SPEC (T).
HASENPFLUG, JEFFREY D.......... AIR TRAFFIC CONTROL JH.................... 129,058 3,554.40
SPEC.
HOCKING, ROBERT G.............. AIR TRAFFIC CONTROL LH.................... 110,605 4,738.60
SPEC (C).
HOFFMAN, ROBERTA S............. AIR TRAFFIC CONTROL LH.................... 130,011 5,063.52
SPEC (T).
HORNER, WILLIAM T.............. AIR TRAFFIC CONTROL KH.................... 125,405 4,080.60
SPEC (T).
HOUSE, MARK S.................. DIR FIN ANALYSIS & 02.................... 144,848 4,830.00
PROCESS REENGI- NEER. 148,469 18,812.28
HURLEY, WILLIAM J., JR......... AIR TRAFFIC CONTROL HH.................... 90,042 1,757.88
SPEC (T).
HYLAND, JOHN L................. AIR TRAFFIC CONTROL JH.................... 117,682 1,148.76
SPEC (C).
JEANES, JOSEPH A............... AIR TRAFFIC CONTROL IH.................... 116,303 4,162.62
SPEC (T).
JONES, MELVIN B................ AIR TRAFFIC CONTROL LH.................... 129,524 3,537.12
SPEC (T).
JUBA, EUGENE................... SR VICE PRESIDENT FOR 01.................... 164,100 6,762.00
FINANCE. 168,200 19,802.40
KERWIN, PETER J................ SUPV AVIATION SAFETY K..................... 127,000 5,997.60
INSPECTOR. 130,000 887.52
KEYES, ROBERT C................ AIR TRAFFIC CONTROL LH.................... 130,011 4,142.88
SPEC (T).
KHATCHERIAN, PAUL.............. SUPV AIR TRAFFIC LJ.................... 142,230 2,300.40
CONTROL SPEC (C).
KOOS, MARK..................... AIR TRAFFIC CONTROL LH.................... 135,543 1,380.30
SPEC (C).
KUHN, GEORGE W................. AIR TRAFFIC CONTROL LH.................... 111,843 3,564.00
SPEC (C).
KUZANEK, DWIGHT M.............. AIR TRAFFIC CONTROL LH.................... 122,788 4,782.36
SPEC (T).
LADNIER, DARRYL A.............. AIR TRAFFIC CONTROL KH.................... 113,300 1,105.92
SPEC.
LANGSTON, MILES H., JR......... AIR TRAFFIC CONTROL KH.................... 125,405 2,448.36
SPEC (T).
LAWRENCE, TONY H............... AIR TRAFFIC CONTROL LH.................... 125,928 429.90
SPEC (T).
LEWIS, KEITH C................. AIR TRAFFIC CONTROL LH.................... 118,733 1,249.38
SPEC (T).
LIGNELLI, ROBERT J............. AIR TRAFFIC CONTROL LH.................... 133,122 4,089.96
SPEC (T).
LIZZIO, MICHAEL J.............. SUPV AIR TRAFFIC LJ.................... 131,855 2,300.05
CONTROL SPEC (C).
LOVETT, STEVEN B............... SUPV AIR TRAFFIC KJ.................... 142,837 1,394.28
CONTROL SPEC. 144,556 3,762.72
MARKS, ROBERT L................ AIR TRAFFIC CONTROL LH.................... 122,329 3,861.54
SPEC (T).
MATHEIS, ULRICH R.............. AIR TRAFFIC CONTROL LH.................... 133,625 5,059.01
SPEC (C).
MAURICE, LOURDES Q............. CHIEF SCIENTIFIC & 03.................... 138,516 5,777.28
TECHNICAL ADVISOR.
MCCONAHAY, KENNETH C........... AIR TRAFFIC CONTROL LH.................... 133,122 2,693.52
SPEC (T).
MCCORMICK, MICHAEL J........... AIR TRAFFIC CONTROL LH.................... 129,524 1,362.96
SPEC (T).
MIETH, DOUGLAS R............... AIR TRAFFIC CONTROL LH.................... 133,625 4,139.19
SPEC (C).
MINER, MATHEW M................ AIR TRAFFIC CONTROL LH.................... 133,122 1,400.76
SPEC (T).
MINIACE, JOSEPH N.............. DEP ASST ADM STRATEGIC 02.................... 145,785 9,016.00
LABOR MGT REL. 149,430 21,122.56
MISNER, JOHN E................. AIR TRAFFIC CONTROL LH.................... 126,402 2,685.24
SPEC (C).
MOFFAT, JAY.................... AIR TRAFFIC CONTROL LH.................... 122,788 3,043.32
SPEC (T).
MOLLICA, ANTHONY J............. AIR TRAFFIC CONTROL HH.................... 92,235 664.32
SPEC (T).
MORALES, DAVID A............... AIR TRAFFIC CONTROL EH.................... 70,600 1,378.44
SPEC (T).
MORRISON, ROBERT M............. SUP ATCS (C/T-I)...... K..................... 130,000 5,640.00
NASH, CHARLES F................ AIR TRAFFIC CONTROL GH.................... 83,814 1,090.80
SPEC (T).
NELSON, BARRY J................ AIR TRAFFIC CONTROL EH.................... 76,950 1,759.32
SPEC (T).
NEMCEK, RICHARD M.............. AIR TRAFFIC CONTROL LH.................... 126,402 4,027.86
SPEC (C).
NICHOLAS, ROBERT M............. AIR TRAFFIC CONTROL LH.................... 133,625 5,059.01
SPEC (C).
OSEKOWSKI, CRAIG P............. SUPV AIR TRAFFIC KJ.................... 144,738 470.94
CONTROL SPEC. 146,480 3,813.12
PALLONE, MARK A................ AIR TRAFFIC CONTROL LH.................... 125,928 859.80
SPEC (T).
PARMAN, DENNIS J............... AIR TRAFFIC CONTROL LH.................... 129,524 1,747.20
SPEC (T).
PASSIALES, JAMES J............. SUPV AIR TRAFFIC LJ.................... 127,548 2,709.72
CONTROL SPEC (C).
PATT, LAWRENCE K............... AIR TRAFFIC CONTROL LH.................... 129,524 4,997.52
SPEC (T).
PETRE, PHILIP J................ SUPV AIR TRAFFIC KJ.................... 127,159 2,482.56
CONTROL SPEC (T).
PRATT, THOMAS J................ SUPV AVIATION SAFETY K..................... 127,000 1,864.28
INSPECTOR. 130,000 18,642.80
PUGH, DENNIS W................. AIR TRAFFIC CONTROL GH.................... 83,814 2,533.68
SPEC (T).
PUNWANI, RAMESH................ ASST ADMIN FOR 01.................... 164,100 11,270.00
FINANCIAL SERVICES. 168,200 31,353.80
QUINN, GLENN P................. AIR TRAFFIC CONTROL KH.................... 127,032 447.48
SPEC (T).
RAWLINGS, KEVIN S.............. AIR TRAFFIC CONTROL HH.................... 94,798 3,393.06
SPEC (T).
RAY, MARK A.................... AIR TRAFFIC CONTROL LH.................... 137,237 4,140.18
SPEC (C).
REGRUTO, SANDRA G.............. AIR TRAFFIC CONTROL FH.................... 81,884 4,368.00
SPEC (T).
REINERT, KURT A................ AIR TRAFFIC CONTROL FH.................... 84,643 3,029.40
SPEC (T).
RHEA, RODNEY R................. AIR TRAFFIC CONTROL GH.................... 83,814 1,908.90
SPEC.
RITMAN, ALLISON W.............. MANAGING DIR OF FINC 02.................... 135,93 3,212.66
RPTNG & CONTROLS. K..................... 130,000 180.72
SUPERVISORY ACCOUNTANT K..................... 127,000 1,212.42
130,000 180.72
ROESKE, DAVID W................ AIR TRAFFIC CONTROL LH.................... 126,402 4,027.86
SPEC (C).
ROY, KIM A..................... AIR TRAFFIC CONTROL KH.................... 127,032 447.48
SPEC (T).
RUIZ, DAVID R.................. AIR TRAFFIC CONTROL LH.................... 129,524 4,997.52
SPEC (T).
SACKETT, GREGORY A............. SUPV AIR TRAFFIC KJ.................... 146,290 951.96
CONTROL SPEC. 148,050 3,853.92
SANOCKI, MICHAEL H............. AIR TRAFFIC CONTROL LH.................... 130,011 5,984.16
SPEC (T).
SCOTT, ROBERT E................ AIR TRAFFIC CONTROL LH.................... 109,000 1,929.60
SPEC (C).
SEACAT, GARY D................. AIR TRAFFIC CONTROL HH.................... 92,617 301.38
SPEC (T).
SICKLES, STEPHAN J............. AIR TRAFFIC CONTROL LH.................... 133,122 4,202.28
SPEC (T).
SMITH, TERRY R................. AIR TRAFFIC CONTROL LH.................... 122,329 429.06
SPEC (T).
SNYDER, FREDERICK J., JR....... AIR TRAFFIC CONTROL KH.................... 125,568 1,435.32
SPEC (C).
SNYDER, THOMAS G............... AIR TRAFFIC CONTROL GH.................... 83,814 1,636.20
SPEC.
STANKOWICZ, JOSEPH M........... AIR TRAFFIC CONTROL LH.................... 133,625 4,139.19
SPEC (C).
STAROS, JOHN D................. AIR TRAFFIC CONTROL LJ.................... 128,572 2,731.32
SPEC (T).
STEINBERG, FREDERICK W......... AIR TRAFFIC CONTROL GH.................... 84,550 2,577.12
SPEC (T).
STEINWEDEL, ROBERT P........... AIR TRAFFIC CONTROL KH.................... 120,165 2,346.12
SPEC.
STRONG, ROBERT L............... AIR TRAFFIC CONTROL JH.................... 125,568 864.60
SPEC.
SWITCH, JAY M.................. AIR TRAFFIC CONTROL KH.................... 120,165 3,519.18
SPEC.
TIGHE, GRACE................... AIR TRAFFIC CONTROL GH.................... 93,531 2,738.88
SPEC (T).
TOTH, DANIEL A................. AIR TRAFFIC CONTROL LH.................... 126,402 3,580.32
SPEC (C).
VANDERWEEL, PETER J............ AIR TRAFFIC CONTROL IH.................... 116,303 1,135.26
SPEC (T).
VELLA, ANTHONY C............... AIR TRAFFIC CONTROL LH.................... 129,524 4,997.52
SPEC (T).
VERONICO, JAMES N.............. AIR TRAFFIC CONTROL LH.................... 130,011 6,435.94
SPEC (T).
WALSH, STEPHEN G............... AIR TRAFFIC CONTROL GH.................... 88,474 1,151.52
SPEC.
WAWRZYNSKI, DAVID B............ AIR TRAFFIC CONTROL LH.................... 125,928 1,324.98
SPEC (T).
WAZOWICZ, PAUL J............... AIR TRAFFIC CONTROL LH.................... 130,011 5,976.23
SPEC (T).
WHEELER, DAVID A............... AIR TRAFFIC CONTROL KH.................... 127,941 2,497.68
SPEC (T).
WHITE, LARRY D................. AIR TRAFFIC CONTROL HH.................... 92,617 1,205.52
SPEC (T).
WHITMAN, STEPHEN S............. AIR TRAFFIC CONTROL LH.................... 137,237 4,140.18
SPEC (C).
WIEGMANN, DARRYL L............. AIR TRAFFIC CONTROL LH.................... 143,599 1,380.24
SPEC (T).
WILLENBRINK, WAYNE C........... AIR TRAFFIC CONTROL GH.................... 93,531 3,347.52
SPEC (T).
WILLETT, ANTHONY J............. PROGRAM MANAGER....... K..................... 127,000 6,466.41
130,000 19,276.80
WILLIAMS, CLIFFORD J........... AIRWAY TRANSPORTATION H..................... 61,335 3,310.00
SYS SPEC. 61,337 1,324.00
63,226 4,279.41
WILLIAMS, HAROLD F., III....... AIRWAY TRANSPORTATION H..................... 78,657 4,245.00
SYS SPEC. 78,660 1,698.00
81,770 5,533.65
WISHOWSKI, DONALD A............ AIR TRAFFIC CONTROL LH.................... 140,842 5,981.04
SPEC (C).
WITTMAN, MARK A................ AIR TRAFFIC CONTROL JH.................... 122,080 2,101.50
SPEC.
WOLVIN, MICHAEL S.............. AIR TRAFFIC CONTROL HH.................... 100,334 1,958.76
SPEC (T).
WYNKOOP, DOUGLAS J............. AIR TRAFFIC CONTROL LH.................... 123,598 2,109.60
SPEC (T).
ZAROBA, PAUL B................. AIR TRAFFIC CONTROL LH.................... 129,524 3,094.98
SPEC (T).
----------------------------
Fiscal Year 2008 Total....... ...................... ...................... ........... 719,405.04
============================
Fiscal Year 2009:
ALLEGRINI, KEVIN J............. AIR TRAFFIC CONTROL GH.................... 68,424 3,583.68
SPEC.
ALLSOP, KEVIN L................ AIR TRAFFIC CONTROL FH.................... 93,531 6,121.74
SPEC (T).
ANDERSON, THEODORE H........... SUPV AIR TRAFFIC LJ.................... 148,960 3,220.56
CONTROL SPEC (C). 155,663 21,165.10
ANGLE, THEODORE W.............. AIR TRAFFIC CONTROL LH.................... 133,122 466.92
SPEC (T).
AUSTIN, THOMAS P............... AIR TRAFFIC CONTROL LH.................... 133,625 20,337.73
SPEC (C). LI.................... 135,772 464.75
BACILE, MICHAEL J.............. AIR TRAFFIC CONTROL KH.................... 120,165 16,858.32
SPEC.
BAHLER, GARY C................. AIR TRAFFIC CONTROL LH.................... 126,402 19,792.56
SPEC (T).
BALL, RANDALL R................ AIR TRAFFIC CONTROL LH.................... 140,319 22,292.10
SPEC (T).
BARBIERI, JOHN R............... AIR TRAFFIC CONTROL KH.................... 120,165 16,858.32
SPEC.
BEADLE, MARK R................. AIR TRAFFIC CONTROL HH.................... 91,568 4,099.62
SPEC (T).
BERRA, PATRICK M............... AIR TRAFFIC CONTROL FH.................... 90,802 10,068.36
SPEC (T).
BIGGERS, JACK H................ AIR TRAFFIC CONTROL KH.................... 120,165 18,441.12
SPEC.
BINNER, ROGER A................ AIR TRAFFIC CONTROL LH.................... 140,319 993.24
SPEC.
BLACK, NELSON K................ AIR TRAFFIC CONTROL FH.................... 74,705 12,682.62
SPEC (T).
BLAIS, MICHAEL J............... AIR TRAFFIC CONTROL LH.................... 126,400 17,506.86
SPEC (T).
BLINK, CHARLES L............... AIR TRAFFIC CONTROL HH.................... 92,235 6,636.84
SPEC (T).
BLITTERSDORF, JEFFREY E........ AIR TRAFFIC CONTROL GH.................... 83,814 13,683.72
SPEC.
BOELTER, TIMOTHY T............. AIR TRAFFIC CONTROL LH.................... 126,402 19,792.57
SPEC (C).
BONE, MICHAEL D................ AIR TRAFFIC CONTROL LH.................... 129,524 20,897.58
SPEC (T).
BORO, THOMAS R................. MANAGER, LABOR & J..................... 109,000 7,351.20
EMPLOYEE REL BRACH. 110,800 23,917.20
BOWE, JOHN R................... AIR TRAFFIC CONTROL LH.................... 126,402 19,335.42
SPEC (C).
BOYLE, DANIEL P................ AIR TRAFFIC CONTROL LH.................... 129,524 19,642.56
SPEC (T).
BRANNIGAN, TIMOTHY W........... AIR TRAFFIC CONTROL GH.................... 67,342 3,527.04
SPEC.
BROKER, BARBARA A.............. AIR TRAFFIC CONTROL LH.................... 119,178 19,088.10
SPEC (T).
BROMLEY, DANA L................ AIR TRAFFIC CONTROL GH.................... 79,154 4,663.44
SPEC.
BRYAN, JEFFREY L............... AIR TRAFFIC CONTROL IH.................... 104,966 5,154.30
SPEC.
BURTON, CARL JR................ SUPV AIR TRAFFIC KJ.................... 141,029 3,220.56
CONTROL SPEC. 147,375 3,310.30
BURZYCH, CRAIG A............... AIR TRAFFIC CONTROL LH.................... 126,402 22,987.74
SPEC (T).
BUSSE, JUDITH A................ SUPV AIR TRAFFIC LJ.................... 140,908 3,220.56
CONTROL SPEC (T). 147,248 20,319.36
BYRNE, JOHN J.................. SUPV AIR TRAFFIC LJ.................... 142,230 3,220.56
CONTROL SPEC (C). 148,630 18,749.30
BYTHEWAY, DAVID L.............. AIR TRAFFIC CONTROL HH.................... 104,010 15,799.32
SPEC (T).
CARGIULO, LUIS P., JR.......... HUMAN RESOURCES I..................... 84,626 5,836.80
SPECIALIST.
CARMICHAEL, DAVID L............ AIR TRAFFIC CONTROL LH.................... 133,122 20,761.38
SPEC (C).
CARVER, STEVEN T............... SUPV COMPUTER SPEC.... K..................... 115,015 7,945.20
CATOE, RALPH D................. AIR TRAFFIC CONTROL IH.................... 102,216 15,686.34
SPEC (T).
CERAMI, JOSEPH S............... AIR TRAFFIC CONTROL LH.................... 130,011 20,346.93
SPEC (C).
CHAMBERLIN, MARK J............. AIR TRAFFIC CONTROL GH.................... 86,141 2,256.00
SPEC (T).
CHIASSON, MICHAEL P............ SUPV AIR TRAFFIC IJ.................... 118,893 3,502.44
CONTROL SPEC.
CLAYTON, ROBERT J.............. SUPV HUMAN RESOURCES K..................... 130,000 10,542.00
SPECIALIST. 132,200 18,715.20
CLEAVER, MICHAEL D............. SUPV AIR TRAFFIC KJ.................... 141,030 3,212.16
CONTROL SPEC. 147,376 18,650.94
COLFER, STEVEN L............... AIR TRAFFIC CONTROL LH.................... 133,625 18,459.37
SPEC (C).
CONTRERAS, CARLOS.............. AIR TRAFFIC CONTROL LH.................... 115,783 18,544.14
SPEC (C).
COPPA, MICHAEL F............... AIR TRAFFIC CONTROL HH.................... 102,216 14,824.80
SPEC (T).
DOBRINICH, DAVID A............. SUPV AIR TRAFFIC LJ.................... 148,893 3,220.56
CONTROL SPEC (T). 155,593 17,292.12
DOEGE, BLANE S................. AIR TRAFFIC CONTROL LH.................... 125,928 20,766.60
SPEC.
DRESSLER, ROBERT K............. AIR TRAFFIC CONTROL LH.................... 122,788 17,450.46
SPEC (T).
DRISCOLL, CHARLES F............ AIR TRAFFIC CONTROL LH.................... 126,402 18,878.28
SPEC (C).
DUNPHY, DANIEL P............... AIR TRAFFIC CONTROL IH.................... 110,732 18,817.68
SPEC (T).
DUTTON, RANDELL L.............. AIR TRAFFIC CONTROL IH.................... 114,201 4,111.80
SPEC.
DYER, STANLEY J................ SUPV AIR TRAFFIC LJ.................... 144,045 3,465.42
CONTROL SPEC (T). 150,527 19,157.28
EWING, MICHAEL L............... AIR TRAFFIC CONTROL LH.................... 133,122 21,616.32
SPEC (T).
FRAWLEY, EDWARD J.............. SUPV AIR TRAFFIC LJ.................... 162,344 3,465.42
CONTROL SPEC. 166,959 21,618.78
FREDRICKSON, THOMAS E.......... AIR TRAFFIC CONTROL KH.................... 128,892 20,628.72
SPEC (T).
FUNKHOUSER, BRADLEY C.......... AIR TRAFFIC CONTROL JH.................... 120,954 18,961.92
SPEC (C).
GALASSINI, DEBRA A............. AIR TRAFFIC CONTROL LH.................... 122,788 19,665.85
SPEC (T).
GIBBS, BRENDA E................ AIR TRAFFIC CONTROL KH.................... 120,165 20,005.20
SPEC.
GIBSON, VENTRIS C.............. ASST ADMIN FOR HUMAN 01.................... 159,544 6,930.84
RESOURCE MGMT. 164,011 9,159.48
GISH, EDMUND C................. SUPV AIR TRAFFIC LJ.................... 164,168 3,220.56
CONTROL SPEC (T). 166,959 21,165.09
GOODNOUGH, DAVID W............. AIR TRAFFIC CONTROL GH.................... 90,802 15,297.96
SPEC (T).
GOSS, NORBERT L., JR........... AIR TRAFFIC CONTROL GH.................... 74,501 4,876.50
SPEC (T).
GRATYS, JOHN G................. SUPV AIR TRAFFIC LJ.................... 140,908 3,220.56
CONTROL SPEC (C). 147,248 18,749.30
GREEN, JEFFREY S............... AIR TRAFFIC CONTROL EH.................... 65,107 4,261.14
SPECIALIST (T).
GRIEST, DIANE L................ SUPV AIR TRAFFIC LJ.................... 159,567 920.16
CONTROL SPEC. 166,747 8,985.10
GRIFFIN, CHARLES W............. AIR TRAFFIC CONTROL LH.................... 118,733 20,563.98
SPEC (T).
GRIMM, CYNTHIA J............... AIR TRAFFIC CONTROL LH.................... 121,658 17,285.04
SPEC (T).
GROENE-BRASS, LISA C........... AIR TRAFFIC CONTROL HH.................... 92,617 13,605.30
SPEC (T).
GROFF, BRYAN W................. AIR TRAFFIC CONTROL LH.................... 133,122 24,295.19
SPEC (C).
HABER, SELIM................... GENERAL ENGINEER...... K..................... 132,200 4,539.36
HALL, MICHAEL A................ AIR TRAFFIC CONTROL LH.................... 133,122 22,599.24
SPEC (T).
HARDIMAN, MATTHEW J............ AIR TRAFFIC CONTROL GH.................... 67,342 3,527.04
SPEC.
HASENPFLUG, JEFFREY D.......... AIR TRAFFIC CONTROL JH.................... 129,058 20,105.28
SPEC.
HAYNES, DARRYL A............... AIR TRAFFIC CONTROL JH.................... 130,974 5,014.02
SPEC.
HEINTZ, ROBERT B............... AIR TRAFFIC CONTROL GH.................... 68,970 3,612.48
SPEC.
HOFFMAN, ROBERTA S............. AIR TRAFFIC CONTROL LH.................... 130,011 19,417.08
SPEC (T).
HOLDGATE, FREDERICK I.......... AIR TRAFFIC CONTROL GH.................... 85,520 4,479.36
SPEC.
HOLLAND, JEFFERY K............. AIR TRAFFIC CONTROL IH.................... 104,966 4,467.06
SPEC.
HORNER, WILLIAM T.............. AIR TRAFFIC CONTROL KH.................... 125,405 17,593.33
SPEC (T).
HOTRUM, GLENN M................ AIR TRAFFIC CONTROL LH.................... 115,133 21,978.01
SPEC (T).
HOUSE, MARK S.................. DIR FIN ANALYSIS & 02.................... 148,469 6,930.84
PROCESS REENGI- NEER. 152,626 8,141.76
HURLEY, WILLIAM J., JR......... AIR TRAFFIC CONTROL HH.................... 90,042 13,817.04
SPEC (T).
HYLAND, JOHN L................. AIR TRAFFIC CONTROL JH.................... 117,682 18,065.64
SPEC (C).
IMUNDO, RICO F................. SUPV TRAFFIC MANGEMENT JJ.................... 124,448 8,698.20
COORDINA- TOR.
JEANES, JOSEPH A............... AIR TRAFFIC CONTROL IH.................... 116,303 15,551.70
SPEC (T).
JONES, MELVIN B................ AIR TRAFFIC CONTROL LH.................... 129,524 19,553.16
SPEC (T).
JUBA, EUGENE................... SR VICE PRESIDENT FOR 01.................... 168,200 6,930.84
FINANCE. 171,100 8,141.76
KELLY, THOMAS C................ SUPV AIR TRAFFIC LJ.................... 164,740 8,740.19
CONTROL SPEC.
KEYES, ROBERT C................ AIR TRAFFIC CONTROL LH.................... 130,011 20,340.76
SPEC (T).
KHATCHERIAN, PAUL.............. SUPV AIR TRAFFIC LJ.................... 142,230 3,220.56
CONTROL SPEC (C). 148,630 19,235.03
KOOS, MARK..................... AIR TRAFFIC CONTROL LH.................... 135,543 23,631.42
SPEC (C).
KRAKOWSKI, HENRY P............. CHIEF OPERATING 1A.................... 211,000 25,762.24
OFFICER.
KUHN, GEORGE W................. AIR TRAFFIC CONTROL LH.................... 111,843 17,512.20
SPEC (C).
KUZANEK, DWIGHT M.............. AIR TRAFFIC CONTROL LH.................... 122,788 6,558.36
SPEC (T).
SUPV AIR TRAFFIC LH.................... 122,788 11,780.10
CONTROL SPECIALIST.
LADNIER, DARRYL A.............. AIR TRAFFIC CONTROL KH.................... 113,300 18,876.12
SPEC.
LAMBERT, DAWN E................ SUPV AIR TRAFFIC LJ.................... 132,494 2,344.50
CONTROL SPEC.
LANGSTON, MILES H., JR......... AIR TRAFFIC CONTROL KH.................... 125,405 19,245.24
SPEC (T).
LASH, WILLIAM C................ AIR TRAFFIC CONTROL LH.................... 125,928 23,062.80
SPEC (C).
LAWRENCE, TONY H............... AIR TRAFFIC CONTROL LH.................... 125,928 22,082.58
SPEC (T).
LESTER, CRAIG S................ AIR TRAFFIC CONTROL FH.................... 90,802 2,972.40
SPEC (T).
LEWIS, KEITH C................. AIR TRAFFIC CONTROL LH.................... 118,733 20,142.60
SPEC (T).
LEWIS, TIMOTHY R............... AIR TRAFFIC CONTROL KH.................... 123,598 6,068.70
SPEC.
LICON, RUBEN................... AIR TRAFFIC CONTROL LH.................... 129,524 23,162.28
SPEC.
LIGNELLI, ROBERT J............. AIR TRAFFIC CONTROL LH.................... 133,122 19,633.32
SPEC (T).
LIZZIO, MICHAEL J.............. SUPV AIR TRAFFIC LJ.................... 131,855 3,220.07
CONTROL SPEC (C).
LOVETT, STEVEN B............... SUPV AIR TRAFFIC KJ.................... 144,556 3,292.38
CONTROL SPEC. 151,061 16,390.45
MANCHESTER, RICHARD D.......... AIR TRAFFIC CONTROL GH.................... 68,424 3,583.68
SPEC.
MARKS, ROBERT L................ AIR TRAFFIC CONTROL LH.................... 122,329 18,550.38
SPEC (T).
MATHEIS, ULRICH R.............. AIR TRAFFIC CONTROL LH.................... 133,625 19,398.55
SPEC (C).
MAURICE, LOURDES Q............. CHIEF SCIENTIFIC & 03.................... 138,516 4,493.44
TECHNICAL ADVISOR. 142,394 7,391.12
MCCARTNEY, WILLIAM A........... AIR TRAFFIC CONTROL LH.................... 129,524 23,162.28
SPEC (T).
MCCONAHAY, KENNETH C........... AIR TRAFFIC CONTROL LH.................... 133,122 21,228.84
SPEC (T).
MCCORMICK, MICHAEL J........... AIR TRAFFIC CONTROL LH.................... 129,524 22,432.56
SPEC (T).
MCKEE, DAVID C................. AIR TRAFFIC CONTROL LH.................... 122,329 22,435.92
SPEC (T).
MICHAEL, GLENN W............... CAST OUTREACH PROGRAM K..................... 132,200 9,951.36
MGR.
MIETH, DOUGLAS R............... AIR TRAFFIC CONTROL LH.................... 133,625 20,337.73
SPEC (C).
MINER, MATHEW M................ AIR TRAFFIC CONTROL LH.................... 133,122 23,055.72
SPEC (T).
MINIACE, JOSEPH N.............. DEP ASST ADM STRATEGIC 02.................... 149,430 9,241.12
LABOR MGT FREL. 153,614 9,498.72
MISNER, JOHN E................. AIR TRAFFIC CONTROL LH.................... 126,402 21,163.99
SPEC (C).
MOFFAT, JAY.................... AIR TRAFFIC CONTROL LH.................... 122,788 20,114.46
SPEC (T).
MOLLICA, ANTHONY J............. AIR TRAFFIC CONTROL HH.................... 92,235 1,992.96
SPEC (T).
MOORE, DIANNA H................ MANAGEMENT AND PROGRAM I..................... 63,698 7,525.44
ANA.
MOORE, GEORGE E................ AIR TRAFFIC CONTROL LH.................... 129,524 23,162.28
SPEC.
MORALES, DAVID A............... AIR TRAFFIC CONTROL EH.................... 70,600 10,603.92
SPEC (T).
MORRISON, ROBERT M............. SUP ATCS (C/T-I)...... K..................... 130,000 5,640.00
NASH, CHARLES F................ AIR TRAFFIC CONTROL GH.................... 83,814 13,374.99
SPEC (T).
NELSON, BARRY J................ AIR TRAFFIC CONTROL EH.................... 76,950 13,889.89
SPEC (T).
NELSON, MATTHEW F.............. AIR TRAFFIC CONTROL JH.................... 114,418 5,243.28
SPEC (T).
NEMCEK, RICHARD M.............. AIR TRAFFIC CONTROL LH.................... 126,402 19,792.56
SPEC (C).
NICHOLAS, ROBERT M............. AIR TRAFFIC CONTROL LH.................... 133,625 19,398.55
SPEC (C).
OSEKOWSKI, CRAIG P............. SUPV AIR TRAFFIC KJ.................... 146,480 3,336.48
CONTROL SPEC. 153,072 18,142.81
OTERO, CARLOS V................ SUPV AIR TRAFFIC GJ.................... 95,385 4,995.84
CONTROL SPEC.
PALLONE, MARK A................ AIR TRAFFIC CONTROL LH.................... 125,928 21,643.92
SPEC (T).
PARMAN, DENNIS J............... AIR TRAFFIC CONTROL LH.................... 129,524 21,546.42
SPEC (T).
PASSIALES, JAMES J............. SUPV AIR TRAFFIC LJ.................... 127,548 3,161.34
CONTROL SPEC (C). 133,287 18,748.44
PATT, LAWRENCE K............... AIR TRAFFIC CONTROL LH.................... 129,524 18,717.90
SPEC (T).
PETRE, PHILIP J................ SUPV AIR TRAFFIC KJ.................... 127,159 2,896.32
CONTROL SPEC (T). 132,881 870.00
PRATT, THOMAS J................ SUPV AVIATION SAFETY K..................... 130,000 3,728.56
INSPECTOR.
PUGH, DENNIS W................. AIR TRAFFIC CONTROL GH.................... 83,814 12,414.60
SPEC (T).
PUNWANI, RAMESH................ ASST ADMIN FOR 01.................... 168,200 11,551.40
FINANCIAL SERVICES. 171,100 16,962.00
QUINN, GLENN P................. AIR TRAFFIC CONTROL KH.................... 127,032 23,860.08
SPEC (T).
RABINOWITZ, BRIAN R............ AIR TRAFFIC CONTROL GH.................... 49,145 2,402.18
SPEC.
RAWLINGS, KEVIN S.............. AIR TRAFFIC CONTROL HH.................... 94,798 16,090.15
SPEC (T).
RAY, MARK A.................... AIR TRAFFIC CONTROL LH.................... 137,237 20,343.60
SPEC (C).
REGRUTO, SANDRA G.............. AIR TRAFFIC CONTROL FH.................... 81,884 12,531.12
SPEC (T).
REINERT, KURT A................ AIR TRAFFIC CONTROL FH.................... 84,643 14,089.09
SPEC (T).
RHEA, RODNEY R................. AIR TRAFFIC CONTROL GH.................... 83,814 14,232.48
SPEC.
RITMAN, ALLISON W.............. MANAGING DIR OF FINC 02.................... 135,933 755.92
RPTNG & CONTROLS.
RITMILLER, JOHN M.............. AIR TRAFFIC CONTROL LH.................... 129,524 1,833.60
SPEC (C).
RIXEY, WILLIAM S............... AIR TRAFFIC CONTROL GC.................... 33,700 147.12
SPEC. GG.................... 44,500 1,748.16
AIR TRAFFIC CONTROL GC.................... 33,700 147.12
SPEC (T).
AIR TRAFFIC CONTROL GG.................... 44,500 194.24
SPECIALIST.
ROESKE, DAVID W................ AIR TRAFFIC CONTROL LH.................... 126,402 19,792.56
SPEC (C).
ROY, KIM A..................... AIR TRAFFIC CONTROL KH.................... 127,032 23,860.09
SPEC (T).
RUBIN, BARRY E................. AIR TRAFFIC CONTROL JH.................... 104,612 4,451.46
SPEC (C).
RUIZ, DAVID R.................. AIR TRAFFIC CONTROL LH.................... 129,524 18,502.42
SPEC (T).
SACKETT, GREGORY A............. SUPV AIR TRAFFIC KJ.................... 154,712 17,815.20
CONTROL S. KK.................... 160,900 508.86
SUPV AIR TRAFFIC KJ.................... 148,050 3,372.18
CONTROL SPEC. KK.................... 160,900 2,544.30
SANOCKI, MICHAEL H............. AIR TRAFFIC CONTROL LH.................... 130,011 18,460.14
SPEC (T).
SCAVILLA, JASON R.............. AIR TRAFFIC CONTROL GH.................... 49,373 2,586.24
SPEC (.
SCOTT, ROBERT E................ AIR TRAFFIC CONTROL LH.................... 109,000 2,701.44
SPEC (C). 110,800 16,128.96
SEACAT, GARY D................. AIR TRAFFIC CONTROL HH.................... 92,617 16,041.54
SPEC (T).
SECIA, PAULA E................. AVIATION ASSISTANT.... E..................... 35,687 1,869.12
SICKLES, STEPHAN J............. AIR TRAFFIC CONTROL LH.................... 133,122 19,797.72
SPEC (T).
SLOSEK, CARRIE A............... AIR TRAFFIC CONTROL GH.................... 67,342 3,527.04
SPEC.
SMITH, TERRY R................. AIR TRAFFIC CONTROL LH.................... 122,329 22,840.98
SPEC (T).
SNYDER, FREDERICK J., JR....... AIR TRAFFIC CONTROL KH.................... 125,568 23,647.86
SPEC (C).
SNYDER, THOMAS G............... AIR TRAFFIC CONTROL GH.................... 83,814 14,234.16
SPEC.
STANKOWICZ, JOSEPH M........... AIR TRAFFIC CONTROL LH.................... 133,625 20,337.74
SPEC (C).
STAROS, JOHN D................. SUPV AIR TRAFFIC LJ.................... 128,572 3,186.54
CONTROL SPEC (T). 134,357 18,898.92
STEINBERG, FREDERICK W......... AIR TRAFFIC CONTROL GH.................... 84,550 14,271.84
SPEC (T).
STEINWEDEL, ROBERT P........... AIR TRAFFIC CONTROL KH.................... 120,165 18,441.12
SPEC.
STRONG, ROBERT L............... AIR TRAFFIC CONTROL JH.................... 125,568 22,650.24
SPEC.
STYER, MICHAEL J............... AIR TRAFFIC CONTROL LH.................... 129,524 10,254.72
SPEC.
SUTPHEN, SCOTT S............... AIR TRAFFIC CONTROL HH.................... 89,675 3,815.76
SPEC (T).
SWITCH, JAY M.................. AIR TRAFFIC CONTROL KH.................... 120,165 20,400.90
SPEC.
TIGHE, GRACE................... AIR TRAFFIC CONTROL GH.................... 93,531 13,122.96
SPEC (T).
TOOREN, JUERGEN G.............. SUPV FOREIGN AFFAIRS L..................... 150,327 10,828.48
SPECIALIST.
TOPHAM, PATRICK M.............. SUPV AIR TRAFFIC GL.................... 98,746 5,171.52
CONTROL SPEC.
TOTH, DANIEL A................. AIR TRAFFIC CONTROL LH.................... 126,402 20,249.70
SPEC (C).
VANDERWEEL, PETER J............ AIR TRAFFIC CONTROL IH.................... 116,303 18,615.54
SPEC (T).
VELLA, ANTHONY C............... AIR TRAFFIC CONTROL LH.................... 129,524 18,712.56
SPEC (T).
VERONICO, JAMES N.............. AIR TRAFFIC CONTROL LH.................... 130,011 17,982.62
SPEC (T).
WACHTER, MARK V................ AIR TRAFFIC CONTROL GG.................... 48,100 2,519.04
SPEC.
WALSH, STEPHEN G............... AIR TRAFFIC CONTROL GH.................... 88,474 15,028.93
SPEC.
WAWRZYNSKI, DAVID B............ AIR TRAFFIC CONTROL LH.................... 125,928 21,808.38
SPEC (T).
WAZOWICZ, PAUL J............... AIR TRAFFIC CONTROL LH.................... 130,011 18,003.53
SPEC (T).
WEBER, GLENN M................. AIR TRAFFIC CONTROL GH.................... 83,814 1,097.52
SPEC (T).
WHEELER, DAVID A............... AIR TRAFFIC CONTROL KH.................... 127,941 20,052.10
SPEC (T).
WHITE, LARRY D................. AIR TRAFFIC CONTROL HH.................... 92,617 14,823.42
SPEC (T).
WHITMAN, STEPHEN S............. AIR TRAFFIC CONTROL LH.................... 137,237 20,343.60
SPEC (C).
WIEGMANN, DARRYL L............. AIR TRAFFIC CONTROL LH.................... 143,599 23,899.93
SPEC (T).
WILKS, RANDY O................. AIR TRAFFIC CONTROL KH.................... 123,598 2,427.48
SPEC.
WILLENBRINK, WAYNE C........... AIR TRAFFIC CONTROL GH.................... 93,531 13,119.24
SPEC (T).
WILLETT, ANTHONY J............. PROGRAM MANAGER....... K..................... 130,000 6,746.88
132,200 14,972.11
WILLIAMS, CLIFFORD J........... AIRWAY TRANSPORTATION H..................... 63,226 1,728.23
SYS SPEC. 65,692 5,160.98
WILLIAMS, HAROLD F., III....... AIRWAY TRANSPORTATION H..................... 81,770 2,234.75
SYS SPEC. 85,646 6,729.16
WISHOWSKI, DONALD A............ AIR TRAFFIC CONTROL LH.................... 140,842 18,042.66
SPEC (C).
WITTMAN, MARK A................ AIR TRAFFIC CONTROL JH.................... 122,080 19,881.80
SPEC.
WOLVIN, MICHAEL S.............. AIR TRAFFIC CONTROL HH.................... 100,334 15,397.08
SPEC (T).
WYNKOOP, DOUGLAS J............. AIR TRAFFIC CONTROL LH.................... 123,598 19,951.20
SPEC (T).
ZAROBA, PAUL B................. AIR TRAFFIC CONTROL LH.................... 129,524 20,004.30
SPEC (T).
----------------------------
Fiscal Year 2009 Total....... ...................... ...................... ........... 2,998,201.46
============================
Fiscal Year 2010:
ALLEGRINI, KEVIN J............. AIR TRAFFIC CONTROL GH.................... 68,424 2,090.48
SPEC. 70,477 2,467.20
ALLSOP, KEVIN L................ AIR TRAFFIC CONTROL FH.................... 93,531 10,408.26
SPEC (T).
BINNER, ROGER A................ AIR TRAFFIC CONTROL LH.................... 140,319 3,476.34
SPEC. 145,974 4,132.80
BLACK, NELSON K................ AIR TRAFFIC CONTROL FH.................... 74,705 1,711.92
SPEC (T).
77,715 2,040.48
BLINK, CHARLES L............... AIR TRAFFIC CONTROL HH.................... 92,235 9,041.74
SPEC (T).
BLITTERSDORF, JEFFREY E........ AIR TRAFFIC CONTROL GH.................... 83,814 1,920.66
SPEC. 87,191 2,289.12
BORO, THOMAS R................. HUMAN RESOURCES J..................... 110,800 7,552.80
SPECIALIST (ER/LR). 114,100 10,435.21
MANAGER, LABOR & J..................... 110,800 1,258.80
EMPLOYEE REL BRACH.
BRANNIGAN, TIMOTHY W........... AIR TRAFFIC CONTROL GH.................... 67,342 2,057.44
SPEC. 69,362 2,428.16
BROMLEY, DANA L................ AIR TRAFFIC CONTROL GH.................... 79,154 1,813.56
SPEC. 82,344 9,179.40
BRYAN, JEFFREY L............... AIR TRAFFIC CONTROL IH.................... 104,966 2,405.34
SPEC. 109,196 11,143.44
CARGIULO, LUIS P., JR.......... HUMAN RESOURCES I..................... 84,626 6,809.60
SPECIALIST. 86,742 8,024.00
CERAMI, JOSEPH S............... AIR TRAFFIC CONTROL LH.................... 130,011 464.62
SPEC (C).
CHAMBERLIN, MARK J............. AIR TRAFFIC CONTROL GH.................... 86,141 1,974.00
SPEC (T). 89,612 2,352.96
CHIASSON, MICHAEL P............ SUPV AIR TRAFFIC IJ.................... 118,893 2,724.12
CONTROL SPEC. 121,865 3,199.68
CLEAVER, MICHAEL D............. SUPV AIR TRAFFIC KJ.................... 147,376 3,376.80
CONTROL SPEC. 151,944 3,989.28
CONDLEY, GARY R................ FAA ACADEMY 02.................... 146,505 8,014.00
SUPERINTENDENT.
DUTTON, RANDELL L.............. AIR TRAFFIC CONTROL IH.................... 114,201 2,616.60
SPEC. 118,803 12,967.44
FLEMMING, JOHNNIE M............ DIRECTOR OF HUMAN K..................... 132,200 2,884.80
RESOURCES. 136,200 11,920.00
FRAWLEY, EDWARD J.............. SUPV AIR TRAFFIC LJ.................... 166,959 3,562.02
CONTROL SPEC. 171,133 4,132.80
GIBBS, BRENDA E................ AIR TRAFFIC CONTROL KH.................... 120,165 2,753.52
SPEC. 125,008 3,282.24
GOSS, NORBERT L., JR........... AIR TRAFFIC CONTROL GH.................... 74,501 8,291.10
SPEC (T).
GREEN, JEFFREY S............... AIR TRAFFIC CONTROL EH.................... 65,107 178.49
SPECIALIST (T).
GRIEST, DIANE L................ SUPV AIR TRAFFIC LJ.................... 166,747 15,580.07
CONTROL SPEC.
GROFF, BRYAN W................. AIR TRAFFIC CONTROL LH.................... 133,122 3,297.84
SPEC (C). 138,487 3,956.64
HABER, SELIM................... GENERAL ENGINEER...... K..................... 132,200 2,269.68
HARDIMAN, MATTHEW J............ AIR TRAFFIC CONTROL GH.................... 67,342 2,057.44
SPEC. 69,362 2,428.16
HAYNES, DARRYL A............... AIR TRAFFIC CONTROL JH.................... 130,974 3,190.74
SPEC. 136,252 3,817.44
HEINTZ, ROBERT B............... AIR TRAFFIC CONTROL GH.................... 68,970 2,107.28
SPEC. 71,039 2,487.04
HOLDGATE, FREDERICK I.......... AIR TRAFFIC CONTROL GH.................... 85,520 2,612.96
SPEC. 88,086 3,083.52
HOLLAND, JEFFERY K............. AIR TRAFFIC CONTROL IH.................... 104,966 2,405.34
SPEC. 109,196 11,889.73
IMUNDO, RICO F................. SUPV TRAFFIC MANGEMENT JJ.................... 124,448 15,107.41
COORDINA- TOR.
JEANES, JOSEPH A............... AIR TRAFFIC CONTROL IH.................... 116,303 761.40
SPEC (T).
JEFF-CARTIER, JOLAINA.......... HUMAN RESOURCES J..................... 87,349 2,071.29
SPECIALIST (LR).
KELLY, THOMAS C................ SUPV AIR TRAFFIC LJ.................... 164,740 920.02
CONTROL SPEC. LK.................... 164,740 14,260.30
KRAKOWSKI, HENRY P............. CHIEF OPERATING 1A.................... 211,000 15,007.52
OFFICER.
LAMBERT, DAWN E................ SUPV AIR TRAFFIC LJ.................... 132,494 3,282.30
CONTROL SPEC. 136,601 2,000.23
LESTER, CRAIG S................ AIR TRAFFIC CONTROL FH.................... 90,802 2,080.68
SPEC (T). 94,461 2,480.16
LEWIS, TIMOTHY R............... AIR TRAFFIC CONTROL KH.................... 123,598 2,832.06
SPEC. 128,579 13,120.57
MANCHESTER, RICHARD D.......... AIR TRAFFIC CONTROL GH.................... 68,424 2,090.48
SPEC. 70,477 2,467.20
MCKEE, STEVEN W................ HUMAN RESOURCES I..................... 93,300 9,156.00
SPECIALIST.
MICHAEL, GLENN W............... CAST OUTREACH PROGRAM K..................... 132,200 4,353.72
MGR. 136,200 2,580.32
MOORE, DIANNA H................ MANAGEMENT AND PROGRAM I..................... 63,698 4,052.16
ANA. 66,437 3,645.12
NELSON, MATTHEW F.............. AIR TRAFFIC CONTROL JH.................... 114,418 2,621.64
SPEC (T). 119,030 11,771.53
NICHOLAS, ROBERT M............. AIR TRAFFIC CONTROL LH.................... 133,625 464.75
SPEC (C).
OSEKOWSKI, CRAIG P............. SUPV AIR TRAFFIC KJ.................... 153,072 501.06
CONTROL SPEC.
OTERO, CARLOS V................ SUPV AIR TRAFFIC GJ.................... 95,385 2,914.24
CONTROL SPEC. 98,342 3,442.56
PARDEE, JAY J.................. DIR, OFF OF ACCIDENT 02.................... 162,695 7,232.40
INVEST & PREV.
RABINOWITZ, BRIAN R............ AIR TRAFFIC CONTROL GH.................... 49,145 1,257.39
SPEC. 52,469 915.53
LH................... 68,496 338.00
RAWLINGS, KEVIN S.............. AIR TRAFFIC CONTROL HH.................... 94,798 2,172.24
SPEC (T). 98,618 2,589.12
REINERT, KURT A................ AIR TRAFFIC CONTROL FH.................... 84,643 1,939.56
SPEC (T). 88,054 2,312.16
RHEA, RODNEY R................. AIR TRAFFIC CONTROL GH.................... 83,814 1,920.66
SPEC. 87,191 2,289.12
RITMILLER, JOHN M.............. AIR TRAFFIC CONTROL LH.................... 129,524 3,208.80
SPEC (C). 134,744 3,849.60
RIXEY, WILLIAM S............... AIR TRAFFIC CONTROL GH.................... 48,100 1,469.44
SPECIALIST. 52,469 1,836.80
RUBIN, BARRY E................. AIR TRAFFIC CONTROL JH.................... 104,612 2,396.94
SPEC (C). 108,828 11,134.56
SACKETT, GREGORY A............. SUPV AIR TRAFFIC KJ.................... 154,712 3,545.22
CONTROL S. 161,365 4,132.80
SANOCKI, MICHAEL H............. AIR TRAFFIC CONTROL LH.................... 130,011 465.24
SPEC (T).
SCAVILLA, JASON R.............. AIR TRAFFIC CONTROL GH.................... 49,373 1,508.64
SPEC (. 52,469 1,836.80
SCHMITT, RICHARD A............. SATCS, OPERATIONS GJ.................... 85,247 1,678.68
SUPERVISOR.
SECIA, PAULA E................. AVIATION ASSISTANT.... E..................... 35,687 1,090.32
36,793 1,288.32
SLOSEK, CARRIE A............... AIR TRAFFIC CONTROL GH.................... 67,342 2,057.44
SPEC. 69,362 2,428.16
SNYDER, THOMAS G............... AIR TRAFFIC CONTROL GH.................... 83,814 1,920.66
SPEC. 87,191 2,289.12
STANKOWICZ, JOSEPH M........... AIR TRAFFIC CONTROL LH.................... 133,625 464.75
SPEC (C).
STYER, MICHAEL J............... AIR TRAFFIC CONTROL LH.................... 129,524 12,934.56
SPEC.
SUTPHEN, SCOTT S............... AIR TRAFFIC CONTROL HH.................... 89,675 2,054.64
SPEC (T). 93,289 10,156.92
SWITCH, JAY M.................. AIR TRAFFIC CONTROL KH.................... 120,165 2,753.52
SPEC. 125,008 3,282.24
TOOREN, JUERGEN G.............. SUPV FOREIGN AFFAIRS L..................... 150,327 3,989.44
SPECIALIST.
TOPHAM, PATRICK M.............. SUPV AIR TRAFFIC GL.................... 98,746 3,016.72
CONTROL SPEC. 101,807 3,118.64
VERONICO, JAMES N.............. AIR TRAFFIC CONTROL LH.................... 130,011 464.62
SPEC (T).
WACHTER, MARK V................ AIR TRAFFIC CONTROL GG.................... 48,100 1,469.44
SPEC. 49,543 1,734.40
WALSH, STEPHEN G............... AIR TRAFFIC CONTROL GH.................... 88,474 2,027.34
SPEC. 92,039 2,416.80
WAZOWICZ, PAUL J............... AIR TRAFFIC CONTROL LH.................... 130,011 20.24
SPEC (T).
WEBER, GLENN M................. AIR TRAFFIC CONTROL GH.................... 83,814 1,920.66
SPEC (T). 87,191 2,289.12
WICKS, EDWIN D................. HUMAN RESOURCES I..................... 93,300 7,518.40
SPECIALIST.
WIETHORN, MICHAEL R............ AIR TRAFFIC CONTROL KH.................... 113,300 385.26
SPEC. 117,866 3,213.60
WILKS, RANDY O................. AIR TRAFFIC CONTROL KH.................... 123,598 2,832.06
SPEC. 128,579 3,375.84
WILLIAMS, CLIFFORD J........... AIRWAY TRANSPORTATION H..................... 65,692 2,007.04
SYS SPEC. 67,334 2,357.12
WILLIAMS, HAROLD F., III....... AIRWAY TRANSPORTATION H..................... 85,646 2,616.88
SYS SPEC. 87,787 3,073.28
----------------------------
Fiscal Year 2010 Total....... ...................... ...................... ........... 519,137.07
----------------------------------------------------------------------------------------------------------------
Question. Other than FAA, do any other offices within DOT provide
retention bonuses? If so, under what circumstances and restrictions?
Answer. Yes. The following agencies have provided retention
bonuses: FHWA, NHTSA, FRA, PHMSA, SLSDC, OST, RITA, OIG, and STB.
The Department of Transportation follows the guidelines in DPM 575-
1, Payment of Recruitment and Relocation Bonuses and Retention
Allowances. Retention incentives are used to retain current employees
with unique competencies that are critical to the Department's mission.
In most cases, retention incentives are used to keep individuals who
are eligible for and who have indicated they will be retiring. However,
they may also be used to retain staff with unique and very marketable
competencies who could otherwise earn a higher salary in the private
sector.
Question. The budget includes $24 million and 100 positions to
establish a new Rail Transit Safety Oversight Program. This proposal
follows on the heels of rail transit accidents in Boston, Los Angeles,
San Francisco, and Washington, DC and supports the legislation the
administration transmitted to Congress in December.
In the meantime, however, what can FTA do within its current
authority to ensure transit systems are safe, without new legislation,
be it through training, technical assistance or other efforts?
Answer. Even without authorization legislation in place, FTA could
still take important steps to stand up its safety program if Congress
provides the necessary funds, including:
--Hiring new program staff (as opposed to field safety inspectors)
with special expertise in areas of safety, engineering, and
behavioral experts.
--Undertaking research and demonstration projects in the area of
transit safety.
Moreover, FTA currently is taking steps to strengthen State Safety
Oversight Agencies (SSOAs). FTA provides stakeholder outreach
(informational exchanges, best practices, lessons learned, program
guidance) through a variety of efforts, including:
--Two State Safety Oversight workshops per year including one for
SSOAs and one for both SSOAs and Rail Transit Agencies.
--Two Safety & Security Roundtables per year co-sponsored by TSA and
attended by safety and security officials from the largest 50
transit agencies.
--FTA's Safety and Security Web site, which contains resource
documents, program guidance, training course listings.
--``Dear Colleague'' letters issued to industry stakeholders about
best practices.
Question. Please explain the need for Federal regulation and
oversight of rail transit safety. What information does FTA have on the
current performance of the State Safety Oversight Agencies in
overseeing safety on rail transit systems, including their safety
standards, level of oversight, and ability to enforce compliance? What
kind of enforcement actions would FTA be able to take?
Answer. Concerning the need for Federal regulation and oversight,
FTA does not have regulatory authority or the resources to oversee
safety performance of transit agencies. This responsibility currently
resides at the State and local levels. Without field verification
audits, FTA cannot confirm that (1) rail transit agencies have adopted
the appropriate safety standards for track, vehicles, signals and train
control, operating practices, and electrification systems and (2) that
the adopted standards are being implemented. Nor do we have the
authority to require States and rail transit agencies to address
critical safety issues, such as fatigue (hours of service), medical
qualification (to include sleep apnea and other sleep disorders),
incorporation of automatic systems and technology into track
inspection, and information management systems to enhance communication
between and across operating and maintenance departments regarding the
reporting and analysis of safety hazards and concerns.
In December 2009, FTA transmitted to Congress authorization
legislation that would expand FTA's responsibilities to help ensure the
safety of the Nation's transit systems. The legislation would allow FTA
to create an oversight program focused on transit safety, with the
ability to develop safety regulatory standards and with increased
enforcement authority. We urge Congress to take up this important
legislation as soon as possible.
Regarding State safety oversight (SSO) agencies, FTA obtains
information on the requirements, activities, and performance of the SSO
agencies and the rail transit agencies from several sources including:
--The SSO Initial Submission.--Made prior to entering the program.
FTA uses a checklist to review the initial submission and
corresponds with the SSO agency until all open issues are
resolved. At the current time, all 27 SSO agencies have Program
Standards that have passed the basic initial submission review
and approval process.
--The SSO Annual Submission.--Made to FTA by March 15 of each year.
This report includes information on the personnel devoted to
implementing the SSO program, the training received that year
by personnel, the use of contractors to support the State's SSO
program, as well as the accidents that were investigated at the
rail transit agency.
--SSO 3-Year Reviews.--Each State also submits any 3-year reviews
completed at the rail transit agencies in its jurisdiction. FTA
uses this information to develop its Rail Transit Safety
Statistics Report and to track the level of effort expended by
each State to meet 49 CFR part 659 requirements. Three-year
review reports also provide valuable snapshots of the rail
transit agencies and their activities to implement their System
Safety Program Plans.
--Periodic Submission.--FTA has the authority to collect information
from the State safety oversight agencies periodically to
address special requests. Working with the States, FTA collects
information on specific rail transit agency issues in response
to publicly submitted complaints. For example, FTA has used
this authority to investigate complaints involving rail transit
agencies in Atlanta, Detroit and Memphis. In addition, FTA
works with the States to get information from rail transit
agencies in special studies, such as on fatigue management,
track inspection, on-site reviews and audits, or managing
safety in extensions and major capital projects.
--Audit Program.--FTA audits each State no less than once every 3
years. As part of the audit process, FTA requests an extensive
list of materials that the State collects from the rail transit
agency, including the rail transit agency System Safety Program
Plan, hazard tracking log, all accident investigations
completed in the last year prior to the audit, all internal
audit reports, and any special studies or investigations
performed by the rail transit agency or the State. Each audit
report provides an in-depth look at how each State is
implementing 49 CFR part 659. As appropriate, in certain cases,
FTA can also make determinations regarding how well the rail
transit agency is performing specific safety functions, such as
internal auditing, hazard identification and analysis, accident
investigation and corrective action management. FTA does not,
however, conduct independent inspections to verify that track,
vehicles, and equipment are being operated and maintained
within specified standards. Nor does FTA review or approve any
standards adopted by the rail transit agency.
--National Transit Database.--FTA compares the accidents and safety
information being reported by the rail transit agencies to the
Safety and Security Reporting Module of the national Transit
Database with the information being reported to the States to
ensure that States are notified of the accidents they should be
notified of and that information is reported accurately to the
NTD.
Collectively, information received from these sources provides FTA
with a reasonable picture regarding the level of staffing, expertise,
training and activity being performed to carry out safety functions in
the States and the rail transit agencies. Further, we have a strong
analytic handle on the types and frequency of accidents occurring in
the rail transit industry, their causes and the typical actions being
taken to prevent recurrence. It is the information culled from these
sources that has contributed to the administration's conclusion that
the status quo is inadequate and is in dire need of reform.
Question. FTA has requested $30 million in fiscal year 2011 for
this new program. What does FTA project this program will cost in
subsequent years and how does it plan to use these funds?
Answer. As you know, the fiscal year 2011 budget includes $30
million and 130 FTE to support policies and activities included in the
administration's transit safety legislation, the ``Public
Transportation Safety Program Act of 2009'' transmitted to Congress on
December 7, 2009. We believe these resources will enable FTA to
institute an effective regulatory system for the rail transit industry.
Looking ahead, we will assess any potential additional resource
requirements as part of the fiscal year 2012 budget.
Question. What is FTA doing to help the Washington Metropolitan
Area Transit Authority get back on track in terms of safety? Do you
believe the Tri-State Oversight Committee as currently organized, can
provide appropriate oversight of WMATA?
Answer. FTA's greatest contribution has been the audit we recently
conducted in December 2009 of both Tri-State Oversight Committee (TOC)
and WMATA. This audit enabled us to identify priority actions to
support both agencies in strengthening their safety programs. TOC and
WMATA recently submitted their initial plans for addressing the audit
findings and we believe positive steps are being taken as a result of
our action. Moving forward, FTA has planned quarterly meetings on-site
with WMATA and TOC to review their progress in addressing and closing
our audit findings.
In terms of technical assistance, through the Transportation Safety
Institute (TSI) FTA has provided safety training, including training on
internal auditing and hazard management on site at WMATA in late 2009.
We are currently working with WMATA to schedule additional training
deliveries for their employees in the next few months including the
following courses.
--Instructors Course for Rail Trainers
--Current Trends in Transit Rail System Safety
--Transit System Security
--Effectively Managing Transit Emergencies
--Transit Rail Incident Investigation
--Transit Rail System Safety.
In June, FTA is bringing a new Track Inspection Refresher Training
Workshop to WMATA with three offerings. This 2-day workshop is designed
to reinforce critical skills and safety practices of employees in
WMATA's track inspection program.
FTA has also participated with WMATA, TOC and the Federal Railroad
Administration (FRA) in supporting WMATA's Roadway Worker Protection
Working Group to overhaul and improve WMATA's existing rules and
procedures for protecting workers on the right of way.
In terms of funding, the Passenger Rail Improvement Act of 2008
authorized a special appropriation for WMATA of $150 million per year.
Congress appropriated as much in fiscal year 2010 and FTA requested
funding for fiscal year 2011. Under this program, the Secretary will
use his authority to approve grants to ensure that available funds
first address WMATA's most critical safety needs. Maintenance and
repair needs are also addressed through formula grants funded from both
the Urbanized Area and the Fixed Guideway Modernization programs. These
grants are in addition to the $150 million appropriation.
Regarding the Tri-State Oversight Committee's oversight, we
recognize that the current three jurisdiction committee organization
presents challenges to the TOC in effectively carrying out its
important safety oversight mission. It has suffered from inadequate
resources, lack of authority and lack of permanent technical staff.
The Obama administration's Public Transportation Safety Act of 2009
that was submitted to Congress this past December will address these
and other shortcomings of the current SSO framework on a National
basis.
As far as TOC's current status, we appreciate that the Commonwealth
of Virginia, the State of Maryland, and the District of Columbia have
come together to address some of the challenges TOC confronts with its
current legal and organizational structure. In response to an FTA
finding from the December audit, TOC jurisdictions have created a TOC
Executive Committee. This committee recently had its first meeting, and
took action with both the WMATA Interim General Manager and the WMATA
Board to request monthly safety reporting and to ensure that WMATA
follows its hazard reporting and accident notification thresholds.
These are good first steps.
In addition, Virginia Governor Bob McDonnell, Maryland Governor
Martin O'Malley and Washington, DC Mayor Adrian Fenty recently released
a white paper documenting their proposal for enhancing TOC's existing
authority and resources. Phase 2 of this plan calls on the
jurisdictions to create a distinct legal entity--the Metro Safety
Commission--that would have additional authorities beyond the existing
program.
The best long term solution to the problems faced by TOC and the 26
other SSO agencies around the Nation are for Congress to take prompt
action on the Obama administration's safety reform proposal.
Question. In January, the Department announced it will now consider
other important factors in addition to reduced commuting time when
evaluating new transit projects. Cutting commuting times is clearly
important, but this change signals a more holistic approach that
considers the impact on congestion, the environment, and local
economies. All contribute to making the places we live and work more
vibrant and sustainable.
When will the draft rule to be made public?
Answer. FTA published an Advance Notice of Proposed Rulemaking
(ANPRM) in the Federal Register on Thursday, June 3, 2010, asking for
public comment on how to change the way major transit project proposals
seeking Federal funding are rated and evaluated.
Question. How will this change affect the importance of cost
effectiveness when the Department considers future transit projects?
Answer. Cost-effectiveness will continue to be evaluated as one of
the six statutory project justification criteria, but will not be the
only consideration in making funding recommendations. Through a
rulemaking, FTA will develop measures for better capturing the
environmental, community and economic development benefits provided by
transit projects, including a revised cost effectiveness measure that
will recognize these benefits. This Advance Notice of Proposed
Rulemaking (ANPRN) will invite feedback on what benefits should be
included in the evaluation process and issues related to baseline
alternatives, travel demand modeling, and New Starts and Small Starts
streamlining. The New Starts and Small Starts projects funded in the
fiscal year 2011 budget were selected using the current project rating
criteria. The earliest any revised rating criteria could be utilized
would be for the fiscal year 2013 budget.
Question. What is the Department's opinion on allowing transit
agencies discretion to use transit assistance funding for operating
costs during these difficult economic times?
Answer. Secretary LaHood has stated that DOT will work with Members
of the House and Senate this year to see if we can allow transit
agencies more flexibility to use a portion of their Federal funds to
cover operating costs during these tough economic times. However, he
has also stated that this cannot be open-ended, and that such
assistance would be temporary, not the normal course of business.
Question. What is the estimated capital needs backlog of transit
systems?
Answer. There is no one single estimate or a simple method to
determine the capital backlog needs of the Nation's transit systems.
That said, we know that transit agencies in general are facing
significant funding shortfalls. For example, an April 2009 FTA report
to Congress identified a $50 billion repair and replacement backlog at
the seven largest rail transit agencies in the country. Moreover, when
you expand the universe from the 7 largest rail operators to 690
separate rail and bus systems, the estimated funding shortfall to bring
the entire transit system in a state of good repair grows from $50
billion to $78 billion.
FTA is proposing to merge its Bus and Bus Facilities and Fixed
Guideway Modernization programs into a new $2.9 billion Bus and Rail
State of Good Repair program to better address the tens of billions of
dollars in rail and bus transit assets that are in marginal or poor
condition. The funding request represents an 8 percent increase above
the equivalent 2010 appropriation, which is significantly more than is
proposed for most other FTA programs--all in a budget that increases
funding for the FTA by just 1 percent.
Question. Transit rail passenger cars purchased across the United
States are relatively unique. A few cars can be used on different
systems, for example, Virginia Railway Express (VRE) can use Chicago
Metra commuter cars, but many others are designed specifically for
their systems' infrastructure and preferences. This uniqueness may
increase the costs to procure transit rail cars as it results in
smaller orders, sometimes limiting the economies of scale that could be
obtained from larger orders.
Has FTA considered supporting efforts to increase standardization
in rail cars or new systems, to help keep the cost of transit rail cars
down? Why or why not? Might this also have safety benefits?
Answer. FTA is supporting the efforts of the American Public
Transportation Association (APTA) in developing consensus standards for
the North American rolling stock industry. APTA, as a Standards
Development Organization (SDO), has developed standards for commuter
rail cars, light rail vehicles, buses, and other rolling stock funded
in part by FTA. While FTA encourages the use of these standards by our
grantees we do not have regulatory authority to require their use.
FTA's financial assistance has also enabled APTA to support
development of rail car crashworthiness standards by another SDO--the
American Society of Mechanical Engineers.
Conceivably standardization in rail cars and new systems, such as
improved crashworthiness standards and crash avoidance systems, will
have safety benefits, but there may be additional costs associated with
achieving standardization, at least initially.
FTA is statutorily prohibited from directly establishing transit
vehicle standards. As a result, FTA has been unable to implement
recommendations from the National Transportation Safety Board related
to transit vehicle crashworthiness, event recorders and other vehicle
safety features. As a result of this limited authority to improve
safety, Secretary LaHood delivered the Obama administration's
legislative proposal entitled the Public Transportation Safety Act of
2009 to the Congress this past December. We take this opportunity to
urge Congress to take prompt action on this proposal.
Question. Has FTA taken steps to support transit agencies' efforts
through joint procurement, etc? If so, what are some examples of these
steps?
Answer. Yes, in addition to supporting the APTA standards
development efforts, FTA has conducted research into joint vehicle
procurements and procurement incentive systems for our section 5307 and
5311 Formula Grants. Specification standardization and joint vehicle
procurements have been promoted by FTA on a limited basis with mixed
results.
FTA recently completed a study for Congress that included an FTA
concept for a shared procurement for FTA funded rolling stock. See
FTA's Report to Congress on the Results of the Cooperative Procurement
Pilot Program at: http://www.fta.dot.gov/publications/
publications_11548.html.
Based on the results of the five completed final projects, FTA
found the following:
--The additional Federal share allowed in the pilot program did not
sufficiently induce greater use of pooled procurement;
--Savings from cooperative procurement are more likely to be realized
by agencies purchasing a small number of vehicles. Agencies
already purchasing a significant number of vehicles are less
likely to achieve savings through additional economies of
scale; and
--Difficulties in forming consortiums, the administrative burden
placed on lead agencies and the reluctance of the other
participating agencies to relinquish control over the process
to the lead agencies pose considerable obstacles to the use of
cooperative procurements.
In an August 2008 study, FTA addressed joint vehicle procurements
in its Report to Congress on Incentives in Federal Transit Formula
Grant Programs, http://www.fta.dot.gov/publications/
publications_8674.html.
Some of the findings from this report were the following:
--Barriers and difficulties that contributed to the limited
implementation of these procurement systems include:
--Transit Culture.--``Agencies Believe They Are Unique . . . The
agencies are justifiably proud of their corporate cultures
and heritage, and their pride may have many positive
effects. However, if the industry is to realize the full
benefits of standards, the systems must weigh their
traditions against the benefits of standards and make the
collective effort that is necessary to settle on safety
standards and adhere to economical design standards.''
--Joint procurements involve significant administrative efforts
because the agencies must reconcile their requirements and
practices to each other's.
--Conflicting legal issues, differing operating requirements, and
differing professional opinions must be resolved.
Question. What other options or authorities might FTA consider
seeking to reduce transit railcar costs?
Answer. As mentioned previously, FTA has focused on developing
standards and specifications to reduce the capital and operating costs
of new rail vehicles. In recent years, FTA has funded APTA's efforts to
develop technical requirements for the design and procurement of new
LRV type vehicles. APTA is responsible for coordinating and managing
this effort.
Question. On September 10, 2009, FTA issued an Advance Notice of
Proposed Rulemaking on capital project management. FTA is considering
whether to require some type of financial plan for all fixed guideway
capital projects. Further, it is considering the extent to which it
should use Project Management Oversight Contractors (PMOCs) to oversee
projects other than Major Capital Projects (those costing $100 million,
among other requirements). Finally, transit properties over time have
indicated that Federal oversight can increase the time, and thus the
cost, it takes to build a new rail transit line or extension.
How will these potential changes impact the PMOC and FMOC budgets
as well as the funds necessary to oversee PMOCs and FMOCs?
Answer. Several items included in FTA's ANPRM on capital projects
management were aimed at soliciting comments and suggestions from the
industry on how to improve overall project management of major capital
projects based on experiences to date. FTA is currently reviewing input
provided by stakeholders as it prepares the Notice of Proposed
Rulemaking, and has not determined what additional oversight, if any,
is necessary. Looking ahead, FTA will consider resource requirements
for its oversight program as it develops its fiscal year 2012 budget.
FTA oversight of public transportation systems is necessary to
safeguard the taxpayer's investment. FTA has designed its oversight
process to minimize the intrusion on grantees while protecting tax
payers' dollars. One tool that has provided tangible benefits is FTA's
risk-informed project management system, which assists grantees in
identifying costly risks at a stage of development which subsequently
allows grantees to mitigate those risks and avoid enormous costs. The
latest innovation by FTA is the incorporation of the New Starts
Engineering Workshop into our outreach program. This workshop is
designed to provide a roadmap for prospective and existing capital
project sponsors on how to prepare for FTA's project management
oversight review process. FTA believes that outreach of this kind will
assist the grantees in being better prepared to make quality submittals
and shorten the time it takes for oversight reviews.
Question. FTA is proposing that funding guidelines for major
transit projects be based on livability issues such as economic
development opportunities and environmental benefits, in addition to
cost and time saved, which are currently the primary criteria. This
would change how projects are selected to receive Federal financial
assistance in the FTA New Starts and Small Starts programs. In making
funding decisions, the FTA will now evaluate the environmental,
community and economic development benefits provided by transit
projects, as well as the congestion relief benefits from such projects.
Will the proposed changes in economic development criteria increase
the number of projects that may be eligible for New Starts or increase
the back log?
Answer. Because the New Starts program is a complex program and the
new criteria under development have not been finalized, it is not
possible to predict how potential changes to the evaluation criteria
would impact the number of projects eligible for funding in the future.
That said, the aim of making these changes is to more fully recognize
the various types of benefits that are generated by investments in
transit services and to ensure that all prospective projects receive
due consideration.
Question. How will FTA determine the value of the economic
development opportunities and community and environmental benefits when
making funding decisions?
Answer. As announced by Secretary LaHood on January 13, FTA plans
to use the rulemaking process to better capture in its evaluation and
rating process the wide range of benefits New Starts projects can
provide. On Thursday, June 3, FTA published an Advance Notice of
Proposed Rulemaking (ANPRM) in the Federal Register asking for public
comment on how to change the way major transit project proposals
seeking Federal funding are rated and evaluated.
Question. In October 2008, FTA issued a report ``Transit State of
Good Repair: Beginning the Dialogue'' highlighting the importance of
maintaining the condition of our transit and the fact that much of
existing bus and rail assets are in poor or marginal condition. The
fiscal year 2011 budget request includes $2.3 million for bus and rail
state of good repair program activities (along with decreases in fixed
guideway modernization and bus and bus facility grants).
How does FTA plan to implement this ``program'' and distribute the
funds, and how would it differ from the way funds in the existing
programs are distributed?
Answer. Under the proposed State of Good Repair program, funds
would be distributed by formula. Though the specifics of such a formula
have yet to be developed, the goal would be allocate funds to both rail
and bus transit systems by formula. FTA looks forward to working with
Congress on developing the program as Congress begins work on 2011
appropriations legislation.
Question. How will this program help rail transit agencies replace
aging transit car fleets?
Answer. One of FTA's highest priorities is to maintain our Nation's
transit assets in a state of good repair (SGR) so they can provide
safer and more efficient service. This new focus will involve
emphasizing the SGR activities in our existing programs, initiating new
activities to address unique local needs, and providing analysis
products that will help decisionmakers better understand their options
for managing the condition of their aging infrastructure. Accordingly,
for fiscal year 2011 FTA has proposed to merge its Bus and Bus
Facilities and Fixed Guideway Modernization programs into a new $2.9
billion Bus and Rail State of Good Repair program. The funding request
represents an 8 percent increase above the equivalent fiscal year 2010
appropriation, which is significantly more than is proposed for most
other FTA programs. The fiscal year 2011 budget also requests $4.61
billion for the Urbanized Area Formula Grant Program for allocation of
funds to urbanized areas (UZAs) around the Nation for maintenance and
capital investment in bus and rail systems.
We also very much appreciate that in fiscal year 2010 Congress
supported FTA using $5 million in research funding to help improve
transit asset management practices. This critical funding will fund
enhanced data collection, asset management, technical assistance, and a
pilot SGR project. Because FTA is currently exploring how transit
agencies should implement SGR practices, it has not determined whether
having an asset management plan should be a necessary criterion for
receiving Federal funds.
Question. What is known about the effects of aging infrastructure
on rail transit safety?
Answer. Rail transit is statistically among the safest modes of
transportation. A rail transit passenger is over 100 times less likely
to be killed in an accident than is an automobile passenger. That said,
FTA is aware that there is a backlog of rail transit infrastructure
maintenance and renewal. FTA's previous study of the seven largest rail
transit systems estimated a $50 billion shortfall, but did not
correlate the investment shortfall to safe operations. There is an
obvious intrinsic correlation and transit agencies must carefully
manage their operations and maintenance to keep the system safe in
spite of aging infrastructure. If done properly, this will affect
frequently service before it affects safety. For example, track
infrastructure may have more defects as it ages, but operations can
continue safely at lower speeds. Given the extent that rail transit
operators are relying on older equipment and capital stock, the need to
enact transit safety legislation is all the more urgent.
SUBCOMMITTEE RECESS
Senator Bond. Well, with no further questions, the hearing
stands--is in recess.
And March 11 at 9:30, we'll take testimony from Secretary
Donovan on the budget request for 2011 Housing and Urban
Development.
[Whereupon, at 11:16 a.m., Thursday, March 4, the
subcommittee was recessed, to reconvene at 9:30 a.m. Thursday,
March 11.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
THURSDAY, MARCH 11, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:32 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray, Leahy, and Bond.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
STATEMENT OF HON. SHAUN DONOVAN, SECRETARY
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. This subcommittee will come to order.
This morning, this subcommittee will conduct an oversight
hearing on the Department of Housing and Urban Development's
budget for fiscal year 2011. We are pleased that Secretary
Donovan is with us today to discuss his Department and his
budget.
Today, the country faces daunting challenges. Unemployment
remains high. Credit is tight. Housing stability is fragile,
and the number of homeless Americans is growing. HUD programs
respond to challenges across the spectrum of this crisis from
stabilizing the housing market to providing assistance to the
Nation's most vulnerable.
This subcommittee's job is to provide the oversight and
resources to make sure that HUD can effectively fulfill its
responsibilities. At the same time, we must also continue to
make investments that will strengthen our economy, create jobs,
and support our communities, both large and small.
Just over a year ago, we passed the American Recovery and
Reinvestment Act, making key investments in public housing,
community development, and affordable housing to help those in
need and weather the crisis. I commend HUD for getting this
funding out the door quickly. And today, we can see it making a
difference in our communities, improving housing, creating new
housing, and putting people to work.
I have seen these dollars at work in my own State. For
example, in Vancouver, Washington, a Housing Authority is using
$2.5 million in public housing capital funds to support
construction and rehabilitation of housing. The jobs created
from these projects are critical to Clark County, where
unemployment has now topped 14 percent.
In Yakima, Washington, where for years we have struggled to
provide affordable and adequate housing to local workers,
recovery funds have gone to renovation efforts that have
improved the lives of families, many with children, who live
well below the poverty line. But as this funding goes to work
and as our economy moves toward recovery, we must remain
focused on stabilizing the housing market.
As we all know, for most Americans, the family home is
their largest investment, an asset that provides them with a
roof over their heads and financial security. This security
gives Americans the confidence to spend and invest and plan for
the future.
FEDERAL HOUSING ADMINISTRATION
Stabilizing and improving the housing market is critical to
the Nation's economic recovery, and the Federal Housing
Administration has played a vital role in this effort. When the
private sector became skittish about mortgage lending and
credit froze, FHA stepped in to make sure that Americans could
still get a mortgage, and this has helped to stabilize the
market.
That is exactly what FHA was created to do. But taking on
this increased role comes with risks of its own. FHA has gone
from insuring only 2 percent of the market in 2006 to nearly 30
percent today. This dramatic increase in business requires
sufficient staff and the technical capacity to protect FHA from
risk and fraud.
Even as FHA's new business grows, it must also continue to
manage loans that were made during the height of the housing
boom. Unfortunately, FHA is not immune from the wave of
foreclosures devastating the housing market. These losses have
taken their toll on FHA's finances.
This fall, FHA's capital reserve fund fell below the
mandatory 2 percent required by Congress. While this does not
mean that FHA requires Federal relief, it is a cause for
concern.
For each of these last 3 years, Senator Bond and I have
held hearings on FHA to focus attention on the solvency of its
Mutual Mortgage Insurance Fund. The recent losses to the
capital reserve fund have now brought this issue into focus for
others for the first time. FHA must continue to seek ways to
strengthen the position of its capital reserve fund to ensure
taxpayers will not be left on the hook to pay for risky or
fraudulent mortgages.
Mr. Secretary, I commend you and FHA Commissioner Stevens
for moving swiftly to assess FHA's risks and to implement
reforms to reduce its exposure and recapitalize the reserve
fund. These changes both protect the American taxpayer and
ensure FHA can continue to provide needed liquidity in the
market.
Some of the reforms proposed require a legislative change.
One of these would allow HUD to increase annual premiums on FHA
mortgage insurance and is included as part of the budget. I
will have questions today on this change, and specifically, how
it would protect FHA from future losses.
Now, despite some positive signs in the housing market, the
crisis we face is not over. And for the more than 2.8 million
Americans facing foreclosure, positive national trends offer
little comfort. So while I am encouraged today by reports that
foreclosure filings appear be slowing, and Washington State
fell 13 percent from this time last year, there are still many
people at risk of foreclosure.
Areas in Washington State continue to experience severe
declines in home values, and nearly a quarter of a million
Washington State homeowners are underwater today. So for
families living in Clark and Pierce County, Washington, we want
to know how the Federal Government can help them hold onto
their homes and regain economic security.
Providing help isn't easy, and we don't want to reward
borrowers that took on mortgages that they could not afford.
But while so many of the early foreclosures resulted from
subprime and other exotic mortgages, many of the homeowners
today who are in trouble are those that are impacted by the
recession. These are unemployed homeowners and those who owe
more on their mortgage than the home is worth because of those
plummeting home values.
MORTGAGE MODIFICATION
Several efforts have been launched to help struggling
homeowners, including the Home Affordable Modification Program,
but servicers have been slow to provide permanent
modifications. To date, only 116,000 homeowners have received
permanent modifications, which is far short of the
administration's goal of 3 million to 4 million.
The President recently announced a new program to help five
States that have been particularly hit hard by this crisis.
While this initiative does attempt to address the problems of
unemployed and underwater borrowers, its geographic
restrictions will limit its impact on the overall market,
including other parts of the country, like Washington State's
Clark and Pierce Counties.
Your testimony today mentions other ways that we might
assist struggling homeowners. So, today, I want to discuss how
we can improve current programs and what other steps may be
taken to protect families from foreclosure.
HUD has a broad and important mission. The President's
budget requests more than $48 billion in fiscal year 2011 in
recognition of the role the Department plays in supporting
housing, especially for some of the most vulnerable in our
society.
SECTION 8 AND NEW INITIATIVES
This funding would maintain critical rental assistance to
help millions of low-income Americans who rely on section 8
vouchers or live in project-based or public housing. The
President's budget also provides funding to continue or expand
initiatives started in 2010, such as Sustainable Communities
and Choice Neighborhoods. The budget also proposes new
initiatives, including Catalytic Investment Competition Grants
and vouchers for homeless individuals and families.
The largest new proposal is the $350 million Transforming
Rental Assistance initiative. This ambitious proposal seeks to
address the capital needs of public and HUD-assisted housing.
By fundamentally changing the way this housing is funded, the
administration hopes to leverage significant private sector
resources to preserve this irreplaceable stock of affordable
housing.
However, the budget offers few details on the changes HUD
would make or in the long-term costs. While the concept may
have merit, this subcommittee does not take its
responsibilities lightly. We require more information if we are
to give the proposal serious consideration. So I want to have a
discussion about the long-term plan for this and the cost of
this initiative.
PROPOSED CUTS
Now, Mr. Secretary, among the promising reforms included in
the budget, there are several drastic cuts to important
programs you and I have talked about, including the housing for
the elderly and disabled. HUD justifies these cuts by citing
program deficiencies. If these programs aren't working
effectively, let us fix them. But the President's budget
doesn't propose any changes. Instead, it brings the programs to
a halt with a promise to just fix them later.
I am also concerned by other cuts proposed in this budget
to programs like the Native American Housing Block Grants and
the highly successful HOME program. While the President's
budget made some difficult choices in order to freeze
discretionary spending, this subcommittee may well be forced to
consider even further reductions.
The President's budget assumed receipts from FHA totaling
$5.8 billion. These receipts would offset some of the spending
included in the HUD's budget for next year. Last Friday,
Congress received the Congressional Budget Office's re-estimate
of the President's budget.
As a result of continued uncertainty about the housing
market, CBO concluded the budget would only generate $1.8
billion in offsetting FHA receipts. That means there could be
potentially a shortfall of $4 billion just to pay for the
program increases proposed in the President's budget. That is a
staggering amount, given the housing needs of this country.
This subcommittee is going to face a very difficult task to
provide resources to this Department so that it can continue
the programs that serve so many Americans across the country,
from homeless veterans, to first-time homeowners, to families
that need help accessing affordable housing. Secretary Donovan,
you have worked very hard to improve HUD's programs, and I hope
you can offer us suggestions on how to tackle the complex
housing and community development needs that are facing this
Nation with limited resources.
So thank you so much for being at this hearing today. I
look forward to your testimony in just a few minutes.
But before we have that, I want to turn it over to my
partner and ranking member, Senator Bond.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you very much, Madam Chair, and thank
you for holding the important hearing.
We are always pleased to welcome our distinguished
Secretary of Housing and Urban Development, Secretary Donovan,
who is passionate about housing and community development. He
has been working hard to remake the Department, a task that is
Herculean, to say the least. We wish him well on his efforts,
but we do have some questions, as the chair has outlined.
Now it is no surprise to anyone here that there are
significant deficit issues facing the entire Federal
Government. Making an already bad situation worse, the
Congressional Budget Office re-estimated the President's budget
would add $8.5 trillion to the national debt by 2020, with a
deficit of $1.5 billion in this fiscal year and another $1.3
billion in 2011. CBO projects the national debt will balloon to
some 90 percent of the economy by 2020, while interest payments
on the debt will soar by $800 billion over the same period.
But that is only if the interest rates stay the same. And
no one I know who is versed in finance or economics generally
will propose that interest rates will not rise significantly
when lenders see the deficit spending and the tremendous debt
we have built up. In other words, we are facing a drowning in
debt with interest rates skyrocketing and adding to an
increasingly high debt spiral.
I do not believe, as some in the administration do, that
making the Federal Government larger is the solution to fixing
our economic woes. Nevertheless, we are in an unprecedented
budget crisis, which is domestic and global in nature,
something we have never faced in my career in Government
service.
And as you know, many of the decisions we make on the
budget and appropriations will be critical to the future
economic health of the Nation. That includes finding the right
balance of spending in HUD with regard to both HUD's current
programs, as well as the dramatic new proposals contained in
the HUD 2011 budget request.
I believe a number of your HUD policy and reform
initiatives are bold and thoughtful, but I am very concerned
about the cost of these initiatives in both the 2011 budget, as
well as the potential huge cost in out-years. For the HUD
budget, this is of particular concern since we recently
received word, as the chair has noted, that there will be a
loss of some $4 billion in FHA receipts. That $4 billion hit
will make funding many of the HUD initiatives even more
difficult in 2011 and possibly limit funding for this
subcommittee's other priorities, like transportation and
infrastructure projects.
As you well know, Mr. Secretary, I have long warned about
FHA and the potential consequences to the budget of the
Department, the appropriations available for this subcommittee,
and the impact on our national economy. We need to be asking
tough questions like where is money for new programs going to
come from.
If the President is serious about promising fiscal
restraint, he has to quit treating taxpayer dollars like
Monopoly money. Our children and grandchildren are going to
have to pay in the future for every extra dollar we borrow and
spend, and that is not something I want to be able to tell
them.
PROPOSED CUTS
While HUD is proposing to create new or expand existing
programs at great cost to the taxpayer, the Department is also
proposing to eliminate or cut funding for a number of important
and proven programs that serve our most vulnerable populations
like seniors and the disabled, as had been mentioned by the
Chair, and homeless veterans, something which she and I have
led the battle to fund. And to say that we are not pleased by
the budget recommendations I would say, at least for my part,
is a huge understatement.
Cuts to these programs like section 202 elderly housing,
the 811 housing program for persons with disabilities, and the
capacity-building funding for LISC and Enterprise will make it
more difficult for low-income seniors or disabled Americans to
find safe and affordable housing.
Of all the capacity-building entities I have seen, LISC and
Enterprise seem to be the ones that are working. I think they
should be the model, and I think they should continue to have
the resources they need and not have the funds distributed over
a wider area, where they do not have the same skills and
abilities.
The HUD staff has claimed all of these programs will
receive funding once needed reforms are made. It seems much
more likely the non-profits will begin to lose their experts
during a zero funding year, a brain drain that will only get
worse if there is not a significant infusion of new funds in
the very near future. Funding in future years will likely be
marginal at best, with HUD and the administration arguing that
202 and 811 will be unneeded once the Transforming Rental
Assistance, or TRA, program is fully funded, including any
provisions targeted to the elderly and disabled.
RURAL HOUSING FUND
Also, I was disappointed to see the administration wants to
eliminate a $25 million rural housing fund, something I fought
with Senator Harkin to include for many years. This small
program offers a unique opportunity for HUD's housing and
community programs to partner with rural development at the
USDA.
It is a mistake for the administration to ignore the
housing needs in our rural communities. Everybody knows the
housing programs in the city because people see them all the
time. I live in the rural areas. I see them. I travel the rural
areas, and I know the need is great. And this budget does not
recognize it.
In addition to the dollars and cents, rural versus urban
questions, I have overall concerns about the proposal we have
received from HUD. Not to keep using a tired, old analogy, but
the proposal I received from the Department of Transportation
and the budget blueprint has left me feeling a little bit like
Bill Murray in ``Groundhog Day.''
In other words, the budget blueprint this year asks for
Congress to write a big check, fails to provide details on the
programs we are supposed to fund. I have been there. I have
seen that before. I have done that. And at least Bill Murray
got smart in ``Groundhog Day,'' and I don't see any of us
getting smarter or better as we see Groundhog Day come back
again.
TRANSFORMING RENTAL ASSISTANCE
Despite not having the proposed actual language for TRA,
HUD's 2011 budget calls for some $350 million for the program,
with projected annual costs of some $1.5 billion when fully
implemented. There is an old story, an old saw about a pig in a
poke, but I won't go into that any further.
Also before Congress is going to sign any check, we need to
see the program details. Members of Congress need to see
specific legislative language for proposed programs, and it has
to be passed. So there are some guidelines in place. You may
have good ideas. We may even like those good ideas. We may
propose them, and they may not come out on the other end of the
sausage factory.
So I, for one, have real concerns about potential
unintended consequences of the TRA that could impact low-income
families assisted under public housing or other low-income
housing programs. Broad waiver language will not do the trick
since there is a widespread risk of abuse and a great danger of
the lack of transparency.
CHOICE NEIGHBORHOODS VS. HOPE VI
Another program where I need to see some details--and
Congress and our constituents, the taxpayers, deserve answers--
is on Choice Neighborhoods. Now, we have discussed Choice
Neighborhoods many times, and you know that I would like to
claim some credit for HOPE VI. And this $250 million program is
replacing HOPE VI as the next evolution in affordable housing
and revitalizing distressed communities.
And if we can make it better, that is always good. I am
willing to do that. But in particular, Choice Neighborhoods
proposes to transfer and merge into its account for 2011 all
remaining HOPE VI funding, despite having account language that
is very broad and which has no metrics for measuring success or
for understanding the grantmaking and implementation process.
While Choice Neighborhoods appears to be a much more
ambitious program than HOPE VI, we need more information to
understand the evolution from HOPE VI to Choice Neighborhoods.
I was there at the beginning when HOPE VI was a mere idea until
it became a major program, ultimately going beyond housing and
transforming entire communities. And I personally know how
important HOPE VI has been to communities across the Nation.
Some of our great successes have been in HOPE VI. And that
is why I don't want to waste the successes of HOPE VI on Choice
Neighborhoods unless and until we see it is a truly viable
successor to HOPE VI. I want to ensure this new program is
designed and implemented in a manner that will revitalize and
grow our low-income communities beyond the greatest potential
of HOPE VI. You have assured me that that will happen. I
believe you said that in good faith, but it is time that we got
to work on the details.
FHA
In addition to specific program concerns, I remain very
concerned, as the Chair has indicated, about the future of FHA
mortgage insurance. Mr. Secretary, you inherited the FHA
problems. To your credit, you acknowledged them. You have taken
a number of important steps to address them.
Under your guidance, HUD is proposing a number of new
reforms to put FHA mutual mortgage insurance on a solid
footing. The proposed reforms include an increase to annual
premiums, as well as credit-related fix, which would allow
these borrowers with a FICO score of 580 and above to make a
3.5 percent down payment, while borrowers with a FICO score
between 500 and 580 would be required to make a minimum down
payment of 10 percent. Borrowers with FICO scores below 500
would be ineligible for FHA mortgage insurance.
It is not that we are not concerned about those people. But
before we put somebody in housing, try to get them into owning
housing we need to make sure that they can afford to pay it.
When they can't afford to pay it, when they don't have any skin
in the game, they don't have the means to make the payments and
then the American dream becomes the American nightmare. Their
communities suffer, and we have seen the tremendous hardship
and harm that a whole raft of those mortgages gone badly has
caused our entire economy and the world's economy.
While the reforms are important, the FHA still faces many
challenges. I remain concerned that FHA is a powder keg that
could explode, leaving taxpayers on the hook for yet another
bailout.
When we look at the numbers, just as recently as 2007, FHA
accounted for less than 4 percent of housing and now, as the
chair indicates, dominates the market with a share of between
30 and 60 percent, including refinances. This puts FHA smack in
the middle of the housing crisis, and I want to be sure that
FHA is dealing with it despite the obvious staffing and
expertise shortfall.
I want to know how HUD is dealing with mortgage default
litigation problems, especially in light of proposed new FHA
reforms. How will these reforms impact homeowners with a
mortgage default crisis who are seeking help from FHA? Have
mortgage defaults become primarily a Fannie Mae and Freddie Mac
problem, or is HUD proposing alternative relief?
While I expect to raise many FHA issues at a scheduled FHA
budget hearing later this month, an understanding of the
foundation of current FHA requirements now would be useful.
TRANSPARENCY FOR TAXPAYERS
The last point I make is most important, and that is
transparency for taxpayers, as we have discussed briefly. I
discussed at the hearing for the Department of Transportation,
on its budget for the coming year last week, I am still waiting
for real transparency in the current administration grantmaking
process. Congress has role and a responsibility not only in
authorizing and appropriating Federal funds, but also in
ensuring that the funds are awarded according to objective and
understandable criteria, including clear benchmarks to measure
success.
This was a particular problem for me and others when HUD
awarded some $2 billion in competitive neighborhoods
stabilization programs under the stimulus bill. I have yet to
receive, and I look forward to getting an understanding, how
HUD cherry-picked the winners. We saw a lot of--we found out
later about a lot of good projects which failed. And we want to
know how the winners were chosen.
Where is the promised transparency in the HUD grant
process? It is critical that the process be transparent, so
Congress and our constituents and those seeking the dollars
know how the taxpayer dollars are being allocated. In fact, I
think the process should be no less transparent than the
current requirements for congressional decisionmaking.
There has been a lot of criticism of Congress. We cleaned
up our act. We make it transparent. At a minimum, the criteria
and process by which grantmaking decisions are made in the
administration should be posted on the Internet for every
taxpayer, every potential applicant to see, to understand so
that community leaders and local people won't be coming to us,
saying, ``What happened? Where is it going? Why is it going
there?''
Cost shares and leveraging of funds also should be made
available. Information should be on the Internet so they and we
have access to information about other sources of Federal,
State, or private funds that may be used to augment grant
awards.
In particular, we in Congress expect to be notified of
award decisions 3 days prior to HUD announcement, with backup
materials and information on the methodology of the award
selections, including how these awards meet our housing and
community development goals. It is critical that the Nation,
Congress, and the administration fully understand the process
and decisionmaking of how the billions of Federal housing and
community dollars are spent.
Mr. Secretary, I thank you very much, and I look forward to
your testimony.
Senator Murray. Thank you very much, Senator Bond.
I will turn it over to the Secretary for his testimony. And
just to forewarn you, both Senator Bond and I also have to go
to an energy and water hearing for a short amount of time. We
may be changing the gavel back and forth.
But we will both be very attentive to your statement, and
we both have a number of questions. So, with that, I will turn
it over to you, Mr. Secretary.
STATEMENT OF HON. SHAUN DONOVAN
Secretary Donovan. Madam Chairwoman, Ranking Member Bond,
and members of the subcommittee, thank you for the opportunity
to testify regarding the fiscal year 2011 budget for the
Department of Housing and Urban Development, Investing in
People and Places.
I appear before you to discuss this budget in a far
different environment than that of a year ago when our economy
was hemorrhaging over 700,000 jobs each month, housing prices
were in freefall, and economic observers warned that a second
Great Depression was a real possibility. Today, though there is
still a long way to go, it is clear that our housing market has
made significant progress toward stability.
What that has meant to middle-class families is clear.
First, security, as a result of stabilizing home prices and
lower financing costs, by the end of September, home equity had
increased by over $900 billion, $12,000 on average for the
Nation's 78 million homeowners.
Second, confidence, though it is still fragile, homeowner
equity is key to consumer confidence and to bringing new
borrowers back into the market, helping the economy grow at the
fastest rate in 6 years and creating jobs.
Third, money in families' pockets, mortgage rates, which
have been near historic lows over the past 10 months, have
spurred a refinancing boom that has helped nearly 4 million
borrowers save an average of $1,500 per year, pumping $7
billion annually into local economies and businesses,
generating additional revenues for our Nation's communities,
and benefiting our economy more broadly.
FHA
The Federal Housing Administration has been essential to
this improved outlook, in the past year helping more than
800,000 homeowners refinance into stable, affordable fixed-rate
mortgages, protecting an additional half million families from
foreclosure--and that, Senator Bond, I would note, is through
our loss mitigation programs that you asked about, one-half a
million families in 2009--guaranteeing approximately 30 percent
of home purchase loan volume and fully one-half of all loans
for first-time home buyers.
With FHA's temporarily increased role, however, as you
said, Madam Chairwoman comes increased responsibility and risk.
That is why HUD's fiscal year 2011 budget presents a careful,
calibrated balancing of FHA's three key responsibilities--
first, providing responsible home ownership opportunities;
second, supporting the housing market during difficult economic
times; and third, ensuring the health of the MMI Fund.
FHA has rolled out a series of measures over the last year
to mitigate risks and augment the MMI Fund's capital reserves--
first, to increase the mortgage insurance premium; second, to
raise the combination of FICO scores and down payments for new
borrowers; third, to reduce seller concessions to industry
norms; and fourth, to implement a series of significant
measures aimed at increasing lender responsibility and
enforcement.
With the help of Congress, FHA has also begun implementing
a plan to ensure its technology infrastructure and personnel
needs reflect this increased responsibility. All of these
changes will lead to increased receipts for FHA for the 2011
budget.
Last Friday, as you mentioned, the Congressional Budget
Office released its re-estimate of the President's 2011 budget,
including their view on FHA's proposed changes. Although the
CBO re-estimate includes a more conservative assessment of how
new loans made through FHA's MMI Fund will perform in coming
years, both CBO and the administration forecast that with our
proposed FHA changes, such credit activity will result in
significant net receipts to the Government. We differ, however,
on the amount.
While the President's budget forecasts, as you said, Madam
Chairwoman, $5.8 billion in net receipts resulting primarily
from insurance premiums and other fees, CBO re-estimated these
net savings at $1.9 billion. In addition, CBO agrees with FHA
that Ginnie Mae and our GI/SRI fund will produce another
roughly $1 billion in receipts.
While recognizing that such a difference with CBO
complicates budget resolution development, it is important to
note that the forecast used in the President's budget will
determine the receipts transferred to FHA's capital reserve
account. This will help have that fund get back on track to be
capitalized with the statutorily mandated 2 percent of
insurance in force. I would also note that based on extensive
modeling and analysis, we remain confident in our forecast for
FHA.
Even with increased FHA receipts, however, because of
broader need for fiscal responsibility, we have had to make
very difficult choices in this budget. We have chosen to
prioritize existing rental assistance in section 8, public
housing--public housing operating fund, and other areas, which
has required us to propose difficult cuts in a number of our
capital programs, as you mentioned, and to target our funding
to the most catalytic uses.
TRANSFORMING RENTAL ASSISTANCE
On that note, allow me to highlight some key initiatives.
The first is HUD's multiyear effort called Transforming Rental
Assistance, or TRA. It does not take a housing expert to see
that HUD's rental assistance programs desperately need
simplification. HUD currently provides deep rental assistance
to more than 4.6 million households through 13 different
programs, each with its own rules administered by three
different operating divisions.
In my career both in the private and public sectors, it was
a constant struggle to integrate HUD's rental assistance
streams and capital funding resources into the local, State,
and private sector financing that was necessary to get the job
done. But I dealt with HUD subsidy programs for a simple
reason--because the engine that drives capital investment at
the scale needed is reliable long-term, market-based stream of
Federal rental assistance.
No other mechanism has ever proven as powerful at unlocking
a broad range of public and private resources to meet the
capital needs of affordable housing. That said the status quo
is no longer an option.
With a public housing program that has unmet capital needs
upwards of $20 billion, now is the moment to permanently
reverse the long-term decline in the Nation's public housing
portfolio and address the physical needs of an aging assisted
stock. This initiative is anchored by four guiding principles.
First, that the complexity of HUD's programs is part of the
problem, and we must streamline and simplify them so that they
are governed by a single, integrated, coherent set of rules and
regulations that better aligns with the requirements of other
Federal, State, local, and private sector financing streams.
Second, that the key to meeting the long-term capital needs
of HUD's public and assisted housing lies in shifting from the
Federal capital and operating subsidy funding structure we have
today to a Federal operating subsidy that leverages capital
from private and other public sources.
Third, that bringing market investment to all of our rental
programs will also bring market discipline that drives
fundamental reforms. Only when our programs are built,
financed, and managed like other housing will we be able to
attract the mix of incomes and uses and stakeholders that we
need.
And fourth, that we must combine the best features of our
tenant-based and project-based programs to encourage resident
choice and mobility. TRA reflects HUD's commitment to
complementing tenant mobility with the benefits that a
reliable, property-based, long-term rental assistance subsidy
can have for neighborhood revitalization efforts and as a
platform for delivering social services.
To be clear, this commitment to tenant mobility is not to
restart old ideological debates about place-based versus
people-based strategies. To revitalize neighborhoods of
concentrated poverty and segregation, we need the best of both
approaches. That is why we look forward to continuing to work
with the subcommittee and authorizers on our Choice
Neighborhoods initiative to make the redevelopment of
distressed public and assisted housing the anchor of broader
community development efforts.
CHOICE NEIGHBORHOODS
Choice Neighborhoods builds on and expands the lessons of
HOPE VI. Not only that investment at scale can affect dramatic
change at the community level, but also that for an investment
to be game-changing, it must take into account more than
housing alone.
For too long, HUD's community development programs have
lacked such a place-based, targeted tool for creating jobs.
That is why our budget proposes $150 million for a catalytic
investment fund designed to help distressed communities
reorient their economies for the 21st century. HUD can't afford
to make housing investments in isolation from community
development investments, particularly when so many communities
are ahead of us in terms of combining housing, economic
development, and transportation.
SUSTAINABLE COMMUNITIES
That is why it was so important that we launched our
Sustainable Communities initiative in 2010 to support these
efforts. I want to thank the subcommittee for making this
possible and emphasize the need for continued funding in 2011.
I recognize that I have asked you to help HUD make these
investments in a difficult fiscal climate. Our approach has
been to target resources where we get the biggest bang for the
buck, and nowhere is this clearer than the area of
homelessness, where we have seen a 30 percent reduction in
chronic homelessness over the last 4 years.
HOMELESSNESS
Our budget request reflects HUD's commitment to its own
targeted homeless programs with a $200 million increase. But as
chair of the Interagency Council on Homelessness as well,
charged with producing a Federal strategy to end homelessness
later this spring, it also reflects a commitment to working
across silos to end homelessness, embodied by our joint housing
and services for homeless person demonstration with the
Department of Health and Human Services and the Department of
Education.
HUD'S 2010 TRANSFORMATION
Last, let me say a few words about HUD, how it's
transforming the way it does business at the agency. With your
help, HUD's 2010 Transformation Initiative is allowing us to
take long-overdue steps to upgrade and modernize our
Department, helping us replace computer programs written in the
1980s, build the capacity of communities--Senator Bond, you
mentioned this, and we have been growing our resources for
technical assistance--and demonstrate what works and what
doesn't.
It has also begun to provide us with the flexibility we
need to cross-cutting initiatives. But a critical next step for
2011 is to take this approach further. In part, it is a matter
of additional funding to move forward with large, multiyear
projects and demonstrations. But just as important is the
flexibility to use up to 1 percent of HUD's budget as
unexpected needs arise during the year.
For example, to revamp FHA as it stepped up in the mortgage
market or to provide technical assistance communities trying to
use neighborhood stabilization funds in the most impactful way.
These are the kinds of flexible investments other cutting-edge
organizations have the ability to make, and they are essential
to building the nimble, results-oriented agency our Nation
needs and this subcommittee deserves to oversee.
And so, Madam Chairwoman, this budget continues the
transformation begun with your help. With the housing market
showing signs of stabilization, our economy beginning to
recover, and the need for fiscal discipline crystal clear, now
is the moment to reorient HUD for the challenges of the 21st
century. With your help, I believe we can and that we will.
Thank you.
[The statement follows:]
Prepared Statement of Hon. Shaun Donovan
Madam Chairwoman, Ranking Member Bond, and members of the
subcommittee, thank you for the opportunity to testify today regarding
the fiscal year 2011 budget for the Department of Housing and Urban
Development, Investing in People and Places.
A CHANGING ENVIRONMENT
I appear before you to discuss this budget in a far different
environment from that faced by the Nation and the Department just 1
year ago. At that time, the economy was hemorrhaging over 700,000 jobs
each month, housing prices were in freefall, residential investment had
dropped over 40 percent in just 18 months, and credit was frozen nearly
solid. Many respected economic observers warned that a second Great
Depression was a real possibility, sparked of course by a crisis in the
housing market. Meanwhile, communities across the country--from central
cities to newly built suburbs to small town rural America--struggled to
cope with neighborhoods devastated by foreclosure, even as their
soaring jobless rates and eroding tax base crippled their ability to
respond.
One year later, though there is clearly a long way to go, it is
clear that the Nation's housing market has made significant progress
toward stability. Through the combination of coordinated efforts by
Treasury, HUD, and the Federal Reserve to stabilize the housing market,
we are seeing real signs of optimism.
As measured by the widely referenced FHFA index, home prices have
been rising more or less steadily since last April. As recently as
January 2009 house prices had been projected to decline by as much as 5
percent in 2009 by leading major macro-economic forecasters. This is
all the more surprising since most forecasters had underestimated the
rise in unemployment that has occurred over the past year.
Allow me to briefly explain what halting the slide in home prices
and housing wealth has meant to middle-class families.
First, security. According to the Federal Reserve Board, as a
result of stabilizing home prices and lower financing costs nationwide,
home owner equity started to grow again in the second quarter of 2009
and by the end of September home equity had increased by over $900
billion, or $12,000 on average for the Nation's nearly 78 million
homeowners.
Second, confidence. Homeowner equity is key to consumer confidence
and is now helping bring new borrowers back into the market. And we all
know the important role confidence plays in helping our economy grow--
which it did in the last quarter of 2009 at 5.7 percent, the fastest
rate in 6 years.
Third, money in families' pockets. Mortgage rates which have been
at or near historic lows over the past 10 months have spurred a
refinancing boom that over the past year that has helped nearly 4
million borrowers to save an average of $1,500 per year on housing
costs--pumping an additional $7 billion annually into local economies
and businesses, generating additional revenues for our Nation's cities,
suburbs, and rural communities.
At the same time we have taken steps to reverse falling home
prices, we have also worked to help families keep their homes. In
partnership with the White House, the Department of Treasury, and other
Federal regulatory agencies, HUD has helped develop the Making Home
Affordable plan, and implement its two major initiatives--the Home
Affordable Refinance Program and Home Affordable Modification Program
(HAMP). These programs have helped to preserve homeownership for more
than 1 million families. More than 900,000 households in participating
trial modifications under HAMP currently are saving an average of over
$500 per month in mortgage payments. To date, program participants have
saved more than $2.2 billion.
And the Federal Housing Administration (FHA) has stepped up to
fulfill its countercyclical role--to temporarily provide necessary
liquidity while also working to bring private capital back to credit
markets. Indeed, the FHA has in the past year alone helped more than
800,000 homeowners refinance into stable, affordable fixed-rate
mortgages and deployed its loss mitigation tools to assist an
additional half million families at risk of foreclosure.
Of course, just as this crisis has touched different communities in
different ways, so, too, have they rebounded at different paces. As a
result, some regions continue to face difficulty, even as others are
moving toward recovery. That is one reason why the President recently
announced $1.5 billion in funding to help families in States that have
suffered an average home price drop of over 20 percent from the peak--
including an innovation fund that will expand the capacity of housing
finance and similar agencies in the areas hardest-hit in the wake of
the housing crisis.
The President's announcement continues the administration's
response to assist homeowners and stabilize neighborhoods, including
through the nearly $2 billion that HUD has obligated under the
Neighborhood Stabilization Program to address the problem of blighted
neighborhoods, targeting hard-hit communities across the country and
including major awards in Ohio, Illinois, New Jersey, Pennsylvania and
other areas that have been deeply affected by the current housing
problems. The administration continues to explore and refine ways to
assist homeowners and stabilize neighborhoods struggling with
foreclosures.
In addition, HUD has played a key role in implementing the American
Recovery and Reinvestment Act (ARRA), which, according to the
nonpartisan Congressional Budget Office is already responsible for
putting as many as 2.4 million Americans back to work and has put the
Nation on track toward a full economic recovery--and I would like to
say a particular word of thanks to this subcommittee for making our
role in that effort possible.
HUD has now obligated 98 percent of the $13.6 billion in ARRA funds
stewarded by the Department--and disbursed $2.9 billion. I would note
that a portion of HUD's ARRA funding is fully paid out, or expended,
only once construction or other work is complete--just as when
individual homeowners pay after they have work done on their homes.
Therefore, some of HUD's obligated, but not yet expended, funds are
already generating jobs in the hard hit sectors of housing renovation
and construction for the purposes of modernizing and ``greening''
public and assisted housing, reviving stalled low-income housing tax
credit projects, and stabilizing neighborhoods devastated by
foreclosures. Additional HUD-administered ARRA funds are providing
temporary assistance to families experiencing or at risk of
homelessness in these difficult economic times.
While the economy has a long way to go to reach full recovery, and
the promising indicators emerging steadily are not being experienced by
all regions or communities equally, it is clear that we have pulled
back from the economic abyss on which the Nation stood a year ago.
ROADMAP TO TRANSFORMATION
HUD's fiscal year 2010 budget, then, reflected a singular economic
moment. During the last administration, the Department's annual budget
submissions chronically underfunded core programs, and many observers
came to regard the agency as slow moving, bureaucratic, and
unresponsive to the needs of its partners and customers. HUD's fiscal
year 2010 budget request, $43.72 billion (net of receipts generated by
FHA and the Government National Mortgage Association, or ``Ginnie
Mae'') was a 7 percent increase over the fiscal year 2009 enacted level
of $40.72 billion and sent the clear message that HUD's programs
merited funding at levels sufficient to address the housing and
community development needs of the economic crisis. It also reflected
this administration's belief that HUD could transform itself into the
more nimble, results-driven organization required by its increased
importance.
In response to HUD's fiscal year 2010 budget proposal, Roadmap to
Transformation, Congress--with key leadership by this subcommittee,
working with your counterparts in the House--provided a vote of
confidence for which I want to express my deepest appreciation. The
fiscal year 2010 appropriations legislation provided HUD programs
$43.58 billion (net of receipts), funding needed to stabilize the
Department's programs across-the-board. Critically, the budget also
targeted $258.8 million to the Department's proposed Transformation
Initiative, the cornerstone of the agency's efforts to change the way
HUD does business. For the first time, HUD has the flexibility to make
strategic, cross-cutting investments in research and evaluation, major
demonstration programs, technical assistance and capacity building, and
next generation technology investments to bring the agency fully into
the 21st century.
I appreciate the level of trust this action showed in the new HUD
leadership and look forward to updating you on the progress we are
making with this new flexibility.
INVESTING IN PEOPLE AND PLACES
As a result of all this work--by Congress, HUD and across the
administration--we no longer confront an economy or a Department in
extreme crisis. Still, much work remains, in much changed fiscal
circumstances. Now that the economic crisis has begun to recede,
President Obama has committed to reducing the Federal deficit,
including a 3 year freeze on domestic discretionary spending. HUD's
fiscal year 2011 budget reflects that fiscal discipline. Net of $6.9
billion in projected FHA and Ginnie Mae receipts credited to HUD's
appropriations accounts, this budget proposes overall funding of $41.6
billion, 5 percent below fiscal year 2010. Not including FHA and Ginnie
Mae receipts, the budget proposal is $1.6 billion above the 2010
funding levels. These figures meant that we had difficult choices to
make--and we chose to prioritize core rental and community development
programs, fully funding section 8 tenant-based and project-based rental
assistance, the public housing operating fund, and CDBG.
Indeed, at the same time, the budget cuts funding for a number of
programs, including the public housing capital fund, HOME Investment
Partnerships, Native American Housing Block Grants (NAHBG), the 202
Supportive Housing Program for the Elderly, and the section 811
Supportive Housing Program for Persons with Disabilities. In some
instances, these are programs that received substantial ARRA funding
(e.g., public housing capital and NAHBG), reducing the need for funds
in fiscal year 2011. In the case of reductions to new capital grants--
in public housing, section 202, and 811--the Department is recognizing
that HUD's partners must increasingly access other private and public
sources of capital as HUD and the Federal Government are facing severe
resource constraints. During this fiscal year, we will modernize these
programs to reflect changed fiscal and operational circumstances.
Simultaneously, the Department has made the difficult decision to
target HUD's housing investments and target them to their most crucial
and catalytic uses, primarily rental and operating assistance that best
enables those partners to leverage additional resources.
As such, we believe this is a bold budget, with carefully targeted
investments that will enable HUD programs to: house over 2.4 million
families in public and assisted housing (over 58 percent elderly or
disabled); provide tenant based vouchers to more than 2.1 million
households (over 47 percent elderly or disabled), an increase of 28,000
over 2009; more than double the annual rate at which HUD assistance
creates new permanent supportive housing for the homeless; and create
and retain over 112,000 jobs through HUD's housing and economic
development investments in communities across the country. In total, by
the end of fiscal year 2011, HUD expects its direct housing assistance
programs to reach nearly 5.5 million households, over 200,000 more than
at the end of fiscal year 2009.
And in terms of reform, this budget proposes fundamental change
beyond the Department's fiscal year 2010 proposal. A year ago, urgent
circumstances called for HUD's programs to be taken largely ``as is''
in order to pump desperately needed assistance into the economy in time
to make a critical difference. With the infusion of ARRA and fiscal
year 2010 funding having stabilized HUD's programs, the time has come
to begin transforming them--to make HUD's housing and community
development programs, and the administrative infrastructure that
oversees them, more streamlined, efficient, and accountable.
This budget is a major step in that direction. Specifically, it
seeks to achieve five overarching goals, drawn from an extensive
strategic planning process that engaged over 1,500 internal and
external stakeholders in defining the Department's high priority
transformation goals and strategies.
GOAL 1.--STRENGTHEN THE NATION'S HOUSING MARKET TO BOLSTER THE ECONOMY
AND PROTECT CONSUMERS
With housing still representing the largest asset for most American
households, it is essential that home prices continue to stabilize in
order to restore the confidence of American consumers. Americans held
roughly $6.2 trillion in home equity in the third quarter of 2009, up
from its lowest point of $5.3 trillion in the first quarter of 2009.
The central role of housing in the U.S. economy demands that Federal
agencies involved in housing policymaking rethink and restructure
programs and policies to support housing as a stable component of the
economy, and not as a vehicle for over-exuberant and risky investing.
With that in mind, the fiscal year 2011 budget represents a
careful, calibrated balancing of FHA's three key responsibilities:
providing homeownership opportunities to responsible borrowers,
supporting the housing market during difficult economic times and
ensuring the health of the MMI Fund.
FHA provides mortgage insurance to help lenders reduce their
exposure to risk of default. This assistance allows lenders to make
capital available to many borrowers who would otherwise have no access
to the safe, affordable financing needed to purchase a home. As access
to private capital has contracted in these difficult economic times,
borrowers and lenders have flocked to FHA and the ready access it
provides to the secondary market through securitization by Ginnie Mae--
FHA insures approximately 30 percent of all home purchase loans today
and nearly one-half of those for first-time homebuyers. The increased
presence of FHA and others in the housing market, including Fannie and
Freddie, has helped support liquidity in the purchase market, helping
us ride through these difficult times until private capital returns to
its natural levels.
Not only is FHA ensuring the availability of financing for
responsible first time home purchasers, it is also helping elderly
homeowners borrow money against the equity of their homes through the
Home Equity Conversion Mortgage (HECM). This program has grown steadily
in recent years, to a volume of $30.2 billion in fiscal year 2009.
It is also providing several outlets of relief for homeowners in
distress. First, and perhaps most significantly, it is helping
homeowners extricate themselves from unsustainable mortgages by
refinancing into 30 year, fixed-rate FHA-insured loans at today's much
lower rates. Given how important this is as a route to greater borrower
stability, we are exploring additional ways to leverage the refinance
option at FHA to help still more distressed homeowners. Further, FHA is
continuing to assist those already in FHA-insured loans who are facing
difficulty making payments to stay in their homes through a variety of
aggressive loss mitigation efforts, which have assisted more than half
a million homeowners at risk of foreclosure since the beginning of
2009.
And finally, FHA is playing an important role in protecting
homeowners and helping prospective homeowners make informed decisions.
It is providing counseling to homeowners to help them avoid falling
into unsustainable loans. And it is fighting mortgage fraud vigorously
on all fronts, having suspended seven lenders, including Taylor, Bean
and Whitaker, and withdrawn FHA-approval for over 300 others since last
summer.
To support these important efforts, the budget includes $88 million
for the Housing Counseling Assistance program, which is the only
dedicated source of Federal funding for the full spectrum of housing
counseling services. With these funds we also plan to continue our work
to expand the number of languages in which counseling is available. In
addition, the budget continues FHA's Mortgage Fraud initiative ($20
million) launched in fiscal year 2010 as well as implementation of
sweeping reforms to the Real Estate Settlement and Procedures Act
(RESPA) beginning in January 2010 and the Secure and Fair Enforcement
(SAFE) for Mortgage Licensing Act beginning in June 2010.
With this budget, HUD is projecting that FHA will continue to play
a prominent role in the mortgage market in fiscal year 2011.
Accordingly, it requests a combined mortgage insurance commitment
limitation of $420 billion in fiscal year 2011 for new FHA loan
commitments for the Mutual Mortgage Insurance (MMI) and General and
Special Risk Insurance (GI/SRI) funds. The proposed total includes $400
billion under the MMI Fund, which supports insurance of single family
forward home mortgages and reverse mortgages under HECM; and $20
billion under the GI/SRI Fund, which supports multifamily rental and an
assortment of special purpose insurance programs for hospitals, nursing
homes, and title I lending. The budget requests a direct loan
limitation of $50 million for the MMI Fund and $20 million for the GI/
SRI fund to facilitate the sale of HUD-owned properties acquired
through insurance claims to or for use by low- and moderate-income
families.
With FHA's temporarily increased role, however, comes increased
risk and responsibility. That is why FHA has rolled out a series of
measures over the last year to strengthen its risk and operational
management. It has hired its first chief risk officer in its 75 year
history and created an entire risk management organization and
reporting structure, tightened its credit standards significantly and,
as I mentioned, expanded its capacity to rein in or shut down lenders
who commit fraud or abuse.
On January 20 of this year, Commissioner Stevens proposed taking
the following steps to mitigate risk and augment the MMI Fund's capital
reserves: increase the mortgage insurance premium (MIP); update the
combination of FICO scores and down payments for new borrowers; reduce
seller concessions to industry norms; and implement a series of
significant measures aimed at increasing lender responsibility and
enforcement. And to strengthen its operational capacity, FHA has begun
implementing a plan to significantly upgrade its technology
infrastructure and increase its personnel, to ensure that both are in
keeping with the increase of its portfolio and responsibility.
These changes merit additional explanation, as they not only put
FHA on firmer footing and increase reserves, but also generate
additional revenues in fiscal year 2011 to contribute to deficit
reduction. First, insurance revenues from single family loan guarantees
will grow by increasing the upfront premium to 225 basis points across
all FHA forward product types (purchase, conventional to FHA
refinances, and FHA to FHA refinances). The upfront premium increase
was implemented by mortgagee letter issued on January 21, 2010 and will
apply to all applications received on or after April 5, 2010.
Second, FHA is also proposing a ``two-step'' FICO floor for FHA
purchase borrowers, which would reduce both the claim rate on new
insurance as well as the loss rate experienced on the claims incurred.
Purchase borrowers with FICO scores of 580 and above would be required
to make a minimum 3.5 percent down payment; and those with FICO scores
between 500-579 would be required to make a minimum down payment of 10
percent. Applicants below 500 would be ineligible for insurance. These
changes are being proposed after an exhaustive review of FHA's actual
claim performance data, which demonstrates that loan performance is
best predicted by a combination of credit score and downpayment--simply
raising one element without recognizing the impact of the layering of
risk factors is not sufficient. We are considering how these changes
might be applied to refinancing borrowers as well. FHA is proposing to
publish the two-step FICO proposal in the Federal Register in short
order with implementation later in 2010. In combination, these
reforms--which are already permitted under current law--can be expected
to produce $4.2 billion in offsetting receipts in fiscal year 2011.
In addition, as noted in the proposed budget, while HUD is moving
to increase the upfront premium to 225 basis points we are ultimately
planning to reduce that premium to 100 basis points, offset by a
proposed increase in the annual premium to 85 basis points for loans
with loan-to-value ratios (LTV) up to and including 95 percent and to
90 basis points for LTVs above 95 percent. That change to the annual
premium will require legislative authority, and we are looking forward
to working with the authorizing committees as part of that effort. This
new premium structure is sound policy. This premium structure is also
more in line with GSE and private mortgage insurers' pricing, which
facilitates the return of private capital to the mortgage market.
Indeed, if these changes are adopted during the current fiscal year,
the estimated value to the MMI Fund would be $200 million in additional
funds each month, providing better underwriting for FHA loans and
replenishing capital reserves.
If implemented, in combination with the two-step FICO floor, this
change in the premium structure is projected to result in the $5.8
billion in offsetting FHA receipts reflected in the budget appendix. In
sum, FHA has taken the kinds of steps necessary to make sure that it
will remain strong and healthy enough to continue to fulfill its
mission of serving the underserved and playing a vital counter-cyclical
role in the housing market.
GOAL 2.--MEET THE NEED FOR QUALITY AFFORDABLE RENTAL HOMES
Several recent national indicators have pointed to increasing
stress in the U.S. rental housing market. Vacancy rates are on the rise
as a result of the dampened demand and additional supply repurposed
from the ownership market. Spreads between asking rents and effective
rents are widening. Asking rents are now $65 higher than effective
rents (6.6 percent of the effective rent)--the largest gap over the
past 4 years. While some new renters have been the beneficiaries of
this softness, drawing concessions from distressed property owners, the
budgets of many more low-income renters have been strained as household
incomes fall, due to unemployment and lost hours worked.
Loss of income stemming from the recession is likely offsetting
affordability gains from declining rents. Vacancies in the lower end of
the market remain considerably lower than market levels overall, and
the number of cost burdened low-income renters is on the rise. Based on
estimates from the 2008 American Community Survey, 8.7 million renter
households paid 50 percent or more of their income on housing, up from
8.3 million renter households in 2007. These figures do not include the
over 664,000 people who experience homelessness on any given night.
As HUD Secretary, as well as the current chair of the Interagency
Council on Homelessness under President Obama, I am committed to making
real progress in reducing these tragic figures. To do so requires
substantial investment even in this difficult fiscal year. For this
reason, the budget provides $1 billion for capitalization of the
National Housing Trust Fund, to increase development of housing
affordable to the Nation's lowest income families.
In addition, HUD's rental assistance and operating subsidy programs
have never been more needed, nor has the imperative to operate them
efficiently been clearer. This budget takes three critical steps to
meet this challenge.
Increases Investment in Core Rental Assistance and Operating Subsidy
Programs
This budget invests over $2.2 billion more than in fiscal year 2010
to meet the funding needs of the Tenant-based Rental Assistance (TBRA)
program, the Project-based Rental Assistance (PBRA) program, and the
public housing Operating Fund.
Tenant-based Rental Assistance
The section 8 TBRA or Housing Choice Voucher (HCV) program is a
cost-effective means for delivering decent, safe, and sanitary housing
to low-income families in the private market, providing assistance so
that participants are able to find and lease privately-owned housing.
In fiscal year 2009, HUD assisted over 2 million families with this
program; and, in fiscal year 2010, we plan to assist over 76,000 more
families through new incremental vouchers.
This budget continues HUD's bedrock commitment to its largest
program. The calendar year request for 2011 is $19.6 billion, a $1.4
billion increase over the 2010 Consolidated Appropriations Act and an
amount estimated to assist 2.2 million households. This represents an
increase of 34,466 families from fiscal year 2010 projections and
112,304 more than at the end of fiscal year 2009.
Of the $19.6 billion request, $17.3 billion will cover the renewal
of expiring annual contribution contracts (ACC) in calendar year 2011;
with $1.8 billion for administrative fees; $125 million for tenant
protection vouchers; $60 million to support family self-sufficiency
(FSS) activities; and up to $66 million for disaster vouchers for
families affected by Hurricanes Ike and Gustav. In addition, this
budget requests $85 million for incremental vouchers to help homeless
individuals, at-risk families with children, and families with special
needs stabilize their housing situation and improve their health
status, as well as $114 million for the shift of the renewal of
mainstream vouchers from the section 811 account to the TBRA account.
Through this budget, the Department reaffirms its commitment to
improving the section 8 program by designing a comprehensive
development strategy to improve HUD Information Technology systems to
better manage and administer the voucher program; implementing an
improved section 8 management assessment program (SEMAP) that will
ensure strengthened oversight, quality control, and performance metrics
for the voucher program; continuing the study to develop a formula to
allocate administrative fees based on the cost of an efficiently
managed PHA operating the voucher program; developing a study to
evaluate current housing quality standards and improve the unit
inspection process; and eliminating unnecessary caps on the number of
families that each PHA may serve.
Project-based Rental Assistance (PBRA)
PBRA assists more than 1.3 million low- and very low-income
households in obtaining decent, safe, and sanitary housing in private
accommodations. This critical program serves families, elderly
households, disabled households, and provides transitional housing for
the homeless. Through PBRA funding, HUD renews contracts with owners of
multi-family rental housing--contracts that make up the difference
between what a household can afford and the approved rent for an
adequate housing unit in a multi-family development.
HUD is requesting a total of $9.382 billion to meet PBRA program
needs. This includes $8.982 billion to be available in fiscal year 2011
(in addition to the $394 million previously appropriated) and $400
million to be available in fiscal year 2012. For fiscal year 2011, HUD
estimates a need of $8.954 billion of new budget authority for contract
renewals and amendments. The need for section 8 amendment funds results
from insufficient funds provided for long-term project-based contracts
funded primarily in the 1970s and 1980s, when long-term contracts (up
to 40 years) made estimating funding needs problematic, leading to
frequent underfunding. The current practice of renewing expiring
contracts for a 1-year term helps to ensure that the problem of
inadequate funded contracts is not repeated. However, some older long-
term contracts have not reached their termination dates and, therefore,
have not yet not entered the 1-year renewal cycle and must be provided
amendment funds for the projects to remain financially viable. The
Department estimates that total section 8 amendment needs in 2011 will
be $662 million. The budget request continues the Department's
commitment to provide full 1-year funding for contract renewals and
amendments.
Public Housing Operating Fund
The public housing Operating Fund provides operating subsidy
payments to over 3,100 public housing authorities (PHAs) which serve
1.2 million households in public housing. The fiscal year 2011 budget
requests $4.8 billion, which will fully fund the operating fund. Full
funding is essential to the proper operation of public housing,
provision of quality housing services to residents, and effective use
of capital fund resources.
Begins to Streamline the Department's Rental Assistance Programs
It does not take a housing expert to see that HUD's rental
assistance programs desperately need simplification. HUD currently
provides deep rental assistance to more than 4.6 million households
through 13 different programs, each with its own rules, administered by
3 operating divisions with separate field staff. Too often over time,
additional programs designed to meet the needs of vulnerable
populations were added without enough thought to the disjointed system
that would result. This unwieldy structure ill serves the Department,
our Government and private sector partners, and--most importantly--the
people who live in HUD-supported housing.
In my last job, as commissioner of the New York City Department of
Housing Preservation and Development, I personally experienced the
challenges of working with HUD rental assistance to preserve and
develop affordable housing at a large scale. While implementing the
city's 165,000 unit New Housing Marketplace plan, it was a constant
struggle to integrate HUD's rental assistance streams, and capital
funding resources for that matter, into the local, State, and private
sector housing financing that was absolutely necessary to leverage to
get the job done.
But I was willing to deal with the transaction costs of engaging
with HUD's less-than-ideally aligned subsidy programs for a simple
reason: the engine that drives capital investment at the scale needed,
in a mixed-finance environment, is typically a reliable, long-term,
market-based, stream of Federal rental assistance. Historically, no
other mechanism--and no other source of Government funding--has ever
proven as powerful at unlocking a broad range of public and private
resources to meet the capital needs of affordable housing. While highly
imperfect, HUD's rental assistance programs are irreplaceable.
This said, tolerating the inefficiencies of the status quo is no
longer an option. The capital needs of our Nation's affordable,
Federally-assisted housing stock are too substantial and too urgent.
The Public Housing program in particular has long wrestled with an old
physical stock and a backlog of unmet capital needs that may exceed $20
billion. (1) To be sure, nearly two decades of concentrated efforts to
demolish and redevelop the most distressed public housing projects,
through HOPE VI and other initiatives, has paid off. The stock is in
better shape overall than it has been in some time; and (2) the $4
billion in ARRA funds targeted to public housing capital improvements
are further stabilizing the portfolio. But this very progress has
created a unique--but time limited--opportunity to permanently reverse
the long-term decline in the Nation's public housing portfolio and
address the physical needs of an aging assisted housing stock.
My many years of experience of dealing with affordable housing on a
large scale--both in New York and overseeing HUD's multi-family
assisted housing programs during the 1990s--have drilled home two key
lessons. First, it is far more costly to build new units than to
preserve existing affordable housing. And, second, an affordable
housing project can limp along for some time with piecemeal, ad hoc
strategies to address its accumulating capital backlog, but eventually
the building will reach a ``tipping point'' where its deterioration
becomes rapid, irreversible and expensive. This moment in time calls
for a timely, crucial Federal investment to leverage other resources to
the task of maintaining the number of safe, decent public and assisted
housing units available to our Nation's poor families--an objective
that at some point, soon, will cost the taxpayer substantially more to
achieve by other means.
Nor can we afford to sustain the disconnect between HUD's largest
rental and operating assistance programs, given the disproportionate
impact of the recession on the recipients of HUD assistance and the
communities where much of HUD's public and assisted housing stock
remains. More than ever, communities of concentrated poverty need their
public and assisted housing stock--even the most distressed projects
that are the targets of our proposed Choice Neighborhoods Initiative--
to serve as anchors of broader neighborhood revitalization efforts.
Simultaneously, in this challenging economy, tenants of HUD-subsidized
projects also need the option to pursue opportunities for their
families in other neighborhoods and communities as and when they arise,
without losing the subsidy that is so crucial to maintaining their
housing stability. Today, we lack the seamless connection that should
exist between HUD's largest project-based assistance programs--PBRA and
public housing--and the Housing Choice Voucher program, which leaves
tenants of PBRA and public housing with limited ability to move to
greater opportunity.
To address these issues and move HUD's rental housing programs into
the housing market mainstream, HUD proposes to launch an ambitious,
multi-year effort called the transforming rental assistance (TRA)
initiative.
This initiative is anchored by four guiding principles:
First, that the complexity of HUD's programs is part of the
problem--and we must streamline and simplify our programs so that they
are less costly to operate and easier to use at the local level.
Ultimately, TRA is intended to move properties assisted under these
various programs toward a more unified funding approach, governed by an
integrated, coherent set of rules and regulations that better aligns
with the requirements of other of Federal, State, local and private
sector financing streams.
Second, that the key to meeting the long-term capital needs of
HUD's public and assisted housing lies in shifting from the Federal
capital and operating subsidy funding structure we have today--which
exists in a parallel universe to the rest of the housing finance
world--to a Federal operating subsidy that leverages capital from other
sources.
Third, that bringing market investment to all of our rental
programs will also bring market discipline that drives fundamental
reforms. Only when our programs are truly open to private capital will
we be able to attract the mix of incomes and uses and stakeholders
necessary to create the sustainable, vibrant communities we need.
And fourth, that we must combine the best features of our tenant-
based and project-based programs to encourage resident choice and
mobility. TRA reflects HUD's commitment to complementing tenant
mobility with the benefits that a reliable, property-based, long term
rental assistance subsidy can have for neighborhood revitalization
efforts and as a platform for delivering social services. And in a
world where the old city/suburb stereotypes are breaking down, and our
metropolitan areas are emerging as engines of innovation and economic
growth, we have to ensure our rental assistance programs keep up.
In 2011, the first phase of TRA will provide $350 million to
preserve approximately 300,000 units of public and assisted housing,
increase administrative efficiency at all levels of program operations,
leverage private capital and enhance housing choice for residents. With
this request, we expect to leverage over $7.5 billion in other public
and private sector capital investment. PHAs and private owners will be
offered the option of converting to long-term, market-based, property-
based rental assistance contracts that include a resident mobility
feature, which we are working to define in close collaboration with
current residents, property owners, local governments and a wide
variety of other stakeholders.
Most of the fiscal year 2011 downpayment on TRA, up to $290
million, will be used to fill the gap between the funds otherwise
available for the selected properties--in most cases the public housing
Operating Fund subsidy--and the first-year cost of the new contracts.
As noted above, a reliable funding stream will help place participating
properties on a sustainable footing from both a physical and a
financial standpoint, enabling owners to leverage private financing to
address immediate and long-term capital needs, and freeing them from
the need for annual capital subsidies.
Under this voluntary initiative, HUD will prioritize for conversion
public housing and assisted multifamily properties owned by PHAs.
Notably, in this regard, TRA delivers on the promise of over a decade's
worth of movement in the field of public housing toward the private
sector real-estate model known as ``asset-management,'' by finally
providing public housing authorities with the resources to successfully
implement this model in the projects they will continue to own. Three
types of privately-owned HUD-assisted properties will also be eligible
for conversion in this first phase: section 8 moderate rehabilitation
contracts administered by PHAs, and properties assisted under the Rent
Supplement or Rental Assistance Programs. With this step, we can
eliminate three smaller legacy programs that have become ``orphans'' as
new housing programs have evolved. This consolidation will preserve
these properties for residents, improve property management, and
streamline HUD oversight to save the taxpayer money.
Much of the remaining funding, up to $50 million, will be used to
promote mobility by targeting resources to encourage landlords in a
broad range of communities to participate in the housing voucher
program and to provide additional services to expand families' housing
choices. A portion of these funds also may be used to offset the costs
of combining HCV administrative functions in regions or areas where
locally-designed plans propose to increase efficiency and effectiveness
as part of this conversion process.
By the spring of 2010, the administration will transmit to the
relevant authorizing committees in Congress proposed legislation to
authorize the long-term property-based rental assistance contracts,
with a resident mobility feature, that would be funded by the budget
request. Enactment of a number of the provisions in the section 8
Voucher Reform Act is also an integral part of the transforming rental
assistance initiative. The administration looks forward to working with
Congress to finalize this vital legislation.
Without this subcommittee's work on HOPE VI and the Quality Housing
and Work Responsibility Act, this opportunity would never have arisen.
In fiscal year 2011, we can together begin to put both public and
assisted housing on firm financial footing for decades to come, and
start to meld HUD's disparate rental assistance and capital programs
into a truly integrated Federal housing finance system. I hope that you
will help HUD make this breakthrough by funding the TRA initiative.
Increases Investment in Proven and Restructured HUD Homeless Assistance
Programs
Fiscal year 2011 also marks the first year for implementation of
the Homeless Emergency Assistance and Rapid Transition to Housing
(HEARTH) Act, which--when signed by President Obama in the spring of
2009--restructured HUD's homeless assistance programs to incorporate
nearly two decades of research and on-the-ground experience in
confronting homelessness. To support implementation of this important
legislation, the budget requests $2.055 billion for homeless assistance
funding--a nearly $200 million increase compared to fiscal year 2010.
This additional investment in homeless assistance programs is
called for even in a difficult fiscal environment. Culminating in the
HEARTH Act, HUD's homeless programs have evolved into a more
performance-driven, outcome-based system for targeting and leveraging
Federal resources at the local level to combat homelessness. This
subcommittee played an indispensable role in this process. In the late
1990s, when less than 20 percent of HUD homeless assistance grants were
supporting permanent housing solutions for the most disabled homeless
individuals and families, this subcommittee in fiscal year 1999 joined
your colleagues in the House in requiring that at least 30 percent of
these grants be spent annually on the evidence-based practice of
permanent supportive housing, and set forth the ambitious goal of
creating 150,000 units of permanent supportive housing for the
chronically ill, chronically homeless. Over time, the research
foundation for this targeted investment has only solidified--attached
to my testimony is a summary of key studies, including several
published in the Journal of the American Medical Association,
demonstrating that permanent supportive housing both ends homelessness
for individuals whom many thought would always live on our streets and
in shelters, and saves taxpayers money by interrupting their costly
cycling through shelters, emergency rooms, detox centers, prisons, and
even hospitals.
As a consequence of the permanent housing set aside, maintained
each year by this subcommittee, HUD's homeless assistance grants
produced an average of 8,878 permanent supportive housing beds annually
from fiscal year 2001 through fiscal year 2008, and a cumulative total
of 71,000 beds, with an increasing percentage targeted to the
chronically homeless (66 percent in fiscal year 2008 compared to 53
percent in fiscal year 2005, the first year HUD tracked such data). The
impact was clear and dramatic. In the 4 years from 2005 through 2008,
the number of chronically homeless individuals dropped by 30 percent,
certainly one of the greatest social welfare policy achievements of the
past decade.
One of the key provisions of the HEARTH Act was its codification of
the 30 percent permanent housing set aside pioneered by this
subcommittee. Coupled with the level of funding this budget requests,
and the alignment of homeless assistance grants with other HUD rental
assistance subsidies (1 year terms), this provision is projected to
yield over 9,500 new units of permanent supportive housing for disabled
individuals and families. This will enable continued progress toward
ending chronic homelessness.
The HEARTH Act also codifies the unique competitive process, known
as the continuum of care (``CoC''), in which HUD homeless assistance
funding and priorities are incorporated within a robust local planning
and implementation process. The CoC system provides a coordinated
housing and service delivery system that enables communities to plan
for and provide a comprehensive response to homeless individuals and
families. Communities have worked to establish more cost-effective
continuums that identify and fill the gaps in housing and services that
are needed to move homeless families and individuals into permanent
housing. The CoC is an inclusive process that is coordinated with non-
profit organizations, State and local government agencies, service
providers, private foundations, faith-based organizations, law
enforcement, local businesses, and homeless or formerly homeless
persons. This planning model is based on the understanding that
homelessness is not merely a lack of shelter, but involves a variety of
unmet needs--physical, economic, and social.
Fiscal year 2011 marks the first year for implementation of this
and other key features of the HEARTH legislation including: increased
investment in the evidence-based practice of homelessness prevention;
improvement in the accuracy of the definition of homelessness; support
for the project operation and local planning activities needed to
continue the movement of the HUD-supported homeless assistance system
to a more performance-based and outcome-focused orientation; and
provision of assistance that better recognizes the needs of rural
communities.
In this period of economic hardship, which in many respects mirrors
the early 1980s when widespread homelessness reappeared for the first
time since the Great Depression, communities will need all of the tools
authorized by the HEARTH Act--and the additional resources requested in
this budget--to meet the needs of those experiencing homelessness,
including too many of our Nation's veterans. In particular, I am
concerned that HUD's Annual Homeless Assessment Report data showed a 9
percent rise in family homelessness from 2007-2008 and the Department's
more recent quarterly PULSE data from a small number of geographically
diverse localities across the country that suggests a continued
increase in homelessness.
GOAL 3.--UTILIZE HOUSING AS A PLATFORM FOR IMPROVING QUALITY OF LIFE
A growing body of evidence points to the role housing plays as an
essential platform for human and community development. Stable housing
is the foundation upon which all else in a family's or individual's
life is built--absent a safe, affordable place to live, it is next to
impossible to achieve good health, positive educational outcomes, or
reach one's full economic potential. Indeed, for many persons with
disabilities living in poverty, lack of stable housing leads to costly
cycling through crisis-driven systems like emergency rooms, psychiatric
hospitals, detox centers, and even jails. By the same token, stable
housing provides an ideal launching pad for the delivery of healthcare
and other social services focused on improving life outcomes for
individuals and families. As noted above, a substantial level of
research has established, for example, that providing permanent
supportive housing to chronically ill, chronically homeless individuals
and families not only ends their homelessness, but also yields
substantial cost savings in public health, criminal justice, and other
systems--often nearly enough to fully offset the cost of providing the
permanent housing and supportive services. More recently, scholars have
focused on housing stability as an important ingredient for children's
success in school--unsurprisingly, when children are not forced to move
from place to place and school-to-school, they are more likely to
succeed academically.
Capitalizing on these insights, HUD is launching efforts to connect
housing to services that improve the quality of life for people and
communities. The fiscal year 2011 budget proposes the following
important initiatives:
Connects Formerly Homeless Tenants of HUD-housing to Mainstream
Supportive Services Programs
The Department requests $85 million for incremental voucher
assistance for the new Housing and Services for Homeless Persons
Demonstration to support groundbreaking collaborations with the
Department of Health and Human Services (HHS) and the Department of
Education. This demonstration is premised on the administration's firm
belief that targeted programs alone cannot end homelessness. Mainstream
housing, health, and human service programs will have to be more fully
engaged to prevent future homelessness and significantly reduce the
number of families and individuals who are currently homeless. Two
separate initiatives will be funded in an effort to demonstrate how
mainstream programs can be aligned to significantly impact
homelessness.
One initiative will focus on individuals with special needs who are
homeless or at risk of homelessness. This initiative is designed to
model ways that resources across HUD and HHS can be brought to bear to
address the housing and service needs of this vulnerable population.
Recently released data shows that over 42 percent of the homeless
population living in shelters has a disabling condition. The
demonstration would combine Housing Choice Vouchers with health,
behavioral health and other support services to move and maintain up to
4,000 chronically homeless individuals with mental and substance use
disorders into permanent supportive housing.
Vouchers will be targeted to single, childless adults who are
homeless and who are already enrolled in Medicaid through coverage
expansion under State Medicaid waivers or State only initiatives. In
addition, HHS is seeking $16 million in its fiscal year 2011 budget
request to provide wraparound funding through grants administered by
the Substance Abuse and Mental Health Services Administration to
promote housing stability and improvements in health outcomes for this
population. HUD and HHS will jointly design the competitive process and
conduct and evaluation to determine: (1) the cost savings in the
healthcare and housing systems of the proposed approach; (2) the
efficacy of replication; and (3) the appropriate cost-sharing among
Federal agencies for underwriting services that increase housing
stability and improve health and other outcomes.
Another initiative will establish a mechanism for HUD, HHS and
Department of Education programs to be more fully engaged in
stabilizing homeless families, ultimately resulting in reducing the
costs associated with poor school performance and poverty. This
initiative strategically targets these resources to: (1) identify
families who are homeless or at risk of homelessness, (2) intervene
with the appropriate array of housing assistance, income supports, and
services to ensure that the family does not fall into the shelter
system or onto the street (or if already homeless that the family is
stably housed and does not return to homelessness), and (3) provide the
tools necessary to assist the family to build on its resources to
escape poverty and reach its highest possible level of economic
security and self-sufficiency.
HUD will make available a minimum of 6,000 Housing Choice Vouchers
on a competitive basis and jointly design the competitive process with
HHS and the Department of Education. Winning proposals will have to
show that the new vouchers are being targeted to communities with high
concentrations of homeless families. With guidance from HHS, States
will need to demonstrate how they will integrate HUD housing assistance
with other supports--including TANF--these families will need to
stabilize their housing situation, foster healthy child development,
and prepare for, find, and retain employment. HHS will provide guidance
to State TANF agencies and other relevant programs to explain this
initiative and their role in both the application for the vouchers and
the implementation of the program. DOE will assist with identifying at-
risk families with children through their network of school based
homelessness liaisons, and providing basic academic and related
supports for the children. Locally, applicants will need to show that
they have designed a well-coordinated and collaborative program with
the TANF agency, the local public schools, and other community partners
(e.g., Head Start, child welfare, substance abuse treatment, etc.).
Collectively, these initiatives represent an unprecedented, ``silo-
busting'' alignment of Federal resources to address the needs of some
of the country's most vulnerable individuals and families. At the same
time, we believe they will save the taxpayer significantly in the long
run. This innovative approach will also involve some collaboration
across subcommittee jurisdictional lines, and we look forward to
working with the members of this panel in determining how best to
facilitate that joint action.
Modernizes the 202 and 811 Supportive Housing Programs for the Elderly
and Disabled
As the Department begins the process of restructuring its rental
assistance programs, it must also ensure that its programs providing
capital grants and rental assistance that are sized to the actual costs
to operate a project (``budget-based'' or ``operating cost-based'') are
well designed for the world of housing finance in the 21st century.
Beyond public and assisted housing--the focus of the TRA initiative--
the most prominent examples of such funding streams are the section 202
and 811 programs, which couple housing and services for the Nation's
poor elderly and disabled, respectively.
Although they have provided critical housing for thousands of
residents, these programs are in need of modernization. Project
sponsors no longer receive enough funding per grant for the 202 and 811
programs to be a ``one-stop shop'' to capitalize and sustain a project,
yet they are subject to a level of bureaucratic oversight that suggests
they are. This regulatory structure also makes it difficult for project
sponsors to work with other financing streams, such as low income
housing tax credits, even as the average grant size requires accessing
other capital sources. As a result, project development is slowed and,
coupled with outdated geographic allocation formulae, limited resources
are spread too thin to reach scale at either the project or national
programmatic levels. In 2009, the 202 program produced only 3,049 units
with an average project size of 44 units and the 811 program produced
only 661 units with an average project size of 10 units.
Already 10 times as many units are produced under the Low Income
Housing Tax Credit program. And under the status quo, the total annual
production of units will continue to decrease as the cost of supporting
existing 811/202 properties consumes more and more of the overall
funding allocation. This threatens to make the programs increasingly
marginal for the Nation's elderly and disabled.
Accordingly, HUD requests a suspension of funding for section 202
and 811 Capital Advance Grants in fiscal year 2011 in order to redesign
the programs to better target their resources to meet the current
housing and supportive service needs of frail elderly and disabled very
low-income households. The redesigned programs will maximize HUD's
financial contribution through enhanced leveraging requirements and
will also encourage or require partnerships with HHS and other services
funding streams to create housing that, while not medically licensed,
still effectively meets the needs of very low-income elderly and
disabled populations unable to live fully independently. The program
reforms for both 202 and 811 will include the following: (1) new
requirements to establish demand to ensure meaningful impact of dollars
awarded; (2) raised threshold for sponsor eligibility to ensure the
award of funds only to organizations with unique competency to achieve
the program goals; (3) streamlined processing to speed development
timeframes; (4) broader benefits of program dollars achieved by
facilitating supportive services provided by Medicaid/Medicare Waiver
programs such as the Program of All-inclusive Care for the Elderly
(PACE) model services to 202 project residents, (5) encouraging better
leveraging of other sources of funding, such as low income housing tax
credits and (6) integrating 811 programs within larger mixed finance,
mixed use projects.
GOAL 4.--BUILD INCLUSIVE AND SUSTAINABLE COMMUNITIES FREE FROM
DISCRIMINATION
The Department's approach to this objective is informed by the
Obama administration's landmark, Federal Government-wide review of
``place-based'' policies for the first time in over three decades.
Place is already at the center of every decision HUD makes. HUD's
programs today reach nearly every neighborhood in America--58,000 out
of the approximately 66,000 census tracts in the United States have one
or more units of HUD assisted housing. But we have taken this
opportunity to renew our focus on place, with the result that the
proposed fiscal year 2011 budget allows HUD to better nurture
sustainable, inclusive neighborhoods and communities across America's
urban, suburban, and rural landscape.
One aspect of HUD's refined place-based approach involves making
communities sustainable for the long-term. Sustainability includes
improving building level energy efficiency, cutting carbon emissions
through transit-oriented development, and taking advantage of other
locational efficiencies. But sustainability also means creating
``geographies of opportunity,'' places that effectively connect people
to jobs, quality public schools, and other amenities. Today, too many
HUD-assisted families are stuck in neighborhoods of concentrated
poverty and segregation, where one's zip code predicts poor
educational, employment, and even health outcomes. These neighborhoods
are not sustainable in their present state.
This budget lays the groundwork for advancing sustainable and
inclusive growth patterns at the metropolitan level, communities of
choice at the neighborhood scale, and energy efficiency at the building
scale. Specifically, the fiscal year 2011 budget calls for the
following series of programs and funding levels.
Supports and Improves the Federal Government's Premier Community
Development Program
The economic downturn and foreclosure crisis have significantly
depleted resources in State and local governments while increasing
demand for services. Revenue declines often turn quickly into layoffs
and cuts in services for the poor. Meanwhile, community development
investments have a heightened role in economic redevelopment and
stabilization for neighborhoods and regions across the country. During
these difficult economic times, it is critical that the administration
support and enhance community development programs and to partner with
grantees in developing strategies to increase economic vitality, build
capacity, and build sustainable communities and neighborhoods of
opportunity. Since 1974, the Community Development Block Grant (CDBG)
program has provided formula grants to cities and States to catalyze
economic opportunity and create suitable living environments through an
extensive array of community development activities.
The fiscal year 2011 budget proposes a total of $4.380 billion for
the Community Development Fund, which includes:
--$3.99 billion for CDBG formula distribution, to meet the
President's campaign promise to fully fund CDBG.
Simultaneously, the Department proposes a number of
improvements to the CDBG program, including revamping the
consolidated plans developed by State and local governments,
greater accountability, and better performance metrics.
--$150 million in funding for the second year of the Sustainable
Communities Initiative. The initiative has four components in
2011, described below. HUD plans to work with the relevant
authorizing committees in order to refine these proposals.
--Sustainable Communities Planning Grants administered by HUD in
collaboration with the Department of Transportation (DOT)
and the Environmental Protection Agency (EPA). These grants
will catalyze the next generation of integrated
metropolitan transportation, housing, land use and energy
planning using the most sophisticated data, analytics and
geographic information systems. Better coordination of
transportation, infrastructure and housing investments will
result in more sustainable development patterns, more
affordable communities, reduced greenhouse gas emissions,
and more transit-accessible housing choices for residents
and firms.
--Sustainable Communities Challenge Grants to help localities
implement Sustainable Communities Plans they will develop.
These investments would provide a local complement to the
regional planning initiative, enabling local and multi-
jurisdictional partnerships to put in place the policies,
codes, tools and critical capital investments to achieve
sustainable development patterns.
--The creation and implementation of a capacity-building program
and tools clearinghouse, complementing DOT and EPA
activities, designed to support both Sustainable
Communities grantees and other communities interested in
becoming more sustainable.
--A joint HUD-DOT-EPA research effort designed to advance
transportation and housing linkages at every level our
agencies work on.
--$150 million for the Catalytic Investment Competition Grants
program to create jobs by providing economic development and
gap financing to implement targeted economic investment for
neighborhood and community revitalization. For too long,
communities have lacked the kind of place-based, targeted,
``game-changing'' Federal capital investment program in the
community and economic development arena that HOPE VI has
proven to be with respect to severely distressed public
housing. The Catalytic Investment Competition would rectify
that imbalance by providing ``gap financing'' for innovative,
high impact economic development projects at scale that create
jobs. The program will create a competitive funding stream that
is responsive to changes in market conditions, leverages other
neighborhood revitalization resources (including formula CDBG
funds), and ultimately increases the economic competitiveness
of distressed communities and neighborhoods.
Under this proposal, my office would be permitted to consider how
much and to what extent the project will complement and
leverage other community development and revitalization
activities such as the Choice Neighborhoods Initiative, Promise
Neighborhoods, HOPE VI, Sustainable Communities, or other
place-based investments in targeted neighborhoods to improve
economic viability, extend neighborhood transformation efforts,
and foster viable and sustainable communities. Applicants must
develop a plan that includes measurable outcomes for job
creation and economic activity, exhibit capacity to implement
such plan, and demonstrate approval for the plan from the local
jurisdiction. Applicants will be required to leverage other
appropriate Federal resources, including but not limited to,
Community Development Block Grant formula funding and section
108 Loan Guarantees. This will support HUD's effort to partner
with grantees to more effectively target community development
investments toward neighborhoods with greatest need,
disinvestment, or potential for growth.
Enhances and Broadens Capacity Building for our Partners
The fiscal 2011 budget provides $60 million for a revamped Capacity
Building program. HUD must embrace a 21st century vision for supporting
the affordable housing and community development sector and will
reframe the section 4 program, including renaming the program
``Capacity Building'', in order to reflect that vision. The objective
is to expand HUD's funding capabilities, and encourage open competition
through mainstream and consistent program funding for these activities.
Working with cities and States to readily understand how to meet
the needs of their communities, leverage private and other kinds of
resources, and align existing programs is fundamental to building
resilience in tough economic times. Increasing capacity at the local
level is critical as jurisdictions partner with the administration in
implementing key initiatives such as Choice Neighborhoods, Sustainable
Communities, and the Catalytic Competition and work to restore the
economic vitality of their communities. This enhanced program will
include local governments as technical assistance service recipients.
Takes Choice Neighborhoods to Scale
The administration will also propose authorizing legislation for
Choice Neighborhoods, funded at $65 million in fiscal year 2010 on a
demonstration basis, and at $250 million in the budget. I am
appreciative that Congress was willing to fund Choice Neighborhoods on
a demonstration basis in fiscal year 2010, and HUD is now requesting
that the program be expanded to a level where its impact can be
significantly broader.
This initiative will transform distressed neighborhoods where
public and assisted projects are concentrated into functioning,
sustainable mixed-income neighborhoods by linking housing improvements
with appropriate services, schools, public assets, transportation, and
access to jobs. A strong emphasis will be placed local community
planning for school and educational improvements including early
childhood initiatives. Choice Neighborhood grants would build upon the
successes of public housing transformation under HOPE VI to provide
support for the preservation and rehabilitation of public and HUD-
assisted housing, within the context of a broader approach to
concentrated poverty. In addition to public housing authorities, the
initiative will involve local governments, non profits and for profit
developers in undertaking comprehensive local planning with input from
the residents and the community.
Additionally, HUD is placing a strong emphasis on coordination with
other Federal agencies, with the expected result that Federal
investments in education, employment, income support, and social
services will be better aligned in targeted neighborhoods. To date, the
Departments of Education, Justice and HHS are working with HUD to
coordinate investments in neighborhoods of concentrated poverty,
including those targeted by Choice Neighborhoods. Again, we will be
working with the House and Senate authorizing committees on these
efforts.
Protects Consumers From Discrimination in the Housing Market and
Affirmatively Furthers the Goals of the Fair Housing Act
The budget proposes $61.1 million in support of the fair housing
activities of HUD partners. Some sources estimate that more than 4
million acts of housing discrimination occur each year. To meaningfully
address that level of discrimination, the Department, in addition to
directing its own fair housing enforcement and education efforts, must
engage outside partners. Therefore, this budget funds State and local
government agencies to supplement HUD's enforcement role through the
Fair Housing Assistance Program (FHAP) and provides funding also to
nonprofit fair housing organizations that provide direct, community-
based assistance to victims of discrimination through the Fair Housing
Initiatives Program (FHIP). The entities participating in the two
programs both help individuals seek redress for discrimination they
have suffered and help eliminate more wide-scale systemic practices of
discrimination in housing, lending, and other housing-related services.
This budget provides $28.5 million to State and local agencies in the
FHAP and $32.6 million to fair housing organizations through the FHIP.
While this budget does not continue a $10 million initiative within
the FHIP program, funded in fiscal year 2010, specifically directed at
mortgage lending discrimination, fair housing funding, generally, and
FHIP funding, in particular, remains substantially higher than in
fiscal year 2009. Overall, the $61.1 million requested this year for
fair housing activities overall represents a 12 percent increase over
the fiscal year 2009 enacted level of $53.5 million, and the $32.6
million requested for FHIP, in particular, is fully 18 percent above
the $27.5 million in fiscal year 2009.
Since its passage in 1968, the Fair Housing Act has mandated that
HUD shall ``affirmatively further fair housing'' in the operation of
its programs. This requires that HUD and recipients of HUD funds not
only prohibit and refrain from discrimination in the operation of HUD
programs but also take pro-active steps to overcome effects of past
discrimination and eliminate unnecessary barriers that deny some
populations equal housing opportunities. To assist recipients in
meeting these obligations, the Department is revising its regulations
to clearly enumerate the specific activities one must undertake to
``affirmatively further fair housing'' and the consequences for failure
to comply. To support this effort, $2 million of the FHIP budget will
support a pilot program whereby fair housing organizations help HUD-
funded jurisdictions comply with these regulations.
Finally, I want to emphasize that as HUD works through the Choice
Neighborhoods initiative and across all of its programs to revitalize
neighborhoods, as well as enable families to choose to move to other
neighborhoods with lower poverty and greater economic opportunity, HUD
will strive to ensure that newly revitalized neighborhoods remain
affordable, inclusive places for low-income people to live.
GOAL 5.--TRANSFORM THE WAY HUD DOES BUSINESS
In light of recent natural disasters and the housing and economic
crises, last year HUD saw a pressing need for adaptability and change.
To become an innovative agency with the capacity to move beyond legacy
programs, shape new markets and methods in the production and
preservation of affordable housing, green the Nation's housing stock,
and promote sustainable development in communities across America, the
Department had to remake itself.
To accelerate the Department's transformation, the fiscal year 2011
budget makes the following vital reforms.
Develops a Basic Data Infrastructure and Delivers on Presidential
Research and Evaluation Priorities
HUD requests $87 million for the Office of Policy Development and
Research, an increase of $39 million from fiscal year 2010, to continue
the transformation of PD&R into the Nation's leading housing research
organization. The role of housing issues in starting the economic
crisis, and the importance of housing issues to the Nation's economy,
shows the urgent need for this housing research. These funds would be
used for three critical activities:
Basic Data Infrastructure.--Continue the investment made in fiscal
year 2010 to support the collection and dissemination of the core data
needed to support effective decisionmaking about housing. HUD's request
for this purpose is $55 million, which is $7 million more than the
fiscal year 2010 appropriated level of $48 million. This will be used
to conduct housing surveys--including full funding for the American
Housing Survey--support enhanced research dissemination and
clearinghouse activities, and underwrite a Young Scholars research
program.
Presidential Research and Development Initiative.--As part of the
administration's Research and Development initiative that is tied to
the President's national goals of energy, health and sustainability,
the Department proposes to administer $25 million for research on the
linkages between the built environment and health, hazard risk
reduction and resilience, and the development of innovative building
technologies and building processes.
Presidential Evaluation Initiative.--Also for fiscal year 2011, the
President is proposing to fund rigorous evaluations of critical
programs to inform future policy discussions. The $7 million proposed
will supplement funding from the Transformation Initiative set-aside to
support rigorous evaluations of the Family Self-Sufficiency Program,
potential Rent Reform strategies, and the Choice Neighborhoods program.
Maintains the Department's Existing Technology Infrastructure
HUD requests $315 million for the Working Capital Fund, to cover
the steady State operations, corrective maintenance of HUD's existing
technology systems, and the re-competition of HUD's infrastructure
support contract. As with fiscal year 2010, this does not include the
``next generation technology'' development that would be funded through
the Transformation Initiative, as described below. The bulk of the
fiscal year 2011 request ($243.5 million) would be in the form of a
direct appropriation. In addition, HUD seeks a $71.5 million transfer
from FHA to pay for its share of infrastructure costs and system
maintenance.
Provides Flexibility and Resources Needed to Fuel Agency Transformation
As in fiscal year 2010, the Department again seeks the authority to
set-aside up to 1 percent of HUD's total budget for an agency wide
Transformation Initiative.
HUD's fiscal year 2010 Transformation Initiative was intended to
indeed be transformational. The resources it provides are allowing us
to take long-overdue steps to upgrade and modernize our Department and
allow it to function as a 21st century organization. As one example, it
is helping us replace computer programs written in COBOL in the 1980s
with those written in the flexible and powerful languages of 2010. In
addition, HUD has not conducted a major demonstration since the 1990s,
when the Moving to Opportunity study was conducted. This demonstration
is still yielding important evidence on how mobility and rental
assistance interact that guides policy. And local government capacity
to effectively use Federal resources varies widely and leaves some
communities at risk of always lagging the pack.
Further, even in the instance that efforts such as technical
assistance were adequately funded, they were funded in silos--making
cross-cutting initiatives that achieve the biggest bang for the buck
next to impossible.
The TI approach we propose--allowing for the flexibility to take up
to 1 percent of our budget and devoting it to four key areas--is
similar to the approach applied by most cutting-edge institutions. This
recognizes not only the need to have targeted funding to overhead--but
the ability to respond to changing circumstances that may require
overhead to consume an increased share of the budget, a change in the
mix of activities funded and cross-cutting initiatives.
While reprogramming requests to the Appropriations Committee
provide some flexibility along these lines, these are inherently
limited in comparison to TI funding because of absolute caps in
statutory appropriations accounts.
The flexibility inherent in this TI structure allows for the more
nimble, responsive agency required in a long budget process where
individual research ideas or investment proposals made in January might
have been usurped by developments through the course of the year. A
good example would be the $50 million in Neighborhood Stabilization
technical assistance HUD made available to communities through ARRA.
Full funding of the Transformation Initiative will enable HUD to take
such an approach to scale and continue the delivery of a new level of
technical assistance and capacity building to Federal funding
recipients, recognizing that human capital, technical competence and
institutional support are critical for the success of HUD's partner
organizations.
And while we appreciate that the subcommittee did recognize this
reality in funding this effort for fiscal year 2010 at $258 million,
which has begun an important process of increasing investment and
bridging silos, we renew our request for authority to use up to 1
percent. I would note that this past year we received 110
groundbreaking research, information technology and technical
assistance proposals internally--but we were only able to fund a little
over one-half of these requests. Further, of the demonstrations and IT
projects that were funded in 2009, many were multi-year projects that
we have had to plan and operate, in all but the most urgent
circumstances, with single-year funding.
Salaries and Expenses Central Fund.--Building on the principle of
the Transformation Initiative, the budget requests the creation of a
Salaries and Expenses Central Fund, funded through a 1 percent transfer
from each of HUD's salaries and expenses accounts. The Fund will
provide targeted, temporary infusions of resources to any of HUD's
program offices in order to increase our responsiveness to
unanticipated crises and new challenges through the hiring of staff
with appropriate expertise. One example of how this type of funding
might be used would be in the instance of a national disaster--in
response to which HUD would be expected to play a key role. Another
would be FHA, which inside of 3 years has temporarily expanded from
insuring 2 percent of the market to, as mentioned previously,
approximately one-third.
As you know, HUD staff has been meeting with the bipartisan,
bicameral appropriations staff to discuss our plans in this area, and
have recently submitted a detailed report on our proposals. And so,
while I appreciate the level of trust this subcommittee showed in HUD
leadership for fiscal year 2010, I would hope that the progress we have
demonstrated and the extraordinary need to build on these successes
would warrant full funding for the coming fiscal year.
CONCLUSION
In sum, this budget continues the transformation begun with the
2010 budget--a budget I recognize simply would not have been possible
absent the leadership and commitment of this subcommittee. With the
housing market showing signs of stabilization, our economy beginning to
recover and the need for fiscal discipline crystal clear, now is the
moment to reorient HUD for the challenges of the 21st century--
retooling its programs and initiatives so it can better fulfill its
mission to serve American households and communities more effectively
and more efficiently over decades to come. I am proud of the progress
we have begun to make in these areas with this subcommittee's support,
and I look forward to our continued progress through the proposals
outlined in the fiscal year 2011 budget. Thank you again for the
opportunity to appear before you to discuss HUD's proposed budget. And
with that, Madam Chairwoman, I would be glad to answer any questions.
--HUD is currently conducting a definitive Capital Needs study of the
public housing portfolio.
--Preserving Safe, High Quality Public Housing Should Be a Priority
of Federal Housing Policy, Barbara Sard and Will Fischer,
October 8, 2008 (noting that ``90 percent of developments meet
or exceed housing quality standards, although most developments
are more than 30 years old, and many will need
rehabilitation.'').
FHA
Senator Murray. Thank you very much for your statement, Mr.
Secretary.
Let me start because you talked a little bit about your
opening statement, I did as well, that OMB and CBO differ
considerably on the amount of receipts that they estimate FHA
mortgages are going to generate in fiscal year 2011, a
difference of about $4 billion. How would a reduction of that
magnitude impact HUD programs?
Secretary Donovan. Obviously, that kind of reduction would
be substantial. Again, let me point to the fact that CBO does
agree that the changes we are proposing in legislation would
have a positive impact on the fund.
My FHA Commissioner is testifying today on the House side
in front of the authorizing committee on those changes. I
believe it is critical that we do get the authority to increase
our annual premium and that we continue to do the kind of risk
management changes and others that we need. CBO fundamentally
agrees that those changes will add to the receipts.
We have begun to work closely with CBO to look at the
reasons for the discrepancy. We would be happy to work closely
with this subcommittee, as well as the Budget Committee, to
look at the reasons for that discrepancy. Obviously, as you
know, while the CBO view is important, it is ultimately
advisory, and the Budget Committee can make a determination on
its own about which of the forecasts make the most sense and
what it is going to choose as the path for the budget.
And I would further add that, as I mentioned in my
testimony, we have substantially increased our capacity at FHA
to monitor the health of the fund, made numerous changes and
improvements in the way we project it. And in fact, thus far
this year, we are running ahead of our projections in terms of
losses and receipts to the FHA Fund.
I would also add that to ensure that we were being
conservative in the President's budget we did use a relatively
conservative house price forecast that has been below what has
actually happened in the housing market since then.
So for all of those reasons, I continue to be confident in
our projections, and we would be happy to provide whatever
information you and the Budget Committee might need to make a
final determination about the path of the budget.
Senator Murray. And are you working with the Budget
Committee on that?
Secretary Donovan. We have been working closely with OMB on
it, and they have been leading discussions with the Budget
Committee.
Senator Murray. Okay. Well, one of the paths that you just
talked about had to do with increasing the premiums on the FHA
mortgages, those premiums that are used to cover any claims on
mortgages. But the losses in recent years have caused the
capital reserve for the FHA to fall below that mandatory 2
percent. In order to recapitalize that, you are planning on
increasing the premiums.
Under existing authority, FHA will increase up front, I
think, 2.25 percent in April. But you also are saying you need
authorizing language to do that. How is your progress going
with the authorizing language, with the authorizing committees
on that?
INCREASE IN ANNUAL PREMIUM
Secretary Donovan. So we have proposed and we do have the
current authority to raise the upfront premium to 2.25 percent.
We believe, and I think there is broad agreement, however, that
it is a better approach, both safer for homeowners and
ultimately better for the health of the FHA Fund, to have a
combination of an increased upfront premium, as well as an
increase in the annual premium. And we currently do not have
the authority to raise the annual premium. That is the
authority that we are seeking through legislation.
We have had numerous meetings with both sides of the aisle
on the authorizing committees; have heard a lot of support. In
fact, Ranking Member Capito introduced her own bill yesterday
that included a broad range of the proposals that we have. And
so, I am encouraged by the progress that we are making with the
authorizing committees on that.
I would make two other notes. One is that not only is
increasing the premiums something that is important for the
health of the fund, but in addition to that, increasing the
premiums, I think, is the single most important thing FHA can
do to encourage the private market to return. We are already
hearing, once we announced the increase in our upfront
premiums, a number of private mortgage insurers and others
beginning to move back into the market. And so, I think it----
Senator Murray. Once you announced the 2.25 percent?
Secretary Donovan. The 2.25 percent. And so, I believe it
is important, given that we believe FHA's current role is a
temporary role, that we want to see the private market return,
that raising the premiums sends the right signal to the broader
market and will help others return to the market.
The last thing I would note is that we do have the current
authority to raise the upfront premium even further. So
increased receipts along the lines proposed in the budget are
not completely dependent on the legislation.
Senator Murray. Increase above the 2.25?
Secretary Donovan. Above the 2.25.
Senator Murray. Do you have authority to do that without--
--
Secretary Donovan. We do have the ability to go up to 3
percent currently. However, and again, there is wide agreement
on this, it is a better path not to raise the upfront premium
that far or even to keep it at the 2.25 that we have already
proposed to raise it to, but to increase the annual premium
further in order to provide more security for homeowners as
well and a better deal for homeowners and to build the fund
more quickly.
Senator Murray. Are you making any progress in the Senate
Banking Committee?
Secretary Donovan. We have had very good discussions with
them on it as well. The House has taken the lead with their own
bill, but we have heard bipartisan support around many of the
changes that we have proposed.
Senator Murray. If we were to get that kind of legislation
passed, when would you anticipate the capital reserve funds
will be at or above the required 2 percent? How long would it
take?
Secretary Donovan. Based on our numbers, we believe that
the 2 percent is achievable by 2012 or 2013, based on
conservative assumptions in house prices.
Senator Murray. When would the legislation have to be
enacted in order to have that date?
Secretary Donovan. One of the keys about getting the
legislation enacted as quickly as possible is that our
estimates are that every month sooner we get the legislation is
another $300 million in net receipts to the FHA Fund. So every
month that we get that either later or earlier has a $300
million impact on those funds.
STATE OF THE HOUSING MARKET
Senator Murray. Okay, all right. Well, let me move on.
It seems that every day there is a new report out there on
the state of the housing market. But the reality is that
economists often arrive at completely different conclusions
from the same housing market data.
You have testified that housing prices have held steady or
risen since last April, which provides reason for optimism.
However, in January, new home sales plummeted to the lowest
level in 50 years, and many regions in my State continued to
experience some severe home value losses.
Do the reductions in home sales that we saw in January make
you concerned about the stability of the market, and when do
you expect that we may see home prices stabilize?
Secretary Donovan. What I would say about that data, widely
expected with the original expiration of the home buyer tax
credit that there would be a decline in sales during December
and January. I would say that the decline in January was
somewhat worse than expected. Part of that was weather driven,
frankly. But even beyond that, there were, I think, notes of
concern that we took from those numbers.
I think what it highlights most of all is that the levels
of prices in home sales continue to be fragile. They are still
above where they were a year earlier, which is, I think, an
important benchmark. But one of the reasons we supported the
extension of the home buyers tax credit, as well as we continue
to support the importance of FHA, the GSEs, and other
interventions keeping interest rates low is that we are
concerned about the fragility of the housing market.
Overall, again--and this goes to your point earlier--when
we came into office, widely predicted economists on both sides
of the aisle, and more broadly across the spectrum, expected on
average another decline of 5 percent in home prices last year.
That did not happen with the support of the administration.
Home prices were basically level during last year.
So I think we have had the impact of stabilizing the
market. But it is fragile, and we need to continue to focus and
do more to ensure that we are on the right path with home
prices.
Senator Murray. One of the programs that the Federal
Reserve is going to end is the purchase of mortgage-backed
securities that has helped quite a bit, and the home buyer tax
credit is going to expire here shortly. Are you concerned that
if we don't extend those important initiatives, we are going to
add to that fragility?
Secretary Donovan. Typically, the home buying season is
slowest during these winter months, and we will all be watching
very closely the sales numbers as we move into the spring and
as we get closer to the expiration of the tax credit. I would
say that it is too early to decide that.
My strong belief based on the indicators that we have seen
is that the Federal Reserve is taking a very measured approach
to stepping back that program and will be watching the market
very closely. We will be doing the same.
But I think it highlights the fact that with FHA, while we
have significantly stepped up our risk management, increased
underwriting requirements, down payments, raising premiums,
that we must take a balanced approach and not go too far to
exclude buyers that can be successful in the market. And so,
that balanced approach, I think, is critical, as well as
watching the numbers over the next few months in the spring
buying season very, very closely.
Senator Murray. Okay. Senator Bond?
Senator Bond. Do you want to continue your questions and do
those, and then let me do mine? Then go on, go to E&W, and let
me--I will, if you trust him to my tender mercies?
MAKING HOME AFFORDABLE PROGRAM
Senator Murray. All, Mr. Secretary, we have reached a
gentleman's agreement here. I am going to finish the question
that I need to ask you right now and then turn the gavel over
to Senator Bond, who is going to ask his questions and then
come to the Energy Committee, if that is okay with you?
So I wanted to ask you about the Making Home Affordable
Program. One of the programs in that, the Home Affordable
Modification Program, HAMP, reduces a homeowner's monthly
payments by lowering interest rates or spreading a mortgage out
over a longer period of time.
That program was supposed to help about 3 million to 4
million families by 2012. But as of January, only about 116,000
homeowners have received permanent modifications under that. We
are hearing that servicers have been struggling with burdensome
changing rules, and borrowers are confused. And wondered what
changes you were looking at on that program?
Secretary Donovan. So, first of all, I would say that there
is no question that there were early implementation problems
with servicers who did not have the capacity to be able to
reach borrowers and that there has needed to be, and there has
begun to be, a significant increase in focus, as well as
resources, at the servicers. We have also taken a number of
steps to streamline the process, streamline documentation, and
simplify the process.
One of the most important changes is that we have announced
that we will be requiring all documentation to be gathered up
front, rather than at two different points--at the beginning of
the trial modification and before permanent. That should
greatly simplify the process.
And we have also done an enormous amount of outreach in
locations around the country to bring homeowners and servicers
together with fairs and a whole range of other events and
direct connections. We have folks under the direction of the
servicers literally going door-to-door to try to get homeowners
qualified.
What I would point out is that based on all of those
efforts, we were able to reach just 1 year after the creation
of the program--just 1 year after the creation of the program
more than 1 million homeowners with trial modifications. And I
think it is very important to point out that those trial
modifications are having a significant positive impact for
those families, average savings per month of over $500 and
significant benefits to them.
So, based on that, we are on track to reach the 3 million
to 4 million homeowners that we originally committed to. We are
concerned that the permanent modifications have not been moving
quickly enough. We have significantly increased the pace of
that. And we today are seeing about 50,000 new permanent
modifications a month, based on our recent experience. And so,
I do believe while we still have some improvements to go, that
we are making significant progress in terms of home affordable
modification.
I would finally just say that--and by the way, we have
almost 20,000 of those in the State of Washington. I would be
happy to share more detailed information with you on that.
Finally, I would say that that is only a part of the
broader strategy. And with the announcement the President made
that you referenced in Nevada just 2 weeks ago, as well as a
number of other steps that we are taking, I believe we are----
Senator Murray. Yes. Let me ask you about that. You
announced this program to help these five States that--in
Nevada a few weeks ago. What is the specific timetable for
implementing that program, and when would we start seeing
results on that?
Secretary Donovan. So, on that program, what we determined
is that we have a number of national efforts. We continue to
examine new national efforts, but that the challenges facing
those places are quite different depending on the State. For
example, Michigan's challenges are very different from Nevada's
or California's.
And so, what we did was to ask the five States, their State
housing finance agencies, to come in and propose tailored
programs for those States that would most effectively target
the problems that they are seeing. We have seen very effective
State programs in a number of places, Pennsylvania and others,
along these lines, particularly targeted at unemployed
homeowners and underwater homeowners.
We have asked the States to come in and propose to us
within the next few weeks plans. We will then review those
plans, and we hope to be able to approve them within the next
month to 6 weeks and then to be able to start implementing
those programs immediately at that point. Again, many of these
State agencies already have programs up and operational that we
could enhance or change that could get going very quickly.
Senator Murray. Okay. Are you looking at expanding that
all? In my home State, we have about a quarter of a million
Washington State homeowners today who are underwater,
representing about 16 percent of our homes, especially in two
of our counties, Pierce and Clark Counties. Are you looking at
expanding this to any of the other States?
Secretary Donovan. What we are looking at, Madam Chair, is
broader national efforts around negative equity and
unemployment that could target the issues that you are talking
about in your State.
One of the reasons we wanted to take the approach on the
program that the President announced in Nevada is to test
models that then potentially could be used in other States. So
we don't have any immediate plans to expand it until we have
begun to see the results. But we are working on other efforts,
which I would be happy to follow up with you on, and talk more
about, that would nationally target the negative equity issue
and unemployment that could have real benefits in Washington.
BACKLOG IN PUBLIC HOUSING CAPITAL IMPROVEMENTS
Senator Murray. Okay. We would like to hear more about
that.
I wanted to ask you about the backlog in capital
improvements needs in public housing now estimated at over $20
billion. The President's budget proposes the first phase of an
ambitious plan designed to leverage significant private sector
resources to tackle that backlog and preserve those assets.
I agree. We have got to find a long-term solution on this,
but I am concerned about the absence of detail in the proposal
so far and its cost.
For 2011, the administration is looking for $290 million in
additional subsidies in order to leverage those private sector
dollars. When fully implemented, I understand the program is
going to cost about $1.4 billion each year. How would you
accommodate this major new requirement, given the President's
commitment to freeze discretionary spending over the next 3
years?
PUBLIC HOUSING CAPITAL FUND
Secretary Donovan. I think one of the important points to
make about this initiative is that the fundamental change that
we are talking about is shifting from an operating and capital
approach to one which has only an operating stream. So while
there are increases that we are proposing in operating
subsidies in the budget, we will have, particularly over the
longer term, significant savings and, ultimately, not require
any capital funding for public housing in a separate account.
And so, that is one way that we have offsetting savings that
come from the way that we are proposing this.
A number of other points, though. That does not account for
efficiencies that this will achieve. I talked in my testimony
about the enormous complexity of the current range of programs
and how difficult it is to achieve mixed financing and other
things. Part of that are operational costs at the Department,
which we have the potential to do significant savings on. We
have begun to estimate those. Those are not simple to estimate.
Senator Murray. Sure. Are you going to put forward
proposals to cut the operating stream side of it, expenses?
Secretary Donovan. The capital?
Senator Murray. Yes.
Secretary Donovan. Yes. There will be offsetting reductions
possible in the public housing capital stream as a result
because we will be moving to a system where there would only be
operating subsidy going to those developments. And they would
use--just as is currently done in almost every other program
that we have, funding could be raised privately or from tax
credits or other sources to pay for the capital needs.
And so, that we would go from this more complex two-subsidy
system that we have today with public housing to a one-subsidy
stream. It would require the operating subsidy to be higher,
but it allows us to offset to a great extent that increased
cost to the operating subsidy with reductions and, ultimately,
elimination of the capital stream.
There will also be significant savings in terms of reduced
complexity for the developments themselves. The management,
oversight, the soft costs of hiring lawyers, and all kinds of
other things around transactions that----
Senator Murray. It sounds really good. I just want to see
how it works on paper so we have accountability in the system
and we know it works.
Secretary Donovan. And I know that we have been working
with your staff to try to get more details about the long-term
costs and savings around the proposal.
TRANSFORMING RENTAL ASSISTANCE
Senator Murray. We will need to see those. Okay, good.
One of your proposals is to transform rental assistance to
make sure that tenants have mobility options, even though from
what I see, the funding is going to be tied to a particular
unit. Now I understand that you are modeling this proposal on
one of the provisions of the section 8 Tenant Based Rental
Assistance Program. Under the existing program, PHAs are
allowed to commit or project-base a voucher to a particular
unit.
Secretary Donovan. That is right.
Senator Murray. This enables the PHAs to leverage private
resources to finance the construction or rehabilitation of
those units. But with project-based vouchers, PHAs are able to
make sure residents have mobility by providing them with
another tenant-based voucher from their existing supply if a
person decides to move.
However, your proposal would allow participation by
entities that don't have voucher programs, whether they are
public housing authorities or owners of other HUD-assisted
housing. The lack of vouchers would appear to be a barrier to
mobility in these systems. In these cases, how do you provide
residents living in this type of housing with mobility options?
Secretary Donovan. It is an excellent question. And
mechanically working out the operations of linking those
housing developments with vouchers is a very important part of
the proposal. And I would just say broadly, we have been
spending a lot of time working with stakeholders, talking with
OMB, within the administration, and also reaching out to the
authorizers, as well as your staff, to discuss a lot of these
issues. And we expect not only to have authorizing language,
but also far more detail based on the input that we are getting
from stakeholder meetings and others that we are doing.
On this mobility point specifically, first of all, what we
are looking to do is to make sure that if a housing authority
or another entity does not have control of a voucher program
themselves, that we link them with a voucher program in the
area where the project is located to ensure that there are
vouchers available for those families that would move. What we
are looking at is sizing exactly how big that pool would be and
to ensure that we are not creating too much of a need for
additional vouchers to be able to do that because, as you
rightly said, the cost of that and the potential pressure on
the voucher program overall is important.
We believe based on our latest modeling that we can achieve
significant mobility, if not complete mobility, with the
existing resources that we have. But we want to come back to
you with a number of options on that that would say if we want
to do this amount of mobility, here is what we could do.
Senator Murray. This is what it would cost.
Secretary Donovan. If we wanted to do further mobility
among a broader population, here is what the cost would be, and
here is how we might be able to work it. So we are working
through a lot of detail on that and look forward to sitting
down with you.
Senator Murray. Okay. We want to be continually updated on
where you are with that.
Secretary Donovan. As always, you have hit on a very
important piece of this, an important point about how we
achieve that mobility.
HUD-VASH PROGRAM
Senator Murray. Okay. And lastly, I wanted to ask you about
the HUD-VASH program. You know this is really important to both
Senator Bond and I. We have worked very hard to include it in
our budgets and appropriations over the last several years.
I have heard wonderful stories from veterans in my home
State, in Walla Walla, Washington, that have gotten jobs,
gotten healthcare, and gained sobriety because they have these
vouchers. There are similar stories across the country. But I
know this program has faced some challenges in implementation
in some parts of the country, and the VA is, as you know,
struggling to quickly hire case managers and adapt to this new
model of permanent supportive housing.
Based on the most recent data, it appears that now only
about half of the vouchers that we provided in fiscal years
2008 and 2009 are actually being used. Can you tell me what HUD
and VA are doing to overcome these problems and make it
successful? Because we know when it gets out there and people
are using it, it makes a huge difference for our veterans. But
having administrative challenges at any level here on the
ground is a disservice to the veterans.
If you can talk to me about what HUD and VA are doing?
Secretary Donovan. Absolutely. And let me just start by
saying your support and championing of this program has been
absolutely critical, and we believe it is having a tremendous
impact on veterans, despite some of the challenges that you
talked about.
I also would put it in the context of the commitment that
the President and Secretary Shinseki have made to end veterans'
homelessness. VA has included a $265 million increase in
funding for veterans homelessness in its proposal for 2011. So
this is in the context of broad support for the intent of the
program and, more broadly, ending veterans homelessness.
The way I would characterize the challenges largely are
that VA is an expert in healthcare. What has been required in
order to make the program effective and to fully utilize the
vouchers has been building a capacity beyond healthcare that
includes community-based outreach and the ability to connect
the healthcare and other services available at VA hospitals
with the housing and other support services that may be
necessary.
Where we have seen great success is where VA hospitals have
built that capacity, and we have begun to connect them with our
continuums of care, community-based providers where they can
form links to ensure they are finding veterans where they are,
whether it is on the streets or in shelters, as well as helping
to build their capacity and understanding about the latest
techniques of whether it is housing first, supported housing,
and others.
And so, whether it is in Washington, DC or in many other
places, we are seeing significant increases in utilization of
those vouchers with those targeted strategies. And we have now
developed with VA a plan to try to more broadly spread those.
We have spoken about this, and you had a number of good points
the last time we spoke about this that we are incorporating
into that thinking, and we want to come back with you with a
response on that.
Senator Murray. Okay. Well, my subcommittee really wants to
work with both you and the VA to get this out. I was really
disappointed the President's budget didn't include any funding
for 2011. We can't let administrative lack of dialogue or lack
of working on problems keep these vouchers from going to our
vets.
So we want to keep working with you on the implementation,
and clearly, that remains a high priority for this
subcommittee, and I thank you for being committed to that and
working with the VA on that.
Secretary Donovan. Thank you.
Senator Murray. Senator Leahy has joined us. Senator Leahy,
I will just let you know I have to run to the Energy and Water
Committee really quickly. Senator Bond is on his way back. I am
going to, without asking you, turn the gavel over to you and
allow you to go ahead and question the Secretary.
Senator HUD will be--Senator HUD, he would love that.
Senator Bond will be back shortly. And if you finish before
he gets back, if you could just put it in temporary recess, he
will be here within----
RURAL AMERICA
Senator Leahy [presiding]. Of course, and I am going back
to a mark-up in Judiciary. But I was able to get permission to
leave the Judiciary meeting, funny how that works.
Thank you, Madam Chair. And thank you for the tremendous
job you do on this and other appropriation matters.
Secretary, it is good to see you, and I appreciate having
you here to discuss the administration's budget request. So
many of the programs in your Department have served my State
very well, you have got one heck of a portfolio, and there are
probably days when you wish it wasn't quite as much. But I
would welcome you up to Vermont sometime to see the good things
HUD has done to provide affordable housing, especially in our
rural communities.
We always think of housing in urban settings, but my home
State has only 660,000 people, and a lot of it is very rural.
But something that works in rural Vermont could also work in
rural California, or New York, or Texas, or elsewhere.
Now I know others have asked you about the Department's
proposal to cut the budgets of the 811 and 202 programs and the
HOME program. I worry about this because as I look at the
budget, I am afraid there is a shift of priorities from rural
areas, rural America to urban areas, and I remind everybody
that rural America still is a third or more of America's
population.
Of course, back at the time of Franklin Roosevelt, they
were concerned about rural America, and we had rural
electrification, a number of other programs that made an
enormous difference in society. I know it did with my
grandparents in Vermont and others.
But Vermont and other rural States rely on these programs
to build affordable housing for low-income, elderly, and
disabled residents. So if Congress agrees with your budget
proposals, how are you going to deal with the problems of rural
America?
Secretary Donovan. Senator, thank you for the question. I
look forward to visiting you in Vermont. It is, I probably
shouldn't say this in a Senate hearing, one of my favorite
States. I spent a lot of time there----
Senator Leahy. Mine, too.
Secretary Donovan [continuing]. Growing up, and just a
beautiful, beautiful place.
So let me say a couple things about this. First of all, we
had to make some very difficult choices in the budget this
year, given the broader outlines of the Federal budget deficit,
and we made a fundamental choice to focus on existing
households that we serve and ensuring that we were fully
funding our major rental assistance programs. That required
capital cuts in a number of different areas. Just to be clear,
those rental assistance programs are critical in rural areas of
the country as well, and we would be happy to get you more
detail on how they support rural areas.
I would also say that, today, the single most important way
that we fund housing for the elderly and disabled in rural
areas and other areas is through the tax credit program. Eight
times more senior housing is developed through tax credits than
through 202 and over 10 times more for people with
disabilities. And so----
Senator Leahy. But I still come back to my basic point. I
worry about the way this is set up, that we are seeing a shift
from rural to urban, and that is what I am going to be most
concerned about. Because there is no way I could support--I
could support an appropriation that did that.
Secretary Donovan. And I believe that that is, in fact, not
the case. Section 202 and 811 are equally available in a range
of areas. But let me point to a few things that I think are
particularly targeted to rural areas in the 2011 budget
proposal.
SUSTAINABLE COMMUNITIES
First of all, we will, for the first time ever, be
establishing a program specifically targeted to rural
homelessness in 2011. That has never been done before. We
have--because of the work of this subcommittee, in our 2010
budget, we will be making Sustainable Communities funding
available for the first time with a specific 25 percent set-
aside for smaller communities, and that is a critical effort.
We are also building on our experience in investing in rural
economic development through a proposed catalytic investment
fund, which will be an important resource available in rural
areas as well.
So not only do I believe that we have housing resources
specifically for constructing senior housing and housing for
people with disabilities in rural areas, but that we are
actually increasing our focus on rural areas with a number of
different proposals in the budget.
SHARED EQUITY PROGRAMS
Senator Leahy. Thank you. I look at some of the different
things you have done--the administration has done and Congress
has supported to promote home ownership. In HUD's previous
budget request, the Department expressed interest in an
innovative home ownership model known as shared equity. It is
typically run by nonprofits.
They promote home ownership among low- and middle-income
families by providing down payment assistance. The
affordability of the home is retained. When the buyer
eventually sells the home, the nonprofit recoups what they put
for the down payment and also part of the appreciation. They
also usually have the right of first refusal to buy the
property. If Congress included funding for a pilot program to
increase shared equity programs, is that something your
Department would support?
Secretary Donovan. We certainly not only believe in shared
equity models, but there are a number of ways that we have
begun to support those. What I would suggest is that we would
love to sit down with your staff and explain what we are
already doing around shared equity and see if there is a way we
could get to a pilot of the kind that you are talking about,
even under existing authority, and then describe, be able to
figure out what additional authority might be needed to achieve
what you are----
MAKING HOME AFFORDABLE PROGRAM
Senator Leahy. Thank you. And we will. Whenever you would
like, we will make sure we have our folks ready.
And in your prepared remarks that were read earlier, you
spoke about the housing market. You noted that a lot has been
done by the administration to right the ship, and I am pleased
that many Americans have been helped by the Making Home
Affordable Program. I think we all know the societal value of
home ownership and community value and everything else, to say
nothing about the economic well-being of the country.
I am concerned about some who have slipped through the
cracks. One of the concerns I hear most often on housing when I
am home in Vermont is that some of the lenders in the program
aren't abiding by the rules. The homeowner has been having a
hard time getting straight answers, and it is frustrating
because I will hear questions, whether walking down the street
or at the grocery store or wherever. They say, ``We can't get a
straight answer.''
Is your Department and Treasury looking at this issue of
whether this is happening in States? Because it is to all our
benefit if people can be homeowners, but they are going to have
to have--they are going to have to be able to get the answers
they need.
Secretary Donovan. There is no question that particularly
in the early months of the program, servicers--there were
significant problems with servicers. There continue to be
significant problems in some cases.
We have both pushed servicers to create better
communication, more resources, and more people in their call
centers, going door-to-door to do that. But we have also
created very specific standards for exactly what the timelines
need to be for servicers to get back to homeowners with a clear
response on whether they are eligible or not. We did that just
a month or so ago.
And in addition to that, we have begun to impose penalties
on servicers who are not following those guidelines. So, yes,
we are hearing those issues, and we are taking action on them.
Senator Leahy. Good. I must admit, and as Senator Bond
knows, when somebody corners you in the grocery store and they
have got a concern, they have got a concern. And I sometimes
find those--actually, I like that. In a small State like ours,
everybody knows everybody. And nobody hesitates to come up and
ask you the questions. And this thing is occurring too often to
make me think it is just a random issue.
Senator Bond is here, who knows these issues as well as
anybody, and I am going to turn the gavel over to him.
Senator Bond. Well, I appreciate getting the gavel back
from my good friend. Senator Leahy has outlined the concerns we
have in rural America. I had raised those earlier, Pat, before
you came, and they had--we had one little $25 million rural
housing program for HUD to work with USDA, and that was gone.
So I was interested to know that the Secretary had said
while they have zero budgeted, that something new is going to
spring full-blown out of somewhere. And I can assure you that
those of us who live in places where we don't have a rush hour,
we have a rush minute, there are--they can't even--radio
stations can't even sell drive time advertising because nobody
is in the car that long unless they are driving to another
city. And then that is----
Senator Leahy. If the Senator would yield? Last week,
Marcelle and I were in Vermont, and I got in the car. We were
driving somewhere. And as I go out of the driveway, I started
to reach for the radio to hear the traffic report, as I do when
I am driving back and forth in Washington. And I am like,
``What am I doing? There is no traffic.''
But I have been in some of the rural areas of your State,
which is so beautiful, it made me think of home. But the needs
are the same. And with that, now that we have done our bit----
Senator Bond. A little soft shoe there.
Senator Leahy [continuing]. To show you that we care about
rural America, but Secretary Donovan, I know you do, too. So
thank you.
RURAL HOMELESSNESS
Senator Bond. Thank you, Pat.
And Mr. Secretary, maybe you would want to comment on that?
You have got a new rural housing initiative to replace rural
housing?
Secretary Donovan. Well, I mentioned as you were coming in,
a range of efforts in the budget. That is an issue I know you
care a lot about. We will be implementing the first-ever rural
homelessness effort specifically in the budget and that is
something that, particularly given that we have seen a 56
percent increase in rural and suburban family homelessness over
the last year, absolutely critical.
We are expanding efforts for economic development. The $25
million that you talked about was targeted to economic
development, and we are proposing a $150 million fund in the
budget, which would have a portion of it specifically targeted
for rural areas. So I don't believe that we are not going to
have the kind of effort----
Senator Bond. I will just ask the question. Are you going
to work with the USDA on rural development?
Secretary Donovan. Absolutely.
TRANSPARENCY IN HUD PROGRAMS
Senator Bond. That is one of the secrets because you need
the housing. You need what USDA can bring. And I think it is
important that you maintain that collaboration. If you are
talking about moving 25 to 150, I am happy with that. But I
just--I want to work with you to make sure that it continues to
work because, as Senator Leahy said and I know, there are
problems there.
Let me go to the issue of transparency, and I mentioned to
you before I sat down that I am concerned that HUD
decisionmaking is open and objective. Are there political
decisions which enter into that? Do you get directives from
either the top of the administration or Congress on how you
make those? Are those transparent?
Secretary Donovan. Absolutely.
Senator Bond. And to what extent are those involved in the
decisionmaking?
Secretary Donovan. Let me be very clear. My ``absolutely''
was to the transparency. We make our decisions, particularly on
competitive grants, in a highly transparent way. We publish the
criteria for those as we did with NSP2. We have--with every
single Recovery Act grant, have made those available on
recovery.gov, our Web site, with detailed information about
where the money is going, how it is being used.
We have every applicant who wants to sit down with us and
go through the details of how their application was reviewed
and scored, we respond to those requests. We would be happy to
sit down with you about any specifics around that.
As you know, whether it is HOPE VI or a range of others, we
run competitions, and we follow very, very strict guidelines in
terms of how they are evaluated and----
Senator Bond. Is there any notification or transparency as
to those who apply? We hear about some, but we don't even know
if we know all of the ones that are coming from our State so we
can follow them. Is there a posting of the applications?
Secretary Donovan. We notify members in advance of making
those announcements.
Senator Bond. Yes. But when you get the applications, do
you notify? Is there any public notice of the application? Who
is in there? Do you advise the representatives in Congress of
those in advance of the process?
Secretary Donovan. I will say I am not sure if we have a
standard process for notifying members about applications in
advance. We can certainly get back to you with more detail on
the process we do follow.
Senator Bond. My staff has some questions about that, and
we are a little concerned. We look forward to working with you
on that.
Secretary Donovan. Okay.
SUSTAINABLE COMMUNITIES INITIATIVE
Senator Bond. Because I think most members, certainly over
on the Senate side and, I would assume, on the House side,
would like to know if there are 3, 10, 15, or 20 coming in from
our State. Because we want to work with them, and we may be
able to shed some light on community support because we are out
there. We are listening to the people. We know some of the
challenges they face, what the State and local priorities are
as well, and we want to see those taken into account.
If the State is putting money into it and the locality has
some skin in the game, to me, that is a very good indicator
that this is something the Feds should look at carefully.
Let me ask some questions about--a major question about
sustainability. Your DOT friends call it ``livability.'' I
don't know if that debate has been going on for a long time.
But I want to make sure, once again, that the Federal
Government is not forcing conclusions on local communities.
How do you make these sustainability decisions? Do you do
it with DOT and EPA? How much involvement do the State and the
local governments have in working with you to make those
sustainability determinations?
Secretary Donovan. Let me say two things about that. First
of all, we here--the fundamental issue here is that more and
more American families are spending a huge portion of their
budgets--the average family today spends 52 percent of their
budget on housing and transportation combined. And not only
that, they are sick of sitting in traffic rather than seeing
their family or having long commutes in rural areas in some
cases to get to jobs. There is a whole range of challenges that
we see.
And so, we feel we are responding to local needs and
choices on that front. But the problem has always been that
housing and transportation investments haven't been coordinated
at the Federal level because there wasn't the kind of
partnership that we are talking about.
So we have begun to coordinate very closely with the
Department of Transportation, with DOE--Department of Energy--
and Environmental Protection Administration, just to give you
an example. On the recent TIGER grants that were awarded as
part of the Recovery Act, we had HUD staff and EPA staff
actively involved in the process, first time it has ever
happened, of evaluating TIGER grants, to look at the connection
of those to housing. So that is an example of that.
On the State and local piece of this, we believe very
strongly that this is not a one-size-fits-all. And so, the very
first initiative we are undertaking in our Sustainable
Communities initiative is to provide, thanks to the
subcommittee's leadership, planning grants for local
communities to be able to decide how they want to coordinate
housing and transportation. This is not about us telling them.
This is us providing help to them so that they can do the kind
of planning and coordination, provide technical assistance.
What are the best practices?
And in fact, I don't know if you were here, 25 percent of
that planning money is specifically directed to smaller places
to ensure that this isn't just an urban or even suburban
investment, but that we are doing planning. Tom Vilsack is very
eloquent about this. We have worked a lot with him and his
Department.
Is how do we ensure in rural areas, whether it is main
street where stores are leaving, that main street, whether it
is figuring out what to do with upper floors of buildings along
those main streets in small towns, whether it is connecting
seniors to the services that they need, with kinds of transit
that you wouldn't see in larger urban areas. A whole range of
ways that we can work together and those planning grants are
the key first step, funded by our 2010 budget, to be able to
help local communities decide how they want to meet these
challenges.
STAFFING FOR INITIATIVE
Senator Bond. Well, I think that is very important that you
have a right to ask of the local communities or regional areas
what their plans are, and that is something I have worked on
for about 40 years. And making sure they have it all together
and know what they are doing is important. And we would hope
that the Federal agencies would make sure there are good plans
that support the plans.
Now, how many FTEs at HUD are working on this? Are you
adding people? Are you reallocating people from other areas?
How many folks do you have working on that?
Secretary Donovan. I just asked my folks to get me the
precise details. We have established an Office of Sustainable
Housing and Communities. It is a small office. And the idea of
that office is to coordinate, as I just talked about, with
other departments that are working on this, as well as within
the agency.
So, for example, where we are retrofitting public housing,
what we want to make sure of is we don't have three different
standards or different approaches to our multifamily programs,
our public housing programs. So we are creating unified best
practice standards that we would apply across the Department.
And so, that is the nature of that office.
For 2010, and this was a discussion I believe we had in
some significant detail with your staff on the subcommittee, we
have 20 FTEs in total for 2010. And we expect for 2011 to have
23 FTEs. So it is a relatively small office, again coordinating
just policy and programs across--between the departments, as
well as across different silos within HUD.
Senator Bond. I know the coordination is very good. You
ought to decide with DOT whether it is sustainability or
livability would be helpful. If you could at least agree on a
title, that would be a good--a good start.
On the FTEs, our big deal is are you dealing with the
overall staff problems, making sure you have enough in FHA
while you are moving people around? We know you need help, but
do you have the FTEs you need?
Secretary Donovan. Thanks to both the investments you made
in the 2009 budget, as well as the investments in 2010 and some
flexibility that you gave us in 2010, one of the concerns that
I had when I came in--and we have worked very collaboratively
with you--is that we had created very specific restrictions
across nine different pieces of HUD in terms of FTEs. And the
flexibility that you have given us has allowed us to increase
hiring substantially.
In FHA, we have literally hundreds of additional staff that
we are bringing on to do that while trying to make sure that we
are not overall increasing the size of the staff of the
Department beyond what is necessary.
SECTIONS 202 AND 811 PROGRAMS
Senator Bond. Now I have--as I indicated, I have some
concerns about if there is a cutback in the 2012 budget based
on problems with the deficit. I would like to know how HUD
plans to deal with it, and when you have put funding on hold
for 202 and 811. Are you going to make sure that those
programs--we will not overlook the people who are served by 202
and 811 while you push the current priorities. How are we going
to make sure that those people are covered?
Secretary Donovan. So, first of all, I think one of the
most important things to recognize is that the vast majority of
housing for seniors and people with disabilities today gets
produced not by 202 and 811, but by the tax credit and other
funding sources.
The issue--and I will tell you very honestly, I dealt with
this very directly in my prior work, both in the private and
public sector. It is very, very difficult, close to impossible
in some communities to develop new 202 and 811s because the
program is really designed, frankly, for the 20th century, not
the 21st century.
And because of the amount of funding that is available, the
way that it is distributed, the rules that apply there is
almost no case where a community can develop a 202 or an 811
without finding tax credits and a range of other sources to
complement it. And yet, at the same time, the rules are not
built so that you can combine those funding sources.
So what we are proposing, just to be very clear, is not
that we eliminate the program. We believe the intent of the
program is absolutely critical. But what we need to do is
reform the program so that it works efficiently with today's
way of producing affordable housing for seniors and people with
disabilities.
There is a reform bill that is being discussed on the House
side where we agree with a large number of those changes. In
addition, we believe there are other steps that could be taken,
for example, to link up with the health funding streams at HHS
that are often necessary, like PACE, for seniors as they age in
202s. And we need to make sure that we get the program right,
we believe, before we continue to build new units under 202.
Senator Bond. What I am worried about, I guess we are
letting loose of the trapeze bar, and I want to see a trapeze
bar there to hang onto. And the other thing is to manage, to
continue the services and providing services in many of these
target populations is critical.
That is why Senator Murray and I promoted the VASH program
to bring the VA and HUD together because the homeless veterans
are very near and dear to my heart. They have some very serious
problems that cannot be fixed with housing alone. I want to
make sure that we continue those services.
Certainly, you will have no argument from me on a need to
clarify, consolidate, and simplify the HUD programs. That has
been--that has been the thicket that every HUD Secretary I have
known has found to be unmanageable. At the same time, as
Senator Murray referred to it, I personally have a minimum
amount of high confidence in the authorizing committees'
ability to deal successfully with these legislative changes in
time to ensure there is not a gap.
And we are going to have to work with you on that because
anybody who looks at the legislative calendar in the United
States Congress knows that even getting our appropriations
bills done is going to be a challenge. And we are going to have
to have some discussion because the banking committees are
trying to bite off financial regulation and that one is not
going to be a simple mark-up in 2 days on the floor, at least
in the Senate. And man, there is not enough time to do it.
TRANSFORMING RENTAL ASSISTANCE
So we need to work with you on that. The TRA program, it is
very optimistic. I would just ask you, what do you see as the
key elements and the advantages of the TRA program over current
programs?
Secretary Donovan. So, today, given the way particularly
let us take public housing as an example operates. Because it
functions with both an operating subsidy and a capital subsidy,
it is essentially 100 percent Government funded. And because of
that, it is almost impossible, short of HOPE VI, to create with
public housing the kind of mixed income, mixed use, 21st
century housing that I believe our residents deserve and that
our communities deserve.
And so, fundamentally, what TRA is trying to achieve,
beyond the simplification and all the benefits that come with
that, is to bring public housing and our other programs into
the mainstream, to stop having them be in some ways a parallel
universe, if you will, from the way the rest of our housing
market operates.
And if you look at whether it is tax credits or the new
ways that we develop affordable housing, they have all of those
benefits public housing has not been able to get. At the same
time, public housing has been underinvested in because it
hasn't been able to access, whether it is tax credits or, more
broadly, private capital or other forms of public capital.
The fundamental reason for that is because we have this
dual system of operating subsidy and capital subsidy. So what
may seem deceptively simple at one level, but I think has very,
very powerful benefits is not just consolidating all these
programs, but shifting to a system where we have one operating
stream that allows public housing to leverage private debt, mix
uses, mix incomes. All of the things that we do in the best
public--best affordable housing today, we can achieve by
shifting from this.
And the last thing I would say is the fact that a low-
income family has to make a choice between keeping their
subsidy or moving, whether it is to get a job in a different
community or a different neighborhood, to follow family, or for
whatever reason they may choose to move, that fundamental
choice that they have to make today, I believe, isn't fair. And
so, one of the key areas of the program would try to change
that is to say let us give families more choices for mobility
as we do in certain of our programs today but, at the same
time, ensure that we keep the project-based, long-term stream
of funding available for that property that I know you believe,
and I agree, is so important to our efforts to keep communities
strong.
Senator Bond. I think when TRA was promised, was proposed--
the legislation was promised this month--it is clearly a big
and controversial effort, had lots of questions with it. And I
think we need to have discussions with you about it and debate,
I hope, sometime. I don't know when we can ever get floor
debate, but have it brought up for thorough congressional
debate.
So when are we going to see it, and how much legislation is
needed? My staff is saying that perhaps 90 percent of it can be
done by regulation. What do you see as the process? When will
we see the product? When will we get to start on the process?
Secretary Donovan. So, first of all, let me just say I
completely agree with you that this is an ambitious, large-
scale effort, and I want to be clear, this will not be achieved
in 1 year or one budget cycle. And so, what we have proposed is
to begin it in 2011, focused on 300,000 units out of a much
broader stock that is probably 10 times that size.
So we don't believe that it is achievable, I think this
aligns with what you just said, that all of this cannot be done
in 1 year. It is going to take some time. Having said that, we
will--we have been working very closely within the Department
with stakeholders, begun discussions with the authorizing
committees as well about legislation.
We are committed to meeting the timeline that we laid out
to get draft legislation put forward, and I would suggest that
we would be happy to sit down as soon as possible with you and
your staff to begin to answer any questions that you have and
go through the details.
Senator Bond. Well, we want to see what needs to be done.
And if you are focusing on 300,000 units, that goes back to my
initial concern. All the other programs that are being zeroed
out, what is going to happen to those needs in areas that are
not covered by the 300,000 units?
So, I mean, there are a lot of questions, and I think we
will have to--we will know the scope of the questions when we
see your proposal.
So we need to have that soon, and at least in the
appropriations process, we need to have that and to deal with
it where we can and see what regulations need to be done, what
has to be fixed legislatively or by appropriations or by
regulation.
Secretary Donovan. Yes.
CHOICE NEIGHBORHOODS PROGRAM
Senator Bond. And the other thing, I appreciate you
mentioning my old friend, HOPE VI again. How is Choice
Neighborhoods better, bigger, longer, stronger an improvement,
and what is going to be different about Choice Neighborhoods?
Secretary Donovan. So let me try and be as specific as
possible in terms of some of those changes.
Senator Bond. Capsulize it, if you can.
Secretary Donovan. I go to places all the time and hear how
great HOPE VI is. And I want to be very clear; this program is
building on HOPE VI, not doing away with it in any means.
One of the constant issues I hear is we have done this
wonderful HOPE VI redevelopment. But across the street is a
project that is assisted with a different HUD program that we
have no tool to be able to redevelop. And specifically, what I
mean is our multifamily programs don't have that same option.
Or there are 10 or 20 foreclosed homes on the next block
that are the real problem in that neighborhood. They are
creating crime. They are bringing down values. And yet we don't
have the flexibility in HOPE VI today to be able to include
that kind of housing as well.
So what we want to do with Choice Neighborhoods is to say
it has been so effective on public housing, let us allow it to
be used for our privately owned assisted housing or for other
housing in a community. And that could be combined with public
housing.
In other words, the housing authority could come in and
say, ``We are going to do this public housing development, but
we are also going to do the assisted housing across the
street.'' We have got many examples where they are in the very
same neighborhood or even across the street.
Or if the most challenging thing that you have in St. Louis
or any other community is not a public housing development--and
I know a number of them in St. Louis, for example, or Kansas
City. But it is, in fact, a privately owned housing development
that is the real problem. This would be a tool available to
redevelop that housing.
So I think that, in some ways, is the most fundamental
change is that it takes what has been so successful in HOPE VI
and expands it to our broader program. It just doesn't make
sense to me, frankly, Senator, that if simply because we fund
something with a different program at HUD--and this is a little
bit the theory behind TRA--that we ought to have totally
different rules and programs available to them. This is trying
to spread the lessons and broaden HOPE VI to other forms of
housing.
Senator Bond. Is that something, what you are talking about
in needing to reach out and deal with others; is this something
that should be fixed? Can it be fixed by the HOME funds that
are given to localities?
Secretary Donovan. I don't believe, fundamentally, that it
can be fixed by the HOME funds. Because traditionally, the way
HOME funds are used is either in moderate rehabilitation or new
construction. These are much more complex, really neighborhood
revitalization schemes and redevelopments. And so----
Senator Bond. We want to know how--I mean, are we wasting
money on HOME. I thought that HOME was going to do that. So we
have a limited pot of money available, and I want to work with
you to make sure we use those dollars the best way we can.
Secretary Donovan. You know HOPE VI as well as anybody, and
I think you know that what has been the secret of it is that it
goes beyond just the bricks and mortar. HOME is a bricks and
mortar program. And so, I think the fundamental difference is
that whether it is HOPE VI or Choice Neighborhoods allows you
to build in, whether it is a community room that has computer
services available, whether it is the services that are
available for literacy or other things for families,
educational programs--all of those pieces that have really made
HOPE VI so successful because it is about more than the bricks
and mortar is something that Choice Neighborhoods would allow
us to do. HOME is a bricks and mortar program.
FHA MORTGAGE REFORM
Senator Bond. As you know, I have worked long and hard to
get child care centers and education centers and community
centers. But when you are talking about a bunch of foreclosed
houses, you have got a bricks and mortar problem in the
community.
Well, anyhow, this is a lot more discussion to be had
later. Let me ask a final question on FHA mortgage insurance
reform. How are you dealing with the mortgage default problems,
especially in light of the proposed FHA reforms?
How will the reforms impact the homeowners who are seeking
help with mortgage defaults? Are these defaults primarily a GSE
problem, or is FHA going to get in and start and put more
taxpayer credit cards on the line explicitly rather than the
implicit situation we have now?
Secretary Donovan. So, going forward, we clearly believe--
and this is why we have proposed the legislation and the
changes that we have--that there are things we need to be doing
to tighten to avoid future defaults. It is why we have
suspended over 170 lenders last year, to say we would no longer
do business with them.
We have taken a number of steps that we are proposing
legislatively to allow us to have greater powers to get rid of
not just lenders, but the principles of those lenders from our
programs. So we have a range of things we need to do more
strongly.
What I would say, though, is if you look at what has
happened over the last year, defaults in FHA have certainly
risen, but they have risen much more slowly than subprime and
even prime mortgages at the GSEs to the point where, today,
subprime defaults are triple what we see in FHA.
So there is definitely more that we can do, but I think our
full underwriting, fixed rate, no liar loan, all of the things
that we have done traditionally and that we are strengthening
to ensure we don't make the same mistakes that were made in the
subprime movement have helped us not have the same level of
defaults.
The only other thing I would say is we have the most
extensive, most aggressive loss mitigation set of tools that
exist. They allowed us to help about a half a million
homeowners, last year, stay in their homes, despite the fact
that they were struggling to make their payments.
And so, that, along with the Home Affordable Modification
Program and other new options that we have introduced, I
believe allow us not just to avoid future defaults, but also to
ensure that existing families that are struggling with
unemployment remain in their homes where possible. We are not
going to stop every foreclosure, nor should we. But I think we
have taken very aggressive actions to do that.
Senator Bond. I appreciate knowing about that. In Missouri,
we had a very aggressive U.S. attorney who files a number of
criminal indictments, and some of these are not just people who
should be disbarred. But I hope where you find the requisite
potential criminal intent, you refer them for criminal
prosecution because some of this is shoddy, but in some
instances, it is criminal.
Obviously, there is much more to discuss. But the good news
is I am being advised that I am running late for a whole bunch
of things that are stacked up. So we will have to let you go
with thanks. We look forward to continuing to work on many of
these things. We have just started the discussion.
ADDITIONAL COMMITTEE QUESTIONS
The hearing record will remain open for additional
questions.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Patty Murray
AFFORDABLE HOUSING FOR SENIORS
Question. Thank you for your testimony Mr. Donovan. The Nation's
shortage of affordable housing for seniors is significant. Currently,
there are at least 10 seniors vying for every available section 202
unit. By 2020, an additional 730,000 senior housing units will be
needed to address the growing housing needs of low-income seniors. Yet,
the administration has proposed to eliminate construction funding for
new 202 developments in order to redesign the 202 program. While I
support efforts to reform the section 202 program, there is no doubt
redesigning the program will be a lengthy process. How long does HUD
propose to continue this funding freeze?
Answer. HUD intends to return back to Congress in June with a
legislative proposal. In addition, HUD will be working concurrently to
implement a range of administrative reforms. While the goal is to
effect the reform of the program as quickly as possible, at this point
it is too soon to forecast how long this implementation process will
take.
Question. Why is HUD not able to work on redesigning the program
while continuing to fund new projects?
Answer. HUD is currently working on developing a roadmap for reform
of the section 202 and 811 programs. This reform and redesign will
increase the programs' cost effectiveness. While this redesign effort
is underway, given overall budgetary constraints, HUD must focus its
limited resources on its core rental and operating assistance programs
(including renewals for existing section 202 programs). It is these
programs that can best leverage additional private and public
resources.
Question. What is the administration's interim plan to address the
growing demand for affordable senior housing while the redesigning
process takes place?
Answer. The administration's fiscal year 2011 budget preserves
critical resources for the elderly by maintaining full funding of core
rental assistance programs such as section 202 operating renewals,
Project Based Rental Assistance, the Public Housing Operating Fund, and
Housing Choice Vouchers. In addition, new units will continue to come
on line through the low-income housing tax credit program which
produces approximately 10 times the number of affordable senior housing
units as section 202. In addition, approximately 5,800 units of section
202 will become available to for the elderly in fiscal years 2011 and
2012 as a result of prior year funding commitments.
SUPPORTIVE HOUSING FOR THE ELDERLY ACT
Question. As you may know, Senator Schumer and I have introduced
the section 202 Supportive Housing for the Elderly Act (S. 118), which
would promote new construction, preservation, and conversion of section
202 housing by streamlining and simplifying administrative processes.
Is it possible for HUD to make any of the suggested reforms to the
section 202 program through report language or bill language included
in S. 118?
Answer. HUD generally supports the direction that S. 118 takes the
section 202 program. S. 118 includes facilitation of mixed finance
structures, enhances preservation of existing projects, and refines the
geographic allocation issues. However, a number of further items are
currently being reviewed by HUD staff which are not fully addressed in
S. 118. For example, we need more work to be done on building synergies
with Health and Human Services and State Medicaid and Medicare programs
to make sure that we bring into our section 202 projects elderly
residents who can best take advantage of PACE and other Medicaid home
and community based waiver programs. Staff will be looking at all of
the items contained within S. 118 and can certainly work with the
Congress to determine whether the reform plan can best be effected as
stand alone legislation or as part of a revised S. 118 bill.
SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY ACT
Question. Alternatively, can HUD implement any of the proposed
changes administratively through the processing of applications or in
the notices of funding availability (NOFAs)?
Answer. Yes. HUD anticipates implementing a wide range of
administrative changes, in addition to proposing statutory changes, to
affect a comprehensive reform of the section 202 program.
SECTION 202 AND LOW-INCOME HOUSING TAX CREDITS
Question. Based on your testimony, HUD will make it easier to take
advantage of low-income housing tax credits (LIHTCs). While I am
supportive of this effort, I want to be clear that the neediest
seniors, such as those eligible for section 202 housing, may not
benefit from this change given that section 202 units must be
affordable to tenants at or below 30 percent of area median income, as
opposed to LIHTCs, which require that housing be affordable to those at
or below 60 percent of area median income. Can you expand on this
initiative? Specifically: How does HUD plan to account for the housing
needs of the most vulnerable seniors, such as the 202-eligible
population, through increased use of LIHTCs?
Answer. As part of the overall reform vision, HUD anticipates
modernizing the section 202 program to make it easier for sponsors to
work with other funding sources, such as the Low-Income Housing Tax
Credit program (LIHTC). This reflects the fact that the section 202
program is no longer a ``one-stop shop'' to capitalize and sustain a
project but rather serves as the critical final piece of an overall
financing structure. Layering LIHTC with section 202 funding does not
reduce affordability relative to section 202 program requirements;
rather it makes LIHTC work to support a lower-income population. By
leveraging LIHTC, which in recent years produced 10 times as many units
of low-income housing for the elderly as the section 202 program, more
projects can be made financially feasible and the reach of the section
202 program can be effectively expanded.
Question. Current law allows section 202 developers to use LIHTCs
in conjunction with HUD funding. How will HUD specifically make this a
more streamlined and accessible process?
Answer. The level of regulatory oversight associated with section
202 is commensurate with that which would be associated with full
Federal funding of the development costs of construction. Yet even
today, the program is expected to leverage a range of funding sources,
often including low income housing tax credits. These other sources of
funds bring with them important oversight, whether through State
Housing Finance Agencies or local municipal lenders or from the
involvement of tax credit investors and commercial lenders. These
parties provide layers of accountability which HUD should generally not
need to duplicate. As part of HUD's on-going review of the program, HUD
will be looking to simplify its processing and oversight to better
reflect its expected role in these kinds of projects.
LOW-INCOME HOUSING TAX CREDITS
Question. Does HUD envision using 202 and 811 project rental
assistance contract (PRAC) to subsidize LIHTC units as is currently
done with tenant-based section 8 assistance?
Answer. For sponsors who are able to bring other sources of funds
to a project such that they don't require any capital advance funds
from HUD, but otherwise are able to comply with the requirement of the
section 202 or section 811 programs, HUD may consider the option of
providing them with operating assistance only. Under this scenario,
these projects would still serve the same populations, but at a much
lower upfront cost to HUD. It's not clear at this time that this
scenario would have significant utilization given the challenges
sponsors generally face in identifying capital funds.
SECTION 202
Question. Lastly, I want to applaud HUDs proposed changes to make
section 202 a platform for the delivery of supportive services so that
seniors can age in place. However, section 202 housing must serve a
varied senior population, not just frail elders that qualify for
nursing home-level care. In your testimony and budget submission you
mention the Program of All Inclusive Care for the Elderly (PACE). Is it
HUD's intent to limit the section 202 program to seniors who are frail
and/or participants in the PACE program?
Answer. HUD is working with stakeholders and its counterparts at
the Department of Health and Humans Services to answer that question.
It's HUD's understanding that PACE must be considered only one of a
number of programs serving frail or near frail elderly in the
community, particularly because PACE is only available in 30 States.
Medicaid Home and Community-Based Service (HCBS) waivers is another
program that has applicability to the section 202 program; HCBS waivers
are found in 49 States. The section 202 program is an independent
living program which does not require licensure, so it is unlikely that
it would make sense for HUD to require all residents in a given
building to be frail. Today, estimates suggest that 38 percent of
current section 202 residents are frail or near-frail.
SELF-HELP HOUSING PROGRAM
Question. The Housing Assistance Council, as authorized by Public
Law 110-246, receives funding to help support housing efforts in rural
communities through the Self-Help Housing program. The HUD budget
removed the funding for the Self-Help Housing program and instead
merged it with the Capacity Building program in HUD. Unfortunately, the
Capacity Building program as proposed by HUD is only funded at $60
million for fiscal year 2011, a decrease of $12 million from last year.
I am deeply concerned about cutting funding to this program. Self-help
housing and, more specifically the Housing Assistance Council have
helped create affordable housing for rural communities across the
country. These cuts may defer much needed resources to rural
communities and limit housing options for rural residents. How is HUD
going to ensure that rural communities will be able to access funds as
the programs are merged together?
Answer. The Self-help Homeownership Opportunity Program (SHOP) is
not proposed for merger into the Capacity Building program. In the
fiscal year 2011 budget request, HUD proposed to merge SHOP into the
HOME Investment Partnerships Program (HOME). Self-help housing,
including activity costs for land acquisition and infrastructure
improvements, is already eligible under both HOME and the Community
Development Block Grant Program (CDBG). Significant amounts of HOME and
CDBG funding are already available to State and local grantees to fund
self-help housing opportunities for low-income households, including in
rural areas. In fact, the State CDBG program provides funding
exclusively to all non-metropolitan areas of the State, including rural
areas, far exceeding the coverage area, and funding level, of all of
the SHOP grantees combined. It is true that self-help housing will be
competing with other eligible activities for State or local HOME or
CDBG funding, but Housing Assistance Council and other SHOP providers
should be able to make a case for a share of the funding based on their
past successful performance in SHOP.
In addition, HUD has requested increased funding for a newly
designed Capacity Building program totaling $60 million, $10 million
more than the $50 million appropriated to the current section 4
Capacity Building program within HUD's SHOP account.
Finally, $25 million of fiscal year 2010 funding is being made
available for competition in HUD's Rural Housing Innovation program
specifically targeted to rural communities.
Question. How will HUD split the funding between self-help housing
and the capacity building entities such as LISC and Enterprise
Community Partners?
Answer. In the fiscal year 2011 budget request, the Self-help
Homeownership Opportunity Program (SHOP) is proposed to be merged into
the HOME Investment Partnerships Program (HOME). Self-help housing,
including activity costs for land acquisition and infrastructure
improvements, is already eligible under both the HOME and the Community
Development Block Grant Programs (CDBG). Significant amounts of HOME
and CDBG funding are available to State and local grantees to fund
self-help housing opportunities for low-income households, in both
urban and rural areas.
The fiscal year 2011 budget HUD has requested increased funding for
a newly designed Capacity Building program totaling $60 million, $10
million more than the $50 million appropriated to the current section 4
Capacity Building program within HUD's SHOP account. These funds would
be made available for competition through a Notice of Funding
Availability.
Recipients will include national and regional intermediaries with
local affiliates and partnerships, and consortia of intermediaries with
demonstrated expertise. Funding for assistance will support
organization and core skills of line staff and management so they can
be partners with the administration as they implement key initiatives
such as Choice Neighborhoods, Sustainable Communities, and the
Catalytic Competition and work to restore the economic vitality of
communities with significant needs.
______
Questions Submitted by Senator Patrick J. Leahy
SECTION 811
Question. The Final Rule for the HUD 811 program published in the
Federal Register on September 13, 2005 section 891.809 lists a number
of limitations on capital advances under that program including: (c)
facilities currently owned and operated by the sponsor as housing for
persons with disabilities, except with rehabilitation as defined in 24
CFR 891.105. However, recent HUD NOFAs for the 811 program essentially
precludes funding applications involving such rehabilitation by stating
that the refinancing of any Federal funded or assisted project or any
project insured or guaranteed by a Federal agency is not permissible
under section 811 and also that if the housing already serves persons
with disabilities it can be rehabilitated as long as it hasn't operated
as housing for persons with disabilities for longer than 1 year prior
to the application deadline. Recognizing the importance of supportive
housing to prevent homelessness and the fact that it is at least half
as expensive to preserve existing units as to create new ones, would
HUD consider allowing in the next NOFA the possibility of funding
capital advances when rehabilitation is occurring as defined in 24 CFR
891.105? If not, would HUD entertain an 811 pilot in Vermont in which
rehabilitation of units housing people with disabilities takes place?
Answer. Section 891.809 is in subpart F of the regulations and
these regulations govern the mixed finance feature of the section 811
Program. HUD's understanding is that the intent of this mixed finance
feature was to encourage the construction of additional units. The
Department believes that it is important to use its limited resources
to increase the supply of affordable housing for this population of
very low-income households. Various policy changes for the overall
program are currently under review.
SECTION 202
Question. In Vermont, as well as in other rural and urban areas of
the country, section 202 housing serves a varied senior population,
including a substantial number of very frail elders. In my home State
we are developing a service delivery model that would layer very nicely
onto HUD 202 housing and meet the wide range of needs our seniors
have--needs that no single existing program can meet. In the
Department's budget submission to Congress, the rational for zeroing
out the 202 was program is that it needs improvement. I understand that
most of the reforms to the section 202 program can be made
administratively in your processing of applications or in the NOFAs.
What is HUD's timeline for the internal process of reform and is it
possible to finish these reforms in time for the fiscal year 2011
funding round if Congress provides funding for section 202 this year?
Can we help implement any of those changes through report language or
bill language included in the subcommittee's bill?
Answer. We plan to return back to Congress in June with a
legislative proposal. Our proposal will be based on analysis of the
section 202 program by HUD staff as well as feedback solicited from
stakeholder groups. We look forward to working with Congress to
determine the best way to implement these recommended changes.
______
Questions Submitted by Senator Dianne Feinstein
NEIGHBORHOOD STABILIZATION PROGRAM FUNDING DISTRIBUTION
Question. California is at the center of the home foreclosure
crisis. The California metro areas of Stockton, Merced, San Bernardino
and Riverside in particular have among the highest foreclosure rates in
the country. And while the national annual increase in foreclosures
appears to be leveling off, nearly 140,000 foreclosures were filed in
California this year--one of the highest rates in the country.
It is concerning to me that some of the hardest-hit areas of the
country, such as Fresno, Merced, and Stockton, have been entirely left
out for funding under the Neighborhood Stabilization Program (NSP)
under the American Recovery and Reinvestment Act.
On January 14, 2010 the Department announced the second round of
NSP awards totaling $318 million in investment for California, yet
nearly all applications submitted by projects in the Central Valley
were rejected, despite a foreclosure rate of 13 percent in that area.
This raises serious concerns to me that a Federal program designed to
stabilize and rehabilitate the hardest-hit communities could have
completely overlooked the Nation's epicenter for foreclosures.
Why are areas with the highest foreclosure rates being denied NSP
funding?
Answer. The Neighborhood Stabilization Program 2 (NSP2) funds were
distributed on a competitive basis as required by the Recovery Act. The
Department reviewed 482 applications that requested, in aggregate, more
than $15 billion, more than 7\1/2\ times the available funding. The
Department established a thorough process to review applications and
was ultimately able to fund 56 applications, less than 12 percent of
total. Of the funded applications, 31 received less than the amount
requested in order to increase the total number of applications
receiving funding.
NSP2 applicants had to respond to six factors: Need in Target
Geography; Demonstrated Capacity; Soundness of Approach; Leveraging of
Other Funds or Removal of Substantial Negative Effects; Energy
Efficiency Improvement and Sustainable Development Factors; and
Neighborhood Transformation. Every applicant for NSP2 funding had to
demonstrate a high level of need in order to be eligible to apply for
assistance but this was only one aspect of the competition. The bottom
line is that NSP2 was a competition and some grantees responded in a
more comprehensive manner than others. Ultimately, HUD's review process
awarded funds to the highest rated applications and need represented
only one aspect of that competition.
Question. What specific measures is the Department using to
determine the funding distribution for NSP?
Answer. The Neighborhood Stabilization Program 1 funding was
distributed through a formula, and the criteria for that formula were
identified in the Housing and Economic Recovery Act (HERA) of 2008. The
criteria included: number and percent of foreclosures; number and
percent of subprime mortgages; and number and percent of mortgages at
risk of default.
Neighborhood Stabilization Program 2 funding was distributed
through a competitive program, using 6 factors: Level of need in Target
Geography; Demonstrated Capacity; Soundness of Approach; Leveraging of
Other Funds or Removal of Substantial Negative Effects; Energy
Efficiency Improvement and Sustainable Development Factors; and
Neighborhood Transformation. Further detail on the factors can be found
in the Notice of Funding Availability (NOFA) issued on May 4, 2009.
This NOFA can be viewed on the HUD Web site at: http://www.hud.gov/
offices/cpd/communitydevelopment/programs/neighborhoodspg/pdf/
nsp2.nofa.pdf.
Question. What is main rationale for not including additional
funding for this important program in the fiscal year 2011 budget?
Answer. While the Department did not request NSP funding as part of
the fiscal year 2011 budget, Secretary Donovan has announced his
support for an additional $2.1 billion for NSP funding to continue
efforts already in place and to help address foreclosure and
abandonment problems in communities that have not been reached via NSP1
or NSP2.
The administration also announced plans to reallocate funds awarded
through NSP1 that have not yet been committed to specific projects in
order to drive more funding to the hardest hit communities. HUD has
already awarded nearly $6 billion in NSP grants to help State and local
governments respond to rising foreclosures and falling home values.
Nearly $4 billion funded NSP1 through the Housing and Economic Recovery
Act of 2008 (HERA) and an additional $2 billion funded NSP2 through the
American Recovery and Reinvestment Act of 2009 (Recovery Act). The
initial NSP1 funds provided each State government with a ``base
allocation'' of $19.6 million without regard to varying degrees of
need. Eighteen months later, the Department will recapture money from
communities that have not yet committed NSP1 funding, and reallocate it
to city and county governments with very high foreclosure and/or
vacancy rates and their jurisdiction, based on the most recent data.
HUD estimates that 70 percent of the $3.9 billion in NSP1 funds would
be obligated by the 18-month deadline this Fall, in September and
October 2010, for a recapture of approximately $1 billion.
Through the recapturing process, HUD is working to use the
resources we have already received and build on the success and lessons
from NSP1 and NSP2, ideally with additional funding for a third round,
to best target the recovery in hard hit areas based on their
foreclosure and delinquency rates, vacancy problems and unemployment.
We also want to go a step further by providing funds to help homeowners
avoid foreclosure.
COMMUNITY DEVELOPMENT FUND CATALYTIC INVESTMENT COMPETITION GRANT
DISTRIBUTION
Question. The new Catalytic Investment Competition Grant program
proposed under the Community Development Fund in the administration's
budget request would provide economic development and gap financing to
implement targeted investments for neighborhood revitalization. I am
encouraged to see HUD further its efforts to help communities with the
greatest need and potential for growth. How would the proposed $150
million grant program take into account areas that are high-cost, such
as California, to ensure they are not left out?
Answer. The Catalytic Investment Competition will use the
authorities of CDBG to provide capital for high impact, innovative
economic development projects and to capitalize meaningful investments
for neighborhood and community revitalization. Unlike CDBG, consortia
including high capacity non-governmental entities may apply along with
governmental entities.
While HUD has not fully developed the competition framework, please
be assured any program design will provide a level playing field for
all applicants including those in high cost areas. Applicants will be
required to develop a plan that includes measurable outcomes for job
creation and economic activity and exhibit capacity to implement the
plan. They will be encouraged to leverage other public and private
community development and revitalization programs and to augment other
place-based strategies, such as Choice Neighborhoods, Promise
Neighborhoods, HOPE VI, and Sustainable Communities to help strengthen
existing and planned investments in targeted neighborhoods to improve
economic viability, extend neighborhood transformation efforts, and
foster viable and sustainable communities.
SECTION 202 HOUSING FOR LOW-INCOME SENIORS
Question. The administration's budget proposes to reduce funding to
support the construction of housing for very low-income elderly. The
Department's section 202 housing program was funded at nearly $825
million in fiscal year 2010, but the administration has requested $274
million for fiscal year 2011. This is a cut of nearly 67 percent to a
program that many elderly Californians rely on for affordable housing.
How will the Department continue to offer affordable rental housing to
low-income seniors despite such a major budget cut?
Answer. The $274 million requested for section 202 in fiscal year
2011 will cover the cost of project renewals only; no new production
funds are being requested. These renewal funds will support the nearly
400,000 elderly residents who currently live in section 202 housing. In
addition, in fiscal year 2011, HUD expects to house over 2.4 million
families in public and assisted housing of which 58 percent are elderly
or disabled and provide tenant based vouchers to more than 2.1 million
households of which 47 percent are elderly or disabled. As well, HUD
anticipates approximately 5,800 new units of section 202 will come on
line during fiscal years 2011 and 2012 because of prior year funding
commitments. The Department will submit a section 202/811 legislative
proposal in June that will address these issues.
SELF-HELP HOME OWNERSHIP PROGRAM (SHOP) FUNDING
Question. The administration's proposed budget does not request
funding for the Self-help Home Ownership Program, which helps non-
profit organizations leverage funds from outside private organizations
to assist home buyers.
The budget request proposes that the HOME Investment Partnerships
Program could instead fund SHOP projects, yet the funding for HOME is
also proposed to be cut from $1.82 billion in fiscal year 2010 to $1.64
billion in fiscal year 2011.
It is my understanding that SHOP makes revolving funds available to
non-profit organizations for future land development. In many urban
areas, there are local funds that work in cooperation with HOME. In
small and rural communities, however, there are seldom such funds
available, making SHOP particularly important for these communities.
How will the Department help support non-profit organizations that
assist low income families despite eliminating the SHOP program and
reducing funding for the HOME program?
Answer. HOME funds are distributed by a needs based formula and all
States, including those with significant rural area, are guaranteed a
minimum HOME formula allocation. By statute, HOME funding for housing
programs must be used for low-income families, including those that
live in rural areas. In addition to HOME funds, a significant amount of
State Community Development Block Grant funding is made available to
local communities that are rural in nature.
Most current affiliates of SHOP grantees (non-profit organizations)
already qualify, or can easily qualify, as a Community Housing
Development Opportunity (CHDOs) in the HOME program. This would make
them eligible for funding for self-help home ownership activities from
the 15 percent minimum set-aside of HOME funds specifically for
qualified CHDOs, giving them an advantage over other groups competing
for funds. In addition, CHDOs are eligible to retain proceeds from
development activities, and annual funds for CHDO operating expenses.
The CDBG program may also be used to create revolving loan funds at the
State and local level for community development and housing activities
in rural areas. The State CDBG program provides funding for these
activities exclusively to jurisdictions in non-metropolitan areas.
SHOP funding is structured as direct funding to grantees for
immediate use--it does not provide funding specifically for revolving
loan funds. Two current SHOP grantees, the Housing Assistance Council
and Habitat for Humanity, are national organizations that require their
local affiliate organizations to repay 20 and 25 percent of the SHOP
funds distributed to them for local self help home ownership programs
back to these national organizations for deposit in their revolving
loan funds. However, these loan funds are not necessarily used for
self-help housing, but for a variety of other community development
activities.
______
Questions Submitted by Senator Frank R. Lautenberg
PUBLIC HOUSING CAPITAL FUND
Question. The President's budget request proposes a $456 million
cut in the Public Housing Capital Fund. The $4 billion provided for the
fund in last year's economic recovery act was meant to supplement
regular appropriations, not replace them.
Given the substantial backlog of capital needs--estimated by your
own agency to be as high as $24 billion--what is the justification for
cutting funding that is so critical for the long-term sustainability of
public housing?
Answer. The Department agrees that there is a substantial backlog
of deferred capital needs in the public housing program. Given fiscal
constraints, the Department cannot realistically request enough funding
to solve the backlog of capital needs through annual Capital Fund
appropriations. For this reason, the Department is proposing to launch
a multiyear effort called Transforming Rental Assistance (TRA). This
initiative will preserve HUD-funded public and assisted housing, stem
the loss of affordable units, enhance housing choice for residents and
streamline the administration of HUD's rental assistance programs. In
2011, the first phase of this initiative would provide $350 million to
preserve approximately 300,000 units of public and assisted housing by
leveraging over $7 billion in private investment.
At this point, PHAs have access to post transfers for operating
purposes from Recovery Act formula funding ($3 billion), Recovery Act
competitive funding ($1 billion) and Capital Funds allocated pursuant
to the standard annual appropriation for 2009 ($2.2 billion). In June,
the Department will post transfers for operating purposes ($2.3
billion) from the Capital Funds pursuant to the 2010 appropriation.
PHAs, therefore, will have access to more Capital Funds in 2011 because
of the large amount of Capital Funding made available in 2009 and 2010.
In previous years, PHAs have funded 8-11 percent of their Capital
Funds to operations in order to make up for a shortfall in Operating
Funds. The Department's fiscal year 2011 budget request for the
Operating Fund is for 100 percent of the eligible costs. Given the
higher level of funding for the Operating Fund, PHAs will be able to
keep an extra 8-11 percent in the Capital Fund account rather than
funding it and will, therefore, be able to address more Capital Fund
needs.
Furthermore, PHAs continue to be able to obtain private financing
through the Capital Fund Financing Program (CFFP) and through mixed
finance transactions. PIH anticipates that PHAs will be able to borrow
over $100 million in CFFP financing alone in 2011 (not including
amounts leveraged in mixed finance transactions).
Ultimately the Department believes that PHAs will have their best
opportunity to address the backlog in capital need through
participation in the Transforming Rental Assistance (TRA) initiative.
PHAs that convert properties from the public housing program to a
project based contract model under TRA can expect to position those
properties to take advantage of private sector financing and leveraging
to address capital needs backlog in a way that is not possible under
the conventional public housing program.
DRUG ELIMINATION PROGRAM
Question. Public housing authorities in New Jersey and around the
country continue to face safety and security issues as a result of
drugs and criminal activity. Prior to fiscal year 2002, public housing
authorities were able to fund safety, security, and drug- and gang-
prevention activities through the Public Housing Drug Elimination
Program (PHDEP). Since that program has been eliminated, public housing
authorities have struggled to find the funding they need to keep their
properties free of drugs and crime. Does HUD have any plans to
reinstate PHDEP? Is your agency willing to work with this subcommittee
to get this program restored this year?
Answer. Safety and security of the public housing residents is part
of the overall mission of the Department. Any capital improvements that
improve the safety and security of public housing developments are an
eligible use of the Capital Fund. However, some PHAs face greater needs
stemming from unanticipated immediate needs that increase the threats
to the safety and security of their residents. Emergency Capital Need
in the amount of $5 million of the 2009 funding had been made available
to address the needs for 2009 and $2 million of the 2010 funding is
being made available to address the needs in 2010. The 2010 amount may
be increased depending on the demand for funds from other types of
emergencies and non-presidentially declared disasters. The Department
is issuing a notice in June 2010 that defines the safety and security
emergencies that will be covered by this funding and details the
application process. The Department is always willing to discuss any
ideas that will effectively improve the safety and security of our
program recipients.
EMERGENCY CAPITAL NEEDS
Question. In both fiscal year 2009 and fiscal year 2010, Congress
allocated $20 million to address the emergency capital needs of public
housing authorities, including ``safety and security measures necessary
to address crime and drug-related activity.'' As of February of this
year, no applications had been received for this funding, largely
because HUD had not issued any notices or guidance. Last December, I
sent you a letter requesting that you make this guidance available as
soon as possible. In your response dated February 5, 2010, you stated
that you intended to ``make this information available to PHAs in the
near future.''
Has HUD provided public housing authorities with a formal
notification of this funding?
When do you expect eligibility guidelines, especially as they
relate to the safety and security portion of this funding, to be made
available to public housing authorities?
Answer. Safety and security of the public housing residents is part
of the overall mission of the Department. Any capital improvements that
improve the safety and security of public housing developments are an
eligible use of the Capital Fund. However, some PHAs face greater needs
stemming from unanticipated immediate needs that increase the threats
to the safety and security of their residents. Five million dollars of
the 2009 funding had been made available to address the needs for 2009,
and $2 million of the 2010 funding is being made available to address
the needs in 2010. The 2010 amount may be increased depending on the
demand for funds from other types of emergencies and non-presidentially
declared disasters. The Department is issuing a notice in June 2010
that defines the safety and security emergencies that will be covered
by this funding and details the application process.
SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY
Question. The President's budget request includes a drastic cut to
the section 202 Supportive Housing for the Elderly program. Although I
understand the need to redesign and modernize this program, demand for
section 202 housing remains high and I am concerned about the effect
this proposal will have on the Nation's stock of senior housing. Why is
it necessary to suspend funding in order to reauthorize and modernize
section 202?
Answer. In the context of severe resource constraints, the
administration's fiscal year 2011 budget targets housing investments to
their most crucial and catalytic uses, primarily rental and operating
assistance that best enable HUD's partners to leverage additional
resources. HUD requested the suspension of sections 202 and 811 Capital
Advance Grants in fiscal year 2011 in order to put both programs
through a thorough review. Both programs have suffered from a lack of
updating and an overhaul was needed to better target HUD's resources to
more cost-effectively meet the current housing and supportive service
needs of frail elderly and disabled very low-income households. The
Department will submit a section 202/811 legislative proposal in June
that will address these issues.
______
Question Submitted by Senator Susan Collins
HOUSING FIRST
Question. Housing First is an approach to ending homelessness that
centers on providing homeless people with housing quickly and then
providing services as needed. Maine has one Housing First model called
Logan Place, a low income housing property serving 30 chronically
homeless people. A second Housing First model, Florence House, is
expected to open at the end of this month and will serve 25 chronically
homeless women.
Studies have shown that the Housing First model is highly effective
at helping people maintain housing stability when they have a history
of homelessness and disabilities. The Housing First approach does not
require tenants to be sober or engage in services at the time of entry;
rather, they are moved directly from the streets or emergency shelters
and the services required to help them remain housed are provided to
them.
An in-depth study was performed in Maine on the cost of housing
people vs. their remaining homeless, which assessed 99 participants,
including most of the residents at Logan Place. The study concluded
that housing people cost less than allowing people to remain homeless,
and services were delivered in a more cost-effective manner.
Is the administration considering the advantages of a Housing First
approach to help address the growing number of homeless people?
Answer. HUD's McKinney-Vento funded Permanent Supportive Housing
(PSH) program grantees are given flexibility to design programs that
meet the community's needs--including PSH programs that use the Housing
First model. New HEARTH Act legislation allows this flexibility to
continue for PSH programs. In general, communities have moved away from
offering shelter-only alternatives, into service-based interventions
such as safe havens, outreach, housing first and permanent supportive
housing. By encouraging Continuum of Care (CoC's) to shift from funding
services to housing activities, HUD shifted millions of dollars from
services funding into funding for housing activities. Persons with
disabilities, including the Housing First target population of
primarily chronically homeless persons, will continue to be targeted
with 30 percent of annual homeless assistance awards. In the past, HUD
has met and exceeded the Congressional requirement of 30 percent for
permanent housing for persons with disabilities, which remains a
requirement under HEARTH.
______
Questions Submitted by Senator Thad Cochran
MANUFACTURED HOUSING
Question. Mr. Secretary, manufactured housing production has
dropped to an annual rate of fewer than 50,000 homes, compared to
nearly 400,000 units in 1998. Can you explain why the new FHA title I
program rules for manufactured housing, which were authorized by
Congress in the Housing and Economic Recovery Act of 2008, have not
been issued?
Answer. The new Federal Housing Administration (FHA) title I
program rules for the Manufactured Home Loan Program were issued on
April 14, 2009, by title I letter, TI-481.
The Housing and Economic Recovery Act of 2008 (HERA) provided for
several changes to FHA programs to be initially implemented by notice
in order to facilitate implementation of long-desired changes to FHA
programs without having to wait for the often 12-month period it takes
for a formal rule to be issued. On this basis, HUD implemented the HERA
changes to FHA title I Manufactured Home Loan Program by title I
letter. Although HUD implemented the new requirements by letter, HUD
solicited comment on HUD's implementation of these requirements through
an April 21, 2009 Federal Register publication.
HUD is currently developing the final rule, which takes into
consideration the 7 public comments received in response to the April
21, 2009 solicitation of comments. HUD believed that it was prudent to
ensure sufficient public comment and did not rush to codify new
regulations based on the title I letter, TI-481, issued April 14, 2009.
HUD believed that before codifying these requirements, it would benefit
by seeing how the new requirements worked in practice, and whether
clarifications or modifications would be needed before formal
codification. HUD believes that it has benefitted from the year-long
experience it has had in seeing how the rules in the title I letter
have worked. HUD is developing the rule for codification, and will not
only take into consideration the 7 public comments received, but also
the experience to date of HUD and industry operating under the new
requirements for the past year. However, until that rule is issued,
title I Letter, TI-481, dated April 14, 2009, remains the rule
implementing document.
Question. You say in your statement that ``the Federal Housing
Administration (FHA) has stepped up to fulfill its countercyclical
roll--to temporarily provide necessary liquidity while also working to
bring private capital back to credit markets'', but this has not been
the case for manufactured housing. Do you believe that a non-career
administrator for the manufactured housing program would address this
disparity?
Answer. The FHA Commissioner has taken the leadership to address
this disparity by responding to an invitation from Representative
Donnelly of Indiana. Both the Congressman and the Commissioner will be
meeting on June 2 in Elkhart, Indiana with key lenders along with
Ginnie Mae, Fannie Mae, Freddie Mac and manufacturers to identify the
issues for which these parties are seeking further clarification and
information regarding the complex financial problems in both the
primary and secondary markets.
Question. Manufactured housing plays an important role in the
housing market by providing families, often with a limited income, an
opportunity for home ownership. What is HUD doing to help promote the
manufactured housing marketplace, including international
opportunities?
Answer. HUD has worked to highlight the home ownership and
community opportunities available with manufactured housing. This has
included reports to help builders understand how manufactured housing
could be used in their construction efforts. It is HUD's general
position that factory built construction (including manufactured,
modular, and panelized) provides many opportunities and can contribute
to local development activities. In addition, HUD provides Federal
insurance through the FHA for loans to finance the purchase of
manufactured homes.
Also as noted in the response to question No. 4, HUD is working
closely with the State Department and USAID on a variety of
international housing development and urban policy issues. In meeting
with representatives of other governments, HUD officials will take
advantage of these new opportunities to highlight the benefits of U.S.
factory built housing and related construction materials and products.
Moreover, many housing products produced in the United States can
be used internationally. HUD has worked with builders and manufacturers
to help them understand how they might take advantage of opportunities
for international sales. The manufactured housing building code (the
HUD-code) is unique to the Unites States and may not be accepted in
other countries. Therefore, manufacturers of HUD-code homes may elect
to offer similar products produced on the same production line or
produce other types of factory-built housing that can be more easily
shipped such as panelized housing. In many cases, the manufactured
housing production line could be used for many similar products.
Question. I understand that you will be attending the United
Nations World Urban Forum. This is especially unusual as HUD seldom, if
ever, plays a role in international housing issues. Nevertheless, this
is an opportunity to note the potentially inexpensive cost and housing
opportunities represented by manufactured housing in many parts of the
world. I urge you to use this opportunity to highlight the benefits and
promote the use of manufactured housing to the international audience.
Answer. HUD has engaged in international exchange programs for
several decades. However, under the Obama administration, HUD has
considerably expanded the scope and nature of its contacts with other
governments and international organizations. The administration
believes that many lessons can be learned from experience of other
countries, and has seen value in these relationships. HUD is working
closely with the State Department and USAID on a variety of
international housing development and urban policy issues. In meeting
with representatives of other governments, HUD officials will take
advantage of these new opportunities to highlight the benefits of U.S.
factory built housing and related construction materials and products.
Moreover, many housing products produced in the United States can
be used internationally. HUD has worked with builders and manufacturers
to help them understand how they might take advantage of opportunities
for international sales. The manufactured housing building code (the
HUD-code) is unique to the Unites States and may not be accepted in
other countries. Manufacturers of HUD-code homes may elect to offer
similar products produced on the same production line or produce other
types of factory-built housing that can be more easily shipped such as
panelized housing. In many cases, the manufactured housing production
line could be used for many similar products.
Question. There have been a number of articles recently regarding
the sale of thousands of manufactured housing units by FEMA into the
marketplace. People have raised serious concerns about environmental
and cost issues regarding these units. As the housing regulator for the
Nation, what is your opinion on the potential impact on the marketplace
for new manufactured units? What is HUD's role in the resale of units,
especially since another Federal agency is involved? If there are
environmental issues, who is looking at those issues, and who is
responsible for any related decisions?
Answer. HUD has no role in GSA's resale of the temporary housing
units as HUD's regulatory role is limited to new sales and not resale.
HUD regulates only how the home was designed, the compliance of the
home when the manufacturer provided it to the first purchaser, and the
first installation of the home. A small fraction of the units FEMA is
selling through GSA are HUD-code manufactured housing. These
manufactured housing units were produced to the same standards as all
manufactured housing and have received periodic inspections and
maintenance during their use. The small size of the FEMA manufactured
homes is in stark contrast with the size of most of the manufactured
housing units available in the United States. It appears unlikely a
home buyer interested in a larger home would purchase one of these
units instead of a new manufactured home. We anticipate the FEMA
manufactured homes entering the resale market will be less expensive
than new units, a result of the units being used and the smaller,
single wide form. This could provide to some degree, increased home
ownership opportunities for families of modest means. Following
Hurricane Katrina, many manufacturers in the region produced units
under contract to FEMA that are now available for resale. It is
reasonable to expect that local retailers would be involved in the
purchase, inspection, resale and installation of the units. HUD is not
involved in the safety aspects of the units being sold through GSA and
these issues rest with FEMA and questions should be addressed to FEMA.
SUBCOMMITTEE RECESS
Senator Bond. The subcommittee will hold the next hearing
on Thursday, March 25, at 9:30 a.m., on the Federal Housing
Administration.
Thank you very much, Mr. Secretary.
Secretary Donovan. Thank you, Senator. And let me just
recognize the great work and partnership that we have with Ken
Donohue, who is our inspector general, around a lot of these
fraud issues. I don't want to let the record close without
recognizing his partnership.
Senator Bond. A very important additional tool that you and
we have and we appreciate his good work.
Thank you.
Secretary Donovan. Thank you.
[Whereupon, at 11:20 a.m., Thursday, March 11, the
subcommittee was recessed, to reconvene at 9:30 a.m., Thursday,
March 25.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
THURSDAY, APRIL 29, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray, Dorgan, Lautenberg, and Bond.
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
STATEMENT OF HON. JOSEPH C. SZABO, ADMINISTRATOR
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Good morning. The subcommittee will come to
order.
This morning, we are going to be holding a hearing on the
President's budget request for the Federal Railroad
Administration (FRA) and the budget request of the National
Passenger Railroad Corporation, Amtrak.
We're going to be hearing testimony from two panels this
morning. The first panel will include the Administrator of the
Federal Railroad Administration, Mr. Joseph Szabo. The second
panel will consist of three witnesses: Amtrak's President and
CEO, Mr. Joe Boardman; Amtrak's inspector general (IG), Ted
Alves; and the deputy inspector general for the Department of
Transportation, Ms. Ann Calvaresi-Barr.
I want to welcome all of our witnesses at this time and
thank you for being here this morning. I look forward to
hearing all of your testimony.
Efficient rail transportation in America ties our community
together. It creates jobs and boosts the economy and reduces
the prices of goods being shipped. And it helps commuters
around the country get to work. That's why I'm so glad this
administration has expressed a level of interest in rail
transportation we haven't seen in a long time. They understand
the important role railroads play in our transportation system.
This subcommittee has seen too many budget requests from
previous administrations that would have guaranteed the
bankruptcy of Amtrak, which would have been devastating to
commuters and communities across the country.
I know families in my home State of Washington deeply value
our Amtrak service. The Cascade line has set a new record for
ridership this year. And I've personally heard from a lot of
people who depend on it.
I know that communities around the country value their rail
service, as well. That's why I'm so glad that this year the
administration's request for grants to Amtrak would support the
railroad, although it does not meet all the needs identified by
Amtrak itself.
In addition, the administration is again requesting $1
billion for grants to support intercity and high-speed rail.
This funding builds on the $10.5 billion provided for these
purposes through the fiscal year 2010 appropriations act and
the American Recovery and Reinvestment Act, including $590
million to improve high-speed rail in Washington State.
And finally, rail transportation is being included with
roads and mass transit in discussions about the Nation's larger
network of surface transportation.
In the Recovery Act, we were able to provide States with
the flexibility to invest their formula grants in freight and
passenger rail. Rail transportation has also played an
important part in the Department's Transportation Investment
Generating Economic Recovery [TIGER] grant program that I
fought to include.
But, we still need to recognize that all of this work, as
well as recent proposals for additional funding, are happening
at a time when financial constraints are increasing and likely
to become even greater. As families across the country look for
ways to tighten their belts, leaders here in Washington, DC
need to redouble our efforts to get Federal spending under
control and reduce our debts and deficit. That's why the budget
President Obama sent to Congress freezes domestic discretionary
spending, and the budget resolution recently passed in the
Senate Budget Committee goes a step further by reducing the
spending by an additional $4 billion.
We owe it to future generations to not burden them with
debt. But, we also owe it to them to continue making the
investments we know will strengthen our economy and make our
country more competitive in the long term. That's why I'm
looking carefully for areas to cut spending. But, I also know
that lower spending levels will make it more difficult for
Congress, and for this subcommittee, in particular, to find
ways to pay for important infrastructure programs.
I know many people think the answer to this problem lies in
funding--finding a source of funding outside of the annual
appropriations process. The Highway Program and the Highway
Trust Fund offer an easy example of a dedicated, and what has
historically been a stable source of funding for transportation
infrastructure. But, we should all understand that the
financial constraints are just as real outside of the
appropriations process. The Highway Trust Fund has been
threatened with insolvency for more than 2 years, and we still
have not seen any realistic proposals to stabilize the Trust
Fund throughout the next authorization period.
This subcommittee has turned to appropriating funds
directly from the general fund in order to provide additional
investments in our Nation's roads and transportation
infrastructure during the current fiscal year.
So, there is no silver bullet and there's no way to avoid
making difficult decisions in setting priorities. And while I
believe that the administration's budget request would make
important investments in rail transportation, there are still
significant concerns that this subcommittee will have to
consider for fiscal year 2011.
The administration has failed to request any funding for
positive train control, an important new technology for
preventing rail collisions and derailments. And the
administration's budget request for grants to Amtrak does not
address the railroad's need to modernize its aging fleet.
During this hearing, we will have the opportunity to look
at those important issues. In addition, we'll be able to get
additional details on the administration's effort to improve
rail safety, and specifically its progress in implementing a
risk-based safety program.
However, one of the biggest questions is how well the new
leadership at the Federal Railroad Administration and at Amtrak
can manage our investments in rail transportation over the long
term. In the very beginning of the Obama administration, the
FRA was tasked with awarding $8 billion in grants for intercity
and high-speed rail. The program was brand new and, as part of
the Recovery Act, it needed to be set up immediately.
Adding to these challenges, the FRA had never before
administered such a significant grant program. Recent rail
legislation has also added significantly to the agency's
workload. FRA needs to manage its new responsibilities and
build a workforce that has the skills necessary to successfully
complete all of that work.
Amtrak also has new leadership, and there's a new level of
cooperation between its board and management team. They've
worked aggressively to complete a new strategic plan, build the
system for prioritizing capital needs, and develop a plan for
modernizing its fleet. But, the real test of Amtrak's new
leadership team will be as the railroad implements its new
plans.
This subcommittee needs to see that the leadership at the
FRA and at Amtrak administer their programs and manage their
funding effectively and responsibly. Both organizations face
significant challenges in the years ahead, but we cannot afford
to waste taxpayer dollars or squander this unique opportunity
to make our railroads work better for commuters, businesses,
and communities across the country.
With that, I will turn it over to my ranking member,
Senator Bond.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you very much, Madam Chair.
And I join you in welcoming all of our witnesses today.
And I thank you for outlining the tremendous budget squeeze
we're going to be facing this year. And it is going to take a
great deal of work to deal with the challenges we have and the
limits on--which are placed on us.
And as the Chair said, making an already bad situation
worse, the Congressional Budget Office projects that the
national debt will balloon to 90 percent of the economy by
2020. If interest payments on the debt remain at this same
interest-rate level, we'll have to pay $800 billion. Nobody who
knows anything about finance thinks we won't have a significant
increase in interest rates when our debt gets that high.
In other words, we're drowning in debt. And the situation
is going to get worse. The decisions we make on the budget and
appropriations will be critical to the future economic health
of our Nation. And we have to find the right balance, spending
to fund critical national priorities.
And, Madam Chair, as you've--as you have already described,
our general revenue programs compete against one another. It's
transportation versus housing. Both programs have strong
proponents, as well as very compelling needs. And they seek to
maximize funding for their priorities. High-speed rail, Amtrak
capital assistance, and fleet are all in direct competition for
funding with other transportation priorities, as well as
critical housing and community development programs for the
poor.
HUD is also in this same pool--is seeking significant
funding for the coming year: $250 million for Choice
Neighborhoods, $350 million for transforming rental assistance.
In addition, these programs, in total, are likely to cost
several billion dollars more in each subsequent fiscal year.
At the same time, HUD is proposing the elimination of
dedicated funding for housing programs that help the elderly
and disabled. These are very important programs. There is great
need, and obviously there's great support in Congress for them.
How we balance those funding needs, both old and new programs
in HUD, are difficult, under whatever allocation we receive for
the year, let alone in competition with substantial old and new
transportation funding requests, and especially rail, which are
likely to require not just significant, but huge increases in
the subsequent fiscal years.
Personally, I grew up as a railroad fan. I always loved
trains. First time I got a chance to ride on a train, I loved
it. I rode on a train. When I got to be Governor, I started
State funding for Amtrak. And there was nothing greater than
taking my very young son from Jefferson City to Kansas City, or
to the State fair at Sedalia. So, I come here as a rail fan.
But, at the same time, if we increase funds for
transportation projects like Amtrak, when we have these other
needs, we are, in a very real way, in danger of railroading the
poor, using limited general revenues to pay for rail, rather
than housing programs. And housing programs are not optional.
We have people who depend on housing. And we can't walk away
from them.
I think it's important, first, to take a look at the
unprecedented amount of money rail projects have already
received. No one can deny that there's a lot of money going to
fund the rail these days, following the passage of the American
Recovery and Reinvestment Act of 2009 [ARRA]. In fact, the
biggest winner within the Department of Transportation,
government-wide, has been the FRA. They are trying to manage
grants, beyond their wildest dreams, when the Passenger Rail
and Investment Improvement Act of 2008 was signed into law. Who
would have anticipated the rail would be the beneficiary of so
much general revenue paid for by the American taxpayer? These
are not dedicated funds, as the chair has pointed out, paid for
by users of passenger rail or freight. These are general funds
paid by all our taxpayers.
Amtrak received a record $1.3 billion in 2009 for capital
grants, while high-speed rail received $8 billion, with an
additional $2.5 billion in 2010. FRA had some experience in
managing Amtrak grants, but a whole new $10.5 billion program
on top of Amtrak and all of the safety programs they are
responsible for overseeing has to be a work in progress for any
modal administration.
With this sudden new influx of billions of taxpayers'
dollars, I want to ensure American taxpayers that not only are
they getting what they are paying for, but also know what
they're paying for. With billions more taxpayer dollars poured
into Amtrak, which has--let's be honest--has had management
problems in the past, I want to ensure that these dollars are
not victims of waste, fraud, and abuse.
To ensure that taxpayers get the oversight and transparency
they deserve, I've asked the Government Accountability Office
to review the first $8 billion awarded for high-speed rail
grants. I believe the American taxpayers need to know how the
administration chooses the projects to fund with their money.
That includes how projects are reviewed, ranked, and scored
within the Department.
Taxpayers also deserve to know how the Department applied
its criteria for selection and the process used in evaluating
awardees. They need to know how the score is given to each of
these projects selected, and those which were rejected for
funding in the first round. It's critical for our subcommittee
to understand the nature of the projects funded and to what
extent they represent a departure from, or a continuation of,
existing rail service and networks, and how they will fit in to
the National Rail Plan due to the subcommittee on September 15
of this year.
What's the future of rail in America? What does the
unprecedented amount of new funding mean? This, to me, is a
very important question. The American public and the private
sector are unclear on if the recent funding for rail in America
is just a blip or if rail is here to stay. Are we looking to
fund beyond the $1 billion proposed, per year, by the
administration, for high-speed rail? Are we supportive of
Amtrak's new fleet proposal, which, over the period of 2040,
will cost approximately $23 billion, in 2009 dollars? When
taxpayer dollars are already scarce, where's the money coming
from? Will it come at the expense of critical programs under
HUD or the fund--the funding needs of traditional
transportation programs, like highways, roads, and bridges?
Last year, $1 billion in the budget for high-speed rail
turned into $2.5 billion when we went to conference with the
House. This was due, in part, to artificially inflated budgets
for transportation without any details or plans for a National
Infrastructure Bank. When the National Infrastructure Bank
failed to get--garner needed congressional support, we had
general fund money on the table that, in my view, should have
gone to critical programs to help struggling families or
deficit reductions, rather than the rail industry.
If Congress goes even further to fund high-speed rail this
year, we're definitely railroading the poor to pay for
passenger rail. Especially true this year, when there's not a
unified National Rail Plan that includes passenger rail, high-
speed rail, Amtrak, State rail plans, freight rail, and a cost-
to-complete estimate.
Right now, when it comes to rail, no one has a complete
picture--we're looking--of what we're looking to build; a map
of the plan; how we're going to pay for it, or how much it will
cost us.
Under last year's appropriations bill, we're supposed to
get the plan on September 15. That plan should contain a map--
which corridors have been identified as high-speed rail
investment priorities for the administration. We need cost
estimates for these corridors, and we should have benchmarks,
an idea of how incremental improvements along existing rail
networks will benefit the traveling public. And they have to be
fully integrated with State rail plans and Amtrak existing
lines.
We should know the full cost of the equipment necessary to
run the system. Today, to be quite honest, despite our
inquiries, we don't know what we're building, how much it will
cost, and whether or not rail investment in America is here to
stay, without dedicated funds, because the cost seems to be
going out the roof.
The proposals, so far, have been just a handout of general
revenue, with no funding source attributed to it, when our
country, as I have indicated earlier, is going further and
further into debt.
The worst part is, under the Recovery Act and grants in
2010, we don't even know what they're building and whether the
use of taxpayer dollars for this purpose is an appropriate use
of funds, because, as I said, we don't have the plan.
In March, Secretary LaHood testified before us on the
budget, and claimed that, quote, ``When President Eisenhower
signed the Interstate Highway bill nobody knew how we were
going to pay for all of it. So, I'm not going to sit here and
tell you that I know where all the money's going to come from
for high-speed rail''.
Well, I was impressed with that statement. It turned out--
but, it turns out that statement is simply false. According to
research done by Transportation Weekly, the national interstate
map predated the Interstate Act--the map predated the act by 10
years. The 1944 Highway Act directed 48 States to designate,
jointly, a map for a national system of interstates, up to
40,000 miles. The State--the States designated 37,700 miles.
And a map was approved by Congress in August 1947. The map
remained pretty much unchanged, although added miles have been
designated and constructed, throughout the years.
On the cost of the map, Congress did have an idea of the
cost, because Congress asked the Department of Commerce to
conduct a comprehensive highway study--a cost study--and submit
it by February 1995. And Congress required an updated State-by-
State cost estimate of the interstate system every 4 years.
Will your National Rail Plan due to us September 15 include
a detailed map, a cost-to-complete estimate? I'm afraid I must
assume the answer to those questions is ``no.''
For that reason, in this year's appropriations bill, I
asked that you provide us with a description of the funds
necessary for you to complete a true cost--add a true cost-to-
complete study map. We have to have that.
In addition, I'd like your input, Mr. Administrator, on how
much you believe a study would cost, and how this could be
worked into you current plans for completion of the National
Rail Plan. Until we have this information, in my view, it would
be irresponsible for the subcommittee to give the high-speed
rail program any additional funds.
Along with the high-speed rail plan, we have Amtrak, which
should be included in the National Rail Plan. And I think you
would agree. I think the Department would include Amtrak's
capital needs and fleet requirements in the plan.
I'm pleased that, for the first time, Amtrak submitted a 5-
year capital budget plan along with its annual appropriations
request. However, as soon as we get a comprehensive plan, we
find an addendum to the plan, which is a sizable investment of
$446 million in the Amtrak fleet. Is Amtrak going to amend this
year's capital budget request to include fleet where we can see
what priority new fleet plays, versus Amtrak traditional
capital requirements and Americans with Disability Act
requirements? When we're dealing with general fund
appropriations, I think we need the answer to these questions
before we provide the resources.
Amtrak sent our subcommittee its addendum to their budget
submission on March 22 of this year. It's not been cleared by
OMB, and is not part of Amtrak's regular 5-year capital plan.
These are additional capital funds Amtrak's seeking for its
aging fleet. It's not included in all of the planning and
included in the budget on which--with which we have to work.
I'm thankful that--don't get me wrong--they've finally
submitted a fleet plan. At least there's a plan and a cost-to-
complete estimate, unlike our National Rail Plan and high-speed
rail plan. But, once again, there are no funding sources
identified other than general funds and loans paid with paid
interest by the general fund. In other words, these loans are
going to be a burden on future general revenue.
Once again, Amtrak is competing with HUD and, potentially,
other forms of transportation and, potentially, railroading the
poor, if this subcommittee agrees to pay $446 million in
additional capital for a fleet or agrees to incur additional
debt service using general funds for loans they may take out on
fleet in 2011 and beyond.
All of these resources should be contained in one
comprehensive National Rail Plan. If you agree with Amtrak's
fleet plan, Congress will agree, over the next 30 years, to pay
$23 billion, in 2009 dollars--$46 billion in escalated
dollars--or more, to provide replacement fleet to Amtrak's
system by 2040. Whichever approach is taken, it will be a very
costly endeavor to acquire the fleet replacement at the same
time that we're attempting to build high-speed rail and, in the
mind of the administration, enhance State service of passenger
rail.
What's the priority? We've got to establish some
priorities. Rail supporters have to know that there are limits,
even in the best of times, to these pie-in-the-sky requests and
to those of us who are rail fans, or who used to be, I'd have
to say. Given our current deficit, you have to admit, the
initial request of $446 million outside of the budget and
capital plan is inappropriate. Why is Amtrak asking for
replacement of locomotives on the Northeast corridor and
single-level long-distance cars?
Now, replacing aging locomotives along the Northeast
corridor might be acceptable, because at least they're
operating on a much lower cost per mile and per passenger
subsidy than other routes for Amtrak. But, long-distance
service last year only had 1.7 million riders, with a cost-per-
passenger subsidy of $153. Replacement of long-distance cars in
Amtrak's fleet, in 2009 dollars, is $4 billion. These are the
most costly routes on the current Amtrak system. And Amtrak is
proposing to ask for some of these cars first.
Where's the proposed money supposed to come from? Who's
going to pay? Will it be the taxpayer paying for rail once
again, at the expense of the poor? If Amtrak chooses to go the
loan route for the fleet, this subcommittee would have to pay
for debt service far into the future. We're really bilking the
poor in the future to pay for rail. Long after I have stepped
aside, general funds would be needed to pay for out-year
budgets for funding decisions that would be made now.
My closing note is that all this doesn't even touch the
safety side and unmet funding needs for positive train control
by 2015. Last year, our subcommittee provided $50 million in
grants for positive train control. The new regulation is
estimated to cost upwards of $13 billion to $15 billion for the
rail industry alone, and $2 billion for the transit industry,
and there's nothing in the budget for the safety program. With
a $12-trillion-and-growing Federal budget, we just can't throw
Federal funds at projects willy-nilly. We need to answer these
tough questions. We need a roadmap for the future. And we need
to balance scarce taxpayer dollars.
I apologize, Madam Chair, for the time, but I think the
magnitude of the problems--of the prioritizing problems we face
deserve some answers.
With that, I look forward to the testimony of the
Administrator.
Senator Murray. Thank you very much, Senator Bond. I
appreciate it.
And, Mr. Szabo, we will turn to you for your opening
statement.
STATEMENT OF HON. JOSEPH C. SZABO
Mr. Szabo. Very good. Thank you, Madam Chair, Ranking
Member Bond, and members of the subcommittee.
Appreciate the opportunity to appear before you today to
discuss FRA's fiscal year 2011 budget request.
Our $2.9 billion request reflects the administration's
commitment to keeping the national rail transportation system
safe and supports the administration's pledge to provide the
traveling public with sound transportation alternatives to
flying or driving.
Without question, this is a transformational time at FRA.
The impact of the Rail Safety Improvement Act, which requires
more than 40 rulemaking studies and reports, the passenger--the
passage of the Passenger Rail Improvement and Investment Act
and its new initiatives in bringing the States in as partners
if the development of passenger rail, and then, of course the
American Recovery and Reinvestment Act has just set about an
unprecedented time at our agency.
Over the past year, FRA has executed its rail safety
regulatory mission while simultaneously implementing an
entirely new line of business, the design and management of a
multibillion-dollar high-speed rail grant program. And
transformation does not come without obstacles, challenges, and
lessons learned.
Considering FRA's fiscal year 2011 budget request, I hope
the subcommittee recognizes the care that was taken to present
a request that supports our key mission--rail safety--while
also enhancing our capacity to manage high-speed rail programs.
And I want to emphasize that when we put this budget
together, we didn't just take last year's budget and start
making adjustments to it; we sat down with a blank sheet of
paper and started from scratch, taking a look at all of our new
requirements, all of our priorities, and from there, developing
a fresh budget.
For fiscal year 2011, we're proposing a strong blend of
safety program enhancements and technical budget changes.
Currently, all of FRA's administrative and operational
expenditures and several safety-related programs are funded
under a single account entitled ``safety and operations.''
In fiscal year 2011, we propose to eliminate this account
and break it into two new accounts: Railroad Safety and Federal
Railroad Operations. The proposed new account structure is more
transparent and will provide greater insight into the cost of
FRA's safety-specific program activities and internal
administrative operations.
Programmatically, under the new Rail Safety account, a
total of $49.5 million is requested to carry out FRA's mission-
critical railroad safety functions and activities. A total of
$153.8 million and 948 full-time equivalents [FTEs] are
requested under the new Federal Railroad Operations account to
fund FRA's administrative activities, such as payroll,
information technology infrastructure, and other shared costs,
and provide the necessary human resources to ensure sound
stewardship of our FRA safety programs. This includes 62 new
positions that will enable FRA to make measured progress on the
responsibilities mandated by the Rail Safety Improvement Act,
PRIIA, and the administration's high-speed rail initiative.
Finally, FRA's 2011 budget activities include a rail safety
user fee, which is modeled after the FRA-administered fee
between 1991 and 1995. FRA estimates that $50 million could be
generated for defraying the salaries and benefit costs of up to
330 of our rail safety inspectors across the country.
A total of $40 million is requested to support FRA's
Railroad Research and Development Program. Specifically, in
fiscal year 2011, FRA will focus added resources on railroad
system safety, train control testing and evaluations, and the
newly authorized Rail Cooperative Research Program.
Although the foundation for a Federal-State partnership
began with the passage of the Passenger Rail Investment and
Improvement Act [PRIIA], it was the $8 billion provided in ARRA
that has truly advanced the high-speed rail initiative. This
year's $1 billion request continues funding to advance
passenger rail infrastructure and includes up to $50 million
for program administration and oversight activities, $50
million for planning grants, and $30 million for high-speed
rail research and development.
FRA and Amtrak have shared a strong partnership for
decades. The fiscal year 2011 budget request for Amtrak, which
totals $1.637 billion, is a reflection of this administration's
continuing support of this relationship. Within the overall
request, $563 million is requested for Amtrak operations and to
support their ongoing efforts to reshape the company by
undertaking meaningful reforms.
A total of $1.052 billion is requested for Amtrak's capital
needs and debt service. And this includes $281 million to
finance Amtrak's ADA requirements.
Finally, $22 million is requested for a direct grant to the
Amtrak Office of Inspector General.
PREPARED STATEMENT
The past 18 months have just been filled with exciting but
challenges at FRA. But, it's been a great challenge. And it's--
even though it's been a challenge, it's been fun. And we're
continuing to enhance the safety of our Nation's freight and
passenger rail systems, while also driving forward this vision
of investment in high-speed passenger rail.
So, with that, I look forward to the subcommittee's
questions.
[The statement follows:]
Prepared Statement of Hon. Joseph C. Szabo
Chairwoman Murray, Ranking Member Bond, and members of the
subcommittee: Thank you for the opportunity to appear before you today
to discuss the Federal Railroad Administration's (FRA) fiscal year 2011
budget request.
This request, which totals $2.9 billion, reflects the
administration's commitment toward keeping the Nation's rail
transportation systems safe, secure, and efficient. In addition, this
request supports the administration's pledge to provide the traveling
public with a practical, energy efficient, and environmentally sound
alternative to flying or driving, particularly where there is
congestion in the air or on the roads, through strategic investments in
high-speed rail.
As you know, in April 2009, I was appointed as the FRA
Administrator. I arrived to find FRA in the midst of a grand
realignment. The entire organization was focused not only on the
effective implementation of the Rail Safety Improvement Act (RSIA) and
the Passenger Rail Improvement and Investment Act (PRIIA) that were
enacted in October 2008, but on the requirements of the American
Reinvestment and Recovery Act (ARRA), which was passed in February
2009. The impact of these mandates on FRA has been significant. RSIA
and PRIIA mandated new and expanded safety mission responsibilities and
programs, while ARRA appropriated an unprecedented $9.3 billion in
resources for intercity passenger rail programs.
Over the past year, FRA has executed its rail safety regulatory
mission, while simultaneously implementing an entirely new line of
business--the design and management of a multibillion-dollar,
discretionary high-speed rail grant program. As expected, this
transformation has not come without obstacles, challenges, and lessons
learned. However, the support this subcommittee has given to FRA has
enabled our agency to acquire the staff and resources to fortify our
continued success. In fact, we are making good progress in building our
workforce. We have hired and/or made offers to nearly one-half of the
20 new positions that were funded in fiscal year 2010 and have active
recruitments for the remaining positions. I expect within a few months,
FRA will have the majority of the new staff in place.
In considering FRA's fiscal year 2011 budget request, I hope the
subcommittee recognizes the great care that was taken to present a
request that fully supports the heart of our mission--rail safety--
while continuing to enhance our capacity to manage the comprehensive
management and oversight requirements of the high-speed rail grant
program.
RAILROAD SAFETY
For fiscal year 2011, we are proposing a strong blend of safety
program enhancements and technical budget changes.
Currently, all of FRA's administrative and operational expenditures
(i.e., salaries, benefits, GSA rent, Working Capital Fund
contributions, etc.) and several safety-related programs (Automated
Track Inspection Program (ATIP) and Railroad Safety Information System
(RSIS)) are funded under a single account titled ``Safety and
Operations.'' In fiscal year 2011, the major technical change proposed
is the elimination of the overarching Safety and Operations account and
the establishment of two new, more targeted accounts: (1) Railroad
Safety; and (2) Federal Railroad Operations. The proposed new account
structure is more transparent and provides insight into the cost of
FRA's safety-specific program activities, as well as FRA's internal
administrative operations. The new structure will allow FRA to be more
precise in its reporting and accountability and directly supports the
administration's transparency initiatives.
Programmatically, under the new Railroad Safety account, a total of
$49.5 million is requested to carry out FRA's mission-critical railroad
safety functions and activities. This new account captures the costs
associated with FRA's major rail safety program activities, which were
previously funded under Safety and Operations. Activities proposed to
be funded under the new Railroad Safety account include: Automated
Track Inspection Program (ATIP), the Risk Reduction Program (RRP), and
FRA's safety inspector-related travel.
FRA MANAGEMENT AND ADMINISTRATION
A total of $153.8 million and 948 full-time equivalents (FTE)/979
positions are requested under the new Federal Railroad Operations
account to fund: (1) FRA's administrative activities such as, payroll,
information technology infrastructure, and other shared costs; and (2)
provide the necessary human resources needed to accomplish a myriad of
priorities and to ensure the sound stewardship of FRA rail safety
compliance, research and development, and financial assistance
programs.
Included in this request are 62 new positions that will enable FRA
to continue to make measured progress on accomplishing the
responsibilities mandated by RSIA, PRIIA, and the administration's
high-speed rail initiative. These new positions minimize FRA's
operational risk and will allow the agency to hire additional staff
with the specialized skills and experience (e.g., civil and mechanical
engineers, environmental specialists, and financial analysts) necessary
to fully support FRA expanding programs and mission-essential
activities.
Finally, FRA's fiscal year 2011 budget includes a rail safety user
fee. The rationale for this fee is consistent with that of other DOT
Modal Administrations that have a fee structure to help finance, in
whole or in part, costs associated with safety mission programs and
activities. This user fee is modeled after a rail safety user fee FRA
administered between 1991 and 1995. As proposed, in fiscal year 2011,
FRA estimates $50 million in collections could be generated for use in
defraying the salary and benefit costs of up to 330 rail safety
inspectors across the country.
RAIL RESEARCH AND DEVELOPMENT
A total of $40 million is requested to support FRA's railroad
research and development program and agenda. Specifically in fiscal
year 2011, FRA will focus added resources in the areas of railroad
systems safety, train control testing and evaluations, and the newly
authorized ``Rail Cooperative Research Program.'' This new initiative
will enable FRA to efficiently gather input from stakeholders to
identify and validate rail research priorities and accelerate the real-
world impact of FRA's research and development program by strengthening
the academic and industrial railroad technical communities.
HIGH-SPEED RAIL
In less than 2 years, we have witnessed the notion of intercity
transportation change across the county. Although the foundation for a
Federal-State partnership to focus on the development of high-speed
rail began with the passage of PRIIA, it was the $8 billion provided in
the ARRA that has truly advanced this initiative. Delivering on the
administration's vision and realizing the benefits of high-speed rail
requires a long-term commitment at both the Federal and State levels.
For this reason, last year, the administration proposed a multiyear
initiative to invest $5 billion over the next 5 years to leverage
resources at the State and local levels, as well as in the private
sector. This initiative will fund strategic investments that yield
tangible benefits to intercity rail infrastructure, equipment,
performance, and intermodal connections over the next several years,
while building capacity for future corridor development. This
particular program is also expected to have a positive impact on the
Nation's rail-related manufacturing sector, which has declined over the
past two to three decades. As the major corridor projects are awarded,
the steel and rolling stock necessary to build and operate the
infrastructure can be supported by our country's factories and a
talented workforce.
The $1 billion requested in the 2011 budget is the second year of
the administration's 5-year high-speed rail initiative. These resources
will continue support of the administration's vision to provide a
sustainable 21st-century rail transportation solution that is energy-
efficient, environmentally sound, and leverages State, local, and
private sector resources and partnerships. This request continues
funding to advance the high-speed rail infrastructure capacity across
the Nation and includes up to $50 million for program administration
and oversight activities, $50 million for planning grants and
activities, and $30 million for high-speed rail research and
development activities.
NATIONAL PASSENGER RAIL CORPORATION (AMTRAK)
FRA and Amtrak have shared a strong partnership for decades, and we
continue to successfully collaborate on critical issues such as: (1)
ensuring rail safety; (2) promoting environmental quality; and (3)
addressing national passenger rail transportation priorities and
policies. The fiscal year 2011 budget request for Amtrak, which totals
$1.637 billion, is a reflection of this administration's continuing
support of this partnership.
Within the overall request, $563 million is requested for Amtrak
operations and to support Amtrak's ongoing efforts to advance its
mandate to reshape the company by undertaking meaningful reforms and
controlling spending. This Federal assistance will supplement Amtrak's
traditional corporate revenues, which are generated through passenger
revenue (ticket, food and beverage sales), State-supported revenues
(State contracts related to route performance), and its ancillary
business revenue.
A total of $1.052 billion is requested for Amtrak's capital needs
and debt service. Included in this funding level is $281 million to
finance Amtrak's fiscal year 2011 Americans with Disabilities Act (ADA)
requirements. Finally, $22 million is requested for a direct grant to
the Amtrak Office of Inspector General.
CONCLUSION
The past 18 months have been filled with exciting challenges for
FRA. We have continued to enhance the safety of our citizens and
communities that live and use the Nation's freight and passenger rail
systems, while designing the policies, programs, and infrastructure
necessary to advance the vision and investment of high-speed passenger
rail across our country. With this, I am happy to respond to your
questions and concerns.
AMTRAK FLEET
Senator Murray. Well, thank you very much, Mr. Szabo, for
your testimony.
Let me start by mentioning that, last February, Amtrak
published its plan for replacing its aging fleet of locomotives
and rail cars. And as part of that plan, they requested $446
million to fund the fleet plan in fiscal year 2011. Can you
explain to the subcommittee why the Department's request had no
additional funding for replacing Amtrak's fleet?
Mr. Szabo. Well, I think, as you know, that anytime you're
putting a budget together, there are a lot of very, very hard
and very difficult choices that have to be made. But, clearly,
we think that that fleet plan is a--you know, it's an excellent
plan. And it's a good vision. It has the opportunity to
invigorate domestic manufacturing. And we're sitting down with
Amtrak and trying to discuss some financing alternatives.
Senator Murray. Well, they have structured their fleet plan
so that it could support a domestic industry for manufacturing
rail equipment by spreading the orders over a 30-year period.
Their demand for rail equipment may be large enough and
reliable enough to actually support a domestic industry. Right
now, we don't have any domestic manufacturers of rail
equipment, but that could help revitalize a very important
sector of American manufacturing, and support the kinds of jobs
we all want to see to get our economy back on track.
But, for this plan to work, manufacturers have to believe
that Amtrak really is going to be a reliable source of funding
for its rail orders. I know they're looking at a variety of
ways to pay for the fleet plan, and have requested funding from
this subcommittee, and understand that it may apply for a loan
through the FRA's Railroad Rehabilitation and Improvement
Financing (RRIF) program.
Can you share with us what kind of financing you think
would help give our domestic manufacturers the kind of
assurance they need to be confident that Amtrak will actually
be able to purchase rail equipment well into the future?
Mr. Szabo. Yes. Let me say, first, Madam Chair, that I
think you're absolutely on the mark, that, in order to
reinvigorate domestic manufacturing, there needs to be the
belief that this is going to be sustainable.
You know, the Secretary pulled in all of the foreign
manufacturers, domestic manufacturers, all rail manufacturers
into a summit over at the DOT, back in December. And if we
heard one thing, it was, they, you know, clearly articulated
the need to ensure that these orders can be smoothed out over a
period of time. And so, you're not constantly going through
these peaks and valleys, and that, if the orders were truly
smoothed out over a period of time, and they believed it was
sustainable, that this would be what it would take to truly
make the investment, as a businessman, that they would need to
make in the plant and equipment, you know, and sink these costs
into establishing these types of facilities here in the United
States.
As far as the financing solutions--again, we're at the
table with Amtrak, and I think it's going to have to take a
blend. I'm not sure that there's this one single silver bullet
that's going to just solve all the problems for financing the
other plan. But, you know, certainly there's the potential for
possibly a RRIF loan, commercial lending, direct
appropriations. I mean, I think we need to take a look at all
of the alternatives and make sure that we come up with a sound
financing plan.
Senator Murray. Well, this is really important. This
subcommittee is a strong supporter of infrastructure spending.
That's what we do, and we believe in it. But, we have to have
consistent priorities and know that that funding is going to be
consistently there, if we want domestic manufacturers to begin
to develop that. And if we get a request this year, and we fund
it, but we don't know what's going to happen next year, I don't
think that is going to be enough for a domestic manufacturer to
make a decision to make that kind of investment. Wouldn't you
agree?
Mr. Szabo. Yes. I would agree. I mean, again, your remarks
directly align with what we heard from the manufacturers back
in December. They need to know that there is stability.
Senator Murray. So, what I'm saying to you is, we all need
to have a concrete plan, not just for an appropriation here or
there, but for how we're going to do this, long into the
future, if we want to really achieve the goal I think some of
us want to achieve.
Mr. Szabo. Yes, I would agree that there needs--again,
there needs to be the appropriate mix. We need to find what
that appropriate mix is.
POSITIVE TRAIN CONTROL
Senator Murray. Okay.
Well, let me turn to another issue, because, under the Rail
Safety Improvement Act, railroads are supposed to deploy the
positive train controls (PTC) by 2015. Senator Bond mentioned
it in his opening statement. We know that's an important safety
technology designed to prevent train collisions and
derailments. But, this is going to cost billions of dollars.
Now, you announced, I think, $50 million in the 2010
appropriations request for Rail Safety Technology grants. I
want to know what you hope to accomplish with that funding, and
what are some of the additional challenges that need to be
resolved so we can deploy the PTC?
Mr. Szabo. Well, what we intend to do with this initial $50
million is, instead of giving grants out to a single railroad
or a small combination of railroads, using it for those kind of
things that can be broadly shared; those initial costs that, in
essence, would benefit the industry as a whole.
And so, I--frankly, that was part of the reason why we
didn't make an additional request for 2011. We wanted the
opportunity to roll out the initial $50 million in 2010, kind
of test the waters with that. And then the opportunity exists
for these broader-based funding programs that the DOT--whether
it's the TIGER grants, whether it's through the high-speed rail
program, or whether it's through the proposed Infrastructure
Bank for the--you know, for the funding of positive train
control.
Senator Murray. Well, as Senator Bond mentioned, we're
talking about billions of dollars. Do you have a plan for how
to get there?
Mr. Szabo. Well, at this point, those funding requirements
belong to the railroads. And, you know, certainly we're looking
at those alternatives that might offer some help. But, again,
the responsibility, at this point, belongs to those rail
carriers that the regulation applies to.
Senator Murray. Well, according to FRA's regulations,
railroads have to deploy positive train control on any line
that carried passengers or certain hazardous materials in 2008.
But, for a lot of reasons, these routes shift before the 2015
deadline that's coming at us. In that case, the original
rationale for deploying positive train control on those lines
may no longer exist. Now, railroads will be given the
opportunity, I understand, to apply for an exemption to the PTC
requirement along those rail lines. But, can you share with the
subcommittee what criteria you will use to determine whether or
not to grant an exception?
Mr. Szabo. The key is that it's all about safety. And there
has to be a baseline from where you start. And so, we believe
that the regulation that we've drafted has a sufficient level
of flexibility that we start with where we're at today. But, as
those routes change, there's the ability to come in and
verify--you know, they--the carriers would need to verify to us
the fact that the routes have changed. And it allows for the
appropriate level of checks and balances that--as modifications
are made, for us to ensure that they're the appropriate
modifications and that public safety is maintained.
Senator Murray. Okay. Thank you very much.
Senator Bond.
ALTERNATIVE FUNDING SOURCES/GRANTS
Senator Bond. Thank you very much, Mr. Administrator.
I am concerned that you talked about, ``We need to find
some alternatives. We don't know what they are. We have a
request for $446 billion--million out of the--outside of the
budget for--OMB's budget--for Amtrak. And yet, we don't know
how that's going to be paid for.'' We don't have our budget
allocation. And I can guarantee you that we're going to have to
start making some hard choices, because there are a whole lot
of wonderful things out there for railroad, but we need some
specifics to know what your priorities are.
No. 1, if you have plans for the alternative source of
funding, what are they? I mean, don't just tell us
``alternatives,'' because we're appropriating what we have. If
you're going to get us more money, how are you going to get us
more money?
Mr. Szabo. Well, I'd say we've just recently sat down and
started those discussions with Amtrak. So, you know, again, we
need to flesh out what those alternatives are and get you----
Senator Bond. Yes.
Mr. Szabo [continuing]. The answers.
Senator Bond. I can't approve any dollars that haven't been
flushed out--or fleshed out--whichever way you put it--sorry.
On, you know, ARA--ARRA gave Amtrak $1.3 billion, and
apparently the inspector general of Amtrak is going to tell us
that these programs are, perhaps, not meeting--going to meet
the February 17, 2011, timeline. Would you comment on the
oversight that FRA provided in making this grant--making these
grants to Amtrak?
Mr. Szabo. Well, let me say this. First off, I had a
sitdown with the Amtrak inspector general just this week, and
we discussed some of his findings in the report. And we welcome
that. You know, that's the purpose of the inspector general, is
to uncover potential areas of problems, whether the problems
exist today or whether it's the potential of developing. And
they did identify one that they have a concern with, you know,
regarding the extraordinary measures that FRA is requiring----
Senator Bond. Paying double overtime, I understand, on some
of----
Mr. Szabo. Yes.
Senator Bond [continuing]. Those projects?
Mr. Szabo. And I think the key is--what they said was, it
has the ``potential.'' We're comfortable that, through our
discussion with Amtrak and through the oversight that we're
providing, that we're going to achieve that appropriate balance
between the need to quickly create jobs--because that was the
intent of these projects--while also ensuring that there isn't
any waste. So----
Senator Bond. But, what did you do in advance? You're
talking about the IG looking at the--have you ever turned
down--denied a grant to Amtrak?
Mr. Szabo. I don't know, but I can get you that answer.
Senator Bond. What criteria----
Mr. Szabo. I mean, have I, in the past year? I have not.
But, we can get an answer of what FRA's history is on that.
Senator Bond. Maybe you can tell us what criteria you used,
what judgment you excised in making that money available. If
you'd provide that for the record, what criteria do you go
through before making those grants to Amtrak, to make sure they
were shovel-ready?
Mr. Szabo. Definitely.
5-YEAR CAPITAL PLAN
Senator Bond. And, in your view, should the 5-year capital
plan include fleet, other rail assets, and the ADA requirements
in one comprehensive fleet plan? Is that part of--is that going
to be part for the plan?
Mr. Szabo. Well, let me say this. One of the challenges,
historically, in preparing our budget request is that,
historically, there has been a mismatched cycle between FRA's
budget request and the budget that Amtrak has prepared. And the
good news is that, under Joe Boardman's leadership, and D.J.
Stadtler, their Chief Financial Officer, that's changing, which
means their budget cycle will be more in sync with ours. So, in
the future, when FRA makes its budget application to this
subcommittee, it'll be based on more sound facts, rather than
us trying to estimate what we believe Amtrak might need, and
then, their budget being developed a month or two later. And--
--
Senator Bond. Yes. Well, Mr. Administrator, I suggest
that's your problem, not ours. But, when you pass that----
Mr. Szabo. Well, and--like I say----
Senator Bond [continuing]. Off onto to us----
Mr. Szabo [continuing]. And the good news is----
Senator Bond [continuing]. We're up against----
Mr. Szabo [continuing]. It's being addressed.
Senator Bond [continuing]. We're up against the wall now.
Mr. Szabo. Right.
Senator Bond. And should we----
Mr. Szabo. But, it's being addressed.
Senator Bond. Are there things in your budget request that
you have submitted that you would like to reduce, to offset,
and to cover some of the $446 million fleet request for Amtrak?
Mr. Szabo. We believe that we have a very sound budget
request that appropriately----
Senator Bond. Okay.
Mr. Szabo [continuing]. Directs----
Senator Bond. So, we should absolutely ignore the $446
million request for Amtrak.
Mr. Szabo. I don't think you ever ignore any information
that----
Senator Bond. Well, unless the----
Mr. Szabo [continuing]. Somebody brings----
Senator Bond [continuing]. Unless----
Mr. Szabo [continuing]. To this subcommittee.
Senator Bond [continuing]. Unless----
Mr. Szabo. Well, sir? No, wait a minute, please, please.
Senator Bond. Yes.
Mr. Szabo. Please allow me to answer.
You know, as I said, when we develop our budget, there's
always difficult choices that we have to make. And so, we make
some decisions, and we present our vision to you. But, that
doesn't mean that you should ever ignore new information or
additional information or different information that somebody
else brings to you.
Senator Bond. I assure you, Mr. Administrator, we will have
to do that. But, what we want to have, going in, is your best
assessment. If you think the budget should be amended to take
account of the $446 million request from Amtrak, or some part
of it, we would ask you to provide that to us, because, at
least we would have some grounds to know. We need to look at
your budget request as a whole. And I--this coming in over the
transom gives us mixed signals on what the administration's
priorities are. And based on what you've said, and what we've
seen in the past, I would have to say that this subcommittee is
being asked by the administration to fund other things, but
not--at--to the exclusion of the Amtrak request. So, that's
something you're going to have to resolve, is whether you think
that some of the requests for locomotives on the Northeast
corridor should be included, and other projects that you've
requested should be eliminated to make room for them.
And finally, you're telling me that positive train control
and all that is totally the freight rail--the $13 billion to
$15 billion--is the freight rail's responsibility, and you're
not going to recommend money for it.
Mr. Szabo. No, that's not what I said. What I said was, we
do have other funding alternatives that are available through
these broadbased transportation programs, whether it's the
TIGER grant process for passenger rail, potentially through the
high-speed rail program, through the proposed Infrastructure
Bank, or even through RRIF loans. So, we do have some
alternatives. But, again, the responsibility--now, we can give
some help--we can give some help--but, the responsibility does
remain with those rail carriers.
Senator Bond. Well, I'd be--I hope we will see that in the
plan. And I'm sure the rail carriers will want to know how much
they're going to be expected to pick up.
Thank you, Madam Chair.
Senator Murray. Thank you, Senator Bond.
Senator Lautenberg.
EQUIPMENT REFRESH
Senator Lautenberg. Yes. Thanks, Madam Chairman.
One thing, I think, that's generally acknowledged, and that
is that Amtrak is critical for our society to function--
critical. And, you know, when you see a disaster, like
September 11 or Hurricane Katrina, it's Amtrak that is called
upon to move Americans out of harm's way.
And in the Northeast corridor, Amtrak operates the only
high-speed rail service in the country. And, as a matter of
fact, if we didn't have Amtrak running there, be in the
Northeast corridor, you'd have to run 243 more flights every
day, with the densely congested airspace in our country. You'd
also have to add, as an afterthought, 30,000 more cars on
highway I-95. Amtrak offers so many positive additions to our
well-being.
And included in that is the commitment that all of us have
made here, and that is to create jobs in this society. And
you're not going to build the rail cars overnight. You're going
to--how long does it take, do you think, Mr. Szabo, to--from
the time equipment's ordered until the time that it's
delivered?
Mr. Szabo. Well, actually, Mr. Boardman could probably give
you a more accurate line on that.
Senator Lautenberg. Do you----
Mr. Szabo. But, certainly----
Senator Lautenberg. You don't know----
Mr. Szabo. I'd say, roughly--Mark, what are we talking
about--a year--from order to delivery. Roughly 3 years.
Senator Lautenberg. Roughly 3 years. And the fact of the
matter is, that as we look at what Amtrak adds--reduces our
dependence on foreign oil, reduces the cost of--reduces
pollution. It adds so many things and also says, ``You can get
there on time.'' Surprise, you can get where you're going on
time, if--98 percent of the time--if you take Amtrak.
I took an airplane flight the other day, Madam Chairman. It
was a 45-minute flight up to LaGuardia Airport, but it took us
an hour and a half to take off. So, that made the 45-minute
flight a heck of a lot longer.
Amtrak's fleet of cars is rapidly deteriorating. The
average age of an Amtrak passenger car is over 24 years old.
And some are more than 60 years old. The fact that I regard
that as young has nothing to do with--what we've--with what
happens in a railcar. And I ask you, do we--how essential is
it, in your judgment, for us to get replacements for the cars
that we have on the railroad right now in order for Amtrak to
be the functioning railroad we'd like to see? Is it important?
Mr. Szabo. It's important, I would say, from both a safety
standpoint, as well as a reliability standpoint.
Senator Lautenberg. Is it critical, would you say?
Mr. Szabo. It's getting very close to critical.
Senator Lautenberg. You mean it's--we're not yet at
criticality?
Mr. Szabo. It's close.
Senator Lautenberg. Mr. Szabo, you're too well informed not
to be able to say yes to that.
Ride the railroad. I don't--do you ever take the railroad?
Mr. Szabo. Every chance I can get.
Senator Lautenberg. How often is that?
Mr. Szabo. I would say at least a couple of times a month.
You know, when I----
Senator Lautenberg. Well, I----
Mr. Szabo [continuing]. Lived in Chicago, several times a
month; now that I'm out here in the District of Columbia----
Senator Lautenberg. Yes.
Mr. Szabo [continuing]. A couple of times a month, whether
it's to go to----
Senator Lautenberg. I do it----
Mr. Szabo [continuing].--New York.
Senator Lautenberg. I do it every week. And I can tell
you--my handwriting was never my best skill, but when I get off
of the Amtrak train, and I try to write some things that I have
to take care of, it's barely readable, because it shakes,
rattles, and rolls. And it is ridiculous. If we want to make
this railroad the thing that America should be proud of, invest
like China or Spain or the countries that are far less able to
do these things than we. And we're like a third, or even a
fourth-rate country, in terms of railroading. It's shameful
what happens with us.
So, I agree with my colleagues here when we talk about
replacing equipment. We need that $400-plus million for new
equipment. And we've got to get those orders out there.
How much cash does it require on the barrelhead in order to
get these orders going?
Mr. Szabo. For----
Senator Lautenberg. For when you pay a deposit--you know,
like if you want to buy a car, you pay a deposit.
Mr. Szabo. It would be roughly $70 million.
Senator Lautenberg. Okay. So, that sounds like a start to
me, and we ought to work like the devil. And I--I've heard you
say that it was--that there's no silver bullets and it's--then
these are difficult decisions. All of that, those tales of woe,
Mr. Szabo, they're interesting, but they don't get the job
done.
And so, when we looked further--I wrote a rail safety law
that mandated that railroads install positive train control on
certain routes by the end of 2015. And it created a grant
program to help railroads meet this safety requirement.
However, the President's budget eliminates funding for this
critical grant program. What's the administration going to do--
I think, Senator Bond, that--to help public and private
railroads meet this deadline? Are they going to do anything
about it?
Mr. Szabo. Yes. Again, we would have funding available
through, potentially, the TIGER Program for the passenger
railroads, possibly the high-speed rail program, the proposed
Infrastructure Bank, and potentially through RRIF loans. So, we
do believe that there are some options out there.
Senator Lautenberg. Do you have any idea as to the amount
of resource or funding that might be available?
Mr. Szabo. Well, again, that would--it would depend on the
amount of TIGER money that is made available. You know, these
different pools--it would vary over time.
Senator Lautenberg. Everything depends on something else.
We know that.
In my State, New Jersey, we have a rail bridge known as the
``Portal Bridge.'' It's over 100 years old, in critical need of
being replaced. One of the biggest factors is--in delays on the
Northeast corridor--is the Portal Bridge. What's FRA's plan to
replace this bridge so that high-speed rail service on the
Northeast corridor can be seriously developed?
Mr. Szabo. Well, as I think you're aware, we, through our
high-speed rail program, have already allocated $38.5 million,
which is also being matched by $16.5 million from the State of
New Jersey to fund the final design of the replacement to the
bridge. And we'll continue to work with the State DOT to see
what alternatives are appropriate.
Senator Lautenberg. The--if I might, Madam Chairman, just
one last thing.
The last environmental impact statement for the Northeast
corridor was completed in 1978, in order for the corridor to
receive this kind of high-speed rail investment that it needs,
this assessment will need to be updated. Last year, Congress
provided $50 million to the Department of Transportation to
move forward on this assessment. Do you know what the status of
this review is and when it will be complete?
Mr. Szabo. Yes. The Secretary has asked for submissions
from the Governors to establish the Northeast Corridor
Commission, the study commission. That's been established and
we'll be putting together the appropriate plans to bring the
corridor to the--you know, to the next step, to the next level.
So, we're committed to that.
Senator Lautenberg. Madam Chairman, thank you very much.
I assume that we'll have the record open so that we can
submit questions for the record.
RAIL SAFETY
Senator Murray. Absolutely. Thank you.
Mr. Szabo, funding for high-speed rail has dramatically
changed the workload at the FRA. We can't forget that the FRA
is a safety organization. You are requesting 26 new positions
for rail inspectors and rail safety staff. Can you describe for
us your workforce strategy for those new positions?
Mr. Szabo. Roughly one-half of those will be field
inspectors, and then the remaining will be at headquarters,
being utilized to make this shift away--you know, we have to
always maintain a strong inspection program while we also shift
to the more creative approaches through our risk reduction
programs and the direction that the Congress sent us on, under
the Rail Safety Improvement Act. And so, the remaining half
would be the bench strength that we need to put together our
new rail safety initiatives.
Senator Murray. Okay. Well, you've proposed covering part
of that with the $50 million in user fees from the industry.
That's a lot of money, especially when we're asking them to
also do positive train control. Can you explain to us the
rational for charging user fees?
Mr. Szabo. Well, it's not unprecedented, when it comes to
safety inside the DOT. Not only is it utilized in a couple of
other modes at DOT, but there's some history of using it at
FRA. As I--as you might be aware, we had such a user fee
through the mid-1990s--roughly from, I think, 1990 to 1995. And
so, again, there's a basis for doing this. And we believe it's
appropriate to try and come up with revenue sources and that,
in some way, we try and supplement the cost of the railroad
safety program. Again, it's about public safety. It's about
ensuring that we have the resources and the inspectors that we
need to keep the Nation's railroads safe.
HIGH-SPEED RAIL
Senator Murray. Okay. In another arena--before the Recovery
Act, States didn't expect the Federal Government to provide a
significant amount of money for high-speed rail; and in less
than 2 years, the Federal Government has now committed $10.5
billion to intercity and high-speed rail. That is an important
long-term investment. We all know it's not realistic to expect
high-speed rail corridors to begin operations in the next year.
But, can you give us an idea of what timeframe you think will
be necessary to see the development of high-speed rail
corridors, and the beginning of service?
Mr. Szabo. Well, I think you need to keep in mind that
Congress developed this program as a State-driven process. And
so, it's the States and the regions that develop their vision
for their service, and then they apply to the Federal
Government for capital money to construct. And I would say each
of those States and regions are in a different maturity level,
as far as where they're at with their plans.
You know, in the case of those that got some of the early
awards, these are State DOTs that have been investing and
planning in rail, through their State programs, for many years.
In the case of California, the case of your State, Washington
State, in the Midwest, North Carolina--these States have been
at this for almost a decade.
You know, true 200-mile-an-hour service like California is
going to take a long time to build out. Now, there can be small
pieces that can be up and running and carrying passengers much
more quickly. But, frankly, it's going to be projects more like
the Midwest plan, the Midwest Regional Rail Initiative that can
have service at 110-mile-an-hour quickly in the next couple of
years, as it continues to build out and develop. And Washington
State, too.
Senator Murray. Well, you've requested a billion dollars.
Can you tell us how much you expect to use for intercity
projects and how much for high-speed rail corridors?
Mr. Szabo. Well, under the $2.5 billion that we rolled out
this year, we allocated, roughly, about 85 percent of that to
high-speed rail and, roughly, about 15 percent more toward the
intercity projects. And if you take a look at the percentages
on the $8 billion that we put out, you know, roughly--I want to
say, roughly, about 45 percent was in that category of true
high-speed rail of over 150 miles per hour. Roughly, another 40
percent went to what I would call ``emerging high-speed rail,''
you know, those in that 110- to 125-mile-an-hour category, and
then, roughly, about 15 percent into the smaller projects and
conventional service. So, that seems to be, you know, a good
balance, a good match.
Senator Murray. Okay. Well, in order to decide which
projects you're going to fund through this program, you're
going to have to rely on forecasts of ridership levels and
revenues and public benefits, projects costs. And, so far, we
haven't seen you develop these strong requirements. And I know
the Department's inspector general is starting to investigate
best practices. Can you tell us what you're doing to make sure
that the grant awards are based on sound forecasts of projects
based on costs and benefits?
Mr. Szabo. Yes. I mean, clearly, it has been, from day one,
a merit-driven process. And we do make these types of analyses.
But, again, there has to be an acknowledgment that this is a
brand new program. You know, it's in its infancy. In less than
a year's time, we've just----
Senator Murray. Well, are you----
Mr. Szabo [continuing]. Given birth to the program.
Senator Murray [continuing]. Developing those?
Mr. Szabo. Precisely.
Senator Murray. And when will we----
Mr. Szabo. Precisely. And that's kind of why I go back to
its--a lot of it is about the lessons learned. You know, when
it comes to ridership forecasts----
Senator Murray. Well, will we see this in writing?
Mr. Szabo. Well, I think ultimately, we will be developing
rules. But, again, we're just going through----
Senator Murray. Do you have a timeframe for that?
Mr. Szabo [continuing]. Utilizing the grant guidance. We
really need to get this first round under our belt, you know,
and experience the--you know, the--we have to execute the first
round before we can start taking a look at those tweaks that
need to be made in future rounds.
AMERICANS WITH DISABILITIES ACT
Senator Murray. Okay. Well, I have one more question. Under
the Americans with Disabilities Act (ADA), all Amtrak stations
are supposed to be accessible by July 26 this year. Amtrak has
already admitted that it will not be able to meet that
deadline, and started a 5-year effort to invest in station
improvements and come into compliance. Do you believe that,
over the years, Amtrak did everything it could have done to
comply with ADA?
Mr. Szabo. Well, I think, as this subcommittee is probably
aware, historically, no administration has ever made an ADA
request on behalf----
Senator Murray. Right.
Mr. Szabo [continuing]. Of Amtrak. And so, I mean, it
really put them behind the eight ball. You know, and that is
one of the reasons why we came forward this year and have, in
fact, made the $281 million request to start funding those
legitimate needs.
Senator Murray. Okay, all right. Thank you.
Senator Bond.
Senator Bond. Thank you, Madam Chair.
I would just note one thing. As a former Governor, I can
tell you that looking to the States to make massive investments
in high-speed rail is not going to happen anytime soon, until
the States get out of the holes they're in. And California,
you've mentioned, probably is in--somewhere up there between
Greece and Spain in having budget problems.
But, Madam Chair, I'm going to submit questions in writing
for the record, and I need to have a lot more specifics--firm
priorities, amounts--not just, ``We're going to work on a
plan,'' but a plan, criteria, priorities--before I can support
any of these requests. I need to know how they fit in our
overall budget.
So, thank you for your testimony, Mr. Administrator. And we
have other witnesses. And we'll be communicating with you.
Thank you.
Senator Murray. Thank you very much, Senator Bond.
Mr. Szabo, that would--will conclude our questions at this
time. There will be questions from the subcommittee that we
will need responses from you in writing.
Thank you very much for your testimony today.
And with that, I'd like the second panel to come forward.
Mr. Szabo. Thank you.
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)
STATEMENT OF HON. JOSEPH H. BOARDMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Senator Murray. All right. I'd like to welcome our second
panel today.
And, Mr. Boardman, we'll begin with you.
You want to turn your microphone on, please.
Mr. Boardman. Okay. Thank you, Madam Chair.
And I appreciate the opportunity to speak with you today.
Before I begin the discussion about Amtrak's funding needs,
I'd like to share with the subcommittee some good news that was
announced on April 8. Amtrak is on pace to break its annual
ridership record, carrying a best-ever 13.6 million passengers
during the first 6 months of fiscal year 2010. And with the
historically busier summer travel season ahead, comparing March
2010 to 2009, ridership increased by 13\1/2\ percent to a
record 2.4 million passengers for the month. In addition, every
single Amtrak route carried more passengers, with several
experiencing double-digit growth.
Furthermore, one of the, I think, important things to see
today is that we've had other wins. A win with Moody's--Moody's
has upgraded the rating for Amtrak from an A2 to an A1 just
this last month. There have been no material weaknesses found
in our audits. This is the first time since 2004 that that's
occurred. And ridership on long-distance trains increased by 16
percent in March, and is up 5.2 percent for the first two
quarters of 2010.
In every one of the services, whether the Missouri River
Runner, where Senator Bond is, it's up by 24.2 percent for
March, to--and 15.8 percent for the first half of Amtrak year.
Cascade's increased by 11.4 percent. And March saw a 16.7
percent increase for the first 6 months of the fiscal year.
These numbers reinforce what so many of us know about
passenger rail; if you provide a safe, reliable, user-friendly
system, the traveling public will use it.
What I'd like to do, though, is spend time talking about
what I think is the most important piece of what we're asking
for. And I know, in the last hearing, there were several
questions on it. And it's the ``Amtrak Equipment Plan and
Needs,'' which is by your table right now.
And just as an introduction, the fleet truly is the key for
customer perception and willingness to use our system. The
operating reliability is particularly important. And the cost
of maintaining a fleet is critical for us for the future.
The railroad belongs to you. It belongs to the United
States. It belongs to the administration and the Congress, and
it has for the last 40 years. We cover 80 percent of our
operating costs from revenue. We are the most efficient
railroad in the United States. We cover none of our capital
costs. Just like highways, capital support comes from the
Federal Government. And the payment on debt comes from the
Federal Government. And that will continue to be that way for
as long as you, the owners of this railroad, decide to operate
a railroad.
Amtrak has suffered insufficient Federal capital investment
over the full 40 years that it's been here. ADA has been around
for 20 years, and every administration has failed, and every
Congress has failed, to deliver what it passed as a law to fund
the ADA requirements for Amtrak. And that is not the case with
highway. It is not the case in the rest of the modes. These
modes are not pitted against the poor. These modes are pitted
against highways and aviation and rail. Nowhere is that more
evident in the railcar fleet and locomotive fleet.
AMTRAK'S AGING FLEET
The fleet needs to be recapitalized. The average age of the
fleet was already said to be 25 years old--or ``more than 24''
are, I think, the words that were used. Domestic production is
needed both for employment and to secure a Nation as we enter a
much higher cost of energy for the future. We need railroads
and passenger railroads.
In the first table, just to identify for you the planned
car locomotive procurement, you can see as red and yellow
lines. The yellow lines are the cars, and the red lines are the
locomotives. And the two high marks on the yellow lines are
when you replace train sets, like the Acela services, and
that's why they're higher.
In the second table, what you see is the average annual
miles, in thousands, that the cars operate for Amtrak. And on
the far right of this table, what you find is that all of the
Amtrak cars are operating, in some cases, 180,000 miles a year,
in comparison to all the transit operators, which are on this
side of the table, Tri-Rail being the most, at 66,000 miles a
year. And the utilization, then, for Amtrak--all of these
Amtrak cars--is much higher than any other operation in the
United States, period. And they're all older.
If you look at the third page, you find the same kind of
information for the average annual mile--locomotive mileage.
And what you see is, the closest competitor--and they aren't a
competitor, they're a host--is BNSF, which has an 83,000 mile
annual locomotive use, where Amtrak is 160,000 mile--almost
double what the mileage is by our private railroads.
But, I think perhaps the most compelling slide in the deck
that you have in front of you is the last one, because it's a
snapshot of the present. It is the locomotives that we're
talking about replacing, which is the electric locomotive on
the Northeast corridor. It's the AEM-7--from the 1980s category
in utilization you saw a couple of minutes ago. It's the
Heritage baggage car that was built in the 1950s. It is the
Viewliner sleeper cars, which are the newest ones on this
fleet. The Heritage diner, which is the same age I am. I was
born in 1948, and this diner was born in 1948.
PREPARED STATEMENT
And it's one of the things that keep our speed down on the
Northeast corridor. You can only operate 177 kilometers per
hour; that's 110 miles an hour. And when we replace these,
we'll be able to immediately go to 200 kilometers per hour, or
125 miles an hour, by replacing these older cars, which then
reduces the time it takes to travel on the Northeast corridor.
And then the Amfleet coaches and the lounge cars, from 1981 to
1983. This is the Florida-bound Silver Star, at Seabrook,
Maryland, and I think it really demonstrates what we need for
fleet for the future.
Thank you for the opportunity to speak.
[The statement follows:]
Prepared Statement of Hon. Joseph H. Boardman
Good morning, Madam Chair, Ranking Member Bond, and members of the
subcommittee. Today is my first time appearing before this subcommittee
as President of Amtrak, and I thank you for the opportunity to testify
on Amtrak's fiscal year 2011 operating and capital needs. I took this
position in November 2008; prior to that I was the Federal Railroad
Administrator.
Before I begin the discussion about Amtrak's fiscal year 2011
funding needs, I would like to share with the subcommittee some very
good news that was announced April 8. Amtrak has posted the best first
half in its history, carrying 13.6 million passengers during the first
6 months of fiscal year 2010. Comparing March 2010 to March 2009,
ridership increased by 13.5 percent to a record 2.47 million passengers
for the month. In addition, every single Amtrak route carried more
passengers, with several experiencing double-digit growth.
Ridership on long-distance trains increased by 16 percent in March
and is up 5.2 percent for the first two quarters of fiscal year 2010.
In the Chicago hub, ridership on the Lincoln Service (Chicago to St.
Louis) showed significant growth with an 18 percent jump in March and
11.6 percent for the 6 month period. The Hiawatha Service (Chicago--
Milwaukee) continues to grow with a 14.3 percent increase in March over
the previous year and a 4.8 percent increase for the fiscal year to
date. Elsewhere in the Midwest, the Missouri River Runner (Kansas
City--St. Louis) is up 24.2 percent for March and 15.8 percent for the
first half of the Amtrak fiscal year, while the Blue Water (Chicago--
Port Huron) increased by 21.7 percent in March and 5.2 percent for
fiscal year to date. In the West, Amtrak Cascades (Eugene, Oregon--
Vancouver, B.C.) increased by 11.4 percent in March and saw a 16.7
percent increase for the first 6 months of the fiscal year.
These numbers reinforce what so many of us know about passenger
rail. If you provide a safe, reliable, and user-friendly system, the
traveling public will use it. I want to personally thank Chairwoman
Murray and this subcommittee for the funding that has helped make this
growth possible and helped prove our belief in this system and mode to
be well founded. Between the funding provided by this subcommittee to
Amtrak and the Federal Railroad Administration's (FRA) High Speed and
Intercity Passenger Rail Grant Program through the fiscal year 2010
appropriations bill and the Recovery Act, you have truly ushered in a
new era of intercity passenger rail development in the United States.
With the funding you have provided Amtrak, we have rededicated
ourselves to our mission of developing the Nation's intercity passenger
and high speed passenger rail system, aiming to grow the quality,
utility, and breadth of our network. We are also working intensely on
this year's capital investment program, split-funded with $420 million
in General Capital Funds and $590 million in Recovery Act funds.
Equally important, we are also working with our State partners and the
FRA to implement the first round of grants awarded under the High Speed
and Intercity Passenger Rail grant program and are in the midst of
collaborating with State for second-round applications due this spring
and summer. Together with the Northeast Corridor States, we have also
just completed the first phase of our 3 year Northeast Corridor Master
Planning Process, and will be transmitting the final version of the
Master Plan document to Congress and the administration in mid-May.
Supplementing this effort, we have also just begun an initial phase of
our Northeast Corridor Next Generation High Speed Rail Study, led by
our new High Speed Rail department, to look at the feasibility of a new
dedicated high speed system in the NEC to serve as successor to the
Acela service, with greatly reduced trip times, increased frequencies,
and top speeds of 200 mph or more for our high speed express trains.
Central to all of these endeavors to strengthen or grow the Amtrak
system is our need to replace our aging and hard-run fleet with modern
equipment. Per Congress's instructions, we completed our first
comprehensive fleet strategy for the entire system and provided it to
the subcommittee on February 1. I testified before the House
Appropriations Committee last month to explain the urgency of our
financial needs, particularly our need to replace aging rolling stock,
and I want to repeat and, if possible, amplify this appeal. New
equipment is an urgent need. We must begin replacement of our aging
cars and locomotives next year, and the arrangement of financing for
these acquisitions is a priority. If we continue to delay, we risk a
significant worsening of the mechanical problems and failures that
degrade our service quality and increase the already considerable
maintenance expenses associated with the maintenance and repair of a
fleet far past its prime.
FISCAL YEAR 2011 REQUEST
For fiscal year 2011, Amtrak initially requested a total of $2.1
billion, consistent with the Passenger Rail Investment and Improvement
Act of 2008 (PRIIA) authorizations. About $592 million of that total is
requested for operating support, and $1.025 billion will cover capital
needs, while a total of $305 million would go for debt and debt
retirement opportunities. Another $231 million will be needed for ADA
compliance requirements. On March 22, Amtrak submitted a supplemental
request to Congress for an additional $446 million to address our most
urgent unfunded need, replacement of our aging fleet. This will raise
our total fiscal year 2011 request to about $2.5 billion.
FLEET PLAN
The $446 million requested for new equipment represents the first
and most urgent investments we need to make in replacing our aging
rolling stock. It will include the cost of purchasing 130 single level
long distance cars to replace our 1950s-era ``Heritage Fleet'' of
dining and baggage cars--the last rolling stock we inherited from the
freight railroads that's still in daily revenue service. The average
annual mileage of these cars is enormous, as you will see on this first
slide (see attachment). The typical Heritage car averages 451 miles per
day--that's like running it from Washington to Boston every single day
of the year. And we're putting these miles on cars whose automotive
equivalent would be a Studebaker or Packard. This is the fleet we are
going to replace. If you go to the next slide, you can see the
situation we face with our locomotive fleet. Our diesel electric
engines are comparatively new, but the electric fleet that powers our
Northeast Regional and Keystone trains is aging and requires
replacement.
The plan we have put together is shown on this third slide. Many
stakeholders have been anxious for the release of this plan, which was
required by Congress in the fiscal year 2010 THUD appropriations bill.
Amtrak has spent a year developing a comprehensive fleet plan that's
designed to replace all of our existing rolling stock as it reaches the
end of its useful life. It calls for the replacement of equipment in
manageable annual increments, which will allow us to identify and fix
issues with new designs before they become problems. This is not only a
procurement plan but a strategy designed to develop and support a
domestic rail manufacturing industry. It supports an administration
goal and an Amtrak goal, as a stable domestic manufacturing and supply
base should help spur innovation and reduce costs for us. Our fleet
strategy affords States an opportunity to join their orders to ours,
with unit cost savings for everyone--a goal set by Congress with
passage of PRIIA. To further this, we are working with the FRA and the
States through the PRIIA section 305 Next Generation Corridor Train
Equipment Pool Committee to ensure that our new fleet shares common
designs and specifications with the equipment needed by the States so
that this equipment is interoperable and easily maintained. All of
these are excellent goals, and Amtrak supports them wholeheartedly--but
we need to take the first step, which is funding the initial
procurement of a new single-level long distance fleet. We must give
potential suppliers reason to believe there is a long-term commitment
to retain Amtrak and to fund additional State procurements of intercity
passenger rail equipment in the United States. Otherwise, they will not
make the type of investments in facilities and workers necessary to
bring the United States back to the position it once occupied, in the
forefront of railcar manufacturing, and the 60-year old cars you see in
this fourth slide, which date from that era, will remain in service as
long as our maintenance and operating crews can keep them rolling.
Amazingly, Amtrak managed to increase its ridership by 32 percent
between 2002 and 2008 without buying new equipment and our ridership
continues to grow today. We are using ARRA funding to return stored and
wreck-damaged equipment to service, and I'm very pleased with the job
that our Beech Grove and Bear shop staffs have done. This extra
equipment now back in service is a contributing factor to our increased
ridership. But there are limits to what we can accomplish, and we can't
put cars that don't exist back into service. Right now the margins for
our equipment, particularly our single-level sleeper and diner fleets,
are razor-thin. A single major accident could potentially require us to
terminate or reduce certain services, particularly on the long-distance
trains.
ACCESSIBLE STATIONS DEVELOPMENT PLAN
This July 26 will mark the 20th anniversary of the enactment of the
Americans with Disabilities Act (ADA), and Amtrak is proud of its role
as an important mode of travel for people with disabilities and of our
special services to the disabled community. We look forward to
celebrating this ADA milestone, but there remains much work to be done.
Last year, 288,000 riders took advantage of the discounted pricing
Amtrak offers to passengers with disabilities, and that number is on
pace to increase by 6 percent this year. All of our front-line
employees are trained to provide special service to passengers with
disabilities, and we have resources and policies in place to
accommodate those with unique service requests, such as at-seat meals.
All of Amtrak's trains meet or exceed the requirements of the ADA,
while each and every one of our new rail cars is designed to be
accessible. Amtrak offers reserved spaces to park wheelchairs,
accessible seating into which passengers can transfer from a
wheelchair, accessible bedrooms on all long-distance trains, accessible
restrooms, and other accessibility features and services. We're also in
the process of modifying our train cars to allow for on-board storage
of Segway devices for those passengers who use them for mobility
assistance.
Currently, 94 percent of Amtrak passengers board at accessible
stations. While our stations must be fully compliant with the terms of
the act by July 26, 2010, unfortunately, as the subcommittee knows, we
will miss this deadline. But we are focused on making each of the 529
stations we serve fully accessible, a challenge that requires
significant funding. We are conducting a capital improvement program to
bring all covered stations we serve up to the necessary standards at a
cost of nearly $1.6 billion based on the comprehensive study we
completed in February 2009. In this fiscal year alone, Congress
allocated $144 million for station accessibility improvements.
Adding to this complication is the annual funding challenge. On
February 1, 2009, Amtrak advised in our report under section 219 of the
PRIIA that nearly $1.6 billion was needed to bring the entire system
into compliance with ADA, assuming that current ADA regulations on
platform boarding remain unchanged. (As the Congress may well be aware,
a proposed Federal Department of Transportation rulemaking is pending
that would call for level boarding at all stations covered by the ADA.
If that rule were to be promulgated and become law, the basic
assumptions and parameters of Amtrak's current stations compliance
program would be nullified and both the time and cost to achieve
compliance would be increased exponentially.) This investment amount
represents a year-old estimate for both Amtrak's responsibility and
third-party responsibilities.
In our fiscal year 2011 request, we asked for $281 million for our
fiscal year 2011 Accessible Stations Development Plan, to continue the
work to bring the stations we serve into compliance with the ADA.
However, today I am here to report to you that we are revising that
number downward to $231 million. Due to the challenges of reaching
agreements with all parties with ownership interests at the stations,
we have to take into consideration the 3 months of experience since our
fiscal year 2011 request was submitted, and we do not think it will be
feasible for us to spend $281 million in fiscal year 2011. If you or
your staff would like more details on this issue, we can certainly
follow up with you on that.
In closing, I am optimistic about our future and the future of
intercity and high-speed passenger rail. Our intercity passenger rail
system is one of the few readily available solutions to the
transportation challenges facing our country--and we are ready to turn
investments in rail into benefits for the environment, the economy, and
our mobility. What it needs is continued investment and leadership. We
look forward to working together in the coming months to ensure that
Amtrak obtains the public funding it needs to sustain its system and
fleet for generations to come and to realize the goals of a stronger
Amtrak and a stronger intercity passenger rail network.
Senator Murray. Thank you very much, Mr. Boardman.
Mr. Alves.
STATEMENT OF THEODORE ALVES, INSPECTOR GENERAL
Mr. Alves. Good morning, Madam Chair, ranking member, and
members of the subcommittee. And thank you for the opportunity
to discuss Amtrak's 2011 budget request.
I'd like to start by thanking Mr. Carper, Amtrak's
Chairman, its Board of Directors, President Boardman, and
members of this subcommittee for the support I've received
during the past 5 months as Amtrak's new inspector general.
I'm also pleased to report that Amtrak management and the
OIG have agreed to a new relationship policy, and that the
inspector general of the Farm Credit Administration found that
the new policy is consistent with the letter and spirit of the
IG Act. I want to thank the subcommittee for including this
very helpful requirement in last year's appropriations act.
Today, I will discuss the significant opportunities Amtrak
has to provide increased levels of high-quality passenger rail
service and four important challenges management must address
to take advantage of these opportunities.
First, the opportunities. The Passenger Rail Investment and
Improvement Act fundamentally changed Amtrak's role within the
national passenger rail system. Rather than relying on Amtrak
to lead development of new intercity passenger rail services
alone, PRIIA calls on States, supported with Federal grants, to
share in developing new corridor and high-speed rail services.
As a result, Amtrak will become one of many choices States have
to provide rail services, rather than the only practical
option.
The first challenge is that Amtrak needs to organize
properly and operate more efficiently. Amtrak is making
organizational changes to help it successfully compete for new
contracts, and has taken steps to operate more efficiently.
To illustrate, the company has made significant progress
implementing reliability-centered maintenance practices in
response to a 2005 OIG report. Using reliability-centered
maintenance on the Acela fleet reduced costs and generated $16
million in new revenue in 2009. Amtrak should continue applying
this maintenance concept across its fleet.
However, Amtrak can do more. For example, we recently
identified opportunities to adopt European best practices,
including better asset management systems and more advanced
technologies.
Second, Amtrak needs to improve its human capital
management practices. In a May 2009 report, we made several
recommendations that management agreed to implement. As a
result, Amtrak is focusing on strategic workforce planning,
including identifying its critical skills and competencies,
implementing a total compensation philosophy, and improving
recruitment and retention practices. Fully implementing these
corrective actions will require a concerted effort over several
years.
Third, significant IT investments always involve risks.
Amtrak has four major technology initiatives underway, and has
taken a number of measures to address the risks, including:
establishing disciplined procedures to guide both project
management and technology development; forming an independent
team to enforce standards; and implementing reviews to ensure
that projects meet quality standards before proceeding to the
next development phase. To ensure that these projects stay on
track and achieve anticipated benefits, Amtrak should closely
watch progress, address emerging problems quickly.
The fourth challenge is managing risks associated with the
Recovery Act projects. Specifically, Amtrak may have to take
measures that could reduce productivity, adversely impact
project quality, or significantly diminish railroad operations
in order to finish some projects by February 2011.
Amtrak faces this issue, in part, because the terms of the
FRA grant are stricter than the terms in the act. The act
requires Amtrak to take measures to complete the projects by
February 2011. The FRA grant, on the other hand, requires
Amtrak to take continuing measures, and even extraordinary
measures, to complete projects by that date.
As projects face slippages, Amtrak is now considering
taking extraordinary measures to meet the completion date.
These measures include adding second or third shifts, which
studies indicate have a negative impact on productivity, and
reducing the scope of projects, which reduces the benefits
associated with the final product. Although the term
``extraordinary measures'' has not been defined, we do not
believe that Amtrak should take actions that would
significantly reduce productivity, adversely impact the quality
of the final products, or significantly diminish railroad
operations.
PREPARED STATEMENT
Madam Chair, this concludes my testimony, and I'll be happy
to answer any questions.
[The statement follows:]
Prepared Statement of Theodore Alves
Good morning Madam Chair, ranking member, and members of the
subcommittee and thank you for the opportunity to testify about
Amtrak's fiscal year 2011 operating and capital budget request. Amtrak
has made considerable progress positioning itself to meet the
challenges it faces to compete effectively in this new era of intercity
passenger rail. The intercity passenger rail system includes the long
distance routes, High Speed Rail corridors, State sponsored corridors,
and the Northeast Corridor (NEC). Accomplishments include completing a
new strategic guidance, a 5 year financial plan, and a long-range fleet
plan. Although fiscal year 2009 saw a decline in ridership and revenue
from fiscal year 2008 as the economy continued to struggle, both
ridership and ticket revenues came in at the second highest level in
company history. The last several months have also seen sustained
increases in passengers and revenue.
Before I discuss Amtrak's funding request, let me thank Mr. Carper,
Amtrak's Chairman, its Board of Directors, President Boardman, and
members of this subcommittee for the support I have received during the
past 5 months as Amtrak's new Inspector General (IG). Last year's
appropriations act directed Amtrak management and the OIG to agree upon
a set of policies and principles for working together that are
consistent with the letter and spirit of the IG Act. On March 17 of
this year, Carl Clinefelter, the IG of the Federal Credit
Administration and Vice Chairperson of the Council of the Inspectors
General on Integrity and Efficiency, reported that the new relationship
policy is consistent with the letter and spirit of the IG Act. I want
to thank the subcommittee for inserting this very helpful requirement.
Amtrak is requesting $2.6 billion for fiscal year 2011. A total of
$592 million is for operating support, $1.8 billion for capital needs--
including $446 million for replacing its aging fleet, and $281 million
to meet the Americans with Disabilities Act requirements--and the
remaining $277 million for debt retirement. This amount, along with
last year's American Recovery and Reinvestment Act (Recovery Act)
funding of $1.3 billion would be a significant infusion of funds and
would help Amtrak move toward its long-term goal of providing
efficient, high quality passenger rail service that is cost and trip
time competitive with other modes.
Today, I would like to discuss the significant opportunities that
Amtrak has to provide increased levels of high quality passenger rail
services, as well as important challenges it must address to take
advantage of these opportunities.
First, the Opportunities.--Congress passed the Passenger Rail
Investment and Improvement Act (PRIIA) in October 2008. PRIIA
recognized that passenger rail services, particularly connecting large
cities, can provide significant public benefits, including road and air
congestion reductions, environmental benefits, fuel usage reductions,
and increased mobility choices for the travelling public.
PRIIA not only reauthorized Amtrak; it fundamentally changed
Amtrak's role within the national passenger rail system. PRIIA also
contains many provisions aimed at spurring Amtrak to operate more
efficiently and to improve services on its existing routes. In
addition, the Recovery Act provided $8 billion through PRIIA grant
programs to States to assist in improving Amtrak's national network and
begin developing new High Speed Rail corridors. Amtrak also received
$1.3 billion through the Federal Railroad Administration (FRA) to
improve its infrastructure, facilities, and security.
Essentially, rather than relying on Amtrak to lead the development
of new intercity passenger rail services alone, PRIIA calls on States,
supported with Federal grants from FRA, to share in the development of
both new corridor services and High Speed Rail services. While Amtrak
is still presumed to be the national operator, PRIIA provides greater
flexibility to the States in determining who will plan, develop, and
operate these new services.
With States playing a larger role in planning for and funding
passenger rail service, Amtrak will become one of many choices States
have to provide services, rather than the only practical option. Amtrak
can still be the provider of choice in this new competitive
environment, but only if it is perceived as an efficient organization
that provides quality and cost-effective service.
In fact, Amtrak has many competitive advantages, including its
statutory access to host railroads, existing liability regime, and
experience in planning, engineering, maintenance, and operations. For
example, Amtrak already operates a number of commuter rail routes in
key markets and has a nationwide reservation system that can be
extended to support new services, allowing significant economies of
scale. Amtrak can leverage these advantages to help States plan for
these new services and to become the operator of choice for new
services.
Now, the Challenges.--As Amtrak moves into this new era of
passenger rail, it faces four interrelated management challenges. Those
challenges include:
--Competing successfully for new State supported corridor and high
speed rail services and then delivering high quality cost-
effective service.
--Improving human capital management practices, including strategic
workforce planning, and training and development.
--Managing risks associated with the modernization of Amtrak's
information technology systems and infrastructure.
--Managing risks associated with projects funded through the Recovery
Act.
CHALLENGE 1.--COMPETING SUCCESSFULLY FOR NEW STATE SUPPORTED SERVICES
AND THEN DELIVERING HIGH QUALITY COST-EFFECTIVE SERVICE
Growth in State supported services, including the development and
operation of new high-speed rail corridors, creates new challenges for
Amtrak. To retain its dominant position in the market, Amtrak must
elevate its customer focus, improve service quality, and become a more
nimble and dedicated partner. Competition for routes should also
challenge Amtrak to implement significant operating efficiencies that
will improve all lines of business.
The strategic direction and additional Federal funding that PRIIA
authorized, along with appropriations support, has given Amtrak a
unique opportunity to expand and enhance its rail passenger operations.
However, Amtrak will face challenges to compete successfully in a
market place that has increasing levels of both domestic and foreign
competition. The competition is evidenced by two recent examples:
--The Virginia Railway Express operating and maintenance service
contract was recently awarded to the U.S.-based subsidiary of a
French firm. Amtrak had been providing the services since the
commuter rail operations began in 1992.
--Caltrans selected a different French firm to renovate all 66 bi-
level intercity passenger vehicles from its California car
fleet. The renovations will take place in a newly-opened
maintenance facility in California. While Amtrak did not
compete for this work, it represents the growing marketplace
for equipment-related work.
To thrive in this newly competitive environment, Amtrak must
significantly improve its operating efficiency. In fact, we believe the
very existence of competition will provide the incentive Amtrak needs
to focus more attention on operating more efficiently.
Amtrak deserves to be commended for its recent decision to
establish a new High Speed Rail department reporting directly to Mr.
Boardman. This new department should help the company focus on the
planning and development activities required to successfully compete
for high speed rail contracts. As it implements this new organization,
Amtrak will need to also focus on ensuring that it is positioned to
deliver efficient and high quality services. A heightened emphasis on
operating more efficiently and controlling costs will be needed to
ensure that Amtrak remains the service provider of choice.
Amtrak has taken some commendable steps to improve operating
efficiencies in recent years, but more needs to be done. For example, a
recent OIG report \1\ concluded that, although Amtrak's Engineering
department has effectively reduced its operating expenses by 15 percent
between 2002 and 2007, the company still spends about $50 million more
per year than the average comparable European railroad, and $150
million more per year than the ``best'' European railroads to maintain
and renew its infrastructure assets. Although American and European
railroads are not entirely comparable and some of these opportunities
are outside Amtrak's direct control, Amtrak can implement many European
practices that would reduce costs. For example, we recommended that
Amtrak implement better asset management systems and procure more
advanced technology/equipment.
---------------------------------------------------------------------------
\1\ ``Amtrak's Infrastructure Maintenance Program'', September
2009, OIG Report Number E-09-05.
---------------------------------------------------------------------------
Amtrak is well along in implementing a new asset management system
but it will be several years before it is fully operational.
Additionally, Amtrak is exploring new technologies along the Northeast
Corridor. The key now is for Amtrak to follow through on these
recommendations to ensure that these changes are implemented
effectively.
In 2005, we issued a report on Amtrak's Mechanical Maintenance
Operations.\2\ We estimated that Amtrak had an opportunity to save $100
million per year by adopting a Reliability Centered Maintenance
strategy along with other efficiency improvements. Amtrak has made
significant progress in this area. For example, implementing
Reliability Centered Maintenance for the Acela fleet allowed Amtrak to
reduce maintenance costs and to increase available train sets from 14
to 16 per day, generating additional revenues of $16 million during
fiscal year 2009 alone. The experience with the Acela fleet is a strong
indicator that significant additional benefits can be realized as this
practice is expanded throughout Amtrak's conventional fleet. Amtrak
needs to ensure that momentum is maintained to apply this important
maintenance concept across all Amtrak fleet assets. We are currently
conducting a follow-up review on this important program.
---------------------------------------------------------------------------
\2\ ``Amtrak Mechanical Maintenance Operations'', October 2005, OIG
Report Number E-05-04.
---------------------------------------------------------------------------
We also note that Amtrak's financial projections do not reflect
significant improvements in operating efficiency. One key indicator of
efficiency that Amtrak uses is loss per passenger mile. The chart below
shows the operating loss per passenger mile increasing by approximately
45 percent from fiscal year 2008 to fiscal year 2010, and then
remaining relatively constant from fiscal year 2010 to fiscal year
2014. During a period when ridership is expected to grow beyond the
levels experienced in fiscal year 2008, we would expect to see the loss
per passenger mile return to the levels experienced in fiscal year 2008
or even improve on those levels. Only through a renewed focus on
efficiency improvement will Amtrak be able to achieve this.
CHALLENGE 2.--IMPROVING HUMAN CAPITAL MANAGEMENT PRACTICES, INCLUDING
STRATEGIC WORKFORCE PLANNING, AND TRAINING AND DEVELOPMENT
Improved human capital management and strategic workforce planning
are critical to ensure that Amtrak has the right people with the right
operational and leadership skills to improve services and expand
operations efficiently and effectively.
Historically, Amtrak had been operating on budgets that allowed it
to maintain the railroad and deliver adequate passenger services, but
provided limited resources to invest in long-term planning, including
human capital initiatives. It maintains a relatively stable work force,
with long-term employees who operate the railroad with reasonable
efficiency, instituting improvements as time and resources allow.
Two significant factors will change this environment:
--Amtrak's workforce is aging. Over the next 5 years, 30 percent of
its work force, representing thousands of employees, will be
eligible to retire. Replacing them will be a daunting task
considering Amtrak employs about 20,000 people.
--Amtrak has received a large injection of capital funds to improve
its infrastructure, facilities, and security capabilities--this
has strained its ability to provide people with the right skill
sets to oversee these investments while continuing to run the
railroad.
Strengthening human capital practices remains a significant
challenge across Amtrak, a challenge which will intensify as workloads
increase at the same time that experienced employees in key positions
retire or migrate to other business opportunities.
In May 2009, we issued a report that compared Amtrak's human
capital management practices to other companies.\3\ In preparing the
report we interviewed over 125 Amtrak managers and employees, obtained
results from benchmarking studies, and visited two other Class I
railroads to see how they managed their human capital.
---------------------------------------------------------------------------
\3\ ``Human Capital Management'', May 2009, OIG Report Number E-09-
03.
---------------------------------------------------------------------------
Our report made specific recommendations that covered four critical
areas. Amtrak agreed with all major recommendations and has been taking
steps to implement them. However, fully implementing these
recommendations will require a concerted effort over several years.
Strategic Work Force Planning.--We found that Amtrak lacks a
strategic workforce planning process to ensure that it has a workforce
with the knowledge and skills to meet future needs. We recommended a
stronger focus in this area that includes identifying the critical
skills and competencies needed to achieve Amtrak's current and future
business requirements. The company has made progress by identifying
employees who are eligible to retire and preparing talent profiles for
non-agreement covered positions. While this is a good start, the
company has not yet identified its mission critical and other key
positions or developed a strategic workforce plan.
Total Compensation.--Amtrak also lacks a total compensation
approach to ensure that pay practices are applied consistently and are
aligned to support Amtrak's strategic goals. Total compensation is the
complete pay package an employee receives, including money, benefits,
and services. Our recommendations focused on the need to define and
implement an overall compensation philosophy and strategy. Since our
report, the Human Resources Department has conducted a compensation
review as part of an effort to develop a new pay structure that will
help attract, motivate, and retain highly skilled and talented
employees. Amtrak has not yet, however, revised its pay structures.
Recruitment.--Successful companies recognize the importance of
having a clearly defined recruiting strategy linked to the company's
identified workforce needs. Recruiting at Amtrak is decentralized and
manually driven. While the company has been successful in filling its
recruitment needs during the past 2 years, as the economy recovers
Amtrak risks losing skilled craftsman and technical expertise faster
than it can replace them. Our recommendations focused on how the
company could improve the recruitment process to reduce the cost and
time to hire while attracting highly qualified candidates. The company
is working to deploy an automated system that should help improve
recruitment.
Retention.--Each time a company loses an employee, it costs money.
Amtrak's overall turnover rate has averaged about 10 percent annually,
which is lower than most companies. Once employees reach 5 years of
service with Amtrak, the majority tend to stay for the entire career.
The problem is that in recent years a high proportion of Amtrak
employees leave before completing 5 years, resulting in an overall
workforce that tends to be skewed toward employees approaching
retirement age. Amtrak's challenge, therefore, is to retain employees
beyond the first 5 years of employment in order to smooth out this
imbalance. Our recommendations focused on the need for a corporate
retention strategy that aligns with and supports an overall strategic
human capital plan.
Amtrak is heavily engaged in implementing the Employee Information
Management (EIM) system, a sophisticated human resource management
system that provides a basis to more effectively track and guide the
career paths for its employees. Amtrak needs to ensure that it also
makes timely progress in addressing the strategic Human Capital issues
by continuing to implement our recommendations.
We also recently completed a separate and more detailed review
focusing specifically on training and employee development. Our October
2009 report,\4\ found that because Amtrak's training program is largely
decentralized, it cannot ensure that training efforts are aligned to
meet the company's strategic needs. We also found that Amtrak needs to
develop an effective corporate-wide strategy for developing management
employees to assume the future leadership roles in the company.
---------------------------------------------------------------------------
\4\ ``Training and Employee Development'', October 2009, OIG Report
Number E-09-06.
---------------------------------------------------------------------------
We made a series of recommendations to improve the effectiveness
and efficiency of training and employee development, focusing on
developing and implementing a corporate-wide training and employee
development strategy. This would ensure that training aligns with the
overall corporate strategy and provides employees with the skills
needed to assume leadership roles in the future.
Management recently agreed with all of our recommendations and
provided a plan to implement them. It is important, however, for
management to stay focused on making near-term improvements, because
effective training and development practices will be a key component of
Amtrak's ability to deliver high quality services.
CHALLENGE 3.--MANAGING THE RISKS ASSOCIATED WITH AMTRAK'S GOAL OF
MODERNIZING ITS INFORMATION TECHNOLOGY SYSTEMS AND INFRASTRUCTURE
Significant IT investments always involve risks, and achieving
anticipated benefits depends on managing the risks and implementing
business process improvements to streamline and improve internal
operations.
Amtrak recognizes that a number of its key information systems and
the underlying technological infrastructure are outdated and
increasingly prone to failure. Modernizing these information systems
also provides a major opportunity for Amtrak to better harness
information to make decisions and operate more efficiently. Amtrak is,
therefore, taking measures to mitigate the potential for system
problems while at the same time leveraging more up-to-date systems
technology to drive operational improvements and more effective
decisionmaking.
Amtrak currently has four major technology initiatives under way:
--Strategic Asset Management (SAM).--SAM is a multiyear program to
transform and integrate key operational, financial, supply
chain, and human resource processes. SAM is expected to help
Amtrak meet managerial accounting requirements mandated by
PRIIA and replace legacy financial, procurement, materials
management, and operational systems.
--eTicketing and Next Generation Reservation (RES-NG).--Amtrak's
current reservation and ticketing system is critical for sales
booking, ticketing, customer service, and train operations.
eTicketing is a major program that aims to replace current
paper-based ticketing processes with an airline-style
electronic ticketing system. This program will also automate
the onboard ticket processing and simplify and streamline the
revenue recognition and accounting functions.
--Amtrak Information Management (AIM).--The objective of this program
is to make critical business information reliable and easily
accessible to Amtrak's managers and executives. It will
integrate information from various internal and external
sources, and will include sophisticated capabilities such as
business intelligence, document management, and train
communications.
--IT Infrastructure Improvement (ITII).--This initiative focuses on
upgrading Amtrak's IT infrastructure to improve service levels
and lower current costs. Under new outsourcing contracts signed
during 2009, IBM is responsible for data center operations and
seat management, while AT&T is responsible for data and voice
networks. Amtrak is also moving its current data center to two
new locations over the next several months.
Because large IT acquisitions involve significant risk, they must
be carefully managed. The fact that these programs are taking place
concurrently and have a number of inter-dependencies heightens these
risks. For example, the AIM program will need to make use of
information that is being made available by other programs such as SAM
and eTicketing. Also, many changes to business processes and
operational procedures will occur in quick succession, challenging the
organizations ability to absorb the changes.
Amtrak is aware of these risks and has taken a number of measures
to manage them, including:
--Reorganizing the IT department to foster partnerships and improve
communications with business customers.
--Establishing a Project Management Office, separate and distinct
from the technology delivery team, to establish standardized,
disciplined procedures to guide both project management and
technology development.
--Forming an independent Enterprise Architecture team to develop,
monitor, and enforce architectural standards.
--Dividing each major project into phases and implementing
comprehensive peer reviews for each phase, to ensure that
projects meet quality standards before proceeding to the next
development phase.
--Instituting progress reports to keep management and the Board
informed about the status of each technology project.
To ensure that these projects stay on track, Amtrak will need to
closely watch progress and take steps to address emerging problems
quickly. We also recently initiated an audit of the largest and most
complex of the four programs--the SAM project--to evaluate how well
management and control measures are mitigating risks.
CHALLENGE 4.--MANAGING RISKS ASSOCIATED WITH PROJECTS FUNDED THROUGH
THE RECOVERY ACT
Recovery Act spending creates many opportunities to improve
infrastructure, facilities, and security, but the large amount of funds
combined with tight spending deadlines create a challenge to spend
money efficiently and effectively and to ensure that projects provide
long-term economic benefits.
The Recovery Act included $1.3 billion in capital grants to fund a
variety of projects to help Amtrak improve its infrastructure,
facilities, and security posture. The act also required the Secretary
of Transportation to take measures to ensure that projects would be
completed within 2 years of enactment (February 17, 2011).
In March 2009, the Federal Railroad Administration (FRA) provided a
$1.3 billion grant to Amtrak. The grant agreement requires Amtrak to
complete all projects funded through the Recovery Act no later than
February 17, 2011 and to continuously take actions to ensure projects
are completed by that date. Amtrak is allowed to request a waiver for
projects that cannot be completed by February 17, 2011, but must
demonstrate that it has taken ``extraordinary'' measures to complete
the project on time.
Amtrak currently has hundreds of individual projects under way that
are funded through the Recovery Act. Examples of important projects
include: replacement of the Niantic River Bridge, refurbishments of
several other bridges, improved communications, power upgrades,
modernization of stations, improvements for customer and workplace
safety, and the return to service of dozens of locomotives and
passenger cars.
This week we plan to issue a draft report to Amtrak that analyzes
project risks associated with key engineering projects funded by the
Recovery Act. Of the nine projects (totaling $293 million) that we
evaluated, five contained a significant number of high-risk areas that
need to be managed effectively to ensure the project's success. These
projects included the Niantic River Bridge project and Positive Train
Control projects. Of the 10 risk categories that we examined, risk
associated with acquisition, environment, schedule slippage, and
technology were identified by program managers as areas of the highest
concern. In general the program managers were quick to recognize the
high-risk items and to put forward tactics that they believed would
adequately manage the associated risk.
However, neither the program managers nor Amtrak's executives are
in a position to mitigate the most significant concern, which is that
the grant between the FRA and Amtrak requires Amtrak to take
extraordinary measures to ensure that all projects are completed by
February 17, 2011. Although the Recovery Act requires that Amtrak take
measures to complete the projects by February 2011, it does not require
``extraordinary'' measures. The March 19, 2009, FRA grant not only
requires that Amtrak take continuing measures to complete projects
within 2 years, but requires Amtrak to identify the extraordinary
measures taken to meet the February 17, 2011, completion date when
applying for a waiver.
This requirement to take extraordinary measures may have the
unintended consequence of encouraging Amtrak to take actions that
increase the risk of waste and inefficiency or even to take shortcuts
that could increase the risk that the project will not perform as well
as expected and will not provide the benefits expected. Although the
term has not been defined, we consider extraordinary measures as any
action that would significantly reduce productivity, increase the
potential for waste or inefficiency, negatively impact the quality of
the final products, or significantly impact the smooth operation of the
railroad.
Amtrak executives, including the President and the Chief Financial
Officer, are committed to ensuring that funds are utilized effectively
and represent an appropriate use of taxpayer funds. They are in the
process of making decisions about how to balance the need and desire to
implement these projects against the need to spend taxpayer funds
efficiently and effectively. In fact, when Amtrak awarded contracts, it
had taken measures to complete the projects on time--those measures
were reflected in a contract completion date that met the requirement.
However, as projects face slippages that threaten the completion
date, which is not unusual for large construction projects, Amtrak
executives are faced with either taking extraordinary actions to meet
the completion date, or cancelling the project and identifying a
substitute project that can be completed in time. Extraordinary actions
that have been proposed by Amtrak include the addition of second or
even third shifts on construction projects and reducing the scope of
projects to accomplish less than originally planned. Identifying
substitute projects at this point in time also involves risks and might
result in spending on lower priority projects that will bring fewer
benefits than the originally selected project.
Because the grant agreement is driving these ``extraordinary''
measures rather than the Law, we are recommending that Amtrak apply to
the FRA to amend the grant provisions that require Amtrak to continue
to take ``extraordinary'' measures to complete projects by February 17,
2011, if those measures would significantly increase the risk of waste,
inefficiency, reduced project benefits, or disrupt operations.
In closing, let me briefly discuss the OIG' s budget request.
We are requesting $22 million as a direct appropriation to the OIG
for fiscal year 2011, which is consistent with our authorized funding
level. Although it represents a $3 million increase over our 2010
appropriation, I would note that the OIG appropriation has not kept
pace with inflation for the prior 3 years.
The request will provide additional leadership positions to support
needed restructuring of our operations as well as positions to
strengthen our internal operations. For example, in the past, the
Amtrak OIG relied heavily on support from Amtrak management units for
Human Resource and procurement activities. While I plan to continue to
rely on Amtrak support, it is essential that we have adequate in-house
capabilities to ensure that we can operate independently and
effectively. Finally, our request funds required upgrades to our IT
systems.
We have developed a new strategic plan for the OIG that will help
us to focus on the major goals Amtrak is trying to achieve and we have
provided that plan to the subcommittee. This additional fiscal year
2011 funding will help us to implement our new strategy of focusing our
attention on the most significant issues Amtrak faces. We expect to
identify significant cost savings and program improvements in important
areas, including Amtrak's $250 million annual healthcare expenditures.
We are also working closely with Congress and this subcommittee to
provide timely information that will be helpful in the legislative and
oversight process. We hope you agree that your investment in the Amtrak
OIG serves to strengthen Amtrak's operations, improve efficiency,
prevent and deter fraud and abuse, and provide the transparency needed
in an organization that receives large Federal subsidies. To
illustrate, in February of this year, Amtrak released a Fleet Strategy
outlining a multibillion-dollar plan to replace its aging fleet and to
provide additional fleet to handle the growth in demand. At the request
of this subcommittee, we plan to review this important initiative.
Madam Chair, this concludes my testimony and I will be happy to
answer any questions.
DEPARTMENT OF TRANSPORTATION
Office of Inspector General
Senator Murray. Thank you very much.
Ms. Ann Calvaresi.
STATEMENT OF ANN CALVARESI-BARR, DEPUTY INSPECTOR
GENERAL
Ms. Barr. Chairman Murray, members of the subcommittee,
thank you for the invitation to discuss ongoing efforts to
strengthen the Nation's passenger rail network.
As you know, recent legislation calls for significant
investment in rail, an investment that demands rigorous
oversight to ensure passenger rail goals are achieved and
taxpayer dollars are used wisely.
My statement today focuses on FRA's expanded role and
responsibilities under PRIIA and the Rail Safety Improvement
Act, the challenges FRA faces in effectively carrying out its
new role, and the progress Amtrak has made in improving its
operating and capital financial management processes.
PRIIA and the Safety Act dramatically expanded FRA's role.
Together, these mandates call for FRA to develop, from the
ground up, a multibillion-dollar high-speed rail program and to
undertake several new safety and passenger rail service
enhancement initiatives.
Among the tasks set out for FRA are the development of
performance metrics for minimum passenger rail service
requirements, such as on-time performance levels, and the
establishment of a discretionary grant program to develop and
deploy positive train technologies. This expanded role presents
several challenges for FRA, especially as they relate to
implementing the high-speed rail program. To ensure program
success, FRA must develop a sound implementation strategy.
While FRA has developed project selection criteria, it has
yet to provide grant applicants with the detailed methodologies
needed to adequately complete their applications. For example,
FRA has not issued guidance on how to prepare forecasts of
project ridership and revenue, costs, and public benefits for
high-speed and intercity passenger rail. Without such guidance,
FRA is not positioned to effectively assess the merits of rail
grant applications and ensure sustainability of the service.
FRA must also enhance its internal policies and practices
in order to effectively oversee these larger project grants.
According to the Office of the Secretary of Transportation
[OST], plans for program monitoring and administration are in
development.
Finally, FRA must obtain adequate staff with the right
skill mix to oversee program implementation.
The Recovery Act greatly accelerated FRA's rollout of the
high-speed rail program, further exacerbating FRA's challenges.
Within 10 months after its enactment, FRA was required to issue
a strategic high-speed rail plan, establish interim guidance,
and process all applications for the $8 billion stimulus
investment.
Balancing other PRIIA responsibilities with its traditional
responsibilities create even more challenges for FRA. For
example, PRIIA requires FRA to coordinate with hundreds of
public and private stakeholders to establish a National Rail
Plan that addresses interconnectivity with other modes of
transportation, informs the development of State rail plans,
and recognizes the need for a sustainable funding mechanism. At
the same time, FRA must not lose sight of its traditional
responsibilities; chief among them, ensuring rail safety and
oversight of Amtrak.
Effectively managing these critical rail programs will
require sustained focus and oversight by FRA and the DOT OIG.
We have begun to shift resources accordingly. Specifically, we
have underway an evaluation of best practices for forecasting
high-speed rail ridership and revenue, costs, and public
benefits; an audit of infrastructure access agreements between
the States and freights to ensure access agreements adequately
address cost, schedule, and performance goals; and a
quantitative analysis of Amtrak's delays that will help FRA
ensure investments yield the highest return.
Given the important role Amtrak plays in intercity
passenger rail, our work on Amtrak's financial management is
relevant to FRA's efforts. Amtrak established key performance
indicators to measure both the efficiency and effectiveness of
its operational and financial performance. For example, Amtrak
developed a cost-recovery indicator to measure the proportion
of expenses covered by revenues and ridership growth. This
approach appears to be a more efficient way to monitor and
improve operating and financial performance than its previous
approach of tracking savings from specific reforms.
Our ongoing work also indicates that Amtrak has improved
its long-term capital planning. Specifically, Amtrak has
developed long-term plans for its fleet and infrastructure, a
transparent process for prioritizing its capital needs, and
guidance on conducting post reviews of its capital investments.
Clearly, Amtrak's success hinges on effective implementation.
PREPARED STATEMENT
In closing, while we are dedicating additional resources to
oversee FRA and its expanded role, we are encouraged that the
Amtrak's OIG, under its new leadership, will enhance its
oversight of Amtrak-related work.
Chairman Murray, this concludes my prepared statement. I
would be happy to answer any questions that you or other
members of the subcommittee may have.
Thank you.
[The statement follows:]
Prepared Statement of Ann Calvaresi-Barr
Madam Chairman and members of the subcommittee: Thank you for
inviting me here today to discuss ongoing efforts to strengthen the
Nation's passenger rail network. As you know, recent legislation has
called for significant investment in rail--an investment that demands
additional scrutiny and oversight to ensure legislative goals are
achieved and taxpayer dollars are used wisely.
My testimony today focuses on: (1) changes in the Federal Railroad
Administration's (FRA) role and responsibilities under the Passenger
Railroad Investment and Improvement Act of 2008 (PRIIA) and the Rail
Safety Improvement Act of 2008 (RSIA); (2) the challenges FRA faces in
effectively carrying out its new role; and (3) the progress Amtrak has
made in improving its operating and capital financial management. My
testimony is based on our recent and ongoing work related to FRA,
Amtrak, and rail issues in general.
IN SUMMARY
PRIIA and RSIA dramatically realigned FRA's role and expanded its
responsibilities. Together these two pieces of legislation have called
for the implementation of a high speed rail program, improvements in
intercity passenger rail services, and safety enhancement initiatives.
Each new mandate carries a unique set of challenges for FRA, especially
as they relate to implementing the high-speed rail program. Challenges
include developing written policies and practices to guide the
program's grant lifecycle process and oversight activities, and
obtaining adequate staff to oversee implementation. The American
Recovery and Reinvestment Act of 2009 (ARRA) exacerbated these
challenges by accelerating timelines and providing FRA an additional $8
billion. At the same time, FRA must continue to carry out its prior
responsibilities, including its oversight of Amtrak. While our work has
found that Amtrak has improved its financial management of operating
and capital planning activities, new PRIIA mandates and ARRA funding
could require Amtrak to heighten its improvement efforts. In light of
these issues, the Department of Transportation (DOT), Office of
Inspector General (OIG) has several audits--completed or under way--to
monitor FRA's efforts to carry out its traditional and new roles and
responsibilities.
BACKGROUND
Within the last 2 years, new legislation has been enacted with
major ramifications to intercity passenger rail in the United States.
On October 16, 2008, the President signed into law RSIA, or the Safety
Act, and PRIIA. The Safety Act is the most comprehensive new railroad
safety law in the past 30 years. In addition to reauthorizing FRA, the
Safety Act contains new mandates for freight railroads, commuter
railroads, and the National Railroad Passenger Corporation, better
known as Amtrak. PRIIA reauthorizes Amtrak and strengthens the U.S.
passenger rail network by tasking Amtrak, DOT, FRA, States, and other
stakeholders with improving service, operations, and facilities. PRIIA
focuses on intercity passenger rail, including Amtrak's long-distance
routes and the Northeast Corridor, State-sponsored corridors throughout
the Nation, and the development of high speed rail corridors.
ARRA was signed into law on February 17, 2009, to preserve and
create jobs and promote economic recovery through investments in
transportation, environmental protection, and other infrastructure.
ARRA provided $8 billion to FRA for discretionary grant programs to
jump start the development of high-speed rail corridors and enhance
intercity passenger rail service. ARRA also directed $1.3 billion to
Amtrak for capital investments. In addition, ARRA designated $20
million to DOT OIG through fiscal year 2013 to conduct audits and
investigations of DOT projects and activities funded by ARRA. In
response, OIG developed a work plan using a three-phase approach to
conduct audit and investigative work by emphasizing high-risk areas and
promptly reporting results. Between March and December 2009, OIG issued
two reports outlining the risks and challenges to DOT program offices
related to ARRA, including FRA.\1\
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\1\ OIG Report MH-2009-046, ``American Recovery and Reinvestment
Act of 2009: Oversight Challenges Facing the Department of
Transportation,'' issued March 31, 2009 and OIG Report MH-2010-024,
``DOT's Implementation of the American Recovery and Reinvestment Act:
Continued Management Attention is Needed to Address Oversight
Vulnerabilities,'' issued November 30, 2009. OIG reports and testimony
are available on our Web site: www.oig.dot.gov.
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LEGISLATION DRAMATICALLY EXPANDED FRA'S ROLE
Historically, FRA was a small agency, focused primarily on
promoting and overseeing railroad safety. FRA was responsible for: (1)
promulgating railroad safety regulations; (2) administering several
small grant and loan programs, such as the Rail Line Relocation grant
program and the Railroad Rehabilitation and Improvement Financing loan
program; and (3) overseeing Amtrak's operations and disbursing Amtrak's
annual grant funds. PRIIA and RSIA, however, dramatically realigned
FRA's role and expanded its responsibilities. Together, these mandates
call for FRA to undertake several new safety and passenger rail service
enhancement initiatives and to develop from the ground up a multi-
billion dollar high-speed rail discretionary grant program.
PRIIA Added Several New Initiatives to Enhance Intercity Passenger Rail
Service
PRIIA tasked FRA with numerous significant responsibilities--among
them the creation of a new High-Speed Intercity Passenger Rail (HSIPR)
grant program. Other new PRIIA mandates include initiatives to improve
existing intercity passenger rail service and to promote the expansion
of intercity passenger rail. PRIIA requires FRA to design a long-range
national rail plan that promotes an integrated, efficient, and
optimized national rail system for the movement of people and goods.
FRA issued its preliminary plan on October 15, 2009, and must submit
the final plan to Congress on September 15, 2010.
PRIIA also required FRA to develop performance metrics that
establish minimum passenger rail service requirements--such as minimal
on-time-performance levels and other service quality measures--and
provide a framework for improved passenger rail service. The metrics
were developed in conjunction with Amtrak and in consultation with the
Surface Transportation Board, Amtrak's host railroads, States, Amtrak's
labor organizations, and rail passenger associations. FRA is required
to publicly report performance results quarterly. Other Amtrak-related
responsibilities that PRIIA requires FRA to carry out include
monitoring and conducting periodic reviews of Amtrak's compliance with
applicable sections of the American's with Disabilities Act and
monitoring Amtrak's development and implementation of performance
improvement plans for its long-distance routes.
RSIA Highlighted and Expanded FRA's Traditional Safety Role
RSIA amended existing railroad legislation to make the safe and
secure movement of people and goods FRA's highest priority. Most
notably, RSIA requires FRA to establish a discretionary grant program,
with authorized funding of $50 million per year for fiscal years 2009
through 2013, to support the development and deployment of positive
train control technologies. FRA issued a Notice of Funds Availability,
Solicitation of Applications for this program on March 29, 2010; a
status report on positive train control implementation is due to
Congress by December 31, 2012.
RSIA also requires FRA to perform several safety-related studies.
One study will assess the risks posed to passengers with disabilities
boarding and alighting from trains where there is a significant gap
between the train and the platform. Another study addresses the risks
associated with the use of personal electronic devices by railroad
personnel while on duty. This body of work will position FRA to carry
out its role as the Nation's rail safety enforcement agency as it
undertakes increasing passenger rail responsibilities.
fra faces significant challenges in meeting its mandate
The new legislative mandates present unique challenges for FRA.
Effectively implementing the HSIPR program is key among these
challenges. Specifically, FRA must: (1) assess the net benefits of
high-speed rail; (2) develop written policies and procedures for grant
management; and (3) determine staffing needs. The $8 billion in ARRA
funding exacerbated these vulnerabilities as it accelerated
implementation. In addition to implementing the HSIPR program, FRA must
balance its increased workload under PRIIA with prior legislative
requirements, including its oversight of Amtrak. While FRA has made
several steps toward meeting these challenges, it has recognized that
more resources are needed to successfully carry out its mandate.
HSIPR Success Depends on an Effective Implementation Strategy
To ensure HSIPR project grantees follow sound management practices,
FRA must develop a sound implementation strategy. First, FRA must
develop guidance for forecasting project ridership, revenue, costs, and
public benefits for high-speed and intercity passenger rail. According
to DOT's Office of the Secretary (OST), FRA has developed detailed
evaluation criteria to determine a proposed project's merit and
feasibility. However, FRA has yet to issue formal guidance for grant
applicants to use in preparing forecasts.
Second, FRA must develop written policies and practices to guide
the program's grant lifecycle process and oversight activities. We
identified certain risks associated with awarding grants without a
fully documented program implementation strategy and grant lifecycle
process. As a result, FRA delayed the awards until early 2010. However,
according to OST, FRA is still in the process of reviewing its grants
management manual for final approval and developing monitoring plans
and grant administration standard operating procedures.
Finally, FRA must obtain a sufficient number of staff with the
skills needed to oversee program implementation. To address its initial
lack of capacity to start up and effectively manage the HSIPR program,
FRA has completed a workforce assessment, which we have yet to
validate. As a result of that assessment, FRA requested and received
funding for 27 additional staff resources in its fiscal year 2010
budget. However, FRA has been slow to fill these vacancies.
ARRA's tight deadlines for spending funds have greatly accelerated
FRA's rollout of HSIPR, exacerbating program challenges. Deadlines for
obligating funds under Track 1 (``ready to go projects'') and Track 2
(``corridor development programs'') are September 2010 and September
2011, respectively. Within 10 months after ARRA's enactment, FRA issued
a strategic plan, established interim guidance, and processed all Track
1 and 2 applications, as required.
Managing Other New and Traditional Legislative Responsibilities Further
Challenge FRA
Balancing new PRIIA responsibilities with its traditional
responsibilities create additional challenges for FRA. With regard to
PRIIA, FRA must coordinate with hundreds of public and private
stakeholders to establish a national rail plan that addresses
interconnectivity with other modes of transportation and recognizes the
need for a sustainable funding mechanism. As the market for intercity
passenger rail carriers grows, tracking and reporting their performance
results could become a challenge for FRA. For example, FRA will have to
establish a standardized mechanism for collecting performance data from
multiple carriers who may have different procedures than currently used
for reporting the proposed metrics and standards.
At the same time, FRA must continue to carry out its prior
administrative responsibilities for its existing grant and loan
programs. Specifically, FRA must effectively manage the Rail Line
Relocation discretionary grant program, the Railroad Rehabilitation and
Improvement Financing loan program, and the Amtrak grant program.
Together, these programs account for 37 percent of FRA's $4.374 billion
fiscal year 2010 budget.
Effectively managing these critical rail programs in the face of
the public scrutiny of the HSIPR program will require sustained focus
and oversight by FRA and OIG. OIG has begun to shift resources to
provide the appropriate level of oversight in order to inform FRA's
efforts and monitor its progress. For example, our evaluation of best
practices for forecasting high-speed ridership, revenue, and public
benefit should assist FRA in its efforts to assess the economic and
financial viability of proposed projects and ensure Federal investments
are allocated to the most worthy projects. Our audit of the risks
private freight railroads pose to the HSIPR program should help FRA
ensure that access agreements adequately address cost, schedule, and
performance goals, and that HSIPR benefits are achieved. Finally, our
quantitative analysis of the causes of Amtrak delays will inform
efforts by Amtrak and the freight railroads to improve Amtrak's on-time
performance and clarify the relative value of investing Federal funds
to expand freight rail capacity as a means to address delays.
AMTRAK HAS MADE IMPROVEMENTS IN FINANCIAL MANAGEMENT
Our work on Amtrak's financial management is extremely relevant to
the HSIPR program, given the important role Amtrak will play in FRA's
development of intercity passenger rail service. Since we began
reporting regularly to Congress \2\ on Amtrak's operating performance
and its progress in reducing Federal operating subsidies, Amtrak has
shifted its financial management approach from implementing various
strategic reform initiatives (SRI) to establishing key performance
indicators (KPI). The KPIs appear to be a more efficient way for
management to monitor operating performance. Results of our mandated
audit on Amtrak's 5-Year Capital Planning, which we are finalizing,
also indicate that Amtrak has made significant improvement to its long-
term capital planning including a more transparent prioritization
process.
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\2\ The Transportation/HUD Division of the Consolidated
Appropriations Act of 2010, Public Law 111-117 changed OIG's reporting
requirement on Amtrak's savings from quarterly to semi-annually.
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Management's New Approach to Measuring Reform Initiatives Through Key
Performance Indicators Appears Reasonable
Since fiscal year 2006, we have reported on Amtrak's savings
achieved as a result of operational SRIs at the corporate level, by
business line, and at the route level.\3\ The SRIs were intended to
improve Amtrak's operating efficiencies and lower its dependence on
Federal operating subsidies. For example, one SRI aimed to reduce
losses through enhanced service flexibility and the outsourcing of
certain services, such as food and beverage. The SRI approach was
established to provide a comprehensive analysis of potential and
realized operating savings for the longer term provision of a more
efficient and financially feasible intercity passenger rail service.
However, as we stated in our fiscal year 2009 fourth quarter report,
Amtrak did not include any new savings from operational reform
initiatives in its fiscal year 2009 budget.
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\3\ Transportation, Treasury, Housing and Urban Development, the
Judiciary, District of Columbia, and Independent Agencies
Appropriations Act (TTHUD), 2006; Public Law 109-1 15.
---------------------------------------------------------------------------
Amtrak's 2009 Strategic Guidance provided further details on
possible savings from future operational reforms through KPIs--criteria
that will measure both the efficiency and effectiveness of Amtrak's
operational and financial performance. For example, Amtrak established
cost recovery ratio KPIs to measure the proportion of Amtrak expenses
covered by revenues and ridership growth. Recently, officials told us
that because the KPIs are derived from the annual budget and Amtrak
operates to its budget targets, the KPIs provide a more streamlined way
of evaluating performance to budget.\4\ Amtrak officials also noted
that because KPIs are linked to monthly financial statements, KPIs are
tracked and updated much more frequently, allowing management to react
quicker to changes in operating and financial conditions. The updates
should also allow management to drill down into KPI detail in real-time
to determine what is driving any changes, and consequently react
quicker, rather than waiting until the next month for the next round of
financial statements. The Strategic Guidance states that KPIs will be
used to evaluate management and to ensure that leadership's attention
and effort are properly focused.
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\4\ March 31, 2010, semi-annual review.
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While Amtrak's new approach appears to be a more efficient way to
monitor and improve operating and financial performance, Amtrak has
continued to pursue improvement initiatives tied to the original SRIs.
Further, Amtrak officials stated that management will not measure the
net impact of individual initiatives because it is too difficult to
determine the incremental impact of any given initiative or project on
one metric. For example, if Amtrak's marketing department invests
additional funds to promote Acela and revenues increase for that route,
there is no clear way to determine if or what portion of the increase
is due to higher gasoline prices, deteriorating airline service, or the
marketing campaign. Instead, executives will discuss the results of
improvement initiatives, and when intended outcomes are not achieved,
they will require the relevant departments to take action to address
the targeted KPIs. If the departments achieve the KPIs, then the
improvement initiatives will be deemed successful.
Because the KPIs have only been in place for 6 months, the ultimate
success of this new approach has yet to be determined. As we stated in
our fiscal year 2009 fourth quarter report, in addition to reporting on
a semi-annual basis Amtrak's financial performance, we will track and
evaluate Amtrak's efficiency KPIs. Our Amtrak semi-annual report, which
will be issued next month, will provide more detail on our evaluation
of Amtrak's operating performance through March 2010.
Progress Has Been Made in Long-Term Capital Planning, but the Measure
of Success Will Be Determined Through Implementation
Since 1999, we have also reported \5\ on Amtrak's progress in
determining its long-term capital needs. Previous reviews by our
office, GAO, and Amtrak's OIG have looked at various aspects of
Amtrak's capital budget and requirements and outlined concerns,
including a number of which focused on Amtrak's lack of a comprehensive
long-term planning strategy with clearly defined goals, as well as a
process for monitoring performance.
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\5\ OIG Report CE-1999-116, Report on the Assessment of Amtrak's
Financial Needs Through fiscal year 2002. Issued July 21, 1999.
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In our current review, we have found a number of operational
changes that have been implemented to improve Amtrak's long-term
capital planning process, which are primarily due to legislative
requirements dictated by PRIIA and leadership from its Board of
Directors and senior management. Specifically, Amtrak has developed
long-term plans for its fleet and infrastructure, a transparent process
for prioritizing its capital needs, and guidance on conducting post-
reviews of its capital projects. However, the success of these efforts
depends on Amtrak's ability to effectively implement and sustain many
of its new policies and procedures. We look forward to issuing our full
report within the next couple of months. Our office is also in various
stages for other PRIIA mandated reviews, which are planned for issue
over the next 12 months.
CONCLUSION
High-speed intercity passenger rail is expected to greatly enhance
the Nation's transportation system. Yet meeting the goals of PRIIA,
RSIA, and ARRA will be a significant challenge, especially given the
transformation required of FRA. While ARRA was enacted to jump start
the U.S. economy, FRA's decision to move forward deliberately is
prudent and should help it make the most of its ARRA funds. Further, it
has given OIG a unique opportunity to ensure proper oversight controls
are built into the program. We have begun to position ourselves to
oversee FRA developments while continuing our ongoing and newly
mandated work on Amtrak. However, we are hopeful that Amtrak's OIG,
under new leadership, will pick up appropriate work, allowing us to
dedicate additional resources to oversee FRA's implementation of the
HSIPR program.
Senator Murray. Thank you very much.
Mr. Boardman, under Amtrak's new leadership, we've seen
some important improvements in how the railroad has been
managed, and instead of limiting its focus to getting through
each day, the management team now has a strategic vision and
has started to look at long-term planning.
Amtrak's overall capital plan and the accompanying fleet
plan reflect that new priority on strategic decisionmaking, but
Amtrak is still making separate requests for its capital plan
and for its fleet plan. If you do not get all of the funding
you've requested for fiscal year 2011, how are you going to
decide on funding between these two separate plans?
CAPITAL PLAN AND FLEET PLAN FUNDING
Mr. Boardman. I think you're referring to--basically--we're
almost a billion dollars over where the request came in from
the administration. And it's accounted for, all in capital.
We're talking about fleet, and we're talking about all the
projects that are capital-related on the Northeast corridor and
on ADA and on all the other projects that are needed. So, as
Amtrak has done in the past, and as Amtrak needs to look,
today, to the future, we look at every opportunity for us to
gain those dollars, one of them being the appropriation
process, another being--and I think the Administrator talked
about it a little bit--we are in discussion with the
administration about--either a Federal loan or even going out
into the commercial market to borrow money.
But, in the end, it all comes back to Congress, because all
capital is subsidized by Congress, in one fashion, form, or
another, just like all capital for the highway or the aviation
side is subsidized through Congress. They have a different
methodology. They have a program that provides user funds for
highways, but those user funds also are distributed to transit,
which are not necessarily--and I think we talked about it a
little bit earlier--they're not paid for by the transit rider,
they're paid for under the same structure that the highway
receives those funds and the same way that aviation receives
those funds; it all comes back to the Congress in making a
decision.
The need for Amtrak is to put on the table to Congress what
our capital needs are, and we have not been bashful about doing
that, because we need to rebuild the railroad.
Senator Murray. Okay. Well, in addition to replacing your
aging locomotives and railcars, as I talked about earlier, this
could revitalize a domestic industry for manufacturing rail
equipment and really help us focus on manufacturing jobs here
in the country. But, realizing that goal, as I mentioned
earlier, is going to require companies to have the confidence
that Amtrak has a reliable, long-term source of funding for its
fleet plan. What will it take, do you believe, for U.S.
manufacturers to believe that passenger rail equipment is a
viable line of business?
Mr. Boardman. Like that commercial on television says,
``Buy my product.'' Fund my plan.
Senator Murray. So, you need to know that there's a--that
they will need to know that there is----
Mr. Boardman. Yes. And----
Senator Murray [continuing]. A consistent----
Mr. Boardman [continuing]. There's a new----
Senator Murray [continuing]. Source of funding.
Mr. Boardman. Chairwoman, there is a new understanding
across the world today, I think, that we are in a very
different competitive environment for--not only the economy,
but for energy for the future. And every country today is
looking at how they are going to solve this problem. And rail
becomes a key part of that. We've already seen that, as a key
part of it, in terms of what the investments are with transit.
But, transit needs to be connected to the rest of the country
and there are two key elements that Amtrak brings to the table.
One is its workforce, its key competitive advantage in the
people that operate this railroad and know what needs to be
done. And the other is the connectivity across this country, up
and down from border to border and from coast to coast. This
railroad will be a key reason why this Nation can live in a
more prosperous position in the future.
Senator Murray. So, what you're saying is, if we have that
goal, as a country, and it's very clear and consistent, it will
send a message to domestic manufacturers that we're in it.
Mr. Boardman. Yes. And I think that message is already
getting there.
Senator Murray. Okay.
In the past, Amtrak has purchased rail equipment from
Bombardier, a company based in Canada. Is Amtrak currently
purchasing rail equipment or overhaul service from Bombardier,
and will it do so in the near term?
UPGRADING THE AMTRAK FLEET
Mr. Boardman. Yes. We continue to enhance our relationship
with Bombardier, with GE, and with other manufacturers across
the United States.
Senator Murray. Okay. I understand that Amtrak is still
trying to decide on the best strategy for replacing the Acela
fleet, which was originally provided by Bombardier. One option
is to purchase additional cars for the Acela fleet in order to
expand capacity along the Northeast corridor, even though these
new cars would be replaced after just a couple of years, along
with that original Acela fleet. How likely is it that Amtrak
would purchase additional Acela cars from Bombardier, before
updating all of the equipment for the Northeast corridor?
Mr. Boardman. Well, what we really looked at was that the
Acela fleet on the Northeast corridor actually covers 121
percent of its costs. So, you're actually making money on
Acela, as compared to----
Senator Murray. Right.
Mr. Boardman [continuing]. Other modes and services on the
corridor. So, we looked at that. We can improve the amount of
revenue and enhance ridership if we could extend the number of
trains that we operated that were Acela-like train sets. So,
the opportunity is for us to increase our revenues, if we can
find about five train sets that we could add to the corridor
for high-speed service.
Certainly, the Bombardier products that exist are already a
proven design, and we don't have to spend the time to go
through to test an entirely new technology to provide that
service. So, there's a great--I'm trying to find the right
word--there's a great opportunity for us to be able to do that
with Bombardier. But, we haven't made that decision. We haven't
decided that that's----
Senator Murray. Not decided.
Mr. Boardman [continuing]. What we're going to do.
Senator Murray. Okay.
In my opening statement, I talked about the fact that I'm
glad the administration is not submitting budget requests that
would guarantee the bankruptcy of Amtrak anymore. But, their
request for capital grants is still lower than the railroad's
own request, by about $500 million. What impact would the
administration's budget have on your capital investment?
Mr. Boardman. It'll just make more shovel-ready projects
available for us to do for the future, if funding becomes
available. And I--what I mean is that we have, as every State
DOT, and at--every competent operation has a list of projects
that need to be done, especially when you have a $5 to $7
billion backlog, just on the Northeast corridor.
But, there are a lot of other projects that could be done.
I know Senator Dorgan may be here, talking to me about one in
particular, in Devils Lake. So, we have opportunities, should
the money become available, to get a----
Senator Murray. On the capital----
Mr. Boardman [continuing]. Job done.
Senator Murray. What about on the operating side? I think
their request is $40 million less than yours. Will that have an
impact?
Mr. Boardman. It will not cause, if the question really is,
us to cut back services.
Senator Murray. That's what I'm asking.
Mr. Boardman. We're looking for a way that we can make sure
that those services are continued to be provided.
But, some decisions--for example, I still get messages,
from those who ride from Albany to New York City, asking,
``When are we going to return the cafe car?'' which we don't
have on there any longer. We eliminated that in order to reduce
costs.
Senator Murray. Right.
Mr. Boardman. But, it--so, it impacts us, that it's not as
convenient for people to ride the service now as it was before.
Senator Murray. Okay. Thank you very much.
Senator Bond.
Senator Bond. Thank you, Madam Chair.
Mr. Boardman, we just heard Mr. Alves testify that second
and third shifts are reducing productivity and compromising the
work that's done. We thought that--I understood that the $1.3
billion in ARRA funds were for shovel-ready projects. Were they
not shovel-ready? Was Amtrak not shovel-ready? Why have you had
to take these extraordinary steps, which apparently are more
costly and less productive?
ARRA PROJECTS
Mr. Boardman. I think all the projects were shovel-ready.
And I think that the IG did an excellent job looking at the
risks for us along the way. But, of the nine projects that he
really looked at--one of them was the Niantic Bridge, there
were two positive train control projects, and there was a
frequency converter replacement project and the Los Angeles
maintenance facility--there were the top five that they were
worried about for risk.
When you looked at the number of points--and they looked at
acquisition, environment, schedule, objectives, technology,
size, complexity, financial, human capital, management, and
fraud--what you wound up with was 10 points for each of the
first 3 that they were worried about, 9 for 4, and 8 for 5. And
when you look at the 10, what you find is the risk is really
environmental and size and complexity. The things that Ted and
his staff found is it's costing us more, as it does in every
capital area, when you try to get it done as quickly as we were
really trying to get it done and you had to put on the second
or third shift.
Senator Bond. So, that was a mistake, trying to put the
time deadline on it. That had----
Mr. Boardman. Well, if----
Senator Bond. That was a mistake, in terms of cost,
productivity. So, that is a signal not to put timelines on it.
I would hope that the requests you have would have reasonable
timelines that are achievable. And I didn't have any----
Mr. Boardman. Absolutely. We agree with you.
Senator Bond. I didn't have anything to do with that bill,
so I can't speak to that.
You've mentioned you're taking a look at different types of
funding for Amtrak. And you mentioned, as it--high on the
priority list, borrowing in the private market. Correct me if
I'm wrong; if you borrow, that means this budget--this
subcommittee's budget will have to pay the interest costs and
the debt service every year. So, that will really be a charge
on this budget.
Are there any dedicated sources of funding that you're
looking at, outside of putting Acela-type trains on, that
generate a profit, making things profitable that will give you
the money you need?
Mr. Boardman. No.
Senator Bond. Thank you----
Mr. Boardman. All capital comes from this--from the Federal
Government.
Senator Bond. Okay. Well, I would urge you to find out ways
to emphasize that--what is profitable, and de-emphasize that
which is not profitable, because we are up against the wall, as
you probably heard me say, earlier.
Mr. Boardman. None of it is profitable, Senator.
Senator Bond. Okay. Well--but, it has to be less costly.
Right now----
Mr. Boardman. And that is happening. But, it's not----
Senator Bond. Yes. Well, it's not----
Mr. Boardman. Even if it----
Senator Bond. But----
Mr. Boardman. Even if it's less costly, though, sir, it
doesn't mean we can pay the capital with it. It means we can
pay the operating. We----
Senator Bond. Well, it's--we----
Mr. Boardman. We----
Senator Bond. They come out of the same pot of funds. If
you're looking here--doesn't matter whether you call them
capital or operating, your capital is going to compete with
your operating, which is going to compete with housing.
Let me turn to Mr. Alves. This is sort of a two-part
question.
I know you're new to the office at--of inspector general.
We welcome you. The--in 2009, Amtrak outlined a strategic
guidance document, and I'd like to know how it is being
implemented. And to what extent are Amtrak managers or others
being held responsible for achieving the key performance
indicators that have been developed? And are they affecting pay
and promotion?
Mr. Alves. I'm not sure I can fully answer that question,
but I'll do my best.
The strategic guidance identifies the key things that
Amtrak is trying to achieve. And Amtrak has been taking steps,
under a new performance measurement system, to develop
performance measures and goals for its key executives, and to--
and then to flow those through the system to subordinates to be
able to----
Senator Bond. Are there--is there tie-in between pay, or--
is there any performance bonus for those who meet it or
penalties for those who don't?
Mr. Alves. I'm not sure about a bonus, but I do know that
the rating and the pay is going to be tied to those measures.
Senator Bond. All right.
Ms. Barr, welcome. You have spoken about the problems that
apparently came from putting too much money, too many
requirements on FRA. In other words, you were--I think I
understood you to say that a bunch of money was dumped on them
with a bunch of requirements that were impossible to meet. And
that's why there have been failures to achieve what is expected
from FRA. Is that a fair assessment?
ROLE OF FRA
Ms. Barr. Yes, I think the assessment, and the point that I
really want to make is, looking at FRA and what its traditional
role really was, was a small regulatory agency that's been
asked to transform into a large grant-making organization. So,
not only do they have to issue their own grants, develop their
own internal policies for good, solid project management and
oversight, but they have to oversee a larger grant operation on
behalf of Amtrak.
Overlay that with all of the new safety requirements that
came out of the Safety Act as it relates to positive train
control, as it relates to the Americans with Disabilities Act,
and a whole host of other things, that is a big challenge.
That's a hugely expanded role. And I think if I had to
characterize what it's like, it's like needing to design and
implement at the same time. That's very difficult.
Senator Bond. Are they able to handle the resources and the
demands that they are expecting now? Are they still have a--are
they able to handle it?
Ms. Barr. I think they're on their way.
Senator Bond. Okay.
Ms. Barr. They've requested the FTEs, but they're nowhere
close to where they need to be.
Senator Bond. Okay.
And finally, who's going to--with the DOT IG, Amtrak OIG,
how are you going to relate the roles of the two IGs?
Ms. Barr. Okay. I can start first. Ted and I had
discussions about this, as well. We're thrilled that he is in
place and can pick up, traditionally, what--where we've been
focused, on some of the Amtrak issues. The way--I guess I would
divide the responsibilities. I think it laid out pretty well
the challenges that FRA has before it. And I think you,
Senator, indicated this National Rail Plan is something that
needs to be looked at very, very closely.
Senator Bond. That will be your----
Ms. Barr. That would be something we would look at. We
would look at all of the other mandates, the requirements, how
well they're overseeing project oversight. And we would hope
that the Amtrak IG can continue doing what he's doing, looking
at some of those internal policies and practices and management
challenges, going forward, with their new requirements.
Senator Bond. Okay. You've got the FRA ball. Mr. Alves,
you've got the Amtrak ball.
Mr. Alves. I would like to say a couple words about this,
if I could. I agree with what Ann is saying. And the Amtrak
inspector general, I think, has some very capable people, and
has done some very good work. But, I think that our focus needs
to be on the major challenges that Amtrak faces and its
strategic goals that are outlined in that strategic guidance.
And we have put together a new strategic plan that builds on
that strategic guidance and, basically, directs us. Our goal is
going to be to spend much more of our resources addressing the
big, major issues. And so, I think that will fit with what
you're looking for.
Thank you----
Senator Bond. We look forward to your sharing with us. My
apologies, Madam Chair, to you and my colleagues.
Senator Murray. Senator Lautenberg.
Senator Lautenberg. One of the things that has been talked
about with a degree of frequency, and that is, searching for
new corridors, where we can bring rail--good quality rail
service to these places.
Where would we--how would we fund the equipment, the
tracks, the infrastructure, we--when we can't handle the
equipment needs for Amtrak, as it exists? We're talking about
other corridors. How is that going to be paid for?
Mr. Boardman. No, no. Directed to me, Senator?
Senator Lautenberg. Yes.
Mr. Boardman. It's good to see you.
Senator Lautenberg. Please.
FUNDING CORRIDORS
Mr. Boardman. First of all, I think there are a lot of
those corridors that we can extend the use of our existing
equipment. For example, Springfield, Mass., to New Haven, for
example--that's one of the things being funded. And, certainly,
there has been a lot of activity about how that'll get financed
for the future. When we extended the corridor to Lynchburg,
Virginia, we were able to use equipment that was available that
extended from the Northeast corridor to provide that service.
But, there are areas, as you say--for example, one of the
corridors that I think has great promise is the Milwaukee-to-
Madison corridor, for example, for the future. That will
require the rebuilding of the tracks, and it will require
additional equipment. And you have a State that's made a strong
commitment, in regard to that, being Wisconsin, and--both in
terms of equipment that they would buy and pay for--in some
cases, on their own--and also applying for and rebuilding the
line between Milwaukee and Madison, or at least part of that
line that they own.
And I think that's where the key for PRIIA came, was that
the States would take a leadership role in those corridors, for
the future, not only with adding tracks and facilities, but
also with the equipment. We're there to help them, but they're
going to have to take a role in that process and also use the
Federal money that's become available.
Senator Lautenberg. The question that arises here--you
know, I look at this, and one thing that we all know, here,
whether we like to look back and talk about all of the years of
neglect in investment that we made--I mean, if you compare what
Amtrak--what's happened with Amtrak on an annual basis, I think
it runs something over a billion dollars a year, over the--
since the 1970s, when it became Amtrak, as we know it.
And when you look in other places and commitments that are
made--$10 billion a year in Germany for--get--to get high-speed
rail to--going. And they did it. And it doesn't do us a lot of
good to beat our chests here about that. But, the fact of the
matter is, this has been a case of sheer neglect on our part,
to step up to the plate.
So, when you look at these amounts of money, this isn't
something that is coming in out of the blue. It's trying to
make up for some lost time.
Mr. Boardman. Well said, sir.
FLEET MAINTENANCE
Senator Lautenberg. And, you know, when we look at, for
instance--I want to ask a couple questions about the equipment.
You were--you pretty well gave an endorsement to the
continuation of a--buying Bombardier equipment.
And how about the maintenance costs for Bombardier, how
about the durability of the equipment, because I've heard,
chatting around, that the maintenance costs right now are
outrageously high. Is that not true? That's--is that because
the equipment was over--has been overworked? Or----
Mr. Boardman. Well, right now--and I don't mean to
interrupt you, if you're----
Senator Lautenberg. No.
Mr. Boardman. Right now, we're actually rebuilding them at
the midlife--it's 10 years. So, the cost, right now, is
somewhat higher. We expect these trains have to last 20 years.
One of the things we did with the fleet plan was we began
to recognize that there was a commercial life and there was a
useful life. There were no manufacturers, other than
Bombardier, in the United States that really built the heavy-
duty, long-lasting, intercity rail cars in the United States.
So, we really had to have a spec on regular--I'm kind of mixing
terms here--but, we're--we really had to have a spec that was
heavy-duty for the future that would drive domestic
manufacturing.
Part of the reason that we're committed to Bombardier is
because we're committed to Bombardier. We have 20 train sets
out there that are operating, and I want to get things done and
keep things moving. And I truly believe that--right to my core
that we're sitting on the precipice of huge increases again in
fuel cost, and our need to deliver for our Nation and for the
community is going to mean that we need to move faster.
Somebody said--asked the question earlier, how long does it
take to get these cars in here? Three years? Maybe, if we push
them, 2 years? We're at $80 a barrel. We're going to be headed
to 100, at least by some estimates, and maybe beyond that. It's
when that happens that you begin to see a total breakdown in
the aviation business model for short distance. And those are
the kinds of things that railroads can provide in the most
efficient manner.
So, I don't want to say that we have to buy Bombardier for
the high-speed rail sets. And I want a new generation of high-
speed rail that's open and competitive. But, right now, in
order for us to really move things the way we think we need to
move them, we need the relationships with Bombardier. And we
also need relationships--and we are improving our relationships
with General Electric, for example, that we have--over 200 of
our diesel locomotives are General Electric locomotives that--
we're improving our relationship with them so that they will
become longer-lasting, and we're looking at the potential for a
new-generation tier-3----
Senator Lautenberg. In the meanwhile, can we get any
acceleration of the speeds--you held out some hope there, and
made me glad for a minute; in this environment, that's pretty
hard. But, the fact is that, with new equipment, you projected
a real shortening of the trip from here to New York. The
example that----
Mr. Boardman. We believe the time savings can be improved.
Senator Lautenberg. If we--the midlife repairs that you
talked about. Does that give you the kind of equipment
advantage that in any way enhances the amount of time that we
have to go on the Northeast corridor to get to destination?
Mr. Boardman. Well, some, but it doesn't get us up to the
speed of the Acela. And it's not going to improve your
handwriting, because we need to have that infrastructure fixed,
as well.
Senator Lautenberg. We don't do old habits like that, huh?
Mr. Boardman. Yes, sir.
Senator Lautenberg. Thank you. Thank you, Mr. Boardman.
Thank you, all of you.
Senator Murray. Senator Dorgan.
Senator Dorgan. Thank you very much.
So, Mr. Boardman, thank you for being here. And Senator
Lautenberg and I were just talking about the fact that both of
us think you're doing a good job, and we were reminiscing, with
Mr. Gunn, who used to run Amtrak, who I thought was a superb
leader, as well. But, thanks for sinking your teeth into this.
This is a big challenge, because you've not gotten the
money from the Congress for capital to do what's necessary.
I was in Russia recently, and was on a fast train from
Moscow to Saint Petersburg, and I'm thinking, ``Wait a second.
Why is it there's a fast train, with faster and better
equipment in Russia than here?'' It makes no sense to me.
Well, I'm a big supporter of Amtrak. I think rail passenger
service is an important part of the transportation network. And
I think Congress just has to do better. And I know we have some
among us, here in Congress, who believe we shouldn't do this at
all, ``The private sector won't do it, it shouldn't be done.''
I'm not one of those. I think this is a very important adjunct
to America's transportation system.
Now, having said all that, and complimented you
sufficiently, let me----
Mr. Boardman. Is Devils Lake on your mind, Senator?
Senator Dorgan. Yes it is. Yes it is.
You know, you mentioned, I think that the Empire Builder is
probably one of the most successful long-distance trains in----
Mr. Boardman. Yes, sir.
DEVILS LAKE
Senator Dorgan [continuing]. On the Amtrak system. The
Senator from Washington knows that, because that's where the
Empire Builder ends up. Over a half a million people get on
that train, from Chicago to Seattle. It goes through North
Dakota. And we face a problem. As you know, we have a chronic
lake flooding that's been going on for a dozen years now in
what is called ``Devils Lake.'' It's dramatic flooding. I think
it's the only circumstance, other than that of the Great Salt
Lake, where you have a closed basin. We don't quite understand
where all this is going to go, but the Lake has increased in
height, I think, 25 feet now. And it just continues to rise.
This year, it's expected to rise again.
We have a bridge, near Churchs Ferry, on a track owned by
BNSF Railway where Amtrak, I believe, slows down to 25 miles an
hour in order to----
Mr. Boardman. Yes.
Senator Dorgan [continuing]. Go over that bridge. But, if
the water goes much higher, perhaps another foot and a half,
you won't be able to go over that bridge. And we met, in
January, about that. I'm hoping that quick action can be taken
to begin the work to resolve that issue.
I don't think you want to avoid stopping at Grand Forks,
Devils Lake, Rugby, along the route of the Empire Builder. You
get a lot of traffic in that area.
So, tell me where we are, in your minds, and what can we do
to fix this, and do it on an urgent basis?
Mr. Boardman. We've been regularly meeting, in regard to
this----
Senator Dorgan. I'm aware of that.
Mr. Boardman [continuing]. With the State and with BNSF and
so forth. And nobody has stood up and volunteered to pay for a
new bridge, for example, which is perhaps understandable. But,
it's time. It's time for all the parties to decide, what part
of this do they need to help pay for? And how do we move this
forward?
So, I would propose to you--with your blessing, I hope--
that we meet with the State, in a more structured way, with our
senior folks, to find a way to not only design and engineer,
but finance, the appropriate bridge that solves this problem
for the future.
Senator Dorgan. Now, the track and the bridge belong to
BNSF?
Mr. Boardman. They do.
Senator Dorgan. And what will the design and the
engineering cost be?
Mr. Boardman. You know what, I had it and----
Senator Dorgan. All right.
Mr. Boardman [continuing]. Was supposed to remember it, and
it's gone. But, I can provide that to you for the record.
I think the construction of the bridge was around $60
million, and usually it's about 10 percent of that, but I
think--I think it was, like, between $4 and $6 million to
design it; and then, the more--maybe more difficult part for
the future was, we had to replace some rails for the future,
and maintain it, which brought the whole thing up to, maybe, in
the $100,000-plus-or-minus category.
Senator Dorgan. You mean $100 million.
Mr. Boardman. Yes, $100 million. If it was 100,000, we'd
take care of it.
Senator Dorgan. Yes, we'd----
Mr. Boardman. Sorry. I was trying to convert, you know----
Senator Dorgan. Senator Murray----
Mr. Boardman [continuing]. Kilometers per hour to----
Senator Dorgan [continuing]. Would fund that out of
personal funds, $100,000.
Mr. Boardman. You got me.
Senator Dorgan. We seldom ever hear numbers like that.
Well, let me make a suggestion. I wonder if perhaps we
shouldn't do a conference call next. My staff has been involved
with all of these calls. I mean, we've had some weekly calls;
but, frankly, nothing is happening.
Mr. Boardman. Yes, sir.
Senator Dorgan. I mean, nothing constructive is happening,
and I wonder if we shouldn't do a conference call with the CEO
of BNSF, Mr. Rose, yourself, the Governor, the congressional
delegation; and, in that call, decide who's going to do what,
when, and how we're going to get this fixed. Because, I worry
very much that we could come up to a time here, in just a
matter of weeks, when something--structural issues or others--
could persuade you that you can't any longer run that Amtrak
train through Grand Forks, North Dakota--Devils Lake, North
Dakota--Rugby----
Mr. Boardman. You were persuasive to me, in the meeting we
had in January, that I would continue to operate----
Senator Dorgan. Well, I tried to be persuasive.
Mr. Boardman. Yes.
Senator Dorgan. But, let me suggest that we put together a
conference call of principals, first. Make some judgments there
about who's going to do what and when.
Mr. Boardman. Yes, sir.
Senator Dorgan. But, again, you want this railroad to run
well. You believe in passenger service, as I do. And I think
that the chairman of this subcommittee, I know, has very strong
feelings about it. You just heard Senator Lautenberg--nobody's
been stronger in the Senate than Senator Lautenberg. You
understand you've got a very strong supporter in the Vice
President's office.
Mr. Boardman. Yes.
Senator Dorgan. We watched him, as a Senator, spend a lot
of time on Amtrak, as well.
So, I really want you to succeed. We need to find a way to
get enough capital into this rail passenger system so that you
can make decisions in the intermediate and longer-term. It's
the only way we're going to get to where we want to be, and
need to be, to have a healthy rail passenger system that works
well.
So let me, Madam Chairman, thank you for the time.
And I'll look forward to talking to you either late today,
Mr. Boardman, or tomorrow.
Mr. Boardman. Yes, sir, Senator.
Senator Dorgan. And we'll set up that call.
Thank you very much.
Mr. Boardman. Thank you.
Senator Murray. Thank you very much.
I have one final area, and that is in fiscal year 2010,
Amtrak committed to spending $144 million on station
improvements to bring the rail system into compliance with the
ADA. The original budget request for 2011 included $281 million
for the second year of its 5-year plan for ADA compliance, but,
today Amtrak is lowering that estimate, I understand, by $50
million, because of difficulty getting the money out the door
this year. And I understand that part of that is due to the
fact that you don't own all the facilities.
But, I wanted to ask you today, Mr. Boardman, if you still
believe that Amtrak will be able to bring all of its stations
into compliance with the ADA within the next 5 years.
Mr. Boardman. I don't know that we can, Chairwoman. I'm not
happy with my organization that reduced the amount from the
$281 million down to the $231 million. And I don't yet have the
answers from them as to what we're going to do to make that 5
year deadline. If we have to drop it--$50 million right this
minute--for me to testify to you that we can deliver it in 5
years, I don't think would be the appropriate thing for me to
do.
Senator Murray. Well, I just want you to know, this is a
high priority for me.
Mr. Boardman. Yes.
Senator Murray. It's about people's civil rights. And it's
not going to get any easier in the next 5 years, so I'm going
to continue to press you on this.
Mr. Boardman. Yes, ma'am.
Senator Murray. With that, I don't believe we have any
other members that have questions. So, I want to thank all of
our witnesses for their testimony.
SUBCOMMITTEE RECESS
And I will recess this hearing until May 6, at 9:30. At
that time, we will be taking testimony from HUD Secretary
Donovan and DOT Secretary LaHood on the administration's fiscal
year 2011 budget request related to community livability and
sustainability.
Thank you very much.
[Whereupon, at 11:24 a.m., Thursday, April 29, the
subcommittee was recessed, to reconvene at 9:30 a.m. Thursday,
May 6.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
THURSDAY, MAY 6, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray and Bond.
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
STATEMENT OF HON. RAY LAHOOD, SECRETARY
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Good morning. This subcommittee will come
to order.
I want to welcome both of our witnesses today and thank you
for coming here and being a part of this today.
Last year, the administration launched the Interagency
Partnership for Sustainable Communities. This partnership,
among the Departments of Transportation, Housing and Urban
Development, and the Environmental Protection Agency,
represents an effort to use Federal resources more effectively
to help our communities create livable and sustainable
communities.
This morning, we are pleased that DOT Secretary LaHood and
HUD Secretary Donovan are here today to talk about their
Departments' funding requests to support that partnership. This
hearing provides us a very important opportunity for us to hear
how these Departments are working together and how their budget
proposals will help communities across the country.
All across the country, Americans are making decisions
about where to live, where to work, where to raise their
families. They are evaluating where they can get a job, where
they can afford to live, how much time and money their commute
will cost, and what schools and services a community can offer.
As the most significant expenses for most families,
transportation and housing are central to those decisions. But
the costs aren't limited just to dollars and cents. The
tradeoffs impact quality of life and future opportunities.
In communities across our country, in small towns and large
urban centers, local leaders understand the issues facing their
communities, and they are seeking ways to address the
challenges of congestion and affordable housing, pollution, and
lack of jobs. Importantly, they recognize that the health of
their communities depends on taking a comprehensive approach to
those challenges.
The economic crisis has made the obstacles to affordable
housing and economic competitiveness that much greater. We have
seen millions of families become overwhelmed by unaffordable
housing costs, entire communities devastated by the foreclosure
crisis, and local economies struggle with the loss of entire
industries.
But as we know, efforts to create sustainable communities
can be part of the solution. Many of our communities are still
growing and need to decide for themselves what they want to
look like as they develop. This isn't always about whether or
not we should build a road, but where and how to build those
roads so they get people where they need to go and how to
create transportation alternatives so people don't have to get
in their car if a bus or a bike or a subway could work better.
Other communities aren't growing. Instead, they are trying
to figure out the right way to reduce their size and create
viable neighborhoods and a smaller footprint, ones that are
connected to jobs in retail and essential services. Taking a
comprehensive approach to housing and transportation is not
about dreaming and idealism. It is about real decisions that
our communities make each day.
There is a perfect example of this in my home State of
Washington. For years, leaders of the city of Bellevue have
worked with residents and local businesses on a coordinated
approach to developing the Bellevue-Redmond Corridor, which
serves as a major thoroughfare connecting Bellevue and the city
of Redmond.
This Bell-Red Corridor plan is a perfect example of the
type of comprehensive approach to sustainable, environmentally
conscious development we are trying to encourage with the
Sustainable Communities Initiative. It is a plan that melds
housing, transportation, and investments to support economic
growth and job creation.
By better aligning Federal programs, this partnership among
HUD, DOT, and EPA can support the work that is already
happening in Bellevue and other communities across the country,
unfortunately, because many of our Federal programs are based
on outdated rules and regulations and thinking, they do not
reward innovation and collaboration.
Distinct programs and funding sources managed by different
agencies and governed by different and often conflicting rules
can make it difficult to coordinate funding streams. And sadly,
the Federal Government provides little incentive for
communities to think comprehensively about housing and
transportation. That is why I worked last year to include the
TIGER program in the Recovery Act and in the fiscal year 2010
appropriations act.
That program offers communities the opportunity to fund the
best solution to their transportation needs without the Federal
Government prescribing whether that solution should be a road
or a transit service or railroad. But I believe that
traditional programs should also help communities coordinate
their housing and transportation plans.
On the Federal level, we need to do more to reward and
promote innovation. These incentives should not change the
fundamental principle that choices about housing and
transportation and economic development are best made at the
local level. At the same time, Federal policies do impact the
choices that communities make, and we should be designing
policies that promote economic competitiveness, affordable
housing, and energy efficient and healthy communities.
HUD, DOT, and EPA have developed livability principles to
serve as a foundation for their partnership. But the hard work
will come in applying those principles. The President's budget
includes several new proposals for sustainable communities,
including $527 million for programs at the Department of
Transportation and $150 million for programs at the Department
of Housing and Urban Development. This is a significant
investment, and the budget materials provide few details on how
these resources would be used.
I want to understand the long-term benefits of those
investments to our communities and our transportation system
and our economy. This subcommittee must decide how to allocate
resources to meet the various transportation and housing needs
across the country, and because our resources are so limited,
we need to closely examine all budget proposals. So I will have
questions today on the specific criteria for each of these
programs and the standards that we will be using to evaluate
their success.
I will also have questions on the appropriate role for each
of the Departments. The administration has laid out a framework
by which HUD will be the lead on planning, DOT will provide
capacity building, and EPA will deliver technical assistance.
While I understand the importance of defining clear roles for
each of the agencies, I am concerned that these roles may
unintentionally reinforce existing silos.
Within HUD, the fiscal year 2011 budget requests an
additional $150 million for the Sustainable Communities
Initiative, which Congress first funded in fiscal year 2010.
This funding is intended to help communities on a regional and
local level gain the tools and capacity to develop and
implement comprehensive plans that integrate transportation and
housing.
In order to develop its NOFA for the fiscal year 2010
funding, HUD has spent a great deal of time working with DOT
and EPA to get feedback from communities and other stakeholders
on how to most effectively design these programs. I support
these efforts to make sure these policies are designed to meet
the needs of communities. But at the same time, there needs to
be clarity of purpose for this initiative and for these Federal
resources.
So I will have questions on how to balance the need to
provide communities with the flexibility to address their
specific needs with the need to have some structure at the
Federal level to make sure they are sound Federal investments.
The budget proposal from the Department of Transportation
includes $200 million for grants to provide transportation
planners with the analytical tools to develop more reliable
forecasts. The administration has proposed paying for these
grants with funds taken from the regular highway program, and I
have very serious concerns about that.
DOT's proposal also includes $307 million in existing
transit funds that have been combined into a new livable
communities account, but without any apparent change in the
purpose. I look forward to hearing more rationale for this
proposal, and I will also have questions about how these
proposals for DOT fit into our larger debate over
reauthorization.
Americans have long realized that quality transportation
and housing are critical elements for vibrant communities that
can foster private sector investment and create good jobs. I
believe this interagency partnership has the potential to
address many of the challenges that communities are facing and
help them achieve those goals.
There is no one-size-fits-all approach to the many
transportation and housing challenges our communities face. The
Federal Government cannot prescribe the solutions, but it
should be able to assist communities in developing them and
prove the appropriate incentives to do so.
Changing practices and thinking in our Federal Departments
and local communities will not be easy. People are always
comfortable with what they know, and change is difficult. So I
commend each of you for the leadership you have demonstrated in
breaking down silos and pushing for leaders on the Federal and
community level to think in a new way about the best way to
make Federal investments.
With that, I will turn it over to my ranking member,
Senator Kit Bond for his opening statement.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you, Madam Chair.
And welcome, Secretary LaHood and Secretary Donovan. We
appreciate both of them coming today, good friends who are
working with us on things that are very, very important in our
States and throughout the country.
And today's hearing is about coordinating Federal housing
and transportation investment in our communities. If done
properly, this cooperation between Government agencies could be
a way to stretch responsibly taxpayer dollars and truly get the
best bang for the buck.
However, as I indicated to you gentlemen prior to the
hearing, I have a philosophical question about that because
this seems to indicate that the Federal Government is the one
that is going to decide what makes a community livable. And I
am concerned that we are looking to the Federal Government to
be involved in the decisionmaking.
Now we already know that the Federal Government helps fund
the planning agency. We have got planning agencies at home, the
MPOs, the RPCs. Their job is to work local officials and get
local input and decide which way their communities should grow,
what they need, and I want to support that effort.
The chair mentioned Bellevue, Washington, and I could go
around the State of Missouri to tell you about Columbia,
Missouri, which wants bike paths. Everybody else wants roads.
They want bike paths. We fought to get them bike paths. St.
Charles needs a river dredged. We want to try to help St.
Charles get the river dredged.
I am not as confident that entrusting Federal
decisionmakers in Washington to lead the process and tell
communities how they should go is the right way to grow. I have
fought for years to say that we have the plans at the local
level, and we want to work with you to make sure that your
agencies carry out their core responsibilities to provide our
communities the roads, highways, and bridges they need and the
affordable, low-cost housing and public housing that are
needed.
And I want to make sure that these decisions are supported
by the Federal Government. I do not see it as the
responsibility of any Federal agency to tell our towns and
cities what would make their communities more livable or
sustainable or even to try to define the term of what they want
their communities to be.
They want it livable. They want it sustainable. I am
concerned about it, and I have, for example, I have mentioned
previously when you asked people in Missouri, the part of
Missouri I live in what makes--how DOT can help us make a
livable community. Their answer is going to be to make the
highways safer because, well, in rural areas people have to
travel.
They work on farms. They live in dispersed cities. They
have to travel. Their children have to go to school. Their
elderly have to get healthcare. Our roads and bridges in
Missouri are out of date. We kill over 1,000 people a year,
almost 3 people a day, and at least one-third of those deaths
are attributable to unsafe highway conditions.
And on the other side, there are housing shortages. There
are rental housing shortages in some areas. There are things
that we need to work on, and we appreciate the working
cooperation with HUD to make sure we take care of those needs.
But I want to see these decisions made at the local level,
but I want to thank HUD especially for the efforts that you
have made. We have got some, what is it, 900 pages of comments
on what they want at the local level.
Well, I--just to be frank, I don't have any question--I
know planners, and I have worked with planners. And if you go
out and tell a bunch of planners that we would like to get your
plans to see how you could spend the money to plan to take care
of our priorities, they would be more than happy to submit
plans for how they are going to use more money to plan. And if
it is only 900 pages, they are just not trying.
But I want to see those planning efforts focused on
planning at the local level for what they need to do.
And again, I share the same concerns that the chair
mentioned that we have a very tight budget, and I have
complained about this before. We have got so many demands at
the same time we have a record budget this year of $1.6
trillion, 10.6 percent of our GDP. We are borrowing that from
our children and grandchildren, and we have to keep our
spending under control.
And I am concerned about committing scarce dollars, an $827
million program that we can't even name, when we have really
pressing needs in transportation and housing that we have
already identified. And I would like to see the money in
highways spent on highways. We need a lot more of it there, and
we have tremendous needs in the housing area.
And I am still looking, Mr. Secretary, for the rationale on
which HUD awarded the $2 billion in competitive neighborhood
stabilization program grants. I would like to see some more
transparency in that process. And I would like to see the
criteria on which the TIGER grant applications were awarded and
what were their ratings.
Basically, we want to see more transparency at the Federal
level. But I am very interested in making sure that the dollars
that we have available go to the core responsibilities that you
have and that we don't take money away from programs which I
believe are already pressed, and that is the housing program,
the transportation program. We have got more needs than we can
reasonably afford with what is likely to be people tell me a
tight budget allocation.
And I would close by just saying that we hope that you will
go back to the process that we have specified in law before and
will again that Congress be notified 3 days prior to
announcement with backup materials and information on how
awards were made, where they are discretionary awards made by
HUD, where those monies are going, and we would like to know--
and how they were selected. We would like to know the same
thing from the Department of Transportation.
But I thank you very much for the work that you have done
on it. I am still confused about what we are trying to do. If
you all can't agree whether it is livability or sustainability
and the fact that you will know it when you see it, if that is
going to be the criterion, I think that is a criterion that the
local leadership can choose and can apply better than we in
Washington can.
Thank you, Madam Chair.
Senator Murray. Thank you very much, Senator Bond.
With that, again we welcome both of our witnesses today,
and Secretary LaHood, we are going to begin with your
testimony.
STATEMENT OF HON. RAY LAHOOD
Secretary LaHood. Madam Chair and Ranking Member Bond,
thank you for your leadership on so many of these issues that
we deal with on a daily basis. We are grateful to you for all
that you do to enable us to carry out the mandates of Congress,
and we also thank you for the opportunity to discuss the
Department of Transportation's efforts to promote livable
communities through our current programs and to highlight our
related budget request for fiscal year 2011.
Over the last 16 months, I have traveled to 80 cities in 38
States, and everywhere I go, Americans are asking for more
public transportation, more walkable neighborhoods, less
congestion, and less sprawl. Livable communities are in great
demand because they make financial and economic sense.
Transportation and housing are the two largest household
expenses for the average American family. In order to reduce
those costs and strengthen our communities, we must rethink our
planning, our priorities, and our investments in the Nation's
transportation infrastructure.
We need a new approach that will improve the quality of
life in cities and towns across this country while helping us
to save billions in infrastructure and energy costs through the
application of livable and smart growth principles we have
developed with our friends at HUD and EPA. We are already
making substantial progress by creatively leveraging our
existing programs, and we have clearly demonstrated that the
American people believe we are headed in the right direction.
We recently funded a project in Dubuque, Iowa, to design
streets that are attractive, convenient, and safe for a broad
range of transportation users. Dubuque's efforts helped to
attract an IBM employment center of more than 1,500 people to
the city.
In Seattle's Mercer Corridor, a hub for biotechnology
companies, we are investing in better roads with bicycle lanes,
improved access to transit, and upgrading local water, sewer,
and electrical infrastructure. These improvements will help
attract and retain a well-qualified workforce to Seattle's
biotech community.
And one other noteworthy project, which I have mentioned
before when I have been here, Kansas City, Missouri, where they
are taking a 150-block distressed urban community called Green
Impact Zone to significantly expand transit and pedestrian
facilities for the first time in the community's history. This
offers residents brand-new access to clean, reliable
transportation to get to jobs, schools, hospitals, and connect
with the rest of downtown.
This project in particular is a national model
demonstration of integrating place-based investments--how
place-based investments can apply the principles of
sustainability to help transform a community. In addition, our
decision earlier this year to include a range of livable
criteria evaluating transit capital projects through FTA's New
Starts program also elicited a huge outpouring of support.
Meanwhile, we are helping to educate and empower local
communities on how to make livable projects a reality by
providing information and training in new ways. This includes
guidance on transit-oriented development we have prepared with
HUD. Elected officials, planners, and developers should find
this information very valuable.
We released a notice of finding for a pilot program
administered by the FTA that will enable urban and rural
communities to put more buses, trolleys, and other local
transit on the street. And along with our friends at EPA, we
are sharing our expertise in support of HUD's efforts to award
planning and challenge grants to help communities become
laboratories for sustainability.
Looking ahead to 2011, the President's budget includes $520
million for a livable community program that will accomplish
several key objectives. It will establish an Office of
Livability to ensure we lead and coordinate our livable-related
programs and grants DOT wide and create appropriate performance
measures.
Too often local governments and planners do not have access
to the best, most comprehensive information that is essential
to making better, more informed transportation investments that
generate the desired outcomes. We must remedy that in
partnership with our friends at HUD and EPA.
PREPARED STATEMENT
We will fund transit and capacity-building initiatives that
give State and local governments the tools, resources, and
assistance they need to better coordinate transportation,
housing, land use planning, and water infrastructure. Our
livable proposal is a starting point for a bold new approach to
revitalize the Nation's transportation infrastructure. The
President's budget and the administration's future surface
transportation proposals reflect these and many other
innovative ideas.
We look forward to your questions following Secretary
Donovan's testimony.
Senator Murray. Thank you very much, Mr. Secretary.
[The statement follows:]
Prepared Statement of Hon. Ray LaHood
Thank you for inviting me to appear before you today to discuss the
Department of Transportation's (DOT) current efforts to promote livable
communities through our existing programs and our budget request for
fiscal year 2011.
INTERAGENCY PARTNERSHIP FOR SUSTAINABLE COMMUNITIES
As a Nation, we pride ourselves on the livability of our
communities, one in which every American has access to affordable
housing, good transportation choices and access to jobs. Making
America's communities more livable is a key part of the President's
agenda, and the administration is already making important advancements
in this area. Last June, DOT joined forces with the Department of
Housing and Urban Development (HUD) and the Environmental Protection
Agency (EPA) to stimulate comprehensive regional and community planning
efforts that integrate transportation, housing, energy and other
critical investments. Together, we will help State and local
governments make smarter investments in their transportation
infrastructure, in order to better leverage that investment, and to
advance sustainable development.
The Department's budget allocates over $500 million toward this
effort. It's an investment that is already receiving national
attention. As I have traveled around the country soliciting input on
our Surface Transportation Reauthorization, I heard resounding support
for our livability initiative. The feedback has been clear: it's time
to rethink how we are investing in our Nation's communities.
Toward this effort, DOT, HUD, and EPA have developed the following
principles to guide our shared efforts to promote livability:
--Provide More Transportation Choices.--Develop safe, reliable and
economical transportation choices to decrease household
transportation costs, reduce our Nation's dependence on foreign
oil, improve air quality, reduce greenhouse gas emissions and
promote public health.
--Promote Equitable, Affordable Housing.--Expand location- and
energy-efficient housing choices for people of all ages,
incomes, races and ethnicities to increase mobility and lower
the combined cost of housing and transportation.
--Enhance Economic Competitiveness.--Improve economic competitiveness
through reliable and timely access to employment centers,
educational opportunities, services and other basic needs by
workers as well as expanded business access to markets.
--Support Existing Communities.--Target Federal funding toward
existing communities--through such strategies as transit
oriented, mixed-use development and land recycling--to increase
community revitalization, improve the efficiency of public
works investments, and safeguard rural landscapes.
--Coordinate and Leverage Federal Policies and Investment.--Align
Federal policies and funding to remove barriers to
collaboration, leverage funding and increase the accountability
and effectiveness of all levels of government to plan for
future growth, including making smart energy choices such as
locally generated renewable energy.
--Value Communities and Neighborhoods.--Enhance the unique
characteristics of all communities by investing in healthy,
safe and walkable neighborhoods--rural, urban or suburban.
CURRENT DOT AND PARTNERSHIP EFFORTS
DOT has already begun using these principles in its programs.
For example, the recent change in the criteria for FTA's New Starts
grants will ensure that the Department considers livability in its
funding recommendations of transit capital investments. Previously,
cost-effectiveness was the primary factor used in making a
recommendation for construction funding, a criterion that uses travel
time savings to quantify a project's benefits as a comparison to
project cost. FTA will now equally consider cost-effectiveness, and
economic, environmental, and livability factors to determine the best
use of funds.
We are also making tools available to transportation professionals
and the public to build their capacity to implement livability projects
at the community level. For example, DOT and HUD produced an action
guide last November to help planners implement mixed-income transit
oriented development and regional transit corridor planning. This
guide, now available online, takes planners step-by-step through the
data gathering and planning process. DOT is also working to develop an
online database for transit-oriented development, which includes over
4,000 existing and planned rail/transit stations. This database will
provide a central resource of transit planning information for
developers, and will be available to the public by the end of the
summer.
To foster the preservation and enhancement of urban and rural
communities by providing better access to jobs, healthcare and
education, DOT released a Notice of Funding Availability (NOFA) in
December for two new pilot programs that would provide funding for
livability projects from existing funds: up to $150 million is
available for bus livability projects and $130 million for urban
circulator grants.
DOT and EPA are also supporting the development of HUD's NOFA for
sustainable community grants authorized in the fiscal year 2010 budget.
DOT and HUD collaborated in the grant selection process and are
providing staff to assist communities that received EPA's smart growth
technical assistance grants. Through these discretionary grant and
technical assistance dollars, DOT, HUD, and EPA are providing States
and communities with opportunities to build the livable communities
that are so important to their economic growth and quality of life.
LIVABLE COMMUNITIES PROMOTE QUALITY OF LIFE
Citizens are changing their preferences toward livable communities,
and State and local governments are responding to constituent demands.
In fact, EPA has found through consumer surveys that at least one-third
of the consumer real estate market prefers a mixed use, transit-
oriented community. The needs and desires of the U.S. home buyer also
are changing: many consumers in the early 1990s had a preference for
golf courses and other recreational amenities. Today, surveys indicate
that many consumers prefer walkable communities--communities
characterized by pedestrian access and a sense of connection,
community, and diversity.
Livable communities are in high demand because they make financial
and economic sense. Transportation and housing are the two largest
expenses for the average American household. Reducing the need for
private motor vehicle trips by providing access to other transportation
choices can lower the average household expenditure on transportation,
freeing up money for housing, education, and savings. Realtors,
developers, and investors recognize that an increase in walkability
translates into a higher home value.
The application of livability strategies can also save billions in
infrastructure investment. For example, Envision Utah brought together
residents, elected officials, developers, conservationists, business
leaders, and other interested parties to participate in the development
of a growth plan for Salt Lake City and the surrounding area. The
process, which included outreach and comprehensive planning efforts,
will help preserve critical lands, promote water conservation and clean
air, promote public health, improve the region-wide transportation
systems, and provide housing options for all kinds of residents. By
coordinating investments, the plan saved $4.5 billion in infrastructure
costs over the last decade. This example shows that as we make our
communities more livable, we can also decrease the strain on natural
resources, decrease greenhouse gases, improve air quality, and promote
public health by supplying more efficient options for transportation
and housing--all while decreasing infrastructure costs and the burden
on the American taxpayer.
LIVABLE COMMUNITIES' INVESTMENTS SUPPORT BOTH RURAL AND URBAN
COMMUNITIES
Livability also can play a substantial role in small towns and
rural communities. The concept of livability comes from rural towns
with a town center that is walkable and accessible to all ages and
income groups. Rural communities, however, face special challenges that
threaten traditional community design. Past transportation policies
have resulted in many rural Main Streets being bypassed by the
interstate highway system, which contributed to the decline of once-
vibrant business centers. Many rural communities located close to
cities have lost farm land and open space as urban areas subsume them.
Transportation costs are often significantly higher for residents of
rural communities, especially those with longer commutes to employment
centers. Better coordination of housing and transportation will lead to
policies and programs that protect and safeguard open space and
agricultural land in rural areas, preserve the historical culture of
rural city centers, and provide rural residents with transportation
options that decrease their household costs.
Livability will certainly take a different form in rural areas than
in urban city centers, but a small town with a walkable, main street
lined with spaces for retail, employment and housing is something we
can all picture. Franklin, Tennessee is a small city 25 miles southwest
of Nashville that has adopted land-use plans and has adjusted their
zoning ordinances to promote higher density mixed-use development. Bath
is a small town in southwest Maine whose historic downtown area is a
model of a livable community. The town provides two trolley loops to
transport residents and tourists through downtown, reducing the need
for on-street parking. Bath's street design encourages citizens to get
out of their cars, which in turn supports local merchants through
increased foot traffic.
My favorite example is Dubuque, Iowa, which I had the pleasure of
visiting last year. In its Historic Millwork District, Dubuque is
redeveloping old factories and mills--dormant since the early part of
the 20th century--to create new mixed income housing, workplaces and
entertainment. Sustainable transportation options are important to this
plan. The city's trolley bus now connects the Millwork District to
downtown. We also funded a project to design streets in this district
that are attractive, convenient and safe for a broad range of users,
including drivers, public transit, pedestrians, bicyclists, people
without access to automobiles, children and people with disabilities.
Dubuque's efforts, in part, attracted IBM to move its employment center
to the area, where it will provide over a thousand new jobs for the
city. With its ``Smart City'' partnership with IBM, Dubuque has become
a model for other cities seeking new livable uses for its established
infrastructure.
We are seeing this emphasis on livability not only in rural
communities, but in urban and suburban communities as well.
In September, Secretary Donovan, Administrator Jackson, and I
visited Denver's La Alma/Lincoln Park neighborhood, which is a
predominantly Latino neighborhood and also one of Denver's oldest. The
10th and Osage station, which adjoins an industrial area, a diverse
existing housing stock, and the Sante Fe Arts District, is serving as a
catalyst for Lincoln Park's redevelopment. The South Lincoln Park Homes
redevelopment, planned around the 10th and Osage station, calls for
developing mixed-use, mixed-income housing within walking distance of
the station, to create a more dense and walkable community. It also
focuses on improving transportation connections within the La Alma/
Lincoln Park neighborhood for its residents to improve job access.
Portland is planning for the growth and development of its city
center and transit systems, strengthening policies to form a denser
bike network, and investing in streetcar and light rail. Our TIGER
grant program has helped them with this by funding over $23 million
toward the reconstruction of a complete street on their waterfront--
including three traffic lanes, dual streetcar tracks and pedestrian and
bicycle facilities--allowing increased access to the central business
district.
In Seattle, we are helping to invest in turning a major roadway
into a multi-modal boulevard. They have instituted smart growth
policies and transportation investments that encourage urban living and
reduce dependence on cars, as well as encourage strong sustainable
building standards.
When I was in Minneapolis in January, I got a chance to tour a 9.8
mile light rail transit line between the downtowns of the twin cities,
Minneapolis and St. Paul. By balancing our cost-effectiveness criteria
with equity considerations in our transit program, we will be able to
help fund three additional stops on this line to serve underserved and
lower income communities that otherwise would not have had access to
this mode of transportation.
Kansas City, Missouri, is another great example. DOT recently
awarded a $50 million TIGER grant to Kansas City for their Green Impact
Zone project, which will provide better access to regional
opportunities through expanded transit and pedestrian facilities. This
project will improve infrastructure in a 150-block area in the urban
core of Kansas City, Missouri that has been impacted over the years by
high rates of poverty, unemployment, crime, and high concentrations of
vacant and abandoned properties. Partners in the Green Impact Zone are
creating a national model that demonstrates how integrated, place-based
investments, centered on principles of sustainability, can transform a
community.
FISCAL YEAR 2011 BUDGET REQUEST
The President's Budget includes $527 million for livable community
efforts in DOT. This funding will support three areas: a Livable
Communities Program within the Office of the Secretary (OST); transit
funding to support livable communities in the Federal Transit
Administration (FTA); and a capacity-building grant program in the
Federal Highway Administration (FHWA). The purpose of these programs is
to provide transportation practitioners with the tools, resources, and
capacity they need to develop a transportation system that provides
transportation choices, saves people money, protects the environment,
and efficiently moves goods.
This budget request was developed in coordination with the requests
for HUD and EPA. As you will hear from Secretary Donovan, HUD's program
focuses on improving regional planning to integrate housing and
transportation decisions. EPA's role is designed to administer
technical assistance to communities to pursue infrastructure
improvements in ways that protect public health and the environment.
DOT's program supports two vital needs: capacity building in
transportation planning and financial assistance to initiate innovative
infrastructure investments. This benefits State and local governments,
which currently use outdated planning and regional models and poor data
to make their transportation investment decisions. Because of
competition for scarce resources, sometimes innovative solutions can
take a back seat to the more pressing needs of maintenance and repair.
By targeting some investment funding, DOT hopes to demonstrate that
smart investment up front can save communities tax money over time by
strengthening communities and lowering infrastructure costs.
The President's budget includes $20 million to establish a new
Livable Communities Program, including a new Office of Livability
within OST. This Office will lead and coordinate livability programs
across the Department's modal administrations and provide grants and
technical assistance for improving local public outreach. It will serve
as the focal point for interagency efforts such as the Partnership for
Sustainable Communities and spearhead efforts such as developing
metrics and performance measures for livability.
Three hundred and seven million dollars is requested to refocus
existing FTA programs to expand transit access for low-income families,
provide effective transportation alternatives and increase the planning
and project development capabilities of local communities.
Consolidating the Job Access and Reverse Commute formula grants,
Alternatives Analysis grants, and formula grants for State and
metropolitan planning will allow DOT to better coordinate efforts with
HUD and EPA to develop strategies that link quality public
transportation with investments in smart development.
The President's budget requests $200 million to fund a competitive
livability program within FHWA. This discretionary grant program aims
to improve modeling and data collection, provide training, and support
organizational changes to better carry out integrated planning. This
assistance would be available to States, local governments, and tribal
partners.
LOOKING FORWARD
What I have described so far is just the starting point for what we
hope to be a robust livability initiative, both within DOT and among
our partnering agencies. The President's budget marks a bold new way of
thinking about investments in our transportation infrastructure and
will become a key component of the administration's future surface
transportation proposal. The programs requested in the President's
budget have been designed to further the goals of the Partnership for
Sustainable Communities and to assist regions and communities in need
of Federal assistance to pursue their own planning and development
needs. By providing capacity building, planning funds, and technical
assistance, DOT, HUD, and EPA can help communities meet the demands
that they face for developing these types of neighborhoods.
Looking forward, reauthorization of our surface transportation
programs will provide an important opportunity to focus on livable
community investments that foster transit-oriented, pedestrian and
bike-friendly development, provide more transportation choices, and
offer better access to jobs and housing.
Thank you for the opportunity to appear before you today to discuss
the efforts of our Partnership for Sustainable Communities and the
Department's fiscal year 2011 budget request to support this effort. We
look forward to working with Congress and our stakeholders to make this
a reality.
I will be happy to answer any questions you may have.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
STATEMENT OF HON. SHAUN DONOVAN, SECRETARY
Senator Murray. Secretary Donovan.
Secretary Donovan. Thank you, Chairwoman Murray, Ranking
Member Bond. I want to thank you for this opportunity to
provide an update on HUD's efforts to help urban and rural
areas across the country create more sustainable homes and
communities.
I also want to take a moment to thank Ray and his entire
team, as well as Lisa Jackson, for their just tremendous
partnership on this effort.
I have submitted more complete testimony for the record,
but today I would like to use my time to report on the progress
we have made, thanks to this subcommittee's support through the
Recovery Act and the $200 million Office of Sustainable Housing
and Communities appropriation for our fiscal year 2010, and to
share with you our plans in the coming months.
OFFICE OF SUSTAINABLE HOUSING AND COMMUNITIES
In February, HUD launched this office to help coordinate
our investments with the Departments of Transportation, EPA,
and Energy, and other agencies at the Federal level, as well as
allowing us to work directly with communities to support
innovation at the local level.
With a combination of housing and transportation costs now
averaging more than 50 percent of income for American families,
we formed a sustainability partnership with DOT and EPA because
when it comes to housing, environmental, and transportation
policy, it is time the Federal Government spoke with one voice.
And the partnership is working.
In addition to the examples that Ray cited, in cities like
Detroit, you can see that we are not only talking to one
another, we are making funding decisions together that improve
outcomes for local communities. In the first round of DOT's
TIGER grant program under the Recovery Act, DOT awarded $25
million for the Woodward Avenue Streetcar Project in Detroit.
All three agencies reviewed the city's application.
HUD brought to DOT's attention community development
activities already planned or underway in the Woodward Avenue
Corridor, which made the site a more attractive investment for
DOT. The EPA was able to highlight brownfield remediation
efforts in the vicinity of the project, which will allow
abandoned properties along the streetcar line to be recycled
for economic development and affordable housing.
As a result, we believe this transportation investment has
the potential to fundamentally transform one of the most
historic neighborhoods of the city and is an example of the
more effective award process in communities throughout the
country.
A similar process will unfold with the selection of HUD's
regional planning and local challenge grants this year. With
this subcommittee's support, we are preparing to launch a $100
million sustainability planning grant program to encourage
metropolitan and rural regions to plan for integration of
economic development, land use, and transportation investments.
We issued an advance notice and request for comment for the
program, inviting feedback through a new online Wiki accessible
via HUD's Web site and through an extensive listening tour
around the country. We wanted communities to tell us what
works, what isn't working, and how we can better help them
build sustainably.
Just as important, we hope to send a very important signal
that we in the Obama administration are serious about being the
kind of partner that listens and learns. And the response has
exceeded even our expectations. We received over 900 written
comments, met with over 1,000 stakeholders in 7 listening
sessions, and staged Webcasts that touched thousands more.
And the feedback we received was overwhelmingly positive as
well, from mayors and other officials of both small and large
communities to business leaders in growing regions to Governors
of States that have been hit hard economically. One example of
how this feedback changed our thinking is with respect to small
towns and rural areas. The White House convened a special focus
group to discuss the needs of such communities, and in this
session and the many letters we received, we heard concerns
that larger communities in central cities might receive
preference for these funds despite the great need in rural
America.
Indeed, Madam Chairwoman, while rural communities generally
have less access to public transportation, higher poverty
rates, and inadequate housing, at HUD we recognize that
residents of these communities also face unique challenges when
it comes to accessing healthcare, grocery stores, adult
education opportunities, and many other services. This is
something it is with communities like St. Peter, Minnesota,
which Deputy Secretary Sims visited last month with the
Department of Agriculture, and how they have responded to these
challenges that we will ensure that small towns and rural
regions have a better shot at competing in this NOFA through a
special category of funding.
ENERGY INNOVATION FUND
While these funds are targeted at the regional level,
another $40 million will support local efforts through a
Community Challenge Planning Grant. With these funds, HUD has
chosen to issue a joint NOFA with DOT for its TIGER II planning
grant program. At the same time, with our $50 million Energy
Innovation Fund as part of the 2010 budget, we are developing
new and innovative low-cost financing for single and
multifamily programs, including taking an energy-efficient
mortgage product to scale.
It could provide key incentives to both buyers and sellers
who want to make much-needed energy improvements in their
homes. But this office isn't limited to the successful
implementation of these funds alone. The Office of Sustainable
Housing and Communities is also active in other partnerships as
well.
Over this past year, HUD has been working with the
Department of Energy to eliminate duplicative rules that
sharply limited the $5 billion in Federal weatherization funds
from being available to retrofit multifamily properties. By
simply cutting through red tape, we have helped pave the way
for Rhode Island to allocate $7 million, one-third of its
weatherization funding, to multifamily housing, and Colorado to
weatherize an expected 1,000 multifamily units by June of this
year and another 1,600 in the next fiscal year.
As a result, thousands of low-income families living in
multifamily housing across the country stand to see their
utility bills reduced. The President has set a goal of
weatherizing 1 million homes per year. As part of the HUD-DOE
partnership, we have made income eligible more than 1.5 million
units of HUD-qualified homes that could potentially use
weatherization funding.
Indeed, we at HUD have set a goal of retrofitting or
building 159,000 energy-efficient homes over the next 2 years,
including 85,000 funded through the Recovery Act. Obviously,
this is only a sample of the work we are doing. My written
testimony offers a more complete picture of the scope of our
sustainability work to date.
As you know, we are requesting $150 million for the second
year of the Sustainable Communities Initiative in our fiscal
year 2011 budget, including a second round of regional planning
grants administered by HUD in collaboration with DOT and EPA
and additional investment in challenge grants to help
localities implement these plans.
Senator Dodd has also introduced legislation that would
make some of our initiatives permanent and look forward to
working with him and your counterparts on authorizing
committees toward that end.
But Madam Chairwoman and Ranking Member Bond, I hope you
can see that this funding is producing real results at the same
time it is helping to fundamentally transform the way the
Federal Government does business. It is helping us prove that
the Federal role isn't about dictating what localities can or
can't do and how to do it, but rather offering them the
resources and tools to help them realize their own visions for
achieving the outcomes that we all want, outcomes like less
time commuting and more time with family, neighborhoods where
kids can play outside and breathe clean air, and communities
with opportunities for people of all ages, incomes, races, and
ethnicities.
PREPARED STATEMENT
That is the goal of these efforts, and it is why I am so
proud to work with my partners in the administration and this
subcommittee.
Thank you for this opportunity.
[The statement follows:]
Prepared Statement of Hon. Shaun Donovan
Chairman Murray, Ranking Member Bond and distinguished members of
the subcommittee, thank you for this opportunity to provide an update
on HUD's expanding efforts to help urban and rural areas across the
country create more sustainable homes and communities. Thanks to this
subcommittee's support, both through the American Recovery and
Reinvestment Act and through this year's appropriation to support new
sustainable housing and communities grant programs, we have been able
to make substantial progress on an ambitious agenda in our first year.
I am pleased to share with you today our early results and plans for
the future.
My testimony has three main sections. The first highlights the
results to date of HUD's Recovery Act investments in sustainable
housing and communities, which has laid the foundation for much of our
continuing commitment. The second summarizes the groundbreaking
sustainability partnerships HUD has formed with other Federal agencies,
building the framework for unprecedented collaboration and impact on
the ground. The third describes the major activities HUD has underway,
led by the new Office of Sustainable Housing and Communities, which
will focus our efforts to ensure this agenda remains an enduring
priority for the Department. First, however, I want to provide context
for HUD's commitment in this area.
THE NEED FOR FEDERAL LEADERSHIP TO ADVANCE SUSTAINABLE HOMES AND
COMMUNITIES
While the consequences of climate change are complex and far
reaching, we know that the increasing emissions of greenhouse gases,
the primary cause of global warming, are largely a result of energy use
in our ``built environment.''
As a Federal cabinet agency focused on the built environment,
strengthening communities, and expanding opportunity for all Americans,
HUD recognizes the urgent need for aggressive action to combat climate
change. The positive news, and the powerful opportunity, is that we can
cut greenhouse gas emissions, while creating jobs and expanding
opportunity for all Americans through proven strategies for creating
more sustainable homes and communities.
Residential housing and the built environment are major
contributors to energy consumption and global warming. Residential
buildings alone account for 20 percent of U.S. carbon emissions, with
the vast majority coming from detached single-family houses. It may be
surprising to many, but all types of buildings combined actually
account for more emissions than the entire transportation sector. The
transportation sector accounts for about another one-third of carbon
emissions, among many factors because sprawling development patterns
separate jobs and houses that, without adequate public transportation
systems, necessitate long commutes and increased dependence on car
travel.
This is no coincidence. During the housing boom, many real estate
agents suggested to families that couldn't afford to live near job
centers that they could find a more affordable home by living farther
away. Lenders bought into the ``Drive to Qualify'' myth as well--giving
easy credit to home buyers without accounting for how much it might
cost families to live in these areas or the risk they could pose to the
market. While some home buyers were aware of the risk they were taking
on, others were not. And all of these families found themselves
vulnerable to gasoline price fluctuations, as they drove dozens of
miles to work, to school, to the movies, to the grocery store, spending
hours in traffic and spending nearly as much to fill their gas tank as
they were to pay their mortgage. And some places more--like Atlanta,
where housing and transportation costs total 61 percent of family
income or East Palo Alto, California where they consume over 70 percent
of family budgets.
The social equity implications of current growth patterns have also
become more apparent. As metropolitan areas continue to sprawl outward
and jobs become increasingly dispersed, fewer low-wage earners and
renters are able to find housing near their work. Nationally, 45
percent of all renters and two-thirds of low-income renters live in
central cities. Low-income families, many of them minorities, live in
neighborhoods that limit access to quality jobs, good schools and
opportunities to create wealth. Indeed, some studies have found that
zip code predicts poor educational, employment, and even health
outcomes. The unbalanced nature of metropolitan housing development has
strained urban, suburban and rural household budgets, as commutes
lengthen: the combination of housing and transportation costs now
average a combined 60 percent of income for working families in
metropolitan areas.
With few exceptions, the Federal Government has historically not
been up to the task of addressing these critical trends. Federal
programs dealing with housing, transportation and energy issues remain
largely separate from each other, precluding smart, integrated problem
solving. Federal policies and rules are narrowly defined, poorly
coordinated and often work at cross purposes. The silo driven nature of
Federal policies and programs extends to planning, data collection,
performance measurement and research and evaluation. To address these
and other issues, the administration has launched the first
comprehensive review of ``place based'' Federal policies since the
Carter administration, with sustainability as a central focus--asking
each agency to determine whether Federal policies enable and encourage
locally-driven, integrated, and place-conscious solutions, or obstruct
them.
Place of course is already at the center of every decision HUD
makes. Today, HUD's programs reach nearly every neighborhood in
America; 58,000 out of the approximately 66,000 census tracts in the
United States have one or more unit of HUD assisted housing. Now we
have seized this opportunity to renew our focus on place, to better
nurture sustainable, inclusive communities across America's urban,
suburban, and rural landscape.
A major component of HUD's place-based approach involves making
communities sustainable for the long-term. For HUD, ``sustainability''
includes improving building level energy efficiency, cutting greenhouse
gas emissions through transit-oriented development, and taking
advantage of other locational efficiencies. Critically, we believe
sustainability also means creating ``geographies of opportunity,''
places that effectively connect people to jobs, quality public schools,
and other amenities.
But it's not just about what we think at HUD or in the Federal
Government. Sustainability means different things to different kinds of
communities. If you asked John Hickenlooper, the Mayor of Denver, where
they are building more than 100 miles of new light rail, commuter rail,
and bus rapid transit lanes, linking the 32 communities surrounding
Denver proper, he'd tell you sustainability is about building inclusive
neighborhoods of opportunity--binding communities to work together as a
region so that they not only share problems, but solutions as well. If
you asked Dan Kildee, who was Genesee County Treasurer for many years,
he'd tell you sustainability is about the very economic survival of a
city like Flint, Michigan--where years of population loss and economic
decline have left a surplus of housing and more vacant land than can be
absorbed by redevelopment. For Flint, sustainability is about being
smaller but stronger and smarter.
And so, the Federal role within each of these efforts is clear: not
to dictate what localities can and can't do or how to do it, but rather
offering them the resources and tools to help them realize their own
visions for achieving the outcomes we all want: less time commuting and
more time with family, neighborhoods where kids can play outside and
breath clean air, and communities with opportunities for people of all
ages, incomes, races and ethnicities.
Partnering with communities so they can make choices that work for
them--for their needs, and their marketplaces--is an example of what I
would call a ``New Federalism'' that President Obama is proposing--and
it's something we are committed to practicing at HUD.
LAYING THE FOUNDATION--RECOVERY ACT INVESTMENTS IN SUSTAINABLE HOMES
AND COMMUNITIES
HUD has played a key role in implementing the Recovery Act, which,
according to the Council of Economic Advisors, is already responsible
for putting about 2.5 million Americans back to work, putting the
Nation on track to create or save 3.5 million jobs by the end of the
year.
HUD has now obligated 98 percent of the $13.6 billion in Recovery
Act funds stewarded by the Department--and disbursed over $3.9 billion.
Nearly all of HUD's Recovery Act funding is fully paid out, or
expended, only once construction or other work is complete--just as
when individual homeowners pay after they have work done on their
homes. Therefore, HUD's obligated but not yet expended funds are
already generating jobs in the hard hit sectors of housing renovation
and construction.
While our top priority with Recovery Act funds is creating jobs and
economic activity, we are also seizing the opportunity to lay a
foundation for HUD's new direction in our Recovery Act investments.
When President Obama signed the Recovery Act into law last year, it was
designed to do three things: create jobs, help those harmed by the
economic crisis, and lay a new foundation to make America competitive
in the 21st century. By putting people back to work greening homes in
cities like Philadelphia and building high-speed rail in places like
Milwaukee and Madison, this administration is using our response to the
economic crisis as a catalyst to build good neighborhoods, more
resilient communities, and the strong, interconnected regional
backbones our economy needs to create and sustain these jobs.
Nearly one-third of HUD's Recovery Act funds can be used for
``greening'' America's public and assisted housing stock, making homes
healthier and more energy efficient. At the same time, this investment
will prepare a new generation of professionals, from mechanics and
plumbers, to architects, energy auditors, and factory workers building
solar panels and wind turbines, all of whom are needed to design,
install, and maintain the first wave of green technologies.
These investments include:
--$600 million for energy retrofits of 226 public housing
developments and 35 more green newly constructed and
substantially rehabilitated public housing developments.
--$500 million for housing on Native American lands, which HUD is
encouraging and supporting tribal housing groups to provide in
an environmentally sustainable manner.
--$250 million for green retrofits of 16,600 units of privately owned
HUD-assisted housing. (HUD received applications for more than
$700 million.)
--$100 million to eradicate lead paint and create healthy homes.
Importantly, energy efficiency and other environmental criteria--
and results--are also present in larger HUD programs funded by the
Recovery Act, such as $3 billion in formula funding for public housing
and $2 billion through the Neighborhood Stabilization Program.
The Recovery Act investments we are making to help families and
communities save energy and live in healthier homes are teaching us
what works and how we can be a more effective partner to builders,
owners and residents who want the opportunity to live in greener
communities. These lessons and feedback from our partners are informing
and improving our continuing efforts to increase environmental
benefits, lower costs, and measure the benefits in affordable housing.
BUILDING THE FRAMEWORK--HUD'S SUSTAINABILITY PARTNERSHIPS WITH OTHER
AGENCIES
Creating more sustainable housing and communities at scale--making
sustainability the ``default option'' for our partners and the people
we serve--requires an interdisciplinary approach and intense
collaboration across the traditional silos of Federal policy. That is
why we are so pleased to be working closely with a number of Federal
agencies to leverage the skills, resources and partnerships that each
can bring to truly transforming our built environment.
As you know, HUD, the Department of Transportation (DOT) and the
Environmental Protection Agency (EPA) have formed the Interagency
Partnership for Sustainable Communities to help improve access to
affordable housing, expand transportation options and lower
transportation costs while protecting the environment in communities
nationwide. Through a set of guiding Livability Principles and a
partnership agreement that frames our collective efforts, the
partnership is coordinating Federal housing, transportation, and other
infrastructure investments to an unprecedented extent to protect the
environment, promote equitable development, and help to address the
challenges of climate change. When it comes to housing, environmental,
and transportation policy, it is time the Federal Government spoke with
one voice. (The Livability Principles are attached as Appendix A.)
Having served in, and worked with, various levels of government for
many years, I can say that the extent of collaboration and cooperation
among our agencies has been nothing short of remarkable--starting at
the senior leadership level where Secretary LaHood, Administrator
Jackson and I have developed an excellent working relationship, and
extending to the staff in each agency. Every day, we are getting better
at aligning where it makes most sense and assigning specific
responsibilities to the appropriate agency based on resources and
expertise. One example was DOT's inclusion of HUD and EPA in the review
of competitive applications for DOT's $1.5 billion TIGER Grant program
funded under the Recovery Act. We would by no means suggest that we
have perfected the collaborative approach. Decades of statutes,
regulations and habits, in some cases, create real challenges to the
partnership results all three of our agencies aspire to achieve. But
the good news is we are making consistent progress, moving forward
despite the barriers, and we always welcome ideas and assistance from
interested parties, including this subcommittee.
Another exciting example is the partnership between HUD and the
Department of Energy that is working to increase energy efficiency in
affordable homes and apartments. One joint project is to develop a
streamlined, low-cost, consumer friendly tool to provide homeowners
with better information about their home's energy use, options for
saving energy, and the cost savings that would result. We are also
exploring options for providing financing for consumers to pay for the
cost of energy saving home improvements, described more below.
HUD's partnership with DOE is delivering results in multi-family
low-income housing as well. Our agencies have worked together to
eliminate duplicative and unnecessary rules that impeded the use of
Federal Weatherization Assistance Program funds to retrofit multi-
family properties. Thousands of low-income families are now in better
position to benefit from the $5 billion in weatherization funds
provided under the Recovery Act as a result.
For instance, Rhode Island's Office of Energy Resources, has
allocated $7 million to weatherize multi-family housing--this set aside
was in response to the HUD/DOE MOU published in May of last year. Rhode
Island anticipates a large number of applications for this program.
Colorado is allocating $80 million for its weatherization program.
GAO and IG reports have identified Colorado as a high performing State.
Currently, about $30 million of the ARRA funding has been expended to
weatherize multi-family homes throughout the State.
In addition, I have appointed Deputy Secretary Ron Sims to
represent HUD on the Steering Committee for the White House Council on
Environmental Quality, the Office of Science and Technology Policy, and
the National Oceanic and Atmospheric Administration interagency process
to produce a set of recommendations for Federal actions that will help
society adapt to climate change. This group is developing
recommendations on how Federal agencies can effectively create and
implement climate change adaptation policies and strategies.
Other similar partnerships are in formation or early development.
We are especially optimistic about potential collaboration with the
Department of Agriculture to ensure we are as effective in helping
deliver sustainability solutions in rural areas and small towns as we
are in larger and more urban communities.
ENSURING HUD'S LONG TERM LEADERSHIP ON SUSTAINABLE HOMES AND
COMMUNITIES
Thanks to this subcommittee's support, we have created a new office
that will ensure that the foundation laid by our Recovery Act
investments, and the framework we are building in partnership with
other agencies, is buttressed and built upon by institutionalized
capacity within HUD. The Office of Sustainable Housing and Communities,
under the direct supervision of Deputy Secretary Sims, will help
provide and expand that capacity among HUD staff and stakeholders.
Shelley Poticha, nationally recognized for her leadership to create
more location efficient communities, is in place as Director of the
office and we have begun to assemble a talented team that brings the
technical skill sets and deep commitment our sustainability initiatives
demand. Just as important, we are creating teams of staff in HUD's
regional and field offices to serve as partners and points of contact
with stakeholders in our sustainability agenda, listening to local
ideas and delivering HUD's solutions in real time. Staff playing these
roles will be current HUD employees who are trained in additional
skills and work with their colleagues from DOT, EPA and other agencies
in our communities.
The office has already made significant progress advancing several
new initiatives totaling $200 million. This subcommittee's early
support for these initiatives will be key to their ultimate success.
First is the Sustainable Communities Regional Planning Grant Program,
which will provide a total of $100 million to a wide variety of multi-
jurisdictional and multi-sector partnerships and consortia at the
regional level, from Metropolitan Planning Organizations and State
governments, to non-profit and philanthropic organizations and another
$40 million to foster reform and reduce barriers, at the local level,
to achieve affordable, economically vital and sustainable communities.
These grants will be designed to encourage regions and local
jurisdictions to build their capacity to plan for integration of
economic development, land use, transportation, and water
infrastructure investments, and to combine workforce development with
transit-oriented development. Second is the $50 million Energy
Innovation Initiative to enable the Federal Housing Administration
(FHA) and the Office of Sustainable Housing and Communities to catalyze
innovations in the residential energy sector that can be replicated and
help create a standardized home energy efficient retrofit market.
Finally, another $10 million is set aside for research on a
transportation/housing affordability index. I will discuss these
initiatives in greater detail below.
Sustainable Communities Regional Planning Grants
For the first time ever, we will provide Federal money to support
planning grants that will be selected not only by HUD, but also by DOT
and EPA--because when it comes to housing, environmental and
transportation policy, it's time the Federal Government spoke with one
voice.
As indicated above, the first $100 million in funding is for
regional integrated planning initiatives through a Sustainable
Communities Planning Grant Program. The goal of the program is to
support multi-jurisdictional regional planning efforts that integrate
housing, economic development, and transportation decisionmaking in a
manner that empowers communities to consider the interdependent
challenges of economic growth, social equity and environmental impact
simultaneously. We are committed to encouraging these regions to engage
residents and other local stakeholders to build long-lasting alliances.
HUD recognizes that while the core principles of the program are
not new, the Federal Government has never attempted to directly support
local leaders in articulating and realizing them. In recognizing that
we can learn from our leaders on the ground, we issued an Advanced
Notice and Request for Comment for the program. We invited feedback
through a new online ``Wiki'' accessible via HUD's Web site
(www.hud.gov/sustainability) and through an extensive listening tour
around the country. We want communities to tell us what works, what
doesn't work, and how we can build sustainably. Just as importantly, we
hope to send a very important signal that we in the Obama
administration are serious about being the kind of partner that listens
and learns.
We received over 900 written comments, met with over 1,000
stakeholders in 7 listening sessions, and staged web casts that touched
thousands more. The feedback we received was overwhelmingly positive--
from the mayors and other elected officials of both small and large
communities, to business leaders in growing regions, to Governors of
States that have been hit hard economically.
One example of how this feedback changed our thinking is with
respect to small towns and rural areas. The White House convened a
special focus group to discuss the needs of such communities. In those
sessions, we heard concerns that larger communities and central cities
would receive preference for these funds despite the great need in
rural America.
Indeed, Madam Chairwoman, while rural communities generally do not
have access to public transportation, at HUD we recognize that these
residents still face unique challenges when it comes to accessing
healthcare, grocery stores, adult education opportunities, among other
things. We are very much aware that there are high rates of poverty and
inadequate housing in rural areas.
That is why we are looking at creating a separate, special funding
category for small towns and rural places as we prepare the Notice of
Funding Availability (NOFA) for the fiscal year 2010 Sustainable
Communities Regional Planning Grant funds--and, indeed, are
incorporating many of the ideas submitted to us.
HUD formed an interagency team to draft the NOFA. This team
included deep engagement from staff within the Federal Transit
Administration and Federal Highway Administration within DOT; EPA's
Brownfields, Water, and Smart Growth offices; all of HUD's key program
offices; the Office of Management and Budget; and the Domestic Policy
Council within the White House.
We also consulted with the Department of Agriculture, the Federal
Emergency Management Agency, the Department of Education, and the
National Endowment for the Arts. Our fiscal year 2010 NOFA is now in
clearance. Applicants will be given at least 60 days to submit
proposals. With DOT and EPA, we aim to announce approximately 40
winners--from small and rural areas, mid-sized regions, and large
metropolitan areas.
The $100 million investment from this fund could potentially be
game-changing and will leverage additional public and private dollars.
We will also be working hard and listening closely to ensure it is
truly useful for rural and smaller communities, as well as larger ones.
The program is designed to address the needs of places that are just
starting to think about more sustainable growth and development, as
well as those that are more advanced. Congress has directed us to share
our plans for the entire Sustainable Communities Initiative and we will
submit a formal report on our plans to the subcommittee.
Finally, as briefly noted above, with $10 million of the Office of
Sustainable Housing and Communities' budget, we are working with the
Department of Transportation and the Environmental Protection Agency to
develop an Affordability Index to educate consumers who want to buy
homes in more sustainable places by accounting for that housing's
proximity to jobs and schools. Congressman Blumenauer is preparing
legislation on this subject and we look forward to continuing to
discuss this proposal with him going forward.
Community Planning Challenge Grant Program
HUD's fiscal year 2010 budget provided $40 million to support the
detailed planning and code reform efforts that cities and counties must
undertake to realize their sustainability goals. Consistent with the
administration's intent to be more transparent and ``user-friendly,''
HUD has chosen to issue a joint NOFA with DOT for its ``TIGER II''
planning grant program (up to $35 million.) This NOFA will be published
at the same time that DOT publishes its TIGER II Capital Grants NOFA.
The key difference between the DOT planning grant program and HUD's
Community Planning Challenge Grant program is in the types of
activities that could be funded. DOT's program funds planning
activities that relate directly to a future transportation capital
investment, while HUD's program funds land-use related planning
activities that would be linked to a future transportation investment.
HUD and DOT will jointly develop selection criteria that will apply to
all proposals submitted in response to the joint NOFA and will jointly
review the proposals.
DOT and HUD believe there is great value in aligning the two
planning programs in order to create synergies between transportation
and land use planning and to set the stage for future linkages between
the three Partnership agencies' various programs. Furthermore, we
believe this proposal has the potential to encourage and reward more
holistic planning efforts and result in better quality projects being
built with Federal dollars.
Energy Innovation Grants
Another area where the Office of Sustainable Housing and
Communities is focused is scaling up energy efficiency in affordable
housing. Our fiscal year 2010 appropriation includes $50 million for an
Energy Innovation Fund. Pursuant to Congress' direction, we are
developing new and innovative low-cost financing for single- and multi-
family programs, including taking an Energy Efficient Mortgage product
to scale that would allow homeowners to wrap energy improvements into
property tax assessments where the up-front cost can be amortized.
In both cases, our aim is to use these Federal funds to pilot
approaches that FHA and the private sector financial institutions will
take to greater scale in the market.
Under the leadership of the Office of Sustainable Homes and
Communities, HUD has also launched a transformative program to develop
uniform investment policies, performance goals, and reporting and
tracking systems to support national objectives for energy efficiency.
HUD is working together with DOE to support the achievement of the
President's goal of weatherizing 1 million homes per year by enabling
the cost effective energy retrofits of a total of 1. 2 million homes in
fiscal year 2010 and fiscal year 2011. As part of this initiative HUD
intends to complete cost effective energy retrofits of an estimated
126,000 HUD-assisted and public housing units during this time.
As we are developing new approaches to the Energy Efficient
Mortgage, we are also exploring the potential for Location Efficient
Mortgages (LEM's). LEM's take into account the lower costs of
transportation in transit rich, walkable communities. This is part of a
larger effort that HUD is considering housing affordability through the
lens of the combined costs of housing (including utility costs) and
transportation, rather than looking at them separately. This work,
while early in the research and development stage, holds significant
promise. These efforts are motivated by a belief that markets work best
when there is reliable and useful information for consumers and
communities alike--and that by making information on utility and
transportation costs widely available, we can drive a much broader
scale of change than Government ever could alone, ensuring that we
never again foster a culture of ``Drive to Qualify.''
As you know, we are requesting $150 million for the second year of
the Sustainable Communities Initiative. Additionally, Senator Dodd and
Rep. Perlmutter have introduced legislation that would make some of our
initiatives permanent, and we will work in consultation with the two
authorizing committees as the legislative process moves forward.
Working closely with this subcommittee and the authorizing committee,
we would use these funds for the following:
--A second round of Sustainable Communities Planning Grants
administered by HUD in collaboration with DOT and EPA. As
described above, these grants will catalyze the next generation
of integrated metropolitan transportation, housing, land use
and energy planning using the most sophisticated data,
analytics and geographic information systems. Better
coordination of transportation, infrastructure and housing
investments will result in more sustainable development
patterns, more affordable communities, reduced greenhouse gas
emissions, and more transit-accessible housing choices for
residents and firms.
--Additional investment in Sustainable Communities Challenge Grants,
also as described above, to help localities implement
Sustainable Communities Plans they will develop. These
investments would provide a local complement to the regional
planning initiative, enabling local and multi-jurisdictional
partnerships to put in place the policies, codes, tools and
critical capital investments needed to achieve sustainable
development patterns.
--The creation and implementation of a capacity-building program and
tools clearinghouse, complementing DOT and EPA activities,
designed to support both Sustainable Communities grantees and
other communities interested in becoming more sustainable.
HUD's focus will be on buttressing the capacity of land use and
housing stakeholders, while DOT will focus on building capacity
and providing tools for transportation professionals. EPA will
bring their decade-long expertise in technical assistance and
research to the Partnership.
--A joint HUD-DOT-EPA research effort designed to advance
transportation and housing linkages at every level where our
agencies work together.
--All three agencies will collaborate on providing guidance to fiscal
year 2011 Sustainable Communities grantees to assist them to
implement their projects and programs.
I also would like to say a word about the various roles of the
three agencies within the interagency partnership. Each agency has
clear and defined roles: HUD will take the lead in funding, evaluating,
and supporting integrated regional planning for sustainable
development, and will invest in sustainable housing and community
development efforts. DOT will focus on building the capacity of
transportation agencies to integrate their planning and investments
into broader plans and actions that promote sustainable development,
and investing in transportation infrastructure that directly supports
sustainable development and livable communities. EPA will provide
technical assistance to communities and States to help them implement
sustainable community strategies, and develop environmental
sustainability metrics and practices. The three agencies have made a
commitment to coordinate activities, integrate funding requirements,
and adopt a common set of performance metrics for use by grantees.
Allow me to explain to the subcommittee how our interagency
collaboration--and your support--is already producing results. In the
first round of DOT's TIGER grant program under the Recovery Act, DOT
awarded $25 million for the Woodward Avenue streetcar project in
Detroit. Both HUD and EPA brought critical information and perspectives
to the table when the three agencies reviewed Detroit's application.
HUD was able to bring to DOT's attention community development
activities already planned or underway in the Woodward Avenue corridor.
EPA was able to highlight Brownfield remediation efforts in the
vicinity of the project which will allow abandoned properties along the
streetcar line to be ``recycled'' for economic development and
affordable housing. In the past, DOT would not have had access to this
information and a project with so much promise might not been selected.
This is a prime example of how I believe, Secretary LaHood
believes, and President Obama believes, Federal agencies must begin to
partner with one another to make the biggest possible impact on the
ground.
Finally, I want to say that with our Choice Neighborhoods
demonstration, which will be soon underway, HUD will be aiming to prove
that neighborhoods can be a platform for a new kind of sustainability--
bringing to bear private capital and mixed-use, mixed income tools to
transform all housing in a neighborhood.
But creating true neighborhoods of choice--where lower-income
families can find opportunity and higher income families would choose
to live, for their location, their uniqueness, and their amenities--
requires we bring HUD's fair housing policies, which have remained
largely unchanged since the Fair Housing Act was passed in 1968, into
the 21st century. With consultation from Ron Sims, HUD's Assistant
Secretary of Fair Housing and Equal Opportunity, John Trasvina, is
adopting a broader definition of fair housing that includes not only
the racial makeup of housing, but also its orientation to opportunity--
to public transportation and job centers.
Armed with this broader set of criteria with which we can better
understand segregated development patterns, HUD can not only help
communities identify longstanding demographic and development
challenges with new technologies such as geospatial data analysis--more
importantly, we can help them with new development strategies and
targeted technical assistance. This is not just enforcement--but what
the law calls ``Affirmatively Furthering Fair Housing.''
Building on this direction, Deputy Secretary Sims and I have
instructed Shelley to collaborate with Assistant Secretary of Community
Planning and Development Marquez toward that end as we develop HUD's
new Consolidated Plan.
With housing-specific resources like vouchers, counseling and
Choice Neighborhoods, to new financing tools for transit-oriented
development, to incentives that encourage the repurposing of polluted
land for affordable housing development, we can help communities
coordinate the use of all available resources to turn segregated
neighborhoods of concentrated poverty into integrated, healthy,
sustainable communities.
That is why I believe this office reinforces President Obama's
commitment to ensuring all Americans have the opportunity to
participate in real community change.
CONCLUSION
My testimony today has focused largely on the work and agenda of
HUD's Office of Sustainable Housing and Communities. We recognize that
$150 million alone is not sufficient to meet the demand for sustainable
communities. That is why I believe the real size of my sustainable
budget is really $44 billion. That is the size of HUD's fiscal year
2010 budget--and we intend to begin using every dollar of it to put
more power in the hands of communities and more choices in the hands of
consumers.
These efforts are motivated by a belief that when you choose a
home, you don't just choose a home. You also choose transportation to
work and to school. You choose public safety for your children. You
choose a community--and the choices available in that community. And I
believe that our children's futures should never be determined--or
their choices limited--by their zip code.
We want to again express our deep appreciation for the
subcommittee's support for this bold, and necessary, new initiative. As
I say frequently, our ultimate goal is to harness the entire HUD budget
as a force for creating greener homes and communities everywhere in
America. We look forward to working with the subcommittee to advance
that goal and I look forward to our continued progress through the
proposals outlined in the fiscal year 2011 budget.
APPENDIX A
HUD-DOT-EPA Interagency Partnership for Sustainable Communities
Livability Principles--June 16, 2009
Provide More Transportation Choices.--Develop safe, reliable, and
economical transportation choices to decrease household transportation
costs, reduce our Nation's dependence on foreign oil, improve air
quality, reduce greenhouse gas emissions, and promote public health.
Promote Equitable, Affordable Housing.--Expand location- and
energy-efficient housing choices for people of all ages, incomes,
races, and ethnicities to increase mobility and lower the combined cost
of housing and transportation.
Enhance Economic Competitiveness.--Improve economic competitiveness
through reliable and timely access to employment centers, educational
opportunities, services and other basic needs by workers, as well as
expanded business access to markets.
Support Existing Communities.--Target Federal funding toward
existing communities--through strategies like transit oriented, mixed-
use development, and land recycling--to increase community
revitalization and the efficiency of public works investments and
safeguard rural landscapes.
Coordinate and Leverage Federal Policies and Investment.--Align
Federal policies and funding to remove barriers to collaboration,
leverage funding, and increase the accountability and effectiveness of
all levels of government to plan for future growth, including making
smart energy choices such as locally generated renewable energy.
Value Communities and Neighborhoods.--Enhance the unique
characteristics of all communities by investing in healthy, safe, and
walkable neighborhoods--rural, urban, or suburban.
REGIONAL PLANNING GRANTS
Senator Murray. Thank you very much to both of you for your
testimony today.
We will begin a round of questions, just so everybody
knows, this is the Senate. We are going to have a vote here in
a few minutes, apparently. So I will begin by asking my
questions, and when the vote is called, I will turn it over to
Senator Bond, and I will go and come back. So, hopefully, we
can keep this moving.
As we engage our stakeholders in discussions about the
partnership for sustainable communities, it is really apparent
that the terms ``sustainability'' and ``livability'' aren't
easily defined. And the reality is, there isn't one type of
sustainable or livable community.
The administration has been clear that plans for
sustainable communities will be locally driven, but at the same
time as the subcommittee considers the administration's funding
request, it is important to understand what types of projects
will fit into these principles of livability developed as part
of the interagency partnership.
So, Secretary Donovan, let me start with you. What specific
criteria is HUD going to be using to determine if regional and
community plans meet the goals of sustainability?
Secretary Donovan. I think there are a number of key things
that we are looking for up front in the applications for these
grants. And then I want to be clear, and I think you said this
well in your opening statement, we need to make sure that this
is about local efforts because one size doesn't fit all, but we
also have to set clear standards for accountability and showing
results.
Those results will be dependent on the specifics of the
local plan, but will include a range of outcomes like lower
cost of living for households, including the combined costs of
housing and transportation, lower infrastructure costs for
communities as well. And what we will see as a result of that
is more disposable income and more resources available at the
State and local level available, as Secretary LaHood said,
because we will be able to lower costs for infrastructure
investment and other forms of investment.
In terms of the criteria, we are looking for very clear
regional partnerships in our regional planning grants. There
must be evidence of collaboration among the various local
jurisdictions that will be competing. We are looking for
capacity to use and leverage funds effectively, and we are
looking for real evidence of the capacity to do planning
efforts, whether it is through direct capacity at the local or
regional government level or whether it is with non-profit or
other types of partners like regional planning organizations or
councils of government that often play the lead function in
these kind of planning efforts.
Senator Murray. So I am hearing you say that you are more
interested in the integrated planning process rather than the
specific details?
Secretary Donovan. I was talking about the regional
planning grants. Those will be the key criteria. That is right.
Senator Murray. Okay. And I am going to turn it over to
Senator Bond because the vote has been called and let him do
his questions, and I will come back and have a number of
additional questions that I will ask.
NON-MOTORIZED TRANSPORTATION
Senator Bond [presiding]. Thank you, Madam Chair, and thank
you for your statements gentlemen.
Secretary LaHood, I have a letter that I assume you have
seen from the Transportation Construction Coalition dated--what
was the date of this letter? We received it yesterday. Ah,
Bella has kindly passed it up.
These are the associations engaged in road building and the
unions that engage in it. And I thought they raise some good
questions. They state that any definition of ``livability''
must recognize that non-motorized transportation is a viable
solution in certain areas, and in our major cities, we
appreciate the support for mass transit.
And I told you Columbia, Missouri, is the one city in the
State that has really gone wild with bicycles. They love to
bike, and they have theirs. But there are a lot of communities,
good-sized communities that don't have public transportation,
and it is too far to bike. And the conditions are not safe.
And they are concerned that--another concern they have is
that transportation goals and transportation policy is usually
set in multiyear reauthorization bills. They are concerned that
the proposal that takes $200 million out of the highway measure
to put it in livability, as I think the chair mentioned, may
reflect a view that we want to get rid of auto transportation.
I don't know if this quote is accurate, but I have an
article stating that last year at a National Press Club event,
a panel moderator said--and some of the highway supporter
motorists groups have been concerned by your livability
initiative. He said is this an effort to make driving more
tortuous and to coerce people out of their cars?
And according to the article, you answered, ``It is a way
to coerce people out of their cars.'' Is that an accurate
reflection of what you said?
Secretary LaHood. Well, first of all, I haven't seen the
letter. I was in Houston yesterday.
Senator Bond. Oh, okay.
Secretary LaHood. And they didn't provide the courtesy to
present the letter to me. So I don't have access to it.
Senator Bond. It was addressed to us, and I thought----
Secretary LaHood. Senator Bond, I have been all over the
country. I have been to 80 cities. I have been to 35 States. I
was in Houston yesterday, which probably has more highways
maybe than any other place in the country. We had a meeting
there around the authorization bill. It is our fourth meeting
that we had.
We have had one in New Orleans. We had one in Minneapolis.
We had one in Los Angeles, and we had one in Houston
yesterday--and nobody has more highways than Texas does.
What I told those folks is what I have told people all over
the country not only at these meetings, but everywhere I have
gone. We have a state-of-the-art interstate system in America.
We have very good roads, and at DOT, we have an obligation to
maintain our roads to make sure they are fixed up. In places in
the country where they need more capacity, we are for that. So
the idea that we are giving up on our road program, or we don't
care about it, or we don't care about our highways is nonsense.
But I can tell you this. Wherever I go, people are sick and
tired of being stuck in cars and in congestion. People want
other alternatives. When we hear that, we feel an obligation,
as the U.S. Department of Transportation, to help create the
kind of opportunities that people want.
In some communities, people want more transit. Now that can
be light rail. It can be a bus. It can be a streetcar.
Streetcars are coming back to America. In some communities, it
can be a walking path or a biking path, and in some
communities, it may be more capacity on an interstate, like
they have done in Miami, where they put another lane right down
the middle of the----
HIGHWAY TRUST FUND
Senator Bond. Mr. Secretary, I am beginning to run short of
time, and I have worked on all those things, and I have made--I
have asked for grants for things like that, and we talked about
the place-based green city in Kansas City. That is something
that came from the bottom up, from the leaders of the community
with the leadership of my good friend Congressman--and we call
him Reverend--Emanuel Cleaver has been very strong on that, and
I have supported that. That comes from the bottom up.
Now a lot of these things, they all want money that most of
it comes out of the Highway Trust Fund. And the Highway Trust
Fund is strangled, and they want to know why we have got all of
these non-motorized uses for highway--for the Highway Trust
Funds when we have a lot of roads, a lot of areas that need
better roads in Missouri.
But the basic question I asked was this is a quote from the
American Spectator, I guess April 19 of this year, talking
about last year. Did you say at the National Press Club it's a
way to coerce people out of their cars?
Secretary LaHood. Yes sir.
[The information follows:]
I believe you are referring to a question that came up at a speech
I gave at the Press Club in early 2009. The moderator asked if this was
an effort to make driving more difficult and to ``coerce people out of
their cars''. I said that it was, and that people already dread getting
stuck in their cars in traffic for hours. My point was that people want
to get out of their cars and it's our role to create those
opportunities for people who want to use streetcars, bicycles, or light
rail.
Senator Bond. That is inaccurate? Well, I think a lot of
people may see that and be very much concerned because----
Secretary LaHood. Well, I have been quoted a lot of places
around the country, Senator. There have been a lot of quotes
that people have used. But I wish--and that is the reason that
I----
Senator Bond. Well, that is all right. I gave you the
opportunity to answer it and say it wasn't--you didn't say
that. So that is good.
Secretary LaHood. No, but look----
Senator Bond. You answered the question.
Secretary LaHood. I have been to 80 cities in 35 States, so
I have been quoted a lot. I have given a lot of speeches, and
what I just told you is the accurate point of view from the
Secretary of Transportation about our priorities. We have a
state-of-the-art interstate system. We are not giving up on it.
If people need more capacity, they will tell us that.
Senator Bond. We are telling you that. We need it in
Missouri----
Secretary LaHood. I know you are telling me that, but I am
also telling you what other people are telling me about other
kinds of things they want in their community.
HIGHWAY TRUST FUND
Senator Bond. Okay. Well, I will tell you something. Your
basic responsibility is the core transportation needs, and we
put money into the Highway Trust Fund, and taking it out for
livability, sustainability, that is greeted with a minimum
amount of high enthusiasm by the people who need the roads. So
I think we all have the same goal. We all have the same goal to
make sure that the communities in States around this country
and areas that are too dispersed even to be considered a
community, where people necessarily live and farm are part of
and thriving parts of every State in the Union.
And what I am concerned about is the focus that we--I know
you like to bike, and I certainly want to respect bikers, but
we need a lot of roads. And we are working on bridges, and we
appreciate your coming to help get us another bridge across the
Mississippi River. I had a battle on the floor with a good
friend of mine who comes from a very dry State who didn't know
why we were spending any highway dollars on a bridge.
I said in your State, you don't need bridges. But if you
live in Missouri and want to get to Illinois, you better have a
bridge or a car with water wings. Now you were there to help us
meet one of the top priorities. That was a priority identified
by the leaders in the community, the people in the community.
And that is what I'm saying. I'm saying these should come
from the bottom up. And to the extent that we pay into the
Highway Trust Fund, we need those dollars and we need more
dollars in the Highway Trust Fund than we are able to put on
the--lead on the target now.
But let me go on to another question. Can you explain the
difference between livability and the FTA's definition of
transit-oriented development?
Secretary LaHood. Well, Senator, let me, first of all, just
say that this bottom-up idea, that is the reason I have been to
35 States and 80 cities. I agree with that. The reason we go
out to these places is so we can listen to people and hear what
they have to say.
In some places in the country, people do want more roads,
and they want more capacity, and we feel at DOT that has to be
part of our priority. I would say just as counter to--I know
the Highway Trust Fund is set up out of the receipts that come
from the gasoline tax. But I will tell you, sir, that when you
all extended the program, twice now, and extended it through
December, the $35 billion, almost $40 billion to pay for that
came from the general fund----
Senator Bond. Right.
Secretary LaHood [continuing]. Which is taxes paid by all
the taxpayers. So, the idea that we are trying to take Highway
Trust Funds and use them for other things than highways--part
of the money came from the general fund, which is paid for by
all the taxpayers, who, in some instances, want something more
than just roads. I just--I have to put that on the record.
Senator Bond. We know that, and we need to have your
recommendations for funding the Highway Trust Fund and also
funding all the transportation needs. And when we get to
electric cars, we are having more and more electric cars. That
is good for the environment. It saves gasoline. It reduces
imports. How are we going to make sure that the electric cars
that are on the roads--and I happen to live in a small
community which is assembling electric cars, and we believe in
them.
But how do you get the trust fund--how do you get the money
into the basic high programs because these little supersized
golf carts need to drive on highways, too? I hope you will have
a recommendation for that.
TRANSIT-ORIENTED DEVELOPMENT
Secretary LaHood. Well, let me answer your question about
FTA and the criteria. We changed the criteria because almost
from the first day that I appeared before any of these
committees on the Senate side, every Senator would ask how come
it takes 10 or 12 years to get a New Starts program?
Because our criteria was very limited, and by expanding the
criteria, we can shorten the period of time within which New
Starts can begin and really give more communities more
opportunities to really begin the kind of New Starts and
transit that they want to do. That is the reason that we really
wanted to change the criteria.
Senator Bond. Well, one of the things that was most
important, we worked very hard on the SAFE-T, and I happened to
be the head of the subcommittee in EPW that worked on it. We
put some streamlining in there to make sure that all of the
relevant questions were asked and answered, but one time only
because the cost of starting has been delayed so much and there
is so much additional cost by all of the regulations,
overlapping regulations that are added without considering
reducing existing limitations.
I hope that you will look at how you can streamline that
to--they are telling me I have got one minute left on the vote.
Oh, well. You win some. You lose some.
But I hope that you will do that, and I am sorry I haven't
had a chance to discuss with you, Mr. Secretary, some of my
concerns about this. We will submit those for the record. And I
guess it would be appropriate to say that the subcommittee will
stand in recess until the return of the chair.
And I thank you very much, gentlemen.
Secretary LaHood. Thank you.
Senator Bond. It is always enlightening. I am sorry,
Secretary Donovan, we will have more of a chance to talk later.
Thanks.
Senator Murray [presiding]. I bet you are glad to see me
back.
Secretary LaHood. We are very glad to see you, Madam Chair.
METROPOLITAN PLANNING ORGANIZATIONS
Senator Murray. I am glad to see you as well. Sorry for the
pause and I appreciate both of you waiting for us. We are back
in session again.
Let me go right back to my questioning, and I wanted to
turn to you, Secretary LaHood. As part of the fiscal year 2011
budget, you have requested $200 million to increase the
capability of metropolitan planning organizations, MPOs. Under
this proposal, will you select those MPOs based on their need
to improve their planning capabilities or their interest in
livability projects?
Secretary LaHood. Well, first of all, we think the MPOs
play a very important role. In your absence, Senator Bond was
talking about how these ideas need to bubble up from the
communities. And we believe in that. And we believe that the
MPOs are a very good mechanism to do that. As I said to Senator
Bond, I have been to 80 cities in 35 States. We have held four
hearings around the country around the idea of transportation
policy tied into with our friends at HUD and EPA.
What we are hearing from people is that we are always going
to need roads, but there are lots of other things that
communities want in terms of transportation. Some communities
want light rail. Some want more buses. Some want to get into
the streetcar business. Some want more walking and biking
paths. So our decisions will be based on what bubbles up from
the MPO.
I think people recognize that we have a pretty good system
of highways and roads around the country, and I think what the
MPOs are going to be hearing about is other opportunities for
transportation that can be tied into affordable housing. So, I
think some of it will be based on what the MPOs have to say,
but I think everybody knows now that livability and
sustainability include not only roads, but they include a lot
of other things, too.
Senator Murray. But when you look at those proposals and
you are evaluating them, are you looking at whether they have
put in place good planning and are capable of doing that? Or
are you looking more at whether it actually is livability?
Secretary LaHood. I think we are probably going to look at
it in terms of what their capacity has been to do the planning
and to do it on a regional basis and incorporate a lot of
different forms of transportation. In some instances, I think
we will try to enhance their ability to do that.
For example, in Houston yesterday, I talked to the mayor,
and she is very concerned about how far a reach her MPO goes
and who should be included and those kind of things. In some
instances, MPOs do need some enhancement, and some more staff
capability to try to incorporate livability not only in an
urban area, but also there are great concerns about rural
transportation and rural areas, and how do you incorporate
their priorities?
So I think we are going to be looking at the capability of
MPOs, what their thinking is, and how we can really enhance
their ability to carry out the agenda that the community wants.
SMALL AND RURAL COMMUNITIES
Senator Murray. Okay. The idea of a sustainable or livable
community sometimes doesn't resonate in some of our smaller or
rural communities. The terms that are associated with concepts
like ``increased density'' and ``congestion pricing'' and
``transit-oriented development'' just don't resonate in small
communities. But small and rural communities do need improved
planning and need to address land-use issues, which is really
actually why this subcommittee included a set-aside within the
regional planning grants to support planning efforts in regions
with populations of less than 500,000.
Secretary Donovan, can you explain how HUD will make sure
that smaller regions benefit from these grants and maybe give
us some examples?
Secretary Donovan. Sure. First of all, I think the set-
aside is very important. In fact, one of the things that we
heard in the feedback that we got and the sessions we have done
around the planning grants is that, in fact, 500,000 may be too
large in some cases. And so, one of the things that we are
looking at is finding ways to ensure we get even to smaller
regions and communities beyond the 500,000.
So I think that was a clear piece of feedback that we heard
and one of the ways that we are looking at right now. I guess
another thing I would say is I think you make a very important
point about not painting livability with too broad a brush
because it does vary so much by community. Secretary LaHood was
just talking about how we need to listen to those local
communities.
One of the things we consistently hear around smaller towns
and rural areas is for seniors in those communities, the
difficulty of linking up housing with transportation options.
And obviously, you are not going to put in a streetcar line or
you are not going to have the same kinds of solutions, but
there are very important transportation solutions like vans or
other kinds of transit options that can be flexible in rural
areas that are available particularly for seniors, and we have
been looking at ways to link up housing to those kinds of
efforts as well.
So there are very specific things like that, examples like
that that we have heard out of these sessions and that we are
incorporating into the criteria that we will have for those
smaller places, as well as implementing the set-aside and
looking at ways to even to get to smaller places. So those are
a few examples.
DATA COLLECTION FOR SMALL COMMUNITIES
Senator Murray. Okay. Secretary LaHood, your proposal seeks
to increase the capacity of MPOs by improving data collection
and computer modeling capabilities. Oftentimes, those things
work better for large communities with really complex
transportation challenges. How will those grants benefit
smaller MPOs and communities, or communities that don't have an
MPO?
Secretary LaHood. Well, we think there needs to be some
reform to MPOs to make sure that in past instances where the
rural communities have not been at the table, that they can be
at the table, that their transportation, housing and other
needs are really being addressed. There are a couple of
programs that Secretary Donovan mentioned in which transit
districts have established contracts with smaller communities
where they do provide transportation services so people can
make a doctor's appointment or go to the grocery store or go to
some other opportunity that they want in a larger city.
We are going to work with MPOs on the idea that there has
to be the kind of outreach that incorporates transportation and
other needs that people have in rural communities. We know that
many people want to retire in the communities where they have
raised their children, where they farmed, or where they have
lived all their lives, and still have access to the larger
metropolitan areas.
So, we have funded in the past some transportation
opportunities for some communities, but we really need to make
sure the MPOs are taking these kinds of considerations into
account when they are putting together their plans.
FUNDING FOR INFRASTRUCTURE
Senator Murray. Okay. Well, most of the transportation
planning is done by the MPOs. Elected officials sit on the
boards of MPOs, but they are still different organizations than
the State or local governments who actually fund transportation
projects.
Secretary LaHood, your planning grants mainly go to those
MPOs, but State and local governments tell us they have huge
backlogs of infrastructure needs, and the Federal Government
needs to find a way to fund more of the transportation
projects. And I think we all agree there is a tremendous need
to invest in our Nation's infrastructure.
So how do you address the concerns that are given to us by
State and local governments who are trying to find a way to
fund their infrastructure needs?
Secretary LaHood. We hope that you all in Congress will
consider the kind of opportunities that were presented to
communities for direct funding through the TIGER program. We
had $1.5 billion. We had $60 billion worth of requests. That
$1.5 billion went directly to communities, directly to transit
districts, bypassed other bureaucracies.
When you get $60 billion worth of requests, which we did,
you get a lot of creative ideas and a lot of good ideas. The
reason there is such a pent-up demand is for the reason that
you just said--because they have been overlooked by either a
State government or a larger metropolitan area. We think this
program worked very well, the way it was intended, to go
directly to very creative ideas in communities that have been
bypassed.
So the MPOs also should incorporate elected officials. If
there is a small town mayor, they ought to have a seat at the
table and be a part of the planning process. I think there will
be some debate about whether they have an equal voice or not,
but the point is they ought to be at the table.
The TIGER program worked well because it went directly to
very creative ideas that have been bypassed for years.
CHALLENGE GRANTS
Senator Murray. All right. Well, as I mentioned in my
opening statement, cities across the country like Bellevue in
my home State have already developed projects like the Bel-Red
Road that really exemplify both of your efforts to build
livable communities. Bellevue has already done its planning and
permitting. So I want to hear from both of you on what you
would tell Bellevue or other cities like that where they would
now look for Federal funding for the next phase of Bel-Red Road
or similar projects that have finished their planning and
permitting processes.
And Secretary Donovan, let me start with you.
Secretary Donovan. And let me just build on the prior
question as well. It is one of the reason we felt that having
the challenge grants that would go directly to local
governments were an important complement. We realized that, I
think as Ray said, the regional component of this, making sure
that the regional organizations, whether it is an MPO. In rural
areas, there are many places where you have regional
organizations that aren't MPOs, but there are other types of
organizations that cut across.
Those are important, but also we have to go directly to
local governments for the kind of planning and implementation
that is important as well. So I think we have a balanced
approach that recognizes you have to work with both kinds of
organizations.
In this case that you are talking about, I think it is the
Bel-Red project that is there, there are a couple of things I
would say on the HUD side, and Secretary LaHood could talk
about the DOT side. Specifically, what we often see with these
kinds of projects is that they create the opportunity for
significant new housing development.
They create demand around the stops on a line like that.
And the challenge grants, as well as the DOT TIGER II planning
grants that we are looking at putting together in one
application or one NOFA process, those could be used, for
example, to do zoning studies and really build out all of the
specifics around the development that would take place around
those transit stops. That is one example of how specifically it
could be used there.
A second would be our CDBG funding, which could be used for
street improvements or a range of supporting investments to the
actual transit line. This is exactly the kind of synergy I was
talking about with the Detroit investment that the TIGER grant
was made there. So those are a couple of examples of the way
what we can do through this sustainability partnership would
support the kind of investment and planning that they have
already done.
Senator Murray. Okay. Secretary LaHood?
Secretary LaHood. We think that the collaboration that we
are doing will enable people to have affordable housing and
affordable transportation, in some communities, it could be a
streetcar line, in other communities, it could be light rail,
in other communities, it will be transit through bus services.
The collaboration enables not only other forms of
transportation besides an automobile, but affordable housing
along the way. We have been around the country and seen where
this has worked very, very well. Where there is good planning,
you can make it happen, and you can actually talk about livable
neighborhoods. Then, really building on the whole livable
community's idea, you create not only affordable housing and
the amenities that go in neighborhoods, but also good
transportation that goes along with it.
TRANSPORTATION INVESTMENTS
Senator Murray. Okay. As both of you know, each State and
local government has a different relationship with their MPO.
In some cases, the plans are a valued part of the process. But
in others, they are largely ignored. How can you be sure that
investments in better planning will actually lead to better
investments in transportation projects?
Secretary LaHood. These MPOs have to be very inclusive.
They have to include the rural areas.
SMALL TOWNS AND MPOs
Senator Murray. So you will be looking at that?
Secretary LaHood. Absolutely, small towns and the
connectivity that can be created around the metropolitan areas.
In the city of Denver, the mayor brought all of the suburban
Denver area in, and collaborated with them on plans. Now they
have one of the really unique transit plans in the country,
which runs six transit lines into their Union Station, where
there will be an Amtrak capability.
So, you create the kind of capacity for people from the
suburban areas, and you take their ideas about the mobility
that they want around the urban area. It has to be very
inclusive, and it has to include rural and suburban in the case
of a city like Denver or even Chicago, which Mayor Daley has
done the same thing and been very inclusive with the suburban
area.
So, you have a couple different systems: you have the metro
system that delivers people from the suburban area into the
city of Chicago, you have the Chicago Transit Authority, where
people can get around there, and you have trains that go to the
airport, and it is connected. This is the kind of thing that
really needs to be done if you are really going to provide the
kind of alternatives that people want.
Senator Murray. Okay.
MEASUREMENT CRITERIA
Secretary Donovan. I would just add to that I think in
addition to the important work we will obviously do in
evaluating these applications, are the plans credible? Is there
real evidence of collaboration, as Secretary LaHood is talking
about, across jurisdictional lines?
I also think it is critical that we set up specific
measurement criteria as a result of the process. Again, we are
not going to impose a single set of criteria up front. That has
to come from the ground up. But it is clear that having impacts
like reducing costs of combined housing and transportation,
reduction in----
Senator Murray. So you will set that out up front, this is
what we expect to see?
Secretary Donovan. Exactly. To say, out of these
applications, we are going to agree to a set of criteria. We
want to see the criteria that you are proposing. We will work
with you on those, and then we will agree to a set of metrics
that will have to be met from the plan.
And that way, everybody knows what success looks like up
front. We are not going to dictate that, but we have to at
least know that there is something to be accountable to.
LIVABILITY
Senator Murray. Well, following on that, what changes would
you expect to see from a community after it has developed this
integrated plan? Do you see the community using Federal housing
programs like CDBG or section 8 in a different way?
Secretary Donovan. I certainly think that we will see lower
costs, and that is in a range of different areas. I would hope
that we would see lower commuting costs, which would also be
able to bring down emissions as well. We would see families
with more income available. And certainly, I would expect to
see lower costs on the HUD side for the taxpayer as well.
What we see with the investments we have made from the
Recovery Act in greening our housing stock, typically we see
those investments pay for themselves in 3 to 5 years. So any
savings that go beyond that, and these are annual savings, is
net savings to the taxpayer. So we certainly expect to see
lower utility costs in the long term that will help on the
budget side with, as you know, what we have seen under the
recession, increasing costs in section 8 and other programs. So
I think this is a significant advantage as well.
Senator Murray. So I am assuming that one of the things you
are looking at in proposals is, at the end of the day, does
that community envision having lower costs as a result of their
planning?
Secretary Donovan. Absolutely. How we measure those costs
may be different in different communities, but in just about
every example that I have seen--urban, rural, different types
of metro areas--we see that.
We see more efficiency in infrastructure investment, and
this is one of the things that I think is so important about
these principles is where we have a community, whether it is
because of brownfields or red tape from HUD is standing in the
way of making investments in places that already have
infrastructure, we should be able to achieve lower
infrastructure costs because we can recycle, if you will,
existing infrastructure that is there, improve it rather than
having to have to continue to sprawl in ways that have negative
impacts on families, but also on infrastructure cost.
Secretary LaHood. Can I just say that as a result of the
work that you have done, Madam Chair, this idea of these kinds
of transportation opportunities coming from the grassroots up,
the whole ferry service, which is very unique to your part of
the world, and there probably aren't any--there are very few
other places around the country like this. But that is an
integral part of the transportation for people to get back and
forth to work, to housing, or to schools or whatever.
Those opportunities to create multimodal forms of
transportation have to come from the ground up, have to come
from the MPOs, and have to come from the idea that not one size
fits all.
CAPACITY-BUILDING FUNDING
Senator Murray. Okay. Let me turn to some questioning about
the roles and responsibilities of the agencies.
In last year's funding we provided to HUD for the
Sustainable Communities Initiative, the administration has
worked to clarify the roles that each agency is going to play
in this partnership. And under those new defined roles, HUD is
going to focus on integrated planning efforts and updating
zoning codes. DOT is going to focus on capacity building. EPA
will focus on administering technical assistance.
Now I understand that those roles were established in part
to avoid duplication of effort among the different agencies,
and that is important. But I am concerned that when we make
those distinctions up front, we just are reinforcing the old
stovepipes.
So, Secretary LaHood, can you provide some more detail on
what you see as DOT's role in providing capacity-building
funding?
Secretary LaHood. Well, I don't know if there has been
another time when three agencies, three big agencies of the
Government have ever sat down at a table together and began
discussions about how we were going to share resources, how we
were going to collaborate. This is an extraordinary
opportunity, I think, for the country as we get into an
authorization bill, as we get into a transportation policy, as
we try to provide affordable housing.
We each have our expertise, and we have our resources. The
point here is, we are willing to share our expertise and some
of our resources if it can be brought to bear on affordable
housing and where people want to live. We know what our role
is, but obviously, we have expertise in transit, and we have
expertise in highways, and we have expertise in other forms of
transportation.
But collaborating with where people want to live and have
affordable housing, has not really ever been done before. So,
we are going to bring our own expertise, and look at a holistic
point of view, not from a sort of a tunnel vision that you
build a road here and then you hope that maybe somebody will
build some houses. Or you see some houses, and how people are
really going to gravitate around these communities.
I think the key point here is that we are really looking at
it from a holistic point of view and coordinating and
collaborating and getting good ideas from people who are in
these communities.
HUD'S ROLE
Senator Murray. Secretary Donovan, you are supposed to
focus on planning, but it seems to me that planning is about
capacity building. So maybe define for me better what you see
your role as.
Secretary Donovan. I think you raise a very important
question, I think, about how we make sure that we are not
duplicating roles because I think that a lot of the work that
we have done to try to define clear roles is to make sure that
we are not replicating expertise that Ray has in his agency, at
HUD that we are not hiring more folks than we need or spending
more than we need to spend in terms of making these happen.
But also recognizing, as you said correctly, that the lines
are not perfectly clear and if we try to make them too hard
that we can end up replicating the silos, and I think it is the
right balance to strike.
Let me maybe use an example in what we are looking at with
the planning grants that we have, our challenge grants. We
looked at this, and we said, look, DOT has $35 million in funds
that could be used for similar purposes, but not exactly the
same. We are going to come together to evaluate, but we will be
awarding these funds depending on the specifics of what that
community needs.
If it really is more of a transportation planning effort
that is specifically around, say, a streetcar line or something
like that or a ferry line or whatever it might be, Secretary
LaHood's team would provide the funding there. We might provide
the funding if it is more specifically, say, an inclusionary
zoning effort or a transit-oriented development around there.
And there may be examples, too, where we would both combine
funding and provide them.
In those cases, we are going to be providing some capacity
building as well because we are going to be working so
extensively with the regional planning organizations, the MPOs,
and others. There is real expertise at Department of
Transportation in doing that. That is why we felt it was
appropriate for them to be the lead.
They being the lead doesn't mean we wouldn't also provide
technical assistance----
Senator Murray. So you don't see that as the sole
responsibility is going to be them?
Secretary Donovan. It is not a sole, but it is making sure
we understand who is leading and who is following. If there is
a more specific issue, for example, around zoning codes, land
use, those issues, we would step in. If there is a brownfields
issue, obviously, EPA would step in and be able to provide the
technical assistance.
But really, the leadership and the greatest experience on
this was in DOT. That is why we felt like on that technical
assistance side, they ought to be leading that effort. I hope
that clarifies it.
BARRIERS TO NEW STARTS PROGRAM
Senator Murray. Yes, it does. And what I hear you saying is
you are using your own expertise, you are sharing it, which is
new, and you are not exclusively limiting yourself to your one
area?
Secretary Donovan. Right. And the biggest risk here, we
don't want to reinvent the wheel----
Senator Murray. Yes.
Secretary Donovan [continuing]. Where we have that
capacity. It is more cost effective, and that means we have to
be in the same room and understand who is leading and who is
following.
COST EFFECTIVENESS
Senator Murray. Okay. All right, very good.
Secretary LaHood, I wanted to talk with you, I was really
happy to see your announcement in January that the Department
is now going to consider other important factors in addition to
cost effectiveness when it is evaluating new transit projects.
Cost effectiveness is obviously important, but I am really
happy to see a more holistic approach that also considers the
potential impacts of congestion and the environment and the
economy because we know all of that is important to the places
where we live and want to make them more vibrant and
sustainable.
That announcement also highlighted the proactive steps that
DOT and HUD can take to remove barriers that stand in the way
of smart development, and I wanted to ask both of you today if
you can tell me what your Departments are doing now to identify
and eliminate obstacles that are within your power to change?
Secretary LaHood. Well, by proposing changes rather than
just using economic development, which is an important,
obviously, criteria. But taking into consideration several
other factors, we think we can speed up opportunities for
funding of New Starts. Really, I think the main obstacle to
really expediting New Start opportunities and providing funding
for it was that we were encumbered by our own guidelines.
Expanding the guidelines and taking other criteria in will
shorten the time within which we can really make these
allocations and approve these projects.
In your absence, I told Senator Bond that the most common
complaint that I heard at the beginning of my tenure was, why
does it take 10 or 12 years to get a New Starts program going?
Well, because of all the bureaucracy, I guess, and all the
hoops that we were making people jump through.
It is not that we are not going to be taking a careful
look. We are going to be doing that, but we are going to be
looking at other criteria, such as livability and
sustainability and the environmental benefits of each. The
economics are important, and they always will be. But there
will be other things that we will look at, and I think it will
speed up the process.
Senator Murray. I am told there is a list available
somewhere in the administration of the barriers that exist. Is
that available? We have been asking for it for over a year now.
Secretary LaHood. Well, it is available as far as I am
concerned. We will see if we can get you a copy of it.
[The information follows:]
The Federal Transit Administration (FTA) has, in the past year,
rigorously examined each stage of the project development of New and
Small Starts and implemented measures in an effort to make the process
move more smoothly and quickly. FTA has revised its internal business
practices and policies as well as the regulatory framework of the New
and Small Starts program to expedite project delivery.
A number of significant improvements have been made. A major change
occurred in January 2010, when Secretary LaHood rescinded the test
established in 2005 requiring New and Small Starts projects to have a
Medium or better Cost-Effectiveness rating to be considered for a
funding recommendation in the President's annual budget. Consideration
for project funding recommendations are now available to projects that
achieve a Medium or better Overall rating, as required by statute.
Cost-Effectiveness no longer trumps all the other statutory evaluation
criteria. Project funding recommendations are now based on the full set
of statutory criteria, including ``livability'' criteria like
environmental benefits and economic development effects. This change is
expected to expedite the project development process because it removes
the need for project sponsors to repeatedly rescope projects to lower
their costs in an effort to meet a Medium cost effectiveness threshold.
To provide better technical support to applicant project sponsors
as they advance toward construction funding, FTA issued new and
clarified guidance. FTA also works with sponsors to develop
``roadmaps,'' mutually developed action time lines for advancing
projects.
FTA revised its organizational structure by creating an office
solely devoted to New and Small Start project development and by
revitalizing its New Starts project development teams that work one-on-
one with applicant sponsors. FTA reduced the number of submittals
required from sponsors. FTA introduced streamlining policies such as
allowing project sponsors to automatically move forward with certain
procurement and early construction activities, using local funds
eligible for later Federal reimbursement upon compliance with
environmental requirements.
Of particular note, FTA has just issued an Advanced Notice of
Proposed Rulemaking (ANPRM) effort to improve and simplify the
methodology used to measure three important criteria used to evaluate
New Starts projects. During this ANPRM effort and subsequent
development of a new regulation, FTA will work with a broad range of
stakeholders in public transportation and livable communities to make
the New and Small Starts regulatory framework not only reflect a wider
range of the benefits of transit, but to be more compatible with
expedited project development timeframes.
With those accomplishments behind us, the FTA also expects to
announce a significant revamping of its project approval processes in
the coming months to further streamline the project decision process
and shorten the period it takes to advance projects to a Federal
funding decision.
Senator Murray. Okay. We would like that, all right.
Secretary Donovan.
Secretary Donovan. I think this is such an important
question, and it goes back a little bit to the issue that was
raised before. Is the Federal Government dictating, absolutely
not. We want to work with local communities.
One of the things we consistently hear from local
communities, and I think in some ways is our first
responsibility, is the Hippocratic Oath, which says ``first, do
no harm,'' and I think that is a principle we need to follow on
this side as well.
One of the great benefits of us coming together in the way
that we have and reaching out to local communities is that we
have heard a lot about where our rules--Ray talked about some
of them, where our rules stand in the way of sustainability at
the local level. In fact, I am not sure which list exactly you
might be referring to. We have a list of 300 comments we have
gotten from our input around the country that is barriers we
ought to try and work on.
Senator Murray. Okay.
Secretary Donovan. We have begun to work on those. Let me
give you just two quick examples. Let me just give you two
quick examples of the things that we have started to work on
already and the things that we have done.
One of the things we have consistently heard is that our
standards, both for ensuring multifamily buildings or
subsidizing them require outdated environmental reviews that
are not state-of-the-art and often limit how much commercial
income a property could have. Well, what are the effects of
that?
We make it way too hard to reinvest in existing communities
that might be close to transit or other things, and we stand in
the way of doing mixed-use development, which is key for
livable communities. So that is one example.
A second, by working with--and we have changed that, by the
way. We have now begun to incorporate state-of-the-art
environmental standards into the work that we do.
A second example is with the Department of Energy. As we
started to look at their weatherization funding and whether it
could be used on multifamily, what we found was the Department
of Energy partners had to go literally family by family and
check their incomes to make sure that they were low income,
even though HUD is already doing that work each and every year
to check their incomes.
It was a big barrier to doing it. So what did we do? We
changed it. We put out an MOU with Secretary Chu that says here
is a list of 1.5 million apartments in HUD programs that are
automatically eligible for weatherization assistance because of
the income level.
Those are just two examples of the kind of barriers that we
have identified already and moved on. And obviously, there is a
significant list of others that we have heard feedback from
that we are beginning to work on as well.
Senator Murray. Okay. If you could share that with the
subcommittee, it would be great. My understanding is there is a
joint list developed by DOT and HUD, and if you could share
that with us and some of the ones that have been removed or
what the challenges are, I would really appreciate it.
Secretary Donovan. Yes.
Secretary LaHood. Can I just list for the record the six
criteria--you know I mentioned cost effectiveness in the past,
but we have mobility improvements, environmental benefits, cost
effectiveness, operating efficiencies, economic development
effects, and public transportation supportive land use. That is
the expansion that I was talking about, in addition to cost
effectiveness.
Senator Murray. Okay, very good.
Well, I appreciate both of your responses to this and look
forward to working with you on that.
Secretary LaHood, I have one other question for you that is
not about sustainable communities, but that is very important
to me. And we will have a number of Senators who will be
submitting questions to both of you.
MEXICAN TRUCKS
And Secretary LaHood, I do need to ask you an important
question. It is one I brought up with you when you were before
our subcommittee before, and that is about the cross-border
trucking issue with Mexico and the devastating effect of
Mexican tariffs on my Washington State farmers now.
Back in March, I urged you and the administration to move
quickly to craft a plan to resume this cross-border trucking in
a way that would address the safety concerns that were raised
during the pilot and the tariffs that are imposed right now.
You told me at that time that a resolution was going to be
forthcoming soon.
You should know and I want you to know that the effects of
that Mexican tariff have been absolutely devastating to the
farmers and families in my home State now. The tariffs are
really undermining our farmers' competitiveness. They are
killing jobs, devastating communities.
In fact, in the 2 months since we last talked and you came
before the subcommittee, the ConAgra potato processing plant
that is located in Prosser, Washington, shut down and
eliminated hundreds of really good-paying jobs. If we don't
address this soon, that is just going to be the first of what
we see. We literally have thousands of jobs at stake and are in
serious jeopardy over this.
I sat down last week with the Mexican ambassador to the
United States in my office because I wanted him to know how
harmful this was, and I told him that I feel very strongly that
our Washington State farmers and our families should not be
punished for a diplomatic dispute they had nothing to do with.
Well, he told me that Mexico's president, as you know, is
planning to be here in a few weeks and is bringing this issue
up with President Obama. So my question to you this morning is
I want to know what you can tell me about the administration's
progress toward fixing this problem, are you prepared to
resolve this issue with Mexico during the state visit later
this month?
CROSS BORDER TRUCKING
Secretary LaHood. Well, since the program was suspended, we
have worked very hard with the White House and other members of
the Cabinet, President Obama's team has worked very hard to put
a proposal together. We will be announcing it very soon, and we
will come to Capitol Hill and brief every Senator that has an
interest in what it says and get feedback.
President Obama's administration's intention is to restart
this program. It is a part of NAFTA. It needs to be restarted.
We believe if it is restarted that these tariffs will be
lifted, which we know have had a devastating effect not only on
the State of Washington, but on many other States across the
country.
We are very close to briefing you and other Senators on the
proposal----
Senator Murray. Is ``very close'' sooner than ``soon?''
Secretary LaHood. It is closer than ``soon.''
Senator Murray. Okay. Well, this is extremely important to
us. So I will stay in touch with you on this.
Secretary LaHood. Yes.
Senator Murray. And we are hoping with the President coming
later this month that we can have a resolution of this and move
on.
Secretary LaHood. Yes. Thank you.
Senator Murray. Okay. Thank you.
ADDITIONAL COMMITTEE QUESTIONS
I would ask at this time that if the subcommittee members
have any additional questions that they submit them for the
record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted to Hon. Shaun Donovan
Questions Submitted by Senator Christopher S. Bond
TRANSPARENCY
Question. Secretary Donovan, as discussed during this and previous
hearings, I am still waiting for real transparency in the current
administration grant making process: in other words, at a minimum,
Congress and the American people need to know the substance of the
implementation of the program and the decisionmaking through the
Internet or the Federal register, including such information as the
basic requirements for receiving a grant, a list of all grants awarded,
to whom and for how much, and what were the requirements that the
grantee met in order to qualify for a grant, how the grant was awarded
(who made the decision, under what basis), what are the minimum
expectations, and a bi-annual review of the status of each grant
including what has been accomplished in contrast to the benchmarks
established for a successful grant, and what benchmarks apply for the
length of the grant, including in all cases the rate of obligation and
the rate of expenditure and whether the expenditures are consistent
with the requirements of the grant. It seems to me that cost shares and
the leveraging of funds also should be readily available on the
Internet so we have access to information about other sources of
Federal, State or private funds that may be used to augment these grant
awards. In brief, what does HUD believe should be the minimum
requirements for transparency? What issues should not be subject to
transparency? What steps is HUD currently taking to ensure that HUD
grant decisionmaking is open and objective with benchmarks on the award
of grants as well as a process to determine whether grants are meeting
program goals and requirements? Is there a political review process at
HUD which allows political decisionmaking once the underlying objective
criteria process is complete?
Answer. For our programs, both NOFAs clearly stated the process
that would be used to evaluate and rate projects.
HUD issued an Advance Notice of Funding Availability and the Office
of Sustainable Housing and Communities organized a public listening
tour with DOT and EPA in advance of the NOFA publication that directly
influenced the structure of the funding notices. Each and every
application for HUD programs is reviewed, evaluated and rated as stated
in the Notice of Funds Availability (NOFA). There is no political
process that is done once the objective process is complete.
Additionally, both grant programs will involve a Logic Model that
has specific performance indicators and there is also $8.5 million
specifically for research and evaluation out of the fiscal year 2010
funding. The $8.5 million is derived by an appropriation of $10 million
less $1.5 million for the Transformation Initiative. The evaluation
funds will be used to see how the grantees are performing. Specific
information can be found on the Sustainable Housing Web site (HUD.gov/
sustainability). There is a list of applicants for both grants and a
summary of those that were funded. The NOFAs contains what criteria
were used and how the grantees applications were weighted.
RELATIONSHIP BETWEEN HUD, EPA AND DOT IN THE SUSTAINABLE HOUSING AND
COMMUNITIES INITIATIVES PROGRAM
Question. HUD has established a new Office of Sustainable Housing
and Communities with an appropriation of $150 million which will be
available for regional planning efforts that integrate housing and
transportation decisions as well as to increase State, regional and
local capacity to incorporate livability, sustainability and social
equity principles into land use and zoning. One hundred million dollars
will be for regional integrated planning initiatives. HUD, EPA and DOT
are directed to work together to bring coherence to the planning
process. HUD is also asking for another $100 million for fiscal year
2011.
This program remains very ambiguous. A dialogue on livability and
sustainability represents a good and healthy debate; however, we must
be careful about not becoming too prescriptive or start to rely too
much on Federal mandates to force certain conclusions. One size does
not fit all--instead we must encourage flexibility and not try to
purchase conclusions through grants. What is the current relationship
between DOT, EPA and HUD as to sustainability/livability? How do the
agencies work together and what are the problems?
Answer. When we formed the Partnership for Sustainable Communities,
the Department of Housing and Urban Development (HUD), the Department
of Transportation (DOT), and the Environmental Protection Agency (EPA)
agreed to collaborate to help communities become economically strong
and environmentally sustainable. Through the Partnership and guided by
six Livability Principles, the three agencies are coordinating
investments and aligning policies to support communities that want to
give Americans more housing choices, make transportation systems more
efficient and reliable, reinforce existing investments, and support
vibrant and healthy neighborhoods that attract businesses. Each agency
is working to incorporate the principles into its funding programs,
policies, and future legislative proposals. The Partnership breaks down
the traditional silos of housing, transportation, and environmental
policy to consider these issues as they exist in the real world--
inextricably connected. This results in better results for communities
and uses taxpayer money more efficiently, because coordinating Federal
investments in infrastructure, facilities, and services meets multiple
economic, environmental, and community objectives with each dollar
spent. As part of this effort, the three agencies have been working to
identify barriers that exist.
Additionally, in June 2010 HUD and DOT joined together to issue a
joint Notice of Funding Availability to support integrated housing and
transportation planning to eligible States, tribal governments,
regions, and local units of government, making up to $75 million
available for these activities.
HUD, EPA AND DOT CONTRIBUTIONS TO SUSTAINABLE HOUSING AND COMMUNITY
INITIATIVE PROGRAM
Question. How much is each agency contributing to this initiative
and what is the relationship of the different funding streams?
Answer. HUD, DOT, and EPA have identified a set of priorities and
roles that guide our individual and joint efforts. Within the
Partnership for Sustainable Communities, each agency will incorporate
the six Livability Principles into their policies and funding programs
to the degree possible and adopt a common set of performance metrics
for use by grantees that helps align and leverage Federal funds. As
laid out in the agencies' joint fiscal year 2011 budget proposal, the
agencies each propose to take the lead in different areas as further
described below.
--HUD will take the lead in funding, evaluating, and building the
capacity for integrated regional and local planning for
sustainable development, and will invest in sustainable housing
and community development efforts.
--DOT will focus on building the capacity of transportation agencies
to integrate their planning and investments into broader plans
and actions that promote sustainable development, and investing
in transportation infrastructure that directly supports
sustainable development and livable communities.
--EPA will provide technical assistance to communities and States to
help them implement sustainable community strategies, and
develop environmental sustainability metrics and practices.
REQUIREMENTS FOR RECEIVING A GRANT
Question. What are the underlying requirements for receiving a
grant under sustainability?
Answer. We respectfully refer you to the Notices of Funding
Availability that were issued on June 24, 2010 for the two Sustainable
Communities grant programs, which describe the program requirements for
each program.
Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.
SUSTAINABILITY VS. LIVABILITY
Question. Why does HUD call this initiative sustainability and DOT
calls it livability?
Answer. DOT uses the term ``livable,'' and by extension
``livability,'' to describe a community where an individual or family
does not need to get in a car in order to do such things as go out to
dinner, go to a movie, or a park. DOT defines livability to mean
building communities that help Americans live the lives they want to
live--whether those communities are urban centers, small towns or rural
areas. Whereas DOT's definition of livability reflects its
transportation mission, HUD uses the terms ``sustainable communities''
and ``sustainability'' in its programs because of HUD's broader
mission.
Although HUD has not defined the term ``sustainability,'' it
defines ``sustainable communities'' to mean ``urban, suburban, and
rural places that successfully integrate housing, land use, economic
and workforce development, transportation, and infrastructure
investments in a manner that empowers jurisdictions to consider the
interdependent challenges of: (1) economic competitiveness and
revitalization; (2) social equity, inclusion, and access to
opportunity; (3) energy use and climate change; and (4) public health
and environmental impact.''
Given its broader mission, which includes promoting such things as
economic competitiveness, social equity, and public health, HUD has
chosen to use what it considers to be a term that has a broader
meaning. We do not see these terms as being in conflict, but rather
represent a coordinated approach between our agencies.
PRIORITIZING FUNDING
Question. Secretary Donovan, as you know, there are significant
deficit issues facing the entire Federal Government. As I discussed, we
are facing a $1.6 trillion deficit this year; a record $1.6 trillion
deficit this year--10.6 of the Nation's GDP--the highest since World
War II, and the future only looks worse, especially for future
generations. The HUD budget is filled with new agenda items, such as
Choice Neighborhood, Sustainable Communities, Transforming Rental
Assistance with its future multi-billion out-year costs and Catalytic
Investment Competition. How will these stack up with HUD's core
programs like HOME, CDBG, public housing and section 8 with the two
previous programs requiring increased additional costs for each fiscal
year just to preserve the housing safety net for low-income families?
There are many other housing and Transportation programs that will also
need funding and are widely supported both in the Congress and
throughout the Nation. How do you plan to prioritize funding?
Answer. HUD's fiscal year 2011 budget request takes into
consideration our core programs such as CDBG, public housing and
section 8 rental assistance. In an effort to not only preserve the
safety net that many of HUD's programs provide to low-income families
and tenants, HUD sought to fundamentally change the way that our
programs work to make them more efficient, serve more families and
communities and preserve affordable rental housing options.
HUD's request compliments our core programs with new initiatives
like Choice Neighborhoods and Sustainable Communities. The Choice
Neighborhoods Initiative modernizes the HOPE VI program so that
neighborhoods and communities can access funding that will improve
existing HUD-assisted housing as well as support other community
development needs. The Sustainable Communities Initiative will help
regions, communities and neighborhoods create comprehensive development
plans that link housing, transportation and job opportunities together.
These programs in addition to HUD's core programs will enable States,
cities and regions to continue to serve low-income families, create
more affordable housing options and spur economic development in a way
that makes sense to that area.
LEVERAGING
Question. Secretary Donovan, HUD is looking at requiring or perhaps
providing points in the grant process for matching or leveraging of
funds or ``in-kind'' matches. The in-kind matching sounds like little
more that crediting an additional staff to a Sustainability program?
How do you plan to measure or identify this match which seems hard to
quantify?
Answer. Matching funds are not required. However, applicants must
provide 20 percent of the requested funding amount in leveraged
resources in the form of cash and/or verified in-kind contributions or
a combination of these sources. Successful applicants must have the
required amount of leverages resources (20 percent) at the time of
signing the cooperative agreement. In-kind contributions may be in the
form of staff time, donated materials, or services. Please see section
VIII.C. for a list of possible in-kind contributions. All assistance
provided to meet this requirement must be identified by their dollar
equivalent based upon accepted salary or regional dollar values. Cash
contributions may come from any combination of local, State, and/or
Federal funds, and/or private and philanthropic combinations dedicated
to the express purposes of the proposal. Applicants will receive credit
for leveraging resources greater than 20 percent of the requested
amount, as described in section V., Rating Factor 4. If an applicant
does not include the minimum 20 percent leveraged resources with its
appropriate supporting documentation, that application will be
considered ineligible. Please see section III.F., Threshold
Requirements.
We respectfully refer you to the Notices of Funding Availability
that were issued on June 24, 2010 for the two Sustainable Communities
grant programs, which describe how leveraging is defined and evaluated
in each program.
Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.
STAFFING
Question. Secretary Donovan, how many staff do you have in the
Office of Sustainable Communities and Housing? How many staff do you
expect to hire and by when? Where will they be located and what will be
there primary functions? How do you plan to perform grant review and
selection? Will you or other political staff be part of the review and
selection process? If yes, in what way?
Answer. As of June 15, 2010, 14 of the allocated 19.5 full-time
employees (FTEs) have joined the Sustainable Housing and Communities
(OSHC). Another FTE will begin work on June 21. The remaining FTEs will
join the Office over the next 2 months. They will be located in HUD
Headquarters in Washington, DC. The primary functions of staff will be
to establish the Office, administer and oversee the two grant programs,
and coordinate with DOT, EPA and other Federal agencies involved in the
Partnership for Sustainable Communities and related energy efficiency
programs.
We respectfully refer you to the Notices of Funding Availability
that were issued on June 24, 2010 for the two Sustainable Communities
grant programs, which describe the grant review process, selection
criteria and rating factors for each program.
Sustainable Communities Regional Planning Grant Program.--http://
www.hud.gov/offices/adm/grants/nofa10/scrpgsec.pdf.
Community Challenge Planning Grant Program.--http://www.hud.gov/
offices/adm/grants/nofa10/huddotnofa.pdf.
As noted in the NOFAs for both grant programs, a senior review team
will be created for each grant program to review qualifying grant
applications that receive qualifying scores from review teams comprised
of career staff from HUD, DOT, EPA and other Federal agencies. For the
Sustainable Communities Regional Planning grants, we also anticipate
using representatives from philanthropy as review team members to
supplement teams with outside expertise on sustainability and regional
planning. The Senior Review teams will review qualifying applications
using the same criteria and rating factors, but will not change project
scores. The Director of the Office of Sustainable Housing and
Communities will recommend selected projects to the Secretary for
recommended funding based on the overall review process as described in
the NOFAs for both grant programs.
SUSTAINABILITY VS LIVABILITY
Question. What is HUD's relationship with DOT and these
Sustainability and Livability programs? One of the primary goals is for
DOT and HUD, and to some extent EPA, to work together on related issues
under each department's jurisdiction to assist jurisdictions and joint
jurisdictions to find common themes and activities that will facilitate
the development of projects and help grow better communities through
the interaction of these agencies.
Neither HUD nor DOT appear to be making any real progress in
growing their relationship and finding ways to join hands on grants and
projects in order to improve the overall quality of life in that
jurisdiction or jurisdictions.
I am especially concerned that HUD calls its programs and
activities ``sustainability'' and DOT calls its programs
``Livability''. Why not a common name and definition? As you know, from
a legal viewpoint, the use of different concepts infers that the
concepts and activities are different. If the departments cannot come
to a common concept for this program, how will you plan to reach a
common working relationship?
Answer. Given its broader mission, which includes promoting such
things as economic competitiveness, social equity, and public health,
HUD has chosen to use what it considers to be a term that has a broader
meaning but is still consistent with the objectives incorporated within
the term of Livability. We do not see these terms as being in conflict,
but rather represent a coordinated approach between our agencies.
Within the joint-NOFA issues by HUD and DOT for Community Challenge/
TIGER 2 Planning grants, both terms are used and described in terms of
eligible activities and a focus on integrated housing and
transportation planning.
OVERSIGHT
Question. Secretary Donovan, it appears that Sustainability funding
could go to a variety of different activities with the planning grants
especially focused on staff and planning costs. These are often
difficult funds to verify as to use. What are your plans to provide
adequate oversight? This is a particularly sensitive issue now where
jurisdictions are often surviving under very tight budgets--how will
you ensure these funds are being used well for the intended purpose and
not merely to maintain existing staffing?
Answer. Grants made under both grant programs will be in the form
of cooperative agreements, providing HUD greater opportunity to provide
oversight in working with grantees. Grantees are required to develop
detailed work plans within 60 days of grant execution and there are
additional bi-monthly reporting requirements, all of which provide HUD
the opportunity to verify use of funds and the on-going progress and
eligibility of grantee activities. In addition, Congress included $10
million in the fiscal year 2010 appropriation for a joint HUD-DOT
research effort that includes a rigorous evaluation of the Sustainable
Communities Regional Planning Grant and Community Challenge Planning
Grant programs.
STAFF TURNOVER
Question. Secretary Donovan, planning grants at the local level are
intended to last 3 years and then hopefully we will reach a project
decision in conjunction with a DOT project. How will jurisdictions
demonstrate they will be able to transition the cost of staff from
Sustainability to other resources?
Answer. You are correct that these are 3-year planning funds. The
work plans and budgets developed by grantees cover work to be performed
only during that timeframe. Applicants will be rated on their capacity
to see these plans through to implementation, which includes plans to
address turnover and a limited time horizon for funding toward staff
costs.
PROJECT COSTS
Question. After the planning stage, how much does HUD estimate the
project stage will cost annually? Rough estimate--how can we be
expected to even fund planning if we have no hard cost estimates for
project costs especially with expected very tight budgets?
Answer. Given the significant variation that we anticipate to see
from each region as it develops its own regional and community plans,
HUD is not able to forecast or estimate a number to answer this
question. We do not advocate a one-size fits all, cookie cutter
approach and these are decisions that will be made at the regional and
local level, not by the Federal Government. Furthermore, the plans that
will be developed will include consideration of Federal, State, local
and private sector finance. As noted in the Livability Principles
included as factors within the grant programs, however, the Partnership
for Sustainable Communities places a strong focus on leveraging
investments and coordinating policies and plans to achieve economic
efficiency. We have seen in some regions such as Salt Lake City, UT
substantial cost savings from avoided infrastructure costs as a result
of integrated regional planning.
CHOICE NEIGHBORHOODS
Question. Secretary Donovan, HUD is proposing to fund Choice
Neighborhoods at $250 million in fiscal year 2011 and Sustainability at
another $150 million in fiscal year 2011. Both programs require the
consultation and integration of program requirements under other
agencies, including primarily DOT and HUD. What is the difference
between these programs and why fund both when the goals are nearly the
same. At a time of tight projects, shouldn't we fund one or the other,
not both?
Answer. HUD's Choice Neighborhoods Initiative focuses on the
redevelopment, replacement and community integration of distressed
public and HUD-assisted housing that cannot be funded through current
annual funding formulas. The goal of the Choice Neighborhoods
initiative is to provide investment targeted to distressed, high-
poverty neighborhoods, to create opportunity in those neighborhoods and
improve quality of life for residents. Choice Neighborhoods builds off
of the HOPE VI program, which focuses on the rehabilitation and
replacement of severely distressed public housing units, but takes it
one step further to include HUD-assisted housing and encourage other
types of community development. Where possible, HUD will coordinate
with the Department of Education's Promise Neighborhoods program, which
aims to improve schools and education-related activities in high
poverty areas, the Department of Justice's Byrne Innovation program,
which has been proposed to replace Weed and Seed, and other Federal
programs to help grantees maximize the impact of Federal investments.
Improvements in housing, access to educational opportunities and other
community amenities will promote economic growth in low-income
neighborhoods and resident self-sufficiency.
The Sustainable Communities Initiative focuses more on holistic
community planning at the metropolitan, regional, or county level, so
that areas can then implement their own community development plans
that take into account access to public transportation, community
amenities and affordable housing. The Sustainable Communities
Initiative is a collaboration with the Department of Transportation and
the Environmental Protection Agency to address land-use, housing and
transportation planning in order to promote more accessible and livable
communities. These integrated plans may serve as a road map for
transportation, infrastructure and housing investments in the future.
Each of these initiatives does focus on better community and
neighborhood planning and development, however, they have two different
goals. The Sustainable Communities Initiative works at a larger
geographic scale to assist local governments in coordinating housing,
transportation and other amenities to reduce transportation costs and
developed mixed-income and mixed-use housing in order to create a more
viable community. The Choice Neighborhoods Initiative focuses more
specifically, in distressed neighborhoods, on redeveloping and
rehabilitating distressed public and/or HUD-assisted housing and
improving economic and other opportunities in those neighborhoods.
Senator Murray. I want to thank both of you for your work
on this issue and for being here today and look forward to
working with you in the coming months and years.
Thank you very much.
SUBCOMMITTEE RECESS
With that, this hearing is recessed. We will reconvene on
May 13 at 9:30 a.m. with testimony from Commissioner Stevens on
fiscal year 2011 budget request for FHA.
[Whereupon, at 10:57 a.m., Thursday, May 6, the
subcommittee was recessed, to reconvene at 9:30 a.m. Thursday,
May 13.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
THURSDAY, MAY 13, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:32 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray and Bond.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Federal Housing Administration
STATEMENT OF HON. DAVID H. STEVENS, COMMISSIONER
ACCOMPANIED BY KENNETH M. DONOHUE, INSPECTOR GENERAL
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Good morning. This subcommittee will come
to order.
This morning we welcome Commissioner Stevens to his first
appearance before our subcommittee as we examine the Federal
Housing Administration and its role in the housing market.
As we sit here today, millions of Americans are out of work
and many more are struggling with unaffordable mortgage
payments, negative home equity, or foreclosure. During the
housing boom, millions of Americans achieved the dream of home
ownership, but for far too many Americans, these dreams were
based on false premises and fueled by investors and lenders
that were chasing profit while ignoring risk. The consequences
of these risky behaviors have rippled through the national and
global economies with mounting foreclosures, a crippled housing
market, and a financial sector in turmoil. We continue to clean
up the mess created by predatory lenders and Wall Street greed.
Fulfilling the same role as it did when it was created
during the Great Depression, the FHA has stepped forward to
help provide liquidity and restore stability to the housing
market. FHA's increased role in the housing market is as
critical as it is daunting. As recently as 2007, when this
subcommittee held the first in a series of annual hearings on
FHA, its share of the market was only 3 percent. Today FHA
represents nearly 30 percent of all new home sales. FHA has
played a critical role supporting the housing market while
private financing has been nearly frozen.
However, FHA has been plagued by longstanding management
challenges, challenges that continue to raise concern about its
ability to manage its outsized role in stabilizing the market.
Commissioner Stevens, you have acknowledged the challenges you
inherited when you took over the agency and have moved quickly
to assess and seek solutions to the problems facing FHA. The
most glaring of these are antiquated information technology
systems and an inadequate workforce, both of which are critical
to equipping the agency to meet the challenges that face us. A
well functioning FHA is vital to maintaining the solvency of
the Mutual Mortgage Insurance Fund and protecting the American
taxpayers from having to pay for risky or fraudulent mortgages.
This subcommittee provided additional resources to help FHA
address its shortcomings both in 2009 and 2010. We provided
funding to help FHA modernize its IT systems and hire
additional staff to better manage and oversee a growing
portfolio.
Equally important to these new tools is fostering a culture
at FHA focused on risk. Commissioner Stevens, one of your first
actions after taking office was to appoint FHA's first chief
risk officer. This position was long overdue and sends an
important signal to lenders, borrowers, and taxpayers that FHA
understands the risks it faces and is working to mitigate them.
I am pleased that the FHA is increasingly using its authority
to investigate lenders that are not playing by the rules. It
must be absolutely clear to lenders engaging in fraudulent and
risky practices that they are not welcome in FHA programs and
will not be supported by taxpayer dollars.
Despite some important progress, FHA still faces
significant challenges. Foreclosures have taken their toll on
FHA's finances, leaving the capital reserve fund below the 2
percent required by Congress. This is a cause for concern since
any significant setbacks in the housing market could result in
additional and possibly unaffordable losses to the fund.
In an effort to strengthen the agency's finances and
protect itself from future risk, HUD has proposed a series of
reforms, including increasing premiums, setting minimum FICO
scores, increasing downpayment requirements for riskier
borrowers, and expanding enforcement authorities. Some of these
changes are already underway but others will require
legislation.
Today I will have questions about these reforms, what they
mean for fulfilling FHA's mission to provide access to
affordable mortgages, as well as how they impact the solvency
of the MMI Fund as we look to the future. It is clear that the
solvency of the MMI Fund and the strength of FHA depend on the
recovery of the housing market. This is evident by CBO's re-
estimate of receipts that FHA is expected to generate in 2011.
Continued uncertainty about the housing market, as well as
lingering doubts about FHA's ability to realistically assess
its risks, resulted in CBO's much more conservative estimate of
$1.9 billion in receipts instead of the $5.8 billion projected
by the administration.
The concerns expressed by CBO are real. Relatively stable
home prices and increasing home sales suggests the market is
stabilizing. Yet, large segments of the housing market remain
fragile and there are looming problems that could undermine the
progress we have made. Over 2 million homes are currently in
foreclosure and that number is expected to grow through 2010.
To date, the administration's Home Affordable Modification
Program has had limited success in stemming the tide of
foreclosures. There have only been 230,000 permanent
modifications made under this program far short of the 3
million to 4 million homeowners expected. And as banks and
servicers determine whether a modification is in their best
interest, many families are left waiting as they face the
agonizing prospect of losing their home. I continue to hear
that servicers are unresponsive to borrowers and in some cases
unwilling to explain why modifications are denied. Americans
trying to get assistance are frustrated and rightfully so. They
have watched as banks have received billions of dollars in
taxpayer assistance and yet many of these same banks are
unwilling to assist homeowners facing foreclosure. This cannot
be tolerated. Servicers must be held accountable. At the very
least, servicers must communicate with those trying to receive
assistance and provide an explanation if borrowers are not
approved.
The success of HAMP was also limited because it failed to
address two of the major problems facing troubled borrowers
today: unemployment and negative equity. I have seen this
tragic combination devastate families firsthand in communities
across my State. In Clark, Snohomish, and Pierce Counties,
communities are struggling with both unemployment and
foreclosure, and unfortunately, home prices have yet to
stabilize in Washington State, so families are continuing to
see the equity of their homes decline. Nearly 16 percent of all
Washington homeowners are under water and they are not alone.
Over 11 million families in the country today are under water
on their mortgages as a result of falling home prices and
growing debt. That represents nearly one out of every four
mortgages.
Just a few months ago, the administration announced plans
to change HAMP in order to address these problems. The plans
include offering increased relief for unemployed borrowers as
they look for work and get back on their feet, as well as
incentives for lenders to permanently write down the principal
of these mortgages instead of addressing interest rates. These
changes were necessary to more effectively address the
foreclosure crisis, but I remain concerned that since this
program is voluntary, it will fail to meet its goal.
So I expect the administration to compel lenders to provide
real aid to families that want to and, with a fair deal, could
stay in their homes. As part of these announcements, FHA's
refinance program is also set to be expanded. This is an
important tool that will assist homeowners to get into a truly
affordable mortgage through incentives and write-downs of both
first and second liens. While these loans will be subject to
FHA underwriting standards, there is still an increased risk
associated with those loans. In order to mitigate the effects
of these riskier loans on the health of FHA's insurance fund,
the administration has set aside $14 billion in TARP funds.
However, many of the details surrounding this proposal are
still being worked out, and I am concerned this could result in
additional losses to the MMI Fund, losses the fund simply
cannot absorb. So I will have questions today about the design
of this program and how we can be assured this program will not
cost American taxpayers anything more than what was already set
aside from the TARP funds.
Amidst all these efforts to modify mortgages so families
can stay in their homes, there are a growing number of
homeowners deciding to strategically default. Many of these
homeowners can afford their mortgage payments, but because of
the severe negative equity, they feel it is in their financial
interests to simply walk away. The potential impact of this on
home values and market stability would be devastating.
There is also the very real concern about what is called
the ``shadow inventory.'' These are houses that are facing
foreclosure or have already been repossessed by the bank but
are not yet on the market. Hopefully the impact of these will
be lessened by an increase in permanent modifications, but if a
large number of homes were to suddenly flood the market, all of
our gains in home values could be erased.
These issues demonstrate how fragile the housing market
remains, but we are beginning to test its stability. The
Federal Reserve ended its purchase of mortgage-backed
securities at the end of March and the homebuyer tax credit
ended last month. Even as we watch with some anxiety as these
supports are withdrawn, it is clear the Government cannot
continue to play the outsized role in the housing market it has
taken on over the past 2 years. The long-term health of the
housing market and the economy depend on the return of the
private market.
It is also clear we must address the future role of Fannie
Mae and Freddie Mac in the housing market. There is no doubt
that the GSEs had a hand in exasperating the housing crisis,
and just as there needs to be consequences for Wall Street,
there must also be consequences for the GSEs. The spigot of
taxpayer dollars flowing into the GSEs cannot stay on
indefinitely. As the administration debates the future of the
GSEs, I like most Americans are growing impatient and my
impatience only increases as the cost to the American taxpayers
grows with no end in site.
The administration must put forward a real plan on how to
reform the GSEs. GSEs currently provide important support to
the housing market, and so this plan has to be thoughtfully
done with care not to reverse the hard-won progress made to
date. The plan must include a clear understanding of how any
changes will impact the housing market and Americans' ability
to buy a home for their families, but it is simply not enough
to say it is complicated and we have a plan soon. It is not
easy. It deserves an honest and open dialogue about its future,
but there needs to be a sense of urgency that has been lacking
so far.
As we try and tackle the complex set of challenges facing
the housing market today, the Federal Government must play a
role in supporting the market but it must also protect the
taxpayers.
Commissioner Stevens, this has been your task since taking
on the FHA, and I want to commend your commitment to addressing
the challenges at FHA while working to ease the recovery of the
housing market. I look forward to hearing your testimony today.
And with that, I turn it over to my partner and ranking
member, Senator Bond, for his opening statement.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Good morning, Madam Chair.
And thank you very much, Commissioner Stevens, for being
with us today.
The chair has outlined the very significant problems that
we have in the whole area of housing, not just in FHA, but I
found her comments on the GSEs very similar to my concerns. We
are in a real problem, and your efforts with FHA and your
guidance on other things may be of help to us in trying to find
a way out.
We are pleased to have on the front row Ken Donohue, the
HUD inspector general. Over the years, he in particular has
been a true partner working with me and others to eradicate
fraud and abuse in the mortgage market. And that is not to
diminish all the hard work both he and his staff perform in
their oversight capacity in the Office of the HUD inspector
general. This may be our last time to have a little gathering
like this, Mr. Donohue, but you have my sincere thanks for
being the uninvited guest at the garden party at so many of
these hearings where you have had to tell the truth, and I am
just lucky that you--we are both lucky that you did not get
tarred and feathered for having warned us in advance of the
problems we are facing. Now that we are seeing those problems,
we can call you a guru, I guess, for having warned of many of
the problems.
Well, with that beginning, Mr. Commissioner, as you know,
FHA's history is marked by longstanding challenges in balancing
the financial risk to FHA which we are seeing is significant
and also very important is the goal of expanding home
ownership, especially for low-income and first-time home
buyers. This is the promise of FHA.
Unfortunately, much of the financial risk in the housing
market, which is a risk to all of us as taxpayers, is
uncertain. It is especially problematic since FHA still faces
many challenges and is still evolving to limit FHA's financial
exposure. Additional reforms we need to discuss, and I am still
concerned the FHA is a powder keg that could explode, leaving
the taxpayers on the hook for another bailout. To borrow the
term from the gulf and the recovery efforts there, I think you
are trying to put a cap on the well. We just hope it is more
successful than the ones they have tried in the Gulf of Mexico.
As recently as 2007--okay, I stretched it a little bit.
Okay, all right. I know when I get that look from the chair she
is saying where is he going with this one. That is off the
record. You can scratch that.
As recently as 2007, FHA accounted for less than 4 percent
of the single family housing market, whereas FHA, as we all
know, now dominates market with a share of about 30 percent of
new mortgages and another 20 percent of refinances. While this
market share may help the Federal oversight of home purchases,
there is nothing predictable in FHA's enhanced role in the
market for assessing the potential for financial risk to the
FHA, the Mutual Mortgage Insurance Fund, the MMIF that has
already been referred to, and those of us as taxpayers.
There is no guarantee the housing market is on the rebound
or that it will not collapse again, even though prospects are
certainly more encouraging than they were a year ago. But with
continuing high unemployment as well as the explosive and
escalating Federal debt, I think the problems have not gotten
much less severe. One of the essential questions we must ask is
are we digging a grave with spending or filling one in.
As recently as late last year, FHA was unable to meet its
statutory requirement of holding capital reserves equal to 2
percent of FHA's insurance in force. I am a born optimist and I
could be optimistic that FHA will be able to meet this
requirement in the future, but there remains wide disagreement
as to the health of FHA's MMIF, with OMB's budget estimate for
FHA receipts in 2011 at some $5.8 billion, as the chair
indicated, which is about $4 billion more generous than the
CBO's re-estimate. This disparity both underlines the
unpredictability in the future of the overall housing market,
as well as uncertainty as the financial risk to FHA's single
family mortgage insurance programs.
The CBO re-estimate also means we will likely have to
tighten our belts with regard to other programs within the
jurisdiction of the THUD appropriations subcommittee. Let me
assure you that others coming in here before us have grand
schemes of how much money they want to spend, but there is a
lot of money in this area we have to spend. So we need to get
an idea of how much we will be called upon to produce.
Nevertheless, Mr. Commissioner, I believe you are moving
FHA in the right direction, as I told you earlier, and
particularly HUD and FHA currently are proposing some
significant changes to shore up the FHA single family mortgage
insurance program by including an increase to annual premiums,
as well as implementing a credit-related risk assessment. That
assessment, as I understand it, would allow borrowers with a
FICO score of 580 and above to make a 3.5 percent downpayment
while home buyers with a FICO score of between 500 and 580
would be required to make a minimum downpayment of 10 percent.
Borrowers with FICO scores below 500 would be ineligible for
FHA mortgage insurance.
Some people are better off renting until they have the
downpayment, and that is a point we have made before. We need
to make sure rental housing is available so that people who
cannot afford to buy a house do not get pushed into buying a
house that they cannot afford. This has been a mistake that has
been endemic in policymakers for the last 20 years in
Washington. I will not cite the list of Members of Congress who
pushed for it. I would say that it has been bipartisan at the
administration level, and for 8 years, I fought the Bush
administration pushing for the American dream no-downpayment
home, which I characterized then, with some little guidance
from the inspector general, as being a recipe for turning the
American dream into the American nightmare.
But I think that the changes you are implementing, while
they continue to promote home ownership, should lower the risk
of financial exposure to the Federal taxpayer and the Federal
Government. I know you have proposed a number of other reforms
designed to protect the integrity of FHA and MMIF, including
reforms to the appraisal process and a proposal to increase net
worth requirements for FHA lenders.
These are controversial, but I am a firm believer that our
financial system will be much stronger if people up and down
the line; borrowers and securitizers and everybody else, has
skin in the game. You look at Canada; they require a lot of
skin in the game. They have a higher percentage of home
ownership and much lower problems than we do because people
there have to have skin in the game, which is the name of
business.
Reforms are important but FHA still faces many challenges.
I am concerned about the programs for default mitigation. We do
not want to leave homeowners behind unless the financial
criteria demand such an approach. If there is no way they can
get out, we need to resolve it as humanely as possible and move
on.
What role is HUD expecting to play over the next few years
with regard to the administration's foreclosure mitigation
policies and how will HUD reforms impact these policy efforts?
And while FHA seems to have been the administration's
initial choice for implementing the administration and
Congress' foreclosure mitigation strategies--congratulations on
getting the ball on that one--much of the emphasis now seems to
have shifted to Treasury and the GSEs, especially Fannie Mae
with their GSE losses buried in TARP payments. It would be very
helpful for us to understand Fannie and Freddie's new role in
the mortgage crisis, especially since the GSEs recently
reported fourth quarter losses, I believe, totaling $18 billion
with an overall request of some $76 billion from Treasury's
unlimited credit line. That is a number that should scare all
of us. Last Monday, Fannie reported losses of another $8.4
billion. That is beginning to mount up to real money.
We cannot fool ourselves that these are just losses from an
old book of business. Instead, Freddie was directed by the
administration to buy back troubled loans from investors and
obviously is taking losses on these mortgages. In fact, this
policy appears to bail out lenders on their risky investment
but it does little to save a home with a risky loan for a
homeowner. And I am asking myself and others why. Why are we
bailing out investors? That to me is a major concern.
As of last month, the opportunities to forestall housing
foreclosures were virtually limited to wishful thinking where
families could receive test funding for foreclosure mitigation
but where the majority of these families would not qualify for
mortgage reform and more permanent mortgage reform options.
Despite the administration's more optimistic view, without
more options by the administration, families are destined to
fall deeper in debt and be unable to meet the needed
qualification for the mortgage reform permanent option. In
other words, it is extremely unlikely that more than a
scintilla of homeowners with looming mortgage foreclosures and
high debts will qualify for the more permanent, long-term
program.
That is bad news. The worse news is the longer we wait, the
worse it will get. I think there are a number of other issues
that have to be investigated somewhere, and I guess that we are
about the only ones interested in it. There have been a number
of articles that claim the affordable housing program under
which Fannie and Freddie were required by law to invest in low-
income housing helped to destabilize the GSEs. More troubling
were Congressman Frank's efforts to tax Fannie's and Freddie's
profits at more than $1 billion annually to benefit favored
nonprofits and I would mention the infamous ACORN. These
legislative requirements I think reinforce losses and undermine
the financial credibility of the GSEs in the financial markets.
Most important, we need to know the administration's
overall plan for revitalizing the housing industry and what
will be the overall menu of tools for addressing the mortgage
default crisis under FHA, the GSEs, Treasury, as well as other
entities.
Finally, not everyone will be eligible for foreclosure
mitigation relief, especially those without permanent
employment or other income. Nevertheless, as we move forward,
it is important that we all understand the contours of the
various foreclosure mitigation programs and the potential
exposure for additional financial losses in the housing
marketplace both to the Federal Government as well as to other
entities, families, and individuals.
I am very interested in how many homeowners we are likely
to help and how many are likely to lose their homes. The answer
is likely to be very troubling, as evidenced by a very negative
report in March by the National Association of Homebuilders in
its index which tracks home purchases.
FHA STAFFING SHORTFALLS
In addition, I am anxious to hear how FHA is addressing its
staffing and expertise shortfalls as well as its plans to
update fully the FHA IT systems. While there have been a number
of comprehensive briefings with congressional staffs on these
issues with FHA recently submitting a comprehensive staffing
plan to Congress on its progress toward hiring an additional
118 FTEs for FHA-related activities, much remains to be done.
The sooner we understand fully HUD's capacity and funding needs
in these areas, the better we will able to respond through
appropriations to the needs of HUD and FHA.
Finally, congratulations on your efforts on the mortgage
and the mortgage insurance fraud. We cannot understate the fact
that enforcement against mortgage fraud remains an area of
overall weakness throughout the Nation, the mortgage market and
likely FHA. I understand, however, FHA is making substantial
progress with reforms in its mortgage programs, especially by
eliminating the participation of bad lenders in the FHA program
that should not be there.
In the predecessor to this subcommittee, the VA, HUD
subcommittee, Senator Mikulski and I learned that these reforms
are likely to be the tip of the iceberg, and now I would urge
HUD and the HUD inspector general to continue to work with the
Department of Justice and Treasury, along with other agencies,
to develop a set of coordinated plans to put predatory lenders
who are criminally at fault in prison. Seeing some of these
people in orange jumpsuits may be one of the best remedial
actions we can take.
Now not only does FHA require larger net worth requirements
for all of its FHA lenders, it is also reviewing lender
enforcement activities. In particular, as your written
testimony indicates, since July 2009, FHA has referred some 365
cases of mortgage fraud or negligence to the Mortgagee Review
Board. These investigations have resulted in the withdrawal of
approval to underwrite FHA loans for some 354 lenders and the
suspension of underwriting authority for another 6 lenders. It
would be helpful to know what additional legislative
authorities may be needed by HUD and the HUD inspector general
to stop mortgage fraud and abuse around the Nation, including
the laws that require jail sentences when some form of mortgage
fraud is the subject of criminal action.
With that pessimistic statement, I look forward with
optimism and enthusiasm to hearing your testimony, Commissioner
Stevens.
Senator Murray. Thank you very much, Senator Bond.
Mr. Stevens, we will turn to you for your opening
statement.
STATEMENT OF HON. DAVID H. STEVENS
Mr. Stevens. Thank you, Chairwoman Murray and Ranking
Member Bond. And thanks for the opportunity to be here to
testify about the Federal Housing Administration's recent
reforms, legislative proposals, contributions to the 2011
budget, and any other subjects that may be of interest.
I also do want to recognize, as you did, Senator, the
involvement of the inspector general. He has been a very
valuable advisor to me coming into this role with all the
challenges we face, and we have had some great opportunities to
partner. I share the zeal for enforcement on fraud and other
issues, not just in the single family area, but the inspector
general has been helpful in advice on multifamily issues and
health care issues as well. So it is a critical partnership
that I value very highly.
I appear before you at a moment when it is clear that the
housing market has made significant progress toward stability.
With the past year's record-low mortgage rates, thanks in large
part to the administration's initiatives, more than 4 million
homeowners have refinanced their mortgages to more affordable
levels. This helped save homeowners more than $7 billion last
year. More than 1 million families are saving an average of
$500 per month through the administration's mortgage
modification program, otherwise known as HAMP. Home equity has
increased on average by more than $13,000 for homeowners in the
last three quarters of 2009, and these efforts have begun to
restore the confidence we need to get the economy moving,
creating 290,000 jobs last month, the largest monthly increase
in 4 years.
FHA
There is also encouraging news relating to foreclosures.
Just this morning, RealityTrac released its latest monthly U.S.
foreclosure report which shows foreclosure activity actually
decreased 9 percent in the month of April. And FHA's second
fiscal quarter numbers show our early delinquencies are better
than expected. The number of loans in early default and claims
has declined 15 percent since December, a strong indicator that
the loan quality is improving.
The FHA has been essential to the improved outlook in the
housing market. In the past 18 months, FHA protected 650,000
families from foreclosure, enabled more than 1.1 million
homeowners to refinance into stable, affordable, fixed-rate
mortgages, and insured 1.4 million new purchase loans, more
than 80 percent of which were first-time home buyers. Indeed,
as access to private capital has contracted in these difficult
times, borrowers and lenders flocked to FHA, and the increased
presence of FHA has help support liquidity in the purchase
market, helping us ride through these difficult times until
private capital returns.
During that time, Fannie and Freddie under conservatorship
have also played an important role in stabilizing the market.
The administration strongly supports the need for reform of the
Government-sponsored enterprises and looks forward to working
with Congress to enact meaningful reform in a manner that does
not disrupt the Federal housing markets, nor increase the cost
and reduce the availability of mortgages for American
households. Toward this goal, we strongly support efforts to
require thoughtful and thorough review, public commentary, and
final study of reform options going forward.
While progress is clearly being made on many fronts, we
continue to see challenges. The administration's strategies to
address the housing crisis has evolved because our challenges
have evolved. On March 26, we announced the FHA refinance
option in conjunction with provisions to the HAMP modification
program to tackle the challenge of underwater borrowers, one of
the biggest threats to our continued recovery. The FHA
refinance option will provide more opportunities for lenders to
restructure loans for families who owe more than their home is
worth due to price declines in their communities. These
adjustments support principal reduction efforts already
underway in the private market and offer incentives to expand
their reach. The vast majority of the burden of writing down
these loans will fall where it belongs, on lenders and
investors, not the taxpayer. It is because FHA is in a stronger
position today that we are able to facilitate these efforts to
help more struggling homeowners.
With FHA's increased role, however, there is risk and
responsibility. In addition to several policy changes that I
have made since taking office on January--or we have made since
January 20 of the year, we proposed several reforms to mitigate
risk and replenish FHA's capital reserves. Some of these steps
require legislative authority.
Thank you for the opportunity to explain these proposals in
more detail in conjunction with the contributions to HUD's
budget for the fiscal year 2011.
These policy changes have three guiding principles that we
are balancing in all of them. First is how does it improve the
capital reserves of FHA. Second, how does it impact the broader
housing market and the recovery? And third, how does it impact
FHA's role to provide opportunities for the underserved?
So first, we are asking Congress for authority to
restructure FHA's mortgage insurance premiums. We would like to
reduce the up-front premium to 100 basis points and increase
the annual premium to 85 or 90 basis points, depending on the
LTV. To more substantially increase FHA's reserves and
facilitate the return of private capital to the mortgage
market, these changes are needed.
We greatly appreciate the cooperation of Congress in
support of these reforms, and on April 27, the House Financial
Services Committee passed H.R. 5072, the FHA Reform Act, on a
voice vote. The bipartisan authorizing bill would enable FHA to
enact these proposed changes, which will further strengthen
FHA's reserves and overall stability. And we look forward to
working with this subcommittee and the Senate Banking Committee
to enact similar legislation in the Senate as quickly as
possible. If these changes are adopted during this current
fiscal year, they would increase the value of the MMI Fund by
approximately $300 million per month, which would replenish
FHA's capital reserve even faster than if the authority was
provided through the annual appropriations process.
Second, FHA is producing a two-step FICO floor for FHA
purchases. Purchase borrowers with FICO scores of 580 and above
would be required to make the minimum 3.5 percent downpayment.
Those with FICO scores between 500 and 579 would be required to
make a 10 percent downpayment. Anything below 500 would not be
allowed.
Some have suggested that FHA raise the minimum requirement
to 5 percent across-the-board as a way to improve loan
performance. As you can see, we have gone further to 10 percent
for low FICO scores to ensure that we are only insuring
responsible loans. We determined, after extensive evaluation,
that an across-the-board 5 percent proposal would be inadequate
to control risk for some borrowers and excessive to control
risk for responsible borrowers, which would adversely impact
the housing market recovery. Increasing minimum downpayments to
5 percent across-the-board would translate to 300,000 fewer
responsible first-time home buyers having access to home
ownership and would have significant negative impacts to the
broad housing market recovery. It would forestall the recovery
of the housing market and potentially lead to a double dip in
home prices by significantly curtailing demand. The policy
changes that FHA has instead proposed in the 2011 budget would
contribute an additional $4.1 billion in additional receipts to
FHA and continue to support the broader housing market
recovery.
The third policy change we are proposing is to reduce
maximum seller concessions from its current 6 percent to 3
percent, which is in line with industry norms.
Our fourth proposal is to increase lender enforcement. In
our 2009 fiscal year actuarial review, the independent actuary
projected more than 71 percent of FHA's losses over the next 5
years will come from loans already on our existing books. That
is why we have renewed our focus on enforcement and
accountability, and since 2009, we have taken more action on
more than six times the number of lenders than FHA had done in
the past decade.
This year, we are requesting an appropriation of $250
million for FHA's reverse mortgage product. The HECM program
provides seniors with a means to access their home equity to
make ends meet and provide funds to pay for long-term health
care and afford necessary home repairs and housing expense. We
have conducted extensive analysis to identify the maximum
policy changes we could perform to reduce risk to the taxpayer
and maintain viability of the program. Without the budget
request, we would be forced to reduce the amount of funds that
would be available to seniors by more than 30 percent, which is
an average of $23,000 to $27,000 in impact. Given the value of
the program in assisting this critical population, HUD has
requested an appropriation to maintain viability of the program
for seniors while we are evaluating a broader range of program
changes that may be necessary to ensure the success of HECM for
the long term.
Finally, as you know, the CBO released its re-estimate of
the 2011 budget, including the review of the FHA changes.
Although the CBO estimate includes a significantly more
conservative assessment of how these new changes made through
the FHA's MMI Fund will perform in the coming years, both CBO
and the administration forecast that with our proposed FHA
changes, such credit activity will result in net receipts to
the Government. We differ, however, on the amount. While the
President's budget forecasts $5.8 billion in receipts, CBO re-
estimated those net savings at $1.9 billion. In addition, CBO
agreed with our forecast that Ginnie Mae and our GI SRI fund
will result in roughly $1 billion more in net receipts.
While recognizing such a difference with CBO complicates
budget resolution development, it is important to note that the
$5.8 billion in receipts forecast in the President's budget
will determine any receipts transferred to FHA's capital
reserves. This will help the fund get back on track to be
capitalized with the statutorily mandated 2 percent of
insurance in force. I would also note that we remain confident
in our forecast.
PREPARED STATEMENTS
I have submitted a more detailed testimony for the record,
but Madam Chairwoman, as you can see, we have proposed a
comprehensive set of reforms to improve loan performance, hold
lenders accountable, and increase revenues to the FHA fund,
while also ensuring that FHA continues to support the overall
recovery of the housing market, continues to serve its mission
of providing home ownership and financial opportunities for
responsible borrowers and seniors. We look forward to working
with Congress closely on all the issues and hope to gain your
support for our budget proposal and legislative requests to
further reduce the risk to the American taxpayer.
And with that, I am happy to answer questions.
[The statements follow:]
Prepared Statement of Hon. David H. Stevens
Chairwoman Murray, Ranking Member Bond, and members of the
subcommittee, thank you for the opportunity to testify today regarding
the Federal Housing Administration's (FHA's) recent reforms,
legislative proposals, and contributions to the HUD fiscal year 2011
budget request. FHA remains focused on providing access to home
ownership, while minimizing the risk to the American taxpayer is of the
utmost importance.
HELPING PREVENT AN ECONOMIC CATASTROPHE
As you know, when this administration took office just over 15
months ago, the economy was hemorrhaging over 700,000 jobs each month,
housing prices were in free fall, residential investment had dropped
over 40 percent in just 18 months, and credit was frozen nearly solid.
Many respected economic observers warned that a second Great Depression
was a real possibility, sparked of course by a crisis in the housing
market. Meanwhile, communities across the country--from central cities
to newly built suburbs to small town rural America--struggled to cope
with neighborhoods devastated by foreclosure, even as their soaring
jobless rates and eroding tax base crippled their ability to respond.
As we move beyond the peak of the recent global financial crisis,
though there is still a long way to go, it is clear that the Nation's
housing market has made significant progress toward stability. Through
the combination of coordinated efforts by Treasury, HUD, and the
Federal Reserve to stabilize the housing market, we are seeing real
signs of optimism.
As measured by the widely referenced FHFA index, home prices have
significantly stabilized since last April. As recently as January 2009
house prices had been projected to decline by as much as 5 percent in
2009 by leading major macro-economic forecasters. This housing
stabilization is all the more surprising since most forecasters had
underestimated the rise in unemployment that has occurred over the past
year.
Homeowner equity started to grow again--increasing by over $1
trillion by the end of December, or $13,000 on average for the Nation's
nearly 75 million homeowners, and helping our economy grow at the
fastest rate in 6 years in the fourth quarter of last year.
And mortgage rates which have been at or near historic lows for
more than a year have spurred a refinancing boom that has helped nearly
4 million borrowers in 2009--freeing up an additional $7 billion
annually, some of which will be spent in local economies and
businesses, generating additional revenues for our Nation's cities,
suburbs, and rural communities.
FHA--FACILITATING RECOVERY
While there remains uncertainty about whether this progress will
continue at this pace going forward, what is not in doubt is that the
FHA has been central to much of this improvement.
Created by President Franklin Roosevelt at a time when two million
construction workers were out of work and housing prices had collapsed,
the FHA was designed to provide affordable home ownership options to
underserved American families and keep our mortgage markets afloat
during tough times.
And by insuring almost 30 percent of purchases and 20 percent of
refinances in the housing market, FHA is certainly doing so today.
We know the critical role first-time home buyers are playing in the
market, including purchasing REO and vacant properties, helping
stabilize home prices and communities alike. More than three-quarters
of FHA's purchase-loan borrowers in 2009 were first-time home buyers,
and nearly one-half of all first-time buyers in the housing market in
the second half of last year used FHA loans.
FHA provides mortgage insurance to help lenders reduce their
exposure to risk of default. This assistance allows lenders to make
capital available to many borrowers who would otherwise have no access
to the safe, affordable financing needed to purchase a home.
As access to private capital has contracted in these difficult
economic times, borrowers and lenders have flocked to FHA and the ready
access it provides to the secondary market through securitization by
Ginnie Mae. The increased presence of FHA and others in the housing
market, including Fannie Mae and Freddie Mac, has helped support
liquidity in the purchase market, helping us ride through these
difficult times until private capital returns to its natural levels.
And with 51 percent of African Americans home buyers and 45 percent
of Hispanic families who purchased homes in 2008 \1\ using FHA
financing, FHA is far and away the leader in helping minorities
purchase homes.
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\1\ Federal Financial Institutions Examination Council (FFIEC) 2008
Home Mortgage Disclosure Act (HMDA) data. Published on December 23,
2009, this is the most recent data available.
---------------------------------------------------------------------------
FHA has stepped up to fulfill its countercyclical role--to
temporarily provide necessary liquidity while also working to bring
private capital back to credit markets. Indeed, the FHA has in the past
year alone helped more than 800,000 homeowners refinance into stable,
affordable fixed-rate mortgages.
At the same time FHA has taken steps to reverse falling home
prices, it has also worked to help families keep their homes, deploying
its loss mitigation tools to assist a half million families at risk of
foreclosure.
Not only is FHA ensuring the availability of financing for
responsible first time home purchasers, it is also helping elderly
homeowners borrow money against the equity of their homes through the
Home Equity Conversion Mortgage (HECM). This program has grown steadily
in recent years, to a volume of $30.2 billion in fiscal year 2009.
And finally, FHA is playing an important role in protecting
homeowners and helping prospective homeowners make informed decisions.
It is providing counseling to homeowners to help them avoid falling
into unsustainable loans. And it is fighting mortgage fraud vigorously
on all fronts, having taken enforcement actions on more than six times
as many lenders since fiscal year 2009 than those over the fiscal year
2000-2008 period combined.
The central role of housing in the U.S. economy demands that
Federal agencies involved in housing policymaking rethink and
restructure programs and policies to support housing as a stable
component of the economy, and not as a vehicle for over-exuberant and
risky investing.
With that in mind, the President's budget for 2011 represents a
careful, calibrated balancing of FHA's three key responsibilities: (1)
providing home ownership opportunities to responsible borrowers, (2)
supporting the housing market during difficult economic times and (3)
ensuring the health of the FHA Mutual Mortgage Insurance (MMI) fund.
With this budget, HUD is projecting that FHA will continue to play
a prominent role in the mortgage market in fiscal year 2011.
Accordingly, it requests a combined mortgage insurance commitment
limitation of $420 billion in fiscal year 2011 for new FHA loan
commitments for the Mutual Mortgage Insurance (MMI) and General and
Special Risk Insurance (GI/SRI) funds. The proposed total includes $400
billion under the MMI Fund, which supports insurance of single family
forward home mortgages and reverse mortgages under HECM; and $20
billion under the GI/SRI Fund, which supports multifamily rental and an
assortment of special purpose insurance programs for hospitals, nursing
homes, and title I lending. The budget requests a direct loan
limitation of $50 million for the MMI fund and $20 million for the GI/
SRI fund to facilitate the sale of HUD-owned properties acquired
through insurance claims to or for use by low- and moderate-income
families.
The budget also includes $88 million for the Housing Counseling
Assistance program, which is the only dedicated source of Federal
funding for the full spectrum of housing counseling services. With
these funds we also plan to continue our work to expand the number of
languages in which counseling is available. In addition, the budget
continues FHA's Mortgage Fraud initiative ($20 million) launched in
fiscal year 2010 as well as implementation of sweeping reforms to the
Real Estate Settlement and Procedures Act (RESPA) which began in
January 2010 and the Secure and Fair Enforcement (SAFE) for Mortgage
Licensing Act beginning in June 2010.
REBUILDING FHA'S CAPITAL RESERVES
As important as FHA is at this moment to our Nation's economy, FHA
has not been immune to the hard times for the housing sector. Late last
year, we reported to Congress that FHA's secondary reserves had fallen
below the required 2 percent level--to 0.53 percent of the total
insurance-in-force. However, when combined with reserves held in the
Financing Account, FHA reported with its fiscal year 2009 actuarial
review that it holds more than 4.5 percent of total insurance-in-force
in reserves--$31 billion set aside specifically to cover losses over
the next 30 years.
As such, the independent actuary concluded that FHA's reserves will
remain positive under all but the most catastrophic economic scenarios.
Further, while its Capital Reserve Account has decreased too
quickly, FHA is not ``the next subprime'' as some have suggested.
Subprime delinquencies are 240 percent higher than FHA's for a
reason--subprime loans had much weaker underwriting standards than FHA.
While others participated in investor-owned markets or were exposed to
exotic mortgages such as option-ARMs and interest-only loans, and while
some tolerated lax underwriting standards, FHA stuck to the basics
during the housing boom: 30-year, fixed rate traditional loan products
with standard underwriting requirements. Unlike subprime lenders, FHA
requires that borrowers demonstrate they can pay their mortgage by
verifying their income and employment.
All of that said, Madam Chairwoman, we've learned from recent
history that the market is fragile, and we have to plan for the
unexpected. That uncertainty is complicated by an organization we
inherited that, to be honest, was simply not properly managing or
monitoring its risk.
Credit and risk controls were antiquated. Enforcement was weak. And
our personnel resources and IT systems were inadequate.
Little of this may have been obvious when FHA's market share was 3
percent as recently as 2006. But when our mortgage markets collapsed,
and home buyers increasingly turned to the FHA for help, the potential
consequences of these lapses in risk management became very clear.
REFORMS TO DATE
From my first day as FHA Commissioner, I began a thorough review of
our loan practices and organizational capacity and gaps. We have
already taken several steps within our existing authority to shore up
the FHA and continue to improve our operations to ensure that taxpayers
are not put at risk.
In addition to steeply increasing lender enforcement, we've
strengthened credit and risk controls--toughening requirements on our
Streamlined Refinance program, made several improvements to the
appraisal process, and published a final rule in the Federal Register
on April 20 to increase net worth requirements for all FHA lenders.
Long overdue, FHA hired its first Chief Risk Officer, Robert Ryan,
to provide the most comprehensive and thorough risk assessment in the
organization's history--and ensure that the assumptions going into our
modeling reflect the most current economic conditions.
In addition, with Congress' help, we are working to increase
staffing and technical capacity and upgrade our technology systems--and
though we still have a long way to go, we delivered FHA's first
comprehensive technology transformation plan to Congress in September.
We have continued to make progress on both fronts. We recently issued
and received several responses to a Request for Information to begin
upgrading our risk and fraud tools and we delivered a FHA Staffing
Report to Congress, which outlines our significant progress toward
hiring the 118 FTEs that we thank Congress for appropriating to FHA in
fiscal year 2010, along with details on an aggressive training and
human capital development plan that includes managerial and technical
skill building training as well as on-the-job mentoring.
Lender Enforcement
Under the Obama administration, FHA has significantly increased its
lender enforcement activities to protect the MMI Fund, consumers, and
address a number of bad actors that were previously not held
accountable.
Since July 1, 2009, the Mortgagee Review Board (MRB) has
investigated 365 cases, resulting in withdrawal of approval for 354
lenders and suspension of an additional 6 lenders. The number of cases
that have been investigated by the MRB since July 2009 are greater than
those investigated in the years 2002-2008 combined.\2\ We take our
responsibility to oversee lenders with the utmost seriousness. I would
also like to emphasize that FHA's intent is to protect the Fund through
a commitment to lender enforcement, but FHA in no way intends to punish
responsible lenders. We are working closely with lenders to identify
best practices and share them among the lending community, proactively
identify problem situations and identify means to improve performance,
to the benefit of lenders, consumers, and the FHA.
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\2\ See Appendix for Historical Data on Mortgagee Review Board
Actions.
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JANUARY POLICY ANNOUNCEMENTS AND LEGISLATIVE REQUESTS
On January 20 of this year, I proposed taking the following steps
to mitigate risk and augment the MMI Fund's capital reserves: increase
the mortgage insurance premium (MIP); impose a firm floor on allowable
credit scores, and further tighten the minimum credit score required
for borrowers with low down payments; reduce the maximum permissible
seller concession to match the industry norm; and implement a series of
significant measures aimed at increasing lender responsibility and
enforcement. Thank you for the opportunity to explain these policies in
more detail.
I would like to be clear that many of these reforms were long
overdue as FHA did not respond effectively to changes in the
marketplace that happened during the housing boom and the subsequent
decline--inaction was and is not an option. In addition to the
Congressional mandate to take action to bring FHA's capital reserves
back up above 2 percent, FHA also has a responsibility to protect
consumers from irresponsible lending practices, protect the taxpayer
from excessive claims on the MMI fund, and facilitate the return of
private capital to the mortgage market. We take these responsibilities
seriously, as evidenced by the series of policies that we have already
enacted and those that we request Congressional authority to enact.
FHA conducted an exhaustive review of loan performance in its
portfolio and a thorough policy development process to ensure that
these policy changes balance three guiding principles: (1) improve FHA
loan performance and capital reserves, (2) continue to support the
broader housing market and recovery, and (3) preserve FHA's role in
providing home ownership opportunities to responsible underserved
borrowers. Each one of our policy changes fulfills these three
priorities. Additionally, FHA evaluated several dozen other policy
options which ultimately were not chosen as they did not strike the
appropriate balance. With these factors, in mind, FHA has proposed a
series of balanced policy proposals that fulfill our responsibility to
the American taxpayer and recognizes the important role that FHA is
currently playing in the recovery of the housing market.
Restructuring FHA Mortgage Insurance Premiums
First, insurance revenues from single family loan guarantees will
grow by increasing the upfront premium to 225 basis points across all
FHA forward product types (purchase, conventional to FHA refinances,
and FHA to FHA refinances). The upfront premium increase was
implemented by mortgagee letter issued on January 21, 2010 and became
fully effective in the market for all applications received on or after
April 5, 2010. I would like to thank Congress for providing FHA with
the flexibility to increase the upfront premium to a maximum of 300
basis points through passage of the Housing and Economic Recovery Act
(HERA) in 2008. While we have not chosen to increase the upfront
premium to the maximum, this flexibility has enabled FHA to take
immediate action to begin rebuilding our capital reserves. Similarly,
we request flexibility in our legislative proposal to increase the
annual premium to 150 basis points although we have not proposed to
increase the annual premium to that level in our fiscal year 2011
budget proposal.
As noted in the proposed budget, while HUD is moving to increase
the upfront premium to 225 basis points we are ultimately planning to
reduce that premium to 100 basis points, offset by a proposed increase
in the annual premium to 85 basis points for loans with loan-to-value
ratios (LTV) up to and including 95 percent and to 90 basis points for
LTVs above 95 percent.
This change to the annual premium will require legislative
authority. We are extremely grateful that the House Financial Services
Committee recently passed H.R. 5072--the FHA Reform Act of 2010--which
provides this authority as well as several other provisions to further
strengthen FHA. This legislation is now awaiting passage by the full
House of Representatives. Given the importance of these issues to FHA's
ability to facilitate our housing recovery while protecting the
taxpayer, we hope that the Senate will similarly move to pass this
legislation as expeditiously as possible.
We believe this new premium structure is sound policy--more in line
with GSE and private mortgage insurers' pricing, and is intended to
facilitate the return of private capital to the mortgage market.\3\
Indeed, if these changes are adopted during the current fiscal year,
the estimated value to the MMI fund would be approximately $300 million
per month, which would replenish FHA's capital reserves even faster
than if this authority was provided through the annual appropriations
process.
---------------------------------------------------------------------------
\3\ See Appendix for detailed information about the effect of
proposed premium rate changes on home buyers.
---------------------------------------------------------------------------
This restructuring of FHA's mortgage insurance premiums will
accomplish two very important goals: (1) increase the homeowner's
equity in each mortgage transaction and reduce the risk to the FHA
fund; and (2) facilitate the return of private capital to the mortgage
market.
Increasing Equity in FHA Loans
As stated earlier, if granted legislative authority to increase the
annual mortgage insurance premium, FHA proposes to reduce the upfront
mortgage insurance premium from 225 basis points to 100 basis points.
Borrowers typically finance the upfront mortgage insurance premium in
their loan balance, increasing the effective loan-to-value and reducing
the amount of equity in their home. The reduction of the upfront
premium will lower the loan balance as well as add an additional 125
basis points of equity to each loan purchase.
Facilitating the Return of Private Capital to the Mortgage
Market
As noted, the elevated role FHA is currently playing in the market
is temporary. In addition to being more equitable for borrowers and
generating more receipts for FHA, this change to the FHA premium
structure brings FHA's pricing more in-line with the private mortgage
insurance industry and enables more robust private competition. In
fact, in response to FHA's announced policy changes, MGIC, the largest
U.S. private mortgage insurer, announced on February 23 that it would
be adopting a new pricing scale.\4\
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\4\ ``MGIC Lowers Rates to Compete With U.S.-Backed Mortgage
Insurers,'' Bloomberg, February 23, 2010.
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Updating Credit Score/Downpayment Guidelines
FHA is also proposing a ``two-step'' FICO floor for FHA purchase
borrowers, which would reduce both the claim rate on new insurance as
well as the loss rate experienced on those claims. Purchase borrowers
with FICO scores of 580 and above would be required to make a minimum
3.5 percent down payment; and those with FICO scores between 500-579
would be required to make a minimum down payment of 10 percent.
Applicants below 500 would be ineligible for insurance. FHA plans to
publish the two-step FICO proposal in the Federal Register soon, with
implementation planned later this fiscal year.
Careful analysis of the existing FHA loan portfolio shows a clear
performance difference between loans that were made below the proposed
FICO/LTV guidelines. Loans below the guidelines are currently more than
four times as likely to be seriously delinquent than loans above the
guidelines. Loans below the guidelines demonstrate a seriously
delinquent rate of 31.1 percent, while loans above the guidelines
currently demonstrate a seriously delinquent rate of 7.6 percent. Of
the total FHA loan portfolio, approximately 6 percent of loans fall
under the proposed guidelines; however, due to improved quality of
recent FHA loans, only 1.5 percent of loans endorsed in fiscal year
2009 would be excluded under the proposed guidelines.
LOAN PERFORMANCE BASED ON PROPOSED UPDATED CREDIT SCORE/DOWNPAYMENT GUIDELINES
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seriously
Proposed Two Step Rule Outstanding 30-Day 60-Day 90-Day In Foreclosure In Bankruptcy Delinquent
Loans (90-Day+)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Excluded................................ 6.2 12.1 6.7 19.9 8.1 3.0 31.1
Still Qualify........................... 93.8 5.0 2.1 4.9 2.0 0.7 7.6
---------------------------------------------------------------------------------------------------------------
Total............................. 100.0 5.5 2.4 5.9 2.4 0.8 9.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: U.S. Department of HUD/FHA; February 2010.
If implemented, in combination with the proposed mortgage insurance
premium structure, the updated FICO/LTV guidelines are projected to
result in the $4.1 billion in additional offsetting FHA receipts as
reflected in the President's budget.
Minimum Downpayment for FHA Loans
Some have suggested that FHA raise the minimum required downpayment
to 5 percent across the board and also remove the option of financing
the upfront insurance premium into the loan balance for all
transactions as a means to increase homeowner equity. We share the goal
of increasing equity in home purchase transactions, but determined
after extensive evaluation that such a proposal would adversely impact
the housing market recovery.
To determine the impact of requiring a minimum 5 percent
downpayment for all transactions, FHA evaluated the loan files of a
large sample of past endorsements to identify the number of borrowers
who had sufficient assets at time of loan application to contribute the
additional 1.5 percent of equity at closing. As illustrated in the
table below, such a policy change would reduce the volume of loans
endorsed by FHA by more than 40 percent, while only contributing $500
million in additional budget receipts. This translates to more than
300,000 fewer first-time home buyers and would have significant
negative impacts on the broader housing market--potentially
forestalling the recovery of the housing market and potentially leading
to a double-dip in housing prices by significantly curtailing demand.
In contrast, the combination of policy changes proposed by FHA in the
fiscal year 2011 budget would contribute an additional $4.1 billion in
additional receipts to FHA while having a much more moderate impact on
the broader housing market.
IMPACT OF FISCAL YEAR 2011 POLICY OPTIONS ON FHA RECEIPTS AND LOAN
VOLUME
[In billions of dollars]
------------------------------------------------------------------------
FHA Loan
Policy Option FHA Receipts Endorsements
------------------------------------------------------------------------
Baseline without policy changes......... 1.7 246
Minimum 5 percent downpayment for all 2.2 139
transactions...........................
Fiscal Year 2011 Budget Proposal with 5.8 223
all proposed policy changes............
------------------------------------------------------------------------
Source: U.S. Department of HUD/FHA; February 2010.
Furthermore, downpayment alone is not the only factor that
influences loan performance. The combination of downpayment and FICO
score is a much better predictor of loan performance than just one of
those components alone. For instance, loans with a loan-to-value (LTV)
above 95 percent and a FICO score above 580 perform better than loans
with LTV below 95 percent and a FICO score below 580, while loans with
a LTV above 95 percent and a FICO score below 580 perform significantly
worse than all other groups, as illustrated below.
FHA SINGLE FAMILY INSURED LOAN CLAIM RATES RELATIVE EXPERIENCE BY LOAN-TO-VALUE AND CREDIT SCORE VALUES \1\
[Ratios of each Combination's Claim Rate to that of the Lowest Risk Cell \2\]
----------------------------------------------------------------------------------------------------------------
Credit Score Ranges \3\
Loan-to-Value Ratio Ranges ---------------------------------------------------------------
500-579 580-619 620-679 680-850
----------------------------------------------------------------------------------------------------------------
Up to 90 percent................................ 2.6 2.5 1.9 1.0
90.1-95 percent................................. 5.9 4.7 3.8 1.7
Above 95 percent................................ 8.2 5.6 3.5 1.5
----------------------------------------------------------------------------------------------------------------
\1\ Based on experience of the fiscal year 2005-fiscal year 2008 insurance cohorts, as of February 28, 2010.
These ratios represent averages of the cell-level ratios in each cohort.
\2\ Claim rates in the first row and last column are the low-risk cell and are represented by a ratio value of
1.00. Values in all other cells of this table are ratios of the cell-level claim rate to the claim rate of the
low-risk group.
\3\ Loan-level scores represent the decision FICO scores used for loan underwriting. This analysis includes all
fully-underwritten loans, purchase and refinance, but excludes streamline refinance loans.
Source: U.S. Department of HUD/FHA; March 2010.
It is for these reasons, rooted in a thorough review of actual FHA
loan performance data, that FHA has decided to reduce the upfront
mortgage insurance premium, which is financed into the loan balance in
the vast majority of transactions, and increase the annual mortgage
insurance premium, which is paid over time and not financed into the
loan balance, which is more aligned with the premium structure of
private mortgage insurance companies.
In particular, we have proposed to permit loans to borrowers with
FICO scores above 580 with a minimum 3.5 percent downpayment and loans
to borrowers with FICO scores between 500 to 579 with a minimum 10
percent downpayment. It is also worth noting that these downpayment
guidelines are minimums and many borrowers do in fact have
significantly lower LTVs--in the fourth quarter of fiscal year 2009,
more than 21 percent of endorsed loans had a LTV lower than 90 percent.
Reducing Seller Concessions
We are also proposing a third policy measure to reduce the maximum
permissible seller concession from its current 6 percent level to 3
percent, which is in line with industry norms. The current level
exposes the FHA to excess risk by creating incentives to inflate
appraised value. As seen in the table below, FHA's experience shows
that loans with high levels of seller concessions are significantly
more likely to go to claim. Experience to-date on loans insured from
fiscal year 2003 to fiscal year 2008 suggests that claim rates on high-
concession loans are 50 percent higher or more than those on low-
concession loans.
FHA SINGLE-FAMILY INSURANCE TO-DATE CLAIM RATE COMPARISON LOW (0-3 PERCENT) VS. HIGH (3.1-6 PERCENT) SELLER
CONCESSIONS \1\
[As of December 31, 2009]
----------------------------------------------------------------------------------------------------------------
Low High
Endorsement Fiscal Year Concessions Concessions Ratio High/low
(percent) (percent)
----------------------------------------------------------------------------------------------------------------
2003............................................................ 6.5 10.7 1.65
2004............................................................ 6.6 11.6 1.76
2005............................................................ 7.2 11.2 1.54
2006............................................................ 6.5 9.5 1.46
2007............................................................ 4.6 6.3 1.36
2008............................................................ 1.0 1.5 1.60
----------------------------------------------------------------------------------------------------------------
\1\ As a percentage of the home price. This analysis is only for home purchase loans.
Source: US Department of Housing and Urban Development, Federal Housing Administration; January 2010.
Increasing Lender Enforcement
In its fiscal year 2009 Actuarial Review, the independent actuary
projected that more than 71 percent of FHA's losses over the next 5
years will come from loans already on our existing books, rather than
from newly insured loans. That's why an important step we can take to
minimize losses to capital reserves in the near term is to step up
enforcement and make lenders more accountable. As mentioned earlier, we
have renewed our focus on enforcement and lender accountability.
Additionally, HUD is seeking Congressional authority to extend
FHA's ability to hold all lenders to the same standard and permit FHA
to recoup losses through required indemnification for loans that were
improperly originated and the error may have impacted the original loan
decision, or in which fraud or misrepresentation were involved. FHA
currently has this authority for loans originated through the Lender
Insured (LI) process, which accounts for 70 percent of FHA loan volume,
but only 29 percent of FHA-approved lenders. FHA is asking that
Congress grant explicit authority to require indemnification for loans
that were improperly originated for the remaining 71 percent of FHA-
approved lenders. FHA is simply requesting that Congress permit FHA to
hold all lenders to the same standard; FHA is not asking for expansion
of authorities beyond those already granted to FHA to oversee lenders
participating in the LI program.
As you can see, we have proposed a comprehensive set of reforms to
improve loan performance, hold lenders accountable, and increase
revenues to the FHA fund, while also ensuring that FHA continues to
support the overall recovery of the housing market and continue to
serve its mission of providing home ownership opportunities for
responsible borrowers. We look forward to working with Congress closely
on all these issues and hope to gain your support for our legislative
requests to further reduce risks to the American taxpayer.
CBO SCORING
On March 5, the Congressional Budget Office released its re-
estimate of the President's 2011 budget. Although the CBO re-estimate
includes a significantly more conservative assessment of how new loans
made through FHA's MMI Fund will perform in coming years, both CBO and
the administration forecast that such credit activity will result in
net receipts to the Government. We differ, however, on the amount.
While the President's budget forecast $5.8 billion in net receipts
resulting primarily from insurance premia and other fees assessed on
FHA loans, CBO re-estimated those receipts at $1.9 billion.
Accordingly, CBO's scoring suggests our policies will cost $3.9 billion
more than we estimated in our submission to you.
While recognizing that such a difference with CBO complicates
budget resolution development, we remain confident that the $5.8
billion in receipts forecast in the President's budget will be realized
and transferred to FHA's Capital Reserve Account. This will help that
fund get back on track to be capitalized with the statutorily mandated
2 percent of insurance in force.
HOME EQUITY CONVERSION MORTGAGE (HECM)
This year, we are requesting an appropriation of $250 million to
support FHA's reverse mortgage product--the Home Equity Conversion
Mortgage, or HECM, program. The HECM program provides seniors with a
means to access their home equity to make ends meet. A survey conducted
by AARP in 2006 showed that the product provided seniors with much-
needed financial relief and was primarily used to pay for long term
healthcare, enable home repairs, and provide piece of mind that housing
expenses could be met.\5\ Another study, conducted by the National
Council on Aging in 2005 showed how the program can help seniors access
in-home healthcare services, an arrangement that allows households to
``age in place'' rather than undergoing disruptive transitions into
nursing homes or other types of public facilities to receive health-
related assistance. Keeping seniors in their homes and communities,
close to familiar support networks, puts less pressure on our Nation's
overextended nursing home infrastructure and the public resources that
support it.
---------------------------------------------------------------------------
\5\ ``Reverse Mortgages: Niche Product or Mainstream Solution?
Report on the 2006 AARP National Survey of Reverse Mortgage Shoppers,''
AARP Public Policy Institute Paper #2007-22. and ``Use Your Home to
Stay at Home,'' National Coalition on the Aging, 2005. http://
www.ncoa.org/news-ncoa-publications/publications/
reversemortgagereportpublications.pdf.
---------------------------------------------------------------------------
We have performed considerable analysis to perform the maximum
policy changes that we could perform to reduce risk to the taxpayer and
maintain the viability of the program, which is why we have proposed
for fiscal year 2011 an increase in the annual mortgage insurance
premium from 0.50 percent to 1.25 percent and a further reduction in
the principal limit factors (PLFs) of approximately 1 to 5 percent
depending on the age of the borrower, on top of the 10 percent
reduction in PLFs that was implemented at the beginning of fiscal year
2010.
Without the budget request, we would be forced to reduce the PLFs
by an additional 21 percent in fiscal year 2011. This would
significantly reduce the amount of funds that would be available to
seniors (more than 30 percent), which is on average a $23,000 to
$27,000 impact.
Any additional steep cut to the PLFs will result in serious decline
in program level as HECMs would no longer be viable to many seniors who
need to access their home equity while staying in their homes. It is
important to note that the need for this type of program is greater now
than it's ever been, due to increasing medical costs, declining
employment/incomes, and less ``savings'' in various types of pension
funds/retirement accounts.
Forecasts suggest that future house prices will grow more slowly
than in the past, and the HECM program costs are very sensitive to
future house prices. As such, we have also assembled a working group
with the Department to see what other kinds of broader program changes
could be made going forward to make the program more viable even under
stressful economic times.
Given the value of this program in assisting this critical
population, HUD has requested an appropriation to maintain the
viability of this option for seniors while we evaluate the range of
broader program changes that may be necessary to ensure the success of
the HECM program into the future.
HUD'S CENTRAL ROLE IN PREVENTING FORECLOSURES AND STABILIZING
NEIGHBORHOODS
On March 26, as part of the administration's continued efforts to
assist homeowners to avoid foreclosure, HUD announced adjustments to
the FHA program, referred to as the FHA refinance option, that will
allow lenders to provide additional refinancing options to those
borrowers who owe more on their home than it is worth if combined with
a principal write down by their lender or mortgage investor. These
adjustments will provide more opportunities for qualifying mortgage
loans to be responsibly restructured and refinanced into FHA loans as
long as the borrower is current on the mortgage and the lender reduces
the amount owed on the original loan by at least 10 percent. We have
also expanded the FHA loan modification program, known as FHA HAMP, to
provide incentives for servicers to modify loans insured by the FHA.
With the issuance of new rules on March 26 (Supplemental Directive 10-
03), TARP-funded incentives will be available to borrowers and
servicers whose loans are modified under the FHA-HAMP guidelines,
corresponding to the pay-for-success HAMP incentive structure. In
addition to efforts to improve the execution of the administration's
Making Home Affordable program, HUD is utilizing long-existing
mechanisms as well as additional authority provided in recently enacted
legislation to aid distressed homeowners and to address community
blight resulting from foreclosed and abandoned properties.
FHA Refinance Option.--To address the challenge of underwater
homeowners, we have made adjustments to Federal Housing Administration
(FHA) programs that will permit lenders to provide additional
refinancing options to homeowners who owe more than their home is worth
because of large falls in home prices in their local markets. These
adjustments will provide more opportunities for qualifying mortgage
loans to be responsibly restructured and refinanced into FHA loans as
long as the borrower is current on the mortgage and the lender reduces
the amount owed on the original loan by at least 10 percent. This
option will be made available in the market in early fall.
The new FHA loan must have a balance less than the current value of
the home, and total mortgage debt for the borrower after the
refinancing, including both first and any other mortgages, cannot be
greater than 115 percent of the current value of the home--giving
homeowners a path to regain equity in their homes and an affordable
monthly payment. By requiring a meaningful principal write-down in
conjunction with the newly refinanced loan, borrowers will have a more
sustainable loan that will be more affordable. Additionally, borrowers
will have an opportunity to refinance into current interest rates,
which remain low.
The new loan must conform to FHA's underwriting requirements, so
performance would likely fall within acceptable risk thresholds for
FHA. That being said, there is reasonable concern that there may be a
performance differential--these loans may perform worse than refinanced
loans that were not previously underwater. As such, loans that conform
to all guidelines of the FHA refinance option will be counted
separately toward lender performance monitoring through Credit Watch--
the system by which FHA suspends or terminates lenders for high default
rates. Originating these loans will not hinder a servicer's ability to
pursue other lines of business, mitigating a potential barrier to
servicers' and investors' willingness to offer principal writedowns to
borrowers.
Of the $14 billion of TARP funds allocated to support the FHA
refinance option, a portion will be made available to provide coverage
for a share of potential losses on these loans, mitigating detrimental
impacts to FHA's capital reserve from facilitating the private sector
to provide principal writedowns to underwater borrowers in conjunction
with these refinancings. No TARP funds will go to the FHA itself for
any loans.
This refinancing will help homeowners by setting monthly payments
at affordable levels and decreasing the mortgage burden for families
owing significantly more than their homes are worth. Keeping more
responsible families in their homes should support the continued
recovery of the housing market.
Established FHA Loss Mitigation Efforts.\6\--Homeowners of FHA-
insured loans have long been eligible for a variety of loss mitigation
programs to help protect them from foreclosure. In 2009, more than
450,000 families were assisted through a variety of methods, including
forbearance, partial claim, loan modification, pre-foreclosure sale,
and deed-in-lieu of foreclosure. In the first quarter of fiscal year
2010, FHA assisted more than 122,000 through these programs. Servicers
of FHA-insured loans are required to notify delinquent homeowners about
the option(s) that are available to help them make their monthly
payments and to implement loss mitigation efforts before they take the
final step of initiating foreclosure proceedings.
---------------------------------------------------------------------------
\6\ See appendix for description of FHA's loss mitigation programs.
---------------------------------------------------------------------------
FHA-Home Affordable Modification Program (FHA-HAMP).--When
initially introduced to the public, the Making Home Affordable program
excluded FHA-insured mortgages and stated that FHA would develop its
own stand alone program. On July 30, HUD announced final rules
implementing the FHA's program--the FHA Home-Affordable Modification
Program (FHA-HAMP)--which is an important complement to MHA and
provides homeowners in default (or at-risk of imminent default) with
greater opportunity to reduce their mortgage payments to a sustainable
level. All servicers were expected to begin offering FHA-HAMP by August
15. This new loss mitigation program was authorized under the ``Helping
Families Save Their Homes Act of 2009,'' signed into law on May 20, and
allows FHA to give qualified FHA-insured borrowers the opportunity to
obtain assistance under terms roughly comparable to borrowers in other
segments of the market, without increasing costs to the taxpayer. This
program allows HUD to permanently reduce a family's monthly mortgage
payment to an affordable level by offering a partial claim of up to 30
percent of the unpaid principal balance. This defers the repayment of
the mortgage principal reduction through an interest-free subordinate
mortgage that is not due until the first mortgage is paid off.
At the initiation of FHA HAMP in August 2009, it was projected to
provide assistance to over 45,000 households over the next 3 years. As
of January 31, 2010, lenders have sent over 15,000 trial plans and over
10,000 borrowers have made at least 1 payment on their trial plan. FHA-
HAMP loan volume is currently above projections for the 3 year
milestone and all but one major lender has borrowers under a trial
program.
Pay for success payments were included for borrowers and servicers
that utilized the conventional HAMP. However, at the time of its
announcement, FHA-HAMP did not include Pay for Success payments for
servicers or mortgagors that made on time payments as it required
regulatory action to be eligible for FHA-insured mortgages. We have
worked diligently to complete this process and FHA issued a mortgagee
letter that enables FHA-HAMP borrowers and servicers to be eligible for
Pay for Success payments. Consequently, it is expected that demand for
FHA-HAMP will increase.
Assistance for Borrowers Facing Imminent Default.--On January 22,
2010, FHA announced that it was exercising authority granted to it by
Congress through the Helping Families Save Their Home Act of 2009 to
use its loss mitigation tools to assist FHA borrowers avoid foreclosure
to include those facing ``imminent default'' as defined by the
Secretary. Homeowners with FHA-insured mortgage loans who are
experiencing financial hardship are now eligible for loss mitigation
assistance before they fall behind on their mortgage payments.
Previously, these homeowners were not eligible for such assistance
until after they had missed payments. Now servicers will have
additional options for those borrowers who seek help before they go
delinquent, which increases the likelihood that the borrower will be
able to retain their home.
The borrower must be able to document the cause of the imminent
default which may include, but is not limited to, one or more of the
following types of hardship:
--A reduction in or loss of income that was supporting the mortgage
loan, e.g., unemployment, reduced job hours, reduced pay, or a
decline in self-employed business earnings. A scheduled
temporary shutdown of the employer, (such as for a scheduled
vacation), would not in and by itself be adequate to support an
imminent default.
--A change in household financial circumstances, e.g., death in
family, serious or chronic illness, permanent or short-term
disability
Improving Servicer Outreach and Performance in Preventing
Foreclosures.--FHA is working closely with lenders and servicers to
improve their outreach and performance in assisting borrowers to avoid
foreclosure. In February 2010, FHA's Office of Single Family Asset
Management and the FHA National Servicing Center began conducting
lender visits to identify best practices that could be shared with the
broader servicing community to improve foreclosure mitigation across
the industry. The visits were conducted with five overall objectives:
(1) better understand in specific detail the process variations that
exist at each lender for providing a delinquent FHA borrower with
options to avoid foreclosure; (2) discuss specific borrower trends the
lenders are experiencing; (3) identify borrower circumstances that
prevent them from being qualified for various foreclosure prevention
options; (4) receive suggestions from the lender that might improve the
process for FHA loss mitigation; and, (5) understand the differences in
default/foreclosure statistics as compared to national averages.
Several findings have already been identified and FHA has begun to
share them with servicers, while continuing to meet with additional
lenders to identify additional best practices that will enable
underperforming servicers to improve their success with preventing
foreclosures. It is worth noting that these best practices are not
limited to the FHA population, and HUD's efforts in this area will
benefit all homeowners, not only those with a FHA-insured mortgage, by
collaborating with the servicer community to improve their foreclosure
prevention activities across the entire industry.
Counseling.--HUD is utilizing its vast network of counselors and
other nonprofits to provide critical assistance to the record number of
homeowners at-risk of foreclosure. It is estimated that more than one-
half of all foreclosures occur without servicers and borrowers ever
engaging in a discussion about potential options to prevent
foreclosure. That is why we have directed HUD-approved counselors to
educate homeowners about their various options, promote the MHA program
in local communities, and assist distressed homeowners with navigating
the system so they can reach servicers and obtain assistance to avoid
foreclosure.
HUD-approved counselors are located across the Nation and provide
distressed homeowners with a wealth of information. The counselors
provide assistance over the phone and in person to individuals seeking
help with understanding the Making Home Affordable program, explain
options available to FHA-insured homeowners, and often work with
borrowers eligible for the administration's refinance or modification
program to compile an intake package for servicers. These services are
provided free of charge by nonprofit housing counseling agencies
working in partnership with the Federal Government and funded in part
by HUD and NeighborWorks America. In addition, HUD, working with
Treasury and the Homeownership Preservation Foundation, encourages
distressed borrowers to contact the Homeowner's HOPE Hotline at 866-
995-HOPE to receive counseling and advice on avoiding foreclosures. The
24 hours a day, 7 days a week hotline utilizes many HUD-approved
counselors who can also help the homeowner reach and resolve issues
with servicers.
Neighborhood Stabilization Program (NSP).--HUD recognizes that
concentrated foreclosures can wreak havoc on once-stable communities
and is working to insure that the nearly $6 billion appropriated by
Congress for NSP plays the intended role of helping to stabilize
housing markets and combat blight through the purchase and
redevelopment of foreclosed and abandoned homes and residential
properties. NSP is starting to generate real results and is emerging as
a vital resource in facilitating the transformation of foreclosed homes
into affordable housing and other useful properties. HUD continues to
monitor program activities, identify strategies that produce real
results, and work to make program modifications that will help ensure
that this funding is deployed quickly, wisely, and effectively.
Additionally, FHA and HUD's Office of Community Planning and
Development have created a working group to assist NSP grantees to
better coordinate the use of NSP funds for the purchase of FHA REO
properties.
FACILITATING OUR RECOVERY, BUT PROTECTING THE TAXPAYER
Madam Chairwoman and Ranking Member Bond, shoring up the FHA won't
solve all our housing challenges--one reason the administration is
working to produce a more balanced, comprehensive national housing
policy that supports home ownership and rental housing alike, providing
people with the options they need to make good choices for their
families.
Further, as important as the FHA is at this moment, I want to
emphasize that the elevated role it is playing is temporary--a bridge
to economic recovery helping to ensure that mortgage financing remains
available until private capital returns.
That means that while we must remain mindful that qualified,
responsible families need the continued ability to purchase a home, the
changes and legislative requests that we have announced are crafted to
ensure FHA steps back to facilitate the return of the private sector as
soon as possible. Until the private sector can step back up, they need
the FHA--and so does our housing market.
So, Madam Chairwoman, while FHA must remain a key source of safe
mortgage financing at a critical moment in our country's history, we
recognize the risks that we face and the challenges of this temporary
role that we play in today's market. And the bottom line is this: the
loans FHA insures must be safe and self-sustaining for the taxpayer
over the long-term. With these reforms the administration is committed
to ensuring that they are today--and into the future. Thank you.
APPENDIX.--MORTGAGEE REVIEW BOARD HISTORICAL ACTIONS BY FISCAL YEAR
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Cases................................ 61 92 14 63 47 38 21 18 95 593 360
Fact Based Cases..................................... 61 92 14 63 47 38 21 18 30 21 40
Recertification Cases................................ ....... ....... ....... ....... ....... ....... ....... ....... 65 572 320
Actions Taken:
Withdrawal of Approval........................... 15 29 2 4 8 10 3 3 27 268 314
Suspension....................................... 1 1 ....... ....... ....... ....... ....... ....... 1 6 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fact Based Cases.--Are those referrals to the board as a result of
a review of the lenders origination, underwriting and/or operations;
primarily the result of the Single Family Quality Assurance Division's
lender monitoring reviews, but the board also receives referrals from
the OIG, Multi-Family, etc.
Recertification Cases.--Are referrals to the MRB from the Office of
Lender Activities Lender Recertification branch and are the result of a
lender's failure to follow our annual renewal process. The addition of
this new category in fiscal year 2008 was primarily due to the new
requirements issued from the decision by HUD's Administrative Law Judge
in fiscal year 2008 that all lenders that do not comply with FHA's
annual renewal requirements must go before the Board for administrative
action.
Withdrawal of Approval.--Terminates the FHA-approval of a lender,
e.g. lenders lose their FHA Approval Status and have no authority to
originate and/or underwrite FHA loans.
Suspension.--Temporarily suspends an FHA-approved lenders ability
to originate and/or underwrite FHA loans. It does not terminate their
FHA Approval, just the ability to use it.
FHA SINGLE FAMILY INSURANCE EFFECT OF PROPOSED PREMIUM RATE CHANGES ON HOME BUYERS WHO MAKE THE MINIMUM CASH
INVESTMENT
----------------------------------------------------------------------------------------------------------------
With Current With Interim Difference With Proposed Difference
Home Price and Mortgage Payment MIP Values 225/55 MIP from Current 100/90 MIP from Current
Components (175/55) Plan Values Plan Values
----------------------------------------------------------------------------------------------------------------
House price--Average Value...... $176,000 $176,000 .............. $176,000 ..............
Base Loan Amount (96.5 percent $169,840 $169,840 .............. $169,840 ..............
LTV)...........................
Loan Amount with UFMIP.......... $172,812 $173,661 $849 $171,538 -$1,274
Interest Rate (percent)......... 5.50 5.50 .............. 5.50 ..............
FHA upfront MIP rate (percent).. 1.75 2.25 .............. 1.00 ..............
FHA annual MIP rate (percent)... 0.55 0.55 .............. 0.90 ..............
Principal and Interest payment.. $981 $986 $5 $ 974 -$7
PITI payment \1\................ $1,355 $1,360 $5 $1,348 -$7
PITI + FHA Mortgage insurance $1,434 $1,439 $5 $1,475 $42
payment (full mortgage payment)
----------------------------------------------------------------------------------------------------------------
\1\ This assumes that property taxes and hazard insurance payments (TI) amount to 2.55 percent of the property
value. This figure is backed into from the difference between the average mortgage payment ratio of FHA-
insured borrowers and the payment without the TI portion. PITI refers to principal, interest, taxes, and
insurance.
Source: U.S. Department of HUD/FHA; February 2010. Average values are for FHA-insured home-purchase borrowers,
October-December 2010.
DESCRIPTION OF HUD'S LOSS MITIGATION PROGRAM TOOLS
Formal Forbearance
A short term repayment plan to postpone, reduce, or suspend payment
due on a loan for a limited and specific time period. A formal
forbearance is normally entered into when a borrower is in imminent
default or early delinquency and can be as simple as a promise-to-pay.
Special Forbearance
A long term repayment plan that may provide for periods of reduced
or suspended payments when there is reasonable likelihood the borrower
can resume normal or increased payments.
Mortgage Modification
Provides a permanent change in the monthly mortgage payment by
capitalizing the accumulated arrears and establishing a new mortgage
term of up to 30 years.
Partial Claim
A promissory note and subordinate mortgage to cover the advance for
delinquent mortgage payments is issued in the name of the Secretary of
HUD. Mortgagee advances funds on behalf of the Mortgagor in the amount
of the Partial Claim advance to reinstate the delinquent loan.
FHA-HAMP
FHA-HAMP allows qualified FHA-insured borrowers to reduce their
monthly mortgage payment to an affordable level by permanently reducing
the payment through the use of a partial claim combined with a loan
modification. The partial claim defers the repayment of a portion of
the mortgage principal through an interest-free subordinate mortgage
that is not due until the first mortgage is paid off. The remaining
balance is then modified through re-amortization and in some cases, an
interest rate reduction.
Pre-foreclosure Sale
Homeowner sells the property at a price less than the outstanding
mortgage balance and HUD pays an insurance claim to the mortgagee for
the resulting loss.
Deed-in-lieu of Foreclosure
Voluntary transfer of property title to the lender or directly to
HUD.
______
Prepared Statement of Kenneth M. Donohue
Chairman Murray, Ranking Member Bond, and members of the
subcommittee, thank you for inviting me to submit written testimony
today. I very much appreciate the opportunity to speak on the
importance of the role of the Federal Housing Administration (FHA) in
addressing the housing crisis currently confronting our Nation. It was
a year ago, when I last testified before you on this topic and much has
transpired during the intervening time as well as some aspects, such as
the stagnancy of the housing market, unfortunately remaining the same.
We have not yet weathered the economic storm but hopefully in its
aftermath we will see some clearer skies and renewed prosperity. This
much is known 1 year later however--the current degree of FHA
predominance in the market still is unparalleled.
BACKGROUND
The mission of the Department of Housing and Urban Development
(HUD) is to increase home ownership, support community development, and
increase access to affordable housing free from discrimination. The FHA
provides mortgage insurance to private lenders that finance single
family homes, multifamily projects, healthcare facilities, loans for
property improvements and manufactured homes. The FHA has provided
mortgage insurance to over 37 million single family homes and over
51,000 multifamily projects since its inception over 75 years ago. Most
of the industry has adhered to the FHA and industry standards in
assisting the American home buyer. Unfortunately, there are those that
seize upon the opportunity for ``greed'' in exploiting the system.
As I stated previously, the last number of years have seen enormous
and damaging developments in the mortgage market: the dissolution of
the subprime and Alt-A loan markets; dramatic drops in housing prices
in most areas of the country; a concomitant rise in default and
foreclosures arguably drawing comparisons to levels of distress
experienced in the Great Depression; financial insecurity in the
mortgage-backed securities markets represented by the Government
takeover of Fannie Mae and Freddie Mac; the collapse of credit markets;
and, as a primary vehicle to address these issues, an urgent reliance
on the FHA to bolster the mortgage market.
The FHA was established under the National Housing Act of 1934 to
improve housing standards and conditions, to provide an adequate home
financing system by insuring mortgages and rental projects, and to
stabilize the mortgage market after the devastation of the Depression
and massive losses of home ownership during that time. It was created
to be the standard setter and the standard bearer for the mortgage and
housing communities in areas such as underwriting standards and ethical
behavior. It had, in my estimation, as history will attest, abdicated
this important role--too often slow on the upside, as we saw during the
recent expansion of FHA in the marketplace, and slow on the downside.
It had a responsibility which frankly it sidestepped.
HISTORICAL PERSPECTIVE
The FHA Commissioner in his testimony a number of weeks ago
regarding policy and legislative reforms, stated that ``. . . many of
these reforms were long overdue as FHA did not respond effectively to
changes in the marketplace that happened during the housing boom and
the subsequent decline.'' In his view ``. . . inaction was and is not
an option.'' I applaud these remarks and state for the record that in
my 8 years as HUD inspector general, this FHA Commissioner has tried to
do more in the last year than I saw in all the previous years combined.
As you know from my many years of testimony before this subcommittee
and others, I agree with his statement that the ``organization they
inherited was simply not properly managing or monitoring its risk.''
Many of his proposals and initiatives are long overdue and meritorious.
That said, we still have much to do and have much uncertainty facing
this Department--some within the control of departmental officials and
some outside their sphere of influence. While it is difficult to
predict the future--as an old adage goes if you have five economists in
the room you'll have eight different forecasts--I am not as optimistic
as some are with where we are today or even going in the near future
but I do agree that the program is attempting to move ahead in a good
direction.
In late 2008, a BusinessWeek article generated a buzz with a
picture of a wolf on the cover representing the pernicious side of the
mortgage industry coming at the FHA. I was quoted at the time
expressing my concern about the groundswell of loans that were going to
come in to the program and the types of loans that might be coming with
the onslaught of new lenders. The FHA disputed my statements. Also
quoted in the article was Michael Ashley, a chief official of a New
York mortgage lending firm who had switched its strategy from subprime
to FHA-backed mortgages. The article reported that in 2008 alone the
company, Lend America, made $1.5 billion in loans and Ashley is quoted
as stating that the ``FHA is a big part of the future.'' I was
perturbed reading his blatant bravado regarding how the FHA had become
his meal ticket because of our open investigation of him and his
company at the time and our previous prosecution against him years
earlier for engaging in similar activity.
When I highlighted this case to you in previous testimony, I was
frustrated with the vulnerabilities in the FHA approval system that
allowed Mr. Ashley to come back into the program and to publicly and
brazenly brag about his participation. I am pleased to state, however,
that we did receive an injunction against Mr. Ashley banning him
permanently from ever engaging in Federal mortgage programs. A local
newspaper reported when we took initial action against him that there
was a Mercedes Benz car in the company parking lot with a license plate
``RefiFHA.'' Hopefully, with the actions that the FHA is trying to put
into place today we will not see such bombastic industry behavior. I am
also pleased that this Commissioner has recently taken action against
over 300 lenders sending a very distinct message to the lending
community. I had highlighted in reports that the Department's Mortgagee
Review Board was broken and I applaud his action to reinvigorate the
process. I do think that this Commissioner is dealing with the
consequences of departmental inactions that took place prior to his
tenure and that our perceptions at the time have, despite the agency's
attempts then at refutation, come to pass in terms of volume, types of
participants, and ramifications to the portfolio.
For example, another recent OIG case underscores large fraud
schemes and losses to the program. At Taylor Bean and Whitaker (TBW)
Mortgage Corporation and Colonial Bank we uncovered various schemes.
Federal search warrants were simultaneously executed at both TBW and
Colonial Bank. The FHA then suspended TBW from participation and the
company filed for bankruptcy. Colonial Bank was taken over by the FDIC
and then sold to BB&T Bank. HUD's suspension was based on TBW failing
to submit an audited financial statement, misrepresenting that there
were no unresolved issues with an independent auditor and its failure
to disclose it was the subject of two examinations into its business
practices. At the point of seizure, TBW was servicing Federally insured
and guaranteed loans with a remaining principal balance of about $26
billion.
Lastly, I had said that, through the multitude of our work in
auditing and investigating many facets of the FHA programs over the
course of many years, we have had, and continue to have, concerns
regarding FHA's systems and infrastructure to adequately perform its
current requirements and services. This was expressed by the OIG to the
FHA through audits and reports regarding a wide spectrum of areas prior
to the current influx of loans coming into the program and prior to the
consideration of the numerous proposals that expanded its reach. Some
of these were long-standing concerns that went back to unresolved
issues highlighted in our work products from as far back as the early
1990s.
THE CURRENT LANDSCAPE
The past 2 years have certainly produced a lot of changes and
initiatives. In response to increasing delinquencies and foreclosures
brought about by the collapsing subprime mortgage market, the FHA
Secure program to refinance existing subprime mortgages, the Housing
and Economic Recovery Act's (HERA) Hope for Homeowners program, the
Helping Families Save Their Homes Act, and The Making Home Affordable
Program were created to assist homeowners.
As we turn to today's environment, the size of the Single-Family
FHA-insured loan portfolio has enlarged by nearly 50 percent from $466
billion in fiscal year 2008 to over $697 billion in fiscal year 2009.
During the month of March of this year, the FHA's total mortgage in
force was over $6.1 million with an aggregate outstanding balance of
over $800 billion. Single-Family market comparisons from the first
quarter of fiscal year 2010 show that FHA's total endorsements have
increased to 74 percent of the insured mortgage market which includes
both home sales and refinances. As recent FHA testimony states, the FHA
program is insuring almost 30 percent of purchases and in the past year
alone helped more than 800,000 homeowners refinance.
I still remain concerned that the FHA will be challenged to handle
its expanded workload or new programs that require the agency to take
on riskier loans than it historically has had in its portfolio. The
surge in FHA loans is overtaxing the current infrastructure, making
careful and comprehensive lender monitoring difficult. Through our
cases we see the consequences of allowing in dubious lenders who then
inflicted the program with problematic loans. In addition, our
experience in prior high FHA volume periods (such as from 1989-1991 and
1997-2001) shows that the program was vulnerable to exploitation by
fraud schemes, most notoriously flipping activities, that undercut the
integrity of the program. I support many of the recent initiatives
proposed by the Secretary and the FHA Commissioner, of which I will
elaborate on later, and a new departmental attitude to address these
issues head on.
We testified last year that the FHA had to contend with a
significant and complex situation in balancing the risks to, and fiscal
vitality of, the Mutual Mortgage Insurance (MMI) Fund against the need
to assure financial mortgage markets continue to function properly
during the downturn of the economy. Among the issues we spoke to were
the adequacy of resources available to FHA for staffing, training,
oversight, and system enhancements. We cited the increasing risks the
FHA faced that needed to be addressed by both its front-end risk
assessment processes as well as its back-end monitoring and corrective
action processes.
Since that time the FHA has undertaken a number of actions to
mitigate some of those risks and protect reserve fund balances. The FHA
has banked on the accuracy of its actuary's projections in assessing
the health of the Fund and has faith that it is experiencing improved
performance with its 2009 and 2010 portfolio. Economists cannot agree
the direction the economy is going and I equally am not a proficient
prognosticator. We are in a fluid and dynamic situation that too often
has not been predictable or readily knowable. The FHA, like the average
American, is still searching for clearer horizons and a break in the
tempest.
The FHA's latest report shows that for last quarter, the net losses
on claims were averaging close to 60 percent which is 13 percent higher
than was predicted. In layman's terms, the FHA is recovering only 42
cents on the dollar (i.e., what it loses after it pays a claim and
sells foreclosed property). In the State of Michigan, however, it is
only recovering 16 cents on the dollar. It currently has approximately
45,600 properties at a value of $5.7 billion in the real estate owned
(REO) inventory. Moreover, its credit subsidy rate is one-half percent
which after adjustment for present value means revenues are a one-half
percent ahead of claims. That's positive but by a very slim margin. The
FHA is taking a number of steps to mitigate losses and keep the fund
positive.
While the FHA's confidence in actuarial numbers brings it hope, we
believe vigilance is needed until the marketplace has stabilized. Like
any American family in today's uncertain times, the FHA will have to
continuously monitor its financial position and take proactive steps to
keep ahead of the curve when reality dictates corrective action is
required. The FHA has a number of tools at its disposal to increase
revenue or to reduce losses accomplished through mechanisms such as
loss mitigation or vigilant oversight of lenders and brokers. Most of
the major actions proposed to mitigate risk will not go into effect
right away so we need to understand that such actions may have little
effect on loans already in the portfolio. With the current state of the
economy, will there be enough new loans to bail out the old loans? This
is where due diligence today is imperative as well as an overall
proactive approach.
FHA POLICY CHANGES TO ADDRESS RISK AND STRENGTHEN FINANCES
New Loan-to-value and Credit Score Requirements
Loans to borrowers with a credit score of less than 580 will
require a minimum 10 percent down payment. Loans to borrowers with a
credit score of 580 or above will require the traditional minimum of
3.5 percent down payment. This change, if approved, will go into effect
this summer after going through the Federal Register notice and comment
process.
We are in general agreement with the move to strengthen down
payment requirements. We, however, believe there are some caveats.
While this requires borrowers with the riskiest loans (below 580) to
put more, to quote an earlier comment by Senator Bond, ``skin in the
game,'' this will more than likely have minimal impact on the Fund in
terms of bringing in additional premiums. Loans for borrowers with
credit scores below 580 are less than 1 percent of new activity. So
these additional requirements may likely end most activity in this
category. It might, however, reduce future claims but the volume of
these loans will not bring in a significant amount of premium payments
to cover current losses. The chart below from LPS Applied Analytics
shows the proportion of FICO credit scores over the last 23 months.
As seen in the lowest color segment of the bar chart for FICO
scores below 620, the percentage of loans that would be potentially
subject to the new 10 percent down payment requirement has steadily
decreased to less than 1 percent. This is both good news and bad news
because it shows that from a financial perspective the FHA's riskiest
business is falling off but from a social perspective the potential
homeowners that it traditionally has served may be priced out of the
market. Importantly, we are also seeing defaults and claims affecting
higher credit score loan holders and there are some vocal advocates who
think a higher down payment may be required for a wider spectrum of
credit score categories. Further, the 580 credit score threshold is
well into what is traditionally considered subprime territory in the
conventional marketplace with 620 being the usual demarcation for
subprime. We believe that to have a higher down payment requirement at
the 620 level may have a more meaningful impact due to the larger
volume of loans at this level.
In assessing the most recent year's book of business, it needs to
be understood that underwriting is like a three-legged stool. FICO
scores are only one leg--the other two legs are the value of the
property and the future employment of the borrower. While it is true
that FICO scores have risen from an average of 626 in fiscal year 2008
to 695 in the first quarter of fiscal year 2010, we should also note
that the loan-to-value ratios have also gone up during this timeframe.
In FHA's recent Quarterly Report, the loan-to-value ratio for the 96-98
percent category had risen from 48.8 percent of the loans written in
the first quarter of fiscal year 2009 to 69.1 percent in the first
quarter of fiscal year 2010. This may mean that any gains realized from
reduced risk for having higher FICO scores may be offset by the
increased risk of higher loan-to-value ratios. In other words,
borrowers are putting less of a down payment into purchased homes. As
we said in previous testimony opposing seller-funded down payment
assistance plans, less ``skin in the game'' often means that there are
increased chances for the owner to walk away if delinquencies occur.
Further, any benefit from the increase in the average FICO scores may
be tempered by a commensurate rise in claims generated from those
loans.
So while the FHA believes that they may have an improved book of
business in terms of increased volume and FICO scores, the jury is
still out if the additional cash generated by the new book of business
will be sufficient to cover the unknown amount of losses in the short
term or if the premise that high FICO scores are equivalent to soundly
underwritten loans still holds. Economic instability is creating
counter-intuitive trends in consumer behavior.
Up-front Mortgage Insurance Premium Increased to 2.25 Percent
The FHA is pursuing legislative authority to increase the statutory
cap on the annual Mortgage Insurance premium. OIG supports this change
in the premium structure. Any business needs to be able to adjust its
pricing in order to continue to operate efficiently. The FHA needs the
ability to adjust premium prices without requiring legislative action
each time that may impede its ability to react quickly. The FHA will
need, however, to ensure that a process is developed to link future
insurance premium changes to actuarial forecasts.
Reduce Allowable Seller Concessions From 6 Percent to 3 Percent
The FHA is seeking an action to conform to industry standards and
to reduce potential value inflation. It is anticipated to go into
effect this summer after appropriate notice and comment time. The OIG
supports this measure. We believe that the FHA needs to be consistent
with industry practices so as to avoid pressure to raise prices to
cover seller concessions.
Increase Enforcement Efforts to Ensure Compliance With FHA Guidelines
and Standards
The FHA: (a) Will use a scorecard system to evaluate and report
lender performance to compliment current information available from
Neighborhood Watch data (this was implemented in Mortgagee Letter 2010-
03); (b) will enforce indemnification provisions through section 256 of
the National Housing Act and cover those loans found to contain
material errors in underwriting (this is anticipated to go into effect
this summer after posting and comment periods); (c) asked for
legislation to apply section 256 to require indemnification provisions
for all direct endorsement lenders in order that all approved
mortgagees assume liability for the loans originated and underwritten
by them; and (d) will move to increase capital requirements from $250
thousand to $1 million in 1 year, and then to $2.5 million after the
final rule is published, and hold the lender responsible for the final
underwriting.
We support the FHA's decision to enhance risk management by, among
other things, hiring a senior level risk management officer. Its
decision to use a scorecard system will certainly assist it in
uncovering problem companies. We note that the FHA has returned to
conducting a 5 percent sample of lender endorsement reviews by its
contractors. The number had slipped to 2 percent last year because it
could not keep up with the volume. We also support FHA's request for
legislative authority to create separate areas for the purpose of
review and termination under the Credit Watch Initiative.
The FHA's intent to strengthen enforcement of its indemnification
provisions in section 256 is important to an overall enhanced
enforcement strategy. OIG reviews of indemnifications found recovery
was hampered by firms going out of business, thereby rendering some
indemnifications worthless. In a recent OIG Inspection and Evaluation
report, we found that the FHA serviced $187.5 million of
indemnification and civil money penalty debt due from lenders for the
period fiscal year 2005 through fiscal year 2008. The FHA collected
$124.4 million or a 66 percent recovery rate (a collection rate that
compares favorably with that of the Veterans Administration's Housing-
Guaranteed and Insured Loans program and private collection agencies),
however $8.7 million was uncollectable primarily the result of the
debtor lender going out of business.
--OIG Concerns Regarding Anti-flipping Waiver.--One change the FHA
recently instituted this year was the decision to waive its
anti-flipping provisions for 1 year. This action was not vetted
with us through normal departmental clearances and we,
unfortunately, had no opportunity to opine on the matter. While
we understand the underlying reasoning to turnaround foreclosed
properties in a quicker manner, we believe its imposition may
open a new round of fraud-related flipping abuse and we would
have liked to express our concerns or to press for more
compensating controls.
Current housing market conditions have created a bulge in HUD's
real estate owned inventories that provide a ready source of
properties for potential flipping schemes. To eliminate
inventories, lenders and the FHA's own contractors often
significantly discount the sales price from acquisition costs
and appraisal values in a more normal housing market. The
discounts provide the necessary margin for flipping
opportunities, legitimate as well as illegitimate.
Historically, the illegitimate flip involved a conspiracy
between investors, loan officers and appraisers, allowing for
the financing of the re-sale to be done at an inflated value,
justified by market conditions of increasing housing values.
When the anti-flipping rule had been originally promulgated, the
FHA, primarily at the request of the OIG, sought to protect the
MMI Fund from this vulnerability by prohibiting financing of
property re-sales until 90 days had elapsed after the purchaser
acquired the property. This waiting period effectively
protected the FHA from flip abuses such as ``double escrows''
and same day closings. The FHA states the waiver is designed to
help reduce REO inventories. There is, however, a real risk
that the waiver could serve as an invitation to investors
willing to engage in abusive schemes or to try to skirt the
rules. Indeed, we almost immediately saw discussions on the
Internet among investors. Moreover, with the increase in the
FHA's loan limits to greater levels, high-end, as well as
traditionally low-end, properties could be targeted by the
unscrupulous.
While an attempt was made by the FHA to mitigate improper
activity by requiring an explanation of any price increase over
20 percent, as a law enforcement agency we know that it can be
just as easy to fabricate documents for this as it can be to
inflate the appraisal itself. We see little to deter the wide-
scale flipping that occurred before the practice was stopped by
a 90 day waiting period. While we recognize that keeping the
status quo may delay closing, we believe that it is preferable
to the alternative risk that such an action may unleash. A
safer approach may be to limit the wavier to GSE-held
properties or to those sold through State and local
rehabilitation programs such as the Neighborhood Stabilization
Program where closer scrutiny of rehabilitation costs can be
made.
--Enhanced Up-front Reviews.--We believe it is important that the FHA
become more aggressive in the areas of monitoring and detection
and analysis of red flags. We endorse FHA's Mortgage Fraud
Initiative which seeks to use fraud detection technology to
identify loans likely to contain fraudulent information. We
have stated previously our belief that FHA needs to take
advantage of commercial off-the-shelf pre-screening loan
software. We have also long voiced our concerns that the
process to become an FHA approved lender and correspondent was
not rigorous enough to keep out the known bad actors. When the
conventional markets started to decline, we expressed our
concern that the same individuals and companies that
precipitated the conventional market collapse would seek
shelter in the FHA markets and use similar tactics that led to
poor underwriting. We believe that this did in fact occur.
In the case which I referred to earlier in this testimony
regarding the New York company Lend America, Michael Ashley,
who carefully did not place himself as a principal in the firm
but as a business strategist, had had a long history of legal
troubles (including with the HUD OIG) and was working as a top
manager for one of the most rapidly growing lenders in the
FHA's portfolio. Court filings show that Ashley fostered an
environment that encouraged sales staff to originate FHA loans
even when the borrowers were not eligible. Sales staff could
make 10 times the commission on FHA loans than on standard
mortgages and almost 4 times the commission than on a subprime
loan.
Mr. Ashley pled guilty in 1996 in Federal court to two counts of
wire fraud relating to a mortgage scam at another company his
family once owned. He was sentenced to 5 years probation and
ordered to pay a fine and his father was sentenced to nearly 4
years in prison. He appealed his suspension and debarment with
HUD which later was reduced to a ban that expired in 1998. Once
served, the FHA allowed him to resume operations. He then went
to another firm that again HUD issued a notice of violation.
After leaving that firm, he became affiliated with the most
recent company. Although this case is still open, it is clear
to say that the Federal court would not have permanently banned
Mr. Ashley if it were not concerned about the current
operations of his affiliated company. The President of the
company was also debarred at the same time but for a specific
period of time--in this case 18 months.
This again calls for the establishment of a new mindset at the
FHA to know your participants and not just the entity. It can
be a very arduous process for the OIG acting as the
investigators for the Department of Justice to work to get a
court-ordered injunction. Mr. Ashley was quoted in the press as
grumbling that the inspector general's office tried its best to
constantly go after him and put him out of business. Although
he was complaining to the judge at the time, his quote is
revealing in that we had to keep following him from one dubious
enterprise to another. It can be frustrating. If current
regulations and statutes are impeding the FHA's ability to
create a watch list or to know its providers complete
backgrounds or to keep out permanently those from entering whom
it does not want to participate in its program--it has a duty
to let Congress know it needs legislative relief to enhance its
administrative remedies (i.e., more permanent debarment
authority, enhanced civil monetary penalty fines) in order to
accomplish this goal. I do not believe in years past, when it
was striving to increase its market share, that this was a
goal. But I do believe that with the large influx of loans and
lenders coming at the program recently it may now see how
imprudent such inaction can be.
A systemic weakness revealed in this case and others showed that
FHA-related monitoring and oversight reports typically cited
the lending firm without naming the individuals associated. The
FHA had argued that without specific citations against
individuals it could not link principals of a defunct company
to those same individuals who would go on to form new entities.
We see this type of maneuver too often and it makes the FHA
program too easy a target for those intent on abusing the
program. We recommend that FHA ensure in a more significant way
that those individuals affiliated with lender entities (either
as principals or as staff) are clear of indictment, conviction,
debarment and suspension, limited denials of participation and
unpaid Federal debt before applications are approved.
The FHA should also consult with other HUD offices to determine
whether applicants are subject to unresolved findings and
ensure that application fees received are reconciled with the
related applications. More importantly, if the Mortgagee Review
Board concludes that a company has participated in improper
activities and recommends removing the company's ability to
participate in the FHA loan program, the Board also needs to
recommend permanent removal of the principals and other
individuals involved from any future FHA and HUD programs. I
know in my conversations with the Commissioner this is an area
on his radar screen.
The Commissioner testified at his recent hearing, and I lauded
earlier in my testimony, that over the last year the FHA has
withdrawn 300 licenses from poor performing lenders. We believe
that many of these could have been screened more vigorously at
the time of their application before the consequences of their
admission came to bear in terms of losses or resources applied
to investigate and to prosecute. Only time will tell how many
more significant failures are yet to be uncovered but we do see
more on the horizon. We believe that more stringent
requirements, in addition to enhanced net worth requirements,
are needed to keep predatory firms and individuals from
conducting FHA business.
I would like to take the opportunity to also draw a parallel
issue with the Government National Mortgage Administration
(Ginnie Mae) approval process. We believe Ginnie Mae equally
needs to strengthen its approval process. While the funding
level for its reserves are in a better financial position than
that of the FHA, it too has experienced increasing default
rates and has suffered unusual substantial losses due to the
failure of Taylor, Bean and Whitaker and Lend America. More due
diligence needs to be done by Ginnie Mae in approving and
recertifying its issuers and I look forward to seeing
meaningful recommendations for statutory and regulatory
improvements akin to what the FHA has recently proposed. It
also has to shift its mindset away from a business-oriented
mentality to let problem issuers remain in the program while
they work out the details. This attitude toward the industry is
no longer feasible unless it wants to absorb large losses. I
will speak more to my concerns with Ginnie Mae later in the
testimony.
We commend the FHA for endeavoring to expand its enforcement and
note that it has very much needed to implement a more robust
early warning system that would alert FHA to precipitous sales
price increases. We also see the need for FHA to enhance its
Neighborhood Watch system (i.e., allow for tracking of
information relating to loan officers, loan processors, and
real estate agents) and the Credit Watch Termination
Initiative.
--Lack of Affirmative Certification Statement.--In this same vein, we
would like to update the subcommittee on a matter we brought
before you a year ago. At the time, I shared with the members
an exhibit showing the current application form to become an
approved FHA lender or Ginnie Mae issuer. I pointed out to the
subcommittee that unlike the Ginnie Mae section which contained
an affirmative statement that required the applicant to attest
that they had not knowingly made a false statement and could be
subject to applicable civil or criminal penalties, and despite
the large volume of new applicants coming into the FHA program,
the FHA certification and recertification inexplicably
contained no such requirement. Even more puzzling is the FHA's
response from the Director of the Office of Lender Activities
to my recommendation in an audit of the lender approval
process. The FHA stated it did not agree with the finding and
stated that ``the OIG has not sufficiently demonstrated that
because of its certification language FHA is unable to
successfully take legal action against lenders violating its
program requirements'' and requested its removal from the
audit.
The Department of Justice as chair of the National Procurement
Fraud Task Force has recommended that all agencies put in
language for grantees of Federal funds the requirement that the
participant certify that the statements made in the application
are true and correct and that it understands that any false
statements made as a part of these certifications can be
prosecuted.
Requirements to Better Manage Brokers Such as New Rules for Audited
Financial Statements and Adequate Capitalization
OIG supports this initiative. We also believe that the annual
financial statements for lenders lag too far behind to be useful. We
believe there should be quarterly unaudited financial statements
similar to the SEC's publicly-traded company requirement and suggest
that there also be an effective review process of these statements.
Billions of dollars flowing through the FHA are riding on the financial
health of these firms. Timeliness of information is essential in making
decisions and we would encourage such a change.
OPERATION WATCHDOG
On January 12, 2010, FHA Commissioner Stevens and I jointly
announced a new OIG initiative focusing on mortgage companies with
significant claim rates against the FHA mortgage insurance program.
This initiative was prompted in part by the Commissioner who was
alarmed by the incidence of excessive default rates by a number of poor
performing FHA lenders and reached out to the HUD OIG for assistance.
Our office served subpoenas to the corporate offices of 15 mortgage
companies in 11 States across the country demanding documents and data
related to failed loans which resulted in claims paid out by the FHA
fund. We identified these direct endorsement companies from an analysis
of loan data focusing on companies with a significant number of claims,
a certain loan underwriting volume, a high ratio of defaults and claims
compared to the national average, and claims that occurred earlier in
the life of the mortgage. These may be key indicators of problems at
the origination or underwriting stages. The firms were not selected for
indications of wrongdoing on their part but we will aggressively pursue
indicators of fraud if they should be uncovered during the analysis. We
are a principal member of the President's Financial Fraud Enforcement
Task Force and this initiative reflects our commitment to seek
information on red flags that may arise from data analysis.
While we are still in the data recovery and analysis phase, and
cannot discuss at this time the initial results of our review, we do
believe that this initiative will continue. We will carry out our line
of inquiry until we have conclusive results to provide to the FHA, to
the Congress and to the American taxpayer. It is important to know for
the long-term viability of the FHA program whether these skewed high
claims and default rates are a result of a weak economy or if companies
are ignoring, or even purposefully violating, FHA regulations. We want
to send a very distinct message to the industry that as the mortgage
landscape has shifted, we are watching very carefully, and that we are
poised to take action against bad performers. The American taxpayer
demands, especially after the lessons of the subprime collapse, that
oversight and monitoring must be rigorously implemented. While we may
disagree from time to time with some of the actions the FHA has taken,
we both share a common resolve to preserve home ownership at the same
time as protecting the American taxpayer from further economic
instability.
In an audit on Single Family insurance claims, we found that the
Department received and paid claims on loans for which the lender did
not show the borrower was able to make the required monthly payments,
made the minimum investment in the property, and was creditworthy. It
paid the claims and did not review the loan files for compliance with
requirements, fraud, and/or misrepresentations. Our initial review
under Operation Watchdog reinforces the concerns we found in this
claims audit. The Department should review claims for eligibility and,
if feasible, independently determine that loans comply with program
requirements and seek, from lenders, recovery or adequate support for
final costs associated with those claims.
Loan Binder Retention.--One issue that has arisen in our reviews of
these poor performing lenders is the ramifications of the prior
administration's policy to allow lenders to maintain original records.
Through the issuance of a Mortgage Letter in 2005, the FHA enabled
certain direct endorsement lenders to endorse FHA loans without a pre-
endorsement review and generally relieved those lenders from the
responsibility of submitting loan origination case binders to the FHA.
The Federal Bureau of Investigation (FBI) and the HUD OIG, vigorously
opposed the FHA's directive (as did HUD's own General Counsel at the
time) to allow lenders the ability to retain documents. As a law
enforcement and auditing agency, we were concerned that such a
relaxation of control would hinder our ability to gather information
for evidence if documents were tampered with or destroyed. Further, the
guidance allowed lenders to maintain the files for only 2 years after
closure. Statutes of limitations run 5 years in criminal fraud and
generally 6 to 10 years in civil fraud matters.
Unfortunately, our fears expressed then in testimony and in a
letter-writing campaign are indeed coming to fruition today. As we
proceed with Operation Watchdog, we have had difficulty obtaining files
from a number of these lenders including encountering instances of
missing case files despite OIG subpoena demands. We strongly recommend
that the FHA again revisit this directive to ensure information
critical to the loan origination and underwriting process is available
for detection of issues and/or potentially fraudulent activity. In a
time when the American public demands our mortgage industry is free of
waste, fraud and abuse, such a policy change is essential.
FHA FINANCIAL CONDITION
The results of the latest actuarial study produced last fall show
that HUD has sustained significant losses in its Single Family program
making a once fairly robust program's reserves smaller. The study shows
that the FHA's Fund to cover losses on the mortgages it insures is
contracting. As of September 30, 2008, the fund's economic value was an
estimated $12.9 billion, an almost 40 percent drop from over $21
billion the year before. By September 30, 2009 the reserve level
dropped below the statutorily mandated 2 percent requirement to 0.53
percent. The Fund's economic value was $3.64 billion compared to the
$685 billion of outstanding insurance in force.
Since its inception in 1934, FHA has been self-sustaining and
premiums paid to the fund have covered the losses due to fluctuating
defaults and foreclosures. We testified last year that given the
current economic conditions, it is critical that the assumptions used
to derive the current estimate of the health of the fund be supportable
and not overly optimistic. We stated to the FHA during our audit of its
financial statement that the model embraced by the FHA should include
the study of past and current delinquencies and the ultimate resolution
as to cures or claims. The current model is designed for long term
claim projections and is based on historical claims paid experience.
Therefore, the model does not reflect recent delinquency development
and lacks the corresponding adjustment to the claims paid. We
recommended that the FHA expand its financial cash flow model
validation to include seriously delinquent aged loans data, case level
historical recovery data, and other leading indicators; and to track
reasons for default and determine whether other economic indicators,
such as unemployment claims, may be useful to support near term
estimates for claim payments.
An assessment of the first quarter of fiscal year 2010 shows some
trends that merit examination. With FHA's greatly increased Single-
Family insured volume (a 24 percent change from the prior year and
currently at more than three-fourths of a trillion dollars in
insurance) comes an increasing default and claims paid rate. Add to
this an increasing inventory of real estate owned properties that are
managed by the FHA--with a falling recovery rate that has FHA now only
recovering slightly more than 40 cents on the dollar and a ``days in
inventory'' average of close to 200 days--and the picture becomes more
disquieting. A significant problem facing the FHA, and the lenders it
works with, is the fallout from decreasing home values. This increases
the risk of default, abandonment and foreclosure, and makes it
correspondingly difficult for the FHA to resell its REO properties.
Approximately 8.8 percent of FHA loans are currently in default
(i.e., more than 90 days non-payment status, foreclosure or
bankruptcy), an increase from the prior fiscal year to date. A major
concern is that even as FHA endorsement levels meet or exceed previous
peaks in its program history, FHA defaults have already exceeded
previous years. Claim rates have also increased and though numerically
still quite small, it must be noted that many of the new defaults are
still in the pipeline. We may see increasing claim rates on the
horizon. The Secretary and the Commissioner hope to stave off the
consequences of this trend with new approaches to business, but the
congressional and executive branch budget offices' disagree with the
impact of these approaches.
In our estimation, this only reinforces the importance for FHA-
approved lenders to maintain solid underwriting standards and quality
control processes in order for the FHA to withstand severe adverse
economic conditions. Another extensive problem confronting the FHA has
been its inability to upgrade and replace legacy (developed in the
1970s and 1980s) application systems that had been previously scheduled
to be integrated. The FHA systems environment remains at risk and must
evolve to keep up with its new demands though there has been increased
funding and new plans formulated. I know in my conversations with
congressional staff that they are frustrated with the amount of
resources expended and the pace with which such replacement plans have
proceeded over the years.
INCREASED RISKS TO FHA
Mortgage Fraud.--Last year during testimony before this is
subcommittee, I highlighted a variety of traditional mortgage fraud
schemes impacting both the FHA and the conventional loan market
including schemes in areas such as appraisal fraud and loan origination
fraud, and identity theft as well as new forms of fraud such as rescue
or foreclosure fraud (to include equity skimming and lease/buy-back
plans), bankruptcy fraud, and Home Equity Conversion Mortgage (reverse
mortgage) fraud (to include schemes involving flipping, annuity sales,
unauthorized recipients, and onerous fee payments/consumer fraud). As
the Department of Justice recently testified, all types of mortgage
fraud are on the rise and we are working closely with other agencies in
the President's Financial Fraud Enforcement Task Force and as part of
the National Mortgage Fraud Team. We currently have over 2,290 case
subjects involving Single Family investigations. We have also recently
created a more robust civil fraud enforcement initiative to assist the
Department of Justice in enhancing civil mortgage anti-fraud
prosecutions. For example, we recently assisted the Department of
Justice in filing a complaint against Capmark Finance Inc, a large
originator of HUD-insured loans, for making false statements in
connection with applications used to acquire two nursing home
facilities (a discussion of nursing home issues appears later in this
testimony). The following represents a sample of a few of the criminal
fraud cases we have recently pursued:
--In Operation Mad House, we conducted an undercover investigation to
deal with the problem of escalating mortgage fraud in the
Chicago area that had consistently placed it as one of the top
five geographic areas for fraud. We received allegations that a
number of mortgage operatives were involved in loan origination
fraud including the creation of fictitious bank statements,
false employment and inflated appraisals and we targeted an
organized group of real estate industry professionals at all
levels. We tracked the inflated appraisal and phony origination
as well as the closing proceeds and how it was distributed.
This investigation resulted in 22 individuals in 9 separate
indictments being charged with multiple counts of fraud and a
spin off whereby 4 new subjects were indicted late last year.
All told, 26 principals in the mortgage industry including
attorneys, brokers, loan officers, loan processors, appraisers,
recruiters, and accountants have been charged.
--Earlier this month in Atlanta, three members of a reverse mortgage
fraud ring were indicted by a Federal grand jury for altering
real estate records, using fake documents, and posing as
realtors in an abuse that took money away from qualified
seniors. The defendants in this case faked required down
payments by senior citizens to establish the equity needed in
the home to qualify for the reverse mortgage. They did this by
using bogus gift letters in amounts between $50,000 and
$105,000 and using fake HUD-1 Settlement Statements reflecting
the sale of non-existent assets closed by fictitious law firms
to show the source of the required down payments. All the down
payments were actually supplied by the defendants, not the
senior citizens, to be returned to the defendants upon the
reverse loan closings along with profits far in excess of the
true sales prices of the properties. Such payments were
disguised as seller proceeds or lien payoffs and all the
mortgages contained fraudulently inflated appraisals.
--In another reverse mortgage case, on April 13, 2010, in Kansas
City, Missouri, the Jackson County Prosecutor charged an
individual with financial exploitation of an elderly/disabled
person and forgery related to a fraudulent HECM (home equity
mortgage conversion) loan. Our investigation revealed that the
defendant allegedly obtained a quit claim deed on a Kansas City
property belonging to an elderly man suffering from Alzheimer's
disease and subsequently took out a fraudulent reverse mortgage
in the victim's name. As a result of the scheme, the defendant
deposited, by means of a forged Power of Attorney, reverse
mortgage proceeds into a personal bank account as well as
obtained a loan against the victim's life insurance policy.
--In February of this year, the former president of a mortgage
company was sentenced in Federal court in California to 156
months in jail, 5 years probation and ordered to pay almost $30
million in restitution to victims for a fraudulent loan
origination scheme that knowingly caused loan applications
containing fraudulent documents to be submitted to various
lenders for FHA insurance so that unqualified mortgagors would
appear qualified. His actions caused over 900 fraudulent loans
to be FHA insured and subsequently default resulting in a
substantial loss to the program.
Nursing Homes/Section 232.--The FHA insures mortgage loans (section
232) to facilitate the construction and rehabilitation of nursing
homes, intermediate care facilities, board and care homes, and assisted
living facilities. It also allows for the purchase or refinancing of
existing projects not requiring substantial rehabilitation. It insures
lenders against the loss on mortgage defaults. As of the end of
calendar year 2009, HUD had 2,327 projects with an outstanding
principal balance of $14.6 billion. This represents close to a 36
percent increase in projects receiving initial endorsements from the
previous year. As we noted in last year's testimony, the current
section 232 regulatory agreement does not prevent transfer of the
Transfer of Need associated with the property; does not include
receivables in any security documents (which is a significant asset to
the properties and can limit HUD's loss when retained); and does not
require a lessee operating the project to abide by the same
requirements as the owner. This allows lessees to use project funds for
non-project expenses to the point of default with no recourse.
With such a vulnerable population involved, the OIG has been
recommending for years in numerous audits and investigations that the
regulatory agreement needs to be changed. This status has not changed
since approximately the fall of 2006. It is our hope that this can be
done expeditiously.
Appraiser Oversight.--Our review of the FHA appraiser roster
identified critical front-end weaknesses as evidenced in the quality
control review and monitoring of the roster. The roster contained
unreliable data including the listing of 3,480 appraisers with expired
licenses and 199 appraisers that had been State sanctioned. In a
further review, we found that HUD's appraiser review process was not
adequate to reliably and consistently identify and remedy deficiencies
associated with appraisers. The FHA's current Single Family insured
exposure totals over $800 billion representing over 6 million in FHA
insured mortgages. Inflated appraisals correlate to higher loan
amounts. If the properties foreclose, the loss to the insurance fund is
greater.
With significant increases in volume and new responsibilities in
the mortgage marketplace, and appraiser fraud a significant problem
highlighted in national studies, we do believe it may be time for the
Department to return to an FHA Appraiser Fee Panel similar to the one
dismantled by statute in 1994. It is essential if the mortgage industry
wants to overcome perceptions regarding its integrity and its role in
the current economic crisis that it ensures true market values are
correctly estimated. Such a move would relieve pressures on appraisers
to return predetermined values and would change a system based on
misplaced incentives. A study indicated that 90 percent of appraisers
had felt pressure ``to hit the number'' provided (i.e., on the sales
contract). The old FHA Fee Panel was rotational and guaranteed work as
long as the appraiser met certain HUD requirements. As can be deduced
from the many cases and problematic issues discussed in this testimony,
inflated appraisals often are at the heart of the scheme or of the
questionable arrangement.
Late Payment Endorsement Requirements Changed.--Last year, we
testified on results from a number of other key audits that have noted
significant lender underwriting deficiencies, inadequate quality
controls, and other operational irregularities. We spoke to an audit in
which we analyzed the impact of FHA late endorsement policy changes
affecting FHA insured loans. Unfortunately, this still remains an issue
and bears repeating. On May 17, 2005, the Federal Housing Commissioner
issued Mortgagee Letter 2005-23, which significantly changed the
requirements for late endorsements for Single Family insurance. A
request for endorsement is considered late whenever the loan binder is
received by the FHA more than 60 days after mortgage loan settlement or
funds disbursement, whichever is later. The Mortgagee Letter removed
the prior 6-month good payment history requirement for these loans and
provided an additional 15 days grace period before the current month's
payment was considered late.
We conducted a review of this rule change and found that, although
FHA asserted the change did not materially increase the insurance risk,
FHA did not perform a risk analysis to support this determination. Our
review of the performance of loans from seven prior OIG late
endorsement audits (i.e., Wells Fargo, National City Mortgage, Cendant,
etc.) found a three and one-half times higher risk of claims when loans
had unacceptable payment histories within the prior 6 months. Since the
issuance of the Mortgagee Letter, we found that the default rate for
loans submitted late had increased and was significantly higher than
the default rate for loans submitted in a timely manner. The HUD
Handbook itself acknowledged the risk of unacceptable payment histories
by stating that ``Past credit performance serves as the most useful
guide in determining a borrower's attitude toward credit obligations
and predicting a borrower's future actions.''
In 2006, we recommended that HUD rescind the Mortgagee Letter until
appropriate rule changes could be designed that were supported by an
adequate risk assessment. The FHA disagreed with our audit report and
declined to implement the recommendations. We referred this matter to
HUD's Deputy Secretary who concurred with our recommendations on
February 27, 2007 and ordered the FHA to immediately rescind the
Mortgagee Letter.
Initially, the FHA agreed to implement the Deputy Secretary's
directive but failed to take action, instead taking efforts to again
dispute our audit results. This continued until April 2008, when the
Deputy Secretary's office again intervened, at our request, and
instructed the FHA to publish the proposed rule change in the Federal
Register reinstating the 6 month payment history requirement for late
endorsements. In June 2008, the proposed rule change was published in
the Federal Register for comment.
Although the final rule rescinding the Mortgagee Letter was never
published, FHA nevertheless closed the audit recommendation. In a
memorandum dated March 18, 2009, we informed the FHA that, given the
amount of time that had lapsed and the absence of a corrective action,
the OIG would report this in our next Semi-Annual Report to Congress.
Given the current mortgage crisis, concerns over losses to the
insurance fund, and requirements for transparency, we believe that this
is an important recommendation that should not be dismissed.
Capturing Key Information in, and Upgrading, Data Systems.--Another
major concern, touched on previously in testimony, is the integration
and upgrading of FHA legacy systems which bears repeating since our
original premise has not been acted on. While there has been much
discussion of an overall plan, and what particular types of systems are
needed to go forward, it would be useful at this juncture to reposition
the discussion to ascertain which data should actually be collected,
and maintained, in the system in order to control the new demands
placed on the program. Our audit work and our investigative ``Systemic
Implication Reports'' transmitted to the Department over the years,
makes it clear that, at a minimum, we need the system to track
identifying information on key individuals involved in the transaction
such as the originating loan officer, loan processor, and real estate
agent.
The loan officer, for example, is central to the origination of the
loan where due diligence should be exercised on the application
material (i.e., credit scores, appraisal information, etc.). It would
be useful to record the person's name and corresponding identifying
information (i.e., license) in the same system the FHA uses to track
underwriter and appraiser details. This will allow the FHA and OIG to
key in on a vital part of the loan process--origination--where fraud
typically can occur. If the system could also capture information on
other key players such as the real estate agent for the seller and
buyer, and other parties to the transaction, that too would be helpful
for purposes of increasing integrity in the processes in our
investigative and audit functions. It would also be valuable to the FHA
in strengthening its risk management and monitoring efforts.
Further, it could be beneficial for the FHA to participate more
significantly in a unified lender oversight consortium with Fannie Mae,
Freddie Mac, the Federal Deposit Insurance Corporation (FDIC), and
Ginnie Mae in order to, among other things, create standardized forms
that could produce common machine-readable data fields with consistent
information as well as to leverage existing data systems.
Earlier in the testimony, we described the TBW case and the
weaknesses that it exposed in the FHA and the Ginnie Mae programs. As
we are discussing the need for Federal entities to come together in a
more unified manner, we would also like to highlight an issue that came
to forefront in this case. Ginnie Mae mortgage-backed securities (MBS)
are the only MBS to carry the full faith and credit guaranty of the
United States. If an issuer fails to make the required pass-through
payment of principal and interest to MBS investors, Ginnie Mae is
required to assume responsibility for it. Typically, Ginnie Mae
defaults the issuers and assumes control of the issuer's MBS pools.
The FDIC temporarily froze the Ginnie Mae custodial bank accounts
at Colonial Bank as well as the bank's mortgage payment lock box
account. As a result, Ginnie Mae was forced to make an approximately $1
billion pass-through payment (principal and interest) to investors.
There needs to be better coordination between the FDIC and other
Federal Government agencies so that losses absorbed because of its
action can be mitigated by more cooperative and forward-thinking
behavior. We are also very concerned with the extent that future bank
failures and bankruptcies could have on the Ginnie Mae program. The
FDIC stated in a recent report that over 200 banks are predicted to
fail this coming year.
The other disconcerting aspect of the TBW case involves the fact
that Fannie Mae became aware of some unsettling practices at TBW, made
it replace some loans and then stopped doing business with it. TBW then
sold their servicing rights to another company and started doing
business with Freddie Mac. Then, down the line, Ginnie Mae accepted
pools from TBW. It appears that Fannie Mae's only interest was self-
interest. A number of years ago, I testified before the House of
Representatives regarding a case called First Beneficial in which
Fannie Mae did not tell other entities of its discoveries at First
Beneficial and then, by its silence and inaction, caused losses to the
Ginnie Mae program. There needs to be mandated requirement of
notification and penalty for failure to notify or we will continue to
see instances of fraud cases being perpetrated on unknowing
securitizers.
CONTINUING CONCERNS
Though there have been incremental increases in funding to the FHA
for a variety of staffing and system needs, including a planned
increase of over 100 FTEs from fiscal year 2010 to fiscal year 2011, we
believe there remains a need for either more, or a proper placement of,
resources to the FHA in light of the dramatic percentage of increased
loan volume and of its increased relevance to the eventual
stabilization of the conventional mortgage marketplace. We would like
to see more personnel dedicated to the Home Ownership Centers, which
are responsible for monitoring loan origination and servicing
practices, setting underwriting standards, and overseeing the
disposition of HUD-owned properties, as well as to headquarters systems
and technology until the IT infrastructure can be put in place in order
to manage the program changes, and away from such activities as
marketing since FHA has already proclaimed it wants to retreat from
such a prominent place in the marketplace.
We still remain concerned that increases in demand to the FHA
program are having collateral implications for the integrity of Ginnie
Mae. Like FHA, Ginnie Mae has seen an augmentation in its market share.
For example, in December 2009, its Single Family issuances totaled
nearly $40 billion and it had a remaining principal balance of over
$880 billion. By comparison, its balance in December 2007 was exactly
one-half at slightly over $440 billion. It too has stretched and
limited resources to adequately address this increase.
CONCLUSION
Mortgage industry behavior was a precipitating factor in the
present economic turmoil. As the Department has written about in its
assessment of the foreclosure crisis, industry participants encouraged
borrowers to take riskier loans with a high risk of default due to the
high profits associated with originating the loans and packaging them
for sale to investors. These lenders had little or no risk in the loan.
There were many factors that made it possible for the mortgage market
to make so many miscalculations and missteps. A primary factor was
development during this period of the growth of the asset-backed
securities market, which shifted the primary source of finance from
Federally regulated institutions to mortgage banking institutions that
acquired funds through the broader capital markets and were subject to
much less regulatory oversight.
Clearly the regulatory structure was not changing rapidly enough to
keep with the pace of growth. Fraud may have had a significant
contribution and analysis shows that there was a lack of adequate
underwriting controls by lenders to oversee brokers' activities. The
general regulatory structure did not work to provide adequate oversight
to oversee the origination and financing of mortgages. The consequences
were high risk lending and a resulting surge in delinquency and
default. The lessons of the conventional side of the industry should
not be lost on that of the FHA and Ginnie Mae programs as they too are
now experiencing increasing delinquencies, defaults and claims. And it
should not be lost on those tasked with rectifying the vulnerabilities
that clearly came to the foreground regarding the lapse in oversight of
the Fannie Mae and Freddie Mac Government sponsored enterprises.
The conventional mortgage market is going back to the basics. It is
embracing full underwriting standards including accurate verifications
of income, employment and appraisal; it is demanding adequate cash down
payments from borrower's own funds; and it is seeking rational debt-to-
income ratios. Observations of current historic contagions of risk
suggest that, in the marketplace today, yesterday's lower 600's FICO
score is now today's higher 600's FICO score and that FHA's floor may
be set too low. Nevertheless, this has to be weighed against the FHA's
traditional mandate to assist homeowners that are low to moderate
income and who may have poorer FICO scores. It also suggests that even
high FICO borrowers with significantly distressed properties still
default because of the rational choice to prevent years of principal
payments just to break even. This makes it all the more important to
have an active risk management department to monitor and rapidly
develop policies as the traditional ``black-boxes'' adapt to the
``new.''
Finally, we remain concerned that, although not within the control
of the FHA, the fact that our nationwide mortgage lending system is
fragmented with separate players embracing differing requirements
creates opportunities for waste, fraud and abuse that a more unified
approach could potentially ameliorate. We have not seen enough progress
or initiative to try to overcome the vulnerability that lapses in
coordination among Federal entities creates. Of one thing, however, we
are sure--those intent on unscrupulous behavior know full well how to
exploit the weaknesses in the system and to profit from such disorder.
We do very much look forward to the implementation of many of the
Secretary's efforts designed to mitigate many of the difficulties we
have been highlighting in the last number of years and to working with
him and the Department to try to improve programs so increasingly
relied on by our citizenry during these trying economic times.
As Chairman Murray has stated, stabilizing and improving the
housing market is critical to the Nation's economic recovery but FHA's
participation must be done in a way that it can effectively manage the
loans that were made during the height of the housing boom so that it
can provide a much-needed boost of liquidity to the market. We thank
you for the opportunity to relay our thoughts on these important issues
based on the body of our work and of our experience, and greatly
appreciate the activities of the Congress to protect the Department's
funds from predatory and improper practices and to ensure an effective
response on oversight at this critical time.
MMI FUND
Senator Murray. Thank you very much, Mr. Stevens.
Let me just start. This is your first appearance before our
subcommittee, but FHA has been the subject of annual hearings
since I have become chairman here. And together, Senator Bond
and I have sounded the alarm on FHA and the solvency of the MMI
Fund, and because of our concern, we did provide FHA with
additional resources both for IT improvements and for increased
staffing in order to give FHA the tools that they needed to
protect the agency from fraud and risk and make sure that
taxpayers never have to subsidize these mortgages.
So I am, obviously, very concerned that FHA's capital
reserve account has now fallen below the mandatory 2 percent
required by Congress. In your testimony, you outlined several
reforms that are designed to recapitalize the reserve fund and
protect the solvency of the MMI Fund, some of which you said
are already in place.
But I would like you to share with us what is the current
state of the MMI Fund and how does it compare with the
projections that were set forth in the audit that Congress got
last fall.
Mr. Stevens. Thank you for the question.
Let me just start with the--we released to you the first
quarterly report of the fiscal year to Congress a month and a
half or so ago. The second quarterly report will be released
here in the next few weeks, so you will get some detailed
information on the status of the MMI Fund.
In particular, the current total reserves are actually
higher than we reported when we announced that we had fallen
below the 2 percent statutory level for the capital reserve
fund. So today we are sitting at about a little over $32
billion. When we reported in the fall, it was about $31
billion. So they have actually increased.
I will tell you that there are a couple of key drivers that
will impact the fund the most. The first are, obviously, the
real foreclosure numbers that will impact the real actual
reserves in the fund. We are actually behind what was
forecasted for the year at this point in time, but we did
forecast that we would have 125,000 total defaults for the
fiscal year, and given the trend line, I believe we still will
be on track to hit the 125,000 number, based on the trend line
that we are seeing now. But I do not expect us to exceed that
number.
The other impact to the fund will be the severity rate or
the recovery rate, however you look at that. While we have some
concerns in that area, the current recovery rates are generally
remaining on track with what was forecasted.
So in total right now, I would tell you that the overall
dollars in the fund are growing, not shrinking, but we still
remain on track with everything that was projected by the
actuary when we released it in the fall.
Senator Murray. Do you know when you are going to hit that
2 percent level?
Mr. Stevens. The forecast for the 2 percent level was
forecasted to be in 2013, I believe. As you know and as I would
strongly caution, there are so many moving parts in the market
that go into these forecasts, that we could hit that sooner or
later, obviously depending on market conditions.
One example I would give you. In our actuarial forecast,
our home price index expected roughly a 9 percent drop in home
prices in the first quarter of the 2010 fiscal year. That has
not been realized. However, there is still enough instability
in the market that we do not know when the new actuarial study
is done for the next upcoming fiscal year, what the home price
forecast will look like. And if stability is on the horizon, we
could end up having a better view of when the capital reserve
will be hit. If the forecast is worse, it could put in jeopardy
our existing forecast, and those are critical components that
we are watching closely.
RECOVERY OF LOSSES
Senator Murray. You noted in your testimony that most of
the expected losses are the results of mortgages from previous
years, and while you are limited in your ability to effect the
performance of older loans obviously, you can hold lenders
accountable for losses on FHA mortgages that were improperly or
fraudulently underwritten. How successful have you been in
recovering losses from some of those mortgages?
Mr. Stevens. I think this is a real challenge, part of
which is there are some limitations to what FHA is allowed to
do. Fortunately, the inspector general has some additional
authorities which have been implemented. I would tell you at
this point that some of the measurements of that are the number
of institutions that we have either withdrawn approval from or
suspended completely. As was noted, there were 300 institutions
in the fiscal year. There have actually been another 200 on top
of that, in total well over 500 institutions that are no longer
allowed to originate loans in the FHA.
Our ability to go after performance on previous book years,
borrowing fraud or misrepresentation or violations of the law,
continues to be somewhat limited, and that is why we are asking
for additional approvals to go after institutions whether they
are DE lenders or LI lenders to be able to require
indemnification at the institution level and that will help
greatly. I do commend the inspector general.
Senator Murray. That will take legislation.
Mr. Stevens. That will take legislation.
But addressing fraud issues has been a significant concern
of mine, and we have a lot more work to do going forward.
Obviously, we made some great visibility with companies like
Taylor, Bean & Whitaker, shutting them down in the first few
weeks while I was on the job, and Lend America, which really
required partnership with the inspector general to get done.
And these were stand-out institutions, but what people do not
see are the little institutions committing fraud like the
reverse lender in Hawaii who was taking reverse mortgages out
for seniors and investing them in their own annuity investment
fund which they owned and operated. Well, we got them too.
That's just not a big headline-maker.
And so it is a big job and it requires a lot of work. And
that is why the first investment we are making on the
technology front is in the fraud tools area. We released our
RFP last week and it is a 30-day process. So we have bids
coming in right now for that work, and that will be in the
market hopefully as quickly as possible.
GSES REFORM
Senator Murray. Well, as we now work to reform Wall Street
and the financial sector and prevent any future housing crisis,
it is really clear that we have to address the future of the
GSEs. During the housing boom, Fannie Mae and Freddie Mac kind
of lost sight of their primary mission of facilitating
liquidity for safe and affordable mortgages. Instead we saw
their zeal for profit drive them to take some unnecessary
risks.
So we know reform is necessary and there has to be a clear
plan for ending this unlimited taxpayer assistance for Fannie
and Freddie. I think we need a very thoughtful approach as we
do this. We have to protect our American taxpayers, but
thoughtful deliberation cannot turn into delay or inaction. And
we need to see the administration recognize the urgency of
reforming GSEs.
So I wanted to ask you, when can we expect to see the
administration's plan for reforming the GSEs?
Mr. Stevens. Senator, what I would respond by saying is to
reiterate what you said in your opening statement, that this
needs to be thoughtfully done with care not to disrupt the
housing market, and we completely agree with that.
We strongly agree with the need for reform. We all
recognize that the housing system and the role of the GSEs or
whatever structure exists going forward will not be the same as
it was coming into this crisis. That is clear.
And we support Senator Dodd's recommendation strongly to do
a study with recommendations early next year.
So to that extent, everything we do now has to be very
carefully balanced with the need not to disrupt the markets
because the GSEs are playing a critical role in the issuance of
mortgages and mortgage-backed securities to keep the market
stable under the current format.
Senator Murray. Well, any kind of radical change in the
role of the GSEs could also mean a dramatic change for FHA and
Ginnie Mae, and I am concerned about the prospect of FHA taking
on significant increase in new business, given all the current
challenges we have.
How do you see FHA fitting into this debate?
Mr. Stevens. Without question, the needs in the future of
the housing finance system under any normal view would have to
consider all the participants that in some way, shape, or form
have involvement by the U.S. Government, whether that is
Federal Home Loan banks, FHA, Ginnie Mae, Freddie Mac, Fannie
Mae, and whatever other solutions ultimately get considered.
So the fundamental belief we have for FHA is in isolation.
FHA plays a critical role, as it always has since the
Depression, when it was first created. It is a countercyclical
role. It has been consistent in the marketplace when other
financing vehicles have not been available. Its role is too big
today. It is unhealthy to run at 30 percent market share as it
currently does. The emergence of private capital to be
sustainable in a recovery market is absolutely the most
important step to help FHA's role in the market begin to shrink
back to more normalized levels.
Senator Murray. Thirty percent is too much. We all agree
with that. What do you think the market share for FHA should
be?
Mr. Stevens. You know, I think targeting a market share for
FHA is something that gets any institution in trouble, but I
will say that 2 percent was also an unhealthy level. That was a
sign of subprime mortgages and option ARMs and private label
securities wrapped by rating agencies and sold into various
debt obligations to unknowing investors. That was an unhealthy
world as well.
So if you look back through normal times, going back
through the decades of FHA, during traditionally stabilized
markets, it typically runs in the 10 percent range, maybe low
teens, and that is sort of the range where I think FHA would be
shown as a healthy participant in the mortgage context.
Senator Murray. How long would it take us to get from 30
down to 10--low teens?
Mr. Stevens. Well, I think that is why the dialogue is so
frustrating, as you said in your opening comments, and both of
you have articulated this concern about even decisions around
the GSEs. We are in a very unique period now. Freddie Mac,
Fannie Mae, and FHA are consuming about 95 percent of the
mortgage finance system for single family housing, and we need
private capital to emerge. The first sign, as you said, Senator
Bond, in your comments, was that--or Senator Murray. I cannot
remember whose comments--who made the point. But as the Fed
steps out of buying mortgage-backed securities out of the
market which have kept interest rates low, that range of
movement in mortgage spreads will be a clear indication of the
private sector's interest in getting back into the mortgage
markets. And we will see. We have a variety of thought leaders
that we have talked to.
Senator Murray. So we do not know what the withdrawal of
these supports is going to be. Yet, we are all kind of looking
out there. Do you have a guess what it is going to do to----
Mr. Stevens. Guessing is a dangerous game. I have been in
this industry for 3 decades.
Senator Murray. How about a thoughtful----
Mr. Stevens. Here is my thoughtful view, Senator. I
actually do not expect mortgage rates to back up as
significantly as some of the extreme negative views are when
the Fed steps out. That will be the first sign of health. The
first-time home buyer tax credit ends here. The last
applications are at the end of the month. It expires at the end
of June completely. That will be an interesting move because
2.2 million Americans filed for tax benefits under the First-
Time Homebuyer Tax Credit Act. And so that will be a next test.
Redwood Trust has already issued one mortgage-backed
securitization in the private sector in the last couple of
weeks. They are getting ready to do another one. The trade
levels of those trusts we are looking at very closely.
Each of these are indicators to me as to what will happen.
Having been through a lot of--I lived in the oil patch crisis
in Colorado and had branches in Missouri at the time many, many
years ago working for a bank, and I do recall the impacts of
going through that kind of cycle. You know, it takes confidence
for investors to return. Private capital will come back when
they believe there is strong regulation, that the rules of the
road are clear, and that they believe that home prices are past
the point of severe instability. There will always be
variations, but stability is what people will invest in. The
markets do not like instability whether it is in the equities
markets or in the housing market.
Senator Murray. Thank you very much.
Senator Bond.
FHA LOSSES
Senator Bond. Thank you very much. Your questions and your
responses raised a whole bunch of interesting areas.
Let me start off. What are the current losses that FHA is
realizing under the MMI Fund? How does it compare to last year,
and what is your projection for the future?
Mr. Stevens. If you give me just a moment, I would like to
be as accurate as possible.
Senator Bond. Okay.
Mr. Stevens. So through the end of March, we have actually
seen current delinquency rates have dropped for January--or
excuse me--for February and March, we saw delinquency rates
drop fairly significantly, 15 percent, over where they were in
December. So while we are seeing delinquency rates drop, we are
seeing foreclosures, actual, real foreclosures increase. And so
what we expect to have occur for the year is 125,000
foreclosures with an expected severity rate on each of those
losses of somewhere in the range of 50 percent. And so, the
specific losses to the fund at year end--and George, I do not
know if you know the number that is in the MMI.
Speaker. No, but like you said earlier, the capital
resources have been increasing.
Mr. Stevens. Yes. I mean, the reality is our capital
resources have been increasing. So let me step back. We reserve
very differently than a bank does. A bank under a Basel
standard will hold for loan loss reserves for anywhere from 2--
sometimes 1 year to a 3-year period they will hold for loan
loss reserves. So the FHA's reserves function is we hold
capital in reserves for a full 30 years' worth of losses. Much
of that loss expectancy will not hit until peak default
periods, 2, 3, 4, or 5 years into the amortization of a
mortgage.
So when we reported that we were below our 2 percent
capital reserve, it was not our total capital, Senator. It was
our secondary loss reserve, which is an additional loss reserve
above our primary reserve account. And the two combined reserve
accounts are actually in excess of about 4.5 percent of total
capital. The 2 percent reserve requirement is based on the
secondary account, which contributes to that. That is what had
fallen below 2 percent, but our primary reserve account
actually continues to grow simply because we are not seeing the
losses that were fully expected when the actuarial audit was
done.
So without trying to sound evasive, the reality is that we
are not seeing the real losses as yet. Our actual reserves are
growing. The forecast is that under the existing book of
business, we will exhaust the entire amount down to that
remaining capital reserve of .53 percent. That forecast assumed
that we do not originate any new loans. So as we continue to
originate new loans of such high quality, the fund is actually
rebuilding faster with better assets offsetting that loss
reserve.
Senator Bond. Have you got a number? How many billions will
you experience in loss this year?
Mr. Stevens. In this year?
Senator Bond. You must have some forecast.
Mr. Stevens. Do we have a forecast, George?
Speaker. We are not forecasting.
Mr. Stevens. Yes. So we forecast the reserve number. We do
not forecast this current year number. But, Senator, if it
would be all right, I would like to give you a more thoughtful
answer.
Senator Bond. Yes, we would like to know because we need to
get a handle on this somewhere. We have got reserve accounts
and reserve accounts are growing, but losses are out there.
There is no question that there are losses out there, and we
need to have a handle on where all this is going.
Mr. Stevens. Senator, if I may, I would tell you that we
would expect by year end that the fund would be either about
where it is now or higher. The actual reserves will be about
where they are now. What it will impact, unfortunately, from a
budget standpoint will not be our actual losses. It will be
what is forecasted in what we have to reserve against. So those
will be very different numbers in terms of how we look at it.
But I will submit to you a more thoughtful response to that
question.
Senator Bond. Okay. You mentioned that you are still
confident in the official $5.8 billion estimate or whatever it
was that OMB came up with. CBO came in with a $1.9 billion in
receipts. What is the difference? How do we resolve this? We
are kind of looking at hither and yon, but we need to have
where we are rather than hither and yon.
Mr. Stevens. So the challenge is both analyses are based on
views on various performance characteristics. The difference in
the CBO score, in particular, can be mostly isolated into two
variables. One is they assumed much higher prepayment speeds on
our portfolio than was in the OMB estimate. Interestingly,
prepayment speeds are a derivative of interest rates. If
interest rates drop dramatically, you get much higher
refinancing and loans will pay off earlier. If interest rates
remain stable or rise, you would actually expect prepayment
speeds to be slower. And so depending on that forecast, you are
going to have an impact to prepayment speeds, that combined
with default rates.
So that is one variable that is very different, and I would
question the prepayment speed assumptions, but I am sure they
are based on rational logic.
The other one is the severity rate. So on your losses, you
know, what is going to be percent of loss on each actual unit
of real estate that goes into foreclosure. And the CBO score
expects higher severity rates than the OMB score does. In that
particular measure, I would say there is probably a little
truth to both, and we will look at that very closely.
But it is interesting that the prepayment speed issue--if
you assume you are going to have losses and worse severities
over the long term, you would assume that the market is
worsening. My own internal logic would say that if interest
rates are dropping, you are probably going to have increasing
volumes of new home sales which may actually level or spur
recovery.
So while there may be some natural conflict there, I think
both are based on rational input. Both expect positive receipts
from FHA in either case. The amount differs because of those
two variables.
Senator Bond. You said in your first element was the
prepayment, and that if interest rates go down, prepayment goes
up. So you get better returns. But I do not see how, with the
problems we have, which are too much like Greece's problems
with our debt with an unending series of spending and declining
tax revenues, somewhere those interest rates are going to go
up. And I do not see--even though the Federal Reserve has been
accommodative, perhaps overly accommodative, I do not see any
prospect that interest rates are going to get lower. Are you
predicting lower interest rates rather than higher?
Mr. Stevens. I am not predicting lower interest rates. I
think we would have to ask the CBO what variables they assumed
for faster prepayment speeds on our portfolio than the OMB view
was, or quite frankly, our own independent actuary had as well
similar prepayment speeds to OMB.
Senator Bond. I tell you what. We probably are not going to
hash this out.
Mr. Stevens. Yes.
Senator Bond. I have got a staff that loves to get into
those things, and maybe they can work with your staff and we
can see if we can find some way to resolve those. And we will
ask the inspector general and your actuary and everybody to get
together and have a whole lot of fun working those things out.
Mr. Stevens. That sounds great.
Senator Bond. If you do not mind.
Mr. Stevens. That is wonderful.
FINANCIAL REFORM
Senator Bond. Now, while we are asking easy questions, as
you have indicated and the chair has indicated, as you know, we
are debating a financial regulation bill on the floor, and from
what I have learned--and granted, some of it comes from the
book, The Big Short--the problem of shaky subprime mortgages
was exacerbated in Wall Street by creating mirror derivatives
based on the subprime securitized mortgages. And these--I call
them computer game shadow derivatives--magnified the impact. In
other words, Wall Street was making a whole bunch of money on
derivatives that mirrored the subprime but these were not
actually based on the subprime loans themselves. But when the
subprime loans went down, all of the value of those
derivatives, which for some reason were successfully marketed
to people who were willing to go out on a limb--is that an
accurate assessment of what happened in the financial system?
What kind of regulation would be necessary to rein in the
risk that the excessive Wall Street manipulation of derivatives
will not impose in the future the same kind of serious risks to
the financial marketplace we have seen not just in America, but
we managed to poison a lot of the world's economic systems?
Mr. Stevens. Which question was easier, this one or the
last one?
Here is just a view that I would articulate, that the
financial reform bill is critical. The risk retention
component, just as one example, clearly under any of the
amendments that are being offered, would require risk retention
for those kinds of programs. Looking back at how these products
were created and manufactured and being in the private sector
and watching that occur, there was clearly a lack of alignment
on incentives, short-term gain based on models that were not
tested, and there was no recourse or skin in the game for that
creation.
I think to that end, whatever ultimately comes of the
amendments on sort of vanilla programs or things offered by the
Landrieu amendment or some of the other amendments that have
been offered, I think one of the most critical values that will
come of financial reform, if it gets passed, which I strongly
encourage, is that without question, no one is carving out the
products that you address. I think to that end, having to hold
capital against loss is clearly--and you made that point about
capital reserves that we are requiring at an institutional
level. In my opinion, capital reserves on risk assets, putting
a risk-based weighting against those, is the clearest way to
require that skin in the game and interest in making sure that
your evaluations of risk are appropriate to the real risks that
you ultimately see.
Senator Bond. I have run over my time.
But the SEC has now come in full force in going after
these. But it is my understanding that they or--I think they
are the ones that should have been regulating these. And I
heard a great Texas country band called Asleep at the Wheel
recently and I was thinking about how that might be a good
moniker for what went on in the regulatory agencies. Is the
regulation of risk an SEC function? What agency should be doing
this?
Mr. Stevens. Without going back to the past and the
multiple regulators----
Senator Bond. Okay. Going forward, who ought to----
Mr. Stevens. Going forward, one of the things that I think
is also important about the financial reform bill is the
creation of a CFPA, having a single regulator to oversee
mortgage products that are directed to consumers. You know, I
think to some degree you have articulated a very important
point. When you have multiple regulators, specific ownership of
specific risk attributes may become murky. And I am not sure
that is the case in the past. I have personal opinions, but I
know that Secretary Donovan and Secretary Geithner would have
clear statements to that effect. But I would say that that is
another value proposition in the financial reform bill to get
this through, is to identify a single regulator responsible for
regulating mortgage products.
Senator Bond. Thank you, Madam Chair.
MAKING HOME AFFORDABLE PROGRAM
Senator Murray. Thank you. Thank you very much.
About a year ago, the administration launched their Making
Home Affordable to help homeowners with foreclosure. One of the
programs is this HAMP, Home Affordable Modification Program,
was designed to make mortgages more affordable, lower interest
rates, spread mortgages out, now by writing down principal. We
were told that that program was supposed to help 3 million to 4
million families by 2012, but as of the end of March, only
about 230,000 homeowners had received any kind of permanent
modification, which is far short, I think, of expectations.
Can you tell us at what rate do we need to see permanent
modifications occur in order to reach that 3 million to 4
million goal?
Mr. Stevens. So if I may, I would just like to back up to
the initial program and kind of where we are today. When the
program was first rolled out, we all know that adoption was
slow in the program. Bank readiness to manage the HAMP program
was not developed at a pace that was acceptable to the
administration.
In July of last year, both Secretaries Geithner and
Donovan, asked in what became the infamous fly-in where all the
CEOs of the banks involved in HAMP flew into Washington, and a
lot of pressure was put on to get the program up and going and
the announcement of the scorecard at that point.
From July until the end of the year, there was a rapid
ramp-up in trial modifications. Unfortunately, a lot of the
initial modifications done by some of the institutions were
modifications first without getting the appropriate
documentation to ensure that they would be sustainable into
permanent mods.
And so what we may see is a relatively higher cancellation
rate of that initial population.
Since then, through a learned process, we have transitioned
to where documentation and qualification is now going to be
done up-front at the trial modification period, and we believe
that there will be a high transition from trial to permanent
mod on all mods going forward.
So I just wanted to put that out there. We just this week
had another fly-in with the executives of all the institutions
in HAMP and reiterated and went through the details of the new
process. I left with the feeling of confidence that at least
that portion is done. We will not have that high fallout.
I would say that we still have well over a million
homeowners saving $500 a month in trial modifications, of
which, to your point, the 230,000 have converted to permanent
mods. We have 108,000 more that have accepted a permanent mod
and are waiting to sign documents. You will see some rapid
activity over the next 60 days because the institutions all
involved in HAMP have pledged to clear out their pipelines of
backlogs from that initial phase over the next couple of
months. So we will see a big transition there.
Senator Murray. So by the end of the summer, we will see
better numbers?
Mr. Stevens. I think we will see some interesting numbers
for the next couple of months, as we see the backlog of
nonpermanent modifications either go permanent or go into
portfolio modifications that are not part of HAMP or perhaps
pure cancellation. So there will be some noise there as they
clean out the pipelines.
We will then see, I believe, a regaining of activity on
trials and permanence. That, combined with our enhancements to
HAMP, which we just recently announced and the FHA program we
believe will remain on track to hit the 3 million to 4 million
homeowners that the administration committed to by 2012.
Senator Murray. All right.
At home I am hearing from a lot of counselors and
homeowners about the problems that they are facing in getting
permanent mortgage modifications. It is very frustrating. In
fact, it is actually anger, especially when we hear about the
profits that a lot of these banks are making in large part due
to Federal taxpayer assistance. Since a lot of these banks have
received direct or indirect Government assistance, is there
anything the administration is doing to make sure that they are
working in good faith now to assist these troubled homeowners?
Mr. Stevens. There are several things that have occurred
and I would be eager to follow up with either of your offices
with additional information, but let me just say a couple of
things.
One is, I think you are all aware we have the Making Home
Affordable Web site. We also have the Making Home Affordable
hotline where consumers can call in, if they are not getting
the response they think they need from their banks, and we have
teams that will triage those and respond to them fairly
quickly. So they do have a direct, non-institution channel if
the point of frustration comes. So that is a backstop at the
point where they are probably already frustrated.
On the front end, that was one of the----
Senator Murray. My front desk in my Seattle office would
tell you that that is not working very well.
Mr. Stevens. The hotline is not working?
Senator Murray. Yes.
Mr. Stevens. Okay, that is good feedback. I would love to
hear more about that. We actually talked about that in our
meeting this week.
You know, the other issue that has gone on with the HAMP
program is the banks did not staff up. People would call
initially. They could not get someone on the phone. They would
send in packages. We have heard stories of lost documents. We
have done several things to try to address that environment.
Senator Murray. Banks not returning phone calls forever.
Mr. Stevens. That is right. And I get a lot of personal e-
mails and phone calls from just consumers that I have to get
involved with, just as I am sure your offices do, and their
frustration level is very high.
There are several things we are working on in the banks.
One, from a readiness standpoint, they are clearly better off
today than they were even 60 days ago. So we are hopeful that
will happen; that they are onboard. We have made them all
designate a czar or a head of the HAMP program within their
institutions that is solely accountable for HAMP and has the
authority to make decisions around HAMP. That was a directive
of the meeting this week.
Senator Murray. Will we know who those people are so we can
direct our constituents to them?
Mr. Stevens. I will work with that office, and we will try
to make sure that list is made public for you.
Senator Murray. If it is just one more phone number that
they call that they cannot get to, it is not going to be very
helpful.
Mr. Stevens. Right, I recognize that.
This is a directive. So we have asked them to identify that
individual, make it clear. We want to assemble who the head of
that is, and we are going to have a much increased frequency of
meetings between the Treasury Department and HUD to meet with
these heads for all the institutions to make sure they are
staying onboard with the HAMP process.
We have changed documentation standards. We have done field
checks. We have gone out and done individual field visits with
each of the institutions to investigate their process. We are
sharing best practices.
But without question, the frustration is real. The lack of
activity and readiness was absolutely there. They were not
ready. They continue to get ramped up and onboard from an
operational standpoint. And then there are a lot of issues in
just getting access to the homeowners, having them understand
the paperwork involved from the trial modification to
transition to the permanent modification.
So all of these are real challenges, Phyllis Caldwell, who
is heading up the office for Treasury, is a great resource and
is very focused on it on a full-time basis solely on HAMP to
try to make sure that these problems are resolved, but without
question, I mean, quite frankly this was a huge program that
was implemented. It has never been done before. The banks did
not get ready quick enough. We have all collectively learned
about what was not working through the process. I think a lot
of----
Senator Murray. Well, I guess from my point of view, I want
to know that the banks are working to do this rather than doing
everything they can to make it not work or stall it or not get
involved.
Mr. Stevens. We agree, and we made that point. I can assure
you that the meeting that was held this week, which was
attended by mostly CEO levels of all the major lenders--
Assistant Secretary Herb Allison was very direct on that
subject, as were all of us at the table about their needing to
be ready to stop these customer responses, these consumer
responses that are so frustrated. And I have personally spoken
to them myself as well, and I feel without question their
frustration and pain. They have committed to going there. They
all acknowledge there are still going to be some missed--just
because of the vast number of people, but we need to do as much
as we can to eliminate that frustration.
If it would be okay, I would actually like to have Phyllis
Caldwell draft a response for you on this question----
Senator Murray. I would really like that.
Mr. Stevens [continuing]. To lay out with specificity what
is going on so that if there are questions or concerns you have
from there, we can respond further.
Senator Murray. Okay, and to give her our feedback that
this is a huge frustration for a lot of our constituents right
now.
Mr. Stevens. Yes. And she knows it and we have had meetings
with many Senators and Members of the House on this issue. We
all get it. We all know the score now, and the pressure has to
be on these banks to get ready to view this as the same
priority as they would originating a new loan through their
sales force. They have pledged their commitment. They re-
pledged it at a meeting that we made them fly in for this week.
It was a very stern discussion on the subject. So we share your
concern. We share the frustration, and it is a full court press
from both Secretary Donovan and Secretary Geithner.
Senator Murray. It may take more than being stern.
Mr. Stevens. It might.
Senator Murray. Also in my last few seconds of my time,
there is an FHA HAMP program which applies only to FHA
mortgages, and that is the one you have just been talking
about. Okay.
And if you want to, please comment on that, and I will turn
it over to Senator Bond.
Mr. Stevens. Yes. The HAMP program I was referring to was
not FHA. It was the broader HAMP program, but that does include
the FHA numbers. The FHA HAMP numbers are actually very small.
They are in the low thousands, and I think the reason for that
is FHA has a loss mitigation program that has been so
successful and has been in the market for many, many years. We
have just a greater experience with dealing with loss
mitigation, and to that extent, we have addressed over 600,000
in-distress homeowners in the last year on our own outside of
HAMP. And I would be glad to report the resolution numbers on
those, if you have interest.
Senator Murray. That would be good.
Mr. Stevens. Okay.
Senator Murray. Thank you.
Senator Bond.
Senator Bond. Thank you, Madam Chair. That was an area that
I wanted to explore, and you have done that, and we thank you
very much, Commissioner, for your comments on it.
Let me ask in a related area. It is my understanding
Freddie Mac was directed to buy back troubled loans from
investors, taking the losses on the mortgage. It seemed to me
that that policy was designed to bail out lenders on their
risky investments but did little to save a home with a risky
loan for the homeowner. Am I missing something here? You want
to keep the investors happy, but if they are losing their skin
in the game, should we be bailing them out?
Mr. Stevens. I apologize. I do not have the specifics on
that. I will tell you that in meetings with Freddie Mac and
Fannie Mae, which we have had, this week, the vast majority of
their efforts are not there. The vast majority of their efforts
are in working on the HAMP initiatives and modification and
HAFA, the refinance program, and very little on the buybacks. I
could guess, but I would rather not guess for you and get
specifics back on what assets they bought. I do not know the
size of it.
HUD INSPECTOR GENERAL EFFORTS ON FRAUD AND ABUSE
Senator Bond. We are interested in getting a handle on this
because, as you have indicated, there are so many moving parts
in this that we want to try to get a handle on as many as
possible.
We talked about the fraud and abuse efforts. Is there a
joint oversight program with Justice, Treasury, HUD inspector
general, and other agencies? You talked about 365 cases have
been referred to the Mortgage Review board. Do you know how
many of those cases have--question No. 1, is there a joint
effort? Question No. 2, how many criminal indictments? Do you
know offhand?
Mr. Stevens. Senator, I would probably defer to the
inspector general who is playing a huge leadership role in the
fraud joint task force. So I would encourage----
Senator Bond. Maybe we could invite Mr. Donohue to come to
the table, if you do not mind, just briefly on this one.
Mr. Donohue. First off, may I thank you very much. I would
be remiss, Senator, if I did not respond back to your first
comments. I am so grateful to you for your support. I would be
remiss in not mentioning Senator Mikulski and Senator Sarbanes
and Senator Murray as well and John Kamarck of your staff and
Megan from yours, Senator Murray.
This is not possible. You mentioned seller down payment
assistance. I think if seller down payment continued, we would
be having a different discussion here today. It is a result of
your leadership that that is possible in support of that
effort.
We are very heavily engaged with the Department of Justice.
We are involved in a major Federal fraud task force that I sit
in with Attorney General Holder and his deputy staff. We had
three summits recently: one in Miami, one in Detroit, and one
in Phoenix, Arizona. And we had a chance to have people come in
from the industry, people who are victims and talk about some
of their concerns and also the law enforcement community as
well.
The reason I mention that, getting back to Senator Murray's
concern, you were talking about the counseling which is very
important to you. One of the things I do want to mention to you
when you spoke to that is what we are finding and the concern
to us is that we are finding fraudulent counseling going on----
Senator Bond. Oh, really.
Mr. Donohue [continuing]. Where people are going back out
and being contacted and being approached to give certain fees
of sorts. And of course, that person disappears in the night or
continues on the fraudulent activity. That came out in all
those three summits very actively. So it is not just the
challenge of--the statements that the Commissioner made, but
also we are seeing a significant amount of fraudulent activity
as well.
As far as our cases are concerned, we have about 2,400
civil investigations on right now with regard to cases specific
to the FHA fraud activity. We have created a civil fraud
initiative. And you mentioned about the other agencies working
together. I was on the National Bank Fraud Working Group back
in the RTC days. And I think what we are seeing now is a
collaboration of law enforcement working together.
I think it is a great challenge, sir. I think that these
regulatory agencies talking to each other, working with them
collectively--I have spoken to the Commissioner about setting
up a consortium with Fannie and Freddie and the other GSEs. The
best practice. I would like to see standard forms applying with
regard to this mortgage activity. I have spoken to that in my
testimony.
So we are very active. We are working well with regard to
law enforcement agencies and, like yourself I share the same
sentiment. I would like to see a lot more people in orange or
red suits as much as I could on these cases.
Senator Bond. I know by the fall of 2008, I was following
very closely my home area. The Eastern District of Missouri
U.S. Attorney had initiated three major actions with numerous
parties involved. I have not had any follow-up or heard how
many criminal prosecutions related to mortgage fraud. I do not
know if they were all FHA--have been initiated, how many have
been concluded with a successful conviction. Do you know that?
Mr. Donohue. Well, sir, my semi-annual report I was just
given, indictments and information from the period of April 1,
2009 to September 30, 2009, 1,182 indictments and information;
convictions, pleas, pretrial diversions, 847.
Senator Bond. Good. That number needs to be publicized
because that is the greatest prophylactic to let people know if
they are going to do it.
I was concerned to hear your comments about fraudulent
counseling. A few years ago, Senator Dodd and I created a $180
million foreclosure counseling effort. I talked with people all
over my State who were involved in the counseling, and they
were having some success, minimal success. But the one thing
they emphasized to me was foreclosure counseling is not good
enough. There has got to be pre-purchase counseling before
somebody buys a home. We have to have an independent and maybe
not a fee-based counseling program set up to sit down with the
family, potential home buyer, explain to them what their
obligations are, and look at their finances to see if they can
buy a home.
Commissioner, obviously you have got some thoughts on that.
Mr. Stevens. Yes. We share the concern. In fact, I have
been hosting meetings with industry participants to talk about
financial counseling particularly related to managing personal
finances and mortgage finances before you make the decision to
buy a home. We have had the help of members of the Housing
Policy Council and others come in and show us and make
recommendations of how we might go down that path. It is very
complicated to institute a whole new way of doing pre-purchase
financial counseling as opposed to what most housing counselors
are doing today, to your point. Given the huge volume of
foreclosures in the market, most housing counselors are
overwhelmed with homeowners in distress. So the ability to
transition into being able to have the time and scope to do
pre-purchase sort of financial literacy becomes more
challenging.
The other thing is most of the agencies in Washington that
deal anywhere in the financial area have some sort of financial
literacy classes that are available on their Web site, and so
there is some opportunity to consolidate those together. But we
are working on that right now and hopefully will be able to
report back on that sometime in the future.
Senator Bond. Well, thank you. I think that is very
important. Senator Murray and I are concerned a whole lot about
what happens in Washington State and Missouri. And the people
on the ground are the ones who really need to do it. In our
State, NeighborWorks has been a very good partner. And we look
forward to seeing those efforts expand and perhaps more
assistance is needed in that pre-purchase counseling.
Mr. Donohue, I am disturbed to hear that there are
fraudulent counselors. But again, the best place for them is in
Government-restricted housing. I wish you the best in assuring
their placement in that kind of facility.
Mr. Stevens. It is interesting. The President even spoke
about this when he first came into office. But if you watch TV
and see someone helping someone walk away from their home, I
think that was one of the things covered on the recent piece on
strategic defaults. They called themselves counselors. They
charge a couple $1,000 to counsel a family in distress, and
they are not authorized. Free counseling is available, and
getting that information to distressed homeowners is the big
challenge.
GSE LOSSES
Senator Bond. One quick question. I do not know if you have
the answer to this. On the GSEs, do you know how much of the
losses are coming from their old books of business as opposed
to the new business like foreclosure mitigation efforts like
HAMP?
Mr. Stevens. I recently just looked at some of their
performance data, and Senator, like with the FHA portfolio the
vast majority of these losses are on older books, 2006, 2007,
and 2008 are just terrible portfolios. They are bad for FHA and
they are bad for Freddie and Fannie. And it is those portfolios
that we are going to be all experiencing losses on and paying
the price for several years more to come.
Senator Bond. Thank you very much. I hope that the new
business does not catch up with the old business. Thank you
very much.
I have a commitment I have got to make, but I appreciate
very much your testimony. We have got a lot of interesting
follow-up that we are going to ask the staff to do.
Thank you, Madam Chair.
Senator Murray. Thank you very much, Senator Bond. And I
would just say I have a financial literacy bill that we start
teaching basic financial skills back in our elementary schools.
You and I probably are the few here who remember our banking
Fridays at school where we learned how to balance our
checkbooks and how to read basic financial statements and that
is lacking in education today.
Senator Bond. The only thing I would add, I took a very
high-level law school course on banking and bankruptcy. And I
was having trouble with my checkbook, and the instructor said
my checkbook never works out right. So I always take the bank's
view from it.
HAMP
Senator Murray. A prevalent opinion today.
Moving on, thank you very much, Senator Bond.
I wanted to go back for a second to the HAMP program.
Originally it was focused on reducing interest payments and
spreading mortgages. The administration has changed that,
focusing on principal write-downs and relief for unemployed
borrowers and an expansion of the existing refinance program.
In order to participate now, lenders are required to write
down principal and make sure that a borrower's mortgage is
affordable, as measured by total mortgage debt, including both
their first and second liens. As I talked about in my opening
statement, these mortgages do come with additional risk, and
$14 billion in TARP funding has been set aside for that
initiative.
Commissioner Stevens, how much additional risk do you
expect to find these refinanced mortgages to carry?
Mr. Stevens. Senator, the way we are looking at the program
is the allocation of the $14 billion in TARP funds will be to
cover the incremental risk exposure on these loans. While we
have modeled various paths of the loans that come in, the
variability will be on seeing the actual loans as they are
originated. So, for example, as you are aware, we allow a
combined loan-to-value where a second lien holder can
subordinate up to 115 percent. It is estimated that one-half of
all negative equity loans in America have a second lien, but we
do not know how many of those will come into the FHA portfolio.
Those that have subordinated second liens are going to have a
higher risk weighting on our portfolio, as we see them come in,
than those that do not.
Likewise, the FICO score distribution can have a wider
range, and if the FICO distribution ends up being much lower on
the scale, they will have a higher risk weighting than those
that do not.
So we have the $14 billion allocation from Treasury. We do
not, but that will be assigned to offset the claims from the
lenders. As the loan comes in, we will be evaluating that
volume coming in. If it skews off the path, we have the ability
in the program, as announced, to stop it with little notice.
And our Chief Risk Officer, Bob Ryan, is tasked with managing
that overview. We will have the data of all the loans coming in
as they are being insured. So we will just watch the volume
coming in, the distribution of all those attributes that can
cause risk, what risk rating we assign to those, and we will
stop the program at a point in time if the risk seems greater
than what we originally foresaw.
DEFAULT RATE
Senator Murray. What is the default rate that you are
assuming?
Mr. Stevens. Without giving specificity--and the reason why
I am trying to avoid is there is a wide range of default
expectations. There is a high default rate, which would be
something similar to what we are seeing on some of our worst
books of business from the past years. There are some estimates
by some economists who think this is actually going to be a
better performing book than even a standard refinance because
the borrower incentives to come into the portfolio are that
much higher. So to that extent, we know we have a bucket of
risk mitigation dollars from TARP that will be available to the
lenders to pay their claims, and that is why it is important to
watch what comes in because the distribution could be from very
low to very high.
It is kind of like stochastic modeling where you are
looking at a variety of outcomes. We just know that we are
going to use those real loans coming in to identify what path
they are coming in on, and that will help us forecast as to
when the funds will be exhausted.
Senator Murray. How much of the $14 billion will actually
cover the costs that are expected to result from additional
risk and how much will be used to provide incentives to lenders
or help extinguish second liens?
Mr. Stevens. The only incentives that are being provided at
all are incentives for second lien extinguishment. There are no
servicer incentives provided in the FHA solution, and there are
no first lien principal write-down incentives whatsoever. So
the private sector will bear all the costs of writing down the
principal balance and refinancing that mortgage into a new FHA
mortgage. So the only variable on the $14 billion will be the
second lien, and without again trying to be evasive, because of
the various paths and what our expectancy is on how many of
these will have second liens versus those that will not, we
have a wide range. I would say for a simplistic view, we expect
the second lien extinguishment portion to be a relatively small
percentage of the $14 billion because it only pays pennies on
the dollar anyway, and the vast majority of the $14 billion
will be to offset risk to the FHA portfolio.
We have pledged to report these numbers and share them with
a high level of frequency with the Department of the Treasury.
We are both going to be reviewing the actual assets coming in
carefully together because our primary focus is not to add
incremental risk to the FHA portfolio through this initiative.
STRATEGIC DEFAULTS
Senator Murray. In my opening remarks, I mentioned the
concern I have about strategic defaults, people who are
defaulting because they are just making that decision to do it
not because they are personally not able to make their mortgage
payment. I am concerned that this could provide some serious
instability in the market, and I wanted to ask you, is there
any good data today on how serious this problem is or something
that you are seeing with FHA-insured mortgages?
Mr. Stevens. We have done a great deal of research into the
strategic default area. There is no history on this. Strategic
default is a new anomaly for this recession. And as I am sure
you are concerned and I am concerned--I was interviewed on 60
Minutes on Sunday on this subject. There is a significant moral
hazard that will pervade the mortgage finance system for
decades to come should this become a real problem.
Based on estimates we have gotten from independent third
party analysts which include the GSEs' view as well as
economists like Mark Zandi, it is estimated that real strategic
default risk is in the single digits as a percentage of overall
foreclosures. So somewhere between 7 and 9 percent are sort of
the current estimates of what are real strategic defaults.
Now, the issue ends up being that negative equity is highly
concentrated in five key States, the sand States plus Michigan.
And in those States--in Nevada, which is the worst hit, for
example, if you look at all negative equity loans, which is
somewhere between 11 million and 15 million loans that have
negative equity, about one-half of those are either second
homes or investor properties, and some small percentage of
those are also super-jumbo, million-plus dollar homes. So when
you isolate back down to the rest of the borrowers that have
negative equity, you break that down into two categories. The
greatest category will be those--our default risk will be those
that are in distress that have lost their jobs, had income
curtailment.
Laurie Goodman of Amherst Securities suggests that negative
equity could contribute 1 percent to the unemployment rate
because people just cannot accept a job somewhere else because
they cannot get out of their home without going into
foreclosure. That is where the focus of our efforts is.
But our solution with FHA does allow an investor, if they
think a strategic defaulter is going to walk away, to write
down their principal too and put them into a refinance, if they
will stay. But we do need to track this carefully over time and
see, to the extent this becomes a greater hazard because the
ramifications, as I am sure you would agree, go far beyond just
the foreclosure risk to those communities. It will affect how
loans are priced in the future if that is considered a real
risk.
Senator Murray. And the other question I wanted to ask you
about is the so-called shadow inventory. We obviously have an
oversupply of housing right now, and there is a concern that
with all the newer imminent foreclosures that are coming or
banks that are holding repossessed homes if those start
flooding back on the market, what kind of impact that would
have. Could you talk a little bit about how big perhaps the
shadow inventory----
Mr. Stevens. Again, this is another where there is great
research on it. In fact, I have a couple of good studies I
would be glad to send to Megan or however you want me to get it
back to you that have been done independently.
The shadow inventory is real. And the in-foreclosure
numbers are clearly higher than the actual foreclosure numbers.
I know that in the FHA portfolio and I see it in the numbers at
both of the GSEs. So there are a lot of reasons why that has
been built up, part of which is just the overwhelming volume
that hit many of these counties that have to process
foreclosures, moratoriums placed in various States or areas
where the courts put a freeze or bans on foreclosures for a
period of time. Clearly the loss mitigation efforts by FHA
through HAMP, even portfolio modifications have also slowed the
process down, and banks are obviously being much more
aggressive to try to delay the foreclosure if they can find any
way to work out a borrower's situation in most cases. And so
the inventory of in-default is clearly rising.
Now, there are some estimates that based on some home price
appreciation forecasts, even modest ones, that a good
percentage of those foreclosure problem cases could be resolved
just by some slight improvements to unemployment and some
slight improvements to home values, in other words, that they
are close enough to the line that they could back into an
affordability with some involvement on either forbearance or
modification efforts that are being done today.
But it is still--without question, the numbers are large.
At FHA, for example, our in-foreclosure numbers are about
double what they were a year ago in foreclosure, but our actual
foreclosures are not double of what they were a year ago. That
is why, even though we are behind on actual foreclosures today
based on our forecasts, I expect them to rise based on what I
am seeing in this shadow inventory that is coming in.
So we are looking at the data very carefully. And again, I
would be glad to share at least some independent looks that I
may have available with your office.
Senator Murray. I would really appreciate that very much.
With that, I want to thank both of you, especially
Commissioner Stevens, for your input today. It has been very
valuable.
ADDITIONAL COMMITTEE QUESTIONS
There will be questions submitted by a number of our
subcommittee members. We will leave the record open in order to
have you respond to those.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Patty Murray
FHA RISKS
Question. As we have discussed, CBO recently came out with its re-
estimate of the receipts that FHA will generate from mortgages insured
in fiscal year 2011. The result is a loss of $4 billion in anticipated
receipts. This is not the first time that CBO had disagreed with OMB's
assumptions for receipts. Do the current models appropriately account
for risk?
Answer. FHA spends a great deal of time and effort studying the
credit risk of its insured portfolios. The valuation models used for
the single family insured portfolio have been developed over a 20-year
period and capture all of the essential factors needed to value a
national portfolio. Those include borrower credit quality, downpayment
rates, house price changes, and interest rate movements.
For its scoring of the fiscal year 2011 budget, the CBO did not
have a similar credit risk model for FHA. They are in the process of
building such a model for scoring the fiscal year 2012 budget. CBO
also, but not unlike OMB, prefers to err on the side of conservative
judgments, especially when there is uncertainly involved. The nature of
any disagreements on the value of FHA loan guarantees generally comes
down to uncertainty with respect to future housing market conditions.
There is no right answer. There are only informed judgments, and
persons of goodwill can differ markedly in their preference for some
risk-adjustment factor in forecasting.
The direct impact of larger economic risk adjustments in a budget
forecast is to lessen the expected budget receipts generated from the
FHA insurance programs, and thus lower the overall receipts the
Congress has when formulating a budget. The indirect impact is to
increase the probability that, in future years, there will be
beneficial budget re-estimates for the affected cohorts of loan
guarantees, and lessen the probability of adverse re-estimates.
FHA PRIORITIES FOR INVESTMENTS
Question. As I mentioned in my statement, improving the information
systems at FHA are critical. As you know from coming from the private
sector, the systems at FHA are outdated and are in some instances
opening FHA to unnecessary risk. Last year, we provided HUD with
significant resources to invest in IT systems. This included funding
for immediate fraud detection and mortgage fraud tools as well as
longer-term investments. How are you prioritizing these IT investments?
Answer. With respect to prioritization for Combating Mortgage
Fraud, fiscal year 2010 funds are being used to address a broad range
of risk and fraud management efforts within the Department. FHA has
worked diligently to put in place contract vehicles which provide
access to industry leading tools and professional services that will
greatly enhance the Department's capabilities related to fraud
detection/prevention and risk mitigation. Specifically, we are focused
on the following three functional areas:
--Counterparty Risk Management Functionality
--Analytical Consulting Services for risk and fraud tool evaluation
and selection
--Consulting and Contracting Services for Loan-level File Review
Through the acquisition process, HUD has focused on services that
address the most critical and immediate areas of need within FHA to
reduce the likelihood of insuring fraudulent and high risk loans,
detect trouble spots among product types, improve targeting methodology
for loans selected for review, significantly improve counterparty due
diligence and review, and aggregate key information to make informed
and reasoned decisions across the organization. To the extent feasible,
these services are designed to have applicability across the FHA
enterprise and may well reduce total organization contract expenditures
on duplicative tools and services. However, the short-term application
of this contract vehicle will be for the Single Family portfolio with
downstream usage envisioned for multifamily and hospital financing.
With respect to prioritization for longer-term FHA IT investments,
the use of the Transformation Initiative funds for IT purposes requires
detailed IT planning per Congressional requirements. Our modernization
objectives align with the FHA IT Strategy and Improvement Plan (FHA IT
Plan) submitted to Congressional committees in August 2009. As
articulated in the FHA IT Plan, with many, if not all, of Housing's IT
systems being old and outdated, our priority is to transform and
upgrade FHA's infrastructure in line with modern financial services
organizations. This initiative is being designed and planned to
leverage the specific components of the Risk and Fraud initiative as
they become a reality for FHA. This is how all of the Transformation
work comes together. Tools selected through the Combating Mortgage
Fraud Initiative will fit into the portions of the architecture that
house aggregated capabilities for FHA. In addition, counterparty level
information, required by the Risk and Fraud initiative, will flow into
the front end of the FHA Infrastructure data area and provide valuable
insight throughout the insurance lifecycle.
Question. How quickly do you think you can make these IT upgrades?
Answer. FHA has worked closely with internal (e.g., OCIO) and
external (e.g., GAO, OMB) organizations to create measurable 6-, 12-,
and 18-month deliverables for the FHA Transformation work. While our
project planning materials indicate that this initiative will be a
multiyear effort that spans longer than an 18-month timeframe, the
initiative has been crafted to ensure that measurable value is
delivered in as short a timeframe as possible.
NEW SHORT SALE PROGRAM
Question. In the midst of all of the attempts being made to keep
families in their homes, the administration recently announced its
plans to implement a program to facilitate short sales. Through these
sales, lenders and borrowers consent to take a loss by selling a home
below the mortgage balance owed in order to avoid foreclosure. How much
would this initiative cost?
Answer. As this is an initiative led by the Department of the
Treasury, it would be more appropriate that these questions be directed
to that agency for response.
Question. As with all of the housing programs, this would be a
voluntary program, and lenders already have the ability to do short
sales. Why do you believe that the relatively modest amount of
incentive payment that would be offered will be enough to increase the
number short-sales so that it has a real impact on the housing market?
Answer. As this is an initiative led by the Department of the
Treasury, it would be more appropriate if this question was directed to
them for response.
Question. Under this new program, participating owners would be
required to sell their home if an offer is made at a pre-determined
price. Under the proposal, this price would be determined by Real
Estate agents. Given the inherent subjectivity of home value
determinations, there is a concern that this program could be open to
fraud and conflicts of interest. What protections will be put in place
to mitigate these risks?
Answer. As this is an initiative led by the Department of the
Treasury, it would be more appropriate if this question was directed to
them for response.
HOME AFFORDABLE MODIFICATION PROGRAM
Question. One of the problems with HAMP has been the capacity of
servicers to process the claims. Do you think that servicers have the
capacity to manage a significant increase in short sales?
Answer. As this is an initiative led by the Department of the
Treasury, it would be more appropriate if this question was directed to
them for response.
SUBCOMMITTEE RECESS
Senator Murray. Again, thank you so much, both of you, for
your participation today.
With that, this hearing is recessed, and this subcommittee
will hold its next hearing on Wednesday, May 19 at 3:30 on the
fiscal year 2011 budget request for the Washington Metropolitan
Area Transit Authority.
[Whereupon, at 11:09 a.m., Thursday, May 13, the
subcommittee was recessed, to reconvene at 3:30 p.m.,
Wednesday, May 19.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
WEDNESDAY, MAY 19, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 4:09 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray and Mikulski.
Also present: Senator Cardin.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY
STATEMENT OF HON. PETER BENJAMIN, CHAIRMAN, BOARD OF
DIRECTORS
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Good afternoon. This subcommittee will come
to order.
Our apologies for being late this afternoon, we are having
votes on the floor and could not get here in time. So I
apologize to all of our witnesses and all those who are here,
but we are here and ready to go.
And this afternoon, we are holding a hearing on the
President's budget request for the Washington Metropolitan Area
Transit Authority [WMATA]. We are going to be hearing testimony
from Senator Cardin. He is going to be joining us here in just
a few minutes.
We will have two panels. The first panel following Senator
Cardin will include the Chairman of WMATA Board of Directors,
Mr. Peter Benjamin, and Mr. Richard Sarles, the Interim General
Manager.
The second panel will consist of three witnesses: Ms.
Jackie Jeter, who is the president of Local 689 of the ATU; Mr.
Jack Corbett, director of MetroRiders.org; and Mr. Francis
DeBernardo, chairman of the Riders' Advisory Council.
I want to welcome all of our witnesses at this time and
really appreciate your being here today.
Metro has often been called the jewel of the Washington, DC
area's transportation system. It is a web of rail and bus lines
that reaches into almost every neighborhood across the region.
On a typical work day, it carries passengers on more than 1.2
million trips, making it the second-largest heavy rail and
sixth-largest bus transit system in the Nation.
Its trains and buses cross two States and the District,
offering mobility, reducing congestion, and reducing air
pollution. For those neighborhoods clustered around its
stations, it is a proven engine for economic development. Its
difficulties--management, financial, and especially safety--
have been deeply troubling to this subcommittee, which have
long been a champion of public transit and strong supporter of
Metro.
In the past year, 13 people have died in 4 separate
accidents at Metrorail, including 8 passengers and 5 employees.
All of these accidents were preventable, which is a tragic
indictment of management and the agency's safety culture.
Like many other transit systems around the country, Metro
faces a severe operating budget shortfall, and its Board of
Directors is considering significant fare increases that are
required to restore the system's financial footing. Given the
need to also replace much of Metro's aging rail fleet, parts of
which date to the 1970s, and upgrade its track signaling
systems, fare increases and other steps to increase revenues
and control costs are unavoidable. They are also essential to
any future growth of the system since financial stability is a
key requirement for support from the highly competitive New
Starts program administered by the Federal Department of
Transportation.
Tackling these challenges is the responsibility of Metro's
board and its new interim general manager, Mr. Sarles, and they
clearly have their work cut out for them. Just 2 weeks ago, we
saw communications delays and confusion over what could have
potentially been a serious incident at Wheaton station.
That said, I am encouraged by the efforts to restore a
culture centered on safety, where safety is considered and
factored into every decision concerning operations. In recent
weeks, Metro has hired a new Chief Safety Officer committed to
filling key vacancies in its Safety Division, taken steps to
increase track worker safety, and committed to address the
findings of the FTA's highly critical review by the end of the
summer.
It is still early, and changing any complex organization,
even one with large numbers of dedicated workers such as Metro,
does not happen quickly. Metro's problems did not develop
overnight, and some solutions will require time and commitment.
For that reason, Metro must be relentless on this point. Its
passengers, employees, and the taxpayers will expect nothing
less.
The real test for Metro's new leadership will be its
ability to demonstrate continued progress, the most visible
sign of which will be the absence of further accidents, as well
as upgrading the system to better serve its riders. The Federal
Government is supporting Metro's efforts to right itself, both
through the technical assistance provided by the Department of
Transportation, as well as through direct appropriations.
Last year, Congress provided almost $200 million in
stimulus funding on top of the $239 million in formula and bus
grant funding awarded to Metro. For fiscal year 2010, Congress
added a further $150 million to support Metro capital and
preventive maintenance expenses, focusing on those investments
that most improve safety. This was in addition to the $85
million appropriated for the Dulles airport extension.
I was pleased to see the administration continue both
investments in Metro in its fiscal year 2011 budget, with
another $150 million requested for capital expenses and $96
million for the Dulles extension. I trust this strong
demonstration of support will encourage Metro's three funding
partners to continue to meet their responsibilities toward the
system as well.
During this hearing, we will have the opportunity to look
into these important issues. It is impossible to imagine the
Washington region without Metro. It has transformed the city
and the region, and we owe it to present and future generations
to not just maintain it, but to make it better.
So I look forward to the testimony today, and I want to
thank Senator Mikulski, who has been absolutely wonderful in
helping us put this hearing together. Her adamant support of
the system and making sure it works right is a real tribute to
her work as a Senator from Maryland. And I am delighted she is
here today.
Senator Mikulski.
STATEMENT OF SENATOR BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Chairwoman Murray.
I want to thank you for holding this very important hearing
on the WMATA budget.
I know that we will be very shortly joined by Senator
Cardin, and I want to thank those in the audience for their
patience while we were working through some parliamentary
quagmire on the financial service bill.
We want to thank you for your courtesy to allow us all to
participate. As a member of the subcommittee, we appreciate
that you have expanded it. Senator Warner is on the Banking
Committee and is on the floor with Senator Webb. We hope they
will join us.
But Senator Murray, I also would ask unanimous consent,
before I begin my remarks, to put into the record a letter from
Governor O'Malley. Governor O'Malley wishes to inform you
through me that he is committed to providing Maryland's full
share for the regional funding to match the statutory Federal
investment in WMATA.
There was some confusion about that. He wanted to assure
you in the strongest possible way that Maryland will meet its
commitment. However, he does call for budget reform with WMATA
and encourages that they go to a 6-year capital program,
updates on their budget process, and so on. I would like to
discuss that with you at a later time, but I ask unanimous
consent that the Governor O'Malley letter be in the record.
Senator Murray. The letter will be put into the record.
[The information follows:]
Office of the Governor,
State of Maryland, May 18, 2010.
The Honorable Barbara A. Mikulski,
United States Senate,
503 Hart Senate Office Building, Washington DC 20510.
Dear Senator Mikulski: The State of Maryland is committed to
providing its full share of the regional funding to match statutory
Federal investment in the Washington Metropolitan Area Transit
Authority (WMATA). In order to qualify for $1.5 billion in Federal
funding dedicated for WMATA system preservation over 10 years, the
Maryland Department of Transportation (MDOT) Consolidated
Transportation Program (CTP) reflects annual on-going contributions of
$50 million--100 percent of our share of the region's matching funds.
To ensure these funds are programmed and managed responsibly, we
and our partner jurisdictions are calling for WMATA to develop and
implement a capital programming process much like the one the MDOT has
used for over 30 years. The key elements of the process include:
--A 6-year capital program period;
--Formal annual updates as part of the budget process; and
--Quarterly reviews focusing on project cost, schedule and scope
changes, updated project cash-flow projections, and revised
estimates of overall capital program components.
I thank you for your efforts to secure dedicated Federal funding
for WMATA as we all work to ensure the safety, security and reliability
of transit in the national capital region. We were the first of the
three jurisdictions to program our matching funds, have always
fulfilled our funding commitments to WMATA, and assure you that WMATA
funding will continue to be a top priority for Maryland in the years
ahead. For further information, you may contact me at any time or
direct your questions to MDOT Secretary Beverley K. Swaim-Staley at
410-865-1001.
Sincerely,
Martin O'Malley,
Governor.
Senator Mikulski. And to assure you of that.
Also, Senator Murray, there was concern, and I would want
to work with you on this, that as we go forward with our
statutory requirement of $150 million, that States and
localities do not reduce their money. That this money was in
addition to the contributions that were pledged by State and
local governments. So we are in addition to. We are not in lieu
of what either Maryland, Virginia, or the District of Columbia,
the Virginia localities would contribute.
As we work on this bill, I would like to talk with you
about a requirement that there be maintenance of effort by all
of those who are signatories to their original agreements.
Senator Murray. I would be happy to discuss that with you.
Senator Mikulski. But, you know, we need the will, a
wallet, and a way. While often this hearing focuses on the
wallet, we have to talk about what is the way forward, and do
we have the will and the methods to accomplishment?
You rightly have identified that Metro's safety and
operational reliability is absolutely critical. It affects
daily riders for those who come to the Capital, for those who
commute from within the region, or others who come from around
the world. It is important to those who work at the Metro,
operating the trains, fixing the tracks, managing the stations.
Madam Chair, you have to know, and others, that we have
been very impatient with Metro; we don't want any more
promises, memos, or laundry lists. We need action on safety. I
hope at today's hearing we can get into the specifics of what
Metro has done already to improve safety? What do they plan to
do? And how have we made progress?
I would hope that we could get into their measurements in
metrics to really identify, have they made progress in both
improving their safety systems, the personnel involved in the
safety systems, and in the leadership and the changing of the
culture. You might be interested to know that Metro has no line
item in its budget for safety, or maybe it has been recently
added as a result of some of the new initiatives that we have
encouraged them to take.
Like you, I am very impatient over the fact that it has
been almost 1 year since the deadly crash at Metro. Thirteen
more people have died: eight Metro riders; and five Metro
employees. These aren't numbers. These aren't statistics. These
are human beings.
We have had audits. We have reports. We have
recommendations. We need action. Audits, reports, and
recommendations are a pathway, but now we need action.
I remain just as worried about the safety of Metro as I was
last June. We are now 11 months from that tragic crash, and we
need to have a sense of urgency. What results does Metro have
to show? The Federal Transit Administration [FTA] audit found
persistent, ongoing, and systemic problems, and a Metro Safety
Department, actually, initially barely functional.
At various points, Metro leadership was ignorant of safety
when they made budget decisions, and also they were not getting
regular safety reports. So, today, I hope we can see what is
the change, how has it changed, and for the Federal
Government's contribution of $150 million, what kind of change
are we going to get for their money?
Madam Chair, I want to acknowledge, both to you and to all
here, all of us need to be safety officers. It is not only the
people who operate who are charged at the Metro, but also all
of us--those of us who fund it, and those of us who have
political responsibility for it. We all need to commit
ourselves to being safety officers.
We need to know, as I said, what has Metro done to improve
the safety, implement the FTA audit recommendations, and what
are the mechanisms they have in place to measure their
performance?
Metro is America's subway. This is an annual dedicated
funding that is authorized. We ask you to continue the $150
million Federal contribution, but for our money, we want
safety, operational reliability, and a way that will also be
sustained. We really do want to insist on those outcomes.
Senator Murray. Senator Mikulski, thank you so much for
your opening statement.
I know we are waiting for Senator Cardin. He will be here
in just a minute. I would like both of our first witnesses, Mr.
Sarles and Mr. Benjamin, to come up to the table, and we will
take their testimony while we are waiting for Senator Cardin to
do that.
I am going to have to apologize. I have been called back
over to the floor, Senator Mikulski. And I will ask Senator
Mikulski to chair this hearing and to take the testimony. And
if I am not able to return in time, Mr. Sarles and Mr.
Benjamin, I do have questions from the subcommittee that I will
submit to you for writing.
But Senator Mikulski, if you would not mind, if I could
turn the chair over to you for a short while here?
Senator Mikulski. Be happy to do it. If you can come back,
we will look forward it. If not, we will move expeditiously.
Senator Murray. Okay. With that----
Senator Mikulski. Mr. Benjamin and Mr. Sarles. Mr. Sarles
is the Interim General Manager, and Mr. Benjamin is the
Chairman of the Board.
Senator Murray. Thank you.
Senator Mikulski [presiding]. Okay. Thank you.
You may proceed.
STATEMENT OF HON. PETER BENJAMIN
Mr. Benjamin. Senator Mikulski, the comments that you have
made and those by Chairman Murray are exactly right, and I am
not sure that I can say them much better. I will try anyway to
give my testimony.
I am honored to appear before you today as the Chairman of
the Board of Directors of the Washington Metropolitan Area
Transit Authority. Metro's General Manager, Richard Sarles,
will cover this agency's specific initiatives with regard to
improved safety and service. I would like to provide the
context for Metro's fiscal year 2011 appropriations request by
giving the subcommittee some background about the Metro system
and our capital needs.
First, let me quote from a letter which President Lyndon
Johnson wrote to Congress in 1965. ``The problem of mass
transportation in the Washington area is critical. It is also a
problem in which the Federal Government has a unique interest
and responsibility. Improved transportation in this area is
essential for the continued and effective performance of the
functions of the Government of the United States, for the
welfare of the District of Columbia, and for the orderly growth
and development of the national capital region.''
In 1966, Congress responded by authorizing the creation of
the Washington Metropolitan Area Transit Authority as an
interstate compact. Today, the Federal Government is uniquely
dependent on Metro, something that distinguishes Metro from
other U.S. transit systems. One-half of all Metro stations are
located at Federal facilities, and over 40 percent of peak
ridership consists of Federal employees.
A quick listing of some of our rail stations demonstrates
Metro's close connection to the Federal Government--Federal
Triangle, Smithsonian, Capitol South, Navy Yard, Pentagon, and
Arlington Cemetery, to name a few. The Federal Government is
particularly reliant on Metro for special national events, such
as inaugurals and state funerals, transportation of visitors to
the Nation's capital, and persons doing business with the
Federal Government.
Without Metro, it is hard to imagine how this region would
have handled the massive influx of visitors who came to attend
the inauguration of President Obama in January 2009. Federal
disaster recovery plans in this region rely heavily on Metro,
and Metro played a key role on September 11 in moving people
out of the downtown core.
Congress recognized the Federal Government's unique
relationship with Metro when it passed the Passenger Rail
Investment and Improvement Act of 2008, PRIIA, which authorized
$1.5 billion for Metro's capital and preventive maintenance
needs to be equally matched by Metro's State and local funding
partners.
I want to thank this subcommittee and your colleagues in
Congress for appropriating the first installment of that
authorization last year. We are requesting that another $150
million be appropriated in Federal fiscal year 2011, as
provided for in the President's fiscal year 2011 budget.
PREPARED STATEMENT
On behalf of Metro's Board of Directors, I thank you for
your long history of support for Metro and your leadership in
providing funding for the rehabilitation of Metro facilities
and the replacement of Metro equipment. It is no understatement
to say that just as the Federal Government depends on Metro,
the future of Metro depends upon the Federal Government and the
funding authorized under PRIIA.
Thank you for allowing me to testify today. I look forward
to answering your questions.
[The statement follows:]
Prepared Statement of Hon. Peter Benjamin
Madam Chairman, Ranking Member Bond, and members of the
subcommittee, I am honored to appear before you today as the Chairman
of the Board of Directors of the Washington Metropolitan Area Transit
Authority (Metro). Metro's General Manager, Richard Sarles, will cover
the agency's specific initiatives with regard to improved safety and
service. I would like to provide the context for Metro's fiscal year
2011 appropriations request by giving the subcommittee some background
about the Metro system and our capital needs.
METRO SERVES THE FEDERAL GOVERNMENT
The problem of mass transportation in the Washington area is
critical. It is also a problem in which the Federal Government has a
unique interest and responsibility . . . improved transportation in
this area is essential for the continued and effective performance of
the functions of the Government of the United States, for the welfare
of the District of Columbia, [and] for the orderly growth and
development of the National Capital region.----President Lyndon
Johnson, 1965 letter to Congress.
It may surprise you to learn that Metro's relationship with the
Congress began over 100 years ago, just a few yards away from where we
are sitting today. In 1906, when the subway was built connecting the
U.S. Capitol to the Senate Office Building (now the Russell Building),
people started thinking about building a subway for the city. The
Washington Post published an article in 1909 titled, ``Why Not a Real
Subway System for Washington?'' A 1931 Post article included a map of
downtown Washington showing possible subway routes.
In 1955, Congress became directly involved in the discussion, and
approved $500,000 to have the National Capital Planning Commission
conduct a ``Mass Transportation Survey'' for the Washington region. The
results of that survey led to passage of the National Capital
Transportation Act of 1960, which created an independent Federal agency
to plan a regional system of highways and mass transit to serve the
Nation's Capital. In 1966, Congress authorized the creation of the
Washington Metropolitan Area Transit Authority as an interstate compact
agency of the State of Maryland, the Commonwealth of Virginia, and the
District of Columbia to plan, finance and construct a rail transit
system for the region, and early the following year Metro was ``born.''
Today, the Federal Government is uniquely dependent upon Metro,
something that distinguishes Metro from other U.S. transit systems.
One-half of all Metrorail stations are located at Federal facilities,
and about 40 percent of peak ridership consists of Federal employees. A
quick listing of some of our rail stations demonstrates Metro's close
connection to the Federal Government: Federal Triangle, Smithsonian,
Capitol South, Navy Yard, Pentagon, and Arlington Cemetery, to name a
few. It is not surprising that in 2005, a ``Blue Ribbon'' report found
that the Federal Government, the region's largest employer, is the
``largest single beneficiary'' of Metro.
The Federal Government is particularly reliant on Metro for special
national events such as inaugurals and State funerals, transportation
of visitors to the Nation's Capital and persons doing business with the
Federal Government. Without Metro, it is hard to imagine how this
region would have handled the massive influx of visitors who came to
attend the inauguration of President Obama in January 2009. Metro
carried 1.5 million riders on Inauguration Day, providing attendees
with a convenient--albeit crowded--transportation alternative.
Federal disaster recovery plans in this region rely heavily on
Metro, and Metro played a key role on September 11, 2001, in moving
people out of the downtown core. People were able to rush home to their
families because Metro employees stayed on the job, operating trains
and buses, staffing stations, and coordinating service from a command
center. Other Federal plans, such as the BRAC-related consolidation of
Walter Reed Army Medical Center and Bethesda Naval Hospital, also
depend upon Metro; the consolidated facility, which will serve tens of
thousands of patients and visitors annually, will be located at the
Medical Center Metrorail station.
In fact, it is fair to say that Metro is the backbone of daily
Federal Government operations. During the recent snowstorms, when it
was impossible to operate Metrobuses safely on surface streets and to
run Metrorail trains on above-ground tracks, the Federal Government
decided to close. With well over 100,000 Federal employees regularly
commuting by Metro, and thousands of others using Metro to access
Federal facilities every day, the Federal Government depends heavily
upon the system.
METRO'S CAPITAL NEEDS
Congress recognized the Federal Government's unique relationship
with Metro when it passed the Passenger Rail Investment and Improvement
Act of 2008 (``PRIIA'', Public Law 110-432), which authorized $1.5
billion for Metro's capital and preventive maintenance needs, to be
equally matched by Metro's State and local funding partners. I want to
thank this subcommittee and your colleagues in Congress for
appropriating the first installment of that authorization last year. We
are requesting that another $150 million be appropriated in Federal
fiscal year 2011, as provided for in the President's fiscal year 2011
budget request.
Why is this funding so important to Metro? Because we have a 34-
year old rail system, which is not like it used to be when it was new.
It has old rail cars, track bed, power equipment, and communications
systems. More than one-half of our bus garages are over 50 years old
and some buses are 15 years old. As the equipment and facilities age
they become less reliable, break down more often, and need more
maintenance. We have to replace our tracks, trains, and buses, and must
rehabilitate our stations, bridges, and maintenance facilities. We have
30-year-old ventilation, lighting, and communications systems which
must be maintained or replaced. Some of our station platforms are
crumbling, our escalators and elevators need major repairs, and water
is leaking into our tunnels. We must do all of the work required while
providing service to hundreds of thousands of customers daily.
We have been fortunate in that our funding partners--the Federal
Government as well as the State and local jurisdictions that we serve--
have demonstrated strong support for Metro's capital program. As a
result, Metro has been able to build out and operate a full 106-mile
rail system, run a fleet of 1,500 buses, and provide paratransit
service to thousands of customers with disabilities. We have also been
able to make a number of critical investments in the system, including,
for the first time, running 8-car trains. (When the Metro system first
opened in 1976, we ran 4-car trains--hard to imagine today!)
Going forward, however, Metro needs increased investment to keep
the system in a state of good repair. We are currently developing our
capital program for the next 6 years. I expect that our State and local
funding partners will not only continue, but will increase, their
current level of funding to Metro, and in addition will match the new
Federal funding stream authorized in PRIIA. The PRIIA funding itself is
essential not just to leverage these additional contributions, but to
help us at Metro address our most critical needs, such as replacing our
oldest rail cars and rehabilitating our oldest segments of track.
I hope that I have made clear why this funding is important to
Metro. I hope that it is also clear why this funding should be
important to the Congress. The PRIIA funds will allow us to make
urgently needed investments in the aging infrastructure of our system
so that we can continue to provide Federal employees, residents of the
metropolitan area, and visitors to the Nation's capital from across the
Nation and around the world, with safe and reliable service. Annual
appropriations under PRIIA are essential if we are to keep our system
in a state of good repair.
On behalf of Metro's Board of Directors, I thank you for your long
history of support for Metro and your leadership in providing funding
for the rehabilitation of Metro facilities and replacement of Metro
equipment. It is no understatement to say that just as the Federal
Government depends upon Metro, the future of Metro now depends upon the
Federal Government and the funding authorized under PRIIA. Thank you
for allowing me to testify today, and I look forward to answering the
subcommittee's questions.
Senator Mikulski. Mr. Sarles, before I call upon you, may I
recognize Senator Cardin.
Senator Cardin.
STATEMENT OF SENATOR BENJAMIN L. CARDIN
Senator Cardin. Thank you, Madam Chair. Senator Mikulski,
thank you very much. You don't have to leave the table. I don't
mind being associated with Metro, I'm a big supporter of the
Transit Authority.
As Senator Mikulski knows, we were interrupted because of
some votes, and I apologize for being a few minutes late. But I
would ask consent that my full statement and letter that I
authored to President Obama in December be made part of the
record.
[The statement follows:]
Prepared Statement of Senator Benjamin L. Cardin
Thank you Chairman Murray and Ranking Member Bond for holding this
hearing, and thank you Sen. Mikulski for inviting me to address the
subcommittee about the Federal Government's increased commitment to
invest in the Washington Metropolitan Area Transit Authority.
Last year, the Greater Washington Congressional Delegation fought
hard for the much needed transportation appropriation we secured for
WMATA. In working with the members of this subcommittee and the full
committee we were able to get it done and for that I am grateful. I
appreciate that the appropriators recognize the important role Metro
plays in the function of the Federal Government, including Congress.
In December, I read a letter to President Obama urging him to
include Metro in his budget. I ask for unanimous consent that a copy of
this letter signed by Senators Mikulski, Webb, Warner and me be
submitted for the record. I applaud and support the administration's
request of $150 million in fiscal year 2011 for Metro.
This demonstrates the President's commitment to smart growth, his
recognition that it is in the Federal Government's interest to
alleviate and not contribute to terrible traffic congestion in the
Greater Washington Area--ranked the 2nd worst in the United States only
behind Los Angeles, how integral a part of the region's transportation
network Metro is and more broadly how transit fits into the Nation's
transportation goals for the future. His budget request for Metro is in
keeping with the October 9, 2009 Executive Order (No. 13514) on Federal
Sustainability and the administration's efforts to reduce the Federal
Government's carbon footprint, including its workforce.
It also shows the administration's recognition of how important
Metro and ``America's Subway'' system is to the function of the
Government. We learned from this February's snowstorms that the Federal
Government in fact cannot function without Metro. The Office of
Personnel Management based its decision to shutdown the Federal
Government on WMATA's inability to operate above-ground rail lines
during the storms. This not only points out the Federal Government's
reliance on Metro, but also highlights Metro's lack of resources to
operate in weather conditions that other city transit systems like
Chicago, New York or Boston could work through.
Every work day, Metro provides tens of thousands of Federal
employees rides to work. During peak ridership, more than 40 percent of
riders on Metro are Federal employees and 10 percent of the overall
ridership serves Congress and the Pentagon alone. Metrorail's alignment
was designed to serve the Federal Government, with more than one-half
of the system's stations located at or near Federal buildings. GSA has
also established guidance that requires all new Federal facilities in
the Greater Washington Area be Metro Proximate.
I believe that the Federal Government has a clear financial
interest in the operation of Metro. Likewise, I believe the Federal
Government must play a greater role in ensuring the safety of Metro for
its riders and employees.
Safe and reliable operation of the Metro System is a top priority
for me and the Greater Washington Area delegation.
Revelations from the March NTSB hearing into the ongoing
investigation of the June 22, 2009, fatal accident on the Red Line near
Fort Totten, as well as discoveries made by the FTA through its Safety
Audit of WMATA provided overwhelming evidence that Metro needs to look
inward and make serious efforts to revise its approach to operating the
system safely.
Metro needs to work hard to establish a culture of safety that
starts from the General Manager office and the Board of Directors on
down through the various leaders of departments within WMATA and
throughout the system's operators.
We have heard directly from interim General Manager, Richard
Sarles, and Board Chairman Peter Benjamin about the changes being made
at Metro to improve safety. However, during our meeting last week in
Senator Mikulski's office, on the afternoon of May 5, there was an
emergency braking situation on the Red Line in Wheaton. The incident
was not reported to the Tri-State Oversight Commission within 2 hours
of the incident, as per WMATA's protocol, nor was the Board or General
Manager immediately informed of the incident.
I appreciate how forthcoming WMATA is with information surrounding
this incident after the fact. I am pleased to know that even though the
train operator may not have needed to take the actions he did, that he
is not being punished for being cautious and causing the disruption.
That said, this incident reveals that lapses in protocol are still an
issue at WMATA.
I am committed to working with my congressional colleagues, the
Federal Transit Administration and the leadership at the Washington
Metropolitan Transit Authority to make safety an operational priority
at Metro and restore public confidence in the system. I want more than
just verbal commitments to improve safety from WMATA and I want to see
measurable results.
If the Federal Government increases its investment in the system,
it should also increase its oversight of operations and capital
projects, so as to ensure that tax dollars are being well spent. I am
confident that we will find a way forward through:
--Increased Federal regulatory authority and oversight, as called for
by the FTA; and
--Increased openness and transparency at WMATA.
The FTA is prohibited by law from establishing national safety
standards, requiring Federal inspections, or dictating operating
practices. However, Senators Dodd, Menendez, Mikulski, and I introduced
The Public Transportation Safety Program Act that will require the
Transportation Secretary to establish and implement a comprehensive
Public Transportation Safety program.
This legislation will give the FTA the ability to take decisive
actions such as conducting inspections, investigations, audits,
examinations of (Federally funded) public transportation systems. This
legislation establishes the type of safety enforcement authority for
the FTA that already exists within the Federal Railroad
Administration's authority over safety rules for commuter rail systems
or the Federal Motor Carrier Safety Administration's ability to
establish enforceable safety guidance for commercial truck drivers.
It makes sense for public transit systems that receive Federal
funding to meet Federal safety requirements set by the FTA. It makes
even more sense to grant FTA a degree of Federal authority to establish
safety guidance, particularly when it comes to WMATA, given Metro's
unique relationship to the Federal Government.
In July 2009, FTA Administrator Peter Rogoff, in testimony before
the House Oversight and Government Reform Committee made special note
of the fact that WMATA does not have a dedicated revenue stream, rather
it relies heavily on Congressional Appropriations which may fluctuate
from year to year.
While the President's request for $150 million for Metro is an
example of such special appropriations, it sends an important signal
that the Federal Government recognizes the need to invest in Metro.
Fortunately, Congress has taken an important step forward to remedy
this situation. The Senate recently passed a new Metro Compact further
advancing the final step in authorizing a 10 year $1.5 billion
authorization providing Metro with a dedicated funding stream to ensure
the safe and efficient operation of the system.
For years, while Metro was a relatively new transit system, Metro
was the epitome of safe, reliable and modern public transit. After 34
years of operation, the results of placing disproportionate resources
toward growing the system rather than attending to the growing backlog
of repairs and maintenance needs of the existing infrastructure,
Metro's age is taking its toll on the safe operation and function of
the system.
Metro must reevaluate its operational priorities. It is one thing
to develop detailed plans to improve safety, and yet another to do what
FTA Administrator Rogoff noted in the FTA's Safety audit, and that is
to change the business culture at Metro to take safety seriously and
execute these new safety measures. Metro provides a vital service to
the Government and the region and I stand ready to help improve the
system.
I thank the chair and Senator Mikulski for inviting me here today.
I urge the subcommittee to include the President's fiscal year 2011
budget request for Metro in the fiscal year 2011 THUD Appropriations
bill.
______
United States Senate,
Washington, DC, December 10, 2009.
The Honorable Barack Obama,
President of the United States,
The White House,
Washington, DC 20500.
Dear Mr. President: As you make final preparation for the
submission of your fiscal year 2011 budget, we request that you provide
$150 million to the Washington Metropolitan Area Transportation
Authority (WMATA), the full amount authorized in the National Capital
Transportation Amendments Act, included as title VI of division B of
Public Law 110-432. This is a vital issue to both the effective and
efficient functioning of the Federal Government as well as to the
entire Washington, DC metropolitan area. WMATA's compact jurisdictions
are committed to providing 50 percent matching funding.
For the first time, both the U.S. Senate and the U.S. House of
Representatives have included $150 million in appropriations for WMATA.
This is the first installment of funding to support a 10 year
authorization for the Washington region's transit system. We urge that
your administration's fiscal year 2011 budget build on Congress's
effort to provide WMATA with essential funding to maintain and improve
systems operation.
Sometimes known as ``America's Subway,'' WMATA was created in 1966
primarily to serve the Federal Government. Many Metrorail stations were
built at the request of the Federal Government, and nearly one-half of
all stations are located at Federal facilities. Federal employees
comprise 40 percent of WMATA's peak ridership, and millions of others
use the WMATA system (Metrorail, Metrobus, and WMATA's paratransit
program: MetroAccess) each year to visit the Nation's Capital or
conduct business with the Federal Government.
WMATA is also a critical component for ensuring continuity of
Federal Government operations during an emergency, and Federal recovery
plans rely heavily on WMATA, which played a key role on September 11,
2001. Another key indicator of how important the system is to the
functioning of the Nation's capital, WMATA handled 1.5 million trips in
a single day during this year's inauguration and was the most viable
transportation option during this event. For all of these reasons,
Congress saw fit to provide a unique authorization for WMATA,
recognizing the special responsibility the Federal Government has to
the Metro system.
Before the enactment of this legislation last year, WMATA operated
the only major transit system in the country without a source of
dedicated revenue. The result has been a system with burgeoning needs
and shrinking resources. Recent fatal tragedies on Metrorail underscore
the need for infrastructure repair and maintenance to ensure the safe
operation of this aging system.
The $150 million in capital funding is for projects included in
WMATA's Capital Improvement Program and approved by WMATA's Board of
Directors. The funds will be used to maintain the transit system in a
state of good repair, including vehicles, facilities, and
infrastructure. All of the funds are for capital improvements and none
may be used for operating expenses.
The enabling legislation provides, for the first time, two seats on
the Board of Directors for the Federal Government, represented by the
General Services Administration. For this reason, we recommend that the
funding be provided through the GSA portion of your budget submittal.
This is a unique Federal obligation related to the operations of the
Federal Government, and this seems an appropriate place in the budget
to demonstrate that relationship clearly. Regardless of its placement
in the budget, however, we urge you in the strongest terms to include
this essential funding in your fiscal year 2011 submission. It is vital
to the region and the Nation. We believe it warrants your strong
support.
Sincerely,
Benjamin L. Cardin,
United States Senator.
Barbara A. Mikulski,
United States Senator.
Jim Webb,
United States Senator.
Mark Warner,
United States Senator.
Senator Cardin. And Senator Mikulski, I want to thank you
particularly for keeping our regional delegation focused on the
importance of Metro, Metro funding, and the Federal
Government's partnership with our Nation's subway system that
is here and our transit system that is so important to the
Federal Government.
We fought hard, our regional delegation, last year to get
$150 million put into the budget. It wasn't easy. And I want to
thank the appropriators for making those funds available. It is
critically important. And I strongly support President Obama's
budget that adds $150 million this year to the Metro funding
for fiscal year 2011. It is desperately needed. It is the right
thing to do.
This is the Nation's subway system. The Washington, DC area
ranks second-worst in the United States as far as traffic
congestion is concerned. This system is critically important to
the operation of the region's Federal facilities. During peak
ridership, more than 40 percent of the riders on Metro are
Federal employees. Ten percent of the overall ridership serves
Congress and the Pentagon. So this is how our employees get to
work.
And the Federal Government has a clear financial interest
in the operation of Metro. Likewise, I believe the Federal
Government must play a greater role in assuring the safety of
the Metro system for its riders and employees, and there has
been no stronger voice in the United States Congress on this
issue than Senator Mikulski. I thank you very much for speaking
out for the fact that, yes, we support the Federal Government's
financial partnership with Metro, but we also believe that the
Federal Government has a responsibility to make sure the system
operates safely for the ridership, its patrons, and its
employees.
And the problems with safety continue. I know that the
witnesses from Metro that you have before you have instituted
changes, and there have been improvements made. But we need to
change the culture of Metro so that safety is a priority, and
that is a continuing process that will require greater
oversight, and I urge us to set up a way that we can continue
the oversight.
May 5, there was an emergency braking situation on the Red
Line in Wheaton, and fortunately the incident was handled by
the operators and system controllers so as to avoid an
accident, but some of the protocols were still not followed in
regards to that particular episode. These missteps reinforce
the need for stronger oversight on safety.
I strongly support the legislation that Senator Mikulski
has been involved with that would give the FTA the authority to
set up safety standards for our transit system, so they can do
it now for our rail. They can do it for the trucks. It seems to
me that we should have the authority to set up Federal
regulatory standards for our transit systems, and I would urge
the Congress to take on that particular issue.
The Senate recently passed the new Metro compact, further
advancing the final steps of authorizing a 10-year $1.5 billion
authorization for Metro with a dedicated funding system. That
is critically important.
But let me just point out one last point. This system is 34
years old. It is an aged system. I have seen the crumbling
platforms, and I tell you, I worry about the safety of Metro
today. It needs maintenance funds. It needs attention. It needs
to make sure that its current service areas are done in a safe
way for its patrons and employees.
I think, in the past, Metro has been divided as to whether
to pay attention to its current system or seek expansion of its
system. And we all believe that we have to expand the service
that Metro provides. But the first priority needs to be to take
care of the existing infrastructure of the current system, with
its stations and with its cars and with the way that it manages
the system for safety.
And I would just urge this subcommittee in making the funds
available. It is critically important the Federal Government
live up to its commitment as a partner, but also to establish a
way that we can be more actively involved as a partner with
Metro in regards to the safety.
And with that, Madam Chair, I thank you very much for
allowing me to be here today.
Senator Mikulski. Thank you, Senator Cardin.
First of all, you have been a real champion of Metro
funding, as mass transit, as well as MARC trains. In other
words, safe, efficient mass movement of people. We want to
thank you for your advocacy both on the Environment and Public
Works Committee and on the Budget Committee. Like you, I join
in wanting to continue the Federal partnership of $150 million,
but I really think we have to be careful. I think we also have
to be insistent on certain kinds of conditions and not give a
blank check.
So, thank you.
Mr. Sarles, you have been one of the most patient people in
the room, and we apologize. We thank you and, please, now go
ahead and take as much time as you want to give us your views.
STATEMENT OF RICHARD SARLES, INTERIM GENERAL MANAGER
Mr. Sarles. Thank you, Madam Chair, and thank you for the
opportunity to testify today.
As you know, Metro has submitted a request for $150 million
in fiscal year 2011. And as the subcommittee considers that
request, I feel that it is important for you to know what we
are doing to improve the safety and reliability of our system.
My written statement includes a detailed description of our
action plan. So I will just briefly summarize a few key points.
I will be at Metro until the board selects a new permanent
general manager. I don't know how long that will be, but while
I am here, I am taking a back-to-basics approach. I want to
strengthen the agency so that I leave it in better shape for my
successor.
The audit that you asked the FTA to conduct was extremely
helpful to us as we developed our safety action plan. And
frankly, I welcome your watchdog role, especially in the area
of safety.
In response to that audit, I am working, first and
foremost, on strengthening our safety program so that it is
robust and proactive, not just reactive. We are hiring more
good people and getting them the training that they need. We
are developing an incident management system so that we can
analyze trends and spot issues before they become major
problems.
We are also improving protections for our track workers by
updating our procedures and our training program for those who
work in and around the track area.
I am also refocusing the agency on addressing our state of
good repair needs. We have an aging system, and things are
starting to break down more often. We need to do more today to
keep our system in a state of good repair than we did when it
was 5, 10, or even 20 years old.
We are developing a new capital program, which will allow
us to meet the state of good repair needs. Our State and local
partners are committed to increasing their contribution to
Metro, but to meet these needs, we must also continue to
receive the funds authorized by Congress in the Passenger Rail
Investment and Improvement Act. I thank this subcommittee for
providing the first installment of that funding last year.
These are the building blocks that will lead to a stronger
organization for our employees and better service for our
customers. It will take time to address all these issues fully,
and we are constantly working on improving. For example, while
the emergency braking at the Wheaton station 2 weeks ago did
not involve an actual hazardous condition, we have learned from
that experience and taken action to improve notification
procedures to our operations control center and our oversight
agencies.
I believe that we are making progress, but you don't have
to take my word for it. Next month, Metro will begin posting an
online performance scorecard so that members of the public can
track how well we are doing.
PREPARED STATEMENT
Thank you for the opportunity to testify today and for your
consideration of our request. I would be happy to answer any
questions.
[The statement follows:]
Prepared Statement of Richard Sarles
Madam Chairman, Ranking Member Bond, and members of the
subcommittee, thank you for the opportunity to testify before you
today. I am Richard Sarles, General Manager of the Washington
Metropolitan Area Transit Authority, known as WMATA or Metro.
I began my service as Metro's General Manager over 1 month ago. My
career in rail and public transportation has spanned 40 years, during
which time I worked with the Port Authority of New York and New Jersey,
Amtrak, and most recently, New Jersey Transit. I have used the Metro
system many times, and have always been impressed by Metro's services
and how well they are delivered. But Metro is no longer new. We have
requested an appropriation of $150 million in Federal fiscal year 2011
to help us address some of the challenges associated with our aging
system. As you consider that request, I want to let you know what Metro
is doing to move forward on improving our system's safety, reliability,
and financial stability.
SAFETY
As the subcommittee is aware, this region experienced an
unprecedented tragedy on June 22 of last year, when two Metrorail
trains collided on the Red Line north of the Fort Totten station. Nine
people lost their lives and dozens of others were injured in an
accident that has had ripple effects throughout the transit industry.
The National Transportation Safety Board's (NTSB) investigation of the
accident has focused on technological issues, not human error, as the
key factor leading to the collision, and as a result, transit and rail
providers across the country have been reexamining their track
signaling systems for signs of the same potential failure that caused
the June 22 accident.
The NTSB's final report on the accident has not yet been issued,
but Metro has already taken steps to improve safety on the rail system.
We have been operating trains in manual mode since the accident, and we
will continue to do so until the NTSB report is issued and any
necessary modifications are completed. We have increased the frequency
of computerized testing of track circuits, and we are holding the
performance of those circuits to a higher standard than previously
required. In addition, as recommended by the NTSB, we are working with
a contractor to develop a real-time monitoring system which will
provide an alert should a track circuit fail.
In addition to the June 22 accident, Metro has experienced a number
of other incidents over the past year that require us to re-assess the
way that we go about ensuring the safety of our customers and
employees. Our internal assessments and findings regarding safety have
been supplemented by external agencies' reports, such as the March 2010
audit of Metro's safety program by the Federal Transit Administration,
requested by Senator Mikulski. These external reports have been and
will be critically important in helping Metro identify where we need to
improve with regard to safety. We have learned even from those
incidents which were not hazardous in nature, such as the May 5
emergency braking near the Wheaton station. Although there were no
hazardous conditions present, we have taken action to improve reporting
of such incidents to our operations control center and our oversight
agencies.
The following section describes a number of other actions that we
have taken in recent months to address both internal and external
findings in the areas of staffing, communications, track worker
protection, and rail operations.
Staffing
The FTA audit and other assessments have identified lack of
sufficient safety staff and expertise as an issue at Metro. To address
that issue, Metro has hired a new Chief Safety Officer, James
Dougherty, who began his duties on April 19. Mr. Dougherty brings 25
years of experience in transit safety, occupational safety and health,
industrial hygiene and environmental protection, and he will report
directly to me. In addition, we have filled 6 of 12 new positions in
the safety department, and we expect to fill the remaining vacancies
within 60 days. These new positions will help us to effectively
investigate incidents/accidents, review and document safety policies
and procedures, ensure safety protocols are in place and implemented,
and analyze safety trends. We have also arranged for needed training
for our safety personnel with the Transportation Safety Institute, an
arm of the U.S. Department of Transportation, with seven courses
scheduled through September.
Communications
Lack of communications across and within departments has also been
cited in various reports as a problem at Metro. We have recently begun
several new communications initiatives. For example, to improve
communication between the Safety Department and operational personnel,
we now have safety officers assigned to each bus and rail division.
These safety officers participate in regular meetings of the front-line
staff in their division, as well as interacting on a daily basis with
operations employees on safety-related matters.
In addition, my predecessor held 6 ``Safety Action Report Out''
meetings with 60 front-line superintendents to increase their awareness
and accountability regarding safety. I intend to continue those
meetings on a regular basis. We have also established a cross-
departmental Safety Action Team tasked with finding ways to create a
safer organization. The Team's first initiative is designed to further
improve communications with front-line employees to ensure that safety-
related information, as well as other messages, reaches all employees
regardless of their work location.
Track Worker Protection
Employees who work on and around our track areas are exposed to
dangerous situations each day they come to work. Protection of these
workers must be robust and effective. Metro is committed to improving
our current practices and has established a cross-departmental Roadway
Worker Protection Work Group which includes representatives from
several Metro departments, union representatives, and representatives
from FTA and TOC. This group has drafted a new roadway worker
protection manual which has been submitted to the TOC for review. The
group is also in the process of developing a new roadway worker
training plan, and will also test and evaluate new technologies and
processes for use in the Metro system; these activities are expected to
be complete by the Fall of 2010.
Metro's track environment shares certain characteristics with other
transit and rail systems, and we have reached out to our peers to learn
from them and share best practices. Metro conducted a workshop in
January with peer transit agencies, FTA, TOC, and union
representatives, and convened a roundtable discussion in April with the
Federal Railroad Administration and inter-city rail operators. The
results of these discussions are reflected in the new draft manual and
will be included in the training regimen being developed by the Roadway
Worker Protection Work Group.
Rail Operations
In addition to the operational changes implemented in response to
the June 22 accident, discussed above, Metro is continuing to respond
to earlier NTSB recommendations. We expect to award a contract in the
near future to begin building the cars to replace our oldest vehicles,
the 1000 series cars, as the NTSB has recommended. In addition, we are
continuing to add rollback protection for rail cars operating in manual
mode, another NTSB recommendation. About one-half of our fleet
currently has such protection, and we are working to install it on the
remaining cars with completion anticipated by the end of calendar year
2012.
Six-month Action Plan--Safety
While we have made progress with regard to safety, we still have
work to do. We have established the following safety-related
priorities:
--Fill Remaining Safety Department Vacancies and Increase Training.--
Specifically, we must continue to have front-line safety
briefings while we develop more effective right-of-way training
and identify other needed training for front-line staff. In
addition, we have begun labor relations training for
supervisors of represented employees, re-emphasizing the
supervisors' role in safety; we intend to complete that
training by the end of 2010.
--Continue Accelerated Close-out of Open Safety-related Audit
Findings.--With the approval of the TOC, Metro develops
corrective action plans (CAPs) in response to findings from
both external and internal audits and investigations. Metro has
closed 190 CAPs since 2007, with the rate of closure increasing
significantly in recent months. Currently 85 CAPs remain open
(including CAPs that were recently added in response to the
TOC's Roadway Worker Protection study and internal safety
audits). I have communicated to Metro staff that continuing to
close CAPs promptly is a top priority. I am particularly
focused on responding to the recommendations in the FTA audit;
we submitted a CAP for that audit to FTA on April 29. (Please
see attachment No. 1 for details.)
--Develop Incident Tracking and Safety Management Reporting System.--
We are taking advantage of improvements in technology to
develop a web-based tool to allow for communication of safety-
related information and tracking across departments.
Development is expected to be complete by the end of August
2010.
--Encourage Near-miss Reporting, Including Anonymous Hotline and
Strengthened Whistleblower Protection.--David Gunn's report
cited Metro for having a ``shoot-the-messenger'' culture. I am
taking steps to end that perception. I have informed all
employees of the existence of a safety hotline and safety e-
mail address through which they can report safety concerns,
anonymously if desired. In addition, we are updating Metro's
whistleblower protection policy to encourage employees to raise
safety-related concerns.
--Complete New Right-of-way Worker Protection Manual and Revisions to
Metrorail Safety Rules and Procedures Handbook (MSRPH).--When
rules are outdated or unclear, they tend to be ignored. By Fall
2010 we intend to complete work on a new set of rules for
right-of-way workers as well as an updated MSRPH, with rules
and procedures that are clear, up-to-date, and effective.
--Complete Self-assessment of Safety-related Internal Controls and
Initiate Thorough Assessment of Safety Culture.--We intend to
complete further self-assessments in safety-related areas, the
first of which is focused on internal controls. In addition, we
have contacted the U.S. Department of Transportation, the AFL-
CIO, and the American Public Transportation Association to seek
their assistance in assembling a team of experts not only to
review Metro's safety culture, but also to recommend specific
measures to improve that culture and to provide assistance in
implementing those recommendations. We intend to initiate this
review by Fall 2010, while recognizing that organizational
culture change is a long-term process.
SERVICE RELIABILITY
According to the Washington Post, ``most riders give the (Metro)
system high marks for comfort, reliability and generally the ability to
take them where they want to go.'' (``In Survey, Metro Still Gets High
Marks after a Year of Low Points,'' April 5, 2010). Still, we know that
we need to do better. The quality of our customers' experience is the
key to the continued success of our system. We are taking steps to
improve the on-time performance of all of our modes--Metrorail,
Metrobus, and MetroAccess--as well as the availability of our elevators
and escalators which have a very direct impact on the quality of our
customers' trips.
For Metrorail, we have evaluated ways of improving service
reliability through schedule adjustments and are preparing to implement
the first adjustment on the Red Line. We have also implemented revised
30-, 60-, and 90-day training performance reviews for newly certified
train operators to ensure that they are meeting our standards for safe
operations and customer service and to provide us with an on-going
source of review regarding the effectiveness of our training programs.
For Metrobus, we are in the process of replacing 148 older buses,
with deliveries between March and September 2010. With newer vehicles
we expect fewer equipment failures, leading to improved service
delivery. We have also reorganized our bus transportation division,
retrained operators and supervisors, and increased supervision of
street operations to better monitor and address service reliability
issues. We have implemented NextBus, which provides customers with
real-time bus arrival information by phone or online, and have created
a new online service disruption notification for bus customers. For
MetroAccess drivers, we have developed a new training program and
installed Drive-Cam in MetroAccess vehicles to record incidents for
investigation and training purposes.
With regard to elevators and escalators, we are consolidating our
command and maintenance centers to eliminate reporting layers and
improve accountability, a process which we expect to have fully
implemented by the end of June 2010. Also by June, we intend to have
restructured our technicians' shifts to create rapid response teams
with responsibility for maintenance and repair in defined geographic
areas.
Six-month Action Plan--Service Reliability
I have established the following priorities regarding service
reliability:
--Increase Training for Front-line Employees and Supervisors.--
Specifically, we intend to provide additional training to all
station managers with a renewed emphasis on customer service,
as well as complete training that we have already begun related
to the reorganization of our bus department, designed to
improve management of operators, reduce accidents, and improve
service.
--Create Transparent Performance Tracking and Reporting Systems.--New
performance measurement tools are currently under development,
including web-based dashboards, a monthly vital signs report of
key performance indicators, and an annual performance report to
assess what is working well, what is not, and why. By the end
of June 2010 we expect to release many of these new tools
publicly to foster increased accountability and transparency.
--Revise Inspection and Maintenance Procedures to Accommodate Changes
in Operations.--As in the area of safety, our rules and
procedures for inspections and maintenance need to be clear and
relevant for our current operating environment. With changes in
place related to manual operation and restricted speeds, our
new vertical transportation command center, etc., we must start
revising our related procedures accordingly.
--Pilot Metrorail Schedule Adjustment on Red Line.--As I mentioned
earlier, we intend to adjust schedules on the Red Line to
improve service reliability and the quality of the customers'
experience. The new schedules will reflect reality and allow
for more time for customers to board and alight the trains at
our busiest stations, and will involve more 8-car trains
running to the ends of the line, which will maintain our
passenger throughput capacity for the Red Line as a whole.
--Initiate External Assessment of Elevator/Escalator Maintenance and
Repair Programs.--We intend to contract with outside experts to
conduct a review of these programs in order to assess their
efficiency and effectiveness and make recommendations for
additional improvements.
--Continually Re-emphasize Safety and State of Good Repair as Top
Priorities.--Maintenance of vehicles, track, structures,
signals, and other infrastructure in a state of good repair has
a direct impact on the safety and reliability of the Metro
system, as it does for every transit agency in the country. If
the condition of the Metro system is allowed to degenerate
further, issues related to service reliability will continue to
increase. The most effective action we can take to improve
reliability is to improve the physical condition of our system.
FINANCIAL STABILITY
Now let me turn to a topic which is integrally related to our
ability to improve service reliability--Metro's budget and current
funding constraints. Metro's proposed fiscal year 2011 budget totals
$2.1 billion. That total is composed of Metro's operating budget, which
supports the daily delivery of transit service (including personnel
costs, fuel and propulsion costs, etc.), and the capital budget, which
funds investments in the vehicles, equipment, facilities, and
infrastructure of the transit system. Sources of funding for those
needs include State and local funds; Federal funds (primarily for
capital costs); passenger fares and parking revenues, and other sources
(such as advertising and fiber optic revenue). Passenger fares cover
about one-half of the cost of Metro's operations; broken out by mode,
they cover more than 70 percent of Metrorail operations, about 30
percent of Metrobus operations, and 5 percent of MetroAccess
operations.
Operating Budget
Fiscal year 2011 is likely the most difficult year, financially
speaking, that Metro has ever had to face. The economic slowdown is
having a continued impact on Metro, as it is across the country. For
the transit industry as a whole, the economic slowdown has meant that
ridership and revenue are down, while costs continue to go up.
Despite the encouraging ridership numbers that Metro has
experienced in the last few weeks, Metrorail ridership for fiscal year
2011 is projected to be just 2 percent above the fiscal year 2009
levels, and on Metrobus, ridership growth over 2009 levels is only
projected to be 1.5 percent. These projections are primarily due to
continued high unemployment in the region combined with reduced
spending by consumers. Lower Metrorail ridership has resulted in less
revenue coming in from Metro parking facilities as well. Major cost
drivers in the fiscal year 2011 operating budget include the rise in
healthcare cost (which is in line with national trends), market losses
in pension values, the increasing demand for MetroAccess service, and
liability insurance and claims associated with the June 22 accident.
The imbalance between projected revenues and expenses created a
$189 million gap in our fiscal year 2011 operating budget, if
jurisdictional subsidies (which cover about one-half of our operating
costs) were held constant at fiscal year 2010 levels. In order to close
that gap, I have proposed a budget that includes further layoffs, fare
increases, some service reductions, and an increase in jurisdictional
subsidies. Metro's Board is currently considering that proposed budget.
Without knowing what they will decide, it is fair to say that balancing
Metro's fiscal year 2011 budget will require hard choices. When we
raise fares or reduce service, we have a direct impact on the people we
serve every day, on their ability to get to jobs, school, medical
services, and recreational opportunities. The economic downturn has
affected everyone in this Nation, and unfortunately Metro is not
immune.
Capital Program
Over the last 6 years, Metro has funded its capital program through
a multi-year agreement with our jurisdictional partners, known as Metro
Matters, which expires June 30, 2010. The stable funding stream
provided by Metro Matters allowed us to, among other things, purchase
667 new Metrobuses to reduce the age of our fleet from over 10 years to
under 8 years; and purchase 122 Metrorail cars, expand rail yard
maintenance and storage facilities, and upgrade power systems to run 8-
car trains.
Board Chairman Peter Benjamin's testimony addresses our capital
needs, and I simply want to reiterate his point that the funding Metro
has requested from this subcommittee in Federal fiscal year 2011 is
urgently needed to allow us to maintain the Metro system in a state of
good repair. (Please see attached spending plan.) However, due in part
to national economic conditions and in part to declining revenues in
the Federal Highway Trust Fund, both Federal and State/local sources of
funding for capital projects are severely constrained. Even with the
new Federal funding authorization and the associated State/local match,
these constraints have required Metro to limit our capital investment
for the next 6 years to only the most critical, ``must-do'' safety and
system maintenance projects. ``Must-do'' projects include, for example,
replacement of the 1000 series rail cars; replacement of our oldest
buses; rehabilitation of the oldest segment of our rail line, and
replacement and/or rehabilitation of decades-old bus facilities. ``Must
do'' projects do not include other investments that should be made,
such as investments to address crowding (more frequent bus service;
more 8-car trains); more elevators/escalators in core stations; and
system and fleet expansion to accommodate projected growth in demand
over the next several decades.
Six-month Action Plan--Budget
By Fall 2010, we intend to accomplish the following objectives
related to Metro's budget:
--Implement Board-approved Fiscal Year 2011 Budget.--As I have
discussed, the budget will include job cuts and likely some
combination of fare increases and service reductions in order
to fill the $189 million projected gap. Successful
implementation of such changes will require timely and
effective customer communication as well as operational changes
such as reprogramming of farecard readers.
--Manage Transition From Metro Matters Capital Funding Agreement to
Next Capital Funding Agreement, Currently Being Negotiated.--I
want to note that the National Transportation Safety Board is
expected to issue its final report on the June 22, 2009, Red
Line collision shortly before or during fiscal year 2011, and
that report may contain recommendations that will have a cost
associated with their implementation. Metro is committed to
responding to those recommendations and that response may
affect our ability to undertake some of the projects that have
been planned for the next 6 years, absent additional funding.
--Initiate a Discussion With Regional and Federal Stakeholders on
Metro's Long-term Fiscal Outlook to Identify Both Challenges
and Solutions.--The basic challenge is this: the Metro system
must be brought into a state of good repair. Unless there is a
renewed commitment to this goal, the system will continue to
degrade.
CONCLUSION
Madam Chairman, in the Fall of this year, I intend to deliver to
Metro's Board of Directors an interim performance assessment, along
with recommendations for further improvement, in each of the areas I
addressed above: safety, service reliability, and budget. But you do
not have to wait until then to track our progress. Metro is developing
products that will allow the public to see how we are doing on a more
frequent basis. We expect to launch shortly a monthly ``Vital Signs''
report, which will initially track operational performance and identify
trends, with the goal of expanding the range of performance metrics to
other areas in the future. We also plan to issue an annual performance
report, beginning this September. Metro is committed to improving
transparency and communication with our customers and other
stakeholders, including Congress.
Thank you for the opportunity to testify today. I greatly
appreciate your leadership on these issues, and I hope that you will
favorably consider our fiscal year 2011 appropriations request. I would
be happy to respond to any questions.
ATTACHMENT NO. 1.--WMATA RESPONSE TO RECOMMENDATIONS IN THE MARCH 4, 2010 FEDERAL TRANSIT ADMINISTRATION SAFETY
AUDIT
----------------------------------------------------------------------------------------------------------------
Recommendation Actions Taken Next Steps Completion Date
----------------------------------------------------------------------------------------------------------------
No. 1. Conduct assessment to identify Developed statement of Initiate and award Final Report,
resources and expertise necessary for work for contractor contract, with Board including identified
Safety Dept. to carry out activities support. approval, received needs and
specified in System Safety Program April 22, 2010. recommendations by
Plan and Safety Rules and Procedures end of August 2010.
Manual.
No. 2. Use results of assessment to Included in statement Initiate and award Issuance of Safety
ensure adequate staffing levels and of work under No. 1. contract, with Board Dept. staffing &
expertise within Safety Department. approval, received recruitment plan by
April 22, 2010. end of August 2010.
No. 3. Increase Safety Dept.'s access Established Review process for Formalize process by
to operating & maintenance Interdepartmental information-sharing end of August 2010.
information and reports to ensure Safety Working Group, and quality of
this information is being analyzed now receiving monthly information shared.
for potential impacts on safety. reports on operations/
maintenance.
No. 4. Develop internal process to Initiated development Develop process for Complete development
require communication of safety- of web-based tool. identifying and by end of August
related info. across depts., evaluating maintenance- 2010.
including impacts of budget related safety issues.
reductions & resource constraints on
performance of safety-related
maintenance activities/requirements.
No. 5. Define and implement the Chief Safety Officer Continue weekly CSO Completed by end of
process for the top Safety Department (CSO) now reports meetings and reports April 2010.
position to communicate safety directly to General to GM; revise System
priorities to the GM in a timely and Manager. Safety Program Plan to
consistent manner. reflect relationship.
No. 6. Identify technical skills Included in statement Initiate and award Contractor to issue
required to perform system-wide of work under No. 1. contract, with Board needs assessment &
hazard analysis; if needed, provide approval. training plan by end
training as soon as practicable. of August 2010.
No. 7. Update the System Safety Interdepartmental Confirm design of new Completed by end of
Program Plan to develop a hazard Safety Working Group process with September 2010.
management process that ensures all has met to design a contractor support.
departments participate in an on- new process.
going manner.
No. 8. Institute process to ensure Outreach to peer Continue outreach to Metrorail Safety Rules
changes in operating rules are transit agencies for peer agencies and and Procedures
analyzed for safety impacts before model forms and consultation with Handbook revisions
system-wide implementation. processes has begun. union; revise rule completed by end of
book. September 2010.
No. 9. Finalize right-of-way Roadway Worker Finalize new manual; Roll out of new
protection rules; develop training to Protection Working finalize new training training program in
implement new rules. Ensure all ROW Group established; new program. October 2010.
employees & contractors receive manual has been
training before accessing ROW. drafted; workshop and
roundtable held.
No. 10. Implement configuration Included in statement Initiate and award Create action plan &
management program described in of work under No. 1. contract, with Board training program by
System Safety Program Plan. approvalreceived April end of September
22, 2010. 2010.
----------------------------------------------------------------------------------------------------------------
WMATA RESPONSE TO FTA FINDINGS OF THE TOC THAT RELATE TO WMATA IN THE MARCH 4, 2010 FTA SAFETY AUDIT
----------------------------------------------------------------------------------------------------------------
Recommendation Actions Taken Next Steps Completion Date
----------------------------------------------------------------------------------------------------------------
Finding No. 1.--Require WMATA to The update of both the Seek permission to MSRPH revisions to be
complete a timely, thorough, and SSPP and WMATA's Initiate and award completed by the end
competent review and update of Safety Rules and contract with WMATA of September 2010.
WMATA's Safety Rules and Procedures Procedures Manual will Board approval.
Manual. be included as part of Board Approval received
the contractor SOW for April 22, 2010..
the Safety Assessment
and Hazard Management
Program.
Finding No. 2.--Require WMATA to The Safety Assessment Seek permission to Completed by the end
develop (and TOC to review and and Action Plan will Initiate and award of August 2010.
approve) an internal WMATA safety ensure that we have contract with WMATA
audit recovery plan for calendar year personnel skilled in Board approval.
2010 and calendar year 2011. auditing in the Safety Board Approval received
Department. April 22, 2010..
We also will receive
contractor support in
reviewing and updating
our existing
checklists and
procedures.
Finding No. 3.--Require WMATA to We are working closely In the May 4, 2010 The goal is to
develop a recovery plan to complete with TOC to address submission, both TOC completed 90 percent
all open accident investigations this finding and have and WMATA will report by the end of
following procedures established in made considerable that a recovery plan September 2010.
TOC's Program Standard, WMATA's progress. of closing at least
System Safety Program Plan and ten open accidents
WMATA's Accident Investigation investigations per
Procedure. month is accomplished.
Finding No. 4.--Work with WMATA to The contractor SOW for Seek permission to Completed by the end
ensure that there is a process in the hazard management Initiate and award of August 2010.
place for evaluating Corrective work will also address contract with WMATA
Action Plan (CAP) alternatives that this issue. Board approval.
may be necessary as a result of Board Approval received
capital and operating program April 22, 2010..
resource limitations.
Finding No. 5.--Require WMATA to Interdepartmental Seek permission to Create action plan &
develop and implement a comprehensive Safety Working Group Initiate and award training program by
and system-wide hazard management to design new process contract with WMATA end of September
program (as specified in 49 CFR part has taken place and Board approval. 2010.
659.31). with contractor Board Approval received
support and will: April 22, 2010..
Integrate into web-
based tool; Integrate
into Internal Safety
Audit process and
Quality Assurance (QA)
process; and Integrate
into day-to-day
activities.
----------------------------------------------------------------------------------------------------------------
WASHINGTON METROPOLITIAN TRANSIT AUTHORITY (WMATA) PROPOSED PRIIA (DEDICATED FUNDS) PLAN AS OF MAY 17, 2010
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Budget
-------------------------
CIP Project Name Project Description Federal Federal
Fiscal Year Fiscal Year
2010 2011
----------------------------------------------------------------------------------------------------------------
RAIL CAR FLEET REPLACEMENT
AND REHABILITATION:
CIP057 1000 Series Rail Car This project will design and purchase 300 79.3 20.5
Replacement 7000 Series railcars, which will replace all
1000 Series railcars that were purchased
between 1974 and 1978. This project is one
component of a long-term fleet plan to avoid
repetitive developmental cost associated
with new car design and procurement. The
replacement of the 1000 Series with the 7000
Series will improve reliability, reduce
maintenance and operating costs and
incorporate technology and enhancements of
newly designed railcars.
CIP063 Rail Rehabilitation This project will procure major repairable 12.4 12.5
Program railcar components tosupport the overhaul of
essential systems in the fleet. To maintain
astate of good performance, major railcar
components must berefurbished or replaced on
a regular basis. These components includebut
are not limited to wheels, trucks, brake
systems, HVAC, and traction motors.
Approximately 225 railcars, or 20 percent of
the fleet, will receive major overhauls
funded through this project.
CIP067 Rail Car Safety and This project will perform engineering 12.1 2.5
Reliability Enhancements analysis, diagnosis, testing and resolution
of safety, maintenance and operational
issues relating to the railcar fleet and its
interaction with track work, automatic train
control, communication, and power systems.
The project work will resolve compatibility
issues across the multiple series of
railcars andinfrastructure related to
changes in technology and
components.Examples of specific issues to be
resolved are emergency exterior
doorreleases, wrong side door openings, and
car roll back.
CIP071 Test Track and Commission This project will procure, design and 5.2 17.5
Facility construct a test track andcommissioning
facility that will be utilized for ongoing
engineeringanalysis and enhancements to the
fleet, as well as acceptance testing of new
railcar procurements and will be in constant
use. A dedicatedfacility will allow testing
to be done and not impact night-time
maintenance activities.
---------------------------
Total ............................................. 108.9 53.0
===========================
TRACK SAFETY IMPROVEMENTS:
CIP018 Track Welding Program This project will provide for the welding of 1.5 2.7
approximately 500 openrunning rail joints
throughout the Metrorail system and to
purchaseflash butt welding kits. The track
welding program will improve theelectrical
conductivity of the rail, eliminate joint
defects, reduce noiseand wear, reduce
maintenance and inspection costs, and
eliminatecross tie fires.
CIP019 Track Floating Slab This project will prevent services delays and 1.7 1.3
Rehabilitation speed restrictions due to differential
settlement of the track structure and
reduces noise andvibration to the
surrounding building and structures by
replacing failedisolation pads and restoring
the track structure to the proper elevation.
CIP020 Replacement of Rail Track This project will procure and install 3,000 1.0 1.1
Signage markers and 500 safety signs to replace old,
illegible rail track graphic signs and
various other signs indicating locations and
warnings to employees, emergency responders,
and the general public. Track graphics are
essential for safe operations and emergency
responses. Many signs throughout the
Metrorail System are approximately 30 years
old. Some of these signs require upgrading
because they are damaged, deteriorated, or
obsolete.
CIP021 Track Pad/Shock Absorber This project will maintain the integrity of 4.3 2.1
Rehabilitation the track structure by rehabilitating 7,000
linear feet of grout pads on Rhode Island
and Minnesota Avenue Metrorail Station
Aerials. Grout/plinth pads (concrete pads)
located below the track provide elevation
and support for the track and track
fasteners. They are replaced as needed to
restore the track structure to the proper
elevation. Improper elevation can result in
damage to the car's third rail collector
shoes and the vibrations can potentially
lead to structural cracking in the
surrounding buildings and structures.
CIP022 Track Structural This project will be utilized for the 2.3 1.5
Rehabilitation rehabilitation of structural components and
to restore the track structures, such as
elevated platforms, bridges, and retaining
walls to their designed load carrying
capacity. These rehabilitations are
critical, as the loss of one of these
structures could result in the functional
loss of an entire Metrorail line segment.
The rehabilitation work includes the anchor
bolts of 65 bridge piers on Minnesota Avenue
Aerial and additional anchor bolts at
Grosvenor and I-495. One down and under
crane for underbridge inspections and
rehabilitation will be procured.
CIP023 Third Rail Rehabilitation This project will replace the original third ........... 5.5
rail (5 miles annually) with the composite
third rail. Original third rails have become
worn throughout the Metrorail system. New
aluminum and steel composite third rails
will provide less resistance for eight car
trains and allow trains to run more
efficiently. This project will result in
maintained tracks and fewer train delays.
CIP024 Track Rehabilitation This project will be utilized for the 44.4 33.3
procurement of material and specialized
equipment to facilitate the removal and
installation of the track and switch panels,
which prevents service delays and speed
restrictions. Track components (which
include running rail, cross ties, direct
fixation fasteners, third rail insulators,
and turnouts) require replacement when,
based on industry standards, they become
worn or unserviceable due to deterioration,
excessive wear, or defects. No. 8 turnouts
will be upgraded from unguarded to guarded
turnouts based on National Transportation
Safety Board recommendations.
CIP027 Switch Machine This project will improve the safety and 0.9 1.0
Rehabilitation Project reliability of the interlocking track
structure by replacing 20 switch machines
throughout the Metrorail Systems. Switch
machines have a normal life expectancy of 10
years; all the switches to be replaced have
been in service over 10 years.
CIP133 Wayside Work Equipment This project is for the installation of a 4.1 3.1
safety signaling system at rail portals and
other locations to alert personnel to
approaching trains. This project will
provide for enhanced safety for customers
and WMATA personnel.
---------------------------
Total ............................................. 60.2 51.5
===========================
TRACK EQUIPMENT:
CIP025 Track Maintenance This project is for the rehabilitation and 17.3 20.7
Equipment replacement of heavy-duty track equipment.
Track maintenance equipment is essential to
deliver quality service and for the safe and
efficient execution of the track
rehabilitation work. Timely rehabilitation
and replacement of four selfpropelled prime
movers will ensure equipment reliability,
reduce the probability of delays due to
equipment breakdowns, and allow for
efficient use of the right-of-way track time.
CIP066 Rail Shop Repair This project funds the replacement of rail 2.2 4.2
Equipment shop equipment that has reached the end of
its useful life. Purchases will include
approximately 125 pieces maintenance
equipment, 48 pieces shop test equipment,
and 15 pieces shop machine equipment. Some
examples of equipment to be purchased are
overhead cranes, rail train lifts, hoists,
industrial shop air compressors, service
elevators, hoisting mechanisms, wheel truing
machines, and electrical controls.
CIP089 Track Fasteners This project is for the replacement of track 2.1 2.1
fasteners. Deteriorated track fasteners
cause stray current and have been found to
cause fires in the system. Track fasteners
are an integral structural component of the
track system that needs to be replaced
periodically. Approximately 15,000 track
fasteners will be replaced on the Red Line
with thesefunds.
---------------------------
Total ............................................. 21.5 27.0
===========================
MAJOR RAIL LINE SEGMENT
OVERHAUL:
CIP110 Rail Rehabilitation Tier This project encompasses engineering and 34.5 60.6
1.--National Airport to design to begin rail line segment
Stadium Armory rehabilitation of the Orange/Blue/Yellow
Lines from National Airport to New
Carrollton which includes 23 Stations with a
route mileage of approximately 18.7 miles.
Stations scheduled for rehabilitation were
completed and put into service between 1977
and 1978. Work to be initiated includes but
is not limited to traction power, automatic
train control and communication upgrades,
track fastener replacement, tunnel
ventilation, air conditioners, replacing
suspended ceiling tiles, canopy roof
replacements, platform rehabilitation
lighting, public address, and CCTV system
upgrades.
CIP116 Rail Yard Facility This project is a rail yard rehabilitation of ........... 24.8
Repairs Tier 1.-- Alexandria, Brentwood and New Carrollton
Alexandria, Brentwood Rail Yards that were put into service
and New Carrollton between 1976 and 1983. The contract will
include items from the Inventory Database
and other items identified by rail
operations and maintenance, security and
environmental to enhance operations and
maintenance activities and provide a better
work environment. Work will include all
systems and infrastructure to increase
overall efficiency.
---------------------------
Total ............................................. 34.5 85.4
===========================
RAIL PREVENTIVE MAINTENANCE:
CIP125 Rail Preventive This project is for preventive maintenance 40.9 20.8
Maintenance and related purchases for rail cars.
Activities will include regularly scheduled
maintenance of railcar components and
systems at scheduled duty-cycle intervals.
Purchases will include brake parts, truck
parts, propulsion parts and other parts
necessary for maintaining functionality of
rail car features.
===========================
TRACK SIGNAL IMPROVEMENTS:
CIP135 Train Control Signal This project funds the initial engineering 1.0 10.3
support for analysis of the train control
signaling system in an effort to improve the
system.
CIP136 FCC Radio Frequency This project will meet the new FCC ``narrow 0.2 1.0
Communication Changes banding'' requirement that affects the
agency's UHF radio system. Planned
activities include specification
development, engineering, prototype testing,
and project management. The primary impact
is to the infrastructure equipment (as
opposed to the subscriber equipment--
handheld and mobile radios).
---------------------------
Total ............................................. 1.2 11.3
===========================
NTSB RECOMMENDATIONS:
CIP139 NTSB Recommendations This project will allow Metro to implement 10.3 10.3
any forthcoming NTSB recommendations as a
result of the ongoing accident investigation.
===========================
BUS FLEET REPLACEMENT AND
REHABILITATION:
CIP006 Bus Replacement This project will purchase 100 buses a year ........... ...........
to maintain an average fleet age of 7.5
years based on the 2009 fleet size of
approximately 1,500 buses that range in size
from 26 to 62 feet, and are a mix of
conventional and articulated buses.
===========================
MAINTENANCE OF BUS GARAGES:
CIP119 Bus Garage Facility This project is a bus facility rehabilitation 18.9 25.7
Repairs Tier 1.-- of Western, Northern and Landover bus
Western, Northern and garages and other auxiliary facilities,
Landover includes Metro Supply facility, Landover
Open Storage and Blair Road Support Shop.
The facilities in this project were
originally put in service between 1906 and
1989. Work will include all systems and
infrastructure to increase overall
efficiency.
===========================
BUS SAFETY IMPROVEMENTS:
CIP007 Bus Camera Installation This project is based on completing ........... 3.0
installation on remaining buses, which will
ensure that all buses will be equipped with
camera systems to reduce detrimental impact
of fraudulent claims, reduce or eliminate
vandalism, deter crime, assist in criminal
prosecutions, and help employees assist
customer concerns and complaints.
CIP002 Automatic Vehicle This project will begin the replacement of 3.7 12.1
Location Equipment Advanced Vehicle Location (AVL) equipment on
Replacement buses that was installed on buses prior to
2002. The equipment, which allows monitoring
of bus locations, has a life span of 7-10
year. If Metro does not replace obsolete AVL
equipment, Metro will not be able to monitor
the location of buses with the old equipment.
---------------------------
Total ............................................. 3.7 15.1
===========================
PRIIA Funds ............................................. 300.0 300.0
----------------------------------------------------------------------------------------------------------------
MEASURING PROGRESS AND PERFORMANCE IN METRO SAFETY
Senator Mikulski. Well, let me get right to some of my
questions. A year ago, right after the accident, I was very
intensely critical of Metro, and everybody knows it. What I
said, though, is that I didn't want to be the manager of Metro.
I don't think that is an appropriate congressional role. But
one of the questions that I said at that time, I am not saying
it this time, is that often solving the problem was having a
meeting about the problem, and that was viewed as solving the
problem.
I asked about how was Metro--and at that time I placed
responsibility on the board, but I throw this question open to
both of you. When we talk about safety and operational
reliability--but let us go to the safety, you need to have the
systems in place. You need to have the training, and you need
to also find out if those systems and training are working.
So my question to you is how are you measuring progress and
performance? What we have here in your testimony, and you and I
have had the opportunity to speak before, is a rather
comprehensive list of actions taken. Develop an incident
tracking and safety management reporting system. Encourage
near-miss reporting, like an anonymous hotline. Strengthen
whistleblower protection so you don't shoot the messenger.
In other words, these look promising. But we have been down
the road of promises before, both the Federal Government, when
we promised funding and broke that promise. So now it is our
job not to break our promise. But the second is that with this
list of things that you say will improve safety, you, sir, and
you, Chairman Benjamin, how will you measure progress? How will
you measure performance? What metrics are you going to use so
that you would really know if this is going to work?
Mr. Sarles. First of all, we have set deadlines for
delivering certain items, when we are going to have the track
worker protection manual done, for example. We have already
completed the draft, but now we have a deadline for finalizing
that and starting training.
We set dates for starting training programs. Starting next
week, there will be a series of training programs over the
summer for people. We have these deadlines set. We are going to
make these milestones, and we can be measured against that.
Beyond that, in the longer run----
Senator Mikulski. But how are you going to measure them?
Mr. Sarles. By meeting those deadlines. If we say we are
going to deliver a manual, the track worker protection manual
by a certain date, we have to make that date. If we say we are
going to conduct training, which we are, this summer between
such and such a date and what those courses are, we will show
that we made those dates and, in fact, people attended those
sessions. Those are the close-on measurements, if you will,
that if you say you are going to do something, you deliver on
it.
Beyond that, ultimately, what the performance measure is,
measures that you will see safety wise are number of injuries,
both employees and passengers, number of incidents or
accidents, that sort of thing. That tells you over the long
term whether you are actually seeing the right trends. And if
you are not seeing the right trends, which all should be
downward, then you have to take additional actions. And those
are the types of things we will make public so people can see
how we are doing as a scorecard.
Senator Mikulski. Well, there was a woman, actually, a
widow, after her husband's death in January, stepped forward to
say that this was her description of safety training for her
husband--now I am going back to before your arrival, but
nevertheless--she said Metro's solution is having a safety
meeting, putting on a video, and then handing out hard hats.
They met a deadline. They had a meeting. They even had
``training,'' but it was a video. Her husband, according to her
comments, had concerns about the vehicle that ultimately killed
him. That it was too powerful, too dangerous, and that it had
no backup camera. It had no backup sound and lights were
disconnected. Metro didn't have floodlights. In other words,
this is beyond giving out manuals and meeting deadlines.
Mr. Sarles. Yes.
Senator Mikulski. I mean, start with the manual. But that
is the whole darned problem, which is that we hear they are
giving out manuals, and they meet deadlines. So what the hell
does that mean? Pardon me.
Mr. Sarles. Yes, sure. You have the manual. Then you have
to train to that manual so the workers understand exactly what
the procedures should be and how they should operate in a safe
manner. And then you see, through gathering of the statistics
that support the performance measures that, in fact, we are
having fewer incidents, and the goal is to be zero in terms of
accidents.
So you have to take the first steps, put it into place, do
the training, and then measure the results of that training.
Senator Mikulski. Well, I understand, and I want to go to
Mr. Benjamin, that at your board meeting, up until very
recently, you got no reports on safety?
Mr. Benjamin. Senator Mikulski, we did get reports on
safety. We always, on a monthly basis, were told how many
accidents there were, how many incidents of various types there
were, how many fatalities, how many injuries, and what the
trend over time had been. What we did not get reports on and
what we should have heard about and we now are getting reports
on is the degree to which our safety staff was fully staffed,
the degree to which we were responding to our oversight
agencies effectively and meaningfully, and the degree to which,
when findings were made, we were, in fact, carrying out those
activities.
So, yes, we got the big picture, but we weren't getting
enough. And we have now changed that. We are getting more
information, and we have asked our inspector general, as a
separate path. Originally, the only path was going through the
General Manager. The inspector general now reports directly to
us as the Board to review all of those materials, make sure
that activities were occurring at the schedules that were
required, and that if we are not getting that activity
occurring, to report directly to the Board.
We have also asked the Tri-State Oversight Committee to
brief the board directly so that if information is not flowing
properly, we hear about it right away.
TOP SAFETY AND HAZARD CONCERNS
Senator Mikulski. The FTA audit found that Metro didn't
have a list of the top 10 safety and hazard concerns. Do you
now have that list?
Mr. Sarles. Yes.
Senator Mikulski. Are you aware, Mr. Benjamin, of what
those top 10 are?
Mr. Benjamin. I am not aware of that particular list.
Senator Mikulski. But those are the top 10 safety and
hazard concerns. Look, please, and I am not trying to play a
game of ``I gotcha,'' and I am not trying to embarrass you. I
am trying to get to the point. We had the accidents. We have
had the FTA audit. We are making corrections.
One of the things that they said was Metro did not have a
list of 10 safety and hazard concerns. Now, sir, you say you
have the 10?
Mr. Sarles. Yes. And I will give you a couple off the top
of my head. One is strengthening the Safety Department, which
we have done. We are moving forward on that. We have hired a
new Chief Safety Officer, who is here with us today. We had a
dozen positions added. We filled six of them. We are
interviewing this week and next week to fill the remainder.
Another issue was to replace the 1000 Series cars. I am
expecting to go to the board very shortly to seek approval to
acquire new cars to replace those 1000 Series cars. And----
Senator Mikulski. I have a request.
Mr. Sarles. Sure.
Senator Mikulski. We will leave this open. I would like you
to submit for the record the 10 top safety and hazard concerns.
[The information follows:]
Ten Key Safety and Hazard Concerns
Replace the oldest railcars in the fleet (Rohr 1000 Series
railcars).
Develop a new real-time automatic train control redundancy system.
Strengthen the expertise of the Safety Department.
Complete the Roadway Worker Protection Program.
Develop a training and certification program for bus and rail
personnel.
Strengthen employee knowledge of rules and rules compliance.
Develop an accident and investigation database.
Create a strong internal training tracking database.
Fill vacancies in the Safety Department.
Improve the agency's safety culture.
Mr. Sarles. Yes.
Senator Mikulski. The actions taken on them, and then I
would like you to give them to your own Board.
Mr. Sarles. Will do and we have discussed most of them with
the Board. We have presented some of those.
Senator Mikulski. That is the point.
Mr. Sarles. Yes.
Senator Mikulski. Mr. Benjamin, you are a very dedicated
public servant. I know your record. You are man of really civic
engagement. Can you tell me why you didn't have the top 10?
Mr. Benjamin. Well, as Mr. Sarles was saying, I think I did
not recognize it as ``the top 10,'' as listed like that. But I
am fairly certain from his statement that these are all issues
that we have discussed, just not discussed as ``the top 10
list.''
Senator Mikulski. Sir, would you identify and would you
agree that those are the top 10 things that need to be changed?
Mr. Sarles. Yes.
Senator Mikulski. In the order of priority?
Mr. Sarles. Yes.
Senator Mikulski. Well, I would like to really have a copy
of those top 10 for us as well for the record. But I also would
really recommend we call this the ``checklist for change.''
That this is one of the basic lists that we will follow. It
won't be the sole list, but it will be a primary list that we
can all agree upon actions taken and progress measured. Would
that be a good way to go?
Mr. Sarles. That is fine.
Senator Mikulski. Because we don't want to be you, but we
need to know how you are doing.
Mr. Sarles. And I welcome that, and that is part of the
scorecard----
Senator Mikulski. We need to know then how the board then
focuses on that. Now we understand that the safety department
has had 41 staff positions, but 10 were vacant. Now where are
we on that?
Mr. Sarles. Yes, and that is what I was referring to
before----
Senator Mikulski. Maybe you don't need all 41. Maybe that
was from another era. But what we are concerned about is that
since 2006, it was reorganized six times. That is what I mean
about having a meeting, a meeting, a meeting, and then the
meeting met the meeting, and then it met the deadline.
Mr. Sarles. I will agree with you that there has been too
much reorganization.
Senator Mikulski. Not enough organization.
Mr. Sarles. And I am trying to stabilize that. And one of
the things that was done just before I got there--and it is the
right thing--is that the Chief Safety Officer now reports to
me. Ten positions were created. Actually, I think it was a
dozen last December. Six of them have been filled. We are
interviewing for the remainder. We expect to fill those within
the next 45 days.
Senator Mikulski. You will have that in 45 days?
Mr. Sarles. Yes. And then, on top of that, the board
authorized at their last meeting the hiring of outside
expertise because I want to take a look at further
strengthening the Safety Department to see if the staffing is
appropriate, to see if they are trained properly.
The board has authorized that. We are out now seeking
proposals. And I expect within the next 2 weeks to award that
contract.
Senator Mikulski. So, what do you think will happen when
you do that?
Mr. Sarles. The key thing is that we look at the Safety
Department and, as I said, see where it needs to be
strengthened further. Is it organized exactly the way it should
be? Get that outside expertise and also aid us in looking at
the other safety aspects as part of our safety plan.
Mr. Benjamin. Senator Mikulski, if I may?
Senator Mikulski. Yes, please.
Mr. Benjamin. I think one of the most important things that
Mr. Sarles has focused on is the culture issue, which you
mentioned earlier, and the fact that safety is not something
that happens in a safety office and that safety officers who
work in headquarters don't cause safety to come about.
And one of the things that he has been working on is making
sure that safety is, in fact, the way that we live, the way
that we react, the way that everybody focuses on the actions
that they take, starting, as you pointed out, from the
Congress, through the Board, the General Manager, the
supervisors, and everybody working throughout the system. And
one of the things he has done right away is to make sure that
there are safety people out in the field working with the
various organizations, not just in an office sitting and
keeping track of things.
Senator Mikulski. Well, I would concur. Safety officers are
not meant to be the bean counters, counting how many accidents
happen. It is the major prevention team. So in the area of
safety, you not only need to have first responders, the ability
to get out of the cars fast. You know, a lot of what the
National Transportation Safety Board [NTSB] is going to tell us
is what to do after a crash, which is how to get out fast and
to have a black box to tell you what happened. We are in the
prevention business.
Mr. Sarles. Exactly.
METRO MODERNIZATION
Senator Mikulski. That is what we are. I think the biggest
role of Congress is we are in the prevention business. I know
we must be. I want to move in short order to modernization
questions and then this will go to the question related to
modernization. To what degree, when we look at technological
problems and the survivability of the cars, is due to the fact
that the Metro system is a system that is aged in place?
Mr. Sarles. Certainly, when you have a----
Senator Mikulski. Do you agree, first of all, that is aged
in place?
Mr. Sarles. Yes.
Senator Mikulski. That it takes a lot to run it and
maintain it?
Mr. Sarles. And that is one of the things that has not
occurred over the years, as I can see. The attention to
maintenance, the attention to reinvesting in the system just to
keep it in a state of good repair, sort of like-new condition,
without having that continual reinvestment in the state of good
repair, it does cause reliability issues. You are now repairing
things. Things break down, even during the operation. That
shouldn't be the way it operates.
And I believe with the proposed capital program, that
especially with the infusion of the $150 million for 10 years
and the matching funds from the jurisdiction--that, combined
with maintaining the same level of other jurisdictional
contributions, will go a long way over a period of time to
restoring this system to a state of good repair.
It is not there now, and it has got to be changed. And that
is what we are focused on.
Senator Mikulski. Mr. Benjamin, do you want to comment on
that?
Mr. Benjamin. Yes. I agree entirely with the statement that
you made. Our rail system is not brand-new anymore. It is 34
years old. Senator Cardin made that point as well.
It is a system which has not been reinvested in. You cannot
have an infrastructure that hasn't been properly reinvested and
parts of it maintained properly. Most of our escalators, one of
the things that people complain about all the time, were
designed to operate for 20 years. Many of them are 30 and 35
years old.
When you have equipment that old, maintaining it, keeping
it operating is extremely difficult, and the result is you are
compromising safety.
When you have moving equipment that people ride on, you
have to maintain it. You have to replace it when the time
comes. And we have not made those investments, and that is what
is critically necessary. And I believe that with the new
funding that we have from the Federal Government, with the
continued funding by each of the jurisdictions by their match
to the funding from the Federal Government, we will be making
progress.
And probably, we will get to the point where we will be
able to bring our system to a state of good repair. What we
will then have is the challenge that we won't have enough money
to really deal with the expansion of service that is necessary
even within our given confines in order to allow us to serve
more and more people that will need to use our existing system.
Senator Mikulski. Well, I know you have just completed
extensive public hearings over the fare box issues, and you
have a pretty good sense that Metro, No. 1, is popular.
Mr. Benjamin. Yes.
Senator Mikulski. There is a lot of expectation of Metro.
As I understand it a significant amount of your funds are now
going into Metrobus and MetroAccess. Is that correct?
Mr. Benjamin. In the increase that is in the proposed
budget, the subsidy increase for bus goes up by about $20
million, the subsidy increase for MetroAccess goes up by about
$20 million, and the subsidy increase for rail is actually a
decrease of $40 million. So what we are looking at is
substantial subsidy going to bus and to paratransit and rail
not getting as much. What we are doing then is charging our
rail passengers more and having them pay that difference.
Senator Mikulski. Well, that is a pretty startling kind of
breakdown there because it is the rail that carries the
majority of the passengers. I am not into allocation or
disputing because I think you would be the first to say you
need rail, bus, and then people with special challenges need
the MetroAccess. We are not disputing any of that.
But for the $150 million Federal contribution, what are we
going to get? Are we going to get modernization? Are we going
to get maintenance? Are these safety improvements? What would
be the breakdown of the $150 million?
Mr. Sarles. You are getting, first and foremost, safety
improvements. The second is state of good repair improvements.
That is just bringing the system back to where it was, and when
you do that, you also improve the safety of the system because
there are less breakdowns, which causes other problems. That is
what the capital program is all about. It is safety and state
of good repair and that is especially what the dedicated funds
are going to, nothing else.
As the chairman was mentioning before, we are not, in this
program, at this time, investing in ways to expand the system
either by adding more eight-car trains or expanding the number
of buses. This is solely focused on the existing system's state
of good repair and safety.
Senator Mikulski. What about modernization?
Mr. Sarles. Only in the sense that, say, for instance, when
we replace the 1000 Series rail cars, we will, of course,
design them and build them to the latest standards, both safety
and functional and all the other standards. So, in that sense,
there is a modernization. When you take something old and
rehabilitate it, you bring it up to the most modern standard.
So you get that kind of modernization that goes on.
Senator Mikulski. Well, this takes me to the Federal
responsibility that while we might be self-congratulatory that
we are finally providing a guaranteed revenue stream of $150
million, the fact is, is that helps maintain the status quo in
good operating order.
Mr. Sarles. Right.
Senator Mikulski. I don't mean to overstate it, but is that
kind of a good summary of it?
Mr. Sarles. Exactly.
Senator Mikulski. So, if we wanted to modernize, it would
take additional revenue from either your Federal partners or
other partners. Is that correct?
Mr. Sarles. That is correct.
Senator Mikulski. If you wanted to because we know there is
going to be some rather robust NTSB recommendations. Those will
probably in many ways deal with more modernization. Am I
correct?
Mr. Sarles. Yes, I would assume so.
Senator Mikulski. Well, what I would like from you, as we
discuss it among ourselves because this goes to national
priorities for not only the Washington system, but for
Americans' public transit, is how are we going to meet our
responsibilities for capital improvement, modernization, and
operational cost? These are national issues, and in some ways,
you are right here. So we see you with the good, the bad, and
the ugly.
But I am going to go to the good, and a modern system needs
to be continually modernized and from a management standpoint,
modernization is not an event. It is a process.
Mr. Sarles. You are right. It is a continuing process. As
we rehabilitate, improve, we have to also bring it up to modern
standards. And if you don't, you fall behind.
Senator Mikulski. Well, I like to have hard, concrete
things, as you hear me say, to measure against, for example the
checklist for change. But when NTSB comes out with their
report, apart from overall words like ``modernization,'' we
would like to hear from you what would it take to implement it?
And I think that is a fair question.
We don't want to create unfunded mandates, but I think it
is time that Congress has to take a realistic view of what it
needs to do to provide in partnership--again, we are in
addition to the stakeholders and the locales. But at the same
time, if there are Federal requirements, there should be a way
for assistance to meet those Federal requirements.
Mr. Sarles. I would welcome that----
Senator Mikulski. I am sure that is the way you see it.
That, in some way, is out of the scope of the subcommittee. I
mean, it goes to authorization. But I believe rail, whether it
is heavy rail to move cargo in our corridors, whether it is--I
will call it heavy rail, to move people in the Northeast
Corridor, whether it is our MARC trains or the Virginia version
of that, we need to have a real commitment to rail and mass
transit in this country because, whether it is Purple Line, our
Red Line in Baltimore, your Red Line here, but we are running
into a lot of red ink. Isn't that the problem?
Mr. Sarles. Yes.
BUDGET SHORTFALL
Senator Mikulski. Now you have a $189 million shortfall?
Mr. Sarles. Currently, right.
Senator Mikulski. So, first of all, what you hear from the
subcommittee is not shouts and chest pounding about how we are
going to withhold the money until you do such things. We do
believe, though, there has to be modernization. There has to be
safety reform, and there has to be accountability. By
accountability, we mean real measurements.
So we are going to be talking with you over the next year.
We have said a lot about what we think about you. I am not
going to ask you what you think about us. But as Congress looks
at what it needs to do, I am asking you what your
recommendations would be to us about what a Federal partnership
would mean for modernization, safety improvements, and
increased operational reliability.
Whether it is the escalator working, which we hear a lot
of, or the fact that significant funds do go in buses.
Significant funds do go into meeting the Federal mandate of
access for people who are challenged. Am I correct?
Mr. Benjamin. You are absolutely correct.
Senator Mikulski. So do you have thoughts or
recommendations you would like to make to us?
Mr. Benjamin. Well, one of the issues, as you point out, is
that we do have a number of requirements that are already upon
us, one of those being providing service for persons with
disabilities. And that is an ever-increasing cost to every
transit system in the United States.
It is a critical service for us to provide because we are,
in fact, the lifeline for many of those people. It is the only
way that they can become productive members of society, and
therefore, it is critically important for us to provide the
service.
However, what we are discovering is that it is overwhelming
in terms of the cost increases, particularly in this area. It
is overwhelming our ability to also provide service for
everybody else because we just don't have enough money to catch
up with everything. So, to the degree that the Congress can
help us in funding that portion, and that is actually everybody
in the United States, every transit system in the United
States, funding the increasing operating costs of that portion,
it allows much of the State and local funding, which otherwise
is going into those increases, to be used for improvements in
bus and improvements in our rail service, which, as you point
out, is where the vast majority of our people are.
So we have got to draw a balance between providing a
critical service for people that have no other choice and
providing the really major service for the vast majority of the
people in the region. So it is an area that is very, very
important. And I would encourage the Congress to look at that,
both for Metro here, but for everybody around the country.
Senator Mikulski. That is what I was saying. This is a
national issue, and it is a mandate. Well, I can only speak
from personal experience. You know, about 10 months ago, I had
a fall and cracked my ankle in three places. So I got around
with a wheelchair. Then I got around with a walker. I had a
space boot that was 3 feet long. But my situation was
temporary.
But I learned a lot from the temporary situation because I
often thought about for many people, whether it is a returning
Iraq or Afghan vet, whether it is a senior citizen, a child
injured in an accident, mine was temporary, but for many, it
would be permanent. But I mean, even for me, getting to
doctor's appointments, returning to work, I had a car and
somebody to help me.
If I didn't have that, and you will be interested to know,
when I came in to vote for Sotomayor and I came in from Mercy
Hospital to meet my constitutional responsibility, I came in a
mobility van. Not yours, but something provided by the Senate
to move handicapped Senators or staff around. I thought, you
know, there are people that do this every day, and they need
it. I am really committed to them having that service.
But what you are saying is commitment, social policy,
economic policy, this would be an area where the Federal
Government is not taking over the role of the State and locals,
but it is meeting a Federal mandate. This is an area that would
enable State and locals to use other of their funds. So now you
are subsidizing the Federal mandate when the Federal Government
should be paying the share for its own mandate.
Mr. Benjamin. Extremely well said, Senator Mikulski.
Senator Mikulski. Is that the way it would go?
Mr. Benjamin. Absolutely.
Senator Mikulski. Well, I think that is a very good
direction to go in because as we ponder how to think about more
money, again, the national systems--New York, San Francisco,
Chicago, any big city, my own, the one in the Baltimore area--
we don't want to get in the business of being the local
government or the State government. But I think this is a very
good guidance.
CORRECTIVE ACTION PLANS
Before I go on to the other panel, I do have a question
again about the FTA report. I understand that there were a
number of open cases that were in the audit. I think there were
63 open cases dating back to 2006. Could you tell me where you
are on your open cases and the backlog, and were they resolved?
Mr. Sarles. Sure. They are not all resolved yet. One of the
things that we have been much more aggressive about is these
corrective action plans, and there are old ones and new ones
get added. We have actually become more aggressive in the last
few months, upping the number of closeouts, if you will.
I have given staff a goal of 10 a month so that when you
look at where we are--we are about at 85 because others got
added. But we are now cutting away at that backlog, if you
will, and the goal is to get them down quickly.
Senator Mikulski. How old is your oldest case?
Mr. Sarles. It is several years old. I don't remember the
exact date, but it is several years old.
Senator Mikulski. In other words, are you moving the
backlog?
Mr. Sarles. We are going after the backlog, too, as well as
the current stuff. Yes.
Mr. Benjamin. Senator Mikulski.
Senator Mikulski. Yes.
Mr. Benjamin. This was the area that I was referring to
that the board was actually very shocked when we discovered how
many of these cases there were. There are two parts to it. One
is the creation of a corrective action plan. That is responding
to an audit finding and saying this is what we are going to do.
We did reasonably well on that, but not very well; we had a
lot of corrective action plans that had never been filed, never
been created.
The second part is actually implementing that plan and
making sure you have done something. Now some of those you can
do very quickly and easily. Some of those are very difficult
because one of them, for instance, is a recommendation by the
National Transportation Safety Board that we replace 300 1000
Series railcars. Well, that takes a lot of money and takes a
lot of engineering. So those take longer.
So it is reasonable for some of them to be a little bit
older and some of them to be newer. But one of the things we on
the Board have said is we want to know what is out there and
what progress we are making and we are now getting those
reports.
Mr. Sarles. To give you a more definitive answer, the
oldest two are from 2004 and have to do with configuration
management, which is how you make sure all the changes that
take place on a particular event get integrated. Those are the
two oldest.
Senator Mikulski. Well, that is exactly what we are talking
about, all the lessons learned.
Mr. Sarles. Yes.
METROACCESS
Senator Mikulski. One last question and this is a budget
question. How much does it cost you to run MetroAccess, and how
much is the Federal contribution? Do you know that?
Mr. Sarles. Off the top of my head----
Mr. Benjamin. I can tell you what the Federal contribution
is. It is zero. It is around $100 million----
Mr. Sarles. Yes, that is the number. And there is no
Federal contribution to our operating budget. So we absorb that
totally. The jurisdictions do.
Senator Mikulski. Well, I think that is an interesting
insight.
Well, we want to thank you, Mr. Benjamin. We want to thank
you, Mr. Sarles. We know we are going to have a lot more
conversations. You are excused from the testimony. If you want
to stick around, we are happy to have you.
NONDEPARTMENT WITNESSES
Senator Mikulski. We would now like to call up to the
witness stand Ms. Jackie Jeter, the president of the
Amalgamated Transit Union Local 689. We also wanted to hear
from the riders. We wanted to hear from Mr. Francis DeBernardo,
the chairman of the Metro Riders' Advisory Council, and Mr.
Jack Corbett, the head of MetroRiders.org.
So, Ms. Jeter, you represent a good bit, if not the
majority of workers at WMATA. We would love to get your views
on safety. And again, there were people who were members of the
union who passed away at these terrible and horrific accidents,
our sympathy and condolences to their families.
But we feel that the way we can express sympathy is to make
sure it doesn't happen again and again and again. So we welcome
your testimony and your insights.
And to the riders, we want to hear what you have got to say
and uncensored, no holds barred.
STATEMENT OF JACKIE JETER, PRESIDENT, AMALGAMATED
TRANSIT UNION, LOCAL 689
Ms. Jeter. Thank you.
I would like to start off by thanking Chairwoman Murray, as
well as you, Senator Mikulski, on your insight concerning the
Federal Transit Administration's audit, also your introduction
of Senate bill 1506 on WMATA safety. It shows the dedication
that is needed on this particular issue.
Every WMATA stakeholder has a vested interest in making
sure that we discuss the issues, but more importantly, making
sure that we find solutions that enable us to move forward. As
a stakeholder, Local 689 is fully aware of each safety,
funding, and operations issue is interdependent. It is
incumbent upon all of us to rebuild the public's confidence in
our good, but aging transit system.
I will address each part of the questions that you ask. I
will start with the budget. In order to realistically develop a
plan of action that will address the various safety issues
facing the transit system, we must begin with the funds
necessary to operate and improve it. The infrastructure at
WMATA rail system is over 30 years old, and as such, an
investment must be made to improve technology, repair the
places where the structure has weakened, and provide for growth
of the system.
Proper fiscal planning must be the cornerstone of this
system. We have debated wage and benefit issues for the last 3
years and have been victimized by WMATA's failure to adequately
plan for expected labor cost increases. Beyond the impact of
wages and benefits, it is the impact on the public, as service
cuts are becoming standard practice to help close budget gaps.
Further, insufficient capital funds have led WMATA into an
environment where less than a state of good repair exists. For
example, WMATA has identified $11.4 billion in capital needs
over the next 10 years. Even with maintenance of efforts, the
budget gap will not be completely closed and only maintaining
the present system without providing an expansion.
And in my written testimony, I go on, but I would like to
also add that I would also recommend that requirements for
meaningful whistleblower protection be included in the
appropriations language. Some of the things that I talk about
are the flexibility in the capital budget allocation in order
to allow the use of capital funds to cover operating cost,
making sure that the Federal transit benefit remains at the
$230 a month; the two appointments for the Metro board, in our
opinion, should at least be someone of a transit advocacy
background, environmental group, or a labor union; and when we
go down to safety, we have addressed this holistically by
defining safety as a three-pronged stool. Our internal process;
interaction with WMATA, and the need to keep the public safety
at the forefront of our decisions and consideration for all
other components of the plan, including funding, that impact
everything that we do; the concerns of the Metro workers; and
needed improvements.
In the last several weeks, there has been an effort to
look more closely at the overall safety issues affecting the
system. Although I have been pleased to see some
recommendations given to the Metro board, I am not confident
that those changes will be implemented immediately. WMATA has
inculcated a culture of deferment, which postpones needed
improvements and changes in the system.
PREPARED STATEMENT
Finally, I note the tendency to blame individual employees
instead of looking for underlying systemic causes of safety-
related incidents. We believe that it should be urgency and
rapidity that causes Metro to do what is needed to improve the
safety of the Metro employees.
Thank you for your time and attention.
[The statement follows:]
Prepared Statement of Jackie Jeter
I would like to begin by thanking Chairwoman Murray for convening
this hearing and allowing us to participate in this important
discussion. Senator Mikulski, thank you for your insight concerning the
Federal Transit Administration's audit that has identified several
serious underlying safety problems. Your introduction of Senate bill
1506 on WMATA safety shows the dedication that needs to be given to
this issue.
Every WMATA stakeholder has a vested interest in making sure we
discuss the issues, but more importantly making sure that we find
solutions that enable us to move forward. As a stakeholder, Local 689
is fully aware that each safety, funding, and operations issue is
interdependent. It is incumbent on all of us to rebuild the public's
confidence in our good but aging transit system.
I will address each part of this equation: (1) Fiscal year 2011
budget request for WMATA; (2) Local 689's efforts to improve safety and
operational reliability; and (3) concerns of metro workers and needed
improvements.
FISCAL YEAR 2011 BUDGET REQUEST FOR WMATA
In order to realistically develop a plan of action that will
address the various safety issues facing the transit system, we must
begin with the funds necessary to operate and improve it. The
infrastructure of the WMATA rail system is over 30 years old and as
such, an investment must be made to improve technology, repair the
place where the structure has weakened, and provide for the growth of
the system.
While the need for more transportation has increased, the amount
given to fund that necessity has not. That is evident from the current
much publicized events at WMATA. The impact of insufficient funding has
had a devastating effect on workers, riders, businesses and overall
development in the three jurisdictions hosting the system. Public
transportation will never be profitable; it is a public service. The
critical nature of funding and the lack thereof has a major impact on
the riding public and WMATA employees.
Proper fiscal planning must be a cornerstone of this system. We
have debated wage and benefit issues for the last 3 years and have been
victimized by WMATA's failure to adequately plan for expected labor
cost increases. Beyond the impact on wages and benefits is the impact
on the public as service cuts are becoming standard practice to help
close budget gaps. I will emphasize the need for flexibility in the
capital budget allocation in order to allow the use of capital funds to
cover operating costs. The ability to purchase a bus or rail car is
only one part of the equation. If the Federal Government does not
establish flexibility in the use of funds, it will be guilty of
weakening the system. As users and providers, ATU Local has spent many
hours developing and outlining these suggested measures:
--Extend the Federal Transit Benefit at the $230 per month level
(Currently set to expire and revert to $120 per month as of
December 31, 2010.
--Require the Federal General Services Administration to appoint the
two remaining WMATA board members, (one voting, one non-voting)
with at least one with a transit advocacy background, such as
an environmental group or labor union.
--Support the passage of the Carnahan/Brown Bill to permit large
systems flexibility in use of Federal capital funds to cover
operating costs.
--Passage of an ``Emergency Assistance'' bill that would help transit
agencies through this recession.
--Move on 6-year Federal re-authorization bill that provides a
permanent funding plan for transit agencies. (Extension of
current authorization expires 12/31/2010. WMATA had recently
proposed a $4.6 billion, 6 year capital program. The previous
``Metro Matters'' agreement spent $2.8 billion + $.2 billion in
Stimulus Funds over a 6 year period. Adding the $1.8 billion in
Federal and local ``dedicated funds'' would have been a $4.8
billion program. Adding an inflation factor would make that
total even higher. The current draft agreement provides for a
level of spending just over $5 billion over the next 6 years.)
--WMATA has identified $11.4 billion in capital needs over the next
10 years. Even with ``maintenance of effort'' the budget gap
will not be completely closed and only maintaining the present
system without providing any expansion capacity.
--The General Services Administration should be urged to locate new
Federal facilities in the Washington area near Metro stations
and restrict the number of parking spaces at such Federal
facilities to a reasonable ratio of automobile vs. transit
usage.
--Support Obama's ``Public Transportation Safety Program Act'' (SB
3015).
--Review carefully the formula grant that is used as the basis for
Federal funding to consider adjusting the percentage allocated
to Metro.
--Lobby to establish a dedicated funding source from the
jurisdictions.
--Consider recapturing tax incentives given to businesses that
surround the Metro stations. They should bear a greater share
of the costs because they gain a greater benefit as a result of
their location.
--The Federal transit benefit should be indexed to both increased use
(riders) and inflation. It would get an annual increase
automatically that reflects the real costs of providing
increased services and any increase costs resulting from
inflation.
--Consider supporting the development of the outer spokes of the
system to increase ridership and revenue from business
development likely to occur around the stations.
local 689's efforts to improve safety and operational reliability
We have addressed this holistically by defining safety as a three
pronged stool--our internal process, interactions with WMATA and the
need to keep public safety at the forefront of our decisions, and
consideration of all other components of a plan, including funding,
that impact everything we do. Our Internal process includes:
--In cooperation with WMATA, relying on the Joint/Labor Management
Safety Committee to address issues as they occur.
--In our orientation process and during union meetings we openly
discuss safety issues and solutions.
--Forging a proactive media campaign and release of public statements
to apprise the public of issues and possible solutions to
safety problems with Metro.
--Testifying before local and Federal agencies in regard to safety
issues, incidents and accidents to publicize the changes and
improvements needed to ensure greater safety throughout the
system.
CONCERNS OF METRO WORKERS AND NEEDED IMPROVEMENTS
In the last several weeks there has been an effort to look more
closely at the overall safety issues affecting the system. Although I
have been pleased to see recommendations given to the WMATA Board, I am
not confident that those changes will be implemented immediately. WMATA
has inculcated a culture of deferment which postpones needed
improvements and changes to the system. Finally, I would note that
there is a tendency to blame the individual employee, instead of
looking for underlying systemic causes of safety related incidents.
Local 689's experience concerning the investigations, leads us to
the belief that to date, WMATA has not implemented several key measures
that would make the Metrorail system safer.
Urgency and rapidity should be the hallmark of the suggested
changes we are offering below. WMATA must consider instituting the
following without delay:
--Multiple layers and redundancy of safety protections.
--Codification of standards for track worker safety similar to
Federal Railroad Administration track worker safety standards.
--Clear and concise communication between workers and controllers.
--Clear notification and designation of work areas and zones on the
right of way.
--Development of a safety communications plan that alerts all WMATA
employees immediately to incidents.
--Immediate notification of the union when a safety incident occurs.
--Firm commitment to respect the rights of workers to have a union
representative present during investigatory interviews after an
incident.
--Effective worker safety training.
--Supervisory enforcement of safety standards.
--A process for WMATA employees, to appeal the standards they believe
to be incorrect or unsafe, such as a Safety Appeal Board.
--Meaningful whistleblower protection to insure that employees are
not fearful of reporting perceived safety problems.
--Effective labor-management safety committees.
--WMATA's commitment to the rapid development and implementation of
procedures and standards that are calculated to improve safety
immediately and in the long term.
Thank you for your time and attention to my concerns. I would be
pleased to address any questions you might have in regard to my
testimony. Thank you on behalf of my members and the riding public.
Senator Mikulski. Thank you. That was very powerful.
Let us go down this way. Mr. Corbett.
STATEMENT OF JACK CORBETT, DIRECTOR, METRORIDERS.ORG
Mr. Corbett. Thank you, Senator.
I appreciate the opportunity to testify, and I wanted to
thank you on behalf of our members for your having lit a fire
under WMATA leadership some months ago when it was very much
needed. We are very appreciative of that.
As you have said so well, the riders are very upset and
have lost confidence in the system over the last year. The
tragedy on the Metrorail system last June, the loss of Ms.
Jeter's employees in other accidents, the scathing report from
the Federal Transit Administration over the safety culture at
WMATA, those things have all been very worrisome to riders. To
ride the train and to see people choosing not to go into the
first car of a six-car train because they know that was the one
that had the tragedy is very worrisome to us.
There is some good news. We are very pleased that two of
the four Federal members of the Board of Directors have been
appointed. Two, we are very pleased that WMATA has the
leadership of Peter Benjamin this year, whose many years of
service with WMATA makes him an admirable leader for WMATA's
board during this very tough period.
We are really pleased that this subcommittee is having this
hearing because there are not many Federal or regional agencies
that have any leverage over WMATA. As you know from having
cosponsored legislation, the FTA cannot mandate any safety for
WMATA. The local Tri-State Operating Committee is powerless and
cannot require Metro to do anything. So we think this
subcommittee, through your power over the conditions of the
$150 million annual appropriations, can be very, very helpful.
And we have got some very specific suggestions. As you have
already indicated, put on maintenance of effort requirement so
the jurisdictions that have financial problems of their own
don't play games where they give $50 million in one side and
they take money out of the other pocket. So that is very
important.
The other things the subcommittee could do to be very
helpful: you could call the administrator of the General
Services Administration [GSA] right now. They have been
interviewing candidates for the other two Federal appointments
since Thanksgiving, and we have urged that at least one of them
be a safety official that would be added to the Board of
Directors, and they still don't have two final appointments to
the Metro Board, when the Board has got to make very important
decisions about safety, funding, and capital.
Before you finalize your appropriation this year, check to
see how well WMATA is doing in agreeing to implement whatever
recommendations the NTSB comes out with between now and then
having to do with the causes of the tragic accident.
Also, it was your work last year that got the FTA to issue
that report. We think the subcommittee report ought to indicate
that FTA should do another report at the 1-year point just to
see what you have heard from Mr. Sarles and Mr. Benjamin is
really having an effect, rather than just being paper products.
PREPARED STATEMENT
We have other suggestions attached to our testimony. One I
have to mention is even with WMATA's and the jurisdictions'
best efforts, there is a $3 billion shortfall in the capital
needs, as Ms. Jeter has pointed out, over the next 10 years. In
the current capital budget, there is no money for any
additional railcars or buses for 10 years. That means the
riders who are standing today are going to have to stand for 10
more years unless somebody, maybe the Congress, maybe the
jurisdictions, contribute some funds to WMATA and other pressed
transit systems in the country to fill that gap.
Thank you very much, Senator.
[The statement follows:]
Prepared Statement of Jack Corbett
Chairman Murray and members of the subcommittee: Thank you for
inviting MetroRiders.Org to testify today to discuss fiscal year 2011
appropriations for the Washington Metropolitan Area Transit Authority
(WMATA) and the safety and operational reliability concerns of
Metrorail and Metrobus riders. MetroRiders.Org has represented the
views of transit users in the Washington, DC metropolitan area
beginning in 2004. We are a riders' voice outside WMATA.
SAFETY CONCERNS ARE PARAMOUNT
WMATA's recent and continuing safety and financial challenges are
well known. The June 2009 Metrorail tragedy that took 9 lives and
injured 80 others and the subsequent deaths of track workers document
that Metrorail safety problems impact riders and employees alike.
Senator Mikulski's leadership in urging a Federal Transit
Administration (FTA) safety audit of WMATA and the regional (powerless)
Tri-State Oversight Committee generated a hard look at WMATA's own
safety program and resulted in a scathing FTA report questioning the
safety culture at WMATA. More recently, David Gunn, a former WMATA
General Manager, was asked by the current WMATA Board to conduct a
review of the entire Metro operation. That 2-week review resulted in a
report highly critical of WMATA's management and organization and
suggested that ``MetroRail has downhill momentum that will be difficult
to stop.'' Both the FTA audit and the Gunn presentation to the WMATA
Board should be included in the record of today's hearing.
Finally, the National Transportation Safety Board (NTSB) held 3
days of investigative hearings in February about the June 2009
Metrorail tragedy; its findings on the probable cause or causes of that
accident should be released soon. For all these reasons it's
understandable that there has been a loss of rider and public
confidence in Metro's safety, management and operation.
WMATA BOARD HAS BEEN RESPONSIVE TO SAFETY CONCERNS
The current WMATA Board has played catch-up but is now attuned to
fixing the system's safety problems. We are grateful that current WMATA
Board Chairman Peter Benjamin has had decades of experience as a WMATA
staff official and is leading the Board--composed of public officials
and political appointees--during this critical period. The recent
appointments of an Interim General Manager and a new WMATA Chief Safety
Officer are hopeful signs.
financial problems underlie the 34-year old metrorail system's frailty
Metrorail's safety problems are not unconnected to its age. Like
many aging transit systems across the Nation, Metrorail needs to
replace its oldest cars and rail infrastructure to meet FTA's ``state
of good repair'' recommendations, as well as to increase rail and bus
capacity to meet growing traffic demand. Unfortunately those capital
requirements are occurring at a time when WMATA's contributing
jurisdictions are hard pressed to provide the needed resources because
of their declining revenues during the national economic downturn.
FISCAL YEAR 2011 OPERATING BUDGET GAP IS ALMOST RESOLVED
There's somewhat better news, at least procedurally, about WMATA's
operating budget. Everyone has read that WMATA has an estimated $189
million gap in its fiscal year 2011 Operating Budget (July 2010-June
2011). While riders will have to pay substantially higher fares
starting this summer to help eliminate the coming year's operating
budget gap and even then may suffer some service cuts, the WMATA Board
has handled this situation very well. It opened up its decisional
process to input from riders and the general public well before tough
decisions were needed.
WMATA received some 5,000 communications from the public about ways
to solve the budget problem; some groups, including MetroRiders.Org,
offered highly detailed proposals that were designed, for example, to
move riders out of congested peak periods where possible, and to
generate adequate revenue to eliminate or substantially reduce the need
for Metrorail and Metrobus service cuts. We are grateful to the WMATA
Board and staff for carefully considering these options. That the
process was open, transparent and deliberative will make the resulting
and inevitable fare increases somewhat more palatable.
METRORIDERS.ORG'S ``TOP 10 RECOMMENDATIONS TO IMPROVE WMATA''
MetroRiders.Org has developed a substantial list of recommendations
for restoring the public confidence in WMATA's governing body and
management and in the safety of everyday Metrobus and Metrorail
operations. That list is attached, and our recommendations would
involve actions by this subcommittee, other Senate and congressional
committees, Maryland, Virginia and the District of Columbia, the WMATA
Board itself, and private organizations as well.
SENATE THUD APPROPRIATIONS SUBCOMMITTEE HAS BROAD JURISDICTION OVER
WMATA
This subcommittee's jurisdiction over WMATA includes the authority
to make appropriations for the U.S. Department of Transportation and
its component agencies such as FTA and, specifically, from title VI of
the Passenger Rail Investment and Improvement Act of 2008 (Public Law
110-432, October 16, 2008) (PRIIA). That recent law authorizes the
appropriation of up to $150 million annually for a decade to WMATA to
finance in part the capital and preventive maintenance programs
included in the Capital Improvement Program approved by WMATA's Board
of Directors. Those Federal funds must be matched by contributions of
``dedicated'' State and local funding from Maryland, Virginia and the
District of Columbia.
That statute included a number of additional, specific conditions
upon which congressional appropriations to WMATA would depend.\1\
MetroRiders.Org urges this subcommittee to actively supervise WMATA's
compliance with these conditions:
---------------------------------------------------------------------------
\1\ Title VI authorized the Administrator of General Services to
appoint four new directors to the WMATA Board, two voting and two non-
voting directors with one voting director ``to be a regular passenger
and customer of WMATA's bus or rail service.'' To date, GSA has only
appointed two directors, one voting and one non-voting. Both appointees
are highly regarded and have been important additions to the WMATA
Board. Because the WMATA Board is considering many critical agenda
items (6-year capital budget, fare increases for fiscal year 2011,
etc.) we believe the GSA Administrator should announce her final two
appointments as soon as possible, as well as to specify which of the
two voting directors would be the designated ``regular passenger''
board member.
Further, the statute required WMATA to appoint an Inspector General
for the agency, with full IG-level powers for internal investigations
of budgetary and agency management issues. We have been disappointed
that the new Office of Inspector General has concentrated on auditing
agency contracts (as had the predecessor internal auditor) and has not
focused on important agency management issues, as Congress clearly
intended by its mandate. The media has performed what are traditional
IG functions at WMATA, such as identifying ineffective staff
organization of safety functions, lack of proper treatment of the Tri-
State Operating Committee, etc.
---------------------------------------------------------------------------
--The subcommittee should appropriate the full authorized $150
million in Federal funds in fiscal year 2011 for WMATA capital
projects but with conditions.
MetroRiders.Org is appreciative of this subcommittee's
appropriating $150 million to WMATA for fiscal year 2010 but is
disappointed that, 6 months after that fiscal year 2010 appropriations
was enacted, WMATA has not yet finalized its application for FTA
project approval for Federal and local matching funds. That said, the
subcommittee should make full appropriations to WMATA for fiscal year
2011, as recommended in the President's budget, because the funding is
much needed for high priority capital projects.
--Fiscal year 2011 appropriations should be conditioned upon the
State and local jurisdictions' maintaining their past
``continuity of effort'' with their own funds as the $300
million annual Federal/local match contribution was to be all
``new money.''
We and other groups (and the local media) were very disappointed
that the State of Maryland recently tried to reduce its fiscal year
2011 capital contribution to WMATA below its past contribution level.
Had this effort been successful, Maryland's $50 million in matching
funds for the PRIIA appropriations would have been provided but its
past annual contribution to WMATA (from the same pot of State
``dedicated funds'') would have been reduced--resulting in a
displacement of State funds with Federal capital funding. Worse,
because Maryland, local jurisdictions in Virginia, and the District of
Columbia contribute to WMATA based on a pro-rata formula, Maryland's
reduced contribution would have also limited the contributions that the
other two jurisdictions would make in fiscal year 2011.
Only the glare of unfavorable publicity apparently caused Maryland
recently to agree to increase its fiscal year 2011 capital contribution
to WMATA to its fiscal year 2010 level plus the $50 million in new
PRIIA-matching funds.
Congress should condition fiscal year 2011 PRIIA appropriations to
WMATA upon all three jurisdictions maintaining their past ``continuity
of effort'' with their own funds. If severe fiscal problems in any
jurisdiction preclude such continuous funding levels, that jurisdiction
must promise to make up any shortfall within a specific number of
fiscal years.
--Before the House-Senate Conference on fiscal year 2011 THUD
Appropriations, the subcommittee should review the adequacy of
WMATA's response to the NTSB's findings and safety
recommendations resulting from the June 2009 Metrorail crash.
In fiscal year 2010, the Congress conditioned WMATA's use of PRIIA
appropriations to assure that safety projects would be funded. In
fiscal year 2011, the Congress should review the adequacy of WMATA's
response to the NTSB recommendations, anticipated to be released
shortly. Currently, WMATA has a $30 million plug in its proposed 6-year
capital budget for this purpose.
--The subcommittee report on fiscal year 2011 PRIIA appropriations
for WMATA should request FTA to undertake a follow-up safety
audit of WMATA 1 year after the first audit.
Because FTA's recent audit of WMATA found many serious safety
concerns, and because FTA doesn't currently have authority to regulate
WMATA's rail safety operations (see attached ``Top Ten Recommendations
to Improve WMATA'' list), the subcommittee should urge FTA to conduct a
follow-up audit of WMATA a year later to see if internal WMATA safety
management has improved in the interim.
--The subcommittee should appropriate funding to implement enactment
of the ``Public Transportation Safety Program Act of 2010.''
As you know, FTA currently is statutorily precluded from setting
and enforcing safety standards for rail transit systems such as WMATA's
Metrorail system. We hope this legislation can be enacted soon,
separately if necessary from congressional reauthorization of multi-
year surface transportation funding. When enacted, FTA could set safety
standards for Metrorail, or Maryland, Virginia, and the District of
Columbia could empower the Tri-State Operating Committee to undertake
safety regulation of Metrorail. MetroRiders.Org prefers direct Federal
safety regulation of WMATA by FTA.
The administration has requested $24.1 million in fiscal year 2011
for a new Rail Transit Safety Oversight Program and for an additional
$5.5 million to fund 30 FTE in FTA's new and expanded Office of Safety.
We hope the authorizing committees of Congress act on this needed
legislation soon and that this subcommittee can provide the necessary
appropriations.
Again, thank you for allowing MetroRiders.Org to testify. I'd be
pleased to answer any questions.
metroriders.org' s ``top ten recommendations to improve wmata''
Safety
Enact S. 1506/H.R. 3338 to authorize the Secretary of
Transportation to establish national safety standards for transit
agencies operating heavy rail on fixed guideways.
Request FTA to update its safety audit on WMATA 1 year later.
Assure adequacy of WMATA's response to expected findings and safety
recommendations of the National Transportation Safety Board (NTSB)
concerning the probable cause of Metrorail's June 2009 crash with
fatalities and injuries.
Capital Financing
Approve full authorized $150 million appropriation for WMATA in
fiscal year 2011 on matching basis with Maryland, Virginia, and the
District of Columbia but with conditions.
Condition fiscal year 2011 appropriations to WMATA upon State and
local jurisdictions' maintaining their past ``continuity of effort''
with their own funds as the $300 million annual Federal/local match was
to be ``new money.''
WMATA, its Contributing Jurisdictions and Congress should develop a
plan to provide $3 billion in additional capital funding to WMATA over
the next 10-year period (fiscal year 2011-fiscal year 2020) to provide
needed rail and bus capacity during the decade beyond the inadequate $5
billion 6-year capital plan now being negotiated by WMATA with its
Contributing Jurisdictions.
Management/Governance
The Administrator of General Services should appoint the remaining
two Federal directors to the WMATA Board of Directors to supplement the
existing two appointees and to designate one of the two voting Federal
directors as the ``regular passenger'' Board member.
Support the project of the Metropolitan Washington Council of
Governments and the Greater Washington Board of Trade for a fast-track,
independent review of WMATA's current governance structure.
Support amendments to the congressionally-approved ``WMATA
Compact'' that would make transparent and available for public comment
the various ``behind-closed-doors'' negotiations among the Contributing
Jurisdictions as to their future capital contributions to WMATA and to
require WMATA to follow the ``open government meeting laws'' of area
jurisdictions.
Other
Congress should extend the current $230/month transit ``commute
benefit'' beyond December 2010 for parity with the existing parking
benefit.
Senator Mikulski. Thank you. That was a very meaty
presentation, Mr. Corbett. Thank you very much.
Mr. DeBernardo.
STATEMENT OF FRANCIS DeBERNARDO, CHAIRMAN, RIDERS'
ADVISORY COUNCIL
Mr. DeBernardo. Yes, thank you. Thank you, Senator
Mikulski.
Thank you for inviting me to testify. My name is Francis
DeBernardo, and I am chair of the Metro Riders' Advisory
Council.
As a transit-dependent rider, I commute each day via
Metrorail and Metrobus from my home in Greenbelt, Maryland, to
my office in Mount Rainer, Maryland. On behalf of the council,
I commend President Obama for including $150 million in his
proposed fiscal year 2011 budget for capital and preventive
maintenance projects.
I also thank Congress for including funding in this year's
budget. These grants, matched by jurisdictional partners, will
address critical safety needs.
As riders, we appreciate the Federal Government's
recognition of the unique relationship between itself and Metro
and urge you to ensure that these funds remain in the fiscal
year 2011 budget. We ask, too, that you ensure that local
jurisdictions will continue to fund Metro's capital needs by
making any Federal aid dependent on maintenance of efforts from
local jurisdictions.
Along with this $300 million, Metro and its partners must
finalize a new capital funding agreement. Metro has estimated
that it has $11 billion in capital needs over the next 10
years. However, as has been mentioned, if funding levels
proposed remain constant over the next 10 years, funding will
fall short by over $3 billion.
Failing to keep the system in good repair seriously
threatens safety. While certainly not as dramatic as the
incidents that have occurred this past year, crowded platforms
following service disruptions, crumbling platform tiles, and
out-of-service elevators and escalators are significant
recurring safety concerns. Ensuring stable and sufficient
capital funding for Metro is necessary to improve safety.
Commuters are not the only ones who benefit from good
transit. The entire region benefits economically. Tourists
visiting the Nation's capital benefit from having a convenient
way to see the city. The Federal Government benefits from
greater productivity. And drivers benefit from reduced
congestion on roadways.
Riders have expressed their vision for improvements at
Metro. They want more reliable service, greater focus on
customers, and clearer frequent communication from Metro,
especially when things go wrong. Metro will soon begin a more
robust reporting of its operational performance, and riders
look forward to working with Metro to use those reports to
improve service.
Safety should top the list of Metro's core values.
Effective oversight is critical to maintaining safety and
confidence in transit. Mandates and projects that improve
safety while maintaining service quality can greatly enhance
transit. Mandates that impair service in the long run in the
name of safety will only drive commuters to other more
dangerous modes of travel.
PREPARED STATEMENT
We are pleased that Congress is taking a strong interest in
the safety and success of the Washington area's transit system.
I thank you for this opportunity to provide testimony and would
be happy to answer any questions you have.
[The statement follows:]
Prepared Statement of Francis DeBernardo
Chairman Murray, Ranking Member Bond and members of the
subcommittee, thank you for inviting me to testify today. My name is
Frank DeBernardo and I am chair of the Metro Riders' Advisory Council.
The Riders' Advisory Council was established by Metro in September
2005 and serves as the riders' voice within Metro. The Council provides
feedback to the Board as well as customer input to Metro staff. Council
members are appointed by the Board of Directors. The Council consists
of 21 members, 2 from each of the District of Columbia, Maryland and
Virginia, 2 appointed at-large and the Chair of the Accessibility
Advisory Committee. Members use all of Metro's transit services--
Metrobus, Metrorail and MetroAccess--and represent a diverse mix of
ages, backgrounds and ways in which they use Metro.
Metro experienced several tragedies in 2009, and suffered a
substantial loss of public confidence. The June 2009 crash on the Red
Line and subsequent declines in service reliability not only shocked
and saddened the region, they also accelerated awareness of the larger
problem, the growing disrepair of the Metrorail infrastructure.
Despite the challenges faced by WMATA, it remains a vital asset to
the Washington region. A recent Washington Post poll found that 80
percent of riders rate the system positively. During April 2010,
Metrorail recorded 3 of its top 5 highest ridership days (April 1, 2,
and 7). This underscores the region's dependence on Metro and also
highlights the need to redouble efforts to maintain and expand the
system.
On behalf of the Council, I would like to first commend President
Obama for including $150 million in his proposed fiscal year 2011
budget for capital and preventive maintenance projects at Metro. These
grants, matched by dedicated funding from Metro's jurisdictional
partners, will help fund projects to address Metro's most critical
safety needs. As riders, we appreciate the Federal Government's
recognition of the unique relationship between the Federal Government
and Metro and urge you to ensure that these funds remain in the fiscal
year 2011 budget as it is considered by Congress. We ask, too, that you
help to ensure that local jurisdictions will continue to adequately
fund Metro's capital needs by making any Federal aid dependent on
maintenance of efforts by local jurisdictions.
Along with the $300 million provided annually through the Passenger
Rail Investment and Improvement Act of 2008, Metro and its partners
must finalize a new capital funding agreement prior to the beginning of
the new fiscal year on July 1, 2010. We are encouraged that
jurisdictions have committed to fund a $5 billion 6-year capital plan.
Recent decisions to restore funding for Metro's capital plan represent
good news for riders. However, Metro estimated that it has $11 billion
in capital needs over the next 10 years; the 6-year plan, as proposed,
will mean that Metro will still fall short of this estimate of needs by
over $3 billion over the next 10 years.
Failing to keep the system in a state of good repair seriously
threatens safety. While certainly not as dramatic as the incidents that
have occurred over the past year, crowded platforms following service
disruptions, crumbling platform tiles and out-of-service elevators and
escalators are significant, recurring safety concerns.
Ensuring stable and sufficient capital funding for Metro is
necessary to improve safety.
As WMATA prepares to enter into its next capital plan on July 1 of
this year, governments must also provide the resources necessary to
adequately maintain Metro's safety and service, from specific safety
recommendations from the National Transportation Safety Board to the
everyday yet critical maintenance challenges.
In addition, WMATA must secure support for its operating budget.
Closing the currently-projected $190 million operating budget gap for
fiscal year 2011 will likely require both substantial fare increases
and significant service cuts. Proposed service cuts, while greatly
reduced from the original proposals, will still result in riders paying
more for less service. During recent public hearings on WMATA's
proposed operating budget, fare increases and service reductions,
riders expressed a clear preference for increased fares over reductions
in service. However, fares cannot be raised too greatly lest riders,
especially the most vulnerable, be priced off of Metro. In addition,
members of the public stated clearly that Metro must work to improve
its service reliability.
The Council is encouraged that Metro will, next month, launch its'
``Vital Signs'' report to provide the Board, the public and other
stakeholders a detailed overview of Metro's monthly performance. As
rider representatives, the Council looks forward to working with Metro
to ensure that these reports provide meaningful information and that
issues they identify are subsequently addressed. It is an old adage
that ``What gets measured gets done.'' These reports represent an
opportunity for an honest dialogue between Metro and its stakeholders
about what needs improvement and how we can work together to make those
improvements happen.
Commuters are not the only ones who benefit from good transit. The
entire region benefits economically. Tourists from around the country
who visit the Nation's capital benefit from having a safe and
convenient way to see the city. The Federal Government benefits from
greater productivity. And drivers benefit from reduced congestion on
roadways. For that reason, the Riders' Advisory Council and transit
advocacy groups asked local jurisdictions to increase their
contributions enough to forestall severe service cuts, and it appears
that many of the most onerous cuts will be avoided.
Over the long term, Federal, State and local governments must
recognize the tremendous asset that Metro represents to the region and
support it accordingly. A majority of residents in the aforementioned
poll said that the region should find new ways to fund Metro, even if
that meant raising some taxes.
Metro's budget difficulties are certainly not unique among the
Nation's transit systems. A recent study released by the American
Public Transit Association noted that 84 percent of transit systems in
the United States are planning to raise fares and/or decrease service,
or have already done so. Metro does provide uniquely direct value to
the Federal Government, and therefore we hope Congress and the States
can work together to explore long-term funding sources.
In the midst of all of these challenges, Metro must also find a
new, permanent General Manager. The Council hopes that as the Board
begins its search it will solicit input from all of Metro's
stakeholders, including its riders and its employees.
Riders have expressed their vision for improvements at Metro. They
want more reliable service, greater focus on customers, and clearer,
more direct and more frequent communication from Metro, especially when
things go wrong. While the General Manager must ensure a safe system,
the region also needs a GM able to improve service quality and
communicate effectively with the public to restore confidence. The
Board should seek a candidate able to address Metro's long-term as well
as short-term challenges and listen to stakeholders' views about those
challenges.
Safety should top the list of Metro's core values. Effective
oversight is also critical to maintaining safety and customer
confidence in transit. Still, safety cannot exist in a vacuum.
Statistics show that commuting by rail is approximately 34 times safer
than driving, and many riders make a daily decision between the two.
Mandates that improve safety while maintaining service quality can
greatly enhance transit; mandates that impair service in the long run
in the name of safety will only drive commuters to other, more
dangerous modes of travel. Transit must be safe; it also must not be
permanently hamstrung in ways that actually make travelers across all
modes less safe.
We are pleased that Congress is taking a strong interest in the
safety and success of the Washington area's transit system. At the same
time, safety for commuters in our Nation's capital does not start and
end with Metrorail. A U.S. Department of Agriculture employee was
killed by a driver after the recent snowstorm when the employee tried
to walk to the Branch Avenue Metrorail station in Prince George's
County, Maryland, where the sidewalks had not been cleared.
Metro safety issues have received considerable press recently, but
the degree of press attention has been so great specifically because
Metrorail fatalities are so rare, while fatalities on roadways are
common to the point that we have become inured to these tragedies. This
Congress should not ignore these larger safety concerns, and could draw
needed attention to them by also conducting oversight into the ways in
which elements of the entire transportation network, including our
roadway designs, snow removal policies, and traffic law enforcement
succeed or fail at maximizing the safety of commuters on all modes.
A safe, reliable, well-maintained and adequately funded Metro
system will enhance the entire region, including the Federal
Government. I thank you for the opportunity to provide testimony and
would be happy to answer any questions you may have.
Attachment A.--List of Current Riders' Advisory Council Members
riders' advisory council roster (as of may 17, 2010)
2010 Officers:
Chair: Frank DeBernardo
District of Columbia Vice-Chair: David Alpert
Maryland Vice-Chair: Victoria Wilder
Virginia Vice-Chair: Dharm Guruswamy
jurisdiction
At-Large:
Dharm Guruswamy
Carl Seip
Patrick Sheehan (Accessibility Advisory Committee Chair)
District of Columbia:
David Alpert
Kelsi Bracmort
Patricia Daniels
Kenneth DeGraff
Carol Carter Walker
Diana Zinkl
Maryland:
Sharon Conn (Prince George's County)
Frank DeBernardo (Prince George's County)
Christopher Farrell (Montgomery County)
Ronald Whiting (Montgomery County)
Victoria Wilder (Montgomery County)
Virginia:
Penelope Everline (Arlington County)
Robert Petrine (Fairfax County)
Clayton Sinyai (Fairfax County)
Lorraine Silva (Arlington County)
Evelyn Tomaszewski (Fairfax County)
Lillian White (City of Alexandria)
Attachment B.--Letter to Board of Directors Concerning Metro's Fiscal
Year 2011 Operating Budget
Riders' Advisory Council,
Washington, DC, April 19, 2010.
Chairman Benjamin and Members of the Board: This letter serves as
the formal position of the WMATA Riders' Advisory Council on the fiscal
year 2011 operating budget, currently estimated to contain a $189.2
million shortfall.
First, we recognize and appreciate the efforts of the Board of
Directors to solicit meaningful public comment on a wide variety of
proposals to address the current budget situation. Providing the public
with alternatives has spurred public debate and allowed riders to
select from a menu of options to create a sound fiscal year 2011
budget. We strongly encourage the Board and the Authority to review the
fiscal year 2011 budget and reduce administrative spending as much as
possible to close the projected budget gap.
Over the past several months, our members have held lengthy
meetings devoted purely to the budget, attended public hearings,
solicited feedback on their commutes, and debated the merits of the
many different proposals put forward by WMATA staff, the Board and
other groups.
This Council is faced with two distasteful options--service
reductions which could drastically impact the quality of life in our
region and/or fare increases that might price some residents out of
using our transit system.
To limit the need for these drastic options, the R.A.C. continues
to strongly support increased jurisdictional subsidies and dedicated
local and Federal funding for the Metro system. While budgets are
tight, we remain hopeful that local and Congressional leaders will
fight to expand Metro funding at the jurisdictional and Federal level
in recognition of the Authority's role as a unique regional and
national asset.
We also recognize that Metro will make changes to MetroAccess
service, continue negotiations with its operating unions to decrease
costs, cut administrative positions, and continue to explore
alternative revenue sources in an effort to reduce the budget shortfall
in fiscal year 2011.
We are deferring to the Accessibility Advisory Committee's
recommendations on the proposed changes to MetroAccess, which have
already been submitted as part of the public hearing record.
If the Board, after it exhausts all other options to close the
fiscal year 2011 budget gap, finds that fare increases and service cuts
on Metrorail and Metrobus are absolutely necessary, the WMATA Riders'
Advisory Council prefers the following proportions and priorities for
the Board's decisionmaking:
If any fare increases should be necessary, we prefer the Board
implement them in the following order from least to most undesirable:
--Decreasing the transfer time among all modes from 3 to 2 hours;
raising the fare differential for (rail) paper farecards; and
instituting a peak-of-peak rail surcharge, which are preferable
to
--Increasing late-night weekend fares (after midnight); increasing
the reserved parking fee; and increasing airport bus fares
(with the consideration that steps be taken to protect airport
workers), which are preferable to
--Increasing bicycle locker rental fees; increasing general parking
fees; and increasing express bus fares for non-airport buses,
which are preferable to
--Increasing the SmarTrip fare differential on bus, which is
preferable to
--Increasing base bus fare along with an increased transfer discount,
which is preferable to
--Increasing regular (rush hour) rail fare, which is preferable to
--Increasing reduced (off-peak/weekend) rail fare, which is
preferable to
--Any special event fares on rail; peak fare surcharges on crowded
bus routes; and increasing base bus fare without increasing the
transfer discount, which are preferable to
--Reducing the age at which children ride free, from under 5 years of
age to under three years of age.
If any service cuts to Metrorail should be necessary, we prefer the
Board implement them in the following order from least to most
undesirable:
--Modifying headways and train lengths on four holidays: Columbus
Day, Veterans' Day, Martin Luther King's Birthday and
Presidents' Day; Restructuring peak service on the Red Line to
have 3 min headways from Grosvenor to Silver Spring and 6 min
from Silver Spring to Glenmont and Grosvenor to Shady Grove;
and early morning weekday headway widening, which are
preferable to
--Closing station entrances or mezzanine levels (after a full and
transparent review of safety and security issues these closures
may cause), which are preferable to
--Weekend headway widening, which is preferable to
--Late night headway widening, which is preferable to
--A later weekday opening time at 5:30 a.m., which is preferable to
--A later weekend opening time at 8 a.m., which is preferable to
--Earlier weekend closing times; and weekend station closures, which
are preferable to
--Elimination of peak 8-car trains; elimination of Yellow Line
service to Fort Totten off-peak/weekends; and elimination of
Yellow Line service after 9:30 p.m. and on weekends except for
a rail shuttle between King Street--Huntington.
If any service cuts to Metrobus should be necessary, we prefer the
Board implement them in the following order from least to most
undesirable:
--Reducing and eliminating bus stops after a full and transparent
review of cost, safety and security measures that these changes
may cause; and reductions in holiday service, which are
preferable to
--Eliminating of line segments/local overlap, which is preferable to
--Peak-period headway widening, which is preferable to
--Weekend headway widening; and off-peak weekday headway widening.
We strongly recommend that any proposals to eliminate entire bus
lines, weekend routes or service, or late-night (after midnight) trips
be examined on a case-by-case basis and give consideration to distance
and accessibility of alternative route service during peak and off-peak
times and route efficiency metrics.
Additionally, we suggest the Board find a middle-ground on many of
the aforementioned fare and service changes. Rather than focusing a
disproportionate level of service cuts or fare increases on one sector
of Metro riders, if any are necessary, we strongly prefer a moderate
slate of cuts and increases that is spread more evenly across the
entire ridership base.
If the Board must make fare increases and service cuts, we prefer
that service cuts represent a very small percentage compared to fare
increases. As noted above, we hope that increased jurisdictional
contributions and other savings measures can reduce as much as possible
the need for fare increase or service cuts.
As you well know, Metro is our communal responsibility. We all reap
the benefits when we commute to work, attend cultural events, and visit
friends throughout the region. It is this Council's sincerest desire to
work with the Board to find more stable funding solutions so that a
budget situation such as this one never happens again.
If you have questions about our proposal or would like to discuss
this matter further, please contact myself or Carl Seip, Chairman of
the Committee on the Budget, through John Pasek in the Office of the
Board Secretary.
Sincerely,
Francis Deberardo,
Chair.
Senator Mikulski. Well, thank you.
WORKER SAFETY
Before I get to kind of the rider questions, I would like
to go to Ms. Jeter, if I may? I have been disturbed about so
many things. First of all, the accidents themselves, the
scathing FTA report, the Gunn report, the things that you have
all referenced. But the very poignant tale of Mrs. Jeffrey
Garrard, who called to share her safety concerns, and when she
said that their solution was have a video and hand out hard
hats. That there was no backup camera on the maintenance truck,
the backup sound and lights were disconnected, and Metro didn't
have floodlights.
You know, a safe Metro has to ensure the safety of the
workers to ensure the safety of the riders. Do you feel that
safety has improved for your workers? Do these patterns
continue to persist? Or do you feel that steps are being made,
and what steps do you see being made?
Ms. Jeter. I can only say that I hear, just like you do,
that steps are being taken. I am sure that Mr. Sarles has
tackled those things that are right in front of his face.
Unfortunately, I think that it is so entrenched that it is
going to take--I have been disappointed for the last year
almost. It has been almost a year now that nothing concrete
other than testing, and I forget what it is called, but it is
the test that they use to see whether or not they are going to
have a circuit to fail, is the only safety measure that has
taken place.
We have known ever since this accident has occurred, and I
have talked to not only Garrard's wife, but I also talked to
Jeanice McMillan's mother, and I have to tell her that your
daughter was an angel because although she died, she brought
out a lot of issues that were here, entrenched at WMATA, and we
have been able to look at them full faced. And hopefully, we
will find a solution for them.
But I am disappointed because I keep hearing talk, but I
don't really hear the ``do.''
Senator Mikulski. Well, what about the safety and the
safety training and the safety officer?
Ms. Jeter. I am looking forward to seeing that. I would
like to see it right now. And I know for the last couple of
weeks, I have been getting reports of safety committee meetings
that have been taking place.
And because the union, too, has said, okay, we have to step
up our safety efforts, and we have to be the ones that are
going after incidents or things that are being told to us by
the members, there has been a butting of heads, so to speak,
because it seems like in those safety meetings, there is a plan
of action that the management comes in with, and the workers
want to talk about things that are actually happening out on
the line, and they seem to be butting heads. So I have to look
into that and find out what is going on because, to me, that is
not going to resolve.
Senator Mikulski. Well, it seems to be that there needs to
be a mechanism of communication between labor and management.
In your testimony, you talked about relying on the Joint Labor-
Management Safety Committee to address issues. Does that exist,
and does it function?
Ms. Jeter. It exists. We haven't met as that particular
committee for a while. Actually, I got a letter from Mr. Sarles
this morning, and one of the things that has happened, even
though we weren't meeting, when Chief Taborn was acting as the
safety officer, he included that committee in with the WMATA
Executive Leadership Team [ELT] committee.
And after I attended a couple of the meetings, I am still
trying to grapple how they function. But I am not so sure
whether or not we should do that. But I am willing to see if it
will work.
Senator Mikulski. Again, I am not the manager of WMATA, but
I believe it is in the best interest of the functionality of
the system that labor and management have a regular systematic
way of communicating. That it be a regular system. That the top
union officials have a chance to talk to the top Metro
management to bring issues of concern. That it is regular and
that they are systematic and that it have a formalized agenda.
This is not about contract negotiations. This is about
problem solving.
Ms. Jeter. Right.
Senator Mikulski. Does such a mechanism exist now? You are
the head of the union.
Ms. Jeter. I know. I will say, yes, it does because--I will
say, yes, it exists, but it is not functioning properly. I will
have to say it that way.
Senator Mikulski. Well, why doesn't it function properly?
Does it meet on a regular basis?
Ms. Jeter. The ELT committee does meet. I don't--I have a
problem with actually including the two. I think we are going
in two different directions. The union's position where safety
is concerned is sometimes not at the same place that this ELT
committee is.
Senator Mikulski. I understand that, but I am going to get
lost in this committee. I mean a subcommittee and this
subcommittee's name and so on. I am an outcome gal. So my
outcome is this. What does it take to have labor and management
meet on a regular basis, to have regular communication of
things of mutual concern?
Ms. Jeter. Mr. Sarles and I have spoken of that. We have
both said that we are going to meet regularly with one another,
and because of his answer to my letter this morning, concerning
the Joint Labor-Management Committee, I will talk to him about
that because----
Senator Mikulski. So, as of now, almost 11 months since the
accident, there is no joint regular systematic, joint mechanism
of communication?
Ms. Jeter. The Joint Labor-Management Committee that was
there, we stopped meeting when Alexa Samuels was the head. We
stopped meeting. And we have had maybe one meeting. I think we
had one meeting in February.
Senator Mikulski. Okay, let us stop. Mr. Sarles, what do
you think? Do you think we can get something going here?
Mr. Sarles. Absolutely. In fact, inside of that first 2
weeks, I met with Jackie, and we personally are going to meet
about once a month to go over safety concerns, besides what is
going on in the organization.
Senator Mikulski. There has to be exactly this. You might
have one view of what the safety issue is. They might be
experiencing operational difficulty, and they are the ones on
the line. They might know things you don't know or technology
doesn't reveal or hasn't come up the chain of command. Or in
the same way, if you are looking to approve it, get greater
cooperation, suggestions on a variety of things, you need to
have the assistance of the union. It is in their interest that
everything be safe.
Ms. Jeter. That is correct.
Senator Mikulski. Because they are the first to experience
any breakdowns for not only such a horrific thing as death, but
also injury, even if it is temporary injury, you know? So I am
going to hope that what comes out of this hearing and some of
the correspondence recently is that there is a regular way of
communicating.
Ms. Jeter. We will make that happen.
Senator Mikulski. Okay?
Ms. Jeter. Yes.
RIDER SAFETY
Senator Mikulski. I will come back to some of the other
issues. I would like to get to the riders for a minute now.
So, tell me, using an old Ronald Reagan phrase, my good
friend Ronald Reagan, when he said, ``Are you better off now
than you were 4 years ago?'' Do you remember that famous
question?
Do you think that Metro is more of a safe place now than it
was on June 22, 2009? Do you think that there have been
improvements that you experience? And I raise that to both of
you.
Mr. Corbett. In my judgment, yes. We don't have the day-to-
day experience that Ms. Jeter has with her members, but if one
listens to the WMATA board meetings, you hear more of a concern
about safety now than you did a year ago. It was embarrassing
to me to hear that a WMATA board member said I've been a board
member for 12 years, and I have never heard of this Tri-State
Operating Committee. That was about a year ago.
It is much different now. The board members are much more
attuned to safety, and we think at least in terms of that
verbal level, which is all we can respond to, it is much better
than it was then.
Senator Mikulski. Would you want to add or elaborate on
that?
Mr. Corbett. I am sorry?
Senator Mikulski. So you feel that there is progress and
momentum, but more needs to be done as you recommend in your
excellent testimony?
Mr. Corbett. There is--thank you. We really are awaiting
the results of the National Transportation Safety Board to see
what WMATA does to those. Those could be very costly
recommendations, and how they respond to those is going to be a
very good signal as to whether the jurisdictions can come up
with the money to address the NTSB concerns.
Senator Mikulski. Well, it will be my intention that when
the NTSB makes their recommendations that we have a public
discussion of that. In other words, what are they recommending?
What was the rationale behind those recommendations? Then, to
get a sense of what it would take to implement it other than
budgetary and managerially.
Mr. DeBernardo?
Mr. DeBernardo. I would concur with Mr. Corbett. I think
that there is definitely a renewed sense of urgency about the
safety issue, and I am very optimistic that Mr. Sarles's new
program of reporting vital signs of Metro will be very helpful
for riders.
Senator Mikulski. Now to your Vital Signs, which we think
is terrific, so the Vital Signs is the way that the riders can
communicate, in addition to your official board capacity. Am I
correct?
Mr. DeBernardo. We are advisory to the board, yes.
Senator Mikulski. So that is, and do you have regular
systematic meetings where you can bring rider concerns to the
board?
Mr. DeBernardo. Yes, we do monthly meetings.
Senator Mikulski. So you have a regular monthly meeting?
Mr. DeBernardo. Right. And we are hoping that with the
Vital Signs report, when that comes out, it will give us a
basis for discussion with the board and with the management at
Metro.
Senator Mikulski. Now you said in your testimony extolling
the virtues of Vital Signs, you talked about measurement, which
is what I talked about in my opening remarks and some of the
questions to the WMATA leadership. You said nothing gets acted
on unless it is measured or that which is measured----
Mr. DeBernardo. That which is measured gets done.
Senator Mikulski. Yes. So what did you mean by that? And
what would you recommend, for our information, but also to the
leadership, that really needs to be measured?
Mr. DeBernardo. Well, in terms of reliability, things like
on-time service and frequency of buses and breakdowns of buses
and trains. At present, with our Riders' Advisory Council, we
are based a lot on anecdotal evidence, and I think that these
Vital Signs, by measuring, by having a measurement, will give
us better ways of discussing improvements.
Senator Mikulski. So rather than somebody saying, oh, I
feel hot or I feel dizzy.
Mr. DeBernardo. Right.
Senator Mikulski. I have pains in my arm, you take the
blood pressure and so on, and you actually get vital signs
about, are you okay? Are you heading for a problem?
Mr. DeBernardo. Right. And is it a real problem? How
extensive is the problem? Is it a problem that by looking at
the Vital Signs, we can often look at the causes of the problem
as well.
Senator Mikulski. Well, we get this anecdotal information
too. I will speak for myself, and I know that Senator Cardin
gets it too. We have talked about it. We hear about out-of-
service escalators and elevators. That is a top favorite, as
well as closed entrances and exits and train delays. Also, no
communication about what is going on when trains break down.
Lots of loud announcements that you really can't hear. In
other words, it is so loud that you can't hear it. You can't
decipher it. I am not talking about aging people or someone,
just regular folks. Then they also say, ``I don't know. I don't
have a number to call. So I called you.'' Sometimes they call
me a lot of things.
Not only me, but we could talk about Congresswoman Norton,
my colleagues Webb and Warner, and the House Members. Riders
call us because we are visible, and we have publicly disclosed
numbers.
So do you feel that riders have a number to call if they
have a problem or an e-mail address that they can send
concerns?
Mr. DeBernardo. Yes. I think there are many avenues at
Metro for--I don't think all the time that the riders
themselves are aware of the many avenues, but I can tell you
that since I joined the Riders' Advisory Council about a year
and a half ago, I was made aware of many more opportunities for
addressing problems than I knew existed.
Senator Mikulski. What about you, Mr. Corbett?
Mr. Corbett. Can I be a negative voice on that?
Senator Mikulski. Sure.
Mr. Corbett. When people don't call you, they call us. And
quite often, we get very irritable people who have tried to
send in a complaint to the WMATA complaint system, and it is
very bureaucratic. They give you a number, and I am not sure
that the service really improves. I think they need more
manpower on that issue.
Second, we divide between really important and nice to
have. Whether there is too much noise in the system--that is
nice to have. But if the escalator is broken and a heavyset
person has got to walk up 123 steps, that is a safety item. So
we try to divide those between nice to have and really
important.
And I think, frankly, in this coming year under Mr.
Sarles's leadership and that of Mr. Benjamin, if they can work
on the got to have safety items, we would be happy with that,
and we will give them extra time on the nice to have items.
Senator Mikulski. Well, it is the way I work, even when we
do appropriations. I have a must do, should do, and would like
to do list. The must dos have to get done. Then we go to the
should dos.
So what you are saying is have the must dos and should dos
and that would go a long way?
Mr. Corbett. Yes.
Senator Mikulski. Is that correct?
Mr. Corbett. That is correct.
WMATA BOARD APPOINTMENTS
Senator Mikulski. But one of your points, though, is the
GSA has got to get cracking on these two other Federal board
appointments?
Mr. Corbett. Yes, speaking very frankly--and you invited us
to speak frankly--the members of the board from the
jurisdictions, they are somewhat protective of their
jurisdictions. If they don't have money, they don't recommend
things that they know are needed. Having the two Federal
appointees already is opening up that process a little bit, but
we think that the other two appointees should be appointed
soon. One of them should be a designated rider representative.
And we think they can help to open up the board so that
some pressure can be put on the jurisdictions to come up with
additional money for additional capacity.
Senator Mikulski. Well, let me say what I am going to do in
this testimony here, because Ms. Jeter also had recommendations
for the board, we are going to take your recommendations and
send them on to GSA. Because you have made recommendations, and
you also have your underpinnings as to why you feel that the
characteristics you are recommending would improve safety and
operational reliability.
We are going to say this is who we heard from. The people
who use the system, the people who work on the system, and the
people who are going to count on a board that--particularly
when its Federal partners--brings some assets to the table
themselves. So we would like to bring your recommendations to
GSA and to tell GSA kind of get moving on it. Isn't that what
you are saying? Get moving on it?
Mr. Corbett. Yes. Yes.
WHISTLEBLOWER PROTECTION
Senator Mikulski. Let us go to Ms. Jeter. The one thing
that came out in both the Gunn report and also in your
testimony is the whistleblower situation.
Ms. Jeter. Yes.
Senator Mikulski. Also the ``kill the messenger'' problem,
where it is difficult at times to speak freely because you are
concerned about some form of retaliation.
Ms. Jeter. Right.
Senator Mikulski. Do you feel that the climate toward
whistleblowers has improved?
Ms. Jeter. It hasn't improved because the employees who
would utilize that type of system don't know that it even
exists. I don't believe that there is a climate at WMATA to
embrace that type of activity among the employees.
I can tell you, even the incident that has been given so
much public attention--the incident at Wheaton--when I spoke to
the operator of the train, his first, initial response to me
was ``I didn't want to put it on the air. So I used the ETS box
because I didn't want them to feel like I was trying to make a
big deal.'' And that, to me, is the climate that is surrounding
the members of the local that I represent.
Some people might shrug it off and say it is normal
paranoia that a lot of American citizens have these days. But
for the most part, you probably will not find that many
individuals reporting certain incidents because they don't
believe--either they don't believe that WMATA is going to take
care of them, or that in some type of way, they are going to be
retaliated against for giving the information.
And I give you another example, the IG had a setting where
she went in to talk to employees, and one of the people that
was there was one of the shop stewards that I have, and the
shop steward informed me that during that meeting, people did
not want to speak up freely, even though the IG said, ``Nothing
is going to happen to you. I want you to speak up freely to
me.'' She said most of them did not.
A lot of conversation happened after the meeting, but not
during the meeting.
Senator Mikulski. Well, we will take a look at how to
strengthen the whistleblower legal provisions. But I would
strongly recommend in the interim, people who have those
concerns bring it to those that they elected to represent them
in the workplace. Since we are now going to have a labor-
management organized and systematic way of communicating. You
can then, if necessary, preserve their anonymity, or whatever.
I am a big believer in people being able to come forward,
and lots of times, the ability to come forward could save a
life or help someone from being hurt or maimed. We need to be
able to have that communication.
The fact we have got so many things going for us, I mean,
we have a system that really people like and use. I mean, that
is one of the things, when I read the papers and follow the
news on the public hearings, people really like WMATA, and they
really want to use it, and they are willing to pay for it out
of their own pocket.
There are days that they function in heroic fashion that I
believe it was Mr. Benjamin that spoke about and I have spoken
about 9/11. That the subway system helped Washington evacuate
in a safe, orderly and non-panicked way. The performance during
the Obama administration and then even during the rocking-
rolling times of the recent snow situation, which bordered on
almost a natural disaster. I mean, it was a slow version of a
hurricane.
So we have got a lot going for the system, and I think we
can feel proud of the people who work there. Efforts have been
made. I think there are certain things that have been falling.
So we want to build on the asset. The most important asset that
WMATA has that we can directly impact upon is the workers and
getting them the ability to communicate and come forward and be
able to do that.
FEDERAL FUNDING AND OVERSIGHT
The other is, I will really say, that WMATA does need
reliable revenue streams. You could have the will, but if you
don't have the wallet, it is very difficult to fix these
things.
I think we have identified a couple of things today. One,
we continue to support the Federal share. In supporting the
Federal share, we really do want to insist on maintenance of
effort from the States and locals. I think we also have
identified an area where the Federal Government has created a
mandate, and it is an appropriate mandate. It is a very
important tool to ensure people's physical and economic
independence. If you can't get to work, even if you have had
the best rehab, or keep your doctor's appointment, but there
needs to be a way then to consider how at the national level to
be able to do that.
I also believe that we need to pass not only the
President's budget, but I think we need to pass what the
President is recommending in rail reform, giving FTA more
authority. I have got my own bill, along with Senator Cardin
and others, to do that.
So I think we have got our own reform efforts. I will say
what I said. We all have to feel we are in this together. So
this isn't about finger pointing and so on, rather that we all
have to take ownership for the safety offices.
WITNESS RECOMMENDATIONS
So before I wrap up, I am going to ask each and every one
of you, is there anything else you want to say: a
recommendation; an observation; or an insight that you would
like to share for the official record. This is an official
congressional hearing. There is going to be an official
congressional record of this. We can go down the row.
Ms. Jeter. Well, I know that I put everything, even the
things that I did not read, in my testimony, and I can say on
behalf of the members of Local 689, we support those acts or
those bills that you are trying to pass. And so, we will do
whatever we can to make sure that that happens.
Senator Mikulski. Thank you.
Mr. Corbett. Senator, we very much appreciate this hearing
and you listening to riders' views. The one other item I would
like to suggest for the Congress is to consider extending what
is called the ``transit commute.'' In the economic stimulus
bill, the employer discount that is for $230 a month is going
to automatically reduce to $115 at the end of this calendar
year unless some vehicle of the Senate Finance Committee
doesn't fix that item up.
And to keep people out of their cars and benefiting from
the parking subsidy, we think having the transit have equal
weight would be very helpful, and this Congress could do that
this year.
Senator Mikulski. Thank you.
Mr. Corbett. Thank you.
Senator Mikulski. Very good idea.
Mr. DeBernardo. And finally, I would just like to say that
we know of your concern, and we appreciate it. And we are glad
that we are working together to improve Metro.
Senator Mikulski. Well, as citizen activists and civic
engagement, I know that, for example, Ms. Jeter is the official
union representative and does a very good job at it, but she
does a lot like you, both of you on your own time and on your
own dime. But you know, I think this is what is different from
our country. I mean, we have got to be able to get together,
put it out on the table, speak uncensored and unfettered, and
let us solve some of these problems.
We really thank you for your insights. This concludes our
hearing, and I wish to state for my colleagues and for the
record, we will leave the record open for additional questions.
I know Senator Murray has an extensive set of questions.
Senator Bond, who is the ranking member, also tied up on the
financial security, could have extensive questions as well,
those will be really for the WMATA leadership. With that, the
hearing is recessed.
CONCLUSION OF HEARINGS
This subcommittee will hold its next hearing on May 20. It
will turn its attention to its housing portfolio, when Senator
Murray will hold a hearing on the progress being made to end
the homelessness among veterans because this does have the
homeless portfolio. To think that you have housing when you
fight over there, but you don't have it when you come back here
is a national disgrace. So she will be holding a hearing on
that.
We thank you for your participation and the subcommittee is
recessed.
[Whereupon, at 5:49 p.m., Wednesday, May 19, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[Clerk's note.--At the direction of the subcommittee
chairman, the following statements received by the subcommittee
are made part of the hearing record on the Fiscal Year 2011
Transportation and Housing and Urban Development, and Related
Agencies Appropriations Act.]
Prepared Statement of the Coalition of Northeastern Governors
The Coalition of Northeastern Governors (CONEG) is pleased to share
with the Subcommittee on Transportation, Housing and Urban Development,
and Related Agencies this testimony on fiscal year 2011 appropriations
for transportation and community development programs. The CONEG
Governors deeply appreciate the subcommittee's longstanding support of
funding for the Nation's highway, transit, and rail systems and
critical community development programs, including the incorporation of
transportation and community development funding in last year's
comprehensive American Recovery and Reinvestment Act (ARRA). The
welcomed infusion of those flexible funds allowed States and local
governments to advance many needed projects. The overwhelming response,
particularly to the intercity passenger rail and multi-modal grant
funds, also demonstrated the diverse and enormous needs for investment
in an integrated national transportation system that supports a
competitive economy, livable communities, and sound use of energy and
environmental resources. Those needs continue to confront all of us--
Federal, State and local governments and the private sector.
We recognize that the subcommittee continues to face a very
difficult set of fiscal challenges and interlocking issues in crafting
the fiscal year 2011 appropriations measure. The slowly recovering
economy exacerbates the shortfall in the Highway Trust Fund even as it
generates greater demand for public transportation and intercity
passenger rail services. The ongoing national debate on the surface
transportation authorization and funding framework to guide highway and
transit programs remains unresolved. Interest is growing in new
approaches to funding, restructuring and financing highway and transit
programs, and creating livable communities, yet many of these
approaches are not authorized. In spite of these challenges, we urge
the subcommittee to continue the strong Federal partnership so vital
for a national, integrated, multi-modal transportation system. This
network underpins the competitiveness of the Nation's economy, broadens
employment opportunities, and contributes to the efficient, safe,
environmentally sound, and energy smart movement of people and goods.
TRANSPORTATION
Surface Transportation
The CONEG Governors urge the subcommittee to fund the combined
highway, public transit, and safety programs at levels greater than the
fiscal year 2010 appropriations. This higher level of Federal
investment is necessary to sustain the progress made under the most
recent authorization to improve the condition and safety of the
Nation's highways, bridges, and transit systems. Attention is also
needed to address the recurring shortfall in the Highway Account of the
Highway Trust Fund.
Continued and substantial Federal investment in these
infrastructure improvements--in urban, suburban, exurban, and rural
areas--is necessary to safely and efficiently move people and products
and to support the substantial growth in freight movement projected in
the coming decades. The Federal Government has invested significant
resources in the Nation's transportation system, and has a continuing
responsibility to maintain and expand its transportation infrastructure
to keep America competitive in a global economy.
Specifically, the CONEG Governors urge the Subcommittee to:
--Increase the Federal aid highway obligation over the fiscal year
2010 appropriated level;
--Increase public transit funding over the fiscal year 2010
appropriated levels, including full funding for the current
Formula and Bus Grants, the Capital Investment Grants, and the
Small Starts programs; and
--Ensure that these funds are provided to the States in a timely
manner.
Rail
The Governors deeply appreciate the subcommittee's strong support
for intercity passenger rail, through the commitment of ARRA funds and
the fiscal year 2010 appropriations levels. The overwhelming response
to the initial AARA funds demonstrated the pent-up interest in
investments to expand and improve intercity passenger rail service
across the Nation. Now, new policy, program and funding frameworks for
a vastly improved and expanded national intercity passenger rail system
are taking shape under the guidance of the Passenger Rail Investment
and Improvement Act (PRIIA), the High Speed Intercity Passenger Rail
Vision and Strategic Guidance, the Preliminary National Rail Plan, and
Amtrak's Comprehensive Business Plan.
The administration, States, Amtrak and freight railroads worked
intensely over the past year to respond to the new intercity passenger
rail program and funding requirements. Those efforts are now showing
results as the Federal Railroad Administration (FRA) prepares to
release the first awards under ARRA; the States begin submitting
applications for the fiscal year 2010 corridor planning and capital
funds; and the administration prepares the National Rail Plan.
The ability of States, FRA and Amtrak to realize opportunities for
service expansion and ridership growth in corridors across the country
will depend upon a substantial and on-going Federal capital investment
in infrastructure, equipment, and safety. These investments in ``state
of good repair,'' capacity, and safety improvements are essential for
the accessible, reliable, frequent and on-time service that attracts
and retains ridership. In addition, the Federal Railroad Administration
will need adequate funding and staffing resources to carry out its
expanded responsibilities for intercity passenger rail grant programs
and related studies in a timely manner.
Amtrak.--The CONEG Governors request that the subcommittee provide
at least the authorized level of $1.927 billion in fiscal year 2011
Federal funding for Amtrak, with specific funding levels provided for
operations, capital, debt service, and the Amtrak Office of Inspector
General. Additional capital resources are needed if Amtrak is to
initiate its fleet program in a timely manner. A balanced program of
adequate, sustained capital investment in infrastructure (including
stations) and fleet modernization and expansion is vital for an
efficient intercity passenger rail system that provides reliable, safe,
quality services that attract and retain riders.
A funding level of $1.025 billion in fiscal year 2011 for capital
improvements is critically needed for the ``state of good repair''
improvements to aging infrastructure and safety improvements on Amtrak-
owned infrastructure and equipment. Even at its requested level, Amtrak
expects that the backlog of deferred investments (currently estimated
at approximately $5.5 billion) will continue to increase. For example,
Amtrak estimates that $700 million is needed annually just on the
Northeast corridor (NEC) main line and branch lines for normalized
replacement of assets and progress on reducing the backlog of deferred
investment. This level of capital investment is vital to Amtrak's
ability to deliver efficient, reliable, quality service nationwide. We
particularly encourage the subcommittee to ensure that Amtrak can
continue bridge repair projects underway on the Northeast corridor, as
well as the system-wide security upgrades and the life-safety work in
the New York, Baltimore, and Washington, DC tunnels.
Amtrak has also identified $446 million as the level of investment
needed in fiscal year 2011 to begin executing its multiyear fleet plan.
Timely action on a systematic plan to replace aging equipment used
throughout the intercity passenger rail system can help modernize the
current Amtrak fleet; offer the prospect of more efficient procurement
by Amtrak and by States supporting corridor services; and help
stimulate the growth of the domestic rail manufacturing sector.
Intercity Passenger Rail Corridors.--The CONEG Governors also thank
the subcommittee for its support of the Intercity Passenger Rail
Corridor Capital Assistance Program, particularly the provision of
funds for the planning activities leading to the development of
passenger rail corridors, including multistate corridors. We urge the
subcommittee to continue funding this critical program at least at the
$2.5 billion level in fiscal year 2011. This program is an important
foundation for a vibrant Federal-State partnership that will bring
expanded, enhanced intercity passenger rail service to corridors across
the Nation. Infrastructure and service plans for these intercity
passenger rail corridors take many forms and are at different stages
across the country, reflecting the diverse range of city pairs, market
opportunities, and travel time needs. Therefore, we urge that these
grant funds be available to States to advance plans for reliable,
frequent and travel-time competitive service and corridors, regardless
of maximum speed requirements. In light of the stringent FRA
requirements regarding funding criteria for intercity passenger rail
grants, we also request that the subcommittee waive the current
statutory requirement that projects be part of an approved State rail
plan, since this requirement might curtail thoughtful and well advanced
efforts already underway by the States.
Northeast Corridor Infrastructure and Operations Advisory
Commission.--The Governors thank the subcommittee for providing funding
for the Northeast Corridor Infrastructure and Operations Advisory
Commission (Commission) in fiscal year 2010. The NEC Governors have
named their representatives to the Commission, and are eager to see it
organized and begin its important work. The Commission is uniquely
designed to encourage mutual cooperation and planning among all three
parties for intercity, commuter and freight use of the Corridor--and to
also maximize the economic growth and the energy and environmental
benefits of the larger regional NEC Network.
The Commission has extensive responsibilities to set corridor-wide
policy goals and recommendations that encompass passenger rail
mobility, intermodal connections to highways and airports, energy
consumption, air quality improvements, and local and regional economic
development of the entire northeast region. The Commission is expected
to play a central role in providing guidance to the Vision and service
development plans that are a pre-requisite for the NEC to seek
corridor-level funds under the newly emerging Federal framework for
intercity passenger rail. To conduct the required assessments in a
timely manner, the Commission will need resources, data and expert
analysis that exceed that which is currently available through the
staff of the States, Amtrak and FRA. Continued funding in fiscal year
2011 will ensure the Commission's ability to secure all essential
resources for conducting these assessments.
Other Programs.--A number of other national rail programs are
important components of the evolving Federal-State-private sector
partnerships to enhance passenger and freight rail across the country.
In this time of uncertainty in financial markets, the Railroad
Rehabilitation and Improvement Financing Program (RRIF) can be an
important tool for railroads (particularly regional and small
railroads) and public agencies to access the financing needed for
critical infrastructure and intermodal projects. We encourage the
subcommittee to provide funding in fiscal year 2011 for the Rail Line
Relocation and Improvement Program, the Next Generation Corridor Train
Equipment Pool, and critical rail safety programs including deployment
of positive train control and the related Nationwide Differential
Global Positioning System which benefit both passenger rail and freight
rail systems. In addition, funding for the Advanced Technology
Locomotive Grant Pilot Program, created in section 1111 of the Energy
Independence and Security Act of 2007, would be an important first step
to assist the railroads and State and local governments in a transition
to energy-efficient and environmentally friendly locomotives for
freight and passenger railroad systems.
The CONEG Governors also request funding for the Surface
Transportation Board (STB) at least at the fiscal year 2010 level of
$29 million, including specific funding for its responsibilities under
PRIIA. Adequate funding is needed for the STB to carryout its expanded
responsibilities for intercity passenger rail corridor service, and to
provide critical oversight as the Nation's rail system assumes
increasing importance for the timely, efficient, and environmentally
sound movement of people and goods across the Nation.
COMMUNITY DEVELOPMENT
The CONEG Governors urge the subcommittee to provide funding for
the Community Development Block Grant (CDBG) program at least at the
fiscal year 2010 level of $3.99 billion. The CDBG program enables
States to provide funding for infrastructure improvement, housing
programs, and projects that attract businesses to urban, suburban,
exurban, and rural areas, creating new jobs and spurring economic
development, growth and recovery in the Nation's low income and rural
communities.
CONCLUSION
In conclusion, the CONEG Governors urge the subcommittee to:
--Increase the Federal aid highway obligation over the fiscal year
2010 appropriated level;
--Increase public transit funding over the fiscal year 2010
appropriated levels, including full funding for the current
Formula and Bus Grants, the Capital Investment Grants, and the
Small Starts programs;
--Fund Amtrak at least at the fiscal year 2011 authorized level of
$1.927 billion, including $1.025 billion in capital for
infrastructure and safety-related investments; $592 million for
operations; $288 million for debt service, and $22 million for
the Amtrak Office of Inspector General; and also provide
funding to initiate a sustained fleet modernization program;
--Provide additional funding specifically for the Northeast Corridor
Infrastructure and Operations Advisory Commission;
--Fund the Intercity Passenger Rail Service Corridor Assistance
Program for corridor planning and capital investment at least
at the current level of $2.5 billion;
--Provide funding for national rail programs that are important
components of the evolving Federal-State-private sector
partnerships to enhance passenger and freight rail across the
country, such as the Rail Line Relocation and Improvement
Program, the Next Generation Corridor Train Equipment Pool, and
positive train control deployment and development of the
related Nationwide Differential Global Positioning System;
--Provide funding for the Surface Transportation Board at least at
the fiscal year 2010 appropriated level; and
--Provide at least $3.99 billion for the Community Development Block
Grant Program.
The CONEG Governors thank the entire subcommittee for the
opportunity to share these priorities and appreciate your consideration
of these requests.
______
Prepared Statement of the New York State Department of Transportation
The New York State Department of Transportation (NYSDOT)
appreciates the opportunity to present testimony on the fiscal year
2011 transportation appropriations.
Most people don't realize how vast New York's transportation system
really is. Indeed, our State and local highway system supports more
than 130 billion vehicle miles of travel annually. The total system in
New York encompasses more than 114,000 miles of highway and more than
17,400 bridges. New York also is home to a 3,565-mile intercity rail
network over which more than 1.5 million passengers travel and more
than 74 million tons of equipment, raw materials, manufactured goods
and produce are shipped each year. New York also has 485 public and
private aviation facilities through which more than 80 million people
travel each year, and we have oversight of many of New York State's
ports. Finally, we support more than 130 public transit operators,
serving more than 8 million passengers each day.
We must recognize that New York State and 47 other States in the
Nation continue to face significant economic challenges. New York is
currently facing a deficit of more than $9 billion in State fiscal year
2010-2011 and a long-term structural deficit of $60.8 billion over the
next 5 years.
Since taking office in 2008, Governor Paterson has continually
warned that New York State is in the midst of an unprecedented economic
crisis. The losses in the financial, insurance and real estate sectors,
which have been hit the hardest, have had a devastating impact on our
State revenues. Prior to the current recession, financial services
alone provided more than 20 percent of our State revenues. The
Governor's actions have helped New York make substantial progress
toward putting the State's fiscal house in order. That does not change
the fact that the process of addressing a financial challenge of this
magnitude has been, and remains, a long and difficult one.
Just 1 year ago, Congress passed the American Reinvestment and
Recovery Act (ARRA). The Recovery Act provided a one-time boost in
funding to allow New York to create jobs to spur the economy and make
progress on addressing transportation deficiencies. Here are some early
results:
--Eighty-two ARRA projects, valued at $80 million have been
completed.
--Another 328 ARRA projects, valued at almost $803 million, are under
construction by the private sector throughout New York State.
--Project selections were made collaboratively within the
Metropolitan Planning Organizations (MPOs) for 80 percent of
the projects.
--Fifty-seven percent of the highway and bridge funds have gone to
locally sponsored projects. In fact, every county in New York
State has received Economic Recovery funding for transportation
projects.
--Fifty-five percent of the projects administered under the program
are in economically distressed areas.
--As of March 15, 2010, $146 million, or approximately 15 percent of
New York's Highway Recovery Act funding has been made available
to Disadvantaged and Minority- and Women-Owned Small
Businesses.
The Federal Economic Recovery funding was certainly needed and we
are very grateful to Congress for the opportunity it provided to invest
in our transportation system. This infusion of Federal aid provided a
one-time boost to our highway and transit funding.
But if we are to maintain the benefits from this one-shot of
investment and job creation provided by the Recovery Act, we need
continued and increasing Federal and State investment in our
transportation infrastructure to meet our growing system, mobility,
infrastructure, safety, congestion and service needs.
In developing the fiscal year 2011 transportation appropriations
legislation, we ask that you consider and endorse the following:
PROVIDE MODEST INCREASES TO TRANSPORTATION PROGRAMS AWAITING
REAUTHORIZATION
New York urges Congress to provide modest funding increases for
those transportation programs that are awaiting reauthorization:
highways, transit, highway safety and aviation.
At a minimum, Congress should provide the level of funding proposed
in the President's budget:
--$41.3 billion for highways, which would provide an increase over
fiscal year 2010 levels ($41.1 billion).
--$10.8 billion for Transit, a slight increase over fiscal year 2010
levels.
--$3.5 billion for the Airport Improvement Program, sustaining the
level of funding the program has received since authorizing
legislation expired.
New York is especially pleased that the President proposes a 32
percent increase in the Next Generation Air Traffic Control System,
providing $1.14 billion to upgrade the Nation's air traffic control
system. Implementing state-of-the-art technology is crucial to the
redesign of the severely congested New York City airspace.
FULLY FUND RAIL PROGRAMS
New York urges Congress to provide rail no less than the amount
authorized in Passenger Rail Investment and Improvement Act of 2008
(PRIIA).
The President's budget proposal calls for a $1 billion allocation
for the High-Speed and Intercity Passenger Rail program. Although this
amount is higher than the $350 million authorized in PRIIA, it is a
reduction from last year's $2.5 billion. Amtrak funding would include
$1.052 billion for capital grants, up from $1.002 this year, and $563
million for operating grants, a continuation of the current level.
The passage of PRIIA and ARRA provided the first significant level
of Federal support for intercity passenger rail investment in 100
years. The nationwide response has been overwhelming. Applications
valued at $57 billion were submitted for $8 billion in ARRA funds last
year. The $2.5 billion provided in fiscal year 2010 will help States
continue to improve intercity passenger rail service. New York urges
Congress to support the President's budget request for rail in fiscal
year 2011.
MAINTAIN EXISTING TRANSIT PROGRAM STRUCTURE
New York urges Congress to maintain the existing Fixed Guideway
Modernization program and Bus and Bus Discretionary program as separate
transit programs until a full and productive discussion of the state-
of-good-repair of our transit system occurs in connection with surface
transportation reauthorization.
New York supports the Federal Transit Administration's (FTA)
reinvigorated emphasis on ensuring that the Nation's transportation
infrastructure reaches a state-of-good-repair. However, to achieve this
goal, the administration, in its fiscal year 2011 budget, proposes to
merge the separate formula-based section 5309 Fixed Guideway
Modernization Program and the section 5309 discretionary-based Bus and
Bus Facilities into a single new ``Bus and Rail State of Good Repair
Program.'' While New York welcomes a full and productive conversation
on a needs-based approach to addressing state-of-good-repair, the
administration's proposal is too short on detail and FTA has not worked
with transit stakeholders on a new process for apportioning program
funds. As such, New York respectfully requests that Congress not
address structural proposals through the appropriations process. We
cannot afford any delay in our State's efforts to maintain and
modernize our existing facilities while the details of such a new
program are developed.
NYSDOT thanks you for this opportunity to present testimony. We
appreciate your dedication to and support of the Nation's
transportation systems.
______
Prepared Statement of the Illinois Department of Transportation
Madam Chairman and members of the subcommittee, we appreciate the
opportunity to submit testimony concerning the Federal fiscal year 2011
U.S. Department of Transportation (U.S. DOT) appropriations on behalf
of the Illinois Department of Transportation (IDOT) to the Senate
Appropriations Subcommittee on Transportation and Housing and Urban
Development, and Related Agencies. We thank Senator Murray and the
members of the subcommittee for their past support of a strong Federal
transportation program and for taking into consideration Illinois'
unique needs.
IDOT is responsible for the planning, construction, maintenance and
coordination of highways, public transit, aviation, intercity passenger
rail and freight rail systems in the State of Illinois. IDOT also
administers traffic safety programs. Our recommendations for overall
funding priorities and our requests for transportation funding for
projects of special interest to Illinois are discussed below.
SAFETEA-LU REAUTHORIZATION/EXTENSION
IDOT recognizes that Congress must vault over numerous hurdles
before it can unite around a long-term surface transportation
reauthorization bill that will enhance the quality of the Nation's
infrastructure. While the HIRE Act provided an extension of the
SAFETEA-LU programs through December 31, 2010, allowing Congress the
time it needs to thoroughly craft a bill that will address the pressing
issues of funding, capacity, mobility, safety, preservation,
modernization, environment and other critical issues, we urge Congress
to complete its work on a surface transportation reauthorization bill
before the end of the HIRE Act extension. Much work has been
accomplished by Congress but substantial work remains. We urge Congress
to maintain the momentum it has achieved in developing a multiyear bill
thus far and to continue with alacrity so that a bill can be enacted
before another extension of SAFETEA-LU is required.
We recognize that the Congress has to view issues from many
different angles, many of them competing, and that the end result may
differ from a particular State's perspective from time to time. All
that being said, provided any extension is needed for any duration of
time, IDOT supports ``clean'' extensions of SAFETEA-LU, i.e. without
any re-structuring or re-programmatic distribution of existing formula
or allocated programs. Extensions that modify only selected categories
of SAFETEA-LU, ex post facto, not only unnecessarily set the stage for
a zero-sum game scenario wherein States are thrust into disagreement,
but it also disturbs the finely tuned State equity equilibrium that was
reached upon SAFETEA-LU enactment.
FULL RESTORATION OF END-OF-SAFETEA-LU RESCISSION
The recently enacted HIRE Act restored $8.7 billion in contract
authority to the States that was rescinded at the conclusion of Federal
fiscal year 2009 due to a mandated provision in SAFETEA-LU. While IDOT
commends Congress for this prudent legislative remedy we also urge the
subcommittee to pursue additional suitable monetary off-sets that will
make it possible to completely nullify the impact of the rescission by
restoring, to the States, the $334 million in useable ceiling that was
lost to them in Equity Bonus (EB) funding. The special obligation
limitation associated with the EB special contract authority was not
rescinded but instead made unusable by the rescission of contract
authority. Even after the restoration of the rescinded contract
authority, this special limitation will not become usable since current
law requires that all contract authority made available as a result of
the rescission restoration is subject to the overall obligation
limitation provided by an appropriations act. Perhaps, additional
obligation limitation could be made available, as it was in Federal
fiscal year 2008, when $1 billion in ceiling was provided (to be used
with a State's existing apportionment) for projects under the Bridge
Program.
As you are aware, within the rescission EB funding was withdrawn
from 34 States (including Illinois). EB funds are more valuable to the
States than contract authority (apportionments) because EB funds are
either exempt from the obligation limitation or they come with attached
obligation authority. Unfortunately, EB funds were rescinded at a time
when the States were also being asked by Congress and the President to
quickly spend funds provided to them from the American Recovery and
Reinvestment Act of 2009 (ARRA) to invigorate the economy and preserve
jobs. The need for transportation infrastructure projects to aid in the
recovery of the national economy is no less critical now than it was
February 17, 2009 when ARRA was enacted for that purpose. Full
restoration of EB funds to the States will allow the States the
opportunity to reinstate those funds with the programmed projects from
which they were cut so that the economy can continue to rebound through
transportation infrastructure improvements.
HIGHWAY
Highway Obligation Limitation
IDOT urges the subcommittee to set the obligation limitation for
highway and highway safety programs at the highest level that can be
sustained by the Highway Trust Fund/Highway Account (HTF/HA). If
another SAFETEA-LU extension is needed for Federal fiscal year 2011,
IDOT supports a reasonable, yet healthy, incremental increase above the
obligation limitation level of $41.8 billion enacted in Federal fiscal
year 2010.
IDOT supports preserving the SAFETEA-LU budgetary firewalls and
guaranteed funding provisions of SAFETEA-LU, as do other transportation
advocates such as the American Association of State Highway and
Transportation Officials (AASHTO) and the American Road and
Transportation Builders Association (ARTBA).
IDOT is aware of the implications of supporting increased
transportation funding when the long-term viability of the trust fund
is in question. However, it is the responsibility of IDOT to secure the
Federal funding that is needed to address the immediate highway and
bridge project backlogs in Illinois and to preserve Illinois'
transportation system for succeeding generations. Sufficient Federal
dollars are needed to fund safer transportation systems, to address
environmental concerns, to offset the erosion of the construction
dollar, to address crippling levels of congestion/delay and to meet the
transportation demands of the future. To quote the most recent findings
of the 2008 Status of the Nation's Highways, Bridges, and Transit--
Conditions and Performance Report to Congress, ``Although investment in
system rehabilitation has increased in constant dollar terms since
1997, despite recent sharp increases in construction costs, the
analysis . . . suggest that current highway investment levels are not
sufficient to sustain the physical conditions of all parts of the
highway system.''
Federal Fiscal Year 2011 Funding Requests for Meritorious Projects
If the subcommittee finds the flexibility to fund meritorious
projects in existing discretionary SAFETEA-LU categories or outside
authorized categories, (Surface Transportation Priorities) IDOT
requests funding for the following projects (noted throughout the
testimony) for highway, Intelligent Transportation Systems (ITS),
transit and rail funding:
--Expansion of US 67.--IDOT requests $70 million for the pre-
construction and construction activities for the expansion of
US 67 to a 4-lane divided expressway between Macomb and Alton,
Illinois.
--Expansion of US 51.--IDOT requests $30 million for pre-construction
and construction activities for the expansion of US 51 to a 4-
lane divided expressway between Decatur and Centralia,
Illinois.
--Central to Central Avenue Connection.--IDOT requests $10 million
for a Central Avenue Bypass connecting Central through Bedford
Park in Southwest Chicago.
Other IDOT highway priorities include:
--$50.0 million for additional lanes on I-80 from US 30 to US 45 in
Will County;
--$58.5 million for I-57 at IL 50 Interchange and ICG Railroad in
Bradley;
--$46.8 million for additional lanes on US 30 (IL 31 to US 34) in
Kane/Kendall County;
--$33.0 million for highway/railroad grade separation at IL 38 &
Kautz Road; and
--$16.3 million for reconstruction of US 45 (LaGrange Rd) from
131st Street to 179th Street.
Other IDOT Intelligent Transportation System Priorities:
--$1.5 million for a prototype Automated License Plate Reader for
commercial vehicle enforcement; and
--$9.0 million for IntelliDrive in Illinois (fiber and wireless
technology)--Readying the Rt. 66 Corridor.
TRANSIT
Transit Authorization
IDOT urges the subcommittee to fund transit programs at the highest
level that can be sustained by the Highway Trust Fund/Transit Account
or, at a minimum, a reasonable, yet healthy, incremental increase above
the $10.7 billion obligation limitation level enacted in Federal fiscal
year 2010.
--Bus and Bus Facilities.--IDOT and the Illinois Public
Transportation Association jointly request a Federal earmark of
$48.9 million ($8.7 million for downstate bus, $25.1 million
for downstate facilities and $15 million for Chicago Transit
Authority (CTA)/Suburban Bus Division of RTA (Pace) buses in
northeastern Illinois) in Federal fiscal year 2011 section 5309
bus capital funds.
The request will provide $8.7 million for downstate Illinois
transit systems to purchase up to 46 buses and paratransit vehicles to
replace over-age vehicles and to comply with Federal mandates under the
Americans with Disabilities Act (ADA). All of the vehicles scheduled
for replacement are at or well beyond their design life. The request
will also provide $25.1 million to undertake engineering, land
acquisition or construction for three maintenance facilities and five
transfer facilities that will enhance efficient operation of transit
services.
Illinois transit systems need discretionary bus capital funds. The
funding provided under SAFETEA-LU has been inadequate to meet Illinois'
bus capital needs. IDOT believes that supplemental discretionary
funding is needed, and justified, to support Illinois' extensive
transit system. Under SAFETEA-LU, Illinois has received less than 2
percent of the combined High Priority Project (HPP) category and
discretionary appropriations made available for bus and bus facilities.
Formula Grants
IDOT urges the subcommittee to set appropriations for transit
formula grant programs at levels that will allow full use of the
anticipated Mass Transit Account revenues. IDOT also supports the
continued use of general funds to supplement transit needs. In
Illinois, Northeastern Illinois Urbanized Area formula funds (section
5307) are distributed to the Regional Transportation Authority and its
three service boards which provide approximately 600 million passenger
trips per year. Downstate urbanized formula funds are distributed to 14
urbanized areas which provide nearly 33 million passenger trips per
year.
The Rural and Small Urban formula funds (section 5311) play a vital
role in meeting mobility needs in Illinois' small cities and rural
areas. IDOT urges the subcommittee to continue to fund section 5311 at
a healthy increment above the Federal fiscal year 2010 funding level.
From the section 5311 funding increases already authorized in SAFETEA-
LU, Illinois was able to expand public transportation service into
counties not currently served. Due to the decrease in Federal and local
funding resources for public transportation, existing statewide public
transportation service levels could be jeopardized unless there is an
overall increase in funding above that enacted in SAFETEA-LU.
State of Good Repair--CTA/Metra Commuter Rail (Metra)/Pace
IDOT supports the increased focus on the state of good repair needs
of the Nation's transit systems. State of good repair is a high
priority for all systems in the State of Illinois. In northeast
Illinois there is a $2 billion annual need to keep their assets in a
state of good repair and there is a $91 million annual need for
downstate systems. A recent Federal Transit Administration study of the
seven largest transit agencies in the country estimated that more than
one-third of the study agency assets were in either marginal or poor
condition. Additional resources should be directed toward preserving
our existing assets. This will minimize future impacts on maintenance
costs and improve safety and reliability to the entire system.
Operating Assistance
IDOT supports the continued flexible use of Federal transit capital
funding for day-to-day operations. However, during these extraordinary
economic times when local funding resources for public transportation
have suffered, an increase or emergency Federal funding for public
transportation is needed to supplement existing Federal transit
funding. These emergency funds should be separate and distinct from
continuing needs. This funding would ensure that vital services are
continued at current service levels.
New Systems and Extensions--CTA/Metra
IDOT supports continued planning and engineering funding for
existing CTA/Metra projects. Public transportation in northeastern
Illinois has benefited over the years from bipartisan, and regional
consensus; and, therefore, there is no particular priority for the
ongoing projects. However, since Metra's Union Pacific Northwest Line
and its Union Pacific West Line have completed their alternatives
analysis studies and are ready for preliminary engineering, IDOT is
supportive of Metra's request of $20 million for upgrades for each
line.
RAIL
Amtrak Appropriation
IDOT supports Amtrak's request of $2.196 billion in funding from
general funds for Federal fiscal year 2011 to cover capital costs
($1.018 billion), operating costs ($592 million), debt service costs
($305 million) and ADA costs ($281 million). Amtrak needs the full
amount of their request to maintain existing nationwide operations. In
addition, IDOT supports Amtrak's Federal fiscal year 2011 capital
funding request for fleet planning which will require an investment of
about $446 million. Amtrak needs to replace aging, obsolescent and
increasingly costly rolling stock and has developed a procurement model
to replace the whole of their existing fleet by 2040 at a cost of $23
billion.
In Illinois, Amtrak operates 58 trains serving approximately 4.4
million passengers annually within the Nation's passenger rail system
that served 27 million passengers in Federal fiscal year 2009. It is
noteworthy that Chicago's Union Station, a primary hub for Amtrak
intercity service and the fourth busiest station in the Amtrak system,
had boardings/alightings totaling over 3 million persons. Illinois
subsidizes 28 State-sponsored trains which provide service in four
corridors: Chicago-Milwaukee; Chicago-Springfield-St. Louis; Chicago-
Galesburg-Quincy; and, Chicago-Champaign-Carbondale. Amtrak service in
key travel corridors is an important component of Illinois' multimodal
transportation network and continued Federal capital and operating
support is needed.
--CREATE Railroad Grand Crossing Connection.--IDOT requests $25
million in Federal fiscal year 2011 for design and construction
of a railroad connection between the Canadian National and
Norfolk Southern Railroads at 75th Street in Chicago--also
known as Grand Crossing.
High-Speed Rail
IDOT supports the administration's $1 billion request for the High-
Speed and Intercity Passenger Rail program for Federal fiscal year
2011. The $8 billion in ARRA high-speed and intercity passenger grant
awards provided a great first step in the building of a national
system; however, a continued Federal commitment and supplemental
funding is crucial to accelerate the development of a true national
intercity passenger high-speed intercity rail system. IDOT also urges
the subcommittee to devote special attention to the development of the
next generation of intercity passenger rail equipment. Providing
funding for next generation intercity rail equipment creates and
preserves solid employment for skilled American workers--employment
that can be truly seen as ``green jobs.'' IDOT also urges the
subcommittee to fully fund the Passenger Rail Investment and
Improvement Act of 2008 (PRIIA) at its authorized levels. Likewise,
IDOT supports the President's Vision For High-Speed Rail in America
strategic plan released last April which promises to build a world-
class network of high-speed passenger rail corridors. We believe that
the funding provided under ARRA, PRIIA and in conjunction with the
President's strategic plan will serve the Nation in making reasonable
investments in establishing a solid foundation for high-speed rail from
which the system can thrive and expand.
AVIATION
Airport Improvement Program Obligation Limitation
IDOT supports a Federal fiscal year 2011 Airport Improvement
Program (AIP) obligation limitation of $4.1 billion, the same funding
level in the House-passed and Senate-passed reauthorization bill. These
amounts are supported by the American Association of Airport Executives
and the National Association of State Aviation Officials.
IDOT continues to support a multiyear reauthorization bill with AIP
funding levels that will allow full use of the anticipated Airport and
Airway Trust Fund (AATF) revenues. In addition, IDOT supports the
continuation of the budgetary guarantees of AIR-21 and VISION-100
protecting the use of the AATF revenues. Both the House and Senate have
passed long-term authorization bills. However, it is essential that
Congress enact legislation to reauthorize the AIP program.
Reauthorizing the AIP program secures Federal funds for Federal fiscal
year 2010 and beyond so that the States can support the future
development of their State aviation infrastructure programs.
IDOT urges Congress to reauthorize the programs of the Federal
Aviation Administration before, or soon thereafter the recent extension
expires on April 30, 2010. Adequate AIP funding remains especially
important for small, non-hub, non-primary, general aviation and
reliever airports. While most large/medium hub airports have been able
to raise substantial amounts of funding with Passenger Facility
Charges, the smaller airports are very dependent on the Federal AIP.
Airports must continue to make infrastructure improvements to safely
and efficiently serve existing air traffic and the rapidly growing
passenger demand. Lower AIP obligation levels translate into less
Federal funds for airport projects, thereby exacerbating the existing
capital project funding shortfall.
Essential Air Service Program (EAS).--IDOT supports an EAS program
funded at a level that will enable the continuation of service at all
current Illinois EAS points. Several Illinois airports, Decatur,
Marion/Herrin and Quincy, currently receive annual EAS subsidies.
Small Community Air Service Program.--IDOT supports funding for the
Small Community Air Service Development Program in Federal fiscal year
2011, at a level no less than $35 million. Illinois airports have
received funding from this program in the past.
Other Non-modal IDOT Priorities
--Height Modernization.--IDOT requests $1.2 million to continue a
newly established Height Modernization program in Illinois.
This project solicitation will be requested through the
Appropriations Subcommittee on Science, State, Justice,
Commerce and Related Agencies.
This concludes my testimony. I understand the difficulty you face
trying to provide needed increases in transportation funding. However,
an adequate and well-maintained transportation system is critical to
the Nation's economic prosperity and future growth. Your ongoing
recognition of that fact and your support for the Nation's
transportation needs are much appreciated. Again, thank you for the
opportunity to discuss Illinois' Federal transportation funding
concerns.
______
Prepared Statement of the American Indian Higher Education Consortium
This statement focuses on the Department of Housing and Urban
Development (HUD) and the Department of Transportation, Federal Highway
Administration--Office of Civil Rights (FHWA-OCR).
On behalf of this Nation's 36 Tribal Colleges and Universities
(TCUs), which compose the American Indian Higher Education Consortium
(AIHEC), thank you for the opportunity to express our views and
recommendations regarding the Department of Housing and Urban
Development's University Partnership Program for Tribal Colleges and
Universities for fiscal year 2011.
SUMMARY OF REQUESTS
Department of Housing and Urban Development (HUD).--Since fiscal
year 2001, a TCU initiative has been funded and administered under the
HUD-University Partnership Program. This competitive grants program
enables Tribal Colleges and Universities to build, expand, renovate,
and equip their facilities that are available to, and used by, their
respective reservation communities. We strongly urge the subcommittee
to reject the recommendation included in the President's fiscal year
2011 budget request to eliminate four separate HUD university and
community assistance programs, each addressing very different community
needs, and establish a homogenized University Community Fund. If all
funds are competed from a single source, there is no assurance that
TCUs will be served equitably, and the likelihood is that they will not
be. We further request that the subcommittee support funding for the
TCU Program, at a minimum of $5.435 million; the same level of funding
appropriated for this separate program in fiscal year 2010.
Additionally, we request that language be included to permit that a
small portion of the funds appropriated may be used to provide much
needed technical assistance to institutions eligible to participate in
this competitive grants program.
Department of Transportation, Federal Highway Administration--
Office of Civil Rights (FHWA-OCR).--Fort Peck Community College and
Salish Kootenai College, both located in Montana, and members of the
American Indian Higher Education Consortium, conduct Highway
Construction Training Programs funded by On the Job Training/Support
Services provided by FHWA-OCR. We urge the subcommittee to direct the
FHWA-OCR to continue its current rate of investment in the vital
programs offered by these TCUs that is designed to increase the number
of American Indians, including women, that are part of the highway
construction workforce in Indian Country.
BACKGROUND
Tribal Colleges and Universities are accredited by independent,
regional accreditation agencies and like all institutions of higher
education, must undergo stringent performance reviews on a periodic
basis to retain their accreditation status. In addition to college
level programming, TCUs provide essential high school completion (GED),
basic remediation, job training, college preparatory courses, and adult
education programs. TCUs fulfill additional roles within their
respective reservation communities functioning as community centers,
libraries, tribal archives, career and business centers, economic
development centers, public meeting places, and child and elder care
centers. Each TCU is committed to improving the lives of its students
through higher education and to moving American Indians toward self-
sufficiency.
Tribal Colleges and Universities provide access to higher education
for American Indians and others living in some of the Nation's most
rural and economically depressed areas. According to 2000 decennial
census data, the annual per capita income of the U.S. population was
$21,587. In contrast, the annual per capita income of Native Americans
was $12,893 or about 40 percent less. In addition to serving their
student populations, TCUs offer a variety of much needed community
outreach programs.
These institutions, chartered by their respective tribal
governments, were established in response to the recognition by tribal
leaders that local, culturally based institutions are best suited to
help American Indians succeed in higher education. TCUs effectively
blend traditional teachings with conventional postsecondary curricula.
They have developed innovative ways to address the needs of tribal
populations and are overcoming long-standing barriers to success in
higher education for American Indians. Since the first TCU was
established on the Navajo Nation in 1968, these vital institutions have
come to represent the most significant development in the history of
American Indian higher education, providing access to, and promoting
achievement among, students who may otherwise never have known
postsecondary education success.
Despite their remarkable accomplishments, TCUs remain the most
poorly funded institutions of higher education in the country. Chronic
lack of adequate funds remains the most significant barrier to their
expanded success. Funding for the day-to-day operating budgets of 26
reservation-based TCUs is provided under title I of the Tribally
Controlled College or University Assistance Act (Public Law 95-471).
Currently, the institutional operating budgets of these colleges are
funded at $5,764 per Indian student--only enrolled members of a Federal
recognized tribe or the biological child of a tribal member may be
counted as Indian students for the purpose of determining an
institution's operations funding level. Because TCUs are located on
Federal trust land, States have no obligation to fund them--not even
for the non-Indian State-resident students who account for
approximately 20 percent of TCU enrollments. Yet, if these same
students attended any other public institution in the State, the State
would provide basic operating funds to the institution. While
mainstream public institutions have had a foundation of stable State
tax-based support, TCUs must rely on annual Federal appropriations for
their day-to-day institutional operating budgets. In the almost 30
years since the Tribal College Act was initially funded, these
reservation-based colleges have never received the authorized funding
level for their institutional operations. In fact, they have lost
ground. If you factor in inflation, the buying power of the current
appropriation is $965 less per Indian student than it was when it was
initially funded almost 30 years ago, when the appropriation was $2,831
per Indian student. This is not simply a matter of appropriations
falling short of an authorization. It effectively impedes the TCUs from
having the resources necessary to provide educational services afforded
students at State-funded institutions of higher education.
Inadequate funding has left many TCUs with no choice but to
continue to operate under severely distressed conditions. The need
remains urgent for construction, renovation, improvement, and
maintenance of key TCU facilities, such as basic and advanced science
laboratories, computer labs, and increasingly important student
housing, day care centers, and community service facilities. Although
the situation has improved dramatically at many TCUs in the past
several years, some TCUs still operate--at least partially--in donated
and temporary buildings. Few have dormitories, even fewer have student
health centers and only one TCU has a science research laboratory.
As a result of more than 200 years of Federal Indian policy--
including policies of termination, assimilation and relocation--many
reservation residents live in conditions of poverty comparable to that
found in Third World nations. Through the efforts of TCUs, American
Indian communities are availing themselves of resources needed to
foster responsible, productive, and self-reliant citizens.
JUSTIFICATIONS
Department of Housing and Urban Development
The HUD-TCU program, funded and administered under the Department's
University Partnership Program, is a competitive grants program that
enables TCUs to expand their roles and efficacy in addressing
development and revitalization needs in their respective communities.
No academic or student support projects are funded through this
program; rather, funding is available only for community based outreach
and service programs at TCUs. Through this program, some Tribal
Colleges have been able to build or enhance child care centers and
social service offices; help revitalize tribal housing; establish and
expand small business development; and enhance vitally-needed library
services. Unfortunately, not all of the TCUs have yet to benefit from
this program. The program staff at the Department has no budget to
provide technical assistance with regard to this program. If a small
portion of the appropriated funds were to be available for program
staff to conduct workshops and site visits, more of the TCUs and their
respective communities could benefit from this vital opportunity. We
strongly urge the subcommittee to support a TCU specific program funded
at a minimum of $5.435 million, and to include language that will allow
a portion of these funds to be used to provide technical assistance to
TCUs, to help ensure that much needed community services and programs
are expanded and continued in the communities served by the Nation's
Tribal Colleges and Universities.
Department of Transportation, FWHA--Office of Civil Rights
Since 1999, two of the Montana-based tribal colleges: Fort Peck
Community College and Salish Kootenai College have conducted highway
construction training programs with funds from FHWA-OCR's On the Job
Training/Support Services. In 2006, FHWA-OCR recognized the strength of
its investment and success of these programs by presenting Salish
Kootenai College with the ``Minority Institutions Higher Education
Achievement Award''. We urge the subcommittee to include report
language directing the FHWA-OCR to continue its current rate of
investment in the vital programs offered by these TCUs designed to
increase the number of American Indians, including women, that are part
of the highway construction workforce in Indian Country.
PRESIDENT'S FISCAL YEAR 2011 BUDGET
The President's fiscal year 2011 budget request proposes
eliminating four existing separate university and community assistance
programs that serve unique constituencies and melding the funds into a
single $25 million University Community Fund, as part of the larger
Community Development Block Grant (CDBG). We request that the
subcommittee continue to recognize and appropriate separate funding for
the Tribal Colleges and Universities Program, and the other affected
programs, namely: Historically Black Colleges and Universities;
Hispanic Serving Institutions Assisting Communities; and Alaska Native
and Native Hawaiian Serving Institutions Assisting Communities, to be
allocated competitively within the separate programs.
CONCLUSION
We respectfully request that in fiscal year 2011, Congress maintain
the current level of funding for a separate Tribal Colleges and
Universities HUD program and provide for technical assistance, to help
these vital institutions improve and expand their facilities to better
serve their students and communities. Additionally, we ask Congress to
direct the Department of Transportation to maintain the current level
of funding for our two TCUs that conduct highway construction training
programs to increase quality jobs for American Indians living in Indian
Country. Thank you for your continued support of Tribal Colleges and
Universities and for your consideration of our fiscal year 2011 HUD
appropriations requests.
______
Prepared Statement of the City of Maricopa, Arizona
Chairwoman Murray, Ranking Member Bond, and distinguished members
of the subcommittee, thank you for allowing me to testify on behalf of
the city of Maricopa in support of $1.8 million for environmental
studies through the Federal Highway Administration's (FHWA) Public
Lands Highway--Discretionary (PLHD) program for a grade separation
along State Route 347 in Maricopa, Arizona.
History.--Maricopa is a small but thriving community 35 miles south
of Phoenix that is between the Gila River Indian Community and the Ak-
Chin Indian Community. Incorporated in 2003 with a population of
approximately 1,000 people, Maricopa is now a burgeoning community of
more than 40,000 and growing at the rate of approximately 100 people
per month. SR-347 is Maricopa's ``Main Street'' and is the area's
primary north-south corridor and most direct route to the Phoenix area.
Originally paved in the 1950's as a two-lane highway, the roadway was
upgraded to a five-lane facility in the early 1990s, when the
population of Maricopa and surrounding communities was less than 1,000
people. The Union Pacific Rail Road's (UPRR) Sunset Line crosses SR-347
in the center of the Maricopa community. The Sunset Line was a single
track but has just recently been double tracked with plans for a third
track. The Sunset Line is one of UPRR's key transcontinental freight
corridors, and currently over 50 trains per day pass through the UPRR/
SR-347 intersection at speeds in excess of 50 mph.
Traffic Levels.--Traffic counts taken in February 2009 show a daily
traffic count of 33,547 vehicles, including 168 school buses carrying
an estimated 2,856 children across this rail line during morning and
afternoon peak hour periods. Also, on average 30 pedestrians cross the
tracks at peak times, many of them students walking to and from
Maricopa High School. Additionally, a majority of patrons of Harrah's
Ak-Chin Casino, located just a few miles south of Maricopa, cross the
UPRR line on SR-347 in both personal vehicles and on charter buses.
Accident History.--Crash statistics documented in our 2007
feasibility study show that SR-347 at the UPRR Line had 21 accidents
including one fatality in the previous 3 years. Federal Railroad
Administration's (FRA) most recent 10-year accident statistics for all
of Pinal County show an average of 3 fatalities a year out of 30
incidents per year county-wide. In Maricopa, FRA statistics show five
fatalities in the past 20 years at crossing 741343C (SR-347 and UPRR)
including a toddler trapped in a truck stalled on the crossing in June
2000. Life long residents remember this tragedy and never want to see
it repeated.
Congestion.--Each passing train stops traffic on SR-347 for several
minutes resulting in delays and congestion. In addition, six Amtrak
trains per week make scheduled stops at the Maricopa Station, typically
taking 5 to 10 minutes to load and unload passengers and baggage. The
Amtrak loading platform is located approximately 120 feet east of the
SR-347 crossing; since the Amtrak trains normally extend through the
intersection, these also cause long back-ups and congestion.
Emergency Access.--To many people in Maricopa, the SR-347 crossing
at the UPRR is literally the only way across the railroad tracks. Due
to the location of fire stations and the restriction of only having one
police station in the city, this means emergency vehicles also commonly
have to wait for the passing of a train before they are able to
continue responding to a code response. Maricopa is concerned about the
SR-347/UPRR crossing as a hindrance to providing proper public safety
responses.
Hazardous Materials.--With the volume and type of freight carried
along the UPRR Sunset Line through the middle of downtown Maricopa,
there is an ever-present threat of a hazardous materials incident.
Spills of this nature can take upwards of 12 to 24 hours to resolve.
The shutdown of this vital crossing, leaving residents unsure of
alternate routes and hindering emergency service response as well as
citizens commuting to and from work, would cause serious repercussions
for the community. Traffic congestion could also delay proper response
of hazardous materials teams.
Current Status.--A grade separation Feasibility Report/
Environmental Overview (FR/EO) was completed in March 2007. The purpose
of the investigation was to develop and evaluate various alternatives
for achieving the grade separation. The FR/EO presents five options for
achieving the project goals, and evaluates each based on a range of
criteria including cost, effectiveness, and community impacts.
Since March 2007, no progress has been made on this project. Steps
left to be taken include the completion of a Design Concept Report and
an Environmental Impact Statement and engineering design. Once project
development is completed, bidding and construction can proceed. The
city of Maricopa strongly supports a congressional appropriation of
$1.8 million for environmental studies with regard to the SR-347 grade
separation project in the fiscal year 2011 Transportation and Housing
and Urban Development and Related Agencies Appropriations bill.
To date, the city of Maricopa has invested $500,000 in the project
and is expected to add more to this total. Additionally, the Arizona
Department of Transportation has committed $400,000 to this project
thus far. To keep this project on schedule, Federal funding is
necessary and we strongly support the subcommittee allocating $1.8
million to complete the environmental studies for this project.
Justification for Dedication of Federal Funds.--SR-347 is the
primary access to one of the fastest growing areas in the country,
carries pass-through traffic to San Diego and Mexico and serves as a
key economic corridor for the Arizona region. The UPRR Sunset Route is
one of the busiest transcontinental rail lines in the United States,
transferring freight between the Port of Los Angeles, California and El
Paso, Texas. We have two significant interstate transportation routes
intersecting within a local municipality, burdening the city and
placing residents at a heightened risk. Federal action to remedy this
is warranted given the gravity of the situation, the scale of the
solution required and the scarcity of alternative options.
The speed of regional growth has outpaced the ability of local and
State authorities to provide for the health, safety and welfare of
travelers crossing the UPRR line on SR-347. Once safety concerns are
identified, it is imperative to seek a solution to this problem at all
levels. The transcontinental nature of the UPRR rail line is a national
issue. The housing boom that created Maricopa and brought residents
from all across the country is a national phenomenon. The reality that
a significant and possibly fatal safety issue exists today should drive
away any notion that this is anything less than a national issue. A
safety issue as this, with emergency needs, should be addressed before
conditions worsen and additional accidents or fatalities take place. We
should solve this problem before another tragedy takes place and this
is why we are urgently asking Congress to address this problem now
before another fatal accident takes place.
Conclusion.--The UPRR crossing at SR-347 is one of the most
dangerous rail crossings in Arizona. Because it bisects the fastest
growing area of Arizona, traffic is congested, public safety is
compromised, and children are at risk because of its proximity to a
high school. The only way to resolve this dangerous situation is an
over or under pass at the current grade crossing. Therefore, again, the
city of Maricopa strongly supports $1.8 million in funding through the
PHLD program under the Federal Highway Administration in the fiscal
year 2011 Transportation and Housing and Urban Development and Related
Agencies Appropriations bill for the completion of the environmental
studies for State Route 347 grade separation project thus keeping it on
an optimal schedule for completion.
Finally, it is important to note that our Senators--Kyl and
McCain--do NOT request earmarks and, therefore, we will not receive any
funding in the Senate. However, we are confident that with our support
in the House from Congressmen Grijalva and Pastor that this project
will be a conferenceable line-item and we hope you will support this
important request. Not one more life should be sacrificed at this
dangerous crossing.
Thank you for your time and attention to this important matter.
______
Prepared Statement of the Cook Inlet Housing Authority
My name is Carol Gore, and I currently serve as the president and
CEO of Cook Inlet Housing Authority. On behalf of Cook Inlet Housing
Authority, I appreciate this opportunity to submit testimony to the
Senate Appropriations Subcommittee for Transportation, Housing and
Urban Development regarding the Department of Housing and Urban
Development's proposed fiscal year 2011 funding allocation for the
Indian Housing Block Grant program.
Cook Inlet Housing Authority is headquartered in Anchorage, Alaska.
It is the Tribally Designated Housing Entity for Cook Inlet Region,
Inc. and has a service area of 38,000 square miles, covering much of
south-central Alaska. According to Census 2000 figures, Cook Inlet
Housing Authority's service area contains a Native American population
of approximately 36,000 individuals, roughly 30 percent of Alaska's
Native American population. We estimate that more than one-half of the
Native American families living within Cook Inlet Housing Authority's
service area are living at or below HUD-defined low-income levels.
The Indian Housing Block Grant program, created by the Native
American Housing Assistance and Self-Determination Act, or ``NAHASDA,''
is Cook Inlet Housing Authority's primary source of funding for
affordable housing and housing-related activities for low-income Native
American families. The program enables Cook Inlet Housing Authority to
develop and operate elder and family rental housing, provide affordable
home loans and down payment assistance, deliver housing readiness case
management, issue tenant-based and project-based rental assistance
vouchers, and provide weatherization upgrades. Cook Inlet Housing
Authority also works with a number of local providers to combat
homelessness and provide supportive housing for individuals with
special needs. This leveraging of local capacity provides a non-
duplicative mechanism to use existing expertise and programs to enhance
homelessness and supportive housing opportunities for low-income Native
American families living within our region.
The Indian Housing Block Grant is critical for another, more
technical and fundamental reason. Congress intended for NAHASDA
recipients to use their Indian Housing Block Grants to leverage
additional funding for affordable housing in Indian country. By using
its Indian Housing Block Grant to secure investment from other sources,
Cook Inlet Housing Authority has been able to bring significant
additional resources to serve the affordable housing needs of all
tribal members living within our region without segregation by income
or location. We describe this leveraging model as providing our region
with the benefits of living within a Village where all people and
resources are valued. By leveraging our NAHASDA funds, we are
benefiting our people and community in a way that celebrates and
welcomes our Native American population providing them quality homes in
a variety of neighborhoods. Simultaneously, our leveraging model has
enabled us to serve more AIAN clients than we could otherwise serve if
we developed housing strictly with NAHASDA funds on a house-by-house
basis. NAHASDA encourages leveraging. We thank Congress for the wisdom
and guidance to provide this opportunity to bring private capital and
funding to our Indian housing. Leveraging is part of the reason why
NAHASDA has been a resounding success throughout the United States.
However, despite the successes and innovations NAHASDA has spawned,
housing conditions in Indian country are far inferior to those of the
general U.S. population. According to the 2000 U.S. Census, nearly 12
percent of Native American households lack plumbing, compared to 1.2
percent of the general U.S. population. Indian households are nearly
three times more likely to be severely overcrowded. We are making good
progress, but our success has only just now begun to reach the private
banking industry and other grant funding sources. Absent NAHASDA funds
for leveraging, we have little chance of continuing our progress. With
NAHASDA, we are perceived to have ``skin in the game'' by other
funders. We are investing in our people and our communities--often
bringing $1 to $9 from other sources for every NAHASDA dollar.
It is for precisely these reasons--the success of NAHASDA and the
disparity in housing conditions between Native American communities and
the general U.S. population--that Cook Inlet Housing Authority is so
confused by the administration's 2011 budget request for the Indian
Housing Block Grant. The President's 2011 budget seeks $580 million for
the Indian Housing Block Grant, an amount 17 percent less than the
level enacted for 2010 and the lowest single-year funding amount for
the IHBG since the Native American Housing Assistance and Self-
Determination Act became law in 1996.
Why a successful program that effectively addresses the housing
needs of an extremely underserved population should bear a
disproportionate burden when it comes time to trim the Federal budget
is simply baffling. Cook Inlet Housing Authority has heard
unsubstantiated assertions that there is a lack of capacity in Indian
country that prevents the timely expenditure of Indian Housing Block
Grant funds. To the contrary, it is our understanding that NAHASDA
recipients have clearly demonstrated their capacity to obligate and
expend American Recovery and Reinvestment Act funding in accordance
with Federal requirements.
It is true that some NAHASDA recipients may hold on to their annual
Indian Housing Block Grant funding for limited periods, but they do so
for legitimate reasons. Because of the nature of the housing industry
in cold weather climates, construction seasons may be limited. In
Alaska, we can miss an entire construction season because the water
transportation system is either too low or doesn't thaw in time for
delivery. Moreover, small tribes receiving minimum NAHASDA allocation
sometimes preserve their Indian Housing Block Grant funding over
multiple years until they have pooled enough resources to engage in
meaningful and strategic housing activities. This practice is expressly
permitted by NAHASDA.
It is also confusing that the administration's budget request
proposes such a substantial cut to the Indian Housing Block Grant only
months after Congress implicitly recognized the efficacy of NAHASDA by
providing millions of dollars for the Indian Housing Block Grant
through the American Recovery and Reinvestment Act. Had the Recovery
Act funding been described to tribes and tribally designated housing
entities as an advance rather than a supplement intended to address
critical housing shortages in Indian country while stimulating the
American economy, Cook Inlet Housing Authority would have vigorously
opposed Recovery Act NAHASDA funding. Such an ``advance'' followed by a
funding cut would require tribes and housing organizations to hire a
significant number of new employees in order to spend Recovery Act
funding, only to lay off those very workers and additional staff once
Recovery Act funding is spent. This was clearly not the intent of
Congress.
Because NAHASDA is an effective program enabling tribes and their
designated housing entities to address the severe shortage of safe,
affordable housing in Indian country, Cook Inlet Housing Authority
respectfully requests that Congress fund the Indian Housing Block Grant
at $875 million for 2011. This funding level will restore Indian
Housing Block Grant funding to the fiscal year 2010 funding level and
provide an additional $175 million to address inflationary forces and
cost increases that were not taken into consideration between 1996,
when NAHASDA was passed, and 2010.
On behalf of Cook Inlet Housing Authority, thank you for the
opportunity to provide testimony opposing the administration's proposed
cuts to the Indian Housing Block Grant and supporting an increase in
the amount of $175 million for that program.
______
Prepared Statement of the Ely Shoshone Tribe Housing Department
It has been brought to my attention that the fiscal year 2011
budget proposed by President Obama includes unprecedented cuts to
funding under the Native American Housing and Self-Determination Act
(NAHASDA). As you may be aware, housing conditions and the availability
of housing in Indian Country fall far below those of the general U.S.
population. For example, according to the 2000 U.S. census, nearly 12
percent of Native American households lack plumbing compared to 1.2
percent of the general U.S. population. Further, Indian households are
nearly three times more likely to be severely overcrowded.
Since the inception in 1996 and funding and implementation in 1998,
NAHASDA has been the cornerstone of tribal housing programs. The
President's budget proposes cutting funding for the Indian Housing
Block Grant (IHBG) to $580 million, which is nearly 18 percent lower
that the fiscal year 2010 funding level and would be the lowest single-
year funding ever allocated to IHBG since NAHASDA was enacted. The
proposed budget does not include sufficient resources for the Indian
Community Development Block Grant (ICDBG) and completely eliminate the
much-needed Training and Technical Assistance (T/TA) that tribes need
to plan, implement and manage their housing programs. I urge you to
support increased funding for the IHBG at $875 million, the ICDBG at
$100 million, and to reinstate the allocation for T/TA at $4.8 million.
Thank you in advance and consideration.
______
Prepared Statement of the Fond du Lac Band of Lake Superior Chippewa
Mr. Chairman, members of the subcommittee, I am Karen R. Diver,
chairwoman of the Fond du Lac Band of Lake Superior Chippewa. On behalf
of the band, I would like to thank you for this opportunity to submit
testimony on fiscal year 2011 appropriations relating to the United
States Department of Housing and Urban Development. We submit this
testimony to urge Congress to increase the Federal funding levels for
Indian housing programs that are provided through the Department of
Housing and Urban Development.
Specifically, we ask that Congress appropriate $875 million for the
Native American Housing Block Grant Program (NAHASDA), and increase all
other HUD programs serving Native Americans. Although the NAHASDA
program is the principal source of Federal financial assistance for
housing on Indian reservations, the President's proposed fiscal year
2011 budget would reduce funding for this program to only $580 million.
This is substantially below the fiscal year 2010 enacted level of $700
million, and, in fact, is well below funding that had been provided for
this program in each of fiscal years 2005 through 2009--which had
averaged $630 million annually but which had not been adjusted to
address increases in housing costs caused by inflation. While the band
very much appreciates the additional funds provided for this program
through the American Recovery and Reinvestment Act of 2009, the ARRA
funds should supplement and not reduce program funding levels. Indeed,
because of the severe and persistent deficiencies in housing in Indian
Country, program funds should be increased above the fiscal year 2010
enacted level.
Native Americans suffer the most substandard housing--at a rate of
six times that of the population at large. The Fond du Lac Band, like
tribes nationwide, has longstanding and severe housing needs. Our
reservation, located in northeastern Minnesota, is part of our
aboriginal homeland. The reservation was established for us by treaty
with the United States on September 30, 1854 as our permanent home. We
have 3,900 enrolled tribal members, and provide a wide range of
services not only to our members, but to approximately 6,500 Indian
people who live and work on and near our reservation.
The Fond du Lac Reservation did not receive public housing until
1965, 30 years after public housing was established for all other
Americans. The implementation of the housing program for Fond du Lac
followed many years of failed Federal policy, which served to break up
families by placing children in boarding schools and foster homes, and
which relocated many of the residents of the Fond du Lac Reservation
from the reservation to urban areas. In recent years, especially with
the decline in the Nation's economy, many band members have come back
to the reservation in the interest of obtaining jobs that the band has
been able to provide as a result of the band's recent strides in
economic development.
Although our reservation encompasses 100,000 acres of land, the
Federal allotment policy, which was applied to the Fond du Lac
Reservation in 1889, left us with the poorest lands; our most valuable
lands went to timber companies and homesteaders. In addition, our
reservation is located in a geographic area that contains mostly
marginal lands that require costly drainage projects for the land to be
useable. Our lands are considered a difficult environment for
affordable housing because they require high development costs
associated with substandard soils and expensive sewage systems and a
lack of decent infrastructure. In an effort to meet our members'
housing needs, the band has found it necessary to invest significant
funds to remediate the band's current lands, purchase other lands, and
construct the infrastructure (septic systems, water and sewer lines,
roads, and utility services) that is essential to serve those lands.
The band cannot do this alone. The band has long depended on the
funds made available to Indian tribes through HUD to assist us in
meeting the housing needs of our members. But the deficits in housing
for Indian people are so entrenched and so severe that they will not be
remedied without continued Federal financial assistance.
We currently have 73 units of home ownership housing and 231 units
of low rent housing. Many of our housing units are over 15 years old,
with the oldest units built more than 30 years ago, in 1970. Because of
the age of our housing stock, the units are constantly in need of
maintenance and repairs. Approximately 30 percent of our housing units
require major renovation, such as the replacement of roofs and siding,
as well as upgrades in plumbing and other utility systems, and the
replacement of windows and doors. Other units require routine repairs
and maintenance, the average cost of which is $5,000 per year.
The Fond du Lac Housing Division currently has a waiting list of
approximately 300 applicants seeking low income and home ownership
housing. We have many other tribal members who are also in need of
housing, but who have moderate incomes and therefore are not even shown
on our waiting list. To meet the needs of our members we need to build
at least 300 new housing units. Our greatest need is for low income
rental units and funds to cover the cost of repairs and maintenance. We
also have ongoing needs to build new and upgrade existing septic
systems to serve that housing, the cost of which is estimated to be
approximately $1-$2 million.
The disparity between housing conditions among our members and that
of the general population is shown by the 2000 Census. In Minnesota,
0.5 percent of the population lives in homes lacking complete plumbing.
In contrast, among Fond du Lac members that figure is 10 times higher--
5.1 percent. In Minnesota, 0.48 percent of the population lives in
homes that lack complete kitchens. In contrast, among Fond du Lac
members, 4.2 percent live in homes without complete kitchens. In
addition the poverty rate in Minnesota is 7.9 percent, while the
poverty rate among Fond du Lac members is 14 percent.
Because of the severity of our housing shortage, approximately 20
percent of our people currently live in overcrowded homes. It is not
uncommon on our reservation and among our people to find 10 or more
individuals living together in a 2-bedroom home. Overcrowding, in turn,
taxes the house itself by accelerating the wear and tear on those
homes.
Overcrowding and dilapidated housing creates other risks. As
discussed by the U.S. Commission on Civil Rights, in its report, A
Quiet Crisis: Federal Funding and Unmet Needs In Indian Country, at 62-
63 (July 2003), the high rate of overcrowded housing among Native
Americans increases the risk of fire and accidents, and creates
unsanitary conditions, with increased spreading of communicable but
normally preventable illnesses. Overcrowded housing is especially
harmful to children, who, as the Commission found, are likely to
``suffer sleep deprivation and inability to concentrate in school.'' In
addition, overcrowded housing ``often results in stress, which can
magnify family dysfunction and eventually lead to alcohol and child
abuse.'' A Quiet Crisis at 63. We see these problems at Fond du Lac.
Our members who are compelled to live in overcrowded homes are also
often only a step away from being homeless. As set out in a recent
study of homeless and near-homeless persons on northern Minnesota
Indian Reservations, including the Fond du Lac Reservation,
``[d]oubling up with family or friends is often the last housing
arrangement a person has before becoming literally homeless, and it is
common for people to go back and forth between doubling up and
homelessness.'' Wilder Research, Homeless and Near-Homeless People on
Northern Minnesota Indian Reservations (Nov 2007), http://
www.wilder.org/download.0.html?report=2018. The Report further found a
substantial number of Indians on the six reservations studied to be in
this near-homeless status.
Homelessness is an equally severe problem among Fond du Lac
members. In 1994, the Minnesota Housing Finance Agency reported that
while the homeless rate for all Minnesota residents was 0.92 percent,
the homeless rate among Fond du Lac members was 6.54 percent. See
Minnesota Housing Finance Agency, Comprehensive Housing Affordability
Strategy 1996-2000 at 28, 43, 49 (December 29, 1995). The problem of
homelessness continues to exist. A 2006 study shows that a
disproportionately high number of Native Americans in Minnesota are
homeless. See Wilder Research, Overview of Homelessness in Minnesota
2006: Key Facts from the Statewide Survey (April 2007), http://
www.mnhousing.gov/initiatives/housing-assistance/Resources/index.aspx.
The study reports that although Native American adults are only 1
percent of the population of the State, they are 11 percent of the
adults identified as homeless. And while Native American youth (age 11
to 17) are only 2 percent of the youth population in the State, they
are 22 percent of the homeless youth that are unaccompanied by an
adult. Id. at p 9.
We see the problem of homelessness among our members every day. The
band regularly receives requests from band members who are homeless and
in need of housing. The band currently has no facilities to provide
temporary shelters to house our members when emergencies arise and
there are no homeless shelters in close proximity to the Fond du Lac
Reservation. Instead, in an effort to combat this problem, the band has
found it necessary provide temporary shelter to homeless band members
in the band's Black Bear Hotel and other local hotels and motels.
In addition, several years ago, the band established an emergency
rental assistance program. Under this program, the band provides
emergency shelter to band members in need of housing by paying the
security deposit and first month's rent on a rental unit anywhere
within a 60 mile radius of our reservation. The band has provided
rental assistance to many band members since the program was created.
But although this program does address the immediate housing crisis
faced by a family that becomes homeless, it is not a long term solution
for many of our members who do not have sufficient financial resources
to continue to pay the higher rents that are generally charged for
housing outside the reservation. Those members risk becoming homeless
again a few months after emergency rental assistance is provided. The
band needs more units of affordable low-income rental housing to meet
the needs of these individuals. However, because of budget limitations,
we do not have enough funds to cover the cost of building and
maintaining a sufficient number of low income rental housing units.
The Fond du Lac Band also needs to address the housing needs of our
elderly population by providing assisted living accommodations for them
if they so choose. Our elders are our teachers and mentors and we need
to honor and respect them by giving them comfort and security, and
allow them to live in a secure, healthy and worry-free environment.
While the band has two housing complexes for our elders, there are not
a sufficient number of units within those complexes to meet the need.
Further, the units in those complexes do not have the medical and
related facilities if the elders require greater assisted care. In such
circumstances, our elders must find a nursing home outside the
reservation.
The band relies on its annual grant from the Department under the
NAHASDA program to meet some of these housing needs. The band has also
relied on Indian Community Development Block Grants, which the band has
been able to use for infrastructure. However, the funding for these
programs has not materially increased over the years. At the same time,
the costs of the supplies, materials and labor necessary to remodel and
modernize our aging housing stock have increased every year with
inflation. Each year we are forced to do more with less. Current
funding levels simply do not meet the housing needs. The lack of any
real increases in the NAHASDA program before fiscal year 2010 and in
the other HUD programs that are intended to serve Indians will only
make this housing crisis worse. The Federal Government's trust
responsibility demands that this Indian housing crisis be addressed.
Housing represents the single largest expenditure for most Indian
families. The development of housing has a major impact on the national
economy and the economic growth and health of regions and communities.
Housing is inextricably linked to access to jobs and healthy
communities and the social behavior of the families who occupy it. The
failure to achieve adequate housing leads to significant societal
costs.
Decent, affordable, and accessible housing fosters self-
sufficiency, brings stability to families and new vitality to
distressed communities, and supports overall economic growth. Very
particularly, it improves life outcomes for children. In the process,
it reduces a host of costly social and economic problems that place
enormous strains on the education, public health, social service, law
enforcement, criminal justice, and welfare systems. For these reasons
the Fond du Lac Band strongly urges Congress to increase funding for
our housing needs so we can meaningfully address the needs of the core
of our communities.
Miigwech. Thank you.
______
Prepared Statement of the Railway Supply Institute, Inc.
Thank you for the opportunity to submit this statement.
The Railway Supply Institute (RSI) appreciates the opportunity to
provide this subcommittee with our views on important transportation
funding policy.
Established in 1908, RSI is the international association of
suppliers to the Nation's freight, passenger rail systems, and rail
transit authorities. The domestic railway supply industry is a $20
billion a year business with some 500 companies employing 150,000
people. Approximately 25 percent of sales involve Amtrak, commuter
railroads and transit authorities. A strong national freight and
passenger rail system will not only continue to sustain good paying
domestic jobs but will lead to future job creation as well.
RSI supports both our Nation's freight and passenger rail
operations. We need a strong, national railroad passenger system that
contributes to reducing dependence on foreign oil; reducing carbon
emissions into the atmosphere; reducing congestion on our highways;
improving transportation safety; reducing airport congestion; and that
will enhance our ability to move vast numbers of people in emergency
evacuation situations (i.e. 9/11, Katrina, etc).
As representatives of those who supply our Nation's railroad
industry, we submit that a more balanced national transportation policy
that places more emphasis on rail will significantly contribute to
meeting our Nation's stated policy objectives that are designed to make
this Nation stronger.
Our key requests for intercity passenger trains for fiscal year
2011 are:
--Amtrak's budget request: $592 million for operations; $1,299
million for capital (including $281 million for Americans with
Disabilities Act compliance work); $305 million for debt
service; $7 million for FRA oversight.
--Amtrak's fleet strategy requirement: $446 million.
--Capital grants for States: $4 billion, with an appropriate portion
designated for rolling stock acquisition.
In addition, we urge the subcommittee to consider fully funding the
FRA Railroad Safety Technology Grant Program in the amount of $50
million. The grant program is intended to accelerate the installation
of Positive Train Control (PTC) on key portions of the Nation's rail
system. As you know, the Rail Safety Improvement Act of 2008 (RSIA)
mandates the deployment of interoperable PTC systems by December 31,
2015 on mainline tracks that carry passenger trains or Poison
Inhalation Hazard/Toxic Inhalation Hazard materials. The new grant
program was authorized under RSIA and has an 80/20 cost-sharing
requirement. Funding assistance would help the railroads continue to
expand needed capacity to meet both freight and passenger demands while
still complying with the PTC mandate.
Finally, RSI requests that the subcommittee provide full funding
for the Federal Railroad Administration's rail research and development
program, ideally to the administration's requested level of $40
million. FRA's R&D program provides vital safety support including
research on track issues, equipment crashworthiness, hazardous
materials transport, human factor issues such as fatigue and many other
areas supporting the Nation's rail safety program and saving lives.
Your continued support for a healthy and vital rail network is good
public policy and good for the Nation.
Thank you for considering our views.
______
Prepared Statement of the Hoopa Valley Tribe
This written testimony is submitted in support of appropriations
for the Hoopa Valley Tribe's Senior Nutrition (Elder) Center in the
amount of $1,150,000. The agency involved is Housing and Urban
Development and the programs involved include Economic Development
Initiatives.
The Hoopa Valley Tribe is a federally recognized Indian tribe
governed by a chairman and a seven member tribal council. Our
responsibilities include governing our tribal members and land;
administering, managing and protecting our tribal property;
safeguarding and promoting the peace and general welfare of the Hoopa
Valley Indians; and negotiating with Federal, State and local
governments.
Located in the rural and remote areas of Northern California, the
Hoopa Valley Indian Reservation is 55 miles from the larger populated
areas of Eureka and Arcata. The Hoopa Valley Tribe is the largest land
based tribe in California. Our reservation is referred to as the ``12
mile square;'' it encompasses approximately 144 square miles (98,355
acres) including the Valley floor.
According to the U.S. Census Bureau (Census 2000), there are
approximately 2,633 people living on the Hoopa Valley Reservation.
About 84.7 percent of the residents are American Indian. Poverty,
inadequate education, high rates of unemployment and limited access to
health services are creating significant and alarming health
disparities among our people. Around 32 percent of Hoopa residents are
currently living in poverty, which is 2.3 times the statewide figure of
14.2 percent and 2.6 times the nationwide figure of 12.4 percent. These
statistics include our elders who are disproportionately affected by
chronic conditions and are principally low income individuals living on
fixed incomes.
The K'ima:w Medical Center is an entity of the Hoopa Valley Tribe.
It is an ambulatory clinic which offers a comprehensive set of services
that include medical, dental, community health, nutrition, social
services, senior nutrition, full laboratory and radiology services as
well as specialty clinics for vision, podiatry and telemedicine. The
service area of K'ima:w Medical Center includes the reservation as well
as the surrounding areas of Willow Creek, Salyer and Johnson.
The tribe and its K'ima:w Medical Center are seeking appropriations
to construct a new Senior Nutrition (Elder) Center. Our current center
is located in a very old building. We have safety concerns as well as
simply not enough space for the services and activities we wish to
offer our seniors, and which our seniors need. The Center we envision
would become a focal point for the community and a place where seniors
in the community could go for nutritious meals, community programs,
medical screenings, physical therapy, and general health education. The
Center would enable us to promote a more fit and healthy senior
population through these screenings, exercise, activity and nutrition.
Importantly, the Center would serve tribal members and non-tribal
members in the community.
Caring for our elders is of utmost importance to the Hoopa Valley
Tribe. The Senior Nutrition (Elder) Center would greatly aid in
improving the lives of senior citizens on the reservation. Because of
the vast area and remote nature of our reservation, seniors can easily
experience isolation from time to time. This Center would help
alleviate this problem. It would provide a gathering place for elders
to create and maintain social relationships and preserve their
connection to the community. It would also provide opportunities for
tribal members to learn from the tribe's elders as they administer care
or simply visit with them at the Center.
The Center's services would not only enhance the quality of life
for our elders but would also help prevent and detect unnoticed
healthcare problems. Poor nutrition and delayed detection of illnesses
can lead to serious consequences. It is expected that the Center would
help prevent healthcare problems and the substantial medical costs
associated with same. Our elders face high rates of diabetes,
dyslipidemia and high blood pressure. The Center would help seniors
take control of their health before more serious problems arise.
The tribe's current senior nutrition program serves meals to tribal
and non-tribal elders in the community. Last year, we served 6,582
meals on-site and 7,953 meals via home delivery. This was an increase
of 332 meals over 2008. We expect these needs to continue to rise and
an upgraded Center is vital to meeting expected increased demands. Our
services in this regard are critical as the meal we serve is likely the
only opportunity for a nutritious meal for a senior, and may very well
be the only opportunity for a meal, period.
Finally, a new Senior Nutrition Center would provide jobs in our
remote area which is in need of economic development. The project is
expected to create at least 15 construction positions. Further,
permanent staff would be hired once the new Senior Nutrition Center is
operational. Having more people employed on the reservation will
stimulate the local economy, something which is seriously needed given
our poverty rate and remote area.
The Total Project Cost and Total Appropriations Request are:
--Senior Nutrition (Elder) Center--Total $1,550,000
--Construction of the building: $1,150,000
--Kitchen equipment, furniture, additional building expenses--
$400,000
Of the Senior Nutrition Center's total costs, $1,550,000, the tribe
plans to contribute $400,000 (26 percent) through the use of tribal
funds and more community fund raising.
Funding in the amount of $1,150,000 is requested for the
construction of a new Senior Nutrition Center on the Hoopa Valley
Reservation.
______
Prepared Statement of the National Association of Railroad Passengers
Thank you for the opportunity to submit this statement. Thank you
also for the positive role that you and your subcommittee have played
over the years in providing funding for intercity passenger trains.
Our key requests for intercity passenger trains for fiscal year
2011 are:
--Amtrak's budget request: $592 million for operations; $1,745
million for capital (including $281 million for Americans with
Disabilities Act and $446 million for the fleet strategy); $305
million for debt service; $7 million for FRA oversight.
--Capital grants for States: $4 billion, with an appropriate portion
designated for rolling stock acquisition.
--Any funding needed to restore service to Las Vegas. Amtrak, as part
of its statutorily mandated California Zephyr performance
improvement plan is considering restoring Salt Lake City-Los
Angeles service. This would put Las Vegas back on the Amtrak
map and restore direct Denver-Los Angeles service. Around 1996,
when Amtrak was considering route reductions, the head of what
was then Amtrak's Chicago-based ``strategic business unit''
told our chairman, ``If I had known Congress was going to put
back routes, based on the economics, I would have recommended
the Desert Wind (Salt Lake City-Los Angeles) first.''
--Funding needed to restore service between New Orleans and Florida,
consistent with the PRIIA requirement that Amtrak by July 16,
2009, submit a plan to restart service.
--Funding needed to restore service between Salt Lake City and the
Pacific Northwest and between Chicago and the Pacific Northwest
via southern North Dakota and southern Montana, as Amtrak
studied in response to the mandates in PRIIA.
Equipping Trains for Growth.--A major factor hurting customer
satisfaction and inflating operating costs is the 37-year average age
of its locomotives and cars, including 92 long-distance ``Heritage''
cars that are between 53 and 61 years old.
Amtrak's fleet strategy assumes ridership growth of only 2 percent.
That is too conservative, given the need to increase capacity on
existing routes and to add routes. We appreciate Amtrak's emphasis on
their plan's ``scalability,'' that is, the fact that car acquisitions
can be increased if the market calls for it and funding is provided.
Indeed, some trains are already outpacing similarly conservative
ridership projections.
Nonetheless, this illustrates the financial challenge: failure to
meet the funding targets Amtrak identified puts us close to a no-growth
scenario regarding both additional capacity on existing routes and
expanding the network to parts of the country that are not adequately
served, a category that includes some of the fastest-growing regions in
the United States.
In addition to funding fleet needs directly, consideration should
be given to the use of tax credits and/or asset depreciation benefits
to encourage private leasing companies to buy equipment and lease it to
States and perhaps Amtrak. Part of the goal is to reduce the high up-
front costs that taxpayer-supported agencies face when procuring new
equipment.
Also of critical importance is the $281 million Amtrak request to
fulfill its obligation to bring stations into compliance with the
Americans with Disabilities Act--money that is left out of the
administration's budget. The Association supports Amtrak's current ADA
policy as set forth in ``Amtrak Guidelines on Platform Design'' (April
2008). Previously, we joined with Amtrak, the Class I railroads and
commuter railroad agencies in strongly opposing a rule that had been
under consideration by U.S. DOT that would have required full length
platforms for level boarding. In fiscal 2010, Amtrak was instructed to
spend the $144 million for ADA which in effect reduced other vital
capital expenditures.
The Importance of Trains.--More and better passenger trains and
intermodal connections are crucial to maintaining mobility for our
citizens, enhancing the quality of life in our communities, bolstering
our Nation's economic competitiveness and energy efficiency, providing
good jobs for Americans and reducing our transportation system's
negative environmental impact.
Mobility and quality of life issues become more relevant as the
proportion of older citizens dramatically increases, and as young
people become more receptive to non-auto transport.
The national interest is well served by enabling as many people--
especially older people--as possible to lead a satisfying life with
little or no driving. This can improve both safety and mental health,
as people in auto-dependent environments who cannot drive suffer from
the resulting sense of isolation.
Fewer Teenaged Drivers.--At the same time, the Millennial
Generation--people in their teens and twenties--is greatly attracted to
a less car-dependent lifestyle. They increasingly do not view acquiring
a driver's license as a ``rite of passage to maturity'' for 16-year-
olds. Indeed, my two sons of driving age, now 21 and 19, both got their
drivers' licenses a year or two after turning 16, becoming serious
about getting their licenses only after realizing that mass transit
served their transportation needs poorly. Media reports confirm that my
sons are not unique, including WRAL.com in Raleigh (January 25),
Tampa's News Channel 8 (February 11), and New York Times (February 25,
2008).
Ridership and Polls.--Americans' desire for improved train service
is demonstrated through increasing ridership on Amtrak and rail transit
systems nationwide. Amtrak gained riders for 6 straight years--from
2002 to 2008. The 2008 run-up in gasoline prices was a big factor in
ridership growth of 11 percent from 2007 to 2008. While Amtrak and
transit ridership fell in 2009, due in part to the recession and lower
gasoline prices, Amtrak ridership still was 5 percent above the 2007
level. Amtrak ridership through the first half of fiscal year 2010
(October-March) was 4.3 percent above the year-earlier level (long-
distance trains were up 5.2 percent).
For years, polls have consistently shown strong support for
increased investment in passenger trains. A recent one, by Kelton
Research--taken February 1-7, 2010 for HNTB Corporation--showed 88
percent ``open to high-speed rail for long-distance travel within the
U.S.,'' according to a February 18 report in Metro Magazine, which also
cited 83 percent support for increasing the share of Federal funding
that goes to public transit and high-speed rail infrastructure. HNTB's
Peter Gertler said, ``The pain we felt when gasoline was hovering near
$4 a gallon has receded, yet we can't stand by for the next crisis to
hit to address the underlying issues of congestion and our dependence
on limited fossil fuels.''
Amtrak's Funding Request.--We are concerned that reducing Amtrak's
other capital items to make way for the ``full ADA funding,'' which in
effect happened this year, damages the overall system, with detrimental
impact on all passengers including those with disabilities. Shorting
the capital request creates a problem for the effort to let passenger
trains assume their rightful place as a primary mode of transportation
providing a desirable travel choice for all Americans--as envisioned by
President Obama.
Grants to States.--We strongly support the general approach that
U.S. DOT took in awarding the $8 billion in capital grants announced
January 28. I commented on NBC Nightly News on January 30 that I was
impressed both with ``the amount of funds involved and the intelligence
with which it was distributed.''
Operating Grant.--This is critical, in part because the big
increase in the capital budget (including Recovery Act funds) drives up
operating costs, as not all personnel costs associated with capital
projects can be capitalized. Moreover, the mandates of PRIIA also
create upward pressure on operating costs. The organization is handling
more than twice the amount of work of 5 years ago. This underscores the
urgency of maintaining Amtrak's operating grant at the full requested
amount of $592 million.
The Transportation for America Coalition's ``United States of
Transit Cutbacks'' map vividly portrays the irony of transit agencies
from Philadelphia to Phoenix receiving new Federal capital funds while
withering operating support is forcing consideration of unacceptable
service cuts--including the elimination of all service on certain days
of the week, bus route terminations, station closures, and dramatic
frequency reductions. As Secretary LaHood put it, it doesn't make sense
to buy so many new trains and buses when we can't afford to pay
operators to run them. On the intercity side, consideration should be
given, at least in emergency situations, to allowing operation of
State-supported intercity trains on a 50/50 matching basis, without
making Amtrak swallow the difference.
Oak Ridge National Laboratory Statistics.--The following table,
showing 2007 data, comes from the annual Transportation Energy Data
Book (Edition 28, released in 2009), published by Oak Ridge National
Laboratory under contract to the U.S. Department of Energy:
------------------------------------------------------------------------
BTUs per
Mode passenger-mile \1\
------------------------------------------------------------------------
Amtrak.............................................. 2,516
Commuter trains..................................... 2,638
Certificated air carriers........................... 3,103
Cars................................................ 3,514
Light trucks (2-axle, 4-tire)....................... 3,946
------------------------------------------------------------------------
\1\ BTU = British Thermal Unit; passenger-mile = one passenger traveling
one mile.
Overnight Trains.--We support Amtrak's initiative, discussed in the
release, to combine the Texas Eagle and Sunset Limited into a daily,
full-service Chicago-Los Angeles train via St. Louis, Dallas/Fort
Worth, San Antonio, El Paso and Tucson. A connecting daily train
between San Antonio and New Orleans via Houston is also planned, and we
understand that some through New Orleans-Los Angeles cars will be
restored if demand is strong. Currently, New Orleans-San Antonio-Los
Angeles service runs tri-weekly.
Hudson River Tunnels; North Station-South Station Rail Link.--We
continue to be concerned about the construction of Hudson River rail
tunnels that will not connect to Penn Station but only to a dead-end,
deep cavern station under 34th Street. We continue to discuss this with
New Jersey Transit. We support the $6 million that Massachusetts
requested to complete environmental work on a potential rail link that
would unify Boston's commuter rail networks and connect Amtrak's
Northeast corridor to northern New England.
Northeast Corridor Fares.--At an April 10 NARP membership meeting
in Philadelphia, Dr. Vukan Vuchic of the University of Pennsylvania
said trains ``should play a maximum role in society, and not just serve
businessmen. Students, tourists, young and old, should be able to
ride.'' Amtrak's current fares don't support that. This may be partly
due to faulty judgments by Amtrak, but relentless pressure to reduce
the operating grant is probably the bigger cause.
Thank you for considering our views.
______
Prepared Statement of the National American Indian Housing Council
INTRODUCTION
Good afternoon Chairwoman Murray, Ranking Member Bond, and
distinguished members of the Senate Subcommittee on Transportation and
Housing and Urban Development, and Related Agencies. My name is Marty
Shuravloff. I am the chairman of the National American Indian Housing
Council (NAIHC), the only national tribal non-profit organization
dedicated to advancing housing, physical infrastructure, and economic
development in tribal communities in the United States. I am also an
enrolled member of the Leisnoi Village, Kodiak Island, Alaska. I want
to thank the subcommittee for the opportunity to submit testimony for
its consideration as it prepares its fiscal year 2011 appropriations
bill.
BACKGROUND ON THE NATIONAL AMERICAN INDIAN HOUSING COUNCIL (NAIHC)
The NAIHC was founded in 1974 and has, for 36 years, served its
members by providing valuable training and technical assistance (T/TA)
to all tribes and tribal housing entities; providing information to
Congress regarding the issues and challenges that tribes face in terms
of housing, infrastructure, and community and economic development; and
working with key Federal agencies in an attempt to address such issues
and meet such challenges. The membership of NAIHC is expansive,
comprised of 271 members representing 463 \1\ tribes and tribal housing
organizations. The primary goal of NAIHC is to support Native housing
entities in their efforts to provide safe, quality, affordable,
culturally relevant housing to Native people.
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\1\ There are approximately 562 federal-recognized Indian tribes
and Alaska Native villages in the United States, all of whom are
eligible for membership in NAIHC. Other NAIHC members include State-
recognized tribes that were deemed eligible for housing assistance
under the 1937 Act and grandfathered in to the Native American Housing
Assistance and Self-Determination Act.
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BRIEF SUMMARY OF THE PROBLEMS REGARDING HOUSING IN INDIAN COUNTRY
While the country has been experiencing an economic downturn in
general, this trend is greatly magnified in Indian communities. The
national unemployment rate has risen and has hopefully passed its peak
at an alarming rate of nearly 10 percent; \2\ however, that rate does
not compare to the unemployment rates in Indian Country, which average
49 percent.\3\ The highest unemployment rates are on the Plains
reservations, where the average rate is 77 percent.\4\ Because of the
remote locations of many reservations, there is a lack of basic
infrastructure and economic development opportunities are difficult to
identify and pursue. As a result, the poverty rate in Indian Country is
exceedingly high at 25.3 percent, nearly three times the national
average.\5\ These employment and economic development challenges
exacerbate the housing situation in Indian country. Our first Americans
face some of the worst housing and living conditions in the country and
the availability of affordable, adequate, safe housing in Indian
Country falls far below that of the general U.S. population.
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\2\ See http://www.bls.gov/news.release/empsit.nr0.htm.
\3\ Bureau of Indian Affairs Labor Force Report (2005).
\4\ Many of these reservations are in the State of South Dakota,
which has one of the lowest unemployment rates in the Nation. However,
on some South Dakota reservations, the unemployment rate exceeds 80
percent.
\5\ U.S. Census Bureau, American Indian and Alaska Native Heritage
Month: November 2008. See http://www.census.gov.
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--According to the 2000 U.S. Census, nearly 12 percent of Native
American households lack plumbing compared to 1.2 percent of
the general U.S. population.
--According to 2002 statistics, 90,000 Indian families were homeless
or under-housed.
--On tribal lands, 28 percent of Indian households were found to be
over-crowded or to lack adequate plumbing and kitchen
facilities. The national average is 5.4 percent.
--When structures that lack heating and electrical equipment are
included, roughly 40 percent of reservation housing is
considered inadequate, compared to 5.9 percent of national
households.
--Seventy percent of the existing housing stock in Indian Country is
in need of upgrades and repairs, many of them extensive.
--Less than one-half of all reservation homes are connected to a
sewer system.
There is already a consensus among many members of Congress, HUD,
tribal leaders, and tribal organizations that there is a severe housing
shortage in tribal communities; that many homes are, as a result,
overcrowded; that many of the existing homes are in need of repairs,
some of them substantial; that many homes lack basic amenities that
many of us take for granted, such as full kitchens and plumbing; and
that at least 200,000 new housing units are needed in Indian Country.
These issues are further complicated by Indian land title status.
Most Indian lands are held in trust or restricted-fee status;
therefore, private financial institutions will not recognize tribal
homes as collateral to make improvements or for individuals to finance
new homes. Private investment in the real estate market in Indian
Country is virtually non-existent. Tribes are wholly dependent on the
Federal Government for financial assistance to meet their growing
housing needs, and the provision of such assistance is consistent with
the Federal Government's centuries-old trust responsibility to American
Indian tribes and Alaska Native villages.
the native american housing assistance and self-determination act
In 1996, Congress passed the Native American Housing Assistance and
Self-Determination Act (``NAHASDA'') to provide Federal statutory
authority to address the above-mentioned housing disparities in Indian
Country. NAHASDA is the cornerstone for providing housing assistance to
low-income Native American families on Indian reservations, in Alaska
Native villages, and on Native Hawaiian Home Lands. The Indian Housing
Block Grant (``IHBG'') is the funding component of NAHASDA. Since the
passage of NAHASDA in 1996 and its funding and implementation in 1998,
NAHASDA has been the single largest source of funding for Native
housing. Administered by the Department of Housing and Urban
Development (``HUD''), NAHASDA specifies which activities are eligible
for funding.\6\ Not only do IHBG funds support new housing development,
acquisition, rehabilitation, and other housing services that are
critical for tribal communities; they cover essential planning and
operating expenses for tribal housing programs. Between 2006 and 2009,
a significant portion of IHBG funds, approximately 24 percent, were
used for planning, administration, housing management, and services.
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\6\ Eligible activities include but are not limited to downpayment
assistance, property acquisition, new construction, safety programs,
planning and administration, and housing rehabilitation. As HUD's
funding justification acknowledges (see http://hud.gov/offices/cfo/
reports/2011/cjs/nahb-grants2011.pdf, Page N-8), a large portion of
tribal funds are spent on planning, administration, and operating
expenses.
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AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) AND FISCAL YEAR 2010
INDIAN HOUSING FUNDS
NAIHC would like to thank Congress, particularly this subcommittee,
for its increased investment in Indian housing in fiscal year 2010.
AARA provided over $500 million for the IHBG program. This additional
investment in Indian Country supports hundreds of jobs, has allowed
some tribes to start on new construction projects, and has assisted
other tribes in completing essential infrastructure for housing
projects that they could not have otherwise afforded with their IHBG
allocations. Tribes have complied with the mandate to obligate the
funds in an expedient manner, thus helping stimulate tribal and the
national economies. In addition to ARRA funding, Congress appropriated
$700 million for the IHBG in fiscal year 2010, the first significant
increase for the program since its inception. This positive step
reversed a decade of stagnate funding levels that neither kept pace
with inflation nor addressed the acute housing needs in Native
communities.
THE PRESIDENT'S FISCAL YEAR 2011 BUDGET REQUEST FOR THE INDIAN HOUSING
BLOCK GRANT
On February 1, 2010, President Obama submitted to Congress a $3.8
trillion budget request. It proposes $580 million for the IHBG, which
is a decrease of $120 million (-17 percent) from the fiscal year 2010
funding level.\7\ At the same time, HUD's overall budget was reduced by
only 5 percent. Should Congress accept the President's budget request,
it would be the lowest, single-year funding level for the NAHASDA since
it was enacted in 1996. To put this in proper perspective, funding
appropriated by Congress in fiscal year 1998, 12 years ago, was $20
million more than the President's budget request for fiscal year 2011.
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\7\ Part of the rationale for reducing IHBG funding was what may
appear to be a delay in use of available tribal housing funds. However,
such apparent delay is an aberration. Since NAHASDA was initially
funded in fiscal year 1998 through fiscal year 2009, tribal expenditure
rates are 88 percent. Based on a HUD ARRA spending report dated March
20, 2010, tribes are spending HUD and ARRA funds at a rate that at
least equals and, in some cases, exceeds the national average.
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While the NAIHC and its members are aware of and appreciate the
large investments made in Indian housing, we are disappointed that the
current request fails to continue the positive budget trajectory of
recent years. Therefore, the NAIHC strongly urges Congress to not only
appropriate funds above the President's budget request, but to fund the
IHBG at $875 million due to the increasing costs for housing
development, energy efficiency initiatives, and other inflationary
factors. Since the President's budget request was released, many of our
members have expressed their deep concerns. They believe, and we agree,
that this budget impacts not only housing, but also the very hope for
self-sustaining economies in Indian Country.
Reduced funding would result in the loss of jobs for our people,
reversing the positive impact of ARRA; the deterioration of existing
housing units; and the curtailment of many housing projects that are
currently under development. Without sufficient funding and proper
training and technical assistance, progress regarding tribal housing
will not only cease; years of hard work will be reversed, as tribes
will lack the funds to maintain and operate existing housing units,
much less provide new ones. Many tribes are at risk of losing between a
quarter and a third or more of their housing budgets if the President's
budget request were to take effect, the impact of which would be
devastating.
OTHER INDIAN HOUSING AND RELATED PROGRAMS
The Title VI and Section 184 Indian Housing Loan Guarantee Programs
The President's budget request includes $2 million for the title VI
Loan Guarantee program and $8.25 million for the section 184 program.
The title VI program is important because it provides a 95 percent
guarantee on loans made by private lenders, which is an incentive for
lenders to get involved in the development of much-needed housing in
tribal areas. Section 184 is specifically geared toward facilitating
home loans in Indian Country. We request that these programs be funded
at $2 million and $9 million, respectively.
Indian Community Development Block Grant (ICDBG)
While appreciated, proposed funds of $65 million for the ICDBG are
insufficient to meet the current needs for essential infrastructure,
including sewer and running water, in Indian Country. We request that
this program be funded at $100 million.
Native Hawaiian Housing
Low-income Native Hawaiian families continue to face tremendous
challenges, similar to those that tribal members face in the rest of
the United States. The President's budget request of $10 million for
the Native Hawaiian Housing Block Grant is appreciated, but the budget
includes no funding for the section 184A program in Hawaii. While it
has taken some time to get this program started--because lenders are
not familiar with the section 184A program--providing no funding would
be a step backward for Native Hawaiian families working toward home
ownership. We urge Congress to consider this before agreeing to the
administration's proposal to eliminate funding for the program.
TRAINING AND TECHNICAL ASSISTANCE (T/TA) AND THE PROPOSED
TRANSFORMATION INITIATIVE
The President's budget request would eliminate entirely the much-
needed, exceptional T/TA that has been provided by NAIHC since NAHASDA
was implemented. The provision of T/TA is critical for tribes to build
their capacity to effectively plan, implement, and manage tribal
housing programs. Eliminating funding for T/TA would be disastrous for
tribal housing authorities and would be a huge step in the wrong
direction. Tribes need more assistance in building capacity, not less.
Since NAIHC's funding for T/TA was restored in 2007, requests for T/TA
have steadily grown. The funding that NAIHC is currently receiving is
insufficient to meet the continuous, growing demand for T/TA.
Therefore, we are forced to make difficult decisions regarding when,
where, and how to provide the most effective T/TA possible to our
membership.
The President's budget request proposes an agency-wide
Transformation Initiative Fund (``TIF'') with up to 1 percent of HUD's
total budget, which would draw funds away from essential housing
programs, including $5.8 million from the IHBG account, ``to continue
the on-going comprehensive study of housing needs in Indian Country and
native communities in Alaska and Hawaii.'' While the NAIHC membership
believes the TI may have merit, we do not believe that transferring
nearly $6 million from the IHBG account to conduct a study on housing
needs is a wise or even defensible use of Federal taxpayer funds. More
importantly, the $6 million affects funding that has historically been
appropriated to NAIHC for T/TA. Through resolutions, the NAIHC
membership has repeatedly taken the position that a portion of the IHBG
allocation should be provided to NAIHC for T/TA, which is a reflection
of their confidence in NAIHC and the continuing demand for the
essential capacity-building services that we provide. We request that
funding in the amount of $4.8 million for T/TA be included in the
fiscal year 2011 budget.
CONCLUSION
NAHASDA was enacted to provide Indian tribes and Native American
communities with new and creative tools necessary to develop culturally
relevant, safe, decent, affordable housing. NAIHC has very specific
concerns regarding the President's budget request for Indian housing
funding levels and we urge Congress, with the leadership of this
subcommittee, to not permit excessive funding reductions in the NAHASDA
program. To do so would be an enormous step backwards and devastate the
progress that has been made in the past 12 years to improve housing
conditions in Indian Country. Based on the facts outlined above and the
potentially devastating impact a dramatic cut to Indian housing funds
will most certainly have on Indian Country, NAIHC requests funding in
the amounts outlined above in order to meet the immense needs in Indian
country.
Thank you, Chairwoman Murray, Ranking Member Bond, and the members
of this subcommittee for allowing us to express our budgetary
priorities and concerns regarding Native American housing needs. Your
continued support of Native American communities is truly appreciated,
and the NAIHC is eager to work with you and your professional staff on
any and all issues pertaining to Indian housing programs and living
conditions for America's indigenous people.
______
Prepared Statement of Na Tanya Davina Stewart
Subcommittee Members: I am submitting this testimony concerning the
Federal and local transportation agencies charged with the creation and
implementation of transportation projects in Lake County, Indiana and
their non-compliance with Executive order 12898, 1994 and the
provisions of Environmental Justice --``the fair treatment and
meaningful involvement of all people regardless of race, color,
national origin, or income with respect to the development,
implementation, and enforcement of environmental laws, regulations, and
policies.''
On April 16 and 17, 2010, the Northwestern Indiana Regional
Planning Commission (NIRPC), the Federal Highway Administration (FHWA)
and the Federal Transit Administration (FTA) held corrective action
workshops as a result of NIRPC's certification review to address the
ongoing challenges NIRPC has with their technical analysis and lack of
adherence to environmental justice mandates.
During the course of the workshops several issues emerged that are
of grave concern to those of us who were in attendance. We stated our
concerns to NIRPC and feel compelled to address this subcommittee since
NIRPC receives Federal funding from you.
--On the Issue of Fair Treatment.--The Federal funding ratio of 80:20
for projects places an excessive burden upon cities that are
experiencing extreme revenue shortfalls. Gary, Indiana and the
entire Northwest Indiana Region once reigned as an industrial
giant and the steel industry was the backbone of the economy.
In this post-industrial age, cities like Gary have been slow to
transition to the information and technology economies. This is
a regional as well as a national problem. Our economic base
continues to erode along with our property values that
incidentally, are the source of our scant city revenues. Is it
possible for the Federal Government to make special allowances
when it comes to funding basic road maintenance projects by
lowering or eliminating the cost distressed cities have to pay
especially when budget cuts dictate that a city may be unable
to prioritize such basic yet essential projects? Safe and paved
streets are a quality of life issue.
--On the Issue of Meaningful Involvement.--NIRPC receives most of its
funding from Lake County residents. The diverse ethnic and
intergenerational demographic make-up of the county is not
reflective in NIRPC's workforce and governing board. NIRPC's
board is appointed by dictates of State law and consists of
elected officials. We are aware that NIRPC's board appointments
are not an issue for the Federal Government to resolve. In
keeping with the call for meaningful involvement as put forth
by the definition of environmental justice and in our right to
fully engage in our democracy; it is imperative that we also
hold positions of power on the board and/or have a say in whom
we desire to represent our interests on the board in order to
be more involved in the decisionmaking on projects that will
affect our lives. Our calls to have grassroots organizations,
youth, the elderly, and differently able people represented in
these positions of power have fallen upon deaf ears and we feel
are a direct violation of our rights. It is our tax dollars
that fund NIRPC yet we do not play a significant role in the
development, implementation, and enforcement of the policies
and transportation projects that directly impact our lives. If
the Federal Government continues to fund agencies like NIRPC
then it is your responsibility to weigh in on ensuring said
agencies truly involve the community residents in every stage
of the development of projects.
During the meeting, a board member of NIRPC just happened to
mention that NIRPC had recently created a 501c3 on Economic
Development within their organization. NIRPC had already
appointed the 501c3 board that is comprised of elected
officials and members from the business community. If a city
within NIRPC's jurisdiction wants to move forward on an
economic development plan and is in need of additional revenue
from the Federal Government, that city would have to go through
NIRPC to secure Federal dollars. Based upon NIRPC's history of
non-inclusion of marginalized people and their technical
analysis and environmental justice shortcomings as cited by the
certification review process, we are gravely concerned about
the acquisition of NIRPC's new power.
We implore the Federal Government to re-evaluate their funding
allocation policies. When Federal funds for transportation are directed
to State governments and Metropolitan Planning Organizations (MPO) how
are those monies dispersed? Do cities with the greatest need receive
the bulk of the money or cities more adapt with the grant writing
process? Is the national objective to secure and maintain center cities
and make them more energy efficient and accessible or is it to continue
to fund urban sprawl and construct new highways that will decimate
farmland and open spaces we all rely upon for food and oxygen?
Sending monies to the State government and MPO's may be an
efficient mechanism to maintain Federal and State highways and regional
projects like light and speed rail but may not be an efficient
distribution of funds for local projects like street and bridge
maintenance. When cities have to compete for monies from a funding pool
that encompasses projects that include regional and State projects,
cities may lose out on funding opportunities and continue to decline,
especially during economic down turns.
We ask that you take our funding concerns and efforts to hold MPO's
like NIRPC to the high standards of inclusion set forth by Executive
order 12898, 1994 into consideration as you weigh in on the fiscal year
2011 appropriations and general national transportation policies.
______
Prepared Statement of the National AIDS Housing Coalition
The National AIDS Housing Coalition (NAHC) requests $410 million
for the Housing Opportunities for Persons With AIDS Program (HOPWA) for
fiscal year 2011. NAHC is a national non-profit membership housing
organization founded in 1994 that works to end the HIV/AIDS epidemic by
ensuring that persons living with HIV/AIDS have quality, affordable and
appropriate housing. NAHC's members are people living with HIV/AIDS,
service providers, developers, researchers, public health and housing
departments and advocates.
Research presented through NAHC's Research Summit Series
overwhelmingly confirms housing as a strategic point of intervention to
address HIV/AIDS and the impacts of homelessness and the concomitant
effects of race and gender, poverty, mental illness, chronic drug use,
incarceration and exposure to trauma and violence. Housing has been
shown as cost effective by stabilizing people with HIV/AIDS and
reducing reliance on other public systems.
The HOPWA program is relied upon by HIV/AIDS service organizations
nationwide to assure that stable, affordable housing and the critical
supportive services that help people remain housed is available to
those coping with the debilitating and impoverishing effects of HIV/
AIDS. HOPWA's hallmark is its flexibility to provide a continuum of
housing and housing-related case management and supportive services for
low income individuals and their families living with HIV/AIDS. HOPWA
dollars are used for short and longer term rents, facility-based
assistance as well as limited rent, mortgage or utility payments that
play a critical role in homelessness prevention. HOPWA can also be used
for new development and rehabilitation. Finally, in the face of
shrinking resources, HOPWA's importance to community strategic planning
efforts cannot be underestimated--facilitating better coordination of
local and private resources and filling gaps in local systems of care
to meet housing need among people with HIV/AIDS and their families.
AIDS HOUSING IS CENTRAL FOR HIV/AIDS HEALTH
Lack of housing is associated with remaining outside of medical
care and improved housing status has been shown to significantly affect
access to healthcare, including anti-retroviral treatment (ART) and
adherence. In summary:
Housing Impacts Continuity of Care.--Over time, housing status is
among the strongest predictors of entry into HIV care, primary care
visits, continuous care, and care that meets clinical practice
standards.
Housing Improves Health Outcomes.--Improved housing status has a
significant, positive association with better HIV-related health,
including CD4 counts, viral load, and co-infection with HCV or TB.
AIDS Housing is a Powerful Weapon Against Homelessness.--Research
confirms that homelessness is a major risk factor for HIV, and HIV is a
major risk factor for homelessness: for example, at any given time, up
to 16 percent of people living with HIV/AIDS are homeless, while as
many as 70 percent report a lifetime experience of homelessness or
housing instability.
AIDS Housing is Prevention.--Over time, persons who improve their
housing status reduce their risk behaviors by one-half. Access to
housing improves access and adherence to ART, which lowers viral load
and reduces the risk of transmission.
AIDS Housing is Cost-effective.--AIDS housing investments reduce
other public costs by improving the health of people living with HIV/
AIDS and preventing new infections, making housing dollars a wise use
of limited public resources.
HOUSING NEED AMONG PEOPLE WITH HIV/AIDS
Over 56,000 people became infected with HIV in the past year in the
United States. Experts estimate that over one-half of people living
with HIV/AIDS will need some form of housing assistance during the
course of their illness, while national research has shown that housing
is the greatest unmet service need for people living with HIV disease.
Data indicates that approximately 72 percent of PLWHA have incomes
below $30,000; the number in need is likely to increase proportionally
with the weakened economy and sustained high unemployment levels.
In 2010, HOPWA will continue providing housing support for over
58,000 households in 133 formula eligible jurisdictions, providing
assistance in all 50 States, the District of Columbia, Puerto Rico and
the Virgin Islands. Three new jurisdictions became eligible for formula
funding--Little Rock, Arkansas; Albuquerque, New Mexico; and Allentown,
Pennsylvania. In addition, 93 competitive grants are currently
operating. The program is tied to positive client outcomes in the
58,367 households served in the current fiscal year, making it possible
for assisted individuals to better attend to their health needs,
function in their families and society. AIDS housing is a cost-
effective way to end homelessness and achieve positive individual and
community health outcomes. HUD reports that 94 percent of all HOPWA
rental assistance households in a recent program year were able to
achieve maximum stability, reducing risks of homelessness and
participating in healthcare.
NAHC recommends a funding level of $410 million, which would permit
assistance to an additional 14,000 people with HIV/AIDS in need of
housing assistance and reduce unmet need by over 10 percent.
EXAMPLES OF AIDS HOUSING NEED ACROSS THE COUNTRY
AIDS housing need has exploded in virtually every region of the
country. As the affordable housing crisis envelopes higher income
people, persistently vulnerable populations are squeezed out of
assistance. Though waiting lists are no longer maintained in many
jurisdictions, affordable housing need continues to grow.
In Alabama, just 414 people with HIV/AIDS and their families
receive HOPWA assistance, while 2,173 HOPWA-eligible households have
unmet housing needs. The tenant-based rental assistance program has
been closed to new applicants since June 2008. Of the families on the
waiting list, 77 percent are living at or below the poverty level.
Across Massachusetts, 1,699 families are on waiting lists for AIDS
housing assistance--355 in greater Boston alone.
In San Francisco, the city's centralized housing waiting list has
over 1,000 people and has been closed to new applicants since November
2001.
There are 4,637 people living with HIV/AIDS on the waiting list for
housing assistance in Dallas--almost one-third of all HIV-positive
people in the city. In needs assessments, housing assistance was
consistently ranked second in overall unmet need, surpassed only by
dental care.
The overall number of unmet AIDS housing need in Central Ohio from
2004-2009 is 770 households, based on the current Consolidated Plan for
the city of Columbus.
OTHER LOW INCOME HOUSING PROGRAMS REMAIN CRUCIAL
Of course, HOPWA will never fully meet the housing need for all
those living with HIV/AIDS and their families. AIDS housing providers
urge full and adequate funding for the range of low-income housing
programs relied upon in the continuum of housing and services for
people with HIV/AIDS, including Homeless Assistance Grants, Tenant-
Based Rental Assistance, Public Housing, and section 811 Housing for
People with Disabilities, among others.
In conclusion, NAHC urges the subcommittee to fund the Housing
Opportunities for Persons With AIDS program at the highest level
possible for fiscal year 2011 to accommodate new formula jurisdictions
expected to become eligible and to assist existing programs in moving
closer to meeting the actual housing needs in their jurisdictions.
NAHC respectfully asks the subcommittee to approve funding of $410
million for the Housing Opportunities With AIDS program for fiscal year
2011.
______
Prepared Statement of the University Corporation for Atmospheric
Research (UCAR)
On behalf of the University Corporation for Atmospheric Research
(UCAR) and the larger university community involved in weather and
climate research, I submit this written testimony for the record of the
Senate Committee on Appropriations, Subcommittee on Transportation and
Housing and Urban Development, and Related Agencies.
UCAR is a consortium of 75 universities that manages and operates
the National Center for Atmospheric Research and additional programs
that support and extend the country's scientific research and
educational capabilities. UCAR is supported by the National Science
Foundation and other Federal agencies, including the U.S. Department of
Transportation (USDOT)'s Federal Highway Administration (FHWA) and
Federal Aviation Administration (FAA).
I want to thank the subcommittee for its leadership in supporting
research and development programs at the FAA and FHWA. I urge you to
support the President's commitment to ensuring safer, more efficient
air and road travel. One essential piece of this commitment to
modernizing air and surface travel is providing drivers, pilots, and
other vehicle operators with access to real-time weather information. I
urge you to support these relatively small but critically important R&D
programs within the FAA and FHWA budgets.
FEDERAL HIGHWAY ADMINISTRATION (FHWA)
The highest priority for the USDOT and the FHWA is transportation
safety. Last month, the National Highway Traffic Safety Administration
released a report projecting that traffic fatalities have declined for
the 15th consecutive quarter, the lowest annual level since 1954.
Still, 24 percent of weather-related vehicle crashes occur on snowy,
slushy or icy pavement, causing 1,300 deaths and more than 116,800
injuries annually. There are also economic costs: snow and ice
significantly increase road maintenance costs, and State and local
agencies spend more than $2.3 billion on snow and ice control
operations annually.
Since the late 1990s, researchers and engineers from several
national labs and universities have played a pivotal role bringing the
surface transportation and weather communities together to increase
traffic safety, efficiency, and mobility. Applications of successful
research and development supported by the Road Weather Research and
Development Program (SAFETEA-LU sec. 5308) have significantly reduced
the cost of State DOT winter snow and ice control activities and are
likely to have significantly reduced weather-related accidents. This
program, authorized at $5 million per year, has proven quite
successful. For example, the Winter Maintenance Decision Support
System, which supports pavement snow and ice control operations, was
successfully developed, tested, and implemented by the private sector
in more than 13 States. The Road Weather Research Program is also
developing advanced weather and road condition safety applications as
part of the USDOT's IntelliDrive Initiative.
In the absence of a new surface transportation reauthorization
bill, the President's fiscal year 2011 request keeps funding for the
Road Weather Research Program frozen at $4 million. It is imperative
that this be increased to the authorized level of $5 million per year.
A fully-funded Program would support the development of technologies
that integrate weather and road condition information into traffic
management centers, improve understanding of driver behavior in poor
weather, develop in-vehicle information systems and wireless
technologies that provide warnings to drivers when poor weather and
road conditions exist, improve the understanding of the impact of
weather on pavement condition, and develop new active control
strategies optimized for poor weather and road conditions. I urge the
subcommittee to fund the Road Weather Research and Development Program
at its full authorized level of $5.0 million in fiscal year 2011.
THE FEDERAL AVIATION ADMINISTRATION (FAA)
Projections indicate that the demand for aviation will increase by
a factor of two or three over the next two decades. Expansion of
aviation is likely to continue and, as in the past, could outpace
economic growth. To meet future aviation capacity needs, the United
States is developing and implementing a dynamic, flexible and scalable
Next Generation Air Transportation System (NextGen) that is safe,
secure, efficient and environmentally sound.
I urge you to support the President's overall fiscal year 2011
request of $16.5 billion for the FAA, an increase of $476 million above
fiscal year 2010 enacted levels. This increase reflects the
administration's recognition of future passenger growth and its
commitment to safety and performance.
INTEGRATING WEATHER INTO THE FUTURE AIR TRANSPORTATION SYSTEM
The primary goal of NextGen is to address and meet the rapidly
changing needs of the National Airspace System (NAS). Providing
accurate, timely weather information required by aviation
decisionmakers is fundamental to NextGen's success in achieving
capacity, efficiency, and safety goals. Improved weather forecasts,
plus a shared source of decision support information for NAS
decisionmakers, are crucial elements of achieving the goal of reducing
the weather impact. The first step, though, is establishing a clear
understanding of the impacts that have the most effect on NAS
efficiency and capacity. The most visible impact to us all is
``delays,'' both airborne and ground, affecting both airplanes and
people. Delay translates to operational cost for the airlines, and lost
productivity for the users of the system--people and cargo.
RESEARCH, ENGINEERING, AND DEVELOPMENT
The fiscal year 2011 request of $190 million for the Research,
Engineering, and Development (RE&D) line office at the FAA continues
important work in current research areas, including aviation weather
research. This 7.6 percent increase over fiscal year 2010 supports
enhanced NextGen research and development efforts in the areas of air-
ground integration, weather information for pilots, and environmental
research for aircraft technologies and alternative fuels to improve
aviation's environmental and energy performance. The following programs
can be found within the RE&D line office of the President's fiscal year
2011 FAA budget request.
WEATHER PROGRAM
Aviation weather research and applications are critical to the
FAA's safety, operations and efficiency record. A number of research
projects are underway, through the Weather Program and in collaboration
with industry representatives, which focus on in-flight icing,
turbulence, winter weather and deicing protocols, thunderstorms,
ceiling, and visibility.
One example system that translates a large amount of weather data
into a significant safety and delay impact is the Weather Decision
Support for Deicing Decision Making System (WSDDM). The accumulation of
ice on aircraft prior to take off has long been recognized as one of
the most significant safety hazards affecting the aviation industry
today. Using WSDDM, airport snowfall rate in terms of liquid water
content is translated into deicing fluid application procedures and
aircraft holdover times.
While the goal of the Weather Program is to increase safety,
capacity, and support NextGen, I am very concerned that the request of
$16.5 million simply will not support the R&D needs of the program
which is down almost 2 percent from last year's level and operating
with one-half the funding level of 10 years ago. To address the
challenges and meet the research needs of NextGen, the Weather Program
must receive, at a minimum, $18 million for fiscal year 2011.
WEATHER TECHNOLOGY IN THE COCKPIT
The crash of an Air France jet last year over the Atlantic Ocean,
killing all 216 passengers and 12 crew members, is an example of the
limits of pilots' ability to cope with severe weather. Pilots currently
have little weather information as they fly over remote stretches of
the ocean, which is where some of the worst turbulence occurs.
Providing pilots with at least an approximate picture of developing
storms could help guide them safely around areas of potentially severe
weather.
The Weather Technology in the Cockpit Program leverages research
activities with other agencies, academia and the private sector by
enabling the adoption of cockpit technologies that provide pilots with
hazardous weather information and improve situational awareness. It
seeks to ensure the adoption of cockpit, ground, and communication
technologies, practices, and procedures that will provide pilots with
shared and consistent weather information to enhance common situational
awareness, plus engage the aircraft as a ``node'' that autonomously
exchanges weather information with surrounding aircraft and ground
systems. One system being developed combines satellite data and
computer weather models with cutting-edge artificial intelligence
techniques to identify and predict rapidly evolving storms and other
potential areas of turbulence, and alert pilots and air traffic
controllers to storms and turbulence over the continental United
States.
I am very disappointed that the fiscal year 2011 request for this
small but life-saving program was reduced almost 3 percent from fiscal
year 2010 to $9.3 million. I urge you to fund the Weather Technology in
the Cockpit program at $10 million, at a minimum.
FACILITIES AND EQUIPMENT
In the FAA's Facilities and Equipment line office, I would like to
call your attention to two very important programs, NextGen Network
Enabled Weather (NNEW) and Reduce Weather Impact, and ask you to
support the fiscal year 2011 request for both.
NEXTGEN NETWORK ENABLED WEATHER (NNEW)
Exploring, identifying, and employing methods and techniques that
will help facilitate the flow of operation-specific weather-related
data and information to end users is critical. The NextGen Network
Enabled Weather project is dedicated to using and developing
technologies and standards for NextGen that will support effective
dissemination of weather data. The concept of a 4-D Weather Data Cube
is a foundational element of NextGen. It is envisioned that this
virtual data cube will comprise weather data and information from
disparate data contributors and locations. From this Cube, end users
(e.g., air traffic managers, pilots, etc.) will be able to obtain a
common weather picture of the NAS. The fiscal year 2011 request for
NNEW is $28.25 million, an $8 million increase over fiscal year 2010.
To develop the NextGen weather dissemination system smoothly and
efficiently, I urge you to support this request.
NEXTGEN REDUCE WEATHER IMPACT
The goal of the NextGen Reduce Weather Impact Program is to provide
increased capacity in U.S. airspace to reduce congestion and meet
projected demand in an environmentally sound manner. The Program
addresses implementation of improved forecasts and provides weather
forecast information tailored for integration into traffic management
decision support systems. Some of this work starts with identification
of the air traffic management impact of interest, and then translating
weather into metrics associated with that impact.
The current weather observing network is inadequate to the needs of
NextGen. Improvements will be central to the Reduce Weather Impact
Program. Working with appropriate scientific, modeling and user
communities, current sensor information and dissemination shortfalls
will be identified and evaluated. Investigating technologies for
optimizing and improving automated aircraft weather reporting will also
be conducted. To continue this work, I urge you to support the
President's fiscal year 2011 request of $43.2 million for the NextGen
Reduce Weather Impact Program, an increase of $7.6 million above fiscal
year 2010.
On behalf of UCAR, as well as all U.S. citizens who use the surface
and air transportation systems, I want to thank you for the important
work you do in supporting the country's scientific research, training,
and technology transfer. We appreciate your attention to the
recommendations of our community concerning the fiscal year 2011 FHWA
and FAA budgets and your concern for the safety of the Nation's
transportation systems.
______
Prepared Statement of the National Recreation and Park Association
Thank you Chairwoman Murray, Ranking Member Bond, and other members
of the subcommittee for this opportunity to submit written testimony on
the fiscal year 2011 appropriations bill.
NRPA is a 501(c)3 national non-profit organization with more than
21,000 members. We represent both citizens and park and recreation
professionals. Our mission is to advance parks, recreation and
environmental conservation for the benefit of all people. Because we
represent the public park and recreation agencies in the United States,
we touch the lives of over 300 million people in virtually every
community.
As your subcommittee works to craft the fiscal year 2011
appropriations bill, we request that you include $4.2 billion for the
Community Development Block Grant (CDBG) Program.
The CDBG program equips communities with the resources they need to
address serious community development challenges. The program has been
an invaluable tool to help cities replace decaying infrastructure and
provide safe places to live, work, learn and become physically active.
Unfortunately, despite proven success, the CDBG formula grant program
has seen a decrease in funding over the past few years going from $4.9
billion in fiscal year 2004 to $3.9 billion in fiscal year 2010. This
is a decrease of more than 20 percent in only 6 short years.
According to the Department of Housing and Urban Development,
approximately $100 million of CDBG funds are utilized annually for
parks and recreation projects. This is not surprising since studies
have shown that parks and recreational resources are often key
components to the revitalization of communities and blighted areas as
they increase property values, reduce storm water runoff, mitigate
urban heat islands and improve health and wellness. The flexibility
afforded through the CDBG program allows communities to implement funds
in ways that best meet their specific needs such as including park and
recreation projects as part of a comprehensive redevelopment
initiative.
The 2005-2010 5 year community development plan for Olympia,
Washington cited an unmet need of $2.7 million for parks and recreation
projects relative to community development. Throughout the State
hundreds of projects are seeking funding for the acquisition of, and
improvements to, parks and recreation facilities in order to improve
the livability of moderate to low income neighborhoods and promote
healthier, sustainable communities. Such projects are well positioned
to be funded through the CDBG program.
Missouri has utilized CDBG funds to address a host of community
development needs throughout the State. In 2009 St. Louis leveraged
over $5 million in CDBG money to improve accessibility of playgrounds
for children with disabilities, for environmental remediation to reduce
stormwater runoff, for sidewalk, and streetlight enhancements to make
parks safer for families, and parks and recreation infrastructure
improvements to support recovery efforts for neighborhoods suffering
from high foreclosure and diminishing property values.
The city of Tuscaloosa, Alabama leverages an average of nearly $1.5
million in CDBG money on an annual basis to fund projects that address
community development needs. Among these were projects bringing park
and recreation facilities into ADA compliance to make them more
accessible for persons with disabilities, improving playground
equipment to make them safer for children, building walking trails to
help the city become healthier and more livable, as well as enhancing
park and recreation infrastructure to provide economic stimulus in
economically depressed areas.
The importance of CDBG, however, goes beyond providing safe
infrastructure. Funding provided through the CDBG program often serves
as the catalyst for private investment. In fact, the National League of
Cities concluded that over the more than 30-year life of the program,
CDBG has leveraged nearly $324 billion in new private investment in our
Nation's communities. This equates to a three to one return on
investment.
CDBG funds also help to reduce crime and build a skilled workforce.
Various parks and recreation departments throughout the country use
CDBG funding in coordination with other community organizations, to
provide educational services, employment training and youth development
initiatives to low-income youth and their families. For example, in
Phoenix, Arizona, the city parks and recreation department partners
with a local non-profit called Kids Cafe to provide a safe and secure
after school environment for children. This program provides low-income
children with healthy, nutritious meals, as well as tutors and mentors,
and engages them in recreational sports.
For more than 30 years the CDBG program has played a critical role
in revitalizing neighborhoods and improving the quality of life in
communities throughout this country. CDBG funding provides valuable
resources that allow communities to tailor projects to address their
unique community needs. From ensuring the energy efficiency of public
buildings to reducing crime and providing safe recreational
infrastructure, CDBG funding is building healthy, livable and
economically viable communities. The National Recreation and Park
Association strongly supports increased funding for the CDBG program
and calls on Congress to fund the program at $4.2 billion in fiscal
year 2011.
Thank you for this opportunity to present testimony.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Alves, Theodore, Inspector General, National Rairoad Passenger
Corporation (Amtrak)........................................... 152
Prepared Statement of........................................ 153
American Indian Higher Education Consortium, Prepared Statement
of the......................................................... 354
Benjamin, Hon. Peter, Chairman, Board of Directors, Washington
Metropolitan Area Transit Authority............................ 285
Prepared Statement of........................................ 291
Statement of................................................. 290
Bertram, Chris, Chief Financial Officer, Assistant Secretary for
Budget and Programs, Department of Transportation.............. 1
Boardman, Hon. Joseph H., President and Chief Executive Officer,
National Railroad Passenger Corporation (Amtrak)............... 145
Prepared Statement of........................................ 147
Bond, Senator Christopher S., U.S. Senator From Missouri:
Opening Statements of..........................4, 64, 123, 182, 229
Questions Submitted by....................................... 218
Calvaresi-Barr, Ann, Deputy Inspector General, Department of
Transportation................................................. 161
Prepared Statement of........................................ 162
Cardin, Senator Benjamin L., U.S. Senator From Maryland:
Prepared Statement of........................................ 293
Statement of................................................. 293
City of Maricopa, Arizona, Prepared Statement of the............. 357
Coalition of Northeastern Governors, Prepared Statement of the... 345
Cochran, Senator Thad, U.S. Senator From Mississippi, Questions
Submitted by................................................... 118
Collins, Senator Susan, U.S. Senator From Maine:
Prepared Statement of........................................ 7
Question Submitted by........................................ 117
Statement of................................................. 7
Cook Inlet Housing Authority, Prepared Statement of the.......... 358
Corbett, Jack, Director, MetroRiders.Org......................... 326
Prepared Statement of........................................ 328
DeBernardo, Francis, Chairman, Riders' Advisory Council.......... 331
Prepared Statement of........................................ 332
Donohue, Kenneth M., Inspector General, Federal Housing
Administration, Department of Housing and Urban Development.... 225
Prepared Statement of........................................ 251
Donovan, Hon. Shaun, Secretary, Office of the Secretary,
Department of Housing and Urban Development...................61, 191
Prepared Statements of......................................73, 194
Questions Submitted to....................................... 218
Statement of................................................. 69
Ely Shoshone Tribe Housing Department, Prepared Statement of the. 360
Feinstein, Senator Dianne, U.S. Senator From California,
Questions Submitted by......................................... 113
Fond du Lac Band of Lake Superior Chippewa, Prepared Statement of
the............................................................ 360
Hoopa Valley Tribe, Prepared Statement of the.................... 364
Illinois Department of Transportation, Prepared Statement of the. 350
Jeter, Jackie, President, Amalgamated Transit Union, Local 689... 323
Prepared Statement of........................................ 324
Lahood, Hon. Ray, Secretary, Office of the Secretary, Department
of Transportation..............................................1, 179
Prepared Statements of.......................................9, 186
Statements of................................................8, 184
Lautenberg, Senator Frank R., U.S. Senator From New Jersey,
Questions Submitted by......................................... 116
Leahy, Senator Patrick J., U.S. Senator From Vermont, Questions
Submitted by................................................... 113
Mikulski, Senator Barbara A., U.S. Senator From Maryland,
Statement of................................................... 287
Murray, Senator Patty, U.S. Senator From Washington:
Opening Statements of.....................1, 61, 121, 179, 225, 285
Questions Submitted by.................................36, 110, 282
National AIDS Housing Coalition, Prepared Statement of the....... 372
National American Indian Housing Council, Prepared Statement of
the............................................................ 367
National Association of Railroad Passengers, Prepared Statement
of the......................................................... 365
National Recreation and Park Association, Prepared Statement of
the............................................................ 376
New York State Department of Transportation, Prepared Statement
of the......................................................... 348
Railway Supply Institute, Inc., Prepared Statement of the........ 363
Sarles, Richard, Interim General Manager, Washington Metropolitan
Area Transit Authority......................................... 297
Prepared Statement of........................................ 298
Stevens, Hon. David H., Commissioner, Federal Housing
Administration, Department of Housing and Urban Development.... 225
Prepared Statement of........................................ 236
Statement of................................................. 233
Stewart, Na Tanya Davina, Prepared Statement of.................. 371
Szabo, Hon. Joseph C., Administrator, Federal Railroad
Administration, Department of Transportation................... 121
Prepared Statement of........................................ 130
Statement of................................................. 128
University Corporation for Atmospheric Research (UCAR), Prepared
Statement of the............................................... 373
SUBJECT INDEX
----------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Federal Housing Administration
Page
Additional Committee Questions................................... 282
CBO Scoring...................................................... 244
Continuing Concerns.............................................. 263
Default Rate..................................................... 280
Description of HUD's Loss Mitigation Program Tools............... 250
Facilitating our Recovery, But Protecting the Taxpayer........... 248
FHA.............................................................. 233
Facilitating Recovery........................................ 237
Financial Condition.......................................... 259
Losses....................................................... 268
Policy Changes to Address Risk and Strengthen Finances....... 253
Priorities for Investments................................... 283
Risks........................................................ 282
Staffing Shortfalls.......................................... 232
Financial Reform................................................. 271
GSE Losses....................................................... 278
GSEs Reform...................................................... 266
Helping Prevent an Economic Catastrophe.......................... 236
Historical Perspective........................................... 251
Home:
Affordable Modification Program (HAMP).....................279, 284
Equity Conversion Mortgage (HECM)............................ 245
HUD Inspector General Efforts on Fraud and Abuse................. 276
HUD's Central Role in Preventing Foreclosures and Stabilizing
Neighborhoods.................................................. 245
Increased Risks to FHA........................................... 260
January Policy Announcements and Legislative Requests............ 239
Making Home Affordable Program................................... 272
MMI Fund......................................................... 264
New Short Sale Program........................................... 283
Operation Watchdog............................................... 258
Rebuilding FHA's Capital Reserves................................ 238
Recovery of Losses............................................... 265
Reforms to Date.................................................. 239
Strategic Defaults............................................... 280
The Current Landscape............................................ 252
Office of the Secretary
A Changing Environment........................................... 73
Additional Committee Questions.................................110, 218
Affordable Housing for Seniors................................... 110
Backlog in Public Housing Capital Improvements................... 94
Barriers to New Starts Program................................... 214
Building the Framework--HUD's Sustainability Partnerships With
Other Agencies................................................. 196
Challenge Grants................................................. 209
Choice Neighborhoods............................................72, 223
Program...................................................... 107
vs. HOPE VI.................................................. 67
Community Development Fund Catalytic Investment Competition Grant
Distribution................................................... 114
Drug Elimination Program......................................... 116
Emergency Capital Needs.......................................... 117
Energy Innovation Fund........................................... 192
Ensuring HUD's Long Term Leadership on Sustainable Homes and
Communities.................................................... 197
Federal Housing Administration...........................62, 67, 70, 89
Mortgage Reform.............................................. 109
Goal:
1.--Strengthen the Nation's Housing Market to Bolster the
Economy and Protect Consumers.............................. 76
2.--Meet the Need for Quality Affordable Rental Homes........ 78
3.--Utilize Housing as a Platform for Improving Quality of
Life....................................................... 82
4.--Build Inclusive and Sustainable Communities Free from
Discrimination............................................. 84
5.--Transform the Way HUD Does Business...................... 87
Homelessness..................................................... 72
Housing First.................................................... 117
HUD:
EPA and DOT Contributions to Sustainable Housing and
Community Initiative Program............................... 219
VASH Program................................................. 96
HUD's:
2010 Transformation.......................................... 73
Role......................................................... 213
Increase in Annual Premium....................................... 90
Investing in People and Places................................... 75
Laying the Foundation--Recovery Act Investments in Sustainable
Homes and Communities.......................................... 195
Leveraging....................................................... 221
Livability....................................................... 211
Low-income Housing Tax Credits................................... 111
Making Home Affordable Program..................................92, 100
Manufactured Housing............................................. 118
Measurement Criteria............................................. 211
Mortgage Modification............................................ 63
Neighborhood Stabilization Program Funding Distribution.......... 113
Office of Sustainable Housing and Communities.................... 191
Oversight........................................................ 222
Prioritizing Funding............................................. 220
Project Costs.................................................... 222
Proposed Cuts....................................................64, 65
Public Housing Capital Fund.....................................95, 116
Regional Planning Grants......................................... 201
Relationship Between HUD, EPA and DOT in the Sustainable Housing
and Communities Initiatives Program............................ 219
Requirements for Receiving a Grant............................... 220
Roadmap to Transformation........................................ 75
Rural:
America...................................................... 98
Homelessness................................................. 101
Housing Fund................................................. 66
Section:
8 and New Initiatives........................................ 63
811.......................................................... 113
202........................................................111, 113
And 811 Programs......................................... 104
And Low-Income Housing Tax Credits....................... 111
Housing for Low-Income Seniors........................... 115
Supportive Housing for the Elderly....................... 117
Supportive Housing for the Elderly Act................... 111
Self-Help:
Home Ownership Program (SHOP) Funding........................ 115
Housing Program.............................................. 112
Shared Equity Programs........................................... 99
Small and Rural Communities...................................... 207
Staff Turnover................................................... 222
Staffing......................................................... 221
For Initiative............................................... 104
State of the Housing Market...................................... 91
Supportive Housing for the Elderly Act........................... 110
Sustainability vs. Livability..................................220, 221
Sustainable Communities..........................................72, 99
Initiative................................................... 102
The Need for Federal Leadership to Advance Sustainable Homes and
Communities.................................................... 194
Transforming Rental Assistance..........................66, 71, 95, 106
Transparency..................................................... 218
For Taxpayers................................................ 68
In HUD Programs.............................................. 101
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
Alternative Funding Sources/Grants............................... 135
Americans with Disabilities Act.................................. 142
Amtrak Fleet..................................................... 132
Equipment Refresh................................................ 137
5-Year Capital Plan.............................................. 136
FRA Management and Administration................................ 131
High-Speed Rail................................................131, 141
National Passenger Rail Corporation (Amtrak)..................... 132
Positive Train Control........................................... 134
Rail:
Research and Development..................................... 131
Safety....................................................... 140
Railroad Safety.................................................. 130
Office of Inspector General
Amtrak has Made Improvements in Financial Management............. 165
ARRA Projects.................................................... 170
Capital Plan and Fleet Plan Funding.............................. 167
Devils Lake...................................................... 175
Fleet Maintenance................................................ 173
FRA Faces Significant Challenges in Meeting its Mandate.......... 164
Funding Corridors................................................ 173
Legislation Dramatically Expanded FRA's Role..................... 163
Role of FRA...................................................... 171
Upgrading the Amtrak Fleet....................................... 168
Office of the Secretary
Additional Committee Questions................................... 36
Capacity-building Funding........................................ 212
Children in Air Traffic Control Tower............................ 15
Cost Effectiveness............................................... 214
Cross Border Trucking............................................ 217
Current DOT and Partnership Efforts.............................. 187
Cyber Security................................................... 35
Data Collection for Small Communities............................ 208
Ferry Funding.................................................... 28
Fiscal Year 2011 Budget Request.................................. 189
Freight Rail..................................................... 19
Funding for Infrastructure....................................... 209
High Speed Rail..........................................10, 17, 25, 31
Highway
Safety....................................................... 10
Trust Fund................................................... 204
Infrastructure Fund.............................................. 24
Interagency Partnership for Sustainable Communities.............. 186
Investing in Transportation Infrastructure....................... 11
Livability.......................................................11, 29
Livable Communities:
Promote Quality of Life...................................... 187
Investments Support Both Rural and Urban Communities......... 188
Looking Forward.................................................. 189
Metropolitan Planning Organizations.............................. 206
Mexican Trucks..................................................28, 217
National:
Highway Traffic Safety Administration Budget Request......... 13
Infrastructure Innovation and Finance Fund................... 15
NextGen.......................................................... 10
Non-motorized Transportation..................................... 202
Pennsylvania Expressway.......................................... 22
Positive Train Control........................................... 27
Rail Transit Safety..............................................10, 27
Recovery Act..................................................... 11
SAFETEA-LU....................................................... 21
Small Towns and MPOs............................................. 210
TIGER Program.................................................... 26
Toyota Recalls................................................... 12
Transit-oriented Development..................................... 206
Transportation Investments....................................... 210
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)
Accessible Stations Development Plan............................. 151
Amtrak's Aging Fleet............................................. 146
Challenge:
1.--Competing Successfully for New State Supported Services
and Then Delivering High Quality Cost-Effective Service.... 154
2.--Improving Human Capital Management Practices, Including
Strategic Workforce Planning, and Training and Development. 156
3.--Managing the Risks Associated With Amtrak's Goal of
Modernizing its Information Technology Systems and
Infrastructure............................................. 157
4.--Managing Risks Associated With Projects Funded Through
the Recovery Act........................................... 158
Fiscal Year 2011 Request......................................... 148
Fleet Plan....................................................... 148
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY
Budget Shortfall................................................. 318
Corrective Action Plans.......................................... 319
Financial Stability.............................................. 302
Measuring Progress and Performance in Metro Safety............... 311
Metro:
Access....................................................... 320
Modernization................................................ 315
Serves the Federal Government................................ 291
Metro's Capital Needs............................................ 292
Safety........................................................... 299
Service Reliability.............................................. 301
Top Safety and Hazard Concerns................................... 313
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