[Senate Hearing 112-515]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 112-515


 THE CHOICE NEIGHBORHOODS INITIATIVE: A NEW COMMUNITY DEVELOPMENT MODEL

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
           HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT

                                 of the

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

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING THE CHOICE NEIGHBORHOODS INITIATIVE AND HOW IT COULD BE 
     IMPROVED, AND HOW COST-EFFECTIVE CHOICE NEIGHBORHOODS AND ITS 
    PREDECESSOR, HOPE VI, ARE IN TERMS OF OUTCOMES FOR FAMILIES AND 
 NEIGHBORHOODS AND GRANTEES IMPLEMENTING ACTIVITIES IN OUR COMMUNITIES

                               __________

                             MARCH 27, 2012

                               __________

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


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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  TIM JOHNSON, South Dakota, Chairman

JACK REED, Rhode Island              RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York         MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              JIM DeMINT, South Carolina
SHERROD BROWN, Ohio                  DAVID VITTER, Louisiana
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin                 PATRICK J. TOOMEY, Pennsylvania
MARK R. WARNER, Virginia             MARK KIRK, Illinois
JEFF MERKLEY, Oregon                 JERRY MORAN, Kansas
MICHAEL F. BENNET, Colorado          ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina

                     Dwight Fettig, Staff Director

              William D. Duhnke, Republican Staff Director

                Beth Cooper,  Professional Staff Member

                       Dawn Ratliff, Chief Clerk

                     Riker Vermilye, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

   Subcommittee on Housing, Transportation, and Community Development

                 ROBERT MENENDEZ, New Jersey, Chairman

         JIM DeMINT, South Carolina, Ranking Republican Member

JACK REED, Rhode Island              MIKE CRAPO, Idaho
CHARLES E. SCHUMER, New York         BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              PATRICK J. TOOMEY, Pennsylvania
SHERROD BROWN, Ohio                  MARK KIRK, Illinois
JON TESTER, Montana                  JERRY MORAN, Kansas
HERB KOHL, Wisconsin                 ROGER F. WICKER, Mississippi
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado

             Michael Passante, Subcommittee Staff Director

          Jeff Murray, Republican Subcommittee Staff Director

                                  (ii)












                            C O N T E N T S

                              ----------                              

                        TUESDAY, MARCH 27, 2012

                                                                   Page

Opening statement of Chairman Menendez...........................     1

                               WITNESSES

Sandra Henriquez, Assistant Secretary for Public and Indian 
  Housing, Department of Housing and Urban Development...........     2
    Prepared statement...........................................    22
Maria Maio, Executive Director, Jersey City Housing Authority....     7
    Prepared statement...........................................    28
Susan J. Popkin, Ph.D., Director, Program on Neighborhoods and 
  Youth Development, Urban Institute.............................     9
    Prepared statement...........................................    30
Anthony B. Sanders, Ph.D., Distinguished Professor of Finance, 
  George Mason University School of Management...................    11
    Prepared statement...........................................    36
Paul N. Weech, Executive Vice President, Policy and Member 
  Engagement, Housing Partnership Network........................    12
    Prepared statement...........................................    38
Egbert L.J. Perry, Chairman and Chief Executive Officer, The 
  Integral Group LLC.............................................    14
    Prepared statement...........................................    48

              Additional Material Supplied for the Record

Prepared statement submitted by Mitchell J. Landrieu, Mayor, City 
  of New Orleans, Louisiana......................................    52
Letter submitted by Stewards of Affordable Housing for the Future    54
Letter submitted by Michael Rubinger on behalf of the Local 
  Initiatives Support Corporation................................    56

                                 (iii)

 
 THE CHOICE NEIGHBORHOODS INITIATIVE: A NEW COMMUNITY DEVELOPMENT MODEL

                              ----------                              


                        TUESDAY, MARCH 27, 2012

                                       U.S. Senate,
               Subcommittee on Housing, Transportation, and
                                     Community Development,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Subcommittee met at 10:40 a.m. in room SD-538, Dirksen 
Senate Office Building, Hon. Robert Menendez, Chairman of the 
Subcommittee, presiding.

          OPENING STATEMENT OF SENATOR ROBERT MENENDEZ

    Senator Menendez. Good morning, and let me say we are sorry 
we are starting a few minutes late. We had a conference call 
with several parties, and it lasted a little longer than I had 
expected.
    The hearing of the Senate Banking Committee's Subcommittee 
on Housing, Transportation, and Community Development will 
examine the Choice Neighborhoods Initiative, both as it has 
been enacted through appropriations thus far and as it is 
proposed in my bill, the Choice Neighborhoods Initiative Act of 
2011, S. 624.
    Among the issues considered will be how the program differs 
from its predecessor, the HOPE VI program; how it could be 
improved; how cost-effective Choice Neighborhoods and HOPE VI 
are in terms of outcomes for families and neighborhoods and 
grantees' planning and implementation activities on the ground 
in our local communities.
    Choice Neighborhoods aims to revitalize severely distressed 
communities of concentrated poverty which are often marked by 
high crime and unemployment rates, health disparities, 
struggling schools, and faltering civic institutions. Built on 
a foundation of over 15 successful years of bipartisan HOPE VI, 
Choice Neighborhoods embodies the best of HOPE VI, but builds 
on it by asking grantees to develop plans for integrated 
supports for residents, ensuring high-quality educational 
opportunities for children, access to transportation and jobs, 
and providing health options and job readiness skills for 
families. Moreover, Choice Neighborhoods expands HOPE VI 
redevelopment techniques to aid in providing redevelopment of 
private federally assisted properties alongside public housing, 
and there is huge demand for the program with local 
applications far outstripping the funds available for it.
    All Americans should enjoy equal opportunity and access to 
affordable housing in safe neighborhoods. It is imperative that 
we continue to support Choice Neighborhoods as it provides 
long-term viability for families and communities nationwide. I 
look forward to hearing from the witnesses as they discuss 
their experiences with HOPE VI and Choice Neighborhoods and the 
potential of Choice Neighborhoods as a practical, cost-saving 
solution to redevelopment of distressed housing and 
neighborhoods that leverage private, nonprofit, and local 
resources to a much greater degree.
    We are thrilled to have a host of witnesses. We are going 
to start off with the Honorable Sandra Henriquez, who is the 
Assistant Secretary for Public and Indian Housing at the U.S. 
Department of Housing and Urban Development. As part of the 
senior leadership team at HUD, Ms. Henriquez oversees the 
Nation's public housing, rental assistance programs, and Native 
American and Native Hawaiian programs. She is the past 
administrator and chief executive officer of the Boston Housing 
Authority and the past president and director of the Council of 
Large Housing Authorities.
    With that, Madam Secretary, we appreciate your appearance. 
We would ask you to synthesize your statement for about 5 
minutes. Your full statement will be entered into the record, 
and please proceed.

 STATEMENT OF SANDRA HENRIQUEZ, ASSISTANT SECRETARY FOR PUBLIC 
AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Ms. Henriquez. Thank you very much, Mr. Chairman. It is 
good to be here, and thank you for this opportunity to discuss 
how the Choice Neighborhoods program uses proven tools to 
transform neighborhoods by revitalizing not just public housing 
but all kinds of federally supported housing in poor 
neighborhoods.
    Today I want to describe the need for authorizing Choice 
Neighborhoods, how it builds on the progress of the HOPE VI 
program, and how at a time when our national economy is growing 
it helps local leaders turn around distressed neighborhoods 
that are critical to helping regional economies rebound.
    In less than 2 years, this program has already had great 
success helping communities tackle housing distress and 
leveraging private dollars. I am particularly grateful for the 
leadership that you have shown, Mr. Chairman, in sponsoring 
legislation that would authorize Choice Neighborhoods formally.
    As local leaders continue to dig their communities out of 
the worst recession since the Great Depression, we recognize 
that the cost of poverty, particularly concentrated poverty, to 
our society and to our economic future is high. Today more than 
10 million people live in neighborhoods of concentrated 
poverty--surrounded by disinvestment, failing schools, troubled 
housing, and, worst of all, virtually no path to opportunity 
for themselves or for their children. And that is why this 
Administration has pursued Choice Neighborhoods, which builds 
on the HOPE VI public housing revitalization program pioneered 
by HUD Secretaries Jack Kemp and Henry Cisneros.
    With strong bipartisan support, HOPE VI has created more 
than 90,000 housing units in healthy, mixed-income communities 
that were once troubled by distressed public housing, 
leveraging twice the Federal investment with additional private 
capital and raising the average income of residents by 75 
percent or more.
    Chairman Menendez, HOPE VI changed the face of public 
housing in America, but in many neighborhoods that is simply 
not enough. In Little Rock, Arkansas, a struggling neighborhood 
just southeast of the downtown area is being challenged by both 
a severely distressed public housing development, Sunset 
Terrace, as well as a severely distressed 50-unit HUD-assisted, 
project-based Section 8 development, Elm Street. Both 
properties have deteriorating foundations and structures, 
electrical and plumbing problems, and the surrounding 
neighborhood is affected by high crime, poor schools, and 
widespread vacancy.
    In the past, this neighborhood would have presented a 
worst-case situation for HUD because two separate and distinct 
HUD program areas were contributing to its deterioration. With 
HOPE VI, the community could have redeveloped the public 
housing property, but the Elm Street housing development in 
Little Rock would have been out of reach simply because it was 
subsidized by a different program at HUD.
    Now, we all know that residents do not make the distinction 
between public housing and project-based Section 8. Communities 
do not make that distinction, and those who engage in criminal 
activity certainly do not make that distinction. And 3 years 
ago, the only one making that distinction was HUD, but with 
Choice Neighborhoods, we are not anymore.
    Indeed, having secured a Choice Neighborhoods Planning 
Grant, the Little Rock Housing Authority is partnering with the 
owner of the HUD-assisted development to engage city and civic 
leaders in turning around the neighborhood. Choice builds on 
HOPE VI by recognizing that the problem of high concentrations 
of distressed housing in a single neighborhood of concentrated 
property is not limited solely to public housing. Indeed, we 
are not only hearing this from private owners, but we hear it 
from public housing authority executive directors, from mayors, 
residents, and other leaders across the country. They are 
telling us that Choice Neighborhoods is exactly the kind of 
catalytic tool they need to revitalize distressed neighborhoods 
with the flexibility local leaders want and need to address 
their specific challenges, from improving neighborhood 
infrastructure to ensuring high-quality, early learning 
opportunities for children. They know that Choice Neighborhoods 
funds leverage significant dollars from the private and public 
sector. Already the $122 million in implementation grants that 
we have made thus far has leveraged a combined $1.6 billion, 
over 13 times their total grant award, with more to come as the 
redevelopment work accelerates.
    Mr. Chairman, that is real and serious return on the 
Federal investment, but that is not all that Choice 
Neighborhoods leverages. Indeed, at a time when Federal dollars 
are precious, Choice Neighborhoods has been critical to 
strengthening taxpayer dollars further. In Seattle, a $10 
million grant is leveraging $32 million from the Seattle 
Department of Transportation to ensure families can get to and 
from work, while Boston is leveraging $350,000 in workforce 
investment funds to ensure residents can get the job training 
they need to be part of the 21st century economy.
    New Orleans' grant is leveraged nearly $1 million from Head 
Start and another half million from a federally qualified 
health center so children can get the quality education and 
care they need to grow up healthy.
    In San Antonio's Eastside neighborhood, where almost half 
of the area's residents live in poverty and drop out of school, 
Choice is working in concert with the Department of Education's 
Promise Neighborhoods program. As the city's Choice 
Neighborhoods planning grant helps the city plan to revitalize 
Wheatley Courts public housing, its Promise Neighborhoods grant 
will help improve schools. It is the same consortium of local 
and partner institutions at the table that are building a 
vision, a shared vision for this work, and this funding ensures 
public, private, and nonprofit partners are all working 
together to provide good schools and quality learning 
opportunities in the center of these neighborhoods.
    It is about attacking interconnected challenges with 
comprehensive proven tools. It is about understanding that 
local problems require locally driven solutions. It is about 
understanding that the Federal Government can serve as an 
effective supporting partner. It is about making taxpayer 
dollars go as far as they can. But, fundamentally, it is about 
making sure every American gets a fair shot, whoever they are, 
wherever they live. That is what Choice Neighborhoods is all 
about. That is why we ask Congress to authorize this program, 
and that is why I am so appreciative of this opportunity to 
appear before you today.
    Thank you and I look forward to your questions.
    Senator Menendez. Well, thank you very much for that 
overview.
    Let me just take advantage that you are here and we are 
developing a record to ask you some questions, and I think you 
in some respects touched upon this, but I want to hone in for 
our colleagues who will be reading the transcript. How does 
Choice Neighborhoods represent a new model of community 
development compared to HOPE VI?
    Ms. Henriquez. Thank you for the question. As you know, 
HOPE VI really was limited only for housing authorities to 
apply and really looked at revitalizing the footprint of the 
existing public housing developments. And the revitalization 
efforts beyond that footprint might have been able to be 
accomplished, but not necessarily with the same strength and 
vitality we see coming out of the Choice Neighborhoods program.
    Choice differs in that it takes the lessons we have learned 
from housing authorities in their creativity in their local 
levels, but takes it a step further so that there are more 
partners at the table. Not only housing authorities can apply, 
but project-based Section 8 multi-family owners can apply, city 
governments can apply, and it really builds a comprehensive 
shared vision for community reinvestment and revitalization, 
looking beyond the public housing or the single housing site 
footprint.
    It makes sure that the commitment is shared, the resources 
are shared, and, therefore, those resources will go further and 
have a greater impact in revitalizing well into the community 
neighborhood in which those properties are located.
    Senator Menendez. Now, in your testimony you referred to 
leveraging, which I appreciate. In that context, can you 
explain the importance of partnerships to the success of Choice 
Neighborhoods.
    Ms. Henriquez. Partnerships are vitally critical, and 
through this process we have learned at HUD to be a better 
partner, to support visions of local government and 
communities. But, indeed, if you start really talking about 
what Choice brings to the table, it is to have people talking 
at the local level who maybe did not do that before to get 
investment, to figure out where people's individual resources 
are in a community, and bring them together in a conversation 
so that everybody then understands we are serving a similar 
constituency, but we want to make sure that our dollars are 
going further and we understand better as a community at the 
local level what a community needs to be healthy, all the 
things that we all take for granted, or many of us take for 
granted: good education, good public transportation, safety on 
our streets. All of what we would call the infrastructure, the 
backbone, and the amenities that one would find in any well-
developed community, that is what we are trying to return to 
distressed communities through the Choice Neighborhoods 
program.
    Senator Menendez. And in your examples of successful 
leveraging or investments under the Choice Neighborhoods 
program created a ripple effect, would those have taken place 
but for Choice Neighborhoods, the likelihood of that?
    Ms. Henriquez. The likelihood is that they would not have. 
We have seen some leveraging in the HOPE VI program. We see 
probably it is 2:1 or 3:1 in terms of the Federal investment. 
On the Choice side, we are already seeing 13 times.
    I work to stress, though, that some of the leveraging and 
the benefits we will not see. They will continue to build. You 
will see better health outcomes, better education outcomes, 
more economic independence for residents in those communities. 
And so the ripple effect will be larger, longer, and stronger.
    Senator Menendez. That precipitates what was my next 
question. Can you give us examples of how this can improve 
cost-effectiveness? I would assume those are elements of it, 
the ones you just described.
    Ms. Henriquez. They are. We believe that with these kinds 
of improvements and investments, you will do a number of 
things. You will revitalize not just the neighborhood where 
that Choice Neighborhoods grant is being implemented. You will 
continue a conversation on the ground. You will see 
reinvestment from the private sector coming back into other 
parts of that community. You will see, we believe, economic 
vitality, businesses reinvesting in those neighborhoods. We are 
just not sure of all of what you will see. We think that it 
will be to the level of something we will be measuring 10, 15, 
20 years from now and beyond.
    Senator Menendez. Which then brings me to my final set of 
questions. In HUD's experience, what has been the local demand 
for programs like Choice Neighborhoods? And how many applicants 
are there, and how much is HUD able to fund?
    Ms. Henriquez. We funded five implementation grants this 
past--a year ago. I think we had over 100 applications for 
that. We, therefore, right now have funded a total in 2 years 
of 30 planning grants so that local neighborhoods can start the 
conversation to get themselves ready to apply for an 
implementation grant. We have given 30 of those out, and we 
have had hundreds of inquiries and applications for those 
limited numbers of planning grants as well. And the demand 
keeps building.
    Senator Menendez. One of our panelists on this next panel 
will say that this is actually a fairly small program and 
question whether or not that is of value considering that, 
among other issues. Are there benefits that accrue to 
applicants who apply for Choice Neighborhoods grants but do not 
get one?
    Ms. Henriquez. I would say undeniably yes. While it is a 
relatively small program, the leveraging and the amount of 
other private and public sector dollars that come into the 
arena for revitalization keeps multiplying and multiplying and 
multiplying. The benefit of having planning grants even if 
those communities are not successful in getting an 
implementation grant is that the conversation and the shared 
vision and the shared planning moving forward really helps 
those communities begin to identify and leverage other kinds of 
programs and other kinds of dollars that they might not have 
thought about before, and they can do lots of that work with 
very little funding and at least identify the direction in 
which as a community they want to move. And as resources become 
identified, they can put those resources toward that shared 
vision. And I think that that is a huge benefit to begin the 
conversation and to get everybody at the table thinking about 
how they want all of their citizens to live.
    Senator Menendez. Well, I appreciate your testimony. In 
your testimony you say we can predict outcomes in health, 
education, and economic outcomes of children based on zip code.
    Ms. Henriquez. That is correct.
    Senator Menendez. And it seems to me that that is a pretty 
sad reality. We should live in a Nation in which the 
happenstance of what zip code you live in is not the 
determinant of where you will end up in life.
    Ms. Henriquez. We wholeheartedly agree.
    Senator Menendez. And so I look forward to working with you 
in this one area. This is only one of many, but one area that I 
think we can, for a relatively small amount of money, make a 
big difference.
    Thank you very much for your testimony and for your 
leadership.
    Ms. Henriquez. Thank you very much.
    Senator Menendez. With that, let me introduce our next 
panel, and I will ask them to come up as the Secretary leaves 
with the thanks of the Committee.
    Ms. Maria Maio is the Executive Director of the Jersey City 
Housing Authority, which has more than 2,500 public housing 
units, more than 3,900 rental vouchers, and three HOPE VI 
demolition and revitalization programs. Ms. Maio has over 40 
years of professional experience--because she was taken from 
the crib to start in this field--in planning, developing, 
financing, administering, and managing assisted housing in 
Jersey City. I have known her for a very long time, and I 
appreciate her coming from New Jersey to give us an on-the-
ground perspective how Choice Neighborhoods is working in 
Jersey City. I appreciate your leadership. It has just been 
extraordinary.
    Dr. Susan Popkin is the Director of the Urban Institute's 
Program on Neighborhoods and Youth Development. Dr. Popkin's 
research has focused on the impact of the changes in housing 
policy over the past decade on the lives of the most vulnerable 
public and assisted housing families, including the HOPE VI 
panel study, the first large-scale systematic look at outcomes 
for families relocated from public housing. We welcome you to 
the Committee.
    Dr. Anthony Sanders is a Distinguished Professor of Finance 
in the School of Management at George Mason University, a 
Senior Scholar at the Mercatus Center, and he has been before 
the Committee many times, and we appreciate him coming back 
with us again.
    Mr. Paul Weech is the Executive Vice President for Policy 
and Member Engagement at the Housing Partnership Network. He 
has served as Vice President for mission strategy execution at 
Fannie Mae, Chief of Staff at the United States Small Business 
Administration, Staff Director for the Subcommittee on Housing 
and Community Development for this Committee--which is the most 
significant of all the Subcommittees--and Senior Analyst for 
housing and credit for the U.S. Senate Committee on Budget. We 
welcome you back to the Senate as well.
    Mr. Egbert Perry is the Chairman and Chief Executive 
Officer of the Integral Group, a full-service development and 
real estate advisory and investment management firm. Mr. Perry 
has provided the entrepreneurial leadership and vision to grow 
the firm into a leading innovator in the field of mixed-use and 
mixed-income developments as well as a driving factor in 
creating private-public partnerships that create opportunity 
for development and redevelopment in underserved communities.
    Let me welcome you all to the Committee. In the order in 
which I introduced you, starting with Ms. Maio, I will ask you 
to summarize your statement in about 5 minutes. All of your 
full statements will be included in the record, and with that, 
we welcome you.

   STATEMENT OF MARIA MAIO, EXECUTIVE DIRECTOR, JERSEY CITY 
                       HOUSING AUTHORITY

    Ms. Maio. Thank you, Chairman Menendez. I greatly 
appreciate your invitation and am honored to be here today to 
testify before the Subcommittee.
    As you are aware, the Jersey City Housing Authority 
received one of the first 2010 Choice Neighborhoods planning 
grants and now is in the midst of preparing an application for 
a Choice Neighborhoods Implement Grant.
    As has been mentioned, Choice Neighborhoods builds upon the 
model and achievements of the HOPE VI program. HOPE VI has 
transformed communities by turning severely distressed public 
housing into mixed-income, mixed-use, and revitalized 
communities that serve as long-term assets in their 
neighborhoods. HOPE VI has led the way in establishing new 
partnerships and leveraging additional resources. HOPE VI has 
also been a pioneer and laboratory for neighborhood place-based 
redevelopment. This has been true for us.
    The Jersey City Housing Authority has been awarded three 
HOPE VI Revitalization Program grants, which have resulted in 
730 constructed units and 275 planned units in mixed-income 
communities including public housing, affordable, and market-
rate units. Our HOPE VI communities have served as a model for 
developing quality sustainable affordable housing, which has 
been applauded by City, State, and Federal officials and 
residents of public housing and the broader community and 
imitated by private and not-for-profit developers.
    Our HOPE VI programs met the goals of rebuilding severely 
distressed public housing, deconcentrating poverty, leveraging 
non-Federal funds--for us $3 for every dollar of HOPE VI--and 
providing higher-quality, efficient affordable housing with 
reduced operating costs through the physical transformation to 
mixed-income developments and a Community and Supportive 
Services Program that focused on self-sufficiency initiatives, 
with a major goal of reducing unemployment.
    The HOPE VI program also began the organizational 
transformation of the Jersey City Housing Authority from 
property manager to developer. Today the housing authority is 
regarded as the major affordable housing developer in the city. 
Severely distressed public housing has been replaced with 
lower-density housing that complements the existing 
neighborhood, new developments that are community assets, and 
attracting a diverse economic resident population in well-
maintained housing. Critics of the stereotyped public housing 
have become the strongest supporters of our HOPE VI 
developments.
    Much of the success of our HOPE VI program is the result of 
our strong commitment to Section 3 local hiring initiatives. To 
date, 500 public housing/local residents have been hired and 
$22 million has been targeted to Minority Business Enterprises. 
To date, 66 percent of the public housing units in HOPE VI 
developments have been leased to former relocatees. But perhaps 
the best indication of success comes from a public housing 
resident who returned to a HOPE VI development and expressed 
how her child can ``sleep in peace, I don't hear gun shots in 
the middle of the night.''
    Whereas the major HOPE VI focus was on addressing severely 
distressed public housing, Choice capitalizes on the strengths 
of institutions and assets of the neighborhood, convenes all 
neighborhood stakeholders and encourages their input, and pulls 
together disparate developments in various stages to plan and 
implement a singular comprehensive neighborhood transformation 
plan through tried-and-true successful public-private 
partnerships.
    The Choice Neighborhood Initiative will allow us to expand 
on our successful public-private partnerships to develop a 
comprehensive plan for a neighborhood that includes the 
transformation of Montgomery Gardens, our remaining high-rise 
family development within the broader McGinley Square-
Montgomery Corridor Neighborhood. Montgomery Gardens is 
currently perceived as a liability to further renewed 
investment in the neighborhood.
    Perhaps most importantly, the transformation of Montgomery 
Gardens to a new Choice community that guarantees one-for-one 
replacement housing, ensures that the inevitable gentrification 
that will accompany market rate development will be addressed 
by the inclusion of affordable housing resulting in a quality 
mixed-income community.
    In closing, I thank you for the opportunity to testify 
today and am available for any questions. Thank you.
    Senator Menendez. Wow, you set a precedent. You still had a 
minute.
    Ms. Maio. I know.
    [Laughter.]
    Ms. Maio. I am from Jersey.
    [Laughter.]
    Senator Menendez. Only the strong survive. All right.
    Dr. Popkin? No pressure for the rest of the panel.
    Ms. Popkin. I do not know if I can match that.

   STATEMENT OF SUSAN J. POPKIN, Ph.D., DIRECTOR, PROGRAM ON 
      NEIGHBORHOODS AND YOUTH DEVELOPMENT, URBAN INSTITUTE

    Ms. Popkin. Senator Menendez, thank you for inviting me to 
appear here today. For the past 14 years, I have been studying 
the impact of the HOPE VI program on the original residents of 
public housing projects that are demolished and replaced. While 
most of my research has focused on Chicago, I have conducted 
research in 13 HOPE VI sites around the country. The testimony 
I present here today draws from four major studies: the HOPE VI 
Panel Study, which tracked residents from five sites across the 
country; the Chicago Panel Study; the Chicago Family Case 
Management Demonstration; and the new HOST Demonstration.
    The three main takeaways from this research are:
    Because of HOPE VI redevelopment, most former residents now 
live in better housing and neighborhoods that are considerably 
less poor and dramatically safer than their original distressed 
public housing communities.
    HOPE VI was less successful in helping families improve 
their economic circumstances and was not a solution for the 
most vulnerable households.
    Our subsequent research makes clear that many families 
require more intensive, better coordinated services and that 
comprehensive community redevelopment efforts seeking to 
improve the well-being of all residents in distressed 
neighborhoods will need to provide intensive services that 
intentionally target both vulnerable children and adults.
    HOPE VI was at its core a housing intervention, and there 
is no question that the program changed the face of public 
housing and succeeded in its goal of improving residents' life 
circumstances. Our studies find that the majority of families 
have experienced meaningful improvement in their housing and 
overall quality of life as a result of HOPE VI redevelopment, 
even though most residents have not moved back to the new, 
mixed-income communities. Most residents are living in 
communities that are less poor and dramatically safer. For 
example, after relocation, the proportion of respondents in our 
study who rated violence--shootings, attacks, and sexual 
assault--as big problems in their communities declined by more 
than 50 percent. The benefits of these improvements in safety 
are profound, with residents reporting significantly lower 
levels of anxiety and fear and describing being able to sleep 
better and feeling comfortable letting their children play 
outside.
    But this research also highlights the significant 
challenges that remain, particularly residents' shockingly poor 
health and persistently low levels of employment, problems that 
will require more intensive, focused interventions. At every 
age level, HOPE VI Panel Study respondents are more likely to 
describe their health as fair or poor than other adults and to 
report suffering from a range of chronic, debilitating 
conditions, including arthritis, asthma, obesity, depression, 
diabetes, hypertension, and stroke. The mortality rate for 
these residents was stunningly high--more than twice that of 
the general population.
    In addition to providing an improved living environment, 
HOPE VI sought to help residents attain self-sufficiency. 
However, our research shows that employment rates have remained 
persistently low, averaging just under 50 percent. Physical and 
mental health problems, particularly mobility limitations, are 
by far the biggest barrier to employment.
    Many residents who leave public housing struggle to make 
ends meet. Our studies show that many are forced to make 
tradeoffs between paying their rent and keeping up with utility 
payments and even affording food for their families.
    The HOPE VI program was not a solution for the most 
vulnerable former residents, the subset of hard-to-house 
families who make up a large share of the population in 
distressed public housing and struggle with multiple complex 
problems like physical and mental health problems, low levels 
of educational attainment, weak labor force attachment, 
substance abuse, and domestic violence.
    For the past 5 years, the Urban Institute has been working 
with housing authorities to test more intensive service models 
to address these deeper challenges. Our first demonstration ran 
from 2007 to 2010, providing participants with intensive case 
management, transitional jobs, financial literacy training, and 
mobility counseling to support participants in moving to 
communities that offered better opportunities.
    The demonstration was remarkably successful, engagement was 
high, and participants reported gains in employment, physical 
and mental health, and housing and neighborhood conditions, but 
the benefits of intensive services and case management for 
adults did not trickle down to their children.
    Developing effective place-based models that do reach youth 
is critical not only for improving the lives of individual 
children but also for ensuring the health and viability of 
public and mixed-income communities. If successful, these 
strategies can reduce problems that drive residents away from 
neighborhoods: vandalism, drug trafficking, fighting, and gang 
activity.
    The Urban Institute's new, multisite HOST Demonstration is 
testing these kinds of dual-generation service models aimed at 
improving the life chances of vulnerable low-income families 
living in both public and mixed-income communities.
    Incorporating intensive case management and permanent 
supportive housing for the most vulnerable residents into 
Choice Neighborhoods and any other comprehensive redevelopment 
efforts is one way to ensure that these initiatives truly meet 
the needs of all public housing families. The Choice 
Neighborhoods Initiative builds on the successes of HOPE VI and 
broadens the scope of revitalization efforts beyond public 
housing to the surrounding community, including schools and 
other types of housing. However, if this new effort is to be 
more successful than its predecessor in improving the lives--
and long-term life chances--of the families who suffered the 
worst consequences of living in distressed public housing, it 
must incorporate strategies that effectively address their 
needs. None of these solutions are simple, and all will require 
a long-term commitment to improving the quality of life for 
these families and ensuring better futures for their children.
    Thank you.
    Senator Menendez. Thank you.
    Dr. Sander.

STATEMENT OF ANTHONY B. SANDERS, Ph.D., DISTINGUISHED PROFESSOR 
    OF FINANCE, GEORGE MASON UNIVERSITY SCHOOL OF MANAGEMENT

    Mr. Sanders. Senator Menendez and distinguished Members of 
the Committee, my name is Dr. Anthony B. Sanders, and I am the 
Distinguished Professor of Finance at George Mason University 
and a senior scholar at the Mercatus Center. It is an honor to 
testify before this Committee today.
    I am here to discuss a proposed Senate bill, S. 624, the 
Choice Neighborhoods bill. This bill calls for $350 million in 
2012 for competitive grants to revitalize distressed 
neighborhoods.
    As someone who has lived on the South Side of Chicago and 
outside of Elizabeth in Jersey City, New Jersey, I clearly 
understand the spirit of what this legislation is attempting to 
do.
    But $350 million spread over the United States for 
distressed neighborhoods is a drop in the bucket. Bear in mind 
that Stanford University recently built a business school 
campus--two buildings--for $345 million. And yet Detroit, 
Cleveland, and many other inner cities continue to suffer.
    Now, I have a question and a suggestion. The Department of 
Housing and Urban Development Secretary Shaun Donovan is an 
advocate of improving the quality of housing projects in the 
United States. Why didn't HUD find this money in their $47.2 
billion budget through effective budget management or 
additional requests? I do not know the answer to that, but that 
would have seemed to have been a more likely way to do this.
    But another way to help solve the problem is to unleash the 
free market on housing. Taking a page from President Reagan and 
the Democratic majority playbook, we could use fiscal policy to 
increase the supply of clean, affordable housing by offering 
accelerated depreciation deductions on multifamily housing. 
This will increase the supply of housing without having to go 
through the housing authorities per se and not-for-profits, and 
it would actually increase the supply again of livable housing, 
which some cities are woefully short on.
    The Reagan/Democratic congressional approach--known as the 
Kemp-Roth Economic Recovery Tax Act of 1981--was put in to 
increase depreciation deductions on multifamily housing using 
the Accelerated Cost Recovery System. Under this legislation, 
all property was depreciable for tax purposes over 15 years, 
and for low-income housing, 200 percent declining balance 
depreciation was available. Furthermore, rehabilitation 
expenditures for low-income housing could be amortized over 5 
years. The act worked so well that it was amended in 1986 with 
the follow-up act.
    We could once again use fiscal policy to help solve the 
public housing problem. I would prefer this approach to smaller 
allocations of capital in trying to get to this.
    To be sure, such legislation would create additional 
deficits, but the stimulative effects to the economy and the 
distressed neighborhoods could be greater than the lost tax 
income received by the Federal Government.
    Now, recently, Bank of America announced a ``Mortgage to 
Lease'' trial program to avoid foreclosure and yet another 
property going into REO and out in the already flooded market. 
This proposal will keep homeowners in their current home but 
switch them to renters. It is a way to stabilize neighborhoods 
hit by the foreclosure crisis and curtail neighborhood blight 
by keeping a portion of the properties off the market.
    Again, I appreciate the other aspects of the Choice 
Neighborhoods legislation that have been discussed so far. 
There are other ways we can help in the total crisis. So I 
would just advocate this is not big enough. We need something 
bigger, a bigger hammer to solve the problem.
    Thank you for the opportunity to testify.
    Senator Menendez. Thank you, Dr. Sanders. I can see you are 
originally from Jersey as well.
    Mr. Weech.

STATEMENT OF PAUL N. WEECH, EXECUTIVE VICE PRESIDENT FOR POLICY 
       AND MEMBER ENGAGEMENT, HOUSING PARTNERSHIP NETWORK

    Mr. Weech. Mr. Chairman, thank you, And on a personal note, 
thank you so much for letting me come testify today. As a 
former staffer of this Committee, I spent an awful lot of time 
on the dais up there behind you, and I had the privilege to sit 
at this table several times during markups of housing 
legislation. But it is the first time I have gotten to be here 
as a witness, and I really on a very personal level think that 
is--I am tickled.
    Anyways, I am honored to be here today with you to 
represent the Housing----
    Senator Menendez. I hope you feel that way at the end of 
the hearing.
    [Laughter.]
    Mr. Weech. Be nice.
    Senator Menendez. I am always nice to former staffers.
    Mr. Weech. Good. Thank you. Thank you.
    I am honored to be here representing the Housing 
Partnership Network today and also to discuss the Choice 
Neighborhoods Initiative.
    The Housing Partnership Network is a member-driven 
collaborative of about 99 entrepreneurial nonprofits from all 
across the country that build, manage, and finance affordable 
housing. Our members include lenders, single-family and multi-
family developers, property owners and managers, and housing 
counselors.
    Mr. Chairman, on behalf of the network, I want to strongly 
support S. 624, the Choice Neighborhoods Initiative Act. I urge 
this Committee to report the bill to the full Senate at your 
earliest possible convenience.
    My main message today is to voice my strong support for the 
role of nonprofits in the Choice Neighborhoods process as 
reflected in your bill. Too often, when people hear the word 
``nonprofit,'' it conjures up an image of a small office 
staffed by highly motivated, well-meaning people working hard 
to make a difference. Unfortunately, the nonprofit image also 
conjures up a picture of an organization that does not have a 
lot of financial and operating capacity. In fact, as outlined 
in my written testimony, the membership of the Housing 
Partnership Network includes some of the strongest nonprofit 
developers in the country, many of whom have worked side by 
side with the public housing community on HOPE VI projects and 
several of whom are already involved in Choice Neighborhoods 
implementation and planning grants.
    As nonprofits, our members are aligned with the public 
sector and its mission goals. Our members care about community 
impacts and are dedicated to positive outcomes for the 
residents. At the same time, the network members are operating 
like business enterprises, bringing good business practices and 
efficiency to complicated development efforts.
    I would also like to applaud the expansion of Choice 
Neighborhoods to allow the redevelopment of both private and 
public housing. Whether distressed real estate is publicly 
owned or privately owned, it has the same negative effects on 
the people in the communities in which it is located. In fact, 
I would argue that we jettison artificial division in the 
program between publicly owned and privately owned housing. All 
Choice Neighborhoods programs should compete based on the 
strength and experience of the developer, on the quality of the 
partnerships committed to the development, on the ability to 
leverage other private resources, and on the outcomes for the 
residents. In an open competition, the very best projects will 
rise to the top, and the Federal Government will maximize its 
social return on investment.
    Choice Neighborhoods improves on HOPE VI by requiring and 
promoting greater linkages to the other systems that make a 
community successful. A successful community includes good 
schools, accessible health care, basic retail services like 
grocery stores, and access to transportation that connects 
residents to jobs.
    The Administration deserves significant credit for its work 
to break down the silos that divide the Federal agencies, and 
the effort to connect this housing with opportunity is also a 
place where Congress could do more to support these efforts, 
and your bill goes a long way there, Senator.
    Finally, I would like to comment on how important it is to 
enact the authorization. The lack of permanent authorization 
makes the future development environment uncertain. Real estate 
development requires extensive planning activities and a long 
lead time. Acquiring property and holding it is expensive.
    Choice Neighborhoods developments will have an even longer 
lead time as developers assemble and formalize new partnerships 
across multiple disciplines. When the program funding and rules 
are institutionalized, more strong players will step up to the 
plate to participate.
    In closing, Mr. Chairman, I would like to reiterate how 
important the work you are doing is for America's urban, 
suburban, and rural communities. In all kinds of places, 
federally assisted properties have fallen into distress for any 
of a variety of reasons: the natural aging of the assets, 
inadequate funding, overleveraging, a change in market 
conditions, a change in tenancy sometimes, and poor property 
management. Whatever the cause, these properties have had a 
negative effect on their residents and the surrounding 
communities. The blight at the center of the neighborhood can 
keep people from buying homes nearby and can prevent new 
investment from coming in. A public investment like Choice 
Neighborhoods can change the negative market dynamic and send 
the community and, more importantly, the lives of the people 
who live in those communities on a positive upward trajectory.
    Thank you.
    Senator Menendez. Thank you very much.
    Mr. Perry.

 STATEMENT OF EGBERT L.J. PERRY, CHAIRMAN AND CHIEF EXECUTIVE 
                OFFICER, THE INTEGRAL GROUP LLC

    Mr. Perry. Thank you, Mr. Chairman. I am honored to have 
the opportunity to be in front of you today to speak in support 
of Senate bill 624, the Choice Neighborhoods Initiative, which 
we do believe is a new model for community development.
    This initiative would help to transform distressed 
neighborhoods and public and assisted projects into viable and 
sustainable mixed-income neighborhoods by linking improvements 
with appropriate services, schools, public assets, 
transportation, and access to jobs. My support comes not only 
as a result of my obvious appreciation for the tremendous 
benefits that would accrue from a public policy perspective, 
but also as a private practitioner in the real estate field.
    My firm is 20-years old, and we have been involved in a 
number of HOPE VI projects across the country, as well as other 
affordable developments, including projects here in the 
Nation's capital, Baltimore, and Atlanta, which is our 
headquarters.
    Now, unlike a lot of real estate firms, we are involved 
both as commercial real estate developers as well as community 
developers. If you think of commercial real estate development 
as focused on transactions and, therefore, intent on maximizing 
the returns to the investors and other partners, think instead 
of community development as more transformation as opposed to 
transactional--transformational because it calls for the 
intersection between public policy and private enterprise, 
which in and of itself is a very difficult one to take, and 
especially for those of us in the private sector, and that has 
given rise to the importance of public-private partnerships.
    It also means that the goals we seek to achieve are both 
hard and soft--hard in the sense that you are trying to achieve 
economic returns that make sense for the capital invested, but 
soft because you are also trying to address the human 
condition, which is a much more challenging undertaking.
    This was the problem that the best HOPE VI developments 
tried to achieve--this was the solution they were trying to 
achieve and this was the problem they were trying to undertake. 
And so from our perspective, we seek to do one thing very 
important with the Federal dollars: it is to leverage those 
dollars as much as possible to attract other local public funds 
as well as private debt and equity capital in order to achieve 
something that would not be possible if left up to the pure 
marketplace, but at the same time we are trying to work as hard 
as we can to restore the market forces so that the private 
marketplace will carry the development the rest of the way. 
Otherwise, you would be intent on looking for unending sources 
of public subsidy.
    Now, I spoke about our prior HOPE VI development 
experience, and I want to cite one example that I think is 
indicative of what Choice Neighborhoods intends to build on and 
will do things that in HOPE VI were nice to have that now will 
become pretty much mandatory under Choice. Those things are, in 
the case of HOPE VI, it was possible to successfully do a HOPE 
VI development and take on a housing challenge, and a housing 
challenge only. You could not do that under Choice. You could 
not respond and be received favorably without having addressed 
education and some of the other initiatives that are important 
to create what we call ``quality-of-life infrastructure.''
    And so if you think about it, in this development we took 
on a project that was the first public housing project in the 
United States, Techwood Homes, and a picture of Techwood shows 
1,100 housing units, household income $4,300 per year, and all 
of that was not earned income; a crime rate that was 35 times 
the average crime rate across the city; and if that was not 
enough, a captive elementary school right in the heart of the 
development that ensured that we were destroying the next 
generation.
    So we created a set of shared goals between our firm and 
the Atlanta Housing Authority, and those shared goals reflected 
the priorities of the authority as well as the priorities of 
the private development partner to create something that was 
truly transformational. I will tell you it was heroic work in 
the sense that it took a lot of heavy lifting and partnerships 
that were nice to have under HOPE VI but were not required. It 
was a successful development, but in the final analysis, it was 
extremely difficult, and we think that Choice Neighborhoods as 
an initiative offers the opportunity to make those things so 
much easier and encourage the collaboration to take place at 
the front end.
    The people who speak adversely about Choice Neighborhoods 
really have not spoken to people on the ground, whether that is 
city governments that see the tax rolls swelling as a result of 
this leveraged investment and this revitalization or the 
families that have benefited from this.
    So I strongly encourage and support the bill and encourage 
you to do so as well. Thank you, Mr. Chairman.
    Senator Menendez. Thank you very much. Thank you all for 
your testimony. Let me flesh out a few more things with you all 
so we can more fully develop the record.
    Dr. Sanders, I do not believe your testimony disagrees with 
the need to address public and private distressed housing 
across the Nation, right? Am I correct in that assessment?
    Mr. Sanders. You are correct.
    Senator Menendez. And it seems to me that the other housing 
solutions you cite such as increasing depreciation deductions 
on multi-family housing and the Bank of America's mortgage-to-
lease programs are probably good ideas.
    Mr. Sanders. Yes, they are supplemental.
    Senator Menendez. But they do not really--but my concern is 
that they do not really deal with what to do about distressed 
public and HUD-assisted housing. So my sense from your 
testimony--I am just trying to get the synthesis here--is that 
you basically have a view that this is just too small to be 
consequential.
    Mr. Sanders. It is not big enough.
    Senator Menendez. OK.
    Mr. Sanders. May I add something else, Senator?
    Senator Menendez. Surely.
    Mr. Sanders. When they were first doing HAMP over at the 
Administration, I met with Treasury and I saw what their 
proposal was for HAMP on the housing side, and my proposal 
said, ``This is way too small. You are trying to put out a fire 
with a glass of water.'' So sometimes these proposals just end 
up being very modest, and they could be big. Again, Stanford 
University spent this amount just on two buildings. So yes, 
this is not big enough.
    Senator Menendez. And so the response to that would be if 
we were to do nothing, even the suggestions that you have, 
which I personally agree with but do not deal with the 
distressed public housing market or public assisted market, 
would have no impetus. And I just think that the leveraging 
that Secretary Henriquez suggested has happened is worthy 
beyond the dollars, but I see your point, and certainly we 
would love it to be more robust, but we need to start--from my 
perspective we need to start somewhere.
    Let me ask you, Ms. Maio, in your view how does Choice 
Neighborhoods in your own experience--and Jersey City is a 
great place because it has been the beneficiary of both HOPE VI 
projects as well as the planning on Choice Neighborhoods. How 
does it differ from HOPE VI in your experience on the ground in 
Jersey City?
    Ms. Maio. We are in the middle of a planning grant, and as 
I indicated preparing a Choice Implementation Grant 
application, and I hope I do not offend anybody by saying this, 
I think Choice is HOPE VI on steroids. It is basically the 
notion of looking way beyond just the public housing site and 
the notion of looking even beyond the benefits to just public 
housing residents. It is bringing so many more entities to the 
table. It is bringing the private developers, the not-for-
profits, the board of education, I mean, the list goes on and 
on and on. And that is why I agree with the Assistant 
Secretary. The planning process, doing all of this up front--
and I think that is where Mr. Perry was going. All the work 
that has to be done up front to coordinate all these entities, 
to come up with a plan that we all agree with.
    I will tell you a little story that as part of this 
planning process we have to have community meetings, not just 
with public housing but all the stakeholders in the 
neighborhood. We had a meeting a week and a half ago. They 
applauded us. I have never been applauded.
    [Laughter.]
    Ms. Maio. That was a first. Typically, when you implement a 
HOPE VI program, because of the relocation and the negativity 
associated with that, it brings out things, you know, in terms 
of difficulties with families relocating. The issues of mental 
health, that is a grave issue. I could not agree with Dr. 
Popkin more on that. I think now that Choice will give us an 
opportunity to collaborate with partners that we never dealt 
with. We are partnering with the Pre-Natal Consortium. I know 
Choice talks about cradle to college. We are talking about 
prenatal. We are talking about even before the child is born 
and what are the implications for the mother's health, the 
implications then for the child's health.
    The board of education, the charter school--we have the 
charter school and a pre-K now working together using combined 
spaces. So making those new connections, making the connections 
that were already there, and bringing us to the table as a 
convener. We in the public sector have spent our lives 
convening meetings, sometimes positive, sometimes not, but we 
are used to that give and take. We are used to meetings where 
people have criticisms as well as accolades for us. And being 
able to put all that together so that--one of the gentlemen 
said, this is not a plan, this is a vision, and I think that is 
what we want to talk about. This is much bigger than HOPE VI.
    I hope I have answered your question.
    Senator Menendez. Actually, you answered my follow-up as 
well.
    [Laughter.]
    Ms. Maio. I am from Jersey.
    Senator Menendez. Invite me to your next Choice 
Neighborhoods planning session so that I can share your 
process.
    Let me ask you, Dr. Popkin, you mentioned that HOPE VI was 
less successful in helping families improve their economic 
conditions, including persistently low levels of employment and 
poor health conditions. How do you think the Choice 
Neighborhoods model incorporates methods to address the 
deficiencies that HOPE VI had? Or maybe deficiencies--well, I 
do not know. Maybe it did not meet all of the aspirations we 
would have had of HOPE VI.
    Ms. Popkin. I think HOPE VI was really a housing 
intervention with the hope that moving people somewhere else 
would have all these other benefits for families. I think the 
research we have done shows it is much harder to move those 
kinds of outcomes for people who have been very disconnected 
from the labor market and are very sick, dimensions. So I think 
the kind of work we have done over the past few years where we 
have worked on using housing as a platform for services, 
integrating services in a coordinated way into a housing 
redevelopment shows a lot of promise, and that is the only time 
in any of the research I have done I have seen the employment 
numbers move or the health numbers stop getting worse.
    So I think that kind of effort to really integrate and 
coordinate, like Ms. Maio is talking about, holds a lot of 
promise.
    Senator Menendez. And if you were to synthesize for me--I 
mean, you did some of this in your testimony. What are some of 
the most important outcomes of your extensive study? If you 
were to highlight it for me, what would you say?
    Ms. Popkin. Of integrating services?
    Senator Menendez. Yes.
    Ms. Popkin. We saw employment numbers rise. In all the 
years I have been tracking people through HOPE VI and through 
the Moving to Opportunity demonstration, I have never seen the 
employment change. So with an intensive transitional jobs 
program, even in the worst labor market in memory, we saw 
employment increase for the participants. We are following up 
this year to see if that was sustained after the services were 
done.
    We saw people's health ratings stabilize, and the main 
reasons for that seem to be the regular contact with case 
managers and some reduction in substance abuse. And, again, I 
have never seen health improvement in any of the research we 
have done. I have only seen it get worse as people get older.
    What we did not see were any benefits trickling down to the 
kids, and that I think is a major concern. There is a lot of 
hope with the case management strategy that if you could 
improve maternal depression, for example, you will see kids' 
outcomes improve, and we did not see that. So the new work that 
we are doing is really very intentionally incorporating 
services for children and youth. You said prenatal, but really 
intensively targeted case management for kids, outreach to 
families to get very little kids enrolled in early childhood 
programs, and we are in the midst of that evaluation so I 
cannot tell you if it is working yet, but we are hoping we will 
see some movement on those outcomes.
    Senator Menendez. Well, that is interesting because it 
seems to me that, of course, in the first instance, what we 
were trying to do with HOPE is stop the warehousing of people 
and creating senses of community, but there were other 
elements, and it seems that some of them were moving in the 
right direction. I am hoping that Choice Neighborhoods can go 
beyond that.
    Mr. Weech, you talked in your testimony about silos that 
divide Federal agencies, and certainly my bill works to try to 
break those silos down. But you suggest that more can be done. 
Can you give me some sense of what you think might be able to 
be done?
    Mr. Weech. Yes, it is interesting. I thought of that, 
Senator, before I came because obviously there is some great 
stuff happening through the partnerships on the ground. You are 
getting better coordination at the local level between the 
housing developers and the other providers who service the 
schools, and Choice Neighborhoods is really driving some nice 
new partnerships. But it still means having to access the 
different delivery systems from the Federal Government.
    Now, this Administration deserves a lot of credit. They 
have been doing terrific kind of on the administrative level of 
trying to coordinate better with the other agencies and the 
grant programs. Things that we might consider that would be 
more aggressive would be requiring joint NOFAs and single 
applications that get sent to all of the Federal agencies 
involved and make it much easier for the applicants, say, on a 
Choice Neighborhoods application to have assurances of these 
other dollars flowing into their projects and cementing the 
partnerships on the ground.
    Senator Menendez. And you talked about well-managed 
affordable housing as a platform for a wider array of positive 
social outcomes. How can the Choice Neighborhoods serve as that 
platform? And what types of specific outcomes for residents do 
you envision possibly resulting from it?
    Mr. Weech. Well, rolling back the tape, you know, all of 
the nonprofit property managers in my organization are trying 
to bring resident services to the people that they are serving, 
and the biggest challenge for them is really kind of the 
consistency of those funding streams. It is an annual grant-
writing process, it is fundraisers, and it is a big challenge 
on services.
    What Choice Neighborhoods is doing, what your bill does in 
the planning process and in the implementation process, is it 
is really starting to get those funding streams more closely 
aligned and working together. And so, you know, I am hoping 
that Dr. Popkin can back us up on this, but we see already with 
the redevelopment process better outcomes in terms of public 
safety and people's sense of well-being, people are sleeping at 
night, and by carrying these linkages to these more intensive 
services, we would like to hope that you have better 
educational outcomes for the kids, better job opportunities for 
the residents, and better health outcomes.
    Senator Menendez. Mr. Perry, I really appreciated your 
testimony. I think you presented an honest and sometimes taboo 
tidbit about community developers, that while you are committed 
to transformation, obviously one of your goals is to indeed 
make a profit. So my question is: How does Choice Neighborhoods 
help you balance between both of those goals--the legitimate 
goal of making a profit and at the same time some of the 
societal benefits? Does it?
    Mr. Perry. It absolutely does, and thank you for the 
question. In fact, as a developer you are often challenged to 
take the long view because returns are not immediate. And with 
Choice Neighborhoods, what you are able to do is take on those 
kinds of things that I call or refer to as ``quality-of-life 
initiatives'' that create long-term value. When you or I decide 
to buy a home, if we have school-aged kids or think we will, we 
certainly want a neighborhood that has a good school. And so in 
some respects, if you look at it, when we make that purchase, 
we are making an investment decision that has a long lifetime 
on it, and so developers focus on wanting to see real estate 
values go up over time, so we want to be in those kinds of 
communities. Choice allows us to take on blighting influences 
in the neighborhood, and by overcoming those blighting 
influences, market forces get restored.
    I indicated that we have done a number of HOPE VI's, and I 
consider Centennial Place to be one of those, and the elements 
of that development include a brand-new K-5 math, science, and 
technology-themed elementary school, early childhood 
development centers, YMCAs, and high-quality housing were in a 
neighborhood anchored by two major institutions, Georgia Tech 
and Coca-Cola. But they were there when this same site, 
Techwood Homes, the worst of the worst, existed. And so it 
means that unless the linkages are intentional, well thought 
out, and put in place up front, you can still get bad outcomes. 
I think Choice ensures that you have to do that homework up 
front in order to submit a successful application.
    Senator Menendez. Now, I think the public-private 
partnership model is critical to the success of Choice 
Neighborhoods, and I was intrigued--you mentioned four metrics 
that you use to measure your ability to mitigate risk without 
ignoring public policy priorities. Can you share the details on 
the metrics that you use? Or are they proprietary?
    Mr. Perry. They are not, and if they were, they are not 
after I submitted the written testimony.
    [Laughter.]
    Mr. Perry. Certainly we have investors, lenders, and other 
partners that have put capital in, so we have to ensure that we 
provide at least a reasonable return. Most of the investors in 
those kinds of communities understand they are not going to 
make maximum dollars, but they at least expect a reasonable 
return, so that is important.
    We are doing this to help families and individuals make it 
into the next generation successfully, and so we have positive 
outcomes that we have to achieve with respect to the families 
that are impacted by these community rebuilding efforts.
    We are also focused on impact in the surrounding 
neighborhoods, and I will give you anecdotally--in the case of 
Centennial, I will tell you that one and a half blocks south of 
our site, a site that was suffering from just total 
disinvestment, we now have the largest aquarium in the world, a 
$300 million aquarium, a $200-plus million Coke museum, a 
complex of high-risk office buildings, condos, hotels, all of 
which together total about $2.5 billion of private investment 
that I would say would not have been remotely possible if the 
redevelopment effort had not been taken on. So that is impact 
to a surrounding neighborhood.
    And then, finally, the impact to the local jurisdiction, 
specifically now you have a site that is 60 acres that was off 
of the tax rolls that is now on the tax rolls paying 
significant taxes, unfortunately or fortunately, depending on 
which side of the table you are; and at the same time, an 
impact that is even broader than that site also contributing to 
those tax revenues.
    So those four are the metrics we look at to bring all of 
the stakeholder together to support one of these comprehensive 
revitalization efforts.
    Senator Menendez. Very helpful.
    One final question, Mr. Weech. You said in your testimony 
that you do not believe my bill should have separate 
distinctions for privately owned versus publicly owned 
distressed housing in terms of grants. And while I agree with 
you that distressed housing has identical impacts on the people 
who live there regardless of ownership, the only thing is I 
remain concerned about the negative effects on the physical 
state of public housing throughout the country during a time of 
declining Federal and State budgets for housing assistance. Is 
that a concern that you share?
    Mr. Weech. Absolutely, Senator, longstanding--in fact, when 
I was here on the Committee, the Commission on Distressed 
Public Housing produced its work, and the HOPE VI program came 
out of that. And part of the motivation for us on HOPE VI was 
to find a way to get the capital we needed to meet the backlog 
modernization needs in public housing. So as a network, we are 
totally supportive of a variety of strategies to recapitalize 
the public housing inventory which has been underinvested in 
for a long time.
    I think I was making more the point that in a competitive 
grant program, it does not make sense to me to have HUD run two 
separate grant competitions. Most of the applicants for the 
Choice Neighborhoods grants were public housing agencies, which 
says to me that the experience they have on HOPE VI, the 
quality of development teams they put together, they will 
continue to compete very successfully for the grant dollars.
    Senator Menendez. Well, thank you all for sharing your 
expertise today. I think that the Choice Neighborhoods 
Initiative builds on the bipartisan success of the HOPE VI 
programs and incorporates what we have tried to do, an 
innovative, holistic approach to solving the dire needs of 
distressed HUD-assisted housing by leveraging public and 
private resources to address not only the distressed housing 
but also the community blight that often surrounds failed 
housing developments.
    In my mind, Choice Neighborhoods ultimately will create 
jobs, having a ripple effect, attracting a variety of State, 
local, and private investment in revived communities. We have 
seen in the last year alone that Choice Neighborhoods has 
leveraged about $1.6 billion in private funding, and whenever 
we can do that, I think that when you can take even admittedly, 
as Dr. Sanders would suggest, a relatively small program but 
leverage it to $1.6 billion, that is a good place to be.
    I have a series of requests: the testimony of Mayor 
Landrieu of New Orleans, a letter of support from the Local 
Initiatives Support Corporation, a letter of support from the 
Stewards for Affordable Housing for the Future. I ask unanimous 
consent that they all be included in the record. Without 
objection, they will be.
    Senator Menendez. I want to take the Chair's prerogative to 
recognize a Rangel Fellow who has worked with us particularly 
on this issue and did a lot of work to make this a very 
successful hearing. She will be leaving us. So, Oneshia, thank 
you very much, Oneshia Herring, thank you very much for your 
work, and we appreciate your service.
    The record will remain open for a week from today if any 
Senators wish to submit questions for the record. I would ask 
our panelists if they do receive such questions that you answer 
as expeditiously as you can so we can finalize the record. This 
has been incredibly helpful, and with the thanks of the 
Committee, this hearing is adjourned.
    [Whereupon, at 11:44 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
                 PREPARED STATEMENT OF SANDRA HENRIQUEZ
           Assistant Secretary for Public and Indian Housing
              Department of Housing and Urban Development
                             March 27, 2012
    Chairman Menendez, Senator DeMint and Members of the Committee, 
thank you for this opportunity to discuss the Choice Neighborhoods 
program. As you know, with your leadership, Mr. Chairman, in less than 
2 years, this program has already had great success helping communities 
tackle housing distress and leveraging private dollars. Indeed, the 
$130 million of funding we have awarded to thirty-five communities 
through implementation and planning grants under this program has 
already leveraged a combined $1.6 billion of other investments in those 
neighborhoods, over 12 times their total grant award.
    Indeed, I am grateful for the leadership that you have shown, 
Chairman Menendez, in sponsoring legislation that will formally 
authorize Choice Neighborhoods. We are grateful as well to Chairwoman 
Waters for her leadership in advancing a similar effort in the House of 
Representatives. We want to work with Congress to authorize Choice 
Neighborhoods so that local leaders can count on the Federal Government 
as a partner in their neighborhood revitalization efforts.
    Today, I want to describe the need for authorizing Choice 
Neighborhoods, how it builds on the progress of the HOPE VI program and 
how it helps local leaders turn around distressed neighborhoods that 
are critical to helping regional economies rebound as our national 
economy is growing.
Background
    Indeed, Mr. Chairman, in many ways we meet at an encouraging 
moment: when our economy is growing, jobs are being created and 
foreclosures are down. We've added private sector jobs for two straight 
years, for a total of over 3.9 million jobs. In the last year, 2.2 
million private sector jobs were added--and we've added more jobs in 
the last 6 months than any 6-month period in nearly 6 years. Indeed, in 
many cities, the tide is turning--unemployment is dropping, vacancy 
rates are improving, and investment is going up--but certain 
neighborhoods remain stubbornly resistant to change.
    Even still, as local leaders dig their communities out of the worst 
recession since the Great Depression, we recognize that the cost of 
poverty, particularly concentrated poverty, to our society and to our 
economic future is very high. Today, more than 10 million people live 
in neighborhoods of concentrated poverty--surrounded by disinvestment, 
failing schools, troubled housing, and, worst of all, virtually no path 
to opportunity for themselves or their children.
    In fact, research shows that one of the most important factors in 
determining whether or not children will do better financially than 
their parents is whether or not they grow up in one of these high-
poverty neighborhoods.\1\ We can predict health, economic, and 
educational outcomes of children based on zip code. Further, a 
conservative estimate finds that allowing millions of children to grow 
up in poverty costs the United States more than $500 billion per year, 
or more than 4 percent of GDP.\2\
---------------------------------------------------------------------------
    \1\ http://www.economicmobility.org/assets/pdfs/
PEW_NEIGHBORHOODS.pdf.
    \2\ Holzer HJ, Schazenbach, DW, Duncan, G, and Ludwig, J (2007) The 
Economic Costs of Poverty in the United States: Subsequent Effects of 
Children Growing Up Poor. National Poverty Center Working Paper Series 
#07-04.
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    In a globalized information economy, where a country's success is 
built on its human capital development, the conditions of our highest-
poverty neighborhoods, among other factors, are preventing children 
from taking advantage of educational opportunities and building the 
skills they need. We must revitalize America's high-poverty 
neighborhoods in order to educate our way to economic success.
Connected Challenges: Distressed Housing and Neighborhoods
    That's why this Administration has pursued Choice Neighborhoods, 
which builds on the HOPE VI public housing revitalization program 
pioneered by my predecessors at HUD, Secretaries Jack Kemp and Henry 
Cisneros.
    With strong bipartisan support, HOPE VI has already created over 
90,000 public housing units in healthy, mixed-income communities that 
were once troubled by distressed public housing--leveraging twice the 
Federal investment in additional private development capital and 
contributing to an increase of 75 percent or more in the average income 
of residents in such communities. This increase might partially result 
from higher-income residents moving into the area.
                                 ______
                                 

        Why Choice Neighborhoods?--In 1994, the media spotlight briefly 
        focused on the nightmarish conditions in one Washington DC 
        neighborhood's large, distressed housing developments--
        Frederick Douglass, Stanton Dwellings, Parkside Terrace and 
        Wheeler Terrace. To quote a report commissioned by Secretary 
        Cisneros, Washington Highlands presented a ``worst-case 
        situation'' for HUD. As the report stated, ``two separate and 
        distinct HUD program areas.[were] alleged to be contributing to 
        the deterioration'' of the neighborhood--public housing and 
        Project-based Section 8.

        Thanks to HOPE VI, local and national nonprofits, the DC 
        government and private developers had ready access to a program 
        to develop the public housing properties--and had secured other 
        financing to build a new community center, elementary school, 
        public library, and a parks and recreation facility. But the 
        challenge didn't end there, because the two other housing 
        developments in Washington Highlands didn't qualify for HOPE VI 
        funding, simply because they were subsidized by different 
        programs at HUD.

        The media didn't make the distinction. The residents didn't 
        make the distinction. Gangs and drug dealers certainly didn't 
        make the distinction. And thankfully, the community leaders who 
        were fighting to turn the neighborhood around didn't make the 
        distinction either. The only one to make the distinction was 
        HUD.
                                 ______
                                 
    Choice Neighborhoods builds on HOPE VI by recognizing that the 
problem of high concentrations of distressed housing in a single 
neighborhood of concentrated poverty is not limited to public housing.
    Indeed, many communities are struggling with the challenge of 
distressed housing in severely declining neighborhoods. The financial 
crisis intensified and expanded disinvestment in these neighborhoods, 
causing spillover effects in surrounding areas--an impact that is felt 
particularly strongly in neighborhoods with a large amount of 
distressed HUD-subsidized housing, whether public housing or assisted 
housing.
    We have heard from Public Housing Authority executive directors, 
mayors, and other leaders across the country that they need a tool that 
is sufficiently catalytic to revitalize these neighborhoods, and get 
their cities headed in the right direction. Existing funding sources 
like CDBG, HOME, LIHTC, and the Rental Assistance Demonstration can 
address some symptoms, but are simply not catalytic or substantial 
enough to effectively restore high-need neighborhoods. Choice 
Neighborhoods is exactly the kind of tool that those local leaders are 
asking for, and it is currently helping change the trajectories of 
cities across the country.
    Building upon HOPE VI by expanding beyond public housing to include 
other, almost indistinguishable HUD-assisted housing, Choice 
Neighborhoods transforms destabilizing, distressed housing into mixed-
income and professionally managed housing. But Choice Neighborhoods 
also provides the flexibility that local leaders need to address their 
specific challenges, whether it's a need to improve neighborhood 
infrastructure, or ensure high-quality early learning opportunities are 
available for young children. Choice Neighborhoods attracts and 
leverages private investment, philanthropic funding, and other public 
investments, to strategically address these challenges. The first five 
Choice Neighborhoods Implementation Grantees have used their $122 
million of funding to leverage a combined $1.6 billion, over 13 times 
their total grant award. And the 30 additional grantees who have 
received funding to spur their plans and preparations for Choice 
Neighborhoods revitalization have used their $7.6 million of awarded 
funding to leverage $13 million in other funds.
    Additionally, in part because of rural set-asides, Choice 
Neighborhoods is restoring neighborhoods in smaller cities and towns, 
which are experiencing challenges similar to those in larger 
metropolitan areas. In towns in rural areas like Meridian, MS and 
Salisbury, NC and small cities like Opa-Locka, FL local leaders are 
using Choice Neighborhoods to form and implement their own solutions to 
regenerate opportunities and their economies.
    In short, over the last two decades, HUD made significant strides 
in reducing the amount of severely distressed public housing through 
the HOPE VI program, which, once all funds are expended, will have 
replaced a total of over 100,000 public housing units that were 
formerly part of some of the most distressed housing stock. However, 
this work is not finished--in part because HOPE VI didn't address the 
most distressed HUD Assisted Housing, which Choice Neighborhoods 
tackles head on. In order to revitalize neighborhoods with large stocks 
of distressed HUD-assisted housing, and provide local leaders with the 
flexible, catalytic tool they need, we must build on the success we're 
already seeing through Choice Neighborhoods.
                                 ______
                                 
        Grantee Spotlight: Salisbury, NC--Salisbury is a small town in 
        a rural area of Eastern North Carolina. As a direct result of 
        Choice Neighborhoods, the Housing Authority and city of 
        Salisbury have partnered to create a Transformation Plan 
        targeting the West End neighborhood and Civic Park Apartments, 
        a 72-unit public housing complex within West End. Civic Park 
        Apartments suffers from failing building structure, water 
        infiltration and substandard electrical systems. The City 
        considers West End its most distressed neighborhood, with a 
        poverty rate of 28 percent, a neighborhood vacancy rate that is 
        nearly five times the County average, and a low-performing 
        middle school. Through their Planning Grant, the Housing 
        Authority and the City will work with a nationally recognized 
        planning firm, Stogner Architecture, to develop an actionable 
        local plan for coordinated investment. They will conduct a 
        locally based needs assessment, continue to partner and build 
        their capacity, and create plans for rehabilitating the 
        neighborhood's public and assisted housing stock, developing an 
        early childhood education center, and supporting existing 
        neighborhood assets.
                                 ______
                                 
Catalyzing Recovery by Targeting Housing and Neighborhoods
    Because of the interconnections between housing and the health and 
economies of neighborhoods, high-poverty neighborhoods with severely 
distressed HUD-assisted housing are strong candidates for return on 
Federal investment. Moreover, like other infrastructure, investments in 
housing last over the life-cycle of the improvements and generate long-
term payoffs to neighborhoods and local economies.
    Under HOPE VI, Choice Neighborhoods' predecessor, we saw that 
removing blighted public housing and replacing it with economically 
sustainable, mixed-income housing, not only replaced severely 
distressed housing, but also reduced poverty, crime, and unemployment; 
increased income and property values; and triggered investment, 
business growth, and local jobs.
    A typical 700-unit redevelopment of distressed public housing 
boosts home values, and generates local revenues of $6.5 million over a 
20-year period.\3\ A recent study looking at four sites estimated that 
three out of the four investments directly increased the surrounding 
areas' home values by a total of $14 million to $107 million. Home 
values in the fourth site kept pace with the rapid increases in the 
local area.\4\
---------------------------------------------------------------------------
    \3\ Turner, et al. (2007). Estimating the Public Costs and Benefits 
of HOPE VI Investments: Methodological Report. The Urban Institute.
    \4\ Zielenbach and Voith. (2010). HOPE VI and Neighborhood Economic 
Development: The Importance of Local Market Dynamics''. Cityscape. 12, 
No. 1: 99-131.
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    Increased home values not only highlight how targeted Federal 
investments can improve the surrounding area, but also show the 
enormous potential that these investments have to unlock private sector 
demand for and investment in these neighborhoods.
    Removing isolated, distressed properties and creating communities 
with connected, defensible spaces also contribute to decreased crime. 
Drops were especially large when this work was done in concert with 
police. For example, in Centennial Place in Atlanta, GA, the site of 
one project where fellow panelist Egbert Perry led so much great work, 
crime dropped by an astonishing 93 percent.\5\ These drops in crime 
have often been much larger than those in other comparable local 
neighborhoods, and can generate significant savings over the life-cycle 
of the housing.\6\,\7\
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    \5\ Turbov and Piper. (2005). HOPE VI and Mixed-Finance 
Redevelopments: A Catalyst for Neighborhood Renewal. Washington, DC: 
Brookings Institution. Vol 8.; From Despair to Hope: Hope VI and the 
New Promise of Public Housing in America's Cities. (2009).
    \6\ Zielenbach and Voith. (2010).
    \7\ Turner, et al.(2007).
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                                 ______
                                 
        Grantee Spotlight: San Antonio, TX--The San Antonio Housing 
        Authority, the local United Way, and their partners have 
        secured both a Choice Neighborhoods Planning Grant and a 
        Promise Neighborhoods Planning Grant for the Eastside area. The 
        Eastside neighborhood is held back by several interconnected 
        problems. The neighborhood vacancy rate is more than three 
        times the County rate and almost half of the area's residents 
        live in poverty. In addition to distressed public housing, the 
        neighborhood also struggles with very low performing schools, 
        including the Sam Houston High School where more than half of 
        all students drop out. The Housing Authority recognizes that, 
        even if the housing is replaced, market rate renters will not 
        move into the area without better schools. As a result of these 
        aligned Federal investments, the Housing Authority, United Way, 
        the City, a local university, and their partners are building 
        on new city efforts and private industry growth and are 
        crafting an integrated, data-driven plan that links educational 
        improvements to mixed income housing and neighborhood 
        revitalization.
                                 ______
                                 
    Targeted investments in housing also create jobs through 
construction related work and multiplier effects. Federal investment, 
combined with the massive private sector leverage that these 
investments marshal, translate into substantial numbers of new jobs, 
further contributing to the re-growth of these local economies. 
Meanwhile, the continued return of private investment in homes, 
businesses, and other infrastructure propels this cycle of increased 
jobs and growth. At its core, Choice Neighborhoods is a job-generator: 
directly creating jobs through its investments, and indirectly creating 
the conditions for private capital--and work--to flow back into 
disinvested neighborhoods. We estimate that the Choice Neighborhoods 
grants awarded thus far and combined leveraging will create thousands 
of jobs.
Using a Proven Approach & Generating Local Solutions
    Choice Neighborhoods builds on HOPE VI successes. With HOPE VI, 
communities used financing from multiple private and public sources to 
remove blighted public housing and replaced it with sustainable mixed-
income developments that cost far less to operate than the original, 
ailing housing. This approach attracted new businesses and market-rate 
renters and opened up opportunities for families to live in affordable, 
decent housing in safer neighborhoods.
    However, Choice Neighborhoods has significantly improved upon HOPE 
VI by requiring that the housing investment enable and align with a 
comprehensive locally driven neighborhood plan. Local leaders, often 
including local elected officials and city staff, begin by assessing 
the needs in their neighborhood, then craft a plan that is responsive 
to those needs, and rooted in effective, evidence-based practices. 
Choice Neighborhoods provides them with the flexibility and resources 
to execute on those locally driven plans.
    Choice Neighborhoods was designed to ensure leaders could carry out 
their vision and respond to the specific challenges in their community. 
For example, under Choice Neighborhoods distressed housing stock is not 
just limited to public housing; often distressed public housing and 
other distressed HUD-assisted housing is located side by side. Now, 
both types of housing are eligible to be the focus of a grant, giving 
local leaders a tool to address whichever types of HUD-assisted housing 
present challenges in their communities.
                                 ______
                                 
        Grantee Spotlight: Little Rock, AR--In Little Rock, AR, a 
        struggling neighborhood just Southeast of the downtown area is 
        being challenged by both a severely distressed 74-unit public 
        housing development, Sunset Terrace, and a severely distressed 
        50-unit HUD-assisted, Project-Based Section 8 development, Elm 
        Street. Both properties have deteriorating foundations and 
        structures, have persistent electrical and plumbing problems, 
        lack defensible spaces, and have other serious design flaws. 
        The surrounding neighborhood is affected by high crime, poor 
        schools, and has a vacancy rate that is over three times the 
        county rate. To address these needs, the Little Rock Housing 
        Authority has partnered with Volunteers of America National 
        Services, the owner of the Project-Based Section 8 development, 
        to engage City and civic leaders in turning around the 
        neighborhood. They have secured a Choice Neighborhoods Planning 
        Grant and are working with Quadel Consulting to create a plan 
        that builds off of other recent development efforts, including 
        the Department of Education's Promise Neighborhood Program, 
        Neighborhood Stabilization investments, and HUD's Sustainable 
        Communities Initiative.
                                 ______
                                 
    Local leaders also need to be able to address the specific 
challenges in these neighborhoods when it is not just the housing that 
needs fixing. Data show that market rate rental and homeownership 
demand in a neighborhood is driven by the quality of the institutions 
and assets in that area, such as schools, grocery stores, parks, public 
safety, access to transportation, and proximity to jobs and businesses. 
Improvements to these assets create the conditions for neighborhood 
change.\8\
---------------------------------------------------------------------------
    \8\ Weissbourd, Bodini, and He. (2009). Dynamic Neighborhoods: New 
Tools for Community and Economic Development. Living Cities.
---------------------------------------------------------------------------
    Choice Neighborhoods makes it easier to make this happen. Choice 
Neighborhoods provides a framework that recognizes the effective 
practice of pairing housing revitalization with a broad intervention in 
a target neighborhood. And critically, Choice Neighborhoods provides 
the flexibility needed to bring in the public and private partnerships 
that will catalyze these changes. The program allows local leaders to 
use up to 15 percent of the grant to focus on human development-related 
investments in early education, job training, health, and other areas. 
Choice Neighborhoods also allows 15 percent of funds to be used for 
critical neighborhood improvements, like providing gap financing for 
grocery stores, financial institutions, and other retail, and removing 
blight caused by vacant private housing. When communities can't 
otherwise access sources of funds to address critical needs, these gap-
filling funds represent ``glue money'' that garner new leverage and 
hold together key strategies.
    Choice Neighborhoods also enhances local flexibility by enabling 
the best-poised leader to drive this process. Under HOPE VI, only 
housing authorities could apply for grants. This limitation sometimes 
left other key players out of the process, making it far too easy to 
miss opportunities to streamline local efforts and leverage the 
greatest return on an investment. Choice Neighborhoods now encourages 
the highest capacity and best situated applicant, whether a mayor or 
other local officials, public housing authority, nonprofit, tribal 
entity, or private developers to directly apply for a grant.
                                 ______
                                 
        Grantee Spotlight: San Francisco, CA--McCormack Baron Salazar, 
        a private development company, and the San Francisco Housing 
        Authority, along with partners like Lennar Homes (a publicly 
        traded real estate development company), the City, School 
        District, and Urban Strategies were awarded a Choice 
        Neighborhoods Implementation Grant to execute their local 
        vision for the Eastern Bayview neighborhood. Forty percent of 
        Eastern Bayview residents live in poverty and the neighborhood 
        suffers from high vacancies, poor schools, and inadequate 
        access to job centers in downtown and Silicon Valley. The 
        neighborhood also contains the Alice Griffith public housing 
        site, a highly distressed collection of barracks style housing 
        scattered over a 22-acre site. Through their Choice 
        Neighborhoods grant, the team will build a total of 1,210 
        mixed-income units, replacing the 256 units of public housing 
        and creating a new master-planned community with market-rate 
        and workforce housing. The team has also identified a clear 
        plan and goals to address their local needs. They are building 
        upon the San Francisco Unified School District's progress to 
        improve the quality of their schools and develop complementary 
        educational opportunities. They have also set employment 
        targets and are working with the Job Readiness Initiative and 
        the local Citybuild program to provide job training and 
        placement. Additionally, the team is bringing in needed 
        everyday services and jobs by improving streetscapes to attract 
        retail, removing blighted housing, and pursuing new commercial 
        assets, fresh food stores, and a new bus rapid transit with 
        direct connections to key commuter rail lines.
                                 ______
                                 
Demonstrating Capacity & Leveraging Investments
    Choice Neighborhoods establishes a high bar for grantees. The 
program is a highly competitive grant program. In the first year alone, 
HUD received over 160 applications but awarded only 22 grants.
    These grants require local leaders to demonstrate that they have a 
solid, high quality plan and the capacity needed to carry it out. Local 
leaders must use evidence-based practices and real-time results to 
inform their work. Additionally, many of the Choice Neighborhoods 
Implementation Grantees have been working with these communities for 
years and have strong partnerships with organizations that have 
successfully revitalized neighborhoods. For example, in New Orleans, 
the Housing Authority and City are working closely with McCormack Baron 
Salazar, a private development group that has been involved in turning-
around neighborhoods across the country, as well as Urban Strategies, a 
nonprofit group that has successfully convened local partners and 
aligned their revitalization efforts.
    Local leaders can't succeed in turning around disinvested 
neighborhoods without securing necessary partnerships and highly 
leveraging their investments. For this reason, Choice Neighborhoods 
reserves a substantial number of points in its competitive process for 
those applicants who have secured leverage far above their grant amount 
and who demonstrate that they are aligning their work with existing 
efforts, thereby streamlining resources and achieving greater 
efficiencies. This approach rewards leaders who are breaking through 
silos and working with public and private agencies, such as school 
districts and police, major market actors like private real estate 
developers, and anchor institutions like universities and hospitals. As 
a result, the five Choice Neighborhoods Implementation Grantees have 
leveraged a combined $1.6 billion, over 13 times their total grant 
award. This total includes new, refocused, and streamlined funds from 
private investors, cities, universities, foundations, and a range of 
local partners. Even Choice Neighborhoods Planning Grants that amount 
to only $250,000 to $300,000 for each neighborhood have pulled in 
substantial amount of leverage. During the past 2 years, Planning 
Grantees have leveraged over $13 million in planning funds alone to add 
to the $8 million they received in Choice Neighborhoods grants.
                                 ______
                                 
        Grantee Spotlight: New Orleans, LA--In New Orleans, Choice 
        Neighborhoods will spur the revitalization of the Iberville/
        Treme neighborhood, where 52 percent of families live in 
        poverty, with a plan centered on the transformation of 
        distressed, highly concentrated public housing into mixed-
        income housing that preserves the historic character of the 
        neighborhood. The partnership, led by the city of New Orleans 
        and its Housing Authority, will take advantage of the 
        neighborhood's adjacency to the French Quarter, bringing back 
        the streetcar named Desire, and expanding the reach of New 
        Orleans' strong tourism economy to include the musical and 
        cultural heart of Treme. The project will replace 821 units of 
        public housing in a new, mixed-income neighborhood, with over 
        2,400 total units being built. A new hospital, clinic, and 
        biomedical research facility, tied to integrated job training, 
        will create critical employment opportunities for neighborhood 
        residents and expand access to needed health care. And through 
        the Choice Neighborhoods partnership with the Recovery School 
        District, Louisiana's fastest-improving school district, 
        children growing up in the neighborhood will have access to 
        quality educational opportunities. All of this work is aligned 
        by a $30.5 million Choice Neighborhoods grant that leverages 
        over $1 billion in private, nonprofit, and other investments 
        into the community.
                                 ______
                                 
Aligning Federal Funding so Taxpayer Dollars Go Further
    Choice Neighborhoods also offers a new way for local leaders to 
access Federal resources more efficiently. Because Choice Neighborhoods 
grants are place-based and driven by local solutions, HUD's grants can 
now be used in concert with other Federal investments around places and 
local needs.
    HUD has been aligning Choice Neighborhoods investments with those 
from the Department of Education, Justice, and Health and Human 
Services. Both Choice Neighborhoods and the Department of Education's 
Promise Neighborhoods, a companion program focused on transforming 
educational opportunities, include preferences for applicants who are 
coordinating these programs. The programs have also used some of the 
same measures and definitions to eliminate the need for local leaders 
to deal with redundant reporting requirements and implementation 
barriers. Currently, five Choice Neighborhoods Planning Grant 
neighborhoods have Promise Neighborhood Planning Grants, including 
communities in San Antonio, Texas, Little Rock, Arkansas, and Tulsa, 
Oklahoma.
    Additionally, the Department of Justice is aligning significant 
investments with Choice Neighborhood Grants. The Department of Justice 
has devoted $2 million of their resources to support the public safety 
strategies of Choice Neighborhoods Implementation Grantees through the 
Public Safety Enhancement (PSE) Initiative. Choice Neighborhoods 
Grantees have recently submitted applications for the PSE grants, which 
will fund local innovations and evidence-based solutions to decrease 
violence, gang activity, and illegal drug activity. The Department of 
Justice has also committed to aligning its upcoming $15 billion Byrne 
Criminal Justice Innovation Program with Choice Neighborhoods.
    The Department of Health and Human Services is also incentivizing 
alignment with Choice Neighborhoods. Applicants for community health 
center improvements are asked to describe how they are working with 
Choice Neighborhoods grantees if there is one in their area and receive 
points for those collaborations.
    Finally, Choice Neighborhoods grantees are aligning substantial 
Federal investments at the local level. Some examples include resources 
from other Federal agencies such as: Department of Transportation--
Seattle is leveraging $32.3 million from the Seattle Department of 
Transportation; Department of Health and Human Services--New Orleans is 
leveraging $962,000 from Head Start and $500,000 from a federally 
Qualified Health Center; and Department of Labor--Boston is leveraging 
$348,600 of Workforce Investment Act funds. The Federal Partnership for 
Sustainable Communities has become a key driver in helping 
jurisdictions target their neighborhood revitalization efforts and 
align them with larger regional plans, providing even greater leverage 
out of our Choice Neighborhoods investments.
    Through coordinating and co-locating these Federal resources, 
Federal funds stretch further and are more effective. For example, 
local leaders who improve schools with Promise Neighborhood grants will 
be better able to attract market rate renter families back to the area 
and prepare the future workforce. Likewise, we expect that students 
living in Choice Neighborhoods' safe, decent, affordable housing will 
be better able to concentrate on school and achieve higher test scores, 
consistent with previous findings of the impact of safe, decent, 
affordable housing on educational outcomes.\9\
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    \9\ See, e.g., MacArthur's ``How Housing Matters'' series at: 
http://www.macfound.org/site/c.lkLXJ8MQKrH/b.6547839/k.163E/
How_Housing_Matters_Recipients_by_Subject.htm#
education.
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Meeting Communities Where They Are
    Choice Neighborhoods also meets communities where they are. That is 
why Choice Neighborhoods has dedicated a small, but significant portion 
of the overall allocation for Planning Grants. These Planning Grants 
ensure that those local leaders and communities who are not yet able to 
fully undertake a successful neighborhood revitalization can start down 
that path. By the end of their planning period these grantees will have 
developed a locally driven plan based on their needs and evidence-based 
practices, secured the necessary partnerships and leverage, and built 
their own capacity and the capacity of their partners and stakeholders 
so that they are ready to effectively implement the plan. Planning 
Grants also include competitive preferences for communities that could 
particularly benefit from these investments, such as rural communities 
and neighborhoods that are designated as Promise Neighborhoods.
What Local Leaders are Telling Us
    We have heard from mayors, PHA Executive Directors, economic 
development directors, and other leaders across the country that they 
need Choice Neighborhoods to help unlock the potential of their most 
distressed neighborhoods. They need this tool for those neighborhoods 
to recover, and for their cities to recover, tapping into the 
underlying economic strength of those neighborhoods. The intensity of 
the challenges faced in neighborhoods that have been mired in 
disinvestment for decades is so strong, it's only through a catalytic 
investment like Choice Neighborhoods that those cities can get them on 
the right track--and ensure that the kids growing up there can access 
the opportunity that every American deserves.
    And so, Mr. Chairman, Choice Neighborhoods is about attacking 
interconnected challenges with comprehensive, proven tools. It's about 
understanding that local problems require locally driven solutions--and 
that the Federal Government can serve as an effective partner in 
supporting these solutions. It's about making taxpayer dollars go as 
far as they can. But fundamentally, it's about making sure every 
American gets a fair shot--whoever they are, and wherever they live. 
That's what this program is all about--and it's why I so appreciate 
this opportunity today. Thank you and I would be happy to answer any 
questions.
                                 ______
                                 
                    PREPARED STATEMENT OF MARIA MAIO
           Executive Director, Jersey City Housing Authority
                             March 27, 2012
    Chairman Menendez, Ranking Member DeMint and Members of the 
Subcommittee, my name is Maria Maio and I am the Executive Director of 
the Jersey City Housing Authority (JCHA) of Jersey City, New Jersey. 
The JCHA is the 2nd largest PHA in New Jersey serving nearly 20,000 low 
and moderate income seniors, families and persons with disabilities in 
its Public Housing and Housing Choice Voucher Programs.
    I greatly appreciate your invitation and am honored to be here 
today to testify before the Subcommittee regarding, ``The Choice 
Neighborhoods Initiative: A New Community Development Model.'' As you 
are aware, the JCHA received one of the first Planning Grants awarded 
under the Choice Neighborhoods Initiative as funded through the FY 2010 
appropriations bill for the Department of Housing and Urban 
Development. Now, we are currently in the midst of preparing an 
application for an Implementation Grant under the Choice Neighborhoods 
program, and I will have more to say on that later in my testimony.
    I also want to commend you, Chairman Menendez, for authoring the 
bill to establish and implement Choice Neighborhoods in S. 624, ``the 
Choice Neighborhoods Initiative Act of 2011'', which would permanently 
authorize the program. Although the program has been funded for the 
last few years through the appropriations process, CNI has lacked the 
critical legitimacy of an authorized program conferred through the 
regular order of Congress. The hearings today will begin to rectify 
that deficiency.
    As has been mentioned, Choice Neighborhoods builds upon the model 
and achievements of the HOPE VI program. HOPE VI has transformed 
communities by turning severely distressed public housing into mixed-
income, mixed-use and revitalized communities that serve as long-term 
assets in their neighborhoods. HOPE VI has led the way in establishing 
new partnerships and leveraging additional resources. HOPE VI has also 
been a pioneer and laboratory for neighborhood place-based 
redevelopment.
    In a MacArthur Foundation study commissioned by the Council of 
Large Public Housing Authorities, the study found that HOPE VI 
redevelopments have had significant economic and fiscal impacts on 
their surrounding areas. The HOPE VI neighborhoods in the study showed 
major drops in violent crime rates, increases in household income and 
rising home values. The study concluded that HOPE VI is a useful and 
cost-effective approach for catalyzing positive economic change in 
local communities. This has been true for us.
    The JCHA has been awarded three HOPE VI Revitalization Program 
grants, which have resulted in 730 constructed units and 275 planned 
units in mixed income communities including public housing, affordable 
and market rate units. Our HOPE VI communities have served as a model 
for developing quality sustainable affordable housing, which has been 
applauded by City, State, and Federal officials and residents of public 
housing and the broader community and imitated by private and not-for-
profit developers. Our HOPE VI Programs met the goals of rebuilding 
severely distressed public housing, deconcentrating poverty, leveraging 
non-Federal funds and providing higher quality, efficient affordable 
housing with reduced operating costs through the physical 
transformation to mixed income developments and a Community and 
Supportive Services Program that focused on self-sufficiency 
initiatives, with a major goal of reducing unemployment.
    The HOPE VI Program also began the organizational transformation of 
the JCHA from property manager to developer. Today the JCHA is regarded 
as the major affordable housing developer in the city. Severely 
distressed public housing has been replaced with lower density housing 
that compliments the existing neighborhood, new developments that are 
community assets and attracting a diverse economic resident population 
in well maintained housing. Critics of the stereotyped public housing 
have become the strongest supporters of our new HOPE VI developments.
    Much of the success of our HOPE VI Program is also a result of our 
strong commitment to Section 3 local hiring initiatives. To date, 500 
public housing/local residents have been hired and $22 million has been 
targeted to Minority Business Enterprise businesses.
    To date, 66% of the public housing units in HOPE VI developments 
have been leased to former relocatees. But perhaps the best indication 
of success comes from a public housing resident who returned to a HOPE 
VI development and expressed how her child can ``sleep in peace, I 
don't hear gun shots in the middle of the night''.
    Choice Neighborhoods proposes to do the same by transforming 
neighborhoods of extreme poverty into mixed-income neighborhoods of 
long-term viability. It proposes to revitalize severely distressed 
housing, improve access to economic opportunities, leverage investments 
in well-functioning services, help foster effective schools and 
education programs, public assets, and help improve access to public 
transportation and improved access to jobs.
    Whereas the major HOPE VI focus was on addressing severely 
distressed public housing, CHOICE capitalizes on the strengths of 
institutions and assets of the neighborhood, convenes all neighborhood 
stakeholders and encourages their input, and pulls together disparate 
developments in various stages to plan and implement a singular 
comprehensive neighborhood transformation plan through tried-and-true 
successful public-private partnerships. It was with these goals in mind 
that the JCHA applied for and was awarded a CHOICE Planning Grant last 
March.
    The CHOICE Neighborhood Initiative is a natural extension of the 
HOPE VI Program. It will allow us to expand on our successful public/
private partnerships to develop a comprehensive plan for a neighborhood 
that includes the transformation of Montgomery Gardens, our remaining 
high rise family development within the broader McGinley Square-
Montgomery Corridor Neighborhood. Montgomery Gardens is currently 
perceived as a liability to further renewed investment in the 
neighborhood.
    Perhaps most importantly, the transformation of Montgomery Gardens 
to a new CHOICE community that guarantees one for one replacement 
housing, ensures that the inevitable gentrification that will accompany 
market rate development will be addressed by the inclusion of 
affordable housing resulting in a quality mixed income community. At 
the JCHA we made a commitment to one for one replacement housing, 
however we recognize it may not be a viable replacement policy for 
every community.
    Properly implemented, we believe Choice Neighborhoods will be a 
broad place-based solution to help address the housing, transportation, 
energy, education, workforce, environmental, health, business and 
development needs of neighborhoods and communities. We hope that with 
passage of this legislation we can work towards a more streamlined 
implementation process, and we stand ready to work with HUD on 
improving implementation of their current Choice Neighborhoods program.
    For example, we must be sure to create the type of environment that 
encourages and incentivizes the private sector to participate, and we 
must be careful to not be overly prescriptive in the implementation 
process. Under HOPE VI, the implementation process was structured such 
that public and private partners could come to the table and develop 
unique solutions to local housing challenges.
    We would like to see this same kind of successful structure adopted 
in the Choice Neighborhoods implementation process. We should also 
develop an implementation process that creates an intentional alignment 
of funding opportunities with other Federal agencies. We believe Choice 
Neighborhoods can be vitally important to long-term livability and can 
be an effective strategy to promoting sustainable communities for 
succeeding generations.
    One aspect of the legislation we believe is critically important--
particularly as Choice Neighborhoods continues the legacy of HOPE VI--
is the focus on public housing which we believe must be maintained. 
Three years ago, HUD acknowledged that there are three times the number 
of distressed developments in public housing as compared to assisted 
housing. We appreciate the legislation acknowledging this focus by 
designating not less than two-thirds of the amounts made available in 
any fiscal year, or two-thirds of the units assisted under Choice 
Neighborhoods shall be public housing units.
    We would further recommend that applicants for Choice Neighborhoods 
should either be, or partner with, a public housing agency; or, if no 
public housing agency is available or interested, then other eligible 
entities are subsequently considered.
    In closing, I thank you for the opportunity to testify today on S. 
624 authorizing the Choice Neighborhoods Initiative.
                                 ______
                                 
             PREPARED STATEMENT OF SUSAN J. POPKIN, Ph.D. *
        Director, Program on Neighborhoods and Youth Development
                            Urban Institute
                             March 27, 2012

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     * The views expressed are those of the author and do not necessary 
reflect those of the Urban Institute, its trustees, or its funders.
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    Mr. Chairman and Members of the Committee, thank you for inviting 
me to appear here today. For the past 14 years, I have been studying 
the impact of the HOPE VI program on the original residents of public 
housing projects that are demolished and replaced. While most of my 
research has focused on Chicago, which had more distressed public 
housing than any other city in the country, I have conducted research 
in 13 HOPE VI sites across the country. The testimony I present here 
today draws from four major studies: The HOPE VI Panel Study, which 
tracked residents from five sites across the country; the Chicago Panel 
Study; the Chicago Family Case Management Demonstration; and the new 
HOST Demonstration.
    Twenty years ago, dilapidated, high-crime public housing 
developments populated by impoverished, female-headed households were a 
powerful symbol of the failures of U.S. social welfare policy. HOPE VI 
was a key element of a bold effort to transform these public housing 
communities and demonstrate that housing programs could produce good 
results for residents and communities. The program provided grants to 
housing authorities to replace their most distressed developments-those 
with high crime rates, physical decay, and obsolete structures-with 
new, mixed-income, mixed-tenure communities. In a departure from 
earlier efforts to ``rehabilitate'' public housing, HOPE VI sought to 
move beyond ``bricks and mortar, and provided funding for supportive 
services for residents intended to help them move toward self-
sufficiency and improve their life circumstances'' (Popkin, Levy, and 
Buron 2009).
    HOPE VI was, at its core, a housing intervention, and there is no 
question that the program has changed the face of public housing-
hundreds of those dilapidated structures have been replaced with 
attractive new developments, and the program has sparked innovations in 
financing and management (Katz 2009; Popkin et al., 2004). The program 
succeeded in improving many families' housing situations and quality of 
life. Evidence from The Urban Institute's comprehensive HOPE VI Panel 
Study and its follow-up, the Chicago Panel Study, shows that many 
former residents received Housing Choice Vouchers or moved into mixed-
income developments. These residents now live in better housing in 
neighborhoods that are considerably less poor and distressed and 
provide safe environments for them and their children.
    However, as I will discuss, HOPE VI was less successful in helping 
families improve their economic circumstances and was not a solution 
for the most vulnerable households. Findings from the Moving to 
Opportunity Demonstration (Sanbotmutsu et al., 2011) and from 
evaluations of individual HOPE VI initiatives show similar results 
(Popkin, Levy, and Buron 2009). These findings suggest that Choice 
Neighborhoods and other new comprehensive community redevelopment 
efforts that seek to improve the well-being of low-income residents in 
distressed neighborhoods need to provide services and support that will 
help address the complex challenges many of these families face in 
moving toward self-sufficiency.
Better Housing in Safer Neighborhoods
    The HOPE VI Panel Study tracked outcomes for 887 residents from 
five sites around the United States: Shore Park/Shore Terrace (Atlantic 
City, NJ); Ida B. Wells Homes/Wells Extension/Madden Park Homes 
(Chicago, IL); Few Gardens (Durham, NC); Easter Hill (Richmond, CA); 
and East Capitol Dwellings (Washington, DC) from 2001 to 2005 (Popkin, 
Levy, and Buron 2009). The Chicago Panel Study (Popkin et al., 2010a) 
continued the research, surveying the Chicago sample.\1\
---------------------------------------------------------------------------
    \1\ The Urban Institute has just completed a 10-year follow-up with 
the Chicago Panel Sample; results from that research will be available 
in summer 2012.
---------------------------------------------------------------------------
    This research concluded that for the most part, HOPE VI succeeded 
in its goal of improving residents' life circumstances. The majority 
have experienced meaningful improvement in their quality of life as a 
result of HOPE VI redevelopment, even though most residents have not 
moved back to the new, mixed-income site. HOPE VI Panel Study 
respondents who moved to the private market or mixed-income 
developments reported substantial improvements in the quality of their 
housing. At baseline in 2001, respondents from all five sites reported 
intolerable and hazardous housing conditions; when we followed them up 
in 2005, their circumstances had improved substantially, and relatively 
few reported serious problems with their housing (Comey 2007). Four 
years later, findings from the Chicago Panel Study (Buron and Popkin 
2010; Popkin et al., 2010a) documented continuing improvements, with 
virtually all former residents reporting better housing quality, 
regardless of whether they now lived in mixed-income housing, in the 
private market with a voucher, or in rehabilitated traditional public 
housing.
    Even more significantly, HOPE VI brought about dramatic improvement 
in respondents' sense of safety. The proportion of Panel Study 
respondents reporting ``big problems'' with violent crime and drug 
sales declined consistently after relocation. In Chicago, the trends 
were even more striking: respondents' perceptions of violence and 
disorder in their neighborhoods decreased significantly across every 
measure the study tracked, with fewer than 25 percent reporting major 
problems with disorder (drug trafficking, sales, loitering, and gangs) 
by 2009. Likewise, the proportion of respondents who rated three 
indicators of violence (shootings and violence, attacks, and sexual 
assault) as a big problem in their community declined by more than 50 
percent. The benefits of the improvements in safety are profound, with 
residents reporting significantly lower levels of anxiety and fear and 
in qualitative interviews, describing being able to sleep better, and 
feeling comfortable letting their children play outside (Popkin and 
Cove 2007; Popkin and Price 2010).
    Finally, respondents who had left traditional public housing living 
in communities that were much less poor than their original public 
housing developments, even if they were not living in a new mixed-
income development. After relocation, half of those renting in the 
private market were living in neighborhoods that had poverty rates 
below 20 percent--in Chicago in 2009, a quarter of the sample were 
living in communities where the poverty rate was less than 15 percent 
(Buron, Levy, and Gallagher 2007; Comey 2007; Popkin et al., 2010a).
Significant Challenges Remain
    But this research also highlights the significant challenges that 
remain--particularly residents' shockingly poor health and persistently 
low levels of employment--problems that will require more intensive, 
focused interventions. At every age level, HOPE VI Panel Study 
respondents are much more likely to describe their health as fair or 
poor than other adults overall and even than black women, a group with 
higher-than-average rates of poor health. Further, HOPE VI Panel Study 
respondents report high rates of a range of chronic, debilitating 
conditions, including arthritis, asthma, obesity, depression, diabetes, 
hypertension, and stroke. Mental health is a very serious problem for 
these respondents--not only depression, but reported rates of anxiety 
and other indicators were also very high: Overall, 29 percent of HOPE 
VI respondents indicated poor mental health (Manjarrez, Popkin, and 
Guernsey 2007). Four years later, the Chicago Panel Study found a 
deteriorating situation, with more than half the respondents rating 
their health as fair or poor--a rate four times that of the general 
population. Underscoring the severity of the problem, the mortality 
rate for these residents was stunningly high--more than twice that of 
the general population (Price and Popkin 2010).
    In addition to providing an improved living environment, the HOPE 
VI program's goals included helping residents attain self-sufficiency. 
However, the evidence from our research shows that employment rates 
have remained persistently low, averaging just under 50 percent, 
although these rates reflect considerable cycling in and out of the 
labor market (Levy 2010; Levy and Woolley 2007). Our research shows 
that health problems are by far the biggest barrier to employment: in 
2005, among working-age respondents, nearly a third (32 percent) 
reported poor health, and most of them (62 percent) were unemployed. At 
each round of surveys, the strongest predictor of not working was 
having severe challenges with physical mobility (e.g., being unable to 
climb a flight of stairs or walk four blocks without resting). 
Depression also substantially reduced the probability of being 
employed, as did having been diagnosed with asthma and being obese.
    Finally, even though moving out of distressed public housing has 
generally improved residents' well-being, findings from the Urban 
Institute's research provide an important cautionary note about the 
challenges that these households may face when they move to the private 
market with vouchers (Buron, Levy, and Gallagher 2007). Moving out of 
public housing presents new financial management challenges: private-
market property managers can be less forgiving of late rent payments 
than public housing managers, making it imperative that rent is paid on 
time. Also, since utilities are generally included in the rent in 
public housing, many former public housing residents are inexperienced 
in paying utility bills. They can find coping with seasonal variation 
in utility costs, particularly heating costs in the winter or spikes in 
gas costs, very daunting. At the 2005 follow-up and again in Chicago in 
2009, we found that residents who moved to the private market with 
vouchers were significantly more likely to report trouble paying their 
utility bills than those still living in traditional public housing 
(Levy 2010). Likewise, voucher holders were more likely than public 
housing households to report financial hardships paying for food. 
However, voucher holders were significantly less likely than public 
housing residents to be late paying their rent. It appears that former 
residents might be making tradeoffs, choosing to pay their rent on time 
to remain lease compliant and delaying utility payments.\2\
---------------------------------------------------------------------------
    \2\ These findings are consistent with new research from the Moving 
to Opportunity Demonstration (Sonbanmatsu et al., 2011).
---------------------------------------------------------------------------
The Most Vulnerable Need More Intensive Support
    Although it improved the circumstances of many former residents of 
distressed public housing, it is also clear that the HOPE VI program 
was not as successful in addressing the more complex social and 
economic challenges facing these very low-income families. In 
particular, it was not a solution for the most vulnerable-the subset of 
families who are ``hard to house'' because of multiple, complex 
problems that make them ineligible for mixed-income housing or unable 
to cope with the challenges of negotiating the private market with a 
housing choice voucher. These families are not typical of all public 
housing residents, but make up a large share of those living in the 
kind of distressed public housing complexes targeted for redevelopment 
(Popkin, Cunningham, and Burt 2005; Theodos et al., forthcoming).
    These findings led the Urban Institute to work with housing 
authorities to test more intensive service models. The Chicago Family 
Case Management Demonstration (Popkin et al., 2010b; Theodos et al., 
2012) provided one model for serving the needs of the most vulnerable 
public and assisted housing families. The Demonstration developed and 
tested an innovative program for serving the needs of the most troubled 
public housing residents-households with high rates of physical and 
mental health problems, low levels of educational attainment, weak 
attachment to the labor force, and high levels of involvement in public 
systems (criminal justice, child welfare). The Demonstration, a 
partnership of The Urban Institute, the Chicago Housing Authority 
(CHA), and Heartland Human Care Services, ran from March 2007 to March 
2010, providing residents from the CHA's Dearborn Homes and Madden/
Wells developments with intensive case management services, where 
clients saw their case managers at least once a week; a Transitional 
Jobs program that provided subsidized jobs and on-the-job training; 
financial literacy training; and mobility counseling to support 
participants in moving to communities that offered access to better 
schools, jobs, and amenities. The Urban Institute conducted a rigorous 
evaluation of the initiative.
    The Demonstration was remarkably successful in implementing this 
wraparound supportive service model for vulnerable public housing 
residents. The lead service provider was able to adapt the service 
model as residents relocated with vouchers or to mixed-income housing, 
while sustaining high levels of engagement. Participants perceived 
improvements in service quality and delivery, and providers felt more 
effective and engaged. Strikingly, participants reported gains in 
employment, health, improved housing and neighborhood conditions, and 
reduced levels of fear and anxiety. The average costs for the intensive 
services per household were relatively modest, about $3,600 per year or 
$1,600 more than the standard CHA service package.\3\
---------------------------------------------------------------------------
    \3\ Costs varied considerably by level of need and service take-up, 
with high-risk participants using the most services.
---------------------------------------------------------------------------
    Most significantly, despite an extremely difficult labor market, 
self-reported employment among working-age Demonstration participants 
increased from 49 percent in 2007 to 59 percent in 2009, likely due to 
the support participants received from the intensive Transitional Jobs 
program (Parilla and Theodos 2010). Also striking was the finding that, 
in contrast to the results of the HOPE VI and CHA Panel studies, 
Demonstration participants' health did not decline over time. Between 
2007 and 2009, participants' health status remained remarkably stable; 
in fact, more respondents reported improvements than declines. Further, 
while there was no change in the proportion of respondents who reported 
poor mental health or clinical depression, respondents did report 
significant reductions in anxiety.
    As was the case with HOPE VI, Demonstration participants 
experienced gains in their housing and neighborhood quality, although 
the majority (59 percent) remained in traditional public housing. 
Participants perceived that relocating had major benefits, with four 
out of five reporting that they live in better-quality housing than at 
baseline. Like their counterparts in the HOPE VI studies, Demonstration 
participants also moved to neighborhoods where they feel safer, have 
more connections with their neighbors, and report less physical and 
social disorder (Theodos and Parilla 2010).
    Still, it was clear that it was easier to improve residents' 
housing and neighborhood conditions than to address their physical and 
emotional health. Even the intensive case management and clinical 
services the Demonstration provided were only able to make a small dent 
in health outcomes for participants--seemingly stabilizing their 
overall health, reducing anxiety, and lowering levels of alcohol 
consumption. While health stabilized overall, levels of chronic illness 
and mortality rates remained strikingly high (Popkin and Getsinger 
2010). This modest progress underscores the depth of the challenges 
facing these families--and service providers.
    Finally, findings from the Chicago Family Case Management 
Demonstration paint a disturbing picture of at-risk children and youth 
living in extremely troubled households. These children have endured 
years of living in violent and chaotic environments; in many cases, 
their parents were so distressed--suffering from mental and physical 
illness, struggling with substance abuse, dealing with histories of 
trauma--that they were unable to shield their children from the worst 
effects of the stresses surrounding them. Although the Demonstration 
took a family focused approach, no services or case managers were 
explicitly dedicated to children and youth; at the follow-up, these 
children were still experiencing alarming levels of distress and 
exhibiting high levels of behavior problems and delinquency (Getsinger 
and Popkin 2010).
Moving to Dual-Generation Strategies
    The Chicago Family Case Management Demonstration offers important 
lessons on what it will take to help improve the well-being of even the 
most vulnerable families. However, even though that demonstration 
succeeded in improving many outcomes for adults, the benefits did not 
extend to children and youth. Developing effective place-based models 
that reach youth is critical not only for improving the lives of 
individual children and youth, but also for ensuring the health and 
viability of public and mixed-income communities. If youth engagement 
strategies are successful, they can reduce critical neighborhood 
problems such as vandalism, drug trafficking, fighting, and gang 
activity--the disorder and violence that have considerable impact on 
other residents and can drive away other residents. The Urban 
Institute's new, multisite HOST (Housing Opportunities and Services 
Together) Demonstration builds on lessons learned from our earlier 
research in Chicago. Launched in December 2010, HOST is testing 
innovative, two-generation service models to improve the life chances 
of vulnerable low-income families living in public and mixed-income 
housing communities. At its core, the demonstration aims to address 
parents' key barriers to self-sufficiency--such as poor physical and 
mental health, addictions, low levels of literacy, lack of a high 
school diploma, and historically weak connection to the labor force--
while simultaneously integrating services and supports for children and 
youth. HOST is currently being implemented in three carefully selected 
sites in variety of settings--from those serving high need populations 
in traditional public housing located in high poverty neighborhoods to 
populations in newly developed mixed-income neighborhoods. The three 
participating housing authorities and sites are: 1) Chicago Housing 
Authority, Altgeld Gardens; 2) Home Forward (Formerly the Housing 
Authority of Portland), New Columbia and Humboldt Gardens mixed-income 
developments; and the District of Columbia Housing Authority, Benning 
Terrace. The New York City Housing Authority is also planning on 
joining the demonstration, and will likely plan to serve families in 
the Brownsville community.
    During its 2-year implementation, the HOST Demonstration will 
identify strategies and services that help the families at greatest 
risk and offer the best potential for strengthening the community. This 
information will inform the Federal Government's multiagency 
Neighborhood Revitalization Initiative, which encompasses the 
Department of Housing and Urban Development's Choice Neighborhood 
program, the Department of Education's Promise Neighborhoods program, 
and the Department of Justice's Byrne Criminal Justice Innovation 
program. Looking forward, HOST will help answer critical questions 
about what works for whom and provide important insight into how local 
communities implement similar dual-generation models to improve the 
life chances of their most vulnerable children and families.
Incorporating Services into Comprehensive Community Initiatives
    Incorporating intensive case management and permanent supportive 
housing for the most vulnerable residents into Choice Neighborhoods and 
any other comprehensive redevelopment efforts is one way to ensure that 
these initiatives truly meet the needs of all public housing families. 
The Choice Neighborhoods initiative builds on the successes of HOPE VI 
and broadens the scope of revitalization efforts beyond public housing 
to the surrounding community, including schools and other types of 
housing. However, if this new effort is to be more successful than its 
predecessor in improving the lives--and long-term life chances--of the 
vulnerable families who suffered the worst consequences of living in 
distressed public housing, it is essential that it incorporate 
strategies that effectively address their needs (Popkin and Cunningham 
2009). None of these solutions are simple, and all will require a long-
term commitment to improving the quality of life for these households, 
and ensuring better futures for their children.

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    J. Price. 2010. ``The CHA's Plan for Transformation: How Have 
    Residents Fared?'' CHA Families and the Plan for Transformation 
    Overview Brief. Washington, DC: The Urban Institute.
Popkin, Susan J., Bruce Katz, Mary K. Cunningham, Karen D. Brown, 
    Jeremy Gustafson, and Margery Austin Turner. 2004. A Decade of HOPE 
    VI: Research Findings and Policy Challenges. Washington, DC: The 
    Urban Institute.
Price, David, and Susan J. Popkin. 2010. ``The Health Crisis for CHA 
    Families.'' CHA Families and the Plan for Transformation Brief 5. 
    Washington, DC: The Urban Institute.
Sanbotmutsu, Lisa, Jens Ludwig, Lawrence F. Katz, Lisa A. Gennetian, 
    Greg J. Duncan, Ronald C. Kessler, Emma Adam, Thomas W. McDade, and 
    Stacy Tessler Lindau. 2011. Moving to Opportunity for Fair Housing 
    Demonstration Program: Final Impacts Evaluation. Cambridge, MA: 
    National Bureau of Economic Research.
Theodos, Brett, and Joe Parilla. 2010. ``Assessing Relocating 
    Counseling for Vulnerable Public Housing Families.'' Supporting 
    Vulnerable Public Housing Families Brief 5. Washington, DC: The 
    Urban Institute.
Theodos, Brett, Susan J. Popkin, Joe Parilla, and Liza Getsinger. 
    Forthcoming. ``Linking Services with Needs: A Typology of Public 
    Housing Residents. Social Service Review.
                                 ______
                                 
            PREPARED STATEMENT OF ANTHONY B. SANDERS, Ph.D.
                   Distinguished Professor of Finance
              George Mason University School of Management
                             March 27, 2012
    Senator Menendez and distinguished Members of the Committee, my 
name is Dr. Anthony B. Sanders and I am the Distinguished Professor of 
Finance at George Mason and a Senior Scholar at the Mercatus Center. It 
is an honor to testify before this Committee today.
    I am here to discuss a proposed Senate bill: S. 624, the Choice 
Neighborhoods Bill.\1\ The Bill calls for $350 million in 2012 for 
competitive grants to revitalize distressed neighborhoods.
---------------------------------------------------------------------------
    \1\ http://confoundedinterest.files.wordpress.com/2012/02/choice-
neighborhoods-bill-as-introduced.pdf.
---------------------------------------------------------------------------
    Three-hundred-fifty million dollars spread over the United States 
for distressed neighborhoods is a drop in the bucket. Bear in mind that 
Stanford University recently built a business school campus for $345 
million.\2\
---------------------------------------------------------------------------
    \2\ Stanford Graduate School of Business, ``Stanford Graduate 
School of Business Launches New Knight Management Center to Enable 
Innovative Curriculum and Engage Students Across University,'' April 
15, 2011, http://www.gsb.stanford.edu/news/headlines/knightmanagement
centeropens.html.
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    This Bill is a revision of the HOPE VI program that was less than a 
success.\3\, \4\ As of June 1, 2010 there have been 254 HOPE VI 
revitalization grants awarded to 132 housing authorities since 1993-
totaling more than $6.1 billion.
---------------------------------------------------------------------------
    \3\ U.S. Department of Housing and Urban Development Web site, 
``HOPE VI,'' http://portal.hud.gov/hudportal/HUD?src=/program_offices/
public_indian_housing/programs/ph/hope6.
    \4\ Carlos A. Manjarrez, Susan J. Popkin, and Elizabeth Guernsey, 
``Poor Health: Adding Insult to Injury for HOPE VI Families,'' 
Metropolitan Housing and Communities Center, June 5, 2007, http://
www.hartfordinfo.org/Issues/wsd/Housing/gblock/HOPEVI_Health.pdf.
---------------------------------------------------------------------------
    And yet Detroit, Cleveland, and many other inner cities continue to 
suffer.
    What are the changes to HOPE VI that give us hope that it will 
help? These changes are supported by housing advocates, private 
developers, HUD, and numerous community groups listed below.
    What are the changes to HOPE VI that give them hope?

    Expands eligible properties to privately owned and managed 
        but severely distressed HUD-assisted housing, that serves as 
        affordable housing for an extended period of time;

    Expands eligible applicants to include local governments, 
        nonprofits, and for-profit developers to apply jointly with a 
        public entity such as a Public Housing Authority;

    Ensures coordination and efficient use of resources by 
        requiring transformation plans to address not only housing, but 
        jobs, supportive services, economic development, education, 
        recreation, and transportation;

    Allows conversion of vacant or foreclosed properties to 
        affordable housing as an eligible project, which addresses the 
        foreclosed and vacant homes plaguing many communities;

    HUD had $265M for this work in 2010 and currently has $165M 
        available in 2011. The bill would authorize the Choice 
        Neighborhoods Initiative at $350M as a full replacement for 
        HOPE VI.

    This is another move toward private-public partnerships like we 
have with Fannie Mae and Freddie Mac, the mortgage giants in 
conservatorship. Private-public partnerships sound like a ``free 
market'' solution, but they are not. In 2010, the grant recipients were 
housing authorities where $22 million per development was common.\5\ 
Now the idea is to open up the grants for nonprofits and for-profit 
developers to join hands with public housing authorities to deliver the 
same public housing solution that has been a failure for decades.
---------------------------------------------------------------------------
    \5\ U.S. Department of Housing and Urban Development Web site, ``FY 
2010 HOPE VI Revitalization Grant Awards,'' http://portal.hud.gov/
hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/
hope6/fy10awardees.
---------------------------------------------------------------------------
    After billions of dollars have been spent, Hope VI and this bill 
should focus on a better way to help the poor rather than ``a lick of 
paint'' approach public housing. After all, $350 million is a drop in 
the proverbial bucket.
A Better Way
    The Senate and the House have taken an important step recently in 
terms of trying to unshackle the free market and encourage job 
creation. Job creation is important to solving the problems of our 
lower-income households, allowing them to possibly escape public 
housing.
    But not everyone will be able to escape public housing. While our 
public housing is far better than many other countries: a visit to 
various public housing projects will convince you that improvements in 
public housing are still needed.
    The Administration and Congress have set aside staggering amounts 
of money for housing and mortgage programs already. HAMP, HARP 2.0, the 
Attorney General Settlement of $25 billion, the proposed FHA Refi 
program from President Obama's 2012 State of the Union Address, HUD's 
2012 Budget of $47,199,000,000,\6\ and the losses of Fannie Mae and 
Freddie Mac to taxpayers of $160 billion puts the amount thrown at 
housing by various government entities at over $230 billion in recent 
years.
---------------------------------------------------------------------------
    \6\ U.S. Department of Housing and Urban Development Web site, ``FY 
2012 Budget Summary,'' February 2011, http://portal.hud.gov/hudportal/
documents/huddoc?id=fy2012budget.pdf.
---------------------------------------------------------------------------
    Department of Housing and Urban Development Secretary Shaun Donovan 
is an advocate of improving the quality of housing projects in the 
Nation. But why can't HUD find $350 million in their $47.2 billion 
budget through effective budget management? Does HUD not deem Choice 
Neighborhoods Initiative important enough to fund in its own budget?
    A better way to help solve the problem is to unleash the free 
market on housing. Taking a page from the President Reagan (and 
Democratic majority) playbook, we should use fiscal policy to increase 
the supply of clean, affordable housing by offering accelerated 
depreciation deductions on multifamily housing. This will increase the 
supply of housing without having to go through housing authorities and 
not-for-profits.
    The Reagan/Democratic Congressional approach (also known as the 
Kemp-Roth ``Economic Recovery Tax Act of 1981'' (Pub.L. 97-34)\7\ was 
to increase depreciation deductions on multifamily housing using the 
Accelerated Cost Recovery System (ACRS).\8\ Under this legislation, all 
property was depreciable for tax purposes over 15 year and for low-
income housing, 200 percent declining balance depreciation was 
available. Furthermore, rehabilitation expenditures for low-income 
housing could be amortized over 5 years. The Act worked so well that it 
was amended in 1986 with the 1986 tax act.
---------------------------------------------------------------------------
    \7\ U.S. Congress Joint Committee on Taxation, ``General 
Explanation Of The Economic Recovery Tax Act of 1981, (H.R. 4242, 97th 
Congress, Public Law 97-34),'' December 31, 1981, http://www.jct.gov/
publications.html?func=startdown&id=2397.
    \8\  Karl Case, ``Investors, Developers, and Supply Side Subsidies: 
How Much is Enough?'' Housing Policy Debate 2 no. 2 (1991), http://
www.wellesley.edu/Economics/case/PDFs/InvestorsDevelopers.apr1991.pdf; 
and James Poterba, ``Tax Reform and Housing Market in the Late 1980s: 
Who Knew What, and When Did They Know It?'' Federal Reserve Bank of 
Boston Conference Series (1992), http://www.bos.frb.org/economic/conf/
conf36/conf36g.pdf.
---------------------------------------------------------------------------
    We could once again use fiscal policy to help solve the public 
housing problem. I would prefer this solution to the ``lick of paint'' 
approach to revitalizing distressed neighborhoods.
    To be sure, such legislation could create additional deficits, but 
the simulative effects to the economy and the distressed neighborhoods 
could be greater than the lost tax income received by the Federal 
Government.
    Recently, Bank of America announced a ``Mortgage to Lease'' trial 
program.\9\ To avoid foreclosure and yet another property going to Real 
Estate Owned (REO) and out in the already flooded housing market, this 
proposal from Bank of America will keep homeowners in their current 
home but switch them to renters. It is a way to stabilize neighborhoods 
hit by the foreclosure crisis and curtail neighborhood blight by 
keeping a portion of distressed properties off the market.
---------------------------------------------------------------------------
    \9\ Anthony B. Sanders, ``Private Market Solution to Foreclosure: 
Bank of America's Lease Alternative to Foreclosure,'' Confounded 
Interest blog, 22 March 2012, http://confoundedinterest.wordpress.com/
2012/03/22/private-market-solution-to-foreclosure-bank-of-americas-
lease-alternative-to-foreclosure/.
---------------------------------------------------------------------------
    Between stimulating the construction and rehab or public housing 
and initiatives like Bank of America's ``Mortgage to Lease'' trial 
program, we now see better potential to fix the problems of public 
housing.
    Thank you for the opportunity to testify.
                                 ______
                                 
                  PREPARED STATEMENT OF PAUL N. WEECH
         Executive Vice President, Policy and Member Engagement
                       Housing Partnership Network
                             March 27, 2012
    Chairman Menendez, Ranking Member DeMint, and Members of the 
Housing Subcommittee: Thank you so much for inviting me to testify 
today. I am honored to be with you to discuss the Choice Neighborhoods 
Initiative and to represent the Housing Partnership Network.
About the Housing Partnership Network
    The Housing Partnership Network is a member-driven collaborative of 
99 entrepreneurial nonprofits that build, manage, and finance 
affordable housing. Our members include mission-driven lenders, housing 
developers, property owners and managers, and housing counselors--all 
of whom are managing their enterprises based on good business practices 
while at the same time working to provide their residents with decent, 
affordable places to live in healthy and sustainable communities.
    Through peer-to-peer exchanges organized by the Network, our 
members come together to share best practices, create innovative 
solutions to housing and community development challenges, and launch 
collaborative businesses that enhance their sustainability and impact.
    Our members are domiciled in 32 different States and in the 
District of Columbia. HPN members operate over large geographic areas--
at least on a citywide basis, but more often on a regional, State-wide, 
multistate, or even a national footprint. The membership has operations 
in all 50 States.
    In the Chairman's State of New Jersey we are very pleased to count 
the New Communities Corporation (NCC) as a member. Founded in 1967 
after the Newark civil disorders, NCC is--like most of the members of 
the Housing Partnership Network--among the more comprehensive and the 
larger community development organizations in the United States. NCC 
has developed and financed 3,000 housing units serving 7,000 residents 
in Newark, Jersey City, and Orange. NCC provides day care, alternative 
education, social services, job training, employment services, and 
health care to residents of the Newark area. A list of all the HPN 
members is included in this testimony as Attachment A.
    These strong nonprofit organizations are critical institutions at 
the center of affordable housing and community development efforts in 
many areas of the country. Their combination of mission focus and 
business discipline brings a new capacity to deal with longstanding 
neighborhood needs. They are, in effect, small- and medium-sized 
businesses. HPN members succeed because they are skilled in creating 
effective partnerships with State and local governments, private sector 
actors, financial institutions, and the civic leaders in the 
communities where they operate. They have demonstrated experience as 
effective stewards of public resources and as entrepreneurial actors 
capable of magnifying the community impact of public funds by using 
these to leverage private resources. These organizations demonstrate 
that there are economies of scale in this work and they bring financial 
strength through the diversification of their revenues.
    Collectively, the 99 HPN members have developed or preserved more 
than 230,000 affordable homes, financed more than 420,000 homes, and 
counseled more than 600,000 families. As a group, the Network members 
have over 13,000 employees and nearly a $1 billion in annual revenues. 
We estimate that the value of the housing developed or financed by the 
membership since 1980 exceeds $67 billion.The point of the statistics 
is that the members of HPN are sophisticated, high-capacity social 
enterprises with long records of accomplishment in affordable housing 
and community development.
Support for S. 624 and the Choice Neighborhoods Approach
    On behalf of this group of organizations, Mr. Chairman, I am here 
to strongly endorse Senate bill 624, The Choice Neighborhood 
Initiatives Act of 2011. I urge the Committee to report this 
legislation to the full Senate at its earliest possible opportunity. I 
am testifying today for the Network, but would also like to acknowledge 
the good work and leadership of the Choice Neighborhoods Coalition of 
which we are a member. I attach the Coalition's letter to the Senate 
Banking Committee in support of the Choice Neighborhoods program in the 
hope that it can also be included in the record with this testimony 
(See Attachment B).
    The Choice Neighborhoods program builds on the long record of 
success of the HOPE VI program. I was here on the Senate Banking 
Committee staff when HOPE VI was launched. The program has had a long 
and successful run providing local communities with the resources 
required not just to renovate and rehabilitate distressed residential 
real estate, but to actually transform communities where both the 
physical and social systems were not working effectively before the 
public investment. With the application of HOPE VI grants, highly 
distressed, dysfunctional public housing high-rise communities were 
transformed into sustainable mixed-income communities where low-income 
and middle-income families could live together and the surrounding 
landscape was transformed from one of blight and decay to one that 
encourages additional private investment. The positive changes that 
occurred in community after community around the country as a result of 
the HOPE VI effort are visible in hundreds of before and after photos.
    The Choice Neighborhoods Initiative builds on the HOPE VI record of 
success but also introduces three important changes that we strongly 
endorse. Most importantly, Choice Neighborhoods expands the focus of 
the program beyond just public housing developments to include equally 
distressed properties under nonpublic ownership. In too many 
communities, distressed privately owned HUD-assisted housing resides 
side-by-side with the distressed public housing inventory. While we are 
entirely sympathetic to the underfunded capital needs of the public 
housing inventory and support a variety of strategies to address this 
challenge, the insight of Choice Neighborhoods is that whether the 
distressed real estate is publicly owned or privately owned, it has the 
same negative effects on the people who live in those properties and 
those who live in the communities surrounding those properties. Local 
governments struggling to combat the infection of blight and spiraling 
disinvestment need a tool to reposition this distressed real estate or 
the community assets will remain blighted, undervalued, a drain on the 
community, and a contributor to poor social outcomes.
    The second important innovation is that Choice Neighborhoods builds 
on HOPE VI by allowing local governments, nonprofits, and for-profit 
developers (in conjunction with the local government) to step into a 
lead development role where previously the lead grantee role on HOPE VI 
efforts was the sole province of public housing agencies. This is an 
important breakthrough. As outlined above there is now within the 
affordable housing delivery system a solid and growing set of highly 
competent nonprofit institutions capable of not only leading 
complicated, multi-sourced, multi-outcome developments, but in many 
places providing the Federal and/or local government with a 
redevelopment leadership option that has the potential to provide 
greater positive outcomes for the community. A strong nonprofit 
developer is mission-aligned with the public sector and can often bring 
skills and flexibility not available to the public actors. At the same 
time, like for-profit development entities, these organizations bring 
business-like approaches and the ability to work with and leverage 
private capital. As the Choice Neighborhoods program evolves we would 
like the government to embrace a more open competition for the 
resources where developments and development plans are selected based 
on the strength and track record of the counterparties and their 
ability to deliver on positive, measurable social and real estate 
outcomes on behalf of the residents and the broader community. 
Competition should lead to better outcomes. In practice, many HOPE VI 
redevelopments were the result of successful public/private/not-for-
profit partnerships. The Choice Neighborhoods program going forward 
should continue to encourage these types of partnerships to flourish 
where each party brings value and expertise that translates into better 
outcomes for the residents and the community.
    Finally, the Choice Neighborhoods approach advances on the HOPE VI 
model by requiring and promoting even greater linkages and synergies 
between the redevelopment effort and other public systems that make a 
community successful and increase opportunities for low-income 
residents. A successful community includes good schools, accessible 
health care, basic retail services like healthy grocery stores, access 
to jobs or access to transportation that connects residents to jobs, 
and strong support services for the individuals in the community who 
need these services. HOPE VI recognized that the revitalization of 
distressed public housing with high concentrations of poverty required 
services for needy families; Choice Neighborhoods goes further to 
advance new connections--especially with its efforts to create linkages 
to good schools, educational opportunities, and health care. The 
Administration deserves significant credit in its implementation of the 
Choice Neighborhoods program in its work to break down the silos that 
divide Federal agencies. This is a huge challenge and a place where 
Congress could do much to support for these efforts.
    There are hundreds of good Choice Neighborhoods projects already 
under consideration. In the FY 2010 and FY 2011 funding rounds, HUD 
received 236 applications from public, private, and nonprofit sponsors 
in 37 States, the District of Columbia, Puerto Rico, and the Virgin 
Island. From these, HUD has so far selected 5 proposals for 
implementation grants and 30 for planning grants.
The Network's Practitioner-Based Experience with Choice Neighborhoods
    The collective experience of HPN members reflects the evolution of 
affordable housing policy in this country. Over the past 25 years we 
have learned a great deal about what successful affordable housing does 
for its residents and the communities in which it is located. Poorly 
managed housing is associated with decay and other undesirable social 
outcomes. Decent, well-managed affordable housing is the platform for a 
wider array of positive social outcomes. Successful housing is housing 
that contributes to the success of its residents: this means linkages 
to jobs, services, health care, education, and the broader community. 
Housing that serves residents of different incomes often works better 
than housing that increases concentrations of poverty. Choice 
Neighborhoods embodies this learning and advances it.
    Nearly all Housing Partnership Network members are engaged in the 
spirit of the Choice Neighborhoods agenda through the work they carry 
out every day. Our multifamily housing developers are not only 
providing high quality affordable places to live for low-income seniors 
and families, but are working to link those families to health services 
for seniors, after-school programs for kids, and job preparedness 
services for heads of households.
    Our Community Development Financial Institution (CDFIs) members, in 
particular, are providing the financing and capital across a spectrum 
of community development activities as part of successful community 
revitalization efforts. In addition to financing affordable housing 
development, CDFIs in the Network are providing innovative financing to 
community facilities like senior centers, loans to child care 
facilities that allow the parents of pre-school kids to go to work, 
charter schools that are advancing educational opportunities, community 
health care facilities providing accessible, lower-cost services, and 
investments to link communities to transit.
    The Housing Partnership Network would be remiss if it did not 
recognize the Chairman's strong leadership in supporting the CDFI 
industry and especially his work in sponsoring the CDFI Bond Guarantee 
program. The Bond Guarantee program has the potential to revolutionize 
the scale and impact of the organizations working so hard to revitalize 
America's low-income communities by providing long-term patient 
capital. We would like to continue to work with you and your staff to 
achieve the successful launch of the CDFI Bond Guarantee program.
    Several Housing Partnership Network members are already active 
participants in the Choice Neighborhoods effort. Preservation of 
Affordable Housing, Inc. (POAH) was the winner of one of the first 
implementation grants. POAH received a grant to transform the 504-unit 
Grove Parc Plaza Apartments in Chicago into Woodlawn Park, a new mixed-
income, mixed-use development that will be the anchor for a 
comprehensive Woodlawn revitalization. With its $30.5 million Choice 
Neighborhoods grant, POAH expects to leverage $272 million of total 
development in the area over the next 5 years. The city of Chicago is a 
key partner in the project's implementation and many other community 
organizations will also participate including the Woodlawn Children's 
Promise Community (WCPC), the Woodlawn New Communities Program, and 
Metropolitan Family Services.
    The POAH plan highlights both the capacity of this strong, 
national, nonprofit developer to lead a complex development process as 
well as the ability of the Choice Neighborhood Grants to catalyze a 
major change in a community. Through the process, POAH will demolish 
the existing, distressed apartment complex and replace it with a 
healthier mixed-use, mixed-income community with 420 units and 95,000 
square feet of retail and community space. All of the affordable units 
in the original buildings will be replaced 1-for-1 through investments 
in other properties in the surrounding neighborhoods, in some cases 
repositioning foreclosed and abandoned properties to create an 
additional 575 units of mixed-income dwellings.
    WCPC and the Urban Educations Institute have designed a 
comprehensive educational initiative designed to improve access and 
outcomes from early childhood through college, for all Woodlawn 
children. A new, 15,000 square foot community resource center at the 
heart of the development will feature a satellite Center for Working 
Families, providing tailored skill-building and job connections to 
residents. And, the project will implement a gang violence initiative 
that incorporates a range of data-tested anti-gang enforcement 
strategies--including more intensive community policing and 
coordination with community watch block clubs and parent school 
patrols.
    I should also note that an HPN CDFI member, the Low Income 
Investment Fund (LIIF), CDFI has provided a loan to POAH in support of 
the Woodlawn redevelopment financing package.
    HPN members are also leading or participating in Choice 
Neighborhoods planning grants. The Community Action Project of Tulsa 
County, Inc. (CAP), for example, received a round one Choice 
Neighborhoods planning grant as the lead developer. CAP has partnered 
with Brightwaters Housing Partners and McCormack Baron Salazar to 
revitalize the Eugene Field neighborhood of Tulsa, Oklahoma. The Eugene 
Field neighborhood is one of Tulsa's poorest and most isolated 
communities. It has experienced a violent crime rate more than double 
the rest of the city. The Brightwaters Apartments in the neighborhood 
is a 200-unit HUD-assisted property. In addition to redeveloping this 
property, the local effort will leverage existing volunteer-led 
activity in the community with a state-of-the-art preschool, a fresh 
foods market, and a new playground. The project is expected to move 
Brightwaters toward a mixed-income development and include expanded CAP 
efforts to link the residents of the community to supportive services 
and job opportunities.
    Columbus, Ohio-based National Church Residences (NCR), a national 
nonprofit that owns and manages 20,000 units in 28 States, is a key 
partner and co-grantee in a project led by the Columbus Metropolitan 
Housing Authority that also includes Ohio State University and the city 
of Columbus. Their project would redevelop a 26-acre site known as 
Poindexter Village as well as the surrounding neighborhood. Omni 
Development in Providence, Rhode Island is participating as a key 
partner to the Providence Housing Authority in a planning grant around 
a proposed redevelopment of the Olneyville neighborhood. The Community 
Preservation and Development Corporation (CPDC) in Washington, DC is a 
partner on a planning grant awarded to the District of Columbia Housing 
Authority, Kenilworth Courts, and the Kenilworth-Parkside Resident 
Management Corporation. CPDC owns and manages the Mayfair apartment 
complex which is an anchor asset in the community targeted for 
revitalization.
Policy Observations and Proposals
    This practitioner-based experience serves to inform the suggestions 
we would make to this Subcommittee as you move to mark up the Choice 
Neighborhoods legislation. We would like to make these comments for 
your consideration:

    1. Institutionalize the program. It is important to put an 
authorization in place. While the Choice Neighborhoods program is up 
and running already, this is due to the actions of the Appropriations 
Committee. We are hopeful that Congress will continue to advance this 
important work in future appropriations acts. However, an authorization 
would provide a more predictable framework for the program. Choice 
Neighborhoods implicates many long-standing, difficult public policy 
issues. Affordable housing program design is often about choosing 
between place-based and people-based strategies, about the sometimes 
competing desires to create mobility and choice for households to seek 
opportunity versus focusing on building communities of opportunity. 
Policy makers need to think through the challenges of balancing the 
positive impacts of new investment and regeneration on surrounding 
property values with the sometimes negative effects of rising rents and 
displacement through gentrification. These are all perennially 
challenging public policy issues reflecting competing values. The HUD 
program implementation is addressing these issues, but future 
policymakers will be tempted to revisit all of these issues and can do 
so more readily in the current legal environment. In short, the lack of 
a permanent authorization makes the future development environment 
uncertain.
    Real estate development requires extensive planning activities and 
a long lead time. Acquiring land or property and holding it is 
expensive. In the case of Choice Neighborhoods eligible efforts, the 
upfront costs will, of necessity, be elevated as partnerships across 
multiple disciplines are formed and formalized. Many HPN members--who 
are the types of organizations one would like involved in the 
development process as strong counterparties--have not stepped up to 
compete because of the uncertainty in program funding, lack of an 
authorization, and uncertain probability of success. When the program 
funding levels and its rules are institutionalized the strongest 
players in the not-for-profit sector will be more willing to absorb the 
upfront costs and take on the risks to compete. A predictable grant-
making process over multiple years will increase the strength of the 
applications. It is important for this Committee to put in place an 
authorization that provides more permanent guidance and a lasting 
authorization framework.

    2. Embrace the equivalency of publicly owned and privately owned 
distressed housing. Distressed housing has identical impacts on the 
people who live there and on the neighborhoods that surround that 
property. We would recommend that the Choice Neighborhoods program move 
toward a level competitive playing field unrelated to the ownership of 
the properties. With limited resources at the Federal level, Congress 
should set up the competition for Choice Neighborhoods grants devoid of 
set-asides for one type of housing, or one type of developer versus 
another. Projects should compete head to head for the public resources 
based on the strength and experience of the lead development 
counterparty, on the quality of the cross-silo partnerships committed 
to the development, on the leverage achieved in bringing in other 
nonpublic resources, and on the quality, assurance, and effectiveness 
of the intervention on the lives of the residents living in these 
communities. The competition for the resources will allow the very best 
projects to rise to the top and the Federal Government will maximize 
the social return on its public investments.

    3. Continue to Encourage Multi-disciplinary Approaches. It is 
important that Choice Neighborhoods legislation continue to push for a 
more holistic approach to community development at the local level. The 
central challenge with Choice Neighborhoods is how to use HUD funding 
for a specific real estate transaction to drive a much broader program 
of community change. The legislation deals with this challenge by using 
HUD funding for housing redevelopment and allowing a certain amount of 
the grant to pay for community improvements and services as an 
incentive for localities to bring other funding such as transportation, 
job training, or school construction. Federal officials must also be 
encouraged to act in a multi-disciplinary manner. Resources from the 
various relevant Federal programs have different rules, different 
timing, and different institutional delivery systems that serve as a 
barrier to local leaders accumulating the funds need to address the 
range of needs in a particular place. There are reasons for all of the 
different program requirements. This is not something that can be 
solved quickly or easily. The Administration deserves great credit for 
its work to break down the programmatic silos across the range of 
relevant Federal agencies. For example, under Secretary Donovan's 
leadership, HUD has been working closely with the Department of 
Transportation on coordinating housing and transportation policy. More 
can be done by Congress to encourage and facilitate the coordinated 
delivery of Choice Neighborhoods with other Federal resources.

    4. Assure Adequate Funding for Both Choice Neighborhoods and Other 
Core Affordable Housing Programs. Within the Housing Partnership 
Network there is a significant concern that the increasingly 
constrained Federal discretionary appropriations picture is pitting 
funding for one Federal housing program against another. This is felt 
most keenly through the pressure on critical affordable housing tools 
like the HOME program and the project-based Section 8 accounts. Both 
programs are essential in the production and preservation of affordable 
housing in this country. HOME is a very important and successful block 
grant program, providing gap funds that allow development and 
preservation projects to move forward. HOME has been wrongly maligned 
in the press recently and as a result has suffered some serious cuts in 
the appropriations process. We are also working with Congress to 
restore the HOME funds and to fully fund the Section 8 program.
    In this era of hard caps on appropriations, some perceive that 
funding for Choice Neighborhoods could come at the expense of funding 
for core programs like HOME and Section 8. This is a false and 
unfortunate choice. Each of the programs addresses a different, yet 
critical need. We need to identify sufficient funds to do both.
Conclusion
    In closing, Mr. Chairman and Members of this Subcommittee, I would 
like to reiterate how important the work you are doing is for America's 
urban, suburban, and rural communities. In all kinds of places, 
federally assisted properties that have fallen into distress for any of 
a variety of reasons--the natural aging of the asset, inadequate 
funding, over-leveraging, a change in market conditions, a change in 
tenancy, and poor property management. Whatever the cause, these 
properties have had a negative effect on their residents and the 
surrounding communities. The presence of these properties is pulling 
down values for blocks and sometimes miles around. The blight at the 
center of the neighborhood can keep people from buying homes nearby and 
can prevent new investment coming in. A public investment like Choice 
Neighborhoods can change the negative market dynamic and send the 
property, the community, and most importantly the lives of the people 
who live there on a new positive upward trajectory. Thank you.

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                PREPARED STATEMENT OF EGBERT L.J. PERRY
                  Chairman and Chief Executive Officer
                         The Integral Group LLC
                             March 27, 2012
    Good morning Chairman Menendez and Members of the Subcommittee. My 
name is Egbert Perry. I am Chairman and Chief Executive Office of The 
Integral Group LLC, a private, for-profit real estate firm focused on 
implementing urban development projects nationally. I am honored to 
have the opportunity to come before you this morning to give you my 
testimony in support of ``The Choice Neighborhood Initiative: A New 
Community Development Model.'' This initiative would help to transform 
distressed neighborhoods and public and assisted projects into viable 
and sustainable mixed-income neighborhoods by linking housing 
improvements with appropriate services, schools, public assets, 
transportation, and access to jobs. My support comes not only as a 
result of my appreciation for the obvious public policy case that 
underpins the proposed legislation, but also from my experience as a 
practitioner in the private development marketplace.
INTRODUCTION
    Integral is a 20-year-old firm, headquartered in Atlanta, Georgia. 
During that period, we have undertaken projects in many cities across 
the country, including Washington, DC, Baltimore and Atlanta.
    Unlike many real estate companies, our firm undertakes both a) 
conventional (commercial) real estate development and b) community 
development. As we all are aware, commercial real estate development is 
``transactional'' and, therefore, focused almost entirely on providing 
maximum economic returns to the investors and developers from the 
transaction in question.
    On the other hand, our community development approach seeks to be 
``transformational'' with respect to the building of communities. Like 
some of the other community developers, we come to this work with a 
commitment to transformation, while simultaneously seeking to achieve a 
reasonable profit. In order to transform, rebuild or revitalize 
communities, our core strategy is designed to leverage resources to 
restore the functioning of normal market forces, thereby minimizing the 
ongoing dependence on public funding to sustain the communities. This 
public-private partnership model is critical to successful community 
development initiatives, and the public dollars must be positioned to 
leverage private resources and private investment. Since the private 
sector partners in these undertakings are expected to bear the 
guarantee and market risks, they must be able to manage and mitigate 
their risk, without ignoring the public policy priorities. Accordingly, 
there are several metrics that we use to measure success. They include:

  1.  Solid economic returns on invested equity;

  2.  Positive economic and social outcomes for the community 
        residents;

  3.  Positive economic development impact on surrounding/adjacent 
        communities; and

  4.  Positive economic impact on the local political jurisdictions 
        (i.e., City, County and State).
BACKGROUND
    It is this multi-faceted solution that the very best HOPE VI 
developments tried to achieve over the past 15 years. The Choice 
Neighborhood Initiative (``Choice'') improves on the lessons learned 
from HOPE VI and provides a path forward for achieving greater and more 
long lasting positive outcomes, by making some ``nice to haves'' under 
HOPE VI (such as linkages to education, working through nonpublic 
housing authorities, etc.) essential elements of the more 
``integrated'' Choice program. In time, the success of this program 
should be reflected in a consistently higher level of quality in the 
development solutions that are produced under Choice.
    Our firm has been involved in the development of over 10 HOPE VI 
developments nationally, as well as other affordable, non-HOPE VI 
developments. This has helped me appreciate the potential benefits that 
Choice offers by reflecting on Centennial Place, the nation's first 
HOPE VI development. Coincidentally, it was developed on the site of 
the nation's first public housing project, Techwood Homes, and an 
adjacent public housing project known as Clark Howell Homes. Centennial 
Place was implemented by a public-private partnership that included The 
Integral Partnership of Atlanta, a joint venture between The Integral 
Group and McCormack Baron & Associates another private developer, and 
the Atlanta Housing Authority.
    At the time of our engagement in 1994, the 60-acre property 
contained 1,081 severely distressed public housing units, 674 of which 
were occupied by households that had an average annual household income 
of $4,300. The remaining units were vacant and uninhabitable. Captive 
to the property was an elementary school that was the second poorest 
performing elementary school in the Atlanta Public School system 
(``APS''). APS was ranked near the bottom of school districts in a 
State that was ranked 49th in the country. At the time, the crime rate 
at Techwood/Clark Howell Homes was 35 times the average rate for 
violent crimes across Atlanta, which according to law enforcement 
reports was one of the most dangerous cities in America. Suffice it to 
say that, like many others, this site of concentrated poverty was a 
ripe breeding ground for producing young people that could never 
successfully compete at home or in this globalizing society. Over 50 
percent of the residents of the projects were children and 
approximately 25 percent were senior citizens. Working adults were 
nearly non-existent despite the employment opportunities that existed 
down the street at Georgia Tech.
    The vision that we conceived for the new community that we would 
eventually create sought to answer one basic question: Is it possible 
to create a mixed-income (subsidized and market rate) community on the 
site such that people of reasonable means would choose to live there? 
We answered in the affirmative and set out to do so. At the outset, our 
public-private partnership adopted five strategic goals that addressed 
the public policy priorities, while employing sound private business 
principles as the foundation for planning and implementing the vision, 
as follows:

  1.  Leverage the Federal resources by attracting considerable local 
        public resources, private philanthropic funds, as well as 
        private debt and equity capital, to finance, develop and manage 
        a new mixed-income community that would be healthy and 
        sustainable over the long term.

  2.  Ensure that the development efforts positively impacted an area 
        that was significantly broader that the primary 60-acre site.

  3.  Pursue a strategy to mainstream the public housing residents into 
        the broader community, while providing counseling and other 
        program support to help them in their transition toward self-
        sufficiency.

  4.  Build the human transformation efforts on a foundation of 
        education, job training and employment.

  5.  Assist the Atlanta Housing Authority in achieving its own 
        economic sustainability by generating additional sources of 
        income to complement the shrinking Federal funding.

    Centennial Place, the new community that was eventually created on 
the site, contains the following components:

  1.  Mixed-income residential development, comprised of 738 multi-
        family rental units and 45 homeownership units with a mix of 
        public housing assisted households (40 percent), other low-
        income households (20 percent) and market rate households (40 
        percent); These components were financed using a combination of 
        Federal funds, private equity and private debt. Infrastructure 
        improvements (i.e., upgrades to roads, sewers, etc.) were 
        funded using previously allocated Federal resources, tax-exempt 
        bonds and direct water, sewer and transportation allocations 
        from the capital budgets of the city of Atlanta.

  2.  A complement of coaching and counseling services delivered to 
        youth, young adults and seniors in assisted households to 
        facilitate the transition to self-sufficiency.

  3.  Two early childhood development centers, operated by established 
        service providers, and funded by private philanthropy; These 
        centers offer crib to kindergarten development services to all 
        families;

  4.  A new high performing public school offering a Math, Science and 
        Technology theme, as well as an Arts program; This school 
        represents a collaboration between the private developer, AHA, 
        the school system and Georgia Institute of Technology (Georgia 
        Tech).

  5.  A Family YMCA, funded primarily from private philanthropy, and 
        operated by the Metro Atlanta YMCA. In addition to some private 
        foundations, the YMCA enjoys the support of a number of anchor 
        institutions that call the neighborhood home.

  6.  Miscellaneous retail and other complementary uses that help to 
        provide a quality of life experience;

The results have been extremely positive.

  1.  The presence of the high-performing elementary school has 
        supported the motto that great schools are essential to create 
        for a great middle class neighborhood. There has been an 
        increase in the demand for housing in the school's zone, and 
        the outlook for real estate values is positive. For the first 
        time in recent decades, with Georgia Tech and Techwood Homes/
        Centennial Place as next-door neighbors, a student that grew up 
        on the 60-acre site has successfully matriculated to Georgia 
        Tech. In fact, many of the students that went to Centennial 
        Place Elementary School have since gone on to highly selective 
        colleges and universities, including Princeton, Michigan, the 
        schools at the Atlanta University Center and Howard.

  2.  The members of the families that lived in community before the 
        development, and were relocated, have seen significant 
        improvement in the circumstances of the families receiving 
        assistance, especially with respect to workforce participation 
        and educational attainment, as attested to by academic studies 
        conducted by Georgia Tech, Emory University and Georgia State 
        University. Further, the ones that exercised their choice to 
        live in Centennial Place saw even greater gains, particularly 
        due to the presence of the excellent quality of life 
        infrastructure (school, YMCA, etc.) that are now readily 
        available and accessible to them.

  3.  The significant reduction in the use and cost of public services 
        (police, fire, social services, etc.) in the zone in which this 
        site sits is well documented. The area's safety is now on a par 
        with safe neighborhoods throughout the city.

  4.  Extensive private development activity in the surrounding area 
        has taken place. Much of this development would not have taken 
        place if Centennial Place (which represented (a) a break from 
        the old model that concentrated poverty, (b) the introduction 
        of private sector involvement and market principles and (c) 
        higher expectations and standards for personal responsibility) 
        had not been created, or if some version of the old Techwood 
        Homes (even with a facelift) remained. Within a two block 
        distance south of the site, we have seen the development of the 
        $300 million Georgia Aquarium, the $200 million-plus World of 
        Coke Museum, the Children's Museum, and Allen Plaza, the one 
        million square foot mixed-use development of high rise office 
        buildings, hotels and condominiums. Other significant private 
        development projects have been announced, including the planned 
        National Center for Civil & Human Rights.

  5.  To the north, Georgia Tech has removed the physical and 
        psychological barriers that have separated it from its southern 
        neighbor for over 50 years. It is converting that corridor into 
        its gateway to the campus. To the west, Coca Cola is expanding 
        its headquarters and reaching out to the community, having made 
        significant financial and other commitments to the school.

  6.  The City and County have seen this very large tract of land 
        (including the project site) placed on the tax rolls and now 
        contributes to their tax base after decades of receiving no tax 
        revenues from these parcels.

  7.  In one of the ultimate signs of progress, the site and the census 
        tract in which it sits is no longer considered ``impacted'' and 
        eligible for the many public incentives for which those 
        development areas typically qualify.

In essence, most of the ingredients for economic sustainability are 
firmly in place.
WHY CHOICE?--THE CASE
    Thus, if the answer to the overarching question of--``Why the 
Choice Neighborhood Initiative?'' is not already obvious, it can be 
explained in the following way:

  1.  Choice is built around the recognition that solutions should be 
        developed locally and not at the Federal level.

  2.  By virtue of the eligibility criteria, Choice ensures that grants 
        are only awarded to those jurisdictions and communities in 
        which the spirit of collaboration has been well cultivated and 
        the critical planning and other ground work that results from 
        such collaboration is evident before funding support is 
        provided. This will surely reduce implementation timelines, 
        though revitalization projects are still time-consuming 
        undertakings.

  3.  Many of the critical community building components that were 
        discretionary under HOPE VI are mandatory under Choice. Those 
        components tend to be directed toward addressing the poor human 
        condition that exists in many of the targeted communities, and 
        which has been facilitated by public policy over decades.

  4.  Under Choice, there is a clear recognition that public housing 
        projects are not the only distressed developments where despair 
        and concentrations of social ills exist. In fact, in many 
        communities, some of the other subsidized developments are in 
        as bad a shape, or worse, than much of the public housing 
        stock. Those developments are often responsible for retarding 
        neighborhood recovery efforts. Appropriately, Choice offers 
        local communities a chance to leverage critical Federal 
        resources on a broader footprint, thereby expanding the 
        revitalization impacts.

  5.  Choice ensures that Federal funds are catalytic, and that the 
        local governments are the primary source of the public funds 
        necessary to address most of the infrastructure and service 
        challenges that must be confronted, especially as the 
        revitalization spreads to the surrounding neighborhood and 
        requires further public investment.

  6.  Choice encourages local jurisdictions to seek out the best 
        partners in the private sector to help conceive and implement 
        these very complex community development plans that require 
        attracting resources from private financial institutions.

  7.  The stimulus effect that Choice funds can have on expanding the 
        revitalization boundaries results in considerable temporary and 
        permanent jobs that will be generated.
CONCLUSION
    A minority of individuals has suggested that HOPE VI was not 
successful, and have gone even further to suggest that Choice is likely 
to yield the same results. Undoubtedly, they are measuring the wrong 
indicators or are not basing their judgment from observations on the 
ground. I strongly argue that:

  1.  Those individuals have not been talking to the many families 
        that, though initially skeptical, have found themselves 
        thriving after what proved to be a brief period outside of 
        their comfort zone. Though the last few years have adversely 
        impacted most families of all stripes, the financial condition 
        of the households that relocated from the housing projects has 
        improved dramatically since leaving the extreme concentration 
        of poverty in those old communities. Their children are 
        performing better in school and are more engaged generally.

  2.  They have not been talking to the local business communities that 
        now find opportunities for development and investment in large 
        swatches of the City that, heretofore, had been considered off 
        limits or undevelopable.

  3.  They have not been talking to families that are moving into the 
        neighborhoods because of the presence of a high-performing 
        school.

  4.  They have not been talking to the City and County governments 
        that have used HOPE VI projects to de-concentrate poverty, 
        resulting in the simultaneous reduction in the demand for 
        public services and the increase in the contribution to tax 
        revenues in those areas of the City where such developments 
        have been successfully undertaken, generally improving the 
        livability of the City.

  5.  They have not been talking to the public redevelopment agencies 
        that have been able to use their economic development tools to 
        drive and achieve meaningful community economic development 
        outcomes across the city by sponsoring the expansion of this 
        community development approach.

  6.  They have not been talking to the investors and lenders that find 
        these communities to be places where they are able to perform 
        responsible and profitable community investment and lending.

    The implementation of the Choice Neighborhood Initiative is not 
without risk, as it requires that the goals, objectives and funding of 
several Federal departments be aligned so that the aspirations 
articulated in Choice can be achieved. Those departments include 
Housing & Urban Development, Transportation, Education, Health & Human 
Services, among others. Ultimately, the community revitalization 
initiatives will be deemed successful when they remove the non-economic 
hurdles and re-engage the private development marketplace on the 
primary site and in the surrounding areas.
    It has been said that for every 1 percent increase in the high 
school graduation rate nationally, there is a $1 trillion increase in 
the country's GDP over the life of those graduates. The result of 
replacing broken and isolated communities in our country with healthy, 
nurturing, connected and sustainable communities that unleash more of 
our human potential should be near the top of our priorities if we are 
serious about regaining our global competitiveness.

              Additional Material Supplied for the Record

               PREPARED STATEMENT OF MITCHELL J. LANDRIEU
                 Mayor, City of New Orleans, Louisiana
                             March 27, 2012
    Chairman Menendez, on behalf of the citizens of New Orleans, I am 
honored to submit this written testimony for the Subcommittee's 
consideration affirming the value of the Choice Neighborhood Initiative 
and the transformational impact it will have on the City of New 
Orleans. Thank you for affording me this opportunity.
    The Choice Neighborhoods Initiative takes an inspired step toward 
the way we should build our cities and the way government should act at 
the local, State and Federal levels. By working from a place-based 
perspective informed by on-the-ground realities of people, New Orleans 
is coordinating and targeting responsive investments for tangible 
outcomes that benefit its citizens. My administration has adopted the 
principles of ``facilitate, link and leverage'' for all projects and 
programs--and that's exactly what the Choice Neighborhoods 
Implementation Grant will allow us to do in the Iberville/Treme 
Neighborhood.
    New Orleans has had significant history with Federal housing 
initiatives like HOPE VI, which transformed many of our public housing 
developments into new communities with their own unique character and 
design. And while we are pleased with the improved housing found at 
Faubourg Lafitte, Harmony Oaks and Columbia Park, we understand that 
these projects still followed a model of concentrated reconstruction 
directly on the public housing sites. When the city of New Orleans 
responded to the NOFA for the Choice Neighborhoods Initiative 
Implementation Grant with its partner, the Housing Authority of New 
Orleans (HANO), we recognized the immediate alignment of Choice 
Neighborhoods with our own approach to develop housing, neighborhoods 
and people in a holistic way. We knew this program would help the city 
of New Orleans redevelop the Iberville Housing site not only to benefit 
the citizens who will call that historic location home, but to benefit 
the city as a whole with targeted linkage to offsite projects we had 
begun, such as the recently completed Armstrong Park and the planned 
Lafitte Greenway that will link Iberville across town to City Park. We 
were proud and excited by the $30.5 million Choice Neighborhoods Award, 
even more so by the fact that we can leverage over $1 billion in 
private, nonprofit, and other investments into the community.
    Essentially, what the Choice Neighborhoods Initiative has allowed 
us to do that no previous Federal grant program had, is use public 
housing re-development as the launching pad to link and leverage other 
Federal and local investments--to go beyond the footprint of the public 
housing development and transform the whole neighborhood with infill 
housing, blight removal, infrastructure and parks. I am hard pressed to 
remember any time when a Federal program and local development strategy 
were so well appointed to work together. It seems that our 
administration was putting the principles of Choice Neighborhood on the 
ground before we even knew about the grant.
    One example is the work between the city and our schools, which we 
see as a key component in our plan for community revitalization. Our 
application brought the City, the Housing Authority and the Recovery 
School District together to act as contractual partners, for the first 
time, with a mutual goal of improving the lives of residents in the 
Iberville development and the surrounding community. We are working 
with the Recovery School District to see that our schools build strong 
communities and our communities build strong schools. New schools for 
both the Recovery School District and the Orleans Parish School Board 
are being constructed under a $1.8 billion dollar settlement from FEMA. 
Lagniappe Academies, a new K-12 charter school modeled after nationally 
renowned Amistad Academy, is intentionally located in Iberville/Treme 
to serve students from the Iberville and Lafitte housing developments.
    The Recovery School District commits in its Reform Plan within 5 
years to: 1) develop teacher and school leader effectiveness; 2) 
implement comprehensive instructional reform strategies; 3) extend 
learning and teacher planning time and create community-oriented 
schools; and 4) provide operating flexibility, and sustained support as 
recommended by the U.S. Department of Education's Title 1 Improvement 
Strategy. The Choice Neighborhood study area will benefit greatly from 
these targets once they are achieved.
    With housing as a primary driver of the Choice Neighborhood 
Initiative, the city of New Orleans and HANO are committed to replacing 
all of the current 821 public housing units and fulfilling the promise 
to de-concentrate poverty and increase housing choice for our lowest-
income residents. Moreover, the Choice Neighborhoods program continues 
the tradition of HOPE IV's commitment to residents through job 
training, education, and assistance moving to self-sufficiency--and 
expands into linkages with our public and charter school systems--to 
make concerted change that will last into the future--not just the 
duration of the grant. This change will also occur through the ultimate 
build out of over 2,000 total units across the Choice Neighborhood 
area.
    The Choice Neighborhoods investment offers the opportunity to link 
housing re-development with our work to revitalize health care access 
and public safety strategies. When you look closely, you will see that 
there is hardly any municipal effort that is not connected to our 
Choice Neighborhood physically or programmatically. As a laboratory of 
innovation, New Orleans will use this experience to instruct us on 
enhancing every neighborhood.
    Beyond housing, there are many ways Washington is helping the city 
of New Orleans lean forward to leverage the Choice Neighborhood 
Initiative, such as supporting our efforts to plan a premier medical 
district with the Veteran's Administration and University Medical 
Center as anchors. Such districts have been key in revitalizing cities 
like Philadelphia, Birmingham, and St. Louis. For New Orleans, the 
opportunity to link this investment with our Choice Neighborhood 
Initiative training and employment goals is one example of how Choice 
Neighborhoods is allowing us to become the city we want to be by 
fulfilling the promise for livelihood in our community. In doing so, we 
take advantage of ever increasingly scarce government funds to 
strategically leverage private resources.
    We appreciate that at the Federal Government level, you are working 
to link and leverage your systems and programs as well. The city of New 
Orleans plans to take full advantage of your connective programing by 
applying for a Promise Neighborhoods Grant from the Department of 
Education, targeting the Treme neighborhood within our Choice 
Neighborhood area. We also look forward to implementing our Public 
Safety Enhancement strategy, provided to Choice Neighborhood grantees 
by the Department of Justice Byrne Grant. We have also been able to 
target our Community Oriented Policing Strategy (COPS) grant funding 
from the Department of Justice to the Treme neighborhood.
    We are a city that cares about design. In fact, it is a passion of 
ours. Within the Choice Neighborhood boundaries of Broad Street, Tulane 
Avenue, Rampart Street, and St. Bernard Avenue, our housing development 
will meet the high design standard for which New Orleans is universally 
known. Like the French Quarter and the musical heart of Treme, the 
design of every element of our new developments will be defined by 
their contexts, maintaining the best physical qualities of the 
Iberville development and its surroundings as blending across the 
blocks of neighborhoods known for their unique feel. The bottom line is 
wherever we build; we will task the design to attract market rate 
tenants to live seamlessly next to public housing residents.
    Although we have not yet broken ground on the Iberville site, there 
already is demonstrated private activity and interest in the area. A 
privately owned theater, the Joy, has been brought back to life and a 
national grocer is looking to open a new site in the Choice 
Neighborhoods area are just a few of the signs that new private 
investment interest is stirring in the Choice Neighborhoods 
neighborhood.
    If nothing else, this testimony should affirm that we, in New 
Orleans have an ambitious plan to improve the lives of the residents 
and revitalize the neighborhoods through the Choice Neighborhoods 
initiative. We will demonstrate results in a fairly short period of 
time. But achieving both near- and long-term goals will require 
significant spending. This is a partnership and New Orleans CNI is 
dependent upon Federal as well as State and City resources to stimulate 
investment across the target area. However, as you know, Federal 
funding is shrinking.
    In the 2012 enacted Federal budget, the reduction in the HOME 
program resulted in the city of New Orleans annual HOME funds being 
reduced by over 70 percent and cuts to the Community Development Block 
Grant Program reduced our annual allocation by nearly 40 percent. These 
cuts are occurring in the face of increasing demand for affordable 
housing in New Orleans. This is the same pool from which the city of 
New Orleans had targeted investments in the Choice Neighborhood area.
    Governments have no choice but to reexamine how they deliver 
services and invest their scarce resources. Choice Neighborhoods is the 
type of Federal program that might serve as a model for all government 
programs to achieve that goal, but we must move forward with eyes wide 
open about the needs of our citizens, the capacity of our resources, 
and this amazing window of opportunity we have in New Orleans to 
facilitate, link and leverage. 

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