[Senate Hearing 112-747]
[From the U.S. Government Publishing Office]
S. Hrg. 112-747
STREAMLINING AND STRENGTHENING HUD'S RENTAL HOUSING ASSISTANCE PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT
and the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
ON
EXAMINING HUD'S RENTAL HOUSING ASSISTANCE PROGRAMS
__________
AUGUST 1 and DECEMBER 11, 2012
__________
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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
Charles Yi, Chief Counsel
Beth Cooper, Professional Staff Member
Erin Barry Fuhrer, Professional Staff Member
Brett Hewitt, Legislative Assistant
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 R. Murray, Republican Subcommittee Staff Director
(ii)
C O N T E N T S
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WEDNESDAY, AUGUST 1, 2012
Page
Opening statement of Chairman Menendez........................... 1
Prepared Statement........................................... 21
Opening statements, comments, or prepared statement of:
Senator Reed................................................. 2
WITNESSES
Keith Kinard, Executive Director, Newark Housing Authority, on
behalf of the Council of Large Public Housing Authorities...... 4
Prepared statement........................................... 22
Response to written questions of:
Senator Schumer.......................................... 87
Dianne Hovdestad, Deputy Director, Sioux Falls Housing and
Redevelopment Commission, on behalf of the National Association
of Housing and Redevelopment Officials......................... 6
Prepared statement........................................... 52
Response to written questions of:
Senator Schumer.......................................... 89
Howard Husock, Vice President for Policy Research, Manhattan
Institute...................................................... 7
Prepared statement........................................... 60
Will Fischer, Senior Policy Analyst, Center on Budget and Policy
Priorities..................................................... 9
Prepared statement........................................... 62
Response to written questions of:
Senator Schumer.......................................... 101
Linda Couch, Senior Vice President for Policy and Research,
National Low Income Housing Coalition.......................... 11
Prepared statement........................................... 76
Response to written questions of:
Senator Schumer.......................................... 105
Additional Material Supplied for the Record
Letters submitted by Dianne Hovdestad............................ 107
NAHRO Voucher Administrative Fee Survey Results.................. 116
Statement submitted by Deborah De Santis, President and Chief
Executive Officer, Corporation for Supportive Housing.......... 120
Statement submitted by Kristina Cook, CAE, on behalf of the
National Affordable Housing Management Association............. 127
Memorandum: Proposed Regulatory and Administrative Reforms and
Statutory Language............................................. 132
Letter from the Preservation Working Group....................... 158
Letter to the Senate Banking Committee regarding Section 8
voucher reform................................................. 160
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TUESDAY, DECEMBER 11, 2012
Opening statement of Chairman Johnson............................ 163
WITNESS
Sandra B. Henriquez, Assistant Secretary for Public and Indian
Housing, Department of Housing and Urban Development........... 164
Prepared statement........................................... 174
STREAMLINING AND STRENGTHENING HUD'S RENTAL HOUSING ASSISTANCE
PROGRAMS--PART I
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WEDNESDAY, AUGUST 1, 2012
U.S. Senate,
Subcommittee on Housing, Transportation, and
Community Development,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Subcommittee met at 10:02 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Robert Menendez, Chairman of the
Subcommittee, presiding.
OPENING STATEMENT OF CHAIRMAN ROBERT MENENDEZ
Chairman Menendez. Good morning. This hearing of the Senate
Banking Committee's Subcommittee on Housing, Transportation,
and Community Development will examine opportunities to improve
the Department of Housing and Urban Development's rental
housing assistance programs, particularly the Section 8 and
public housing programs.
Section 8 and public housing programs put a roof over the
heads of a combined 3.5 million American families, from
formerly homeless veterans of our Nation's armed forces to
hard-working single parents with children to elderly and
disabled families. Over the past several years, these programs
have performed to high standards while operating under dire
funding constraints, but we can clearly see the strain.
In March, HUD Secretary Shaun Donovan testified that 18
housing authorities had given up their voucher programs since
January and two housing authorities had turned down the HUD-
VASH vouchers to assist homeless veterans because they could
not afford to administer these programs.
Meanwhile, for the better part of a decade now, Congress
has been debating proposals to enact a package of changes to
these rental assistance programs, changes which have the
potential to improve outcomes for low-income families while
saving the Federal Government money and easing the
administrative and regulatory burden on housing authorities.
The names of the bills have changed from the Section 8
Voucher Reform Act to the Section 8 Savings Act and now the
Affordable Housing and Self-Sufficiency Improvement Act, but
many of the provisions have remained remarkably consistent and
enjoy substantial bipartisan support.
Many of these provisions just make good sense. For example,
it makes sense to recheck the incomes of participant families
on fixed incomes less frequently since the incomes of these
families are more stable. It makes sense to make families with
high net assets ineligible for housing assistance through these
programs. It makes sense to streamline housing inspections and
to relieve housing authorities of the burden of inspecting
housing units that have already passed inspection under another
State or Federal program. And it makes sense to allow housing
authorities to pay higher rental subsidies for families with
disabilities if the higher rent is needed to enable the family
to live in an accessible home. I believe my colleagues and I
can agree on many of these commonsense provisions, and I look
forward to highlighting these areas of consensus.
Changes to HUD's rental assistance programs have also been
linked to proposals related to other HUD programs, including
the Family Self-Sufficient Program, the Rental Assistance
Demonstration, Moving to Work Demonstration, among others. Our
discussion today will shed greater light on these important
proposals and, in particular, contribute to the dialog around a
balanced expansion of the Moving to Work Program that builds on
the success of the current demonstration while implementing a
rigorous evaluation system and protecting assisted families
from policies imposing severe burdens.
HUD's rental assistance programs enable millions of low-
income Americans to live in safe and affordable homes. It is
critical that we make these programs more efficient and place
them on a stable footing for the future so that they can remain
available to the most vulnerable members of our society.
I look forward to hearing the witnesses' testimony on
changes that would move us toward this goal by improving
outcomes for residents, reducing program costs, and
streamlining requirements for housing authorities.
Senator Reed, would you like to make an opening statement?
STATEMENT OF SENATOR JACK REED
Senator Reed. Well, thank you very much, Mr. Chairman. I
want to welcome the witnesses and particularly thank you for
holding this very important hearing.
As today's hearing will explore, we are looking for ways to
streamline and strengthen HUD's rental housing assistance
programs, and I would like to focus my brief comments on a key
approach to accomplish this goal, and that is the enhancement
of the Family Self-Sufficiency Program.
Family Self-Sufficiency is an employment and saving
incentive program for families that have Section 8 vouchers or
live in public housing. This program provides at least two key
tools for its participants: first, it provides access to the
resources and training that helps participants pursue
employment opportunities and other goals; and, second, it
encourages FSS families to save money by establishing an escrow
account for them. And upon graduation from the FSS program, the
family can use these savings to pay for job-related expenses
such as the purchase and maintenance of a car or for additional
workforce training.
I will soon be introducing legislation to enhance the FSS
Program as it exists today which will broaden the supportive
services that can be provided to participants, including GED
prep and financial literacy training, and extend the FSS
Program to participants who live in privately owned properties
with project-based assistance. And I would urge all my
colleagues to look very closely at the bill, and hopefully they
will be supportive.
Finally, I will continue to work to fund the National
Housing Trust Fund, and I reiterate my willingness to work with
all my colleagues to realize this goal.
One point I think I want to just emphasize is that there is
something more that we have to do than simply provide shelter.
You have to provide people the ability to move up and move
forward, and the FSS Program does it. So without supportive
services, I think we end up in the long run spending a lot more
money and not giving people the chance to use their talents to
move up and move out and move on. And that should be our goal
just as much as providing basic shelter.
Thank you, Mr. Chairman.
Chairman Menendez. Thank you, Senator.
Let us welcome all of our witnesses. As I introduce you,
let me just say that your full testimony will be included in
the record. We ask you to summarize your testimony in around 5
minutes or so, and then that will be followed by a question-
and-answer period.
Let me introduce our panel. Keith Kinard is the executive
director of the Newark Housing Authority in New Jersey since
June 2006. That is the largest public housing authority in the
State of New Jersey, managing over 11,000 public housing units
and housing choice vouchers. It also serves as the
redevelopment authority for the city, working in support of the
revitalization of the city of Newark. Prior to that, Mr. Kinard
was the executive director of the Pittsburgh Housing Authority,
which participates in the Moving to Work Demonstration, so we
look forward to hearing his insights on that. He is testifying
today on behalf of the Council of Large Public Housing
Authorities, of which he is a board member. Welcome, Keith. We
look forward to your testimony.
Dianne Hovdestad is the deputy director of the Sioux Falls
Housing and Redevelopment Commission in Sioux Falls, South
Dakota. She is responsible for the day-to-day administration of
programs that provide affordable housing to approximately 2,000
households, including 1,800 housing choice vouchers. She has
over 35 years of experience--they must have taken you from the
crib to do this work--working with HUD rental assistance
programs and has served in various leadership positions with
the National Association of Housing and Redevelopment
Officials, including the vice president of the housing
committee, and she testifies on their behalf today.
Howard Husock is vice president for policy research at the
Manhattan Institute where he is also director of its Social
Entrepreneurship Initiative, a contributing editor to City
Journal, has written widely on housing and urban policy, has
served as director of case studies in public policy and
management at Harvard University's Kennedy School of
Government, where he is also a fellow at the Hauser Center for
Nonprofit Organizations. We welcome you as well.
Will Fischer is a senior policy analyst at the Center on
Budget and Policy Priorities. His work focuses on Federal low-
income housing programs, including the Section 8 Voucher
Program, public housing programs, the Low-Income Housing Tax
Credit Program has been cited in numerous media publications,
and we welcome him.
Linda Couch is the senior vice president for policy and
research at the National Low Income Housing Coalition. In this
role, Linda focuses on issues including public and assisted
housing, appropriations, capitalization of the National Housing
Trust Fund. She has previously worked at Leading Edge on
affordable housing for low-income seniors. She also has a
background in State Government affairs.
So we have a very talented set of panelists. With that, we
are going to start with you, Mr. Kinard, and, again, about 5
minutes, and then we will move on to the rest of the panelists
and have a good question-and-answer session.
STATEMENT OF KEITH KINARD, EXECUTIVE DIRECTOR, NEWARK HOUSING
AUTHORITY, ON BEHALF OF THE COUNCIL OF LARGE PUBLIC HOUSING
AUTHORITIES
Mr. Kinard. Good morning, Chairman Menendez, Senator Reed,
and other Members of the Subcommittee. My name is Keith Kinard.
I am the executive director of the Newark Housing Authority and
a board member of the Council of Large Public Housing
Authorities. CLPHA's 70 members serve over 1 million
households, manage almost half the Nation's public housing
stock, and administer nearly one-quarter of the Section 8
program.
With the proposed AHSSIA legislation, Congress has
recognized the need for revision of the Housing Choice Voucher
Program to allow agencies to operate more efficiently. There
are several aspects of AHSSIA that would undoubtedly improve
the Housing Choice Voucher Program. The first is allowing
families with fixed incomes to recertify at least 3 years in
lieu of the annual recertification requirement. Current HUD
regulations require all assisted families to recertify
annually. This creates a significant incessant administrative
task. Of those 4,500 families on the program in Newark, nearly
40 percent, or 1,800, rely on fixed income to support their
families. The provisions of AHSSIA that allow the reexamination
to take place every 3 years would greatly reduce the costs
associated with the current process.
The second improvement is curbing the volume of unplanned
interim reexaminations performed at the participant's request.
Our agency received approximately 180 requests for interim
reexaminations last month alone, or 2,500 annually. New
provisions in AHSSIA setting a 10-percent decline threshold and
giving housing authorities discretion on whether to complete an
interim recertification if the change in income occurs within 3
months preceding the annual recertification are a welcome
option to housing authorities' avoiding duplicative work.
An additional positive recommendation is the allowance of
biennial housing quality standard inspections. The Newark
Housing Authority must conduct a minimum of 4,500 annual HQS
inspections per year. That equates to 87 per week and spending
roughly $160,000 annually. It is the Newark Housing Authority's
position that through this reform effort, landlords should bear
the cost for required second and third inspections that occur
due to the failing condition of units.
The Rental Assistance Demonstration Program is a step in
the right direction toward converting public housing rental
portfolio. Public housing nationwide carries a $26 billion
capital backlog due to funding issues and an aging inventory.
Newark Housing Authority alone has $500 million in capital
needs and receives just over $16 million annually. This is a
recipe for failure. RAD begins to offer a path to allow
conversion and preservation through private investment in our
public housing stock. The current House version of AHSSIA is
strongly supported by CLPHA because it not clears up many
aspects of the process, but it also authorizes appropriations
of $30 million annually over the next 5 years in order to
supplement costs, evaluate the program, and provide much needed
technical assistance to authorities and residents.
We do, however, believe that HUD should use to the maximum
extent possible their waiver authority to address current
limitations on contract rent setting, the cap on the number of
PBV units, and also the 12-month choice mobility constraint.
Finally, we support the permanent expansion of the Moving
to Work Program for any interested housing authorities.
Currently 35 MTW agencies are managing a program that falls
outside the bounds of the traditional models and are raising
overall standards of housing services. Innovative programs
dealing with rent simplification, preservation of expiring use
properties, and funding of housing for the chronically homeless
are just a few initiatives that were born out of the MTW
Program. Having run both an MTW agency and a nontraditional
non-MTW housing authority, I can attest to the major benefits
that residents, the community, and the housing authorities
alike realize in an MTW environment. In Newark, a non-MTW
agency, we are consistently drawn to focus on HUD test
protocols such as PHAS, SEMAP, PIC, and VMS submissions. This
diverts attention away from families we serve and the outcomes
we strive to achieve.
In my previous role as the executive director of the
Pittsburgh Housing Authority, we utilized a broad range of MTW
flexibility to address the more critical needs in our
community. We began our days thinking about creating affordable
housing within intensive supports, eliminating high-cost/low-
benefit activities required by regulation, and focusing cash,
regardless of its origin, on creating new affordable housing
and preserving the existing stock.
In sum, CLPHA strongly supports the expansion of MTW and
this assisted housing reform effort, and we thank you all for
the opportunity to provide testimony on these critical issues.
Chairman Menendez. Thank you very much.
Ms. Hovdestad.
STATEMENT OF DIANNE HOVDESTAD, DEPUTY DIRECTOR, SIOUX FALLS
HOUSING AND REDEVELOPMENT COMMISSION, ON BEHALF OF THE NATIONAL
ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS
Ms. Hovdestad. Good morning, Chairman Menendez, Senator
Reed, Senator Crapo. My name is Dianne Hovdestad, and I serve
as the deputy director of the Sioux Falls Housing and
Redevelopment Commission in South Dakota. I am also
representing the 22,000 individual members and 3,200 agency
members of the National Association of Housing and
Redevelopment Officials, the oldest and largest group
representing housing and community development professionals. I
am here representing many, many housing authorities across the
Nation.
The voucher program is a difficult program to administer
and difficult for households and landlords to participate in as
the regulations are very complex. My written testimony has many
recommendations of what I hope you will consider enacting, but
there are three things I implore you to consider based on my 35
years of experience in administering rental assistance
programs:
One, adequate funding for administration of the program, on
the budget appropriations side, that Congress provides adequate
funding for the administration of the voucher program. In many
ways, Sioux Falls Housing is indicative of a great number of
housing authorities serving rural, geographically large areas.
I mention this because the impact of the current situation with
the administrative fees affects both large urban housing
authorities as well as smaller rural housing authorities, but
in substantially different ways.
Given this need, the time for relief is now. I will use
Sioux Falls Housing administrative fees to demonstrate how
difficult it has become.
In fiscal year 2003, Sioux Falls Housing earned
approximately $970,000 to administer $7.3 million in voucher
rental assistance for 1,500 households. In calendar year 2012,
Sioux Falls Housing anticipates that it will receive
approximately $950,000 to administer $10 million in rental
assistance for approximately 1,800 households. Sioux Falls
Housing is receiving less money to administer $3 million more
in rental assistance to an additional 316 households.
I am pleased that Chairman Johnson recognized that housing
authorities could not perform all the required program tasks
based on the pro-ration in 2012. In order to assist housing
authorities, Senator Johnson introduced an amendment to address
this issue. I hope you will address the administrative fee in
any legislation that you develop.
Two, rent simplification. The determination of a
household's income which is used to calculate the amount of
rental assistance and the household's share of rent is an
extremely complicated process. Every source and amount of a
household's income must be verified by a third party and
reported to HUD. This includes amounts that are specifically
excluded by statute and/or regulation. Each household
participating in the voucher program must provide information
annually to determine if an adjustment should be made in the
amount of their rental assistance and tenant share of the rent.
Each interview takes approximately 30 to 45 minutes to
complete. I am asking that the complexities of the rent
calculation requirements be alleviated through quick rulemaking
changes so long as statutory requirements are met. A rapid
response to this request would mean immediate relief to staff
time currently dedicated to meeting the current complex
requirements. Changes would alleviate the administrative costs
associated with the current calculations regime and result in a
twofold effect of reducing administrative costs currently
associated with the current rent calculation regime while also
providing immediate relief to address my request.
Three, regulatory relief. Housing authorities across the
country, whether small rural agencies like the one I serve or
the larger urban communities, desperately need responsible
regulatory reform. I am respectfully requesting that you bring
your significant influence to bear at this time to stress to
the Department the urgent need for quick action. For nearly 10
years, the National Association of Housing and Redevelopment
Officials has urged the Department to take quick action. With
your permission, I would like to submit the Mountain Plains
NAHRO's request for regulatory relief and the Department's
response for the record.
Chairman Menendez. Without objection.
Ms. Hovdestad. Positive action on requested regulatory
relief by the Department would provide not only the regulatory
relief I mentioned but, more importantly, increase staff time
to address the important matters of providing excellent
customer service to our community, greater transparency to our
landlords participating in the voucher program, and place low-
income families in safe, quality housing.
Thank you.
Chairman Menendez. Thank you.
Ms. Husock.
STATEMENT OF HOWARD HUSOCK, VICE PRESIDENT FOR POLICY RESEARCH,
MANHATTAN INSTITUTE
Mr. Husock. Thank you, Mr. Chairman, and thanks to this
Committee for devoting its time and attention to the important
issues of low-income housing.
The legislation recently considered by the House focused
both on how best to finance and maintain affordable housing and
how to structure tenant-based low-income housing programs so as
to encourage self-sufficiency and upward mobility. I will focus
mainly on the Housing Choice Voucher Program and, particularly,
the Moving to Work Program, which, like Mr. Kinard, I will
strongly support.
Over the past two decades, housing vouchers have emerged as
a major program for many of our lowest-income households,
roughly doubling in size. In fiscal year 1998, the Congress
appropriated $9 billion for local public housing authorities to
distribute vouchers. More recently, HUD has allocated $17
billion for that same purpose. Spending on vouchers has even
surpassed the cash benefits of Temporary Assistance for Needy
Families.
One can well understand why the challenge for the lowest-
income families earning 30 percent or less of median to find
housing is substantial. It is important, however, to understand
the housing choice voucher not just as a housing program but,
in addition, as a key aspect of U.S. social policy, that is,
our policy aimed at aiding the long-term upward mobility of the
most disadvantaged households. That traditional goal of social
policy--what President Johnson called a ``hand up''--is
relevant to this program in which many of the most vulnerable
households are enrolled.
Like traditional public housing, nonelderly voucher
recipients with children are largely single-parent families, 94
percent headed by single women; and they are of extremely low
income, 47 percent at 20 percent or less of national median. So
the importance of structuring the program to provide incentives
such that households move toward economic self-sufficiency is
crucial. But this also has a practical dimension. The long
waiting list and the likelihood that appropriations will not be
significantly increased means it behooves us to find ways to
help the participants move up and out if only to serve others
in need. But HUD data shows that currently 50 percent of
voucher tenants and 48 percent of public housing tenants have
been in the program for 5 years or longer.
It is in this context that it is crucial to set goals for
the program that go beyond administrative efficiency, as
important as that is, and that public housing authorities which
administer the program seek to improve such metrics as
employment, household income, and the graduation, if you will,
from the program. To find the best ways to manage and structure
it so as to achieve these goals, it makes sense to give the
Nation's network of 3,200 public housing authorities
flexibility based on the model of efforts authorized under the
modestly scaled, too modestly, Moving to Work initiative, which
should be made permanent and expanded to include as many
authorities as possible.
We are already seeing very significant social improvement
through Moving to Work to date. Notably, the Atlanta Housing
Authority has used its MTW waiver to link a work requirement
with extensive counseling to the voucher, and they have
increased work participation among voucher holders--among its
housing population, rather, from 14 percent in 1994 to 71
percent today. Other authorities--including Cambridge,
Massachusetts; Charlotte, North Carolina; Portland, Oregon;
Ravenna, Ohio; the State of Delaware--are using MTW in ways to
change their rent structure so as to stop discouraging work and
to encourage savings. An expansion of Moving to Work would
allow other authorities to try similar experiments, even to
consider, as Philadelphia did, an outright time limit.
Flexibility for local housing authorities must be guided by
clear goals shaped by the Congress and overseen by HUD, but
there is just no reason to limit the flexibility that comes
with Moving to Work, an initiative begun by the Clinton
administration, to just 35 of the Nation's 3,200 housing
authorities.
Finally, I would like to address briefly the proposal also
discussed in the House bill's language to convert public
housing capital and operating subsidies into project-specific
vouchers, both as a means to preserve affordable housing
developments in their current use and to facilitate increased
investment of private capital to reduce an estimated $30
billion in maintenance backlog. The rationale for doing this in
a time of serious maintenance needs and budget shortfalls is
obvious, and the approach may provide a useful additional tool
for public housing officials facing serious deferred
maintenance.
I would urge, however, that Members of the Committee be
cautious in a too broad embrace of this plan which could be
fiscally consequential. Anytime public incentives divert
private capital, we cannot be sure what opportunities we are
forgoing, and the same is true for preserving specific housing
developments when there may be a higher and better use for
their sites in ways which could benefit those of all income.
Innovative maintenance financing may be worth trying in a
limited number of circumstances but should not be seen, in my
view, as a way to preserve unit by unit all public and
subsidized housing. Better for the Congress through HUD to
encourage additional approaches which could include, for
instance, the sale of high-value parcels currently owned by
local housing authorities so as to create locally based
maintenance endowments for remaining units.
Let us be guided both in how much public housing we
preserve and how we set the rules for housing choice vouchers
not by a narrow goal of preservation or program expansion, but
by a broad determination to help improve the economies of our
cities in ways that uplift the poorest households.
Thank you very much.
Chairman Menendez. Thank you.
Mr. Fischer.
STATEMENT OF WILL FISCHER, SENIOR POLICY ANALYST, CENTER ON
BUDGET AND POLICY PRIORITIES
Mr. Fischer. Thank you, Chairman Menendez, Senator Reed,
and Members of the Subcommittee. It is a privilege to testify
before you today, and I want to thank you also for holding this
hearing on the important topic of strengthening and
streamlining Federal rental assistance.
The Nation's rental assistance programs assist more than 4
million low-income families, most of them elderly people,
people with disabilities, and working-poor families with
children. Research has shown these programs to be highly
effective in addressing problems like homelessness and housing
instability, but it has been a long time--14 years--since
Congress has enacted authorizing legislation covering the
voucher and public housing programs, and there are
opportunities to improve the programs based on lessons learned
and changed circumstances.
Both AHSSIA, the bill that the House considered this year,
and the Section 8 Voucher Reform Act that Congress has
considered in previous years contain a set of largely similar
core reforms that would strengthen and update these programs
through reducing administrative burdens for agencies and
owners, allocating voucher funds more efficiently, and
strengthening support for work.
Even more pressing, these bills contain large Federal
savings. According to CBO, the December 2010 version of SEVRA,
which is the most recent, would reduce the amount of funding
needed to maintain the current level of rental assistance by
more than $700 million over 5 years. According to the Financial
Services Committee, the most recent version of AHSSIA, which
contains some additional cost savings measures, increases that
to $1.5 billion. Those numbers do not include savings from
administrative streamlining which would reduce costs by an
additional several hundred million dollars.
My testimony contains details on the core reforms in these
bills. Just as one example, I think the provisions streamlining
determination of tenant rents and incomes are one of the key
reforms that would really reduce administrative burdens as well
as generating other cost savings. The change to doing
recertifications for people in fixed incomes every 3 years, as
has been mentioned, is a good example of that. That would
reduce burdens on mostly elderly people and people with
disabilities who would be affected and also generate large
administrative savings for agencies. It is just one of a large
number of similar commonsense, good Government reforms that are
in these bills. These are largely proposals that HUD supports
but cannot move forward with without congressional
authorization. They have been vetted for a number of years in
Congress and have had strong bipartisan support, and they are
supported by a broad range of housing groups, as evidenced by
the letter from 810 organizations around the country that was
sent to the Banking Committee urging prompt action.
I would urge the Committee to be cautious with more
controversial provisions. For example, a sharp expansion of the
Moving to Work Program raises a number of risks, such as large
shifts of funds from the voucher program to other purposes that
would result in many fewer families receiving assistance. And
any Moving to Work expansion that goes beyond the compromise
provision that is in the most recent House bill would also
undermine the broad support that the bill has received so far.
I want to close by just emphasizing how important it is
that the country's rental assistance programs work as
efficiently and as effectively as possible so that they can
assist as many families as they can. In concrete terms, the
savings in these bills would mean that housing agencies can
serve more needy families or, if necessary, avoid painful cuts
in assistance. These are critically important changes,
especially now when budgets are expected to be tight for years
to come, but the need for rental assistance remains very high
with fewer than one in four families eligible for assistance
getting help.
The voucher reform bills, the rental assistance reform
bills would take a big step toward achieving those goals of
improving these programs, and I would urge the Congress to
enact them as soon as possible so that the savings and other
benefits from the programs can begin to be realized as soon as
possible.
Thanks again for the privilege of testifying before you,
and I will be happy to take any questions that you have.
Chairman Menendez. You are so efficient. You had another
minute.
[Laughter.]
Chairman Menendez. Ms. Couch.
STATEMENT OF LINDA COUCH, SENIOR VICE PRESIDENT FOR POLICY AND
RESEARCH, NATIONAL LOW INCOME HOUSING COALITION
Ms. Couch. On behalf of the National Low Income Housing
Coalition, I would like to thank Chairman Menendez for holding
this important hearing today at a time when the need for rental
assurance is growing across the United States.
The shortage of affordable and available units for
extremely low income households in 2010 was 6.8 million units,
400,000 more than it was in 2009. For extremely low income
households, there is a shortage of more than 189,000 affordable
and available units in New Jersey alone.
Ideally housing reform legislation would result in both
more affordable housing and more efficient use of Government
resources. Recent versions of housing reform legislation would
result in 5-year savings ranging from around $700 million to
more than $1 billion. These are tremendous savings, the vast
majority of which come from uncontroversial policy changes.
In any reform bill, we urge the Subcommittee to balance new
program flexibilities with the need for program accountability.
In the long run, we fear that if Congress' understanding of the
program's use and impact fade due to fewer reporting
requirements, the result would be decreased resources. The
reforms that we support bring efficiencies while continuing to
hold all parties accountable for the use of Federal resources.
We support several changes that would encourage increased
earned income and simplify rent setting while maintaining
Brooke, the program's underlying tenet that each household pays
a rent that is affordable, even as its income fluctuates.
The Nation would also benefit from enactment of
improvements to the project basing of vouchers, which would
allow otherwise unaffordable units to meet the Nation's most
significant affordable housing needs.
The need for clear direction to HUD on the allocation of
voucher renewal funding was a primary reason for the
development of reform legislation several years ago. We support
language directing HUD to base renewals on actual costs and
leasing data as well as policies that would allow agencies to
over-lease vouchers and reserve offset and reallocation
policies.
We would like any Senate housing reform bill to include
provisions to improve the portability of vouchers from one
housing agency's jurisdiction to another, to require HUD to
establish certain standards and procedures for assessing the
performance of agencies' voucher programs, and to guard voucher
households from paying excessive rent burdens. Each of these
provisions improve the voucher program for tenants, and each
has thus far been left out of the House versions of the bill
this session.
On another note, the Low Income Housing Coalition was
shocked and disappointed that the Administration requested
increased minimum rents in its fiscal year 2013 budget request.
We referred to HUD's proposal as one that ``picks the pockets
of the poorest of the poor.'' It follows then that we do not
believe increasing minimum rents is needed to create a robust
housing reform bill. The House's latest proposal increases
minimum rents for households with incomes of less than $2,800 a
year. While it may be hard to imagine that there are households
with incomes so low, the reality is that these households
exist, and the programs keeping them off the street, out of the
back seats of cars at night, and out of shelters are HUD's
voucher, public housing, and project-based Section 8 programs.
We also support other major reforms to the voucher program
which we know are outside of the scope of any bill this year.
Three policies that would significantly increase households'
choice and ability to use their vouchers are the
regionalization of voucher assistance and administration, the
enactment of Federal source of income laws, and instituting
nationwide small-area fair market rents, an effort for which
HUD is currently doing a demonstration.
Of course, a real breakthrough would be to make assistance
by the Housing Choice Voucher Program an entitlement to those
households eligible for it, at least for certain populations.
Today the only housing entitlement programs are for homeowners,
the vast majority of those resources going to assist high-
income households.
While the coalition has agreed to a carefully crafted
version of Moving to Work expansion, referred to by others here
as the ``stakeholder agreement,'' and I believe attached to
CLPHA's testimony, history shows that Moving to Work expansion
has stalled housing legislation for years. We support moving
forward with voucher reform legislation without an MTW title.
Moving to Work legislation could be considered separately while
the significant savings and efficiencies of a broader housing
reform bill could be taken advantage of now.
We also encourage Members of this Subcommittee to support
capitalization of a National Housing Trust Fund, which Congress
authorized in 2008 thanks to the leadership of Senator Reed.
The National Housing Trust Fund, coupled with the stabilization
of HUD's rental assistant programs by housing reform
legislation, could end homelessness in the United States.
Thank you for your work to improve HUD's programs.
Chairman Menendez. Thank you. Thank you all.
There is a lot of ground to cover here, so let me start
with you, Mr. Kinard and Ms. Hovdestad. Both of you are on the
ground. You are working every day to implement these programs
on behalf of low-income families. We have been talking about
this for some time. I think there is a tendency to forget how
incredibly pressing the need for action really is. I have heard
from affordable housing advocates and housing professionals
telling me that these reforms really cannot wait and are
urgently needed now.
Can you discuss the impact over time if Congress fails to
act soon to implement some of the specific reform proposals we
have talked about? What are the consequences on the ground?
Mr. Kinard. I certainly can do some of that. The
consequences really are devastating. There are financial
consequences associated with cumbersome, burdensome processes
that simply we cannot afford and each year are escalating.
There is the potential for loss of units. We have many units in
Newark alone right now that are boarded up, that we simply do
not have the funding to put back online. And a lot of our
funding is being used today to ultimately fill out score sheets
and fill out reports and send information in. And it is really
sad riding to work every day past units that have the windows
boarded up and the doors boarded up, knowing that we have
waiting lists that have thousands and thousands of families on
them for many, many years, and realizing that I have got to
divert that funding to ultimately respond to needs that have
been on regulatory books for many, many years, and
unfortunately really do not get to the heart of the mission
that we are in business to do.
So essentially for the availability of future housing, for,
I think, the future existence of our program, and especially in
light of the outlook of budgets moving forward in forward
years, I think the impact is devastating if we do not move
soon.
Ms. Hovdestad. I would like to echo what was just said and
that we do spend a lot of time working on reports that we have
not had to do in the past. HUD is putting a lot of emphasis on
lease-up, and so every month we respond to questions from HUD
about why we are not leasing up to our baseline units. And part
of our problem of underutilization of our vouchers is that we
are unable to hire staff that has left the agency's employ for
other jobs, and so the rest of the workload is distributed to
the other staff, and they cannot take on any more than they
currently have. It is taking longer to get the inspections done
because of the lack of staff. And then the interim changes that
we are required to do, they are taking a lot of time also.
Another big impact is on the Family Self-Sufficiency
Program that we have, and I would like to thank Senator Reed
for his work on the FSS Program. We have a very successful
Family Self-Sufficiency Program, and we were able to use some
of our administrative fees to help meet some of the unmet needs
like personal counseling. We have a lot of participants who
have a lot of personal issues that are barriers for them
becoming self-sufficient. We have used it to put on workshops
on financial wellness and what it takes to buy a house and
things like that.
On the regulatory side, we just spend a lot of time kind of
doing things that seem kind of redundant and unnecessary, like
the reporting of excluded income.
Chairman Menendez. Since you are both representing a
different universe of housing authorities here, what is the
reality of housing authorities' refusing to run their voucher
programs, turning down VASH vouchers to assist homeless
veterans, loss of hard units as a result of the lack of
reforms? With your colleagues, do you experience that?
Mr. Kinard. Well, I feel that. We have not done that. We
have not been forced to do that. But we have had to make
similar decisions, and I will give you a concrete example that
we face on a monthly basis.
Due to reduced admin fees and due to our strain in terms of
resources, we are making decisions in terms of how many staff
we have associated with interim reexamination processes and
annual reexamination processes versus our ability to actually
issue vouchers and get families on the program. It is a
budgetary issue. It is a commonsense issue. If you only have
ten staff and that is all you can afford, but you must get
these forms in, somewhere in there you have got to make a
decision between the two. And I believe those housing
authorities have made probably the most difficult choice in
many of those directors' and staffs' career that they do not
want to provide insufficient service or they do not want to
jump into something that ultimately will provide less than
decent, safe, and sanitary housing. Instead, they will turn
those vouchers in, and hopefully someone else can utilize those
correctly because they simply do not have the funding to run
the program.
Chairman Menendez. All right. I have several other
questions, but I want to turn to Senator Reed first.
Senator Reed. Well, thank you, Mr. Chairman, and I want to
thank the witnesses for excellent testimony and giving great
perspectives on some very critical issues. I think Mr. Husock
pointed out that it is not just about keeping people in
housing; it is giving them a chance to move up, move forward,
move ahead. And I think that is a theme that we want to
support.
That takes me back to the point I raised in my opening
statement about the Family Self-Sufficiency Act. Thank you,
Dianne, for using it so well and effectively. But I wondered,
Mr. Fischer, with your colleagues at the Center on Budget and
Policy Priorities, have you looked at this issue and can you
give some comments about how valuable the program is and what
we can do to continue it? In terms of changes, HUD is making
similar proposals as I am.
Mr. Fischer. Sure. I think this is an important issue to
look at, ways to help people who receive rental assistance move
toward self-sufficiency. As context, there are a lot of people
on rental assistance for whom this is not an issue. Half of the
caseload is elderly people or people with disabilities. Another
30 percent is working families. But there is a segment of the
population that could use support to help move toward self-
sufficiency and increase their earnings, and I think the Family
Self-Sufficiency Program is a really strong approach to doing
that. It combines both supportive services and counseling and
also earnings incentives through the creation of escrow
accounts, and that is a combination that based on the available
information does work in terms of helping people increase their
earnings.
Like you said, HUD is considering some--has supported some
similar proposals to strengthen the Family Self-Sufficiency
Program. The AHSSIA bill that is in the House has a number of
provisions that move in the same direction, and I really thank
you for looking at this issue and looking at ways to move this
legislation forward.
I think one example of an important change that needs to be
made and that all these entities are looking at is extending
the program to the project-based Section 8 program, which is,
along with public housing and vouchers, the third large rental
assistance program. Currently the Family Self-Sufficiency
Program is not available. There is no reason for that. It is
equally applicable in project-based Section 8. And so proposals
like yours that would extend it there would really do a lot of
good for the people who are in that program.
Senator Reed. Thank you very much.
Just a final question, because I know the Chairman has
additional questions. Ms. Couch, you mentioned the National
Housing Trust Fund. From your evaluation, capitalizing this
program, getting it up and running, how could it help the
current crisis?
Ms. Couch. Well, the Nation's housing needs, as you know,
are overwhelmingly clustered within households with extremely
low incomes, households below 30 percent of area median income.
And the National Housing Trust Fund, as Congress designed it in
2008, would dedicate the majority of its assistance to
households at that really deep income level.
Today we have these great shortages, like almost a 190,000-
unit shortage in New Jersey, because we are not producing
housing that is affordable to incomes at this low of a level.
We used to with public housing and project-based Section 8, but
the numbers of those units are shrinking. The trust fund could
step in and really produce units affordable to households at
that low income level and also preserve other units that might
be unsubsidized today and really set this Nation on a path
toward ending worst-case housing needs, as HUD defines them,
all of the--more than 73 percent of ELI households pay more
than half of their very low incomes on rent, and ending
homelessness in the United States. So we see the trust fund as
really critical to setting the Nation on a path to end
homelessness in the country.
Senator Reed. Let me just add one final point. There might
be, particularly at this moment, an additional benefit, that
is, putting people to work building rental properties,
renovating rental properties. We have a very weak housing
market. I know Senator Menendez has been leading the way on
several different initiatives. Your legislation, which I am
proud to cosponsor, is designed to try to get people back not
only into housing but people banging nails, et cetera, to build
housing.
Ms. Couch. It is certainly a jobs program as well. We
appreciate that. And I think that, you know, the home builders
have all sorts of great data on the numbers of jobs, both
immediate jobs and long-term jobs, that can be sustained
through the development of housing.
Senator Reed. You look like you have a comment, Mr. Husock,
and I want to give you the chance. Are you all set?
Mr. Husock. If I might very briefly, with the Chairman's
permission, I wanted to add to Mr. Fischer's comments about
Family Self-Sufficiency in response to Senator Reed's question
and to echo what Ms. Couch said about the importance of not
having a rent structure that penalizes people for improving
moving up and forward, as the Senator puts it, because when you
have a Brooke amendment-based rent structure that has a set
percentage, the more you earn the more you pay, so, in effect,
the marginal tax rate on our poorest households is higher than
for our highest-income households. That is ridiculous.
And so setting fixed rents and allowing people to earn more
but to keep what they earn perhaps in the context of other
requirements--with which we may not agree, but nonetheless we
agree on that, I think--I think would be very important to
promote self-sufficiency also in the context of counseling and
other programs.
Senator Reed. My time is up, but the possibility exists,
too, of sort of a shared appreciation where, you save more. But
you contribute a little bit more, too. So I do not think it
would necessarily have to be either/or, either fixed or not.
But I think there is a way in principle we can work out a
formula that encourages moving up. Let me just thank you for
that insight. It is valuable.
Do you have a quick response, Ms. Couch?
Ms. Couch. I just wanted to clarify that we believe
strongly that each household's income should--each household's
rent should reflect its income at the time, and all of the
voucher reform bills have included provisions which we think
really encourage and allow for increased earned income without,
you know, immediately coming and raising people's rent. And so,
you know, we support those proposals, but one of the key
benefits of these programs is stability, and if your rent keeps
going up but for some reason your income goes down, these
programs are not providing the assistance we need them to. And
so the rents absolutely have to maintain this Brooke standard
of fluctuating as a household's income fluctuates.
Senator Reed. Well, thank you very much for your insights.
Thank you, Mr. Chairman.
Chairman Menendez. Thank you, Senator Reed, for your
leadership in this field.
Let me ask a few other questions here. There are various
legislative proposals that would enact a stable voucher renewal
funding policy. Currently congressional appropriators set a
voucher renewal funding policy each year, which I am told makes
it very difficult for housing authorities to plan for the year
ahead. In addition, there are various legislative proposals
that would clarify how much money housing authorities can hold
in reserves for a rainy day without those funds being taken
back or offset, so to speak.
Mr. Fischer, you write in your testimony that these voucher
funding rules will allow housing authorities to serve many more
families with the same amount of funding. Can you explain how
the predictability and clarity provided by those simple changes
would translate into more families served?
Mr. Fischer. Sure. When agencies are able to predict how
much money they will have and also how much funding they will
have in reserves, it can let them manage their funds more
predictably. There is history behind this where there was--
starting in 2003, there has been a series of changes in the
funding formula. It has gotten somewhat more stable in recent
years, but during that period we saw the percentage of
agencies' vouchers in use drop from around 97 percent down to
92 percent, which translates to about 100,000 fewer families
being assisted. And part of this was just that it was much
harder to predict both what funding level agencies would get
and whether their funding reserves, whether they could keep
funding reserves or those would be recaptured. And those played
a role in those large numbers of families not receiving
assistance. I think stabilizing the funding formula, like SEVRA
and AHSSIA would do, would give agencies more certainty and
would help them assist more families.
Another sort of specific thing in both bills that would
contribute to this is a provision that would allow agencies to
assist more families than their authorized number if they had
funds available to do this. Right now, agencies, even if they
are sitting on unused money and have reserves, they are not
allowed to go above their authorized voucher cap. They are
penalized for that, and they do not get, it affects their
funding for the following year. Under SEVRA and AHSSIA,
agencies could use those extra funds to assist more families,
and this would mean not only more families getting help but
also the agencies would have a strong incentive to reduce the
cost per voucher because they would know that they are able to
do that and stretch their funds further and they can help more
families.
Chairman Menendez. Let me go back to you, Mr. Kinard, on a
different issue. I am concerned nationwide but certainly that
New Jersey's stock of federally assisted affordable housing is
aging rapidly. We have long been a population center.
Affordable housing was built many decades ago and is now in
danger of becoming obsolete as a result of a lack of funding
for modernization. And I am hopeful that HUD's Rental
Assistance Demonstration will serve as an effective tool to
preserve affordable housing in New Jersey and nationally. But I
share the concerns that have been raised by affordable housing
advocates that the lack of funding for RAD will prevent the
housing developments with the greatest capital needs from
participating in the program.
Could you discuss whether you believe the new RAD
authorizing language and the authorization for appropriations
contained in the most recent, I think it is an April draft of
the House's Affordable Housing and Self-Sufficiency Improvement
Act would help open the program to developments most in need?
Mr. Kinard. Certainly. It is our belief firmly that it
would, that RAD is an important initiative that ultimately
would allow the conversion of much needed deteriorated and
distressed public housing into a more stable environment on the
project-based voucher side. In fact, in Newark right now we are
in the midst of converting a 220-unit public housing building
into project-based voucher. We have been able to partner with a
private bank and generate nearly $30 million to go into a
building that--we talk about the future--maybe in 5 or 8 years
this building would have become obsolete, and those seniors
would likely had to have been moved out of the building.
So we know that putting money in RAD will supplement in
some regards, in some jurisdictions, the funds that are
ultimately needed to make their projects work. Is it enough?
Clearly not in certain jurisdictions. But putting money into it
in the demonstration program will make some jurisdictions who
are one side of the fence able to get on the other side of the
fence and actually participate. And hopefully it will
demonstrate a program that will generate more funds, will
demonstrate the need for more funds, and allow us to get even
more housing authorities involved.
But I think there is a lot of training and technical
assistance and evaluation that those funds will also support
that need to occur with the RAD conversions.
Chairman Menendez. All right. So let me move to Moving to
Work. You had a time in the Pittsburgh Housing Authority, which
had a Moving to Work Demonstration project, and you are now at
the Newark Housing Authority, which does not have a Moving to
Work Demonstration project. So I think you are in a unique
position to talk to us from both perspectives. Can you speak to
the good and the bad as you see it?
Mr. Kinard. Well, the good was Pittsburgh with Moving to
Work. The bad is Newark without Moving to Work. It is a very
different environment, and it actually gets even down to the
depths of the work culture. When you have Moving to Work, you
tend to think about problems as any corporation would think
about a problem that they are facing. You tend to think about
your funding as a source to solve problems and create new
housing for the homeless, create self-sufficiency programs,
preserve expiring use housing 236. 236's do a number of
innovative initiatives that the community that you operate in
is actually desperately needing.
When you do not have Moving to Work, you are really focused
on trying to score your best on some PHAS or SEMAP score sheet
or getting all your forms in because, really, that is the bar.
You are operating in a very limited box, and unfortunately,
many times you can see the light at the end of the tunnel and
the trouble heading your way. But you can only move so far left
and right in a non-Moving to Work environment, and you have to
let the car run over you.
So, you know, that is--in essence, I think the importance
of Moving to Work is it will allow us to move more fluidly and
flexibly in an environment of limited funding, and it will
allow us to find greater administrative cost savings and
hopefully serve even more families in quality housing. And it
has been proven. I mean, Moving to Work has been out there. We
were in it in Pittsburgh in 1998, and we were able to do some
really innovative things on the self-sufficiency side, on the
housing production side, really, really creative things. So it
has been proven to work, and I think it is a program that
really merits strong consideration, deep expansion, and
obviously taking into consideration some of the concerns of
others.
Chairman Menendez. Let me broaden the question. I wanted to
get your perspective because you have been in both
environments. So I will open it to anyone on the panel who
wants to have an opinion.
We have long debated whether or not HUD's Moving to Work
Demonstration should be expanded and made permanent, and I can
see the attraction from a director's position. The question is
whether that is the way in which we take you out of the
straitjacket that you are in or whether the actual program is
positive in terms of results at the end of the day that would
want to expand it. I am talking about beyond the straitjacket
of how you have resources to deal with your challenge.
This issue has actually been a sticking point preventing us
from moving ahead on the substantial set of changes that HUD's
rental assistance programs that we can agree on. So I am
encouraged to hear that the stakeholders--many groups have come
together around a compromise solution which would pair an
expansion of some elements of the Moving to Work Demonstration
Program with tenant protections and a strong evaluation
component. Can you discuss the compromise, which I understand
is incorporated into the latest version of the Affordable
Housing and Self-Sufficiency Improvement Act, and whether it is
acceptable to you and the organizations that you represent? And
if so, why? And if not, why? Anyone who wants to comment.
Ms. Couch. I will start. We have opposed, strongly opposed
Moving to Work expansion for many, many years and got back to
the table on Moving to Work last winter and sat down with most
of the groups at this witness table and several others and HUD
to work out what we call the ``stakeholder agreement.'' The
agreement would expand Moving to Work's footprint
substantially. Right now there are about 35 agencies that are
considered MTW agencies.
The agreement would expand a basic version of Moving to
Work to 500,000 units of public housing and vouchers, and under
basic, the Moving to Work agencies would have what I see as
really broad flexibility administratively to funge money
between the public housing and voucher accounts, to reporting
requirements to HUD, simplification of rent setting, not rent
reforms, and have a lot of really administrative
simplifications, many of which, you know, we have talked about
over the years as part of the voucher bills.
But the stakeholder agreement and what was included in the
April 13th version of AHSSIA would also include an enhanced MTW
whereby up to 25 housing authorities could access this enhanced
authority where they could enter into programs that maybe would
institute work requirements or time limits, or huge rent policy
shifts that would divorce people's rents from what their
incomes are. And all of those, you can see the problems for
tenants in each of those, but the bill language would also
require really strict reporting and evaluation requirements and
a stakeholder advisory committee that would try and watch and
make sure that no harm was being done but that successful
programs could be replicated in the future. And there are a lot
of tenant protections and assuredness that households--that
significantly the same number of households would continue to
be served.
And so all of those things are dangers in the current MTW
landscape that I think would be addressed by the stakeholder
agreement.
Chairman Menendez. Anyone else?
Mr. Husock. I think that Ms. Couch's remarks demonstrate
why it is a compromise, and some of the potentials that concern
her are exactly what I think makes the bill attractive to those
who are concerned about the open-endedness of housing
assistance and not conforming to the goals that Senator Reed
enunciated of moving up and moving forward.
So in the context of a rigorous evaluation, could work
requirements or time limits be draconian and drive people into
homelessness if they do? Well, that would be a bad thing, and
we would have to know about that. Could it encourage, as we
have seen in some housing authorities, improvement in the
situation and making room in a limited number of unit universe,
because entitlement is not a likely prospect anytime soon,
assistance for others who are on the waiting list? That seems
to be worth trying in a relatively confined context in an
atmosphere of evaluation.
So that is what makes it an attractive compromise, and I
think if those aspects of it were not included, you would not
see the same buy-in.
Chairman Menendez. Mr. Fischer.
Mr. Fischer. Like Linda, we have had strong concerns about
expansion of Moving to Work under the current rules. One issue
is the elimination of a lot of key tenant protections that
would, for example, get rid of the guarantee that tenants would
pay affordable rents that Linda and Senator Reed were talking
about earlier. Because it allows shifts of funds from the
voucher program to other purposes, when we have looked at data
on the program today, one of the things that has resulted in is
many fewer families receiving assistance per dollar of Federal
funding, and that is a concern when the resources are already
very limited for housing assistance.
Another really strong concern is that Moving to Work is
funded as a block grant under the existing--it goes from the
existing housing voucher system where funding is based on the
actual cost of funding a particular number of units. Instead,
it is a fixed block grant amount.
When we look at other housing assistance or HUD programs
that are funded as block grants, what we see is that they tend
to erode or see cuts over time in a way that the Housing
Voucher Program has not experienced, and I think a big part of
the difference is these funding programs, for example, the four
largest HUD block grants have seen their funding erode by 38
percent in inflation-adjusted terms over the last 10 years,
where funding for the Housing Voucher Program has seen some
shortfalls but it has basically kept up with the need. And so
that is another big concern about MTW.
The agreement that is in the House bill contains a lot of
protections that reduce these risks. I do not want to overstate
it. I think we still see some significant risks in that bill on
all of those areas that I mentioned. But in our view, the core
reforms that are in SEVRA and AHSSIA are so important and so
beneficial and the restrictions in the House agreement are
strong enough that our view is that the package together is
worth enacting if that is what it takes to get those core
reforms.
Chairman Menendez. Ms. Hovdestad.
Ms. Hovdestad. Yes, NAHRO has been working with the
Department to expand the Moving to Work Program. The concern
that we have is that there is no harm done to the current
Moving to Work agencies and their agreements with the
Department. Moving to Work as a separate bill would be OK, but
our preference would be to expand the MTW program as soon as
possible.
Chairman Menendez. Well, very good. I think that that gives
us a good sense of where we are at. Hopefully we can move here
because I get the sense that our continuous delay here is
creating consequences at the end of the day, and moving would
have a powerful, beneficial benefit. So I am hoping that this
hearing and the foundation that we have laid here assists us in
the fall to see if there is a possibility.
With that, I appreciate the testimony of all of you. The
record will remain open for 1 week so that everybody can submit
their comments, Members can submit their questions. If we do
have questions and we send them to you, we ask for your speedy
response so we can close the record as soon as possible.
With that, this hearing is adjourned.
[Whereupon, at 11:05 a.m., the hearing was adjourned.]
[Prepared statements, responses to written questions, and
additional material supplied for the record follow:]
PREPARED STATEMENT OF CHAIRMAN ROBERT MENENDEZ
Local public housing agencies across the Nation face an existential
threat. The current Federal budget crisis looms over a public housing
inventory that is already stressed by inadequate appropriations and the
famously burdensome HUD regulatory regime. The high-water funding mark
for FY2013 appropriations is now known. House and Senate appropriations
bills are strikingly similar and both significantly underfund the
Public Housing Operating Fund and the Capital Fund. Only deeply
committed authorizers can significantly improve conditions in current
public housing funding by passing legislation that improves local
flexibility, spurs revenue growth and lets agencies take advantage of
cost-efficiencies that are within easy reach.
Public housing is, in the words of the HUD Secretary ``an
irreplaceable public asset that must be preserved.'' That asset serves
among the poorest households in more than 3,000 communities, both large
and small, all across the country. Public housing is community owned,
place based, and locally accountable. It provides stable homes to more
than 2 million people every day of the year--and has served untold
millions more over the last 75 years. Public housing has survived rapid
neighborhood change and every sort of policy direction prescribed by
Washington. It endures because hundreds of thousands of elderly and
disabled households will always have need for safe, secure, and decent
homes in their neighborhoods. Public housing will also endure for the
more than 800,000 children whose parents need the time and services of
a secure platform to prepare for better, stronger lives. As you know,
public housing is easily maligned by occasional glaring headlines and
is too often targeted by outdated stereotypes. The truest story of
public housing, however, is one of safe and well-run housing that
provides a real sense of community and that has quietly helped produce
generation after generation of productive citizens including members of
Congress and the Supreme Court, business leaders, schoolteachers, elite
athletes, soldiers, artists, and public servants.
Authorizers in the 112th session of Congress have real
opportunities to pass legislation that will limit the loss of units as
a result of chronically low funding and enormous amounts of deferred
capital improvements. If the public housing inventory is to be salvaged
for the next generation, it will need a broad menu of funding
opportunities that can begin to address the enormous $26.5 billion
capital needs backlog that threatens it. This authorizing Committee and
its counterpart in the other chamber have the ability to set public
housing on a new, more streamlined and sustainable course by passing
key pieces of legislation. They include:
Affordable Housing and Self Sufficiency Improvement Act (AHSSIA) is
proposed legislation that promises to deliver long-awaited and much
needed reforms to the Section 8 voucher program. Voucher agencies are
particularly stressed as Congress has failed to provide adequate
administrative fees for the program that is uniquely rule-bound and
labor intensive. With no ability to adjust to these real-time
marketplace conditions; HUD continues to apply SEMAP, the program's
report card, as if agencies were fully funded and fully staffed. AHSSIA
offers agencies administrative flexibility that will help provide some
cost-cutting opportunities. Agencies will have fungibility for their
Operating and Capital funds and the flexibility to do risk-based
scheduling for physical inspections. Agencies will also be able to
perform fewer recertifications for fixed-income households and to use a
more streamlined rent and income determination process. Overall the
bill allows agencies to economize on costs. The bill was gingerly
crafted with tenant advocate groups so it has some added complications.
For example, the bill allows agencies, for the first time in 14 years,
to charge a higher minimum rent of approximately $70. The opportunity
for added revenue comes with new reporting and procedural requirements.
Of special importance is the section of AHSSIA entitled
``Flexibility for High-Capacity HAs'' that makes permanent the highly
useful and successful Moving to Work (MTW) program. The bill also
allows for a significant expansion of the program but limits
participation primarily to PHAS and SEMAP high performers. A Moving to
Work (MTW) expansion was recommended in HUD's own 2010 interim MTW
report to Congress. The report stated ``MTW provides unprecedented
insight into alternative methods of providing housing assistance. By
prolonging and doubling the number of participating agencies, the
housing industry stands to learn even more from this unique resource.''
This successful program has survived for 16 years in spite of unfounded
criticism of the MTW demonstration. This section of the AHSSIA consumed
much of the bill's negotiations and added more narrow definitions of
households served by MTW. The enormous transformative efforts in cities
like Atlanta, Chicago and Philadelphia might not have happened if
baseless fears had been allowed to rule implementation of the MTW
demonstration. MTW is the most hopeful preservation solution for the
greatest number of agencies at HUD's disposal. The program can help
counter the deep and chronic funding shortfalls in public housing
programs. To date, MTW agencies have used the program's flexibility to
significantly expand affordable housing opportunities in their
communities.
Also included in AHSSIA is $30 million in funding for the
Administration's RAD (Rental Assistance Demonstration). RAD is the
Administration's signature program to help housing agencies convert
their public housing properties to a more reliable Section 8 funding
platform using either project-based vouchers or project based rental
assistance. Appropriators launched RAD in the FY2012 THUD
Appropriations bill but provided no new funding for the program. The
bill allowed agencies to convert with only the money currently
available to public housing properties. Unfortunately, the current low
funding cannot sustain properties in the public housing program--much
less support them in the Section 8 program where higher rents are
needed to maintain properties and to also support debt service on
financed capital needs. The $30 million will make it more likely that
properties with deferred capital needs will be able to participate in
the RAD program.
Today public housing finds itself at a critical juncture where poor
funding might well determine the fate of the program. The Subcommittee
has an opportunity to intercede on behalf of public housing and its
residents by working with the House to pass AHSSIA this year. Public
housing has been rocked by a series of recent funding and policy
choices that call into question the Federal Government's resolve to
continue its decades-long relationship with local communities to house
the poorest among us. It is well within the authority of this
Subcommittee to pursue proposals like AHSSIA, with its important MTW
and RAD components, that will help preserve assisted and public housing
for future generations of needy elderly, disabled, and family
households. PHADA looks forward to working with the Subcommittee to
find new ways for agencies to use flexibility, streamlining and
innovation to bring additional funding resources to support and
maintain public housing.
______
PREPARED STATEMENT OF KEITH KINARD
Executive Director, Newark Housing Authority, on behalf of the Council
of Large Public Housing Authorities
August 1, 2012
Chairman Menendez, Ranking Member DeMint, and Members of the
Subcommittee, my name is Keith Kinard and I am Executive Director of
the Newark Housing Authority and Board Member of the Council of Large
Public Housing Authorities (CLPHA). CLPHA is a national, nonprofit
membership organization that works to strengthen neighborhoods and
improve lives through advocacy, research, policy analysis, and public
education. CLPHA's members comprise nearly 70 of the largest Public
Housing Authorities (PHAs), located in most major metropolitan areas in
the United States. These agencies act as both housing providers and
community developers while effectively serving over one million
households, managing almost half of the Nation's multibillion dollar
public housing stock, and administering nearly one quarter of the
Section 8 Housing Choice Voucher program.
The Newark Housing Authority (NHA) has over 11,000 public housing
and housing choice vouchers. NHA is the largest public housing
authority in New Jersey and one of the largest in the Nation. We have a
portfolio of 44 public housing communities with a total of over 7,000
rental units scattered throughout the City of Newark. NHA also
administers up to 4,000 Housing Choice Vouchers (Section 8) within the
city limits. A unique aspect of the Newark Housing Authority is that
the agency also serves as a redevelopment authority and uses that power
to enhance the renaissance of Newark. As a redevelopment authority, the
NHA has a stake in the creation and maintenance of safe, livable
neighborhoods and the expansion of economic opportunities in their
communities.
We thank the Subcommittee for holding this hearing on
``Streamlining and Strengthening HUD's Rental Housing Assistance
Programs'' and appreciate the opportunity to comment on those matters
that we believe are critical to include in any legislation to improve
and reform HUD's rental assistance programs. As you know, for many
years, CLPHA has been active in these legislative efforts.
We have most recently been engaged in efforts to improve the draft
legislation entitled, ``Affordable Housing and Self-Sufficiency
Improvement Act of 2012'' (AHSSIA) in the U.S. House of
Representatives. AHSSIA is the latest iteration of recent endeavors to
reform and advance the Section 8 Housing Choice Voucher program which
began in the 109th Congress and continued with the ``Section Eight
Voucher Reform Act'' (SEVRA) and the ``Section Eight Savings Act''
(SESA) through the 110th and 111th Congresses. While we have seen
different variations on a theme with the various legislative
proposals--with refinements and degree of emphasis--there have been
certain core components in most versions of the reform proposals.
Included among those core features which CLPHA strongly supports are
simplification of rental assistance administration; preservation of the
housing stock; protection of tenants; and expansion of funding
flexibilities and local decision making for housing authorities.
As CLPHA testified last year on SESA, we believe that simplifying
and streamlining the administration and funding of the Housing Choice
Voucher (HCV) program is a key component to a broader rethinking of the
landscape of public and assisted housing in this country. Equally, we
believe that expansion and permanency of the Moving to Work (MTW)
program is an essential element in strengthening the flexibility and
local decision making that housing authorities need to be successful in
their communities. And, we believe that the Rental Assistance
Demonstration (RAD) program will be critical in helping housing
authorities reposition and strengthen an effective housing rental
assistance delivery system for residents in a time of shrinking Federal
budgets.
Streamlining and Simplification
Voucher Renewal Funding
One activity to streamline and simplify would be a permanently
authorized renewal funding formula which would provide predictability
and stability to the Housing Choice Voucher program. As you are aware,
the shift to the ``snapshot'' voucher funding formula in 2004 caused a
serious mismatch between funding eligibility and vouchers requiring
renewal funding. Further, continued uncertainty about determining
eligibility each subsequent year undermines agencies' ability to manage
their programs efficiently, as they are unable to predict the level of
voucher utilization that they could support. We have seen, since 2007,
how funding based on actual leasing and costs provides agencies the
resources needed to increase leasing and help additional families. We
are slowly recovering vouchers lost to the previous policies. With a
renewal formula reflecting actual PHA needs placed in permanent
statute, rather than in annual appropriations acts as is currently the
case, PHAs will have renewed confidence in the predictability of their
funding. A stable and reliable funding formula will provide
predictability for housing authorities and landlords alike. They will
be able to plan for the future, taking steps to increase utilization,
reduce costs, eliminate inefficiencies, and improve service delivery.
Reserves and Use of Funds
Another proposal that we support is to allow housing authorities to
retain a portion of their housing assistance payment funds as reserves.
An adequate and stable reserve is the bedrock of any well-run
enterprise. Housing authorities serving large metropolitan areas must
often deal with fluctuations in the number of landlords, the cost of
rent, and other market factors beyond their control. We recommend that
agencies always be able to retain their full accumulated reserves in
order to support leasing in their communities, to allow them the
flexibility to respond to changing markets, and to prepare for planned
and unplanned extraordinary expenses, particularly in light of Federal
budget allocations oftentimes subject to pro-ration. Given their level
of unspent funds, some PHAs have taken steps to increase their voucher
utilization levels. They have made commitments in their communities to
increase leasing by a certain percentage or house a certain number of
additional families. Large funding offsets and pro-rations could derail
such plans, even if a housing authority is making progress toward their
goals. Housing authorities that have defined plans should be allowed
additional reserves protection to increase leasing.
The Newark Housing Authority has been struggling with voucher
utilization issues for more than a decade. Newark's Section 8 program
consistently spends in excess of 100 percent of the allocated Housing
Assistance Payments (HAP) funds; however, we report less than 80
percent utilization on a monthly basis. This discrepancy is due in part
to the high cost of rent in the region and an offset of 10 million
dollars of reserves. The reserve offset occurred in the midst of a plan
to place 2,000 families on the program and created community animosity
and trust issues for the Agency.
Additionally, agencies participating in the Moving to Work (MTW)
program should be funded according to their agreements, subject to any
pro rata adjustment. MTWs rely on their reserve balances as set out in
their plans and agreements to leverage funds for redevelopment and
revitalization projects. Allowing their funding to be offset by their
reserves would severely undermine the goals of the MTW program. HUD has
recognized this fact by exempting MTW voucher funding from offset
provisions to meet Congressionally mandated rescissions (see, PIH 2009-
13, PIH 2008-15). CLPHA supports language in previous versions of SEVRA
that clarifies that MTW agencies shall spend their reserves in
accordance with their program agreements.
Finally, CLPHA has long advocated eliminating the authorized-
voucher cap on leasing, and we strongly support provisions that allow
leasing in excess of authorized levels.
Project-Based Vouchers
CLPHA also supports previous legislative provisions that allows
housing authorities to project-based vouchers in their own buildings,
as part of a public housing redevelopment, without going through a
competitive process. This would eliminate a significant administrative
burden that has, in the past, kept PHAs from being able to commit
project-based vouchers in a timely fashion. Time is often of the
essence in redevelopment deals, and having this provision would
facilitate and expedite project-basing of vouchers. Thus, this
provision would not only help increase the affordable housing supply
using tenant-based resources, but also add to the supply of deeply
subsidized hard units for communities that need them.
Newark's experience with this policy is two-fold. We currently own
a 100 percent project-based voucher, elderly/disabled hi-rise building
that has been thriving for many years. This facility has benefited
tremendously from this initiative in many ways. The most prominent
benefit is what it provides for the residents. Through Project-Based
Vouchering the agency has been able to take on extensive capital needs
of the building and upgrade the general amenities for the residents.
Our second experience involves our current work to convert a public
housing, 220-unit, elderly/disabled hi-rise building into a Section
Eight Project Based facility. We started this process 4 years ago and
quite frankly we are about 70 percent through the conversion. A
significant amount of administrative time and financial resources have
been used to competitively procure and ultimately award project based
vouchers to ourselves. In Newark, Section 8 vouchers are scarce and we
were not able to provide any vouchers to the more than twelve (12)
applications who submitted proposals. Everyone's scarce resources could
be better utilized.
We also strongly urge the Subcommittee to expand the flexibility of
PHAs to use project-based vouchers to leverage private investment for
the preservation of affordable housing. Specifically, we support
increases in the percentage of its Section 8 vouchers that a PHA may
use for project-basing, above the 20 percent cap, and in the number of
vouchers that may be project-based in individual projects, for the
purpose of preservation. There is precedent for these changes under the
recent notice implementing the Rental Assistance Demonstration, which
exempts converted units from the 20 percent cap and increases the
percentage of vouchers that may be project-based in a single project,
though we do not believe that the Department has gone far enough on
this second point. Again, project-based vouchers have become an
essential tool for PHAs' efforts to meet their local community needs,
particularly with populations that require the availability of ongoing
supportive services. Increasing the resources that can be used for this
purpose can play an important role in preserving affordable housing and
efforts to end homelessness and serve other vulnerable populations. In
addition, we support the language in the bill that would extend the
maximum term of the Section 8 contract from 15 years to 20 years, which
will also encourage private investment.
Administrative Streamlining
Some changes that could streamline administrative processes
include: options for triennial recertifications for fixed-income
households and moving to less frequent inspections and interim
recertifications. The Newark Housing Authority spends a large
percentage of administrative fees on work associated with mandatory
annual recertification, annual unit inspections and rent, allowances
and asset calculations. Local flexibility that maintains the integrity
of the program while eliminating the need for high cost, low benefit
work could save our agency vital resources. It is worth noting that
many similar innovations have already been tested for years at MTW
agencies throughout the country. Many MTW agencies have adopted less-
frequent recertifications for their fixed-income households and have
found that it not only produces less stress for their residents, but
also significantly reduces their administrative burden.
Some MTW agencies have been able to streamline their inspection
process, grouping inspections geographically to save travel time and
costs. Allowing housing authorities to use a risk-management approach
to conducting inspections, rather than tying them to arbitrary annual
deadlines, will help relieve housing authorities of a sometimes
redundant administrative burden, while still ensuring that families are
housed in safe and decent housing. Also, allowing housing authorities
to rely on inspections from governmental agencies further simplifies a
complicated inspection process and allows localities to rely on one
standard for guaranteeing the suitability and safety of area housing.
CLPHA previously testified in support of these changes in SEVRA and
SESA.
Additional ways of streamlining administrative processes and
reducing administrative burden and costs include additional
simplification of the rent calculation process (even beyond what is
included in SESA), allowing flexibility with regard to re-inspections,
and allowing the development of local wait-list policies. These are all
areas in which Moving to Work agencies have been developing local
policies, to meet their statutory objective of ``reducing cost and
achieving greater cost effectiveness in Federal expenditures.''
Congress would do well to look to MTW agencies for further ideas about
administrative streamlining.
Rental Assistance Demonstration (RAD)
CLPHA's objective for a rental assistance demonstration was
straightforward. As MTW helps housing authorities in their public and
affordable housing preservation strategies, we were seeking to preserve
the existing housing stock through the funding flexibility and funding
leverage that MTW offers. For this reason, we proposed and supported
the Rental Assistance Demonstration (RAD)--a conversion option for
public housing rental assistance to project-based vouchers (PBV) or
project-based rental assistance contracts (PBRA) that will enable
greater funding flexibility and leveraging. CLPHA worked alongside
other stakeholders to help Congress enact RAD last year as a
demonstration program to preserve this important affordable housing
stock.
We see this initial version of RAD as the first step in converting
public housing subsidies to leverage additional capital investment and
address the nearly $26 billion capital backlog of our public housing
stock. The current no-cost model that authorizes conversions to PBV and
PBRA is an important step forward, but will only go so far in
addressing a segment of the portfolio. Furthermore, a recent industry-
funded research report by Recap Real Estate Advisors makes clear the
critical need for adequate RAD funding in order to provide conversion
and recapitalizing opportunities to a larger pool of public housing
properties.
With no funding to support this first iteration of the
demonstration, CLPHA appreciates the broad waiver authority from
Congress to create the best program possible within the constraint of
current public housing operating and capital subsidies. We believe this
waiver authority is a critically important tool in order to ensure a
successful demonstration program, and HUD should exercise its waiver
authority to a greater extent than it proposes in the recently
published Final Notice. In order to operate successfully under the no-
cost RAD program and for housing authorities to be creative in their
approaches, this flexibility is necessary. For example, the limitations
on PBV conversions, including contract rent setting, the cap on the
number of PBV units in a project, and the 12-month choice mobility
constraint, all create a disincentive for housing authorities to pursue
PBV conversions and undermines a critically important option in the
demonstration program.
The current House AHSSIA draft proposal includes the original
legislative draft language from the stakeholders' coalition on RAD. It
authorizes a demonstration program for the voluntary conversion of
units currently assisted under the public housing or Section 8 moderate
rehabilitation programs to a contract under either the Section 8
project-based voucher or project-based rental assistance programs,
including the authorization of appropriations of $30 million per year
for 5 years of a demonstration. The additional funding is for
supplemental costs of the first year of assistance, evaluation,
technical assistance to housing authorities and tenant organizations,
and other appropriate purposes.
It also authorizes properties assisted under the rent supplement
program or the Section 236 rental assistance program to convert to
project-based Section 8 renewal contracts, subject to the terms of
Section 534 of MAHRAA, with authorization of appropriations of $10
million per year for 5 years.
CLPHA strongly supports the RAD program and considers it an
important tool for public housing preservation strategies. The
additional funding authorization will help PHAs stabilize properties in
markets where the current level of assistance and rents are not
sufficient to address capital backlog needs and provide for long-term
viability of the properties. We support the version of RAD in the
AHSSIA bill, and strongly urge the Senate to include the RAD program in
any legislative proposal.
Moving to Work Expansion
CLPHA has long been a strong supporter for a permanent expansion of
a Moving to Work (MTW)-like program for any interested housing
authority. The premise of MTW is simple, to allow PHAs to develop
locally driven housing plans that respond to local housing needs, in
concert with their residents and community stakeholders. The current 35
MTW agencies administer over 131,000 public housing units and 307,500
Housing Choice Vouchers, or more than 12.5 percent of the current
traditionally PHA-operated housing stock, in addition to operating
local housing programs that fall outside the bounds of traditional
models. A review of the current MTW agencies show that they have raised
the standard of housing services, used program flexibility to create
jobs, added affordable housing stock, served more households, and
helped families build savings. They have also shown how to operate and
manage affordable housing in ways that is accountable to their
residents and local communities without needless and time-consuming
bureaucratic measures that add costs but no value. Many administrative
activities now universally accepted as good practice, providing cost-
savings, are beneficial to residents, and are noncontroversial were
first tested in the laboratory of Moving to Work (MTW).
Instead of asking themselves ``what do we need to do to make sure
we score high on our next Section 8 Management Assessment Plan
(SEMAP)?'', MTW agencies ask themselves, ``where are the most profound
needs in our community and what are we going to do to address them?''
This fundamental shift in thinking has allowed MTW agencies from
Cambridge, MA, to Atlanta, GA, to Seattle, WA, to solve problems in
their communities more efficiently, more rapidly and with greater
community participation than most non-MTW agencies could even imagine.
The strength of MTW is that it allows PHAs to customize their
services to meet the unique challenges their communities face. For
example, in the northwest and northeast, MTW PHAs are engaging with
homeless service providers in ways unimaginable outside of MTW. The new
sponsor-based housing is allowing the most difficult-to-house
populations to find stable homes, with supportive services.
Comprehensive, long-term services are being paired with PHA
redevelopment efforts to create dynamic, place-based service centers
where the most vulnerable households receive not just housing, but the
intensive supports they need to keep from slipping back into
homelessness. These are just a few examples of the amazing work going
on at MTW agencies.
NHA is not designated as an MTW agency, however, in my previous
role as Executive Director of the Pittsburgh Housing Authority, we were
among the original group of agencies granted this broad range of
flexibility. Having worked for 14 years under both circumstances, it is
evident that the greatest advantage of MTW is the localized focus true
regulatory flexibility affords. For example, in Pittsburgh we were able
to utilize MTW to dramatically improve our housing stock, promote
significant private investment, streamline our applicant waiting list
process, promote programs for the homeless and create a social service
endowment to consistently fund strong self-sufficiency programs.
On the other hand, without MTW in Newark, our focus has been
predominately driven by regulatory scoresheets such as the Public
Housing Assessment System (PHAS) and SEMAP. With both limited
flexibility and funding, we spend more of our time focused on the
timeliness of our PIC submissions, Asset Management Projects (AMP) and
Central Office Cost Center (COCC) performance (financial performance of
the central office and grouped sites), Voucher Management System (VMS)
submissions, coordinating REAC inspection activities, along with dozens
of other monthly, quarterly, and annual submissions.
In sum, if the Newark Housing Authority were designated a Moving to
Work site, we would seek to create housing programs for the homeless,
focus on prisoner re-entry and transitional housing. In addition, we
would tackle extensive applicant wait-list issues and examine rent
simplification, recertification and inspection processes for overall
program efficiencies. Finally, we would utilize funding fungibility to
create greater housing opportunities for our city's most vulnerable
populations.
However, we are aware that the MTW program is controversial among
many housing advocates and engenders strong, negative, and emotional
reactions due to misperceptions and misinterpretations of the program's
objectives, accounting, and results. Given the disparate views of
proponents and critics of the program, we realized the best approach to
try to resolve differences was to declare a period of detente, sit down
with the differing parties, and attempt to work out a practical
agreement on extending and expanding the program. The result was
intensive, passionate, and focused deliberations between the
stakeholders.
The stakeholder group representatives included tenant advocates,
civil rights advocates, housing authorities, assisted housing owners,
and HUD. In a remarkable undertaking with no issue too minor or nuanced
for consideration, the stakeholder group produced a set of guidelines
culminating in the ``MTW Expansion Principles and Proposals'', along
with a legislative draft incorporating those guidelines, that was
agreed upon by all the parties involved. The stakeholder agreement
provides for a permanent basic and enhanced MTW program; a robust
evaluation; new development tools; and resident protections.
Included with my written comments for the record is a copy of those
principles (Attachment 1) and legislative draft (Attachment 2).
Closing
In closing, even as we work to improve the housing choice voucher
program, we must not forget the continuing challenges faced by the
shortage of public and other affordable housing. There is still an
urgent need to preserve and increase the supply of housing units
specifically dedicated to those most in need. Once again, CLPHA urges
this Committee to work to provide additional resources and tools to
enable PHAs to preserve our public housing stock and increase the
supply of housing affordable to very low-income households.
We appreciate the Subcommittee's perseverance and willingness to
continue to tackle the reforms needed in HUD's rental housing
assistance programs. We look forward to working with you and HUD on
making additional improvements to the programs and developing reform
legislation.
Thank you again for this opportunity to testify.
PREPARED STATEMENT OF DIANNE HOVDESTAD
Deputy Director, Sioux Falls Housing and Redevelopment Commission, on
behalf of the National Association of Housing and Redevelopment
Officials
August 1, 2012
Chairman Menendez, Ranking Member DeMint, Members of the
Subcommittee on Housing, Transportation, and Community Development,
thank you for giving me the opportunity to provide information and
perspective on ``Streamlining and Strengthening HUD's Rental Assistance
Programs''. My name is Dianne Hovdestad; I currently serve as the
Deputy Director of the Sioux Falls Housing and Redevelopment Commission
(SFHRC) in Sioux Falls, South Dakota. SFHRC provides rental assistance
to approximately 2,000 households by utilizing various HUD-funded
programs. These include: the Section 8 Housing Choice Voucher (HCV)
program; the Section 8 Moderate Rehabilitation Program, public housing,
programs funded through the McKinney-Vento Act, including Shelter Plus
Care and Housing Opportunities for Persons with AIDS; HOME Tenant-Based
Rental Assistance; and the Section 8 Multi-Family program. In addition,
the SFHRC provides affordable housing using Neighborhood Stabilization
Program funding and is currently working toward the construction of
additional affordable housing using the Low-Income Housing Tax Credit
program and the HOME program.
I am also proudly representing the National Association of Housing
and Redevelopment Officials (NAHRO), one of the Nation's oldest and
largest housing advocacy organizations. NAHRO currently represents over
22,000 individual members and over 3,200 housing and redevelopment
authorities across the country. NAHRO has led the fight for cost-
effective legislative reform of the Section 8 voucher program over the
past 10 years. Speaking for myself as someone who has been involved in
the housing industry as a professional for 35 years, I am particularly
pleased to have the opportunity to address the Subcommittee today on
the critically important matter of streamlining and strengthening HUD's
Rental Assistance Programs, particularly the Section 8 voucher program.
Responsible Program Administration During a Period of Fiscal Restraint
I think it is safe to say that this hearing is being held at a time
when economic and political considerations affecting the Nation's
fiscal health are in more dramatic focus than they were when we began
the conversation about administrative and programmatic reform of the
Section 8 voucher program--nearly 10 years ago. Speaking not only for
housing authorities in South Dakota but on behalf of my colleagues
across the country, I think the need to support responsible reform of
the Section 8 voucher program is more pressing and more important today
than it was in 2002. In my own case, the work of my authority and our
own efforts to support those in need of decent, safe, sanitary and
affordable housing in Sioux Falls have been greatly impacted by
spending reductions, which have drastically reduced available funding
to operationalize the voucher program. In particular, Section 8
administrative fees have been reduced to such an extent that in
testimony before the Senate's own THUD Appropriations Subcommittee, HUD
Secretary Donovan testified that housing authorities in growing numbers
were telling HUD that they would no longer be able to afford to run the
voucher program--including the highly praised Veterans Affairs
Supportive Housing (VASH) program that serves America's veterans. Since
that admission earlier this year, the numbers of housing authorities in
the same position has only grown. This alone should compel this
Subcommittee to act now to reform this critically important program by
reducing administrative burdens that not only cost the Federal
Government money in a time of fiscal restraint but also impair housing
authorities' abilities to serve families, seniors and the disabled who
rely on this program to ensure a decent, safe and affordable place to
call home.
The Section 8 HCV program is a regulation-rich program. The myriad
of complex regulations make the program difficult to administer and
difficult for recipients and landlords alike to participate in. Program
operations are subject to administrative directives, rules and
regulations of Federal and State agencies including, but not limited
to, HUD. Administrative directives, rules and regulations are always
subject to change. Most often such changes may occur with little
notice, and/or inadequate funding to pay for related costs. These same
changes usually increase administrative burdens that simply add cost,
often with a limited net gain in efficiency. I want to thank you for
holding this hearing and for your commitment to addressing the pressing
need for reform properly through the authorization process. Hopefully
your work and your leadership will result in thoughtful and purposeful
improvements in HUD's rental assistance programs--most particularly the
voucher program.
Necessary Funding to Properly Administer the Voucher Program
The work of SFHRC, as well as that of other housing authorities
across South Dakota and the Nation, has been greatly impacted by
significant cuts in administrative fees over the past 10 years. By way
of example, in 2003, SFHRC received $970,000 to cover the costs of
administering $7,300,000 in housing assistance payments under the
voucher program. In addition, SFHRC was paid by HUD for audit
reimbursement costs, hard-to-house fees, assessment and preliminary
fees for tenant-protection vouchers. Each year since, SFHRC has
received less administrative fee dollars than it has earned, due to
shortfalls in appropriations which led to significant administrative
fee pro-rations. SFHRC was able to meet the program's regulatory
requirements through the utilization of its Section 8 administrative
fee reserves, currently referred to as Unrestricted Net Assets (UNA).
Unfortunately, SFHRC has now spent down most of its UNA, so it no
longer has that resource to cover future program expenses. Sound
business practice is to have the equivalent of six months of
operational expenses in reserves. SFHRC's current UNA would cover
approximately 12 days of operational expenses.
SFHRC anticipates it will receive administrative fees of $950,000
for calendar year 2012 to administer approximately $10,000,000 in
rental assistance dollars. Due to the pro-ration I referred to earlier,
SFHRC will receive a mere $0.80 for every $1.00 it earns. The
consequences of the decrease in administrative fees have been a
decrease in customer service to both the recipients and the landlords.
Sadly, as I understand from discussions with my NAHRO colleagues, this
is now the norm. SFHRC has not been able to replace staff who have left
its employ; remaining staff have to labor under an increased daily
workload. As a consequence, SFHRC does not have the funds to pay for
overtime, as required by Federal labor laws, so households are waiting
longer for inspections. Recipients, landlords, applicants and the
community wait longer for answers to questions. Landlords in particular
are becoming so upset with this delayed response that they are
threatening to leave the program.
Decreases in administrative fees have also led to a problem with
utilization of SFHRC's annual budget authority for the voucher program.
In calendar years 2008-2011 for example, SFHRC utilized 100 percent of
its vouchers. In calendar year 2012, SFHRC utilization rates are
approximately 95.67 percent, even though SFHRC has over 3,500
households who are on its waiting list. Our wait time is approximately
4 years. The 4.33 percent that is available but not utilized represents
92 very low-income households who are also in desperate need but who
are not receiving assistance with their rent each month. Simply put,
fewer staff means fewer people can be served.
The bottom line? NAHRO projects that 87,352 fewer households will
receive much-needed rental assistance due to staff reductions from lack
of administrative fees. This figure excludes all incremental and
special voucher programs. NAHRO is happy to make available to the
Subcommittee their most recent administrative fee survey, as well as a
chart showing the historic relationship between administrative fee pro-
rations at pre-Quality Housing Work Responsibility Act (QHWRA) rate and
housing authorities' ability to lease and serve low-income households.
Reform Provisions Central to Any Bill To Be Adopted
I believe that today's hearing is a very positive step forward in
the effort to bring about desperately needed changes that will make the
voucher program more inviting to landlords, better able to ease current
administrative burdens on staff and better able to assist the very low-
and extremely low-income households in need of affordable housing. At
NAHRO we believe that local discretion is the key to providing
flexibility for program administrators that serve these households in
varied geographic and economic conditions.
For several years now there has been much talk in Washington about
proposed reforms that would make the administration of the voucher
program and the delivery of other rental assistance programs more
effective and efficient--including, for example, statutory changes to
improve the Family Self-Sufficiency (FSS) program. Here again, an
adequate, consistent subsidy structure is key to a successful program.
A program like FSS needs stable funding, as it is difficult to manage
due to the uncertainty of annual appropriations for housing assistance
payments and administrative fees. Again, it takes people to serve
people, but it also takes adequate and properly deployed funding to
help move families out of poverty and on to a life based upon
individual achievement, accomplishment, and fulfillment.
Mr. Chairman we believe that there are several factors or
components that are essential to any reform bill you ultimately adopt.
At this time, I would like to highlight those factors, recognizing that
several of these components have been part of previous reform bills
that have been under consideration here in Washington.
Housing Quality Standards and Property Inspection Protocols
Under current regulations, a housing authority cannot provide
rental assistance until it has determined that a dwelling unit that a
voucher holder wishes to rent meets HUD's Housing Quality Standards
(HQS). This regulation applies whether the unit is brand new or 100
years old. NAHRO and my colleagues in South Dakota support the
enactment of legislative changes that would give agencies discretionary
authority to start paying rental assistance from the date of the
initial property or unit inspection if there are only minor HQS
violations, i.e., conditional approval, where in addition the rent is
reasonable. We believe that adequate safeguards are in place to ensure
that housing assistance payments will be withheld and assistance abated
in 30 days, from the date of the initial inspection, if the violations
are not corrected. This simple, straightforward change would benefit
both recipients and landlords. Recipients would receive quicker rental
assistance in a safe and healthy environment and landlords would have
an incentive to participate in the program since they would not lose
income while correcting minor violations. A majority of landlords
participating in the voucher programs administered across South Dakota
are in fact small business owners. Any assistance that can be provided
to them in the operation of their rental property with limited loss of
income is a win for everyone. On this point, I would like to note that
HUD program regulations allowed ``conditional approval'' of units from
the inception of the Section 8 Certificate program until 1980. SFHRC
has exercised this option and it has worked very well for the reasons I
noted above.
In an effort to ease unnecessary regulatory burdens, NAHRO also
continues to support the discretionary authority to inspect voucher
program units every 2 years, while acknowledging that this may not be
the right solution for all housing authorities. This would allow
housing authorities to perform inspections on a geographic basis
instead of tying inspections to each household's lease anniversary
date. It is important to note that in South Dakota, as well as other
rural areas across the country, there are housing authorities that
administer the voucher program across significantly large geographical
areas. For most of those housing authorities, it would not be uncommon
for staff to drive 100 miles or more to conduct an inspection. The
annual inspection process is a major program expense when considering
staff salaries (including driving time to the inspection and the
necessary time to conduct the on-site property inspections), gas costs,
vehicle maintenance, and reimbursement for meals while traveling to and
from the property We believe that local discretion to inspect units on
a biennial basis is a critically important cost-savings measure that
should be included in any reform bill you consider.
Finally on this point, in areas of the country where Low-income
Housing Tax Credit, HOME or other multifamily properties are inspected
by other governmental agencies such as a State housing finance
authority, we believe that housing authorities should have the
discretion to use inspections conducted by those entities, as long as
the inspection criteria meets or exceeds HQS, in lieu of conducting our
own HQS inspection.
Income and Rent Determinations
A second component central to any reform effort deals with the
evaluation of resident income and the determination of tenant rents.
The complexity of the rent and income calculations existing under
current regulation is daunting, and no doubt underlies many of the
problems experienced under current rules with respect to payment error.
NAHRO recognizes that efforts to address rent simplicity, and more
particularly ``rent reform,'' are inherently controversial.
Nevertheless, any effort to simplify the rent and income calculation
process should be pursued with all deliberate speed.
All of the various bills which have been in circulation and under
review for years, including the Section Eight Voucher Reform Act
(SEVRA), the Section Eight Savings Act (SESA) and now the Affordable
Housing Self-Sufficiency and Improvement Act (AHSSIA) which is
currently under consideration by the House Financial Services
Committee, include titles intended to provide ``income and rent
simplicity.'' However, with all the changes over the years in each of
the bills, housing authorities that have examined this issue indicate
that none of them accomplish the intended goal of determining household
income and calculating households' rent shares simply, as in the
definition above. I would like to highlight some of our concerns and
recommendations regarding income and rent provisions.
First and foremost, an operational definition of ``income and rent
simplicity'' is an income definition and household rent calculation
method that is relatively simple for housing authorities to calculate
and administer, leaves the Brooke Amendment in place for existing
assisted households by household type (not each individual household)
within each housing authority, but does not automatically create a set
of intended incentives or disincentives for low-income households, and
provides a greater degree of transparency to participating households
property owners and managers. By contrast, an operational definition of
``income and rent reform'' is an income definition and household rent
calculation method that is relatively simple for housing authorities to
administer, does not necessarily leave the Brooke Amendment in place
for existing or future assisted households by household type (not each
individual household) within each individual housing authority, likely
creates a set of intended incentives or disincentives for low-income
households, and likely provides a greater degree of transparency to
participating households property owners and managers.
With this in mind, NAHRO is particularly concerned about two areas
of potential hardship related to elderly and disabled families and
families with dependent children. In any legislation you adopt, we urge
you to include a provision that authorizes the Secretary, by regulation
and for a period not exceeding 3 years following the date of enactment,
to limit increases in rent for elderly or disabled families and for
families with dependent children whose rent has increased due to
changes in the allowable exclusions for medical expenses or child care
expenses.
It is also important to point out that the rent and income
provisions you consider and possibly adopt may have an unintended and
negative impact on housing authorities' rent revenue in the public
housing program. For example, the New York City Housing Authority has
estimated that its public housing rent revenue from residents would
decrease substantially as a result of legislative changes affecting
rent and income. Thus, we urge you to include in any bill you adopt a
provision that would authorize compensation to housing authorities
through increased Operating Funds.
Housing authorities are required to verify and report to HUD all
sources and amounts of included and excluded household income. While
securing third-party verification of income that is to be included in
determining annual income and rent does make sense, the noteworthy
expense of verifying excluded income to be reported to HUD does not.
Additionally, verification of allowable deductions is another time-
consuming and costly administrative process.
If income and rent determinations are done in a way that meets the
principal and intended goals and objectives of the voucher program, and
if income and rent determinations could be conducted in a way that
would otherwise benefit low-income households, then I believe that
property owners and the remaining 99 percent of public housing
authorities that are not MTW agencies would benefit in terms of reduced
administrative burdens. The Federal Government would also directly
benefit from administrative cost savings. I am certain Mr. Kinard of
the Newark Housing Authority can provide you with comments from the
vantage point of an MTW agency.
As the representative of a non-MTW agency in South Dakota, I think
that any changes in income and rent simplicity provisions in the
voucher, public housing and project-based rental assistance program
should reduce burdensome reporting requirements placed on recipients
and should relieve housing authority staff of many verification and
processing tasks that only add cost. As a professional and as a
taxpayer I also believe that a proper income and rent methodology
should reduce the amount of improper payments.
I encourage you to add language to any reform legislation you adopt
that would authorize recertifications for fixed-income households every
3 years, with the application of an annual adjustment factor to their
income. This would provide relief to recipients who struggle to attend
appointments due to physical limitations or lack of reliable
transportation. I also encourage and support other simplification
provisions, such as eliminating the requirement to verify and maintain
records of excluded income, as well as the requirement to use a
household's prior year's income. I also support the ability to use
income determinations made by other Government agencies.
In addition to reducing the reporting and processing responsibility
on low-income households and housing authority staff, income and rent
reform changes have the potential of promoting employment among
assisted households without the immediate burden of paying a higher
rent. Modest reduction of the interim reporting requirement for
decreases and increases in households' earned income, for example,
along with exclusion of the first 10 percent of earned income up to
$9,000, should provide greater incentive for some working households to
remain gainfully employed.
Households with children in particular should also get the benefit
of an increase in the dependent allowance and any program reform bill
you adopt should permit an adjustment in the threshold for unreimbursed
child care expenses from 10 percent to 5 percent of gross income.
Current regulations allow a dollar-for-dollar deduction in gross income
for unreimbursed child care. This new adjustment to child care
deduction would increase the household's rent.
Finally, NAHRO supports language that would enable a housing
authority to implement alternative tenant rent structures in rental
assistance that preserves the Brooke Amendment. Alternative rent
methods include the continuation of flat rents based on the rental
value of the unit, income-tiered rents, rents based on a percentage of
the household's income and the use of existing rent structures. NAHRO
believes that alternative approaches to income and rent determinations,
when carefully reviewed and analyzed for their likely effects, offer
important lessons for possible further improvements for all assisted
agencies and owners and provide opportunities for outcome-based
research for a menu of locally based options in the future.
Funding Policy
As I mentioned earlier, the uncertainty of the renewal funding
process in recent years has made the management and operation of the
voucher program a difficult challenge. The goal of any housing
authority is to maximize its leasing up to its baseline total of
authorized vouchers in order to assist as many families as possible.
Unfortunately, with constant formula changes over the years and delays
in the annual budget process, many agencies have been hesitant to issue
vouchers--either to keep from over-committing their dollars, or to keep
from leasing beyond their baseline until they know their annual
appropriation.
A provision found in the December 1, 2010, version of SEVRA that
bases funding on the actual leasing and voucher costs for the prior
calendar year and the 5-year authorization for renewing leased vouchers
for example provides much-needed stability to properly manage the
program. Authorization to retain 6 percent of annual budget authority
in Net Restricted Assets (NRA) is also an important provision in any
final legislation you adopt.
As I stated earlier, reductions in administrative fee funds have
already had an impact on the number of families that housing
authorities can serve on a national basis. NAHRO is very concerned that
additional funding reductions in FY2013 could lead to more perilous
consequences across the country if a remedy cannot be agreed to and
implemented in a timely fashion. NAHRO has two proposals, either one of
which can responsibly mitigate decreased administrative fee funding.
The first would allow the current HAP and administrative fee accounts
to be combined into one account, providing local authorities with the
discretion to utilize those dollars with proper safeguards built in. A
second approach would allow housing authorities to utilize unused NRA
to supplement dwindling administrative fee dollars--again, with proper
safeguards built in. NAHRO would welcome the opportunity to discuss
these recommendations with you in greater detail as you continue to
deliberate the content of voucher reform legislation.
NAHRO has also prepared a detailed analysis that addresses voucher
funding practices over the years, and has recommendations that will
address problems related to an uneven and unstable funding policy.
Utility Allowances
Currently, each housing authority must devise a utility schedule
for their jurisdiction. The data is often imprecise and continually
changing. For an agency with a large geographic area, or with multiple
providers of a certain utility, the task is arduous, time-consuming,
and costly. Consider, too, all the small public service districts.
NAHRO recommends that HUD be required to share utility costs with
housing authorities and allow them, if they so desire, to utilize these
estimated utility costs as standard allowances. I sincerely hope that
this language is included in any bill that you ultimately adopt.
If HUD were required to publish utility information each year by
State and region from other governmental sources, housing authorities
would know whether or not utility rates in their respective areas
increased by 10 percent or more in order to determine whether or not
conducting extensive calculations of utility rates and consumption were
warranted. We certainly hope the Subcommittee will address this
apparent inconsistency. Housing authorities should be able to use the
utility allowance of a household's authorized voucher size if the
bedroom size of their leased unit is greater than their authorized
voucher size. During the drafting of AHSSIA, your colleagues in the
House responsibly included language proposed by NAHRO that does exactly
that.
Finally, housing authorities should be allowed to use the lower of
their utility companies' ``lifeline'' rates or the standard commercial
rate averages where applicable and be able to average annual utility
allowances by bedroom size in lieu of utility allowances by structure
type. Alternatively, housing authorities should be able to survey their
area utility charges and consumption rates, document them, and propose
average utility allowances by bedroom size, subject to HUD approval.
This would significantly reduce the complexity and calculation errors
by housing authorities for utility allowances, and greatly simplify the
leasing process for voucher holders and property owners to help create
less programmatic barriers to low-income assisted households accessing
the housing market relative to unassisted households.
Current Legislative Reform Proposals Before the Congress
With one notable exception, much of the December 1, 2010, version
of SEVRA (Section 8 Voucher Reform Act) provides a thoughtful and
pragmatic platform to begin your current review and analysis and
hopefully represents a workable place to begin your work on voucher
reform. In 2010, this version of SEVRA was actively discussed for
possible inclusion in the 2011 appropriation bill under consideration
at that time. As such, it was a vehicle that a number of our industry
colleagues, if pressed, likely could have supported. NAHRO played an
active role in moving this particular version of events forward and
formally endorsed this particular legislative draft.
As I mentioned earlier in my statement, the time for action is now.
The 111th Congress had an opportunity to advance a bill that NAHRO felt
made good sense, practically and politically. The December 1, 2010,
version of SEVRA was a rather scaled-down version of earlier iterations
of SEVRA legislation from years past but it was, never the less, a
meaningful and practical bill. That bill did not contain everything we
had hoped for, but it did contain much that we could support, including
the following:
Income Targeting: The December 1, 2010, version of SEVRA improved
income targeting for all extremely low-income applicant households,
with particular benefits for families in rural communities and large-
size families in metropolitan communities, by using the higher of the
Federal poverty level or extremely low-income thresholds. It provided
better access to the Section 8 HCV program, public housing program, and
project-based Section 8 multifamily housing assistance programs.
Housing Quality Standards and Inspection Process: The December 1,
2010, version of SEVRA also included a number of inspection-related
provisions, including ones that would: allow housing authorities the
discretionary authority to conduct HQS inspections of all of their
voucher-assisted units every 2-years rather than annually; permit
housing authorities to perform inspections on a geographical basis;
allow inspections conducted by other entities to be used in place of a
housing authority-conducted HQS inspection; and permit a housing
authority at its discretion to allow a voucher-assisted household to
move into a dwelling unit after signing a lease with a property owner
for a unit that has a reasonable rent and no health or safety
violations, such that an agency may commence a lease, execute a HAP
contract and verify within 30 days that the unit passes HQS.
Administrative Simplicity for Income and Rent Reviews:
Administrative simplification provisions in the December 1, 2010,
version of SEVRA also track with the reforms noted in my testimony
today. That version of SEVRA would have relieved housing authorities of
the responsibility to maintain records of miscellaneous HUD-required
income exclusions, and would have allowed housing authorities to use
applicable inflation adjustments for fixed-income families.
Additionally, language in that bill permitted housing authorities safe
harbor reliance on other governmental income determinations (e.g.,
Medicaid, TANF), and allowed housing authorities to make other
appropriate adjustments when using prior year's calculations of other
types of income. These would be welcome additions to the HCV program.
NAHRO also supported provisions regarding housing authorities' use of
households' prior-year earned income and alternative rent structures
that would be allowed under the voucher, public housing and project-
based Section 8 programs.
Expansion of Family Self-Sufficiency Program (FSS): The December 1,
2010, version of SEVRA converted the Family Self-Sufficiency (FSS)
program from an annual competitive grant to an administrative fee to
pay for the cost of an FSS coordinator as part of the standard
administrative fee provided to housing authorities. Additionally,
language in the bill would have established standards for the number of
FSS coordinators that an agency may fund and restored coordinator
funding for agencies with effective FSS programs that lost funding in
prior years for reasons unrelated to performance.
Payment Standards, Fair Market Rents, and Utility Allowances: The
December 1, 2010, version of SEVRA required HUD to approve housing
authority requests to raise the payment standard to up to 120 percent
of the Fair Market Rent (FMR) for housing authorities with high rent
burdens or high concentrations of poverty. To provide reasonable
accommodations for persons with disabilities, the proposed bill also
permitted housing authorities to, without HUD approval, increase
payment standards up to 120 percent of the FMR. Also, HUD was
authorized to approve payment standard requests in excess of 120
percent of FMR. The 2010 bill also improved the timing of HUD-published
FMR values. This version of SEVRA also required HUD to publish data
regarding utility consumption and costs in local areas as is useful for
the establishment of allowances for tenant-based utilities for voucher
families.
Access to HUD Programs for Persons With Limited English
Proficiency: The 2010 bill language also included a requirement that
HUD develop and make available translations of vital documents
developed by a HUD-convened task force, establish a toll-free number
and document clearing house, and complete a study of best practices for
improving language services for individuals with Limited English
Proficiency (LEP).
Project-Based Voucher Assistance Program: Finally, the December 1,
2010, version of SEVRA would have amended the percentage of units that
can have project-based assistance in an agency's voucher portfolio;
provided protections against displacement for families who reside in a
dwelling unit proposed to be assisted under the PBV program; and
permitted the use of site-based waiting lists under the PBV program--
all of which NAHRO supported.
AHSSIA
In the period of time between December of 2010 and today, your
House colleagues on the Financial Services Committee have advanced two
separate reform proposals: the Section 8 Savings Act (SESA) and the
current Affordable Housing Self Sufficiency Improvement Act of 2012
(AHSSIA). At present, an AHSSIA draft proposal has already been
approved by the Insurance, Housing and Community Opportunity
Subcommittee. We understand that the draft is currently being readied
for a full Committee mark-up, which will hopefully take place following
the August recess. We at NAHRO believe that there is much that we can
support in the most recent AHSSIA draft. I would add the fact that
NAHRO's many discussions with House staff about improving that proposal
even further have been fruitful and productive. Our views on the most
recent draft of AHSSIA are as follows:
Funding Voucher Renewals: With respect to Housing Assistance
Payments and Net Restricted HAP Assets, NAHRO believes that regulatory
and administrative reforms are desperately needed. The backbone upon
which the voucher program relies to achieve its historic success--a
sound funding policy--has been thrown off kilter over the years and is
in need of improvement. Housing authorities around the country have
witnessed a widening gap between budget utilization rates and their
voucher lease-up rates (percentage of authorized vouchers leased). As a
result, many housing authorities are now serving fewer families than
their authorized number of vouchers. We would submit that prudent,
strategic and purposeful application of a sound funding policies based
on lessons learned, and the restoration of the renewal HAP funding
policy that was in place in FY2003 represent the centerpiece of any
voucher reform legislation and accordingly should be included in the
final bill you adopt. Please know that funding policies recommended by
NAHRO over many years do not increase the amount of required funding,
but rather distribute this limited Federal resource on a sound and
rational basis subject to pro-rations. This approach we believe would
provide a greater measure of transparency and accountability to voucher
programs. We are pleased to see that the most recent draft of AHSSIA
does contain a voucher renewal policy that for the most part includes
these important components. But we are concerned however that offsets
of MTW agency dollars are anticipated in the most recent House draft
with respect to voucher renewals. We oppose offsets of this nature and
we are working with House staff to find a mutually acceptable solution.
To avoid problems such as this, we suggest that this Subcommittee
formally adopt language on this subject that has been a part of THUD
bills for the past 7 years. This language would avoid overfunding/
underfunding of housing authority dollars and the formula for renewals
in these same bills is based upon actual cost data from housing
authorities. Both components are necessary and entirely appropriate and
we urge that you include language in your bill that anticipates and
includes language to support these important points.
Financial Self Sufficiency (FSS): NAHRO has supported the inclusion
of language concerning the FSS program in AHSSIA and has been pleased
to support the provision championed by Chairwoman Biggert over several
years. We would, however, note that HUD has also advanced FSS reform
legislation that also appears to achieve many of the objectives NAHRO
could support. Senator Reed, a distinguished Member of the Banking
Committee, is also very involved in the FSS discussion. Our hope is
that a consensus product will be hammered out and will part of any
final reform bill that Congress approves going forward. We feel
confident we could support a responsive FSS provision in any final
reform product you adopt based upon our most recent review of proposals
currently on the table.
In all circumstances however, current experience over the last
several years have shown us that unless Congressional appropriators
increase funding for the expanded FSS program contemplated by HUD,
Senator Reed and Representative Biggert, existing agencies with
successful FSS programs will lose much-needed funding. NAHRO recommends
coordination between this Subcommittee and the THUD Appropriations
Subcommittee as this legislation moves forward to ensure that there are
not unintended consequences of existing agencies inadvertently losing
their existing FSS funding.
Restoration of ``Maximized Leasing'' and an Explicit Policy on Net
Restricted Assets: Earlier AHSSIA discussion drafts have included
language that states ``[r]eserves may be used for overleasing in any
year, regardless of whether such use is eligible for renewal funding in
a subsequent calendar year.'' Although the language contained in
earlier AHSSIA discussion drafts does not state whether the use of
reserves would be eligible for HAP renewal funding, NAHRO is at a
minimum pleased these provisions would reinstate ``maximized
leasing''--a wise and prudent practice that worked effectively prior to
FY2003. Maximized leasing was an option formerly available to housing
authorities for many years under the voucher program. It has enabled
them to serve the maximum number of households possible with the annual
amounts provided to them, so long as their annual spending over the
subsequent year did not exceed 100 percent of their contracted units
over the 2-year period.
Ongoing Administrative Fees: NAHRO believes that studying
administrative fees in the voucher program is necessary. We believe
that a study, if well-designed and well-executed, can illustrate the
voucher program's current condition relative to these goals, and would
illustrate examples where a balance is being struck between the methods
housing authorities are using to achieve balanced outcomes within their
budgets. However, we feel strongly that final determinations regarding
administrative fee rates should not be left open to change by the
Executive Branch. If allowed by Congress, one Administration could, for
example, use the authority to significantly incentivize use of vouchers
in metropolitan and suburban areas at the expense of rural communities
unmet affordable housing needs; another Administration could use its
authority to significantly incentivize widespread use of deep rental
housing subsidies at the highest end of agencies' payment standard
authority even if it meant serving fewer families overall. Still
another Administration could use its authority to significantly
incentivize home ownership at the expense of rental housing
opportunity.
Administrative fee rates have been established in statute over the
history of the HCV program with operational success, without undue
influence by any Administration. The Office of Management and Budget
(OMB) has consistently given the HCV program the highest rating awarded
to any of HUD's programs. Just as we have emphasized how important a
sound HAP and NRA funding policy is to the success of voucher programs,
we also believe that the funding structure to support the
administrative functions necessary to help families succeed and to
enforce housing quality standards under the program be established by
the Congress. Accordingly, for reasons specified above, NAHRO believes
that any legislation you adopt should require HUD to submit ongoing
administrative fee study findings to Congress and to interested
stakeholders. NAHRO also supports deferring to the existing authorized
statute regarding pre-QHWRA fee rates and design under Section 8(q).
Moving to Work: NAHRO has long advocated for greater program
flexibility and an expanded Moving to Work (MTW) program in its current
form. We fully support expanded participation in a well-designed MTW
program, as has been done in an incremental fashion over the last
several years through the appropriations process and in similar fashion
in legislation sponsored by Representative Gary Miller. NAHRO's first
order of business with regard to MTW over the years has been and
remains to ensure that existing MTW agencies do not have to unravel
their valuable programs, which they have crafted over several years. We
do however strongly support an expansion of MTW to enable program
flexibility for many more housing authorities, large and small. If
moving and passing long-awaited legislative reforms for non-MTW
agencies means doing so without a separate MTW title, NAHRO would
support introduction and passage of a stand-alone and well-crafted MTW
bill.
With respect to MTW language found in AHSSIA, NAHRO and many other
groups working with HUD collaborated on principles to underpin an
expanded MTW program. Much of what we agreed to as a group is we
understand to be included in any final version of AHSSIA. We urge this
Subcommittee to carefully consider this consensus approach to MTW
expansion as one possible approach towards greater program flexibility
for many more housing authorities nationwide. However we also stand
ready to work with you to find additional avenues to encourage program
innovation and flexibility using the current MTW framework.
Meaningful Regulatory and Administrative Reforms From HUD Are Long
Overdue
I would also like to briefly raise the matter of administrative and
regulatory reform which, in our opinion, has been long-overdue at HUD
with regard not only to the voucher program but other programs
administered by housing authorities.
On May 3, 2011, NAHRO provided an extensive set of recommendations
(Document ID: HUD-2011-0037-0024-1 and HUD-2011-0037-0024-2) regarding
regulatory and administrative reforms in the voucher, public housing
and community development programs, in response to President Obama's
Executive Order 13563 titled, ``Reducing Regulatory Burden;
Retrospective Review.'' On, May 23, 2011, NAHRO also sent a letter to
HUD to thank HUD for including us in a ``Delivering Together'' briefing
focusing on the Department's intent to identify and implement short-,
medium-, and long-term regulatory and statutory reforms to decrease the
regulatory and administrative burden faced by public housing agencies.
At that time, NAHRO submitted a smaller list of 27 regulatory and
administrative reforms in voucher programs, and also at that time
expressed our belief that significant reforms are needed immediately
for programs administered by housing authorities.
We believe that, in addition to the efforts you are making to
advance voucher reform legislation, HUD should be prompted by Congress
to act with deliberate speed to put in place long-overdue regulatory
and administrative reforms that would further enhance and expedite a
more cost effective and administratively less burdensome voucher
program. We ask the Subcommittee to work with us to ensure the rapid
execution of these reforms that HUD can do now.
Conclusion
Mr. Chairman, as this Subcommittee seeks to advance a bill that not
only makes sense substantively but politically, we urge you to consider
and ultimately adopt a bill that hews closely to the December 1, 2010,
version of SEVRA and reflects some of the more thoughtful and
constructive provisions in AHSSIA that we have identified today. We see
no reason, given the measure of support that the December 1, 2010,
version of SEVRA had and the AHSSIA bill for the most part now has, to
either radically depart from language contained in these constructive
approaches to reform--or worse to start from scratch. The time for
discussion has passed; the time to act is now! With specific respect to
AHSSIA, we are very pleased to see that your House colleagues made
significant progress on a number of issues important to NAHRO,
including improvements to the HQS section, and also retained important
language regarding the establishment of administrative fee rates by
Congress. Certainly there is more that this Subcommittee can do to
improve upon both bills as I have noted but, after almost 10 long years
of fits and starts, there is no reason to undermine largely viable
products that have many if not most program stakeholders on board.
On behalf of my colleagues at NAHRO, thank you again for the
opportunity to come before you and express our opinions regarding this
vitally important legislation. We look forward to working with you to
achieve voucher reform now!
______
PREPARED STATEMENT OF HOWARD HUSOCK
Vice President for Policy Research, Manhattan Institute
August 1, 2012
Thank you Mr. Chairman and thanks to this Committee for devoting
its time and attention to the important issues of low-income housing
policy, which matters so much both to the Nation's most disadvantaged
households and to the economies and development of our cities.
The question of how to finance and maintain affordable housing and
how to structure and manage our tenant-based low-income housing
programs so as to encourage self-sufficiency and upwardly mobility,
both discussed in the bill recently considered by the House, are
crucial elements of both U.S. housing policy--and social policy. In
these remarks, I will focus mainly, on tenant-based programs,
particularly the Housing Choice Voucher program.
As the members know, housing vouchers, over the past two decades,
have emerged as a major program for many of our lowest-income
households, roughly doubling in size. In FY1998, the Congress
appropriated some $9 billion for local public housing authorities to
distribute in voucher form; most recently, the HUD budget includes more
than $17 billion for the purpose. Vouchers now serve more households
than traditional public housing--1.8 million vouchers were issued from
March 2011 through June 2012, compared with just 1.1 million
traditional public housing households. Spending on vouchers has even
surpassed direct cash benefits provided through the Temporary
Assistance for Needy Families program of time-limited support.
One can well understand and sympathize with the reasons for
supporting the program's growth. The challenge for the lowest-income
families, those earning 30 percent or less of the median income, to
find housing they can afford is substantial, although the unfortunate
rise in home foreclosures may plausibly make some difference in that
regard. It is important, however, to understand the housing choice
voucher program, in addition, as a key aspect of U.S. social policy--
our policy aimed at aiding the long-term upward mobility of the most
disadvantaged households. That traditional goal of social policy--what
President Johnson called a ``hand up''--is relevant to the program, in
which many of the most vulnerable households are enrolled. Like
traditional public housing, nonelderly voucher recipients with children
are largely single-parent families--a full 94 percent of whom are
headed by single women. By design, the program serves disadvantaged
households of extremely low income--47 percent of voucher recipients
are at or below 20 percent of the national median income.
The importance of structuring the program so as to provide aid and
incentives such that households move toward economic self-sufficiency
has, in addition to being in keeping with the traditional goal of
social programs--as expressed, for instance in the 1996 welfare reform
act signed by President Clinton, Work--also has a practical dimension.
The combination of long waiting lists and the likelihood that
appropriations will not be significantly increased and the program
expanded, means that it behooves policy makers to find ways for the
program to help participating families move up and out, if only so as
to be able to serve others in need.
It's in this context that it's crucial to set goals for the program
that go beyond administrative efficiency, as important as that is--and
include, in addition, such metrics as employment, increased household
income, and what could be called graduation from the program, or
reduced tenure length. To find the best ways to manage and structure
the program so as to achieve these goals, it makes good sense to give
the Nation's extensive network of 3,200 public housing authorities
flexibility, based on the model of efforts authorized under HUD's
extremely important but modestly scaled Moving to Work initiative,
which should be made permanent and expanded to include as many
interested authorities as possible.
There is precedent for this approach. In the early 1990s, the
Nation saw State Governments, in their traditional role that Justice
Brandeis characterized as that of laboratories of democracy, experiment
with a variety of approaches to welfare reform. The results guided what
then proved to be a successful Federal level reform, which has since
reduced dependency and increased workforce participation. We have seen
similar significant local successes among those public housing
authorities permitted to date to make use of the flexibility of the
Moving to Work program. Notably the Atlanta Housing Authority, about
which I've written extensively in City Journal, used its MTW waiver to
link a work requirement with the housing choice voucher, coupled with
an extensive counseling and workforce preparation program. As a result,
it has seen an increase in workforce participation among its nonelderly
population from 14 percent in 1994 to 71 percent today. Atlanta
officials believe they have created what they term ``a culture of
work''--an historic return to the original conception of who public
housing authorities should serve. Other authorities, including
Cambridge, Mass, and Portland, Oregon, are using Moving to Work ways to
change their rent structure so as to stop discouraging work--and to
encourage tenants to move up and out over time. HUD data shows that,
currently, 50 percent of voucher tenants, and 48 percent of tenants in
traditional public housing, have been in the program for 5 years or
longer, a tenure beyond the time limit included in the TANF legislation
and with which housing programs might logically be aligned. An
expansion of Moving to Work could allow other authorities to try such
experiments--or even to consider, as Philadelphia has, an outright time
limit, or to tie housing assistance to education, as in Tacoma,
Washington.
Flexibility for local housing authorities must be guided, however,
by clear goals to be shaped by the Congress and overseen by HUD. These
could include increases in employment, measurable increases in voucher
household income, and reduced length of stay in the voucher program
itself. As with public education, the requirement to meet standards,
coupled with local flexibility in how best to do so, can be an
effective approach. Local officials know their own labor and real
estate markets best. It's unwise to limit the flexibility that comes
with Moving to Work, an initiative begun by the Clinton Administration,
to just 30 of the Nation's 3,200 housing authorities. It's a result
which could be achieved, as well, through a bloc grant approach to the
voucher program generally.
It is important to acknowledge and keep in mind, as well, as you
consider such changes, that the voucher program has experienced
problems that Moving to Work might help to fix. In a 2009 paper for the
University of Cincinnati School of Planning entitled ``The Geographic
Concentration of Housing Vouchers'', a team of researchers led by David
Varady concluded that a concerted effort by the local housing authority
to reduce the reconcentration of poverty households through the voucher
program--a goal widely discussed--had not succeeded. The authors found
``vouchers clustering in areas that are poor and/or getting poorer,
including ``emerging hot spots''--and reported, too ``neighborhood
alarm.'' The study cites and confirms journalistic accounts, including
my own in City Journal and that of Hannah Rosin in The Atlantic, which
have raised similar concerns. In discussing what the authors call the
``implications for national policy'', they conclude that ``studies
combining the qualitative and quantitative perspectives are urgently
needed''. Policy innovation, permitted at the local level, can serve as
the foundation for such research, as policy makers, over the long-term,
consider whether housing-specific assistance, and on what terms, is the
best way to assist low-income households.
Finally, I'd like to address briefly the proposal, also discussed
in the House bill's language, to convert public housing capital and
operating subsidies into project-specific vouchers, as a both a means
to preserve affordable housing developments in their current use and to
facilitate increased investment of private capital to reduce an
estimated $30 billion in maintenance backlogs. The rationale for doing
so, in a time of serious maintenance needs and budget shortfalls, is
obvious--and may provide a useful additional tool for public housing
officials facing serious deferred maintenance. I would urge, however,
that Members of this Committee be cautious in a too-broad embrace of
such plans. First, public policies which use public funds, tax credits,
or regulatory mandates to influence the allocation of private capital
risk reducing the availability of capital for other uses which may
contribute more to economic growth and wealth creation--in ways which
ultimately benefit lower-income families more than might affordable
housing preservation. Similarly, the designation of specific real
estate parcels for affordable housing purposes for the long-term risks
inducing municipalities to forestall the use of such parcels for the
highest and best economic uses--again in ways that may uplift the
economic prospects of all citizens. The proposed voucher-based
maintenance financing approach for public housing is impressively
imaginative--but should not been seen, in my view, as a way to
preserve, unit-by-unit--all public and subsidized housing. Better, in
my own view, for the Congress, through HUD, also to encourage
additional approaches which could include, for instance, the sale of
high-value parcels currently owned by local housing authorities so as
to create locally based maintenance endowments for remaining units.
Let's be guided, both in how much public housing we preserve, and how
we set the regulations for housing vouchers, not by a narrow goal of
preservation or expansion but by a broad determination to help uplift
low-income households and improve the economies of our cities.
______
PREPARED STATEMENT OF WILL FISCHER
Senior Policy Analyst, Center on Budget and Policy Priorities
August 1, 2012
Thank you for the opportunity to testify. I am Will Fischer, Senior
Policy Analyst at the Center on Budget and Policy Priorities. The
Center is an independent, nonprofit policy institute that conducts
research and analysis on a range of Federal and State policy issues
affecting low- and moderate-income families. The Center's housing work
focuses on improving the effectiveness of Federal low-income housing
programs, and particularly the Section 8 housing voucher program.
It is commendable that the Subcommittee is holding a hearing on
streamlining and strengthening rental assistance. The proposed
Affordable Housing and Self-Sufficiency Improvement Act (AHSSIA),
Section 8 Savings Act (SESA), and Section 8 Voucher Reform Act (SEVRA)
all contain important, timely measures to strengthen the voucher
program and other major rental assistance programs. The reforms in
these bills would sharply reduce administrative burdens for State and
local housing agencies and private owners, establish voucher funding
rules that would enable housing agencies to manage funds more
efficiently, strengthen work supports, and generate large Federal
savings.
This testimony focuses on seven core reforms that should receive
top priority for enactment. Each of these measures appears in some form
in the version of AHSSIA circulated by the Financial Services Committee
on April 13, 2012, and the version of SEVRA circulated by the Banking
and Financial Services Committees on December 1, 2010. \1\ These high-
priority reforms would:
---------------------------------------------------------------------------
\1\ My testimony focuses on these versions--the most recent public
version of each bill--except where otherwise noted. Since SESA was
circulated by the current leadership of the House Financial Services
Committee earlier in this Congress, I generally focus on the
Committee's later AHSSIA bill instead. A detailed side-by-side
comparing AHSSIA, SEVRA, and current law is available at http://
www.cbpp.org/files/5-10-12-SEVRA-AHSSIA-CurrentLaw-Comparison.pdf.
Simplify rules for setting tenant rent payments, while
---------------------------------------------------------------------------
continuing to cap rents at 30 percent of a tenant's income;
Streamline voucher housing quality inspections to encourage
private owners to participate in the program;
Establish a stable, fair voucher funding system to enable
agencies to use funds more efficiently and better cope with
shortfalls;
Allow more working poor families to qualify for vouchers by
modestly raising income targeting limits;
Strengthen the Family Self-Sufficiency program, which
offers housing assistance recipients job counseling and
incentives to work and save;
Provide added flexibility to ``project-base'' vouchers to
support affordable housing development and preservation;
Make the rental assistance admissions process fairer by
limiting screening to criteria related to suitability as a
tenant.
My testimony also discusses several other provisions that have been
included in one or more of the reform bills.
Reform Would Build On Strengths of the Rental Assistance Programs
The Nation's rental assistance programs help more than four million
low-income households afford decent housing. The great majority of
these households are senior citizens, people with disabilities, and
working poor families with children. As shown in the table attached to
this testimony, rental assistance units are spread among the 50 States
and across rural and urban areas.
Rigorous research has shown that rental assistance can sharply
reduce the incidence of homelessness and housing instability--problems
that have been shown to have serious harmful effects on children's
health and development. \2\ Families that receive assistance to ease
rent burdens also have more funds available for other basic needs, such
as food, medication, child care, and transportation, and may be able to
save or invest in education to help lift themselves out of poverty. \3\
---------------------------------------------------------------------------
\2\ Diana Becker Cutts, MD, ``U.S. Housing Insecurity and the
Health of Very Young Children'', American Journal of Public Health,
August 2011, Vol. 101, No. 8, p. 1508; Michelle Wood, Jennifer Turnham,
and Gregory Mills, ``Housing Affordability and Well-Being: Results From
the Housing Voucher Evaluation'', Housing Policy Debate 19:367-412
(2008).
\3\ Joint Center for Housing Studies of Harvard University,
``America's Rental Housing: Meeting Challenges, Building on
Opportunities'', April, 2011, p. 5 and table A-9, http://
www.jchs.harvard.edu/sites/jchs.harvard.edu/files/
americasrentalhousing-2011.pdf.
---------------------------------------------------------------------------
Housing assistance produces positive indirect effects, as well.
Studies suggest that work-promoting initiatives are more effective for
families with affordable housing, \4\ and a growing body of research
suggests that stable, affordable housing may provide children with
better opportunities for educational success. \5\ Affordable housing
combined with supportive services can help the elderly and people with
disabilities retain their independence and avoid or delay entering more
costly institutional care facilities. \6\ The evidence of health care
and other savings from providing affordable housing and services to
homeless individuals with chronic health problems is particularly
compelling. \7\
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\4\ James A. Riccio, ``Subsidized Housing and Employment: Building
Evidence of What Works'', in Nicolas P. Retsinas and Eric S. Belsky,
eds., Revisiting Rental Housing, Joint Center for Housing Studies and
Brookings Institution Press, 2008.
\5\ Maya Brennan, ``The Impacts of Affordable Housing on
Education: A Research Summary'', Center for Housing Policy, May 2011,
http://www.nhc.org/media/files/Insights_HousingAndEducationBrief.pdf.
\6\ Gretchen Locke, Ken Lam, Meghan Henry, Scott Brown, ``End of
Participation in Assisted Housing: What Can We Learn About Aging in
Place?'' Abt Associates Inc., February 2011, available at: http://
www.huduser.org/publications/pdf/
Locke_AgingInPlace_AssistedHousingRCR03.pdf.
\7\ For summaries of findings and references, see U.S. Interagency
Council on Homelessness, ``Opening Doors: Federal Strategic Plan To
Prevent and End Homelessness, 2010'', pp. 18-19, http://www.usich.gov/
PDF/OpeningDoors_2010_FSPPreventEndHomeless.pdf; and Michael Nardone,
Richard Cho, and Kathy Moses, ``Medicaid-Financed Services in
Supportive Housing for High-Need Homeless Beneficiaries: The Business
Case'', Center for Health Care Strategies, Inc., June 2012, available
at http://www.rwjf.org/files/research/74485.business.case.pdf.
---------------------------------------------------------------------------
Research has found additional benefits when housing assistance
enables low-income families to live in neighborhoods with lower poverty
rates, including sharply fewer deaths from disease or accidents among
girls and lower rates of obesity and diabetes. \8\ Where housing
policies have allowed low-income children to attend high-performing,
economically integrated schools over the long term, their math and
reading test scores are significantly better than comparable children
who attended higher-poverty schools. \9\
---------------------------------------------------------------------------
\8\ Jens Ludwig, et al., ``Neighborhoods, Obesity, and Diabetes--A
Randomized Social Experiment'', New England Journal of Medicine,
365:16, October 2011, http://www.nejm.org/doi/full/10.1056/
NEJMsa1103216; Brian A. Jacob, Jens Ludwig, Douglas L. Miller, ``The
Effects of Housing and Neighborhood Conditions on Child Mortality'',
NBER Work Paper No. 17369, National Bureau of Economic Research, August
2011, http://www.nber.org/papers/w17369.
\9\ Heather Schwartz, ``Housing Policy is School Policy'', The
Century Foundation, 2010, http://tcf.org/publications/pdfs/housing-
policy-is-school-policy-pdf/Schwartz.pdf.
---------------------------------------------------------------------------
The core reforms in SEVRA and AHSSIA would build on this record of
success. Fourteen years have passed since the enactment of the Quality
Housing and Work Responsibility Act (QHWRA) in 1998, the last major
authorizing legislation affecting the voucher and public housing
programs. As with any program, adjustments are needed over time to
reflect changed circumstances and lessons learned.
Reforms that stretch limited dollars to assist more families or
avoid painful cuts are especially urgent today, when budgets are tight
but unemployment, poverty, and homelessness are high. The Congressional
Budget Office (CBO) estimated that the December 2010 version of SEVRA
would reduce the budget authority needed to fund the current level of
housing assistance by more than $700 million over 5 years. Financial
Services Committee staff have indicated that the April 2012 version of
AHSSIA (which included additional cost saving measures) would save at
least $1.5 billion. These estimates do not attempt to include
administrative savings, which could lower funding needs by an added
several hundred million dollars over 5 years.
Simplifying Rules for Determining Tenants' Rent Payments
Tenants in HUD's housing assistance programs generally must pay 30
percent of their income for rent, after certain deductions are applied.
The rent streamlining provisions in AHSSIA and SEVRA maintain this
rule, but would streamline determination of tenants' incomes and
deductions. As a result, the bills would reduce burdens on housing
agencies, property owners, and tenants. The changes would also reduce
the likelihood of errors in rent determinations and strengthen work
incentives for tenants.
Most significantly, the bills would:
Reduce the frequency of required income reviews. Currently,
agencies and owners must review income annually for all
tenants. AHSSIA and SEVRA would allow agencies and owners to
limit reviews to once every 3 years for households that receive
most or all of their income from fixed sources such as Social
Security or SSI and consequently are unlikely to experience
much income variation. \10\
---------------------------------------------------------------------------
\10\ Many fixed-income benefits, such as Social Security and SSI,
typically increase annually due to cost-of-living adjustments. To avoid
a loss of revenue from this streamlined option, agencies would be
required to assume that in the intervening 2 years these tenants'
incomes rose by a rate of inflation specified by HUD.
Today agencies and owners also must adjust rents between annual
reviews at the request of any tenant whose income drops. AHSSIA and
SEVRA would require adjustments only when a family's annual income
drops by 10 percent or more, making such ``interim'' reviews less
common but still providing adjustments when tenants would otherwise
face serious hardship. The bills also would require interim adjustments
for income increases exceeding 10 percent, except that adjustments for
earnings increases would be delayed until the next annual review to
strengthen work incentives.
Together, these changes would sharply reduce the number of income
reviews that agencies and owners must conduct. This would substantially
lower administrative costs, since income reviews are among the most
labor-intensive aspects of housing assistance administration.
Simplify deductions for the elderly and people with
disabilities. Currently, if the household head (or his or her
spouse) is elderly or has a disability, housing agencies and
owners must deduct medical expenses and certain disability
assistance expenses above 3 percent of the household's income
from income for purposes of determining the household's rent.
Agencies and owners report that this deduction is difficult to
administer, since they must collect and verify receipts for all
medical expenses. It also imposes significant burdens on
elderly people and people with disabilities, who must compile
and submit receipts that may contain highly personal
information. Largely for these reasons, many households
eligible for the deduction do not receive it. By contrast, a
second deduction targeted to the same groups--a $400 annual
standard deduction for each household where the head or spouse
is elderly or has a disability--is quite simple to administer.
AHSSIA and SEVRA would increase the threshold for the medical and
disability assistance deduction from 3 percent of annual income to 10
percent. This would reduce the number of people eligible for the
deduction--and therefore the number of itemized deductions that would
need to be determined and verified--while still providing some relief
for tenants with extremely high medical or disability assistance
expenses. At the same time, the bills would increase the easy-to-
administer standard deduction for the elderly and people with
disabilities, to $675 annually in SEVRA and $525 annually in AHSSIA,
and index it for inflation.
In addition to reducing processing burdens for agencies, owners,
elderly people, and people with disabilities, this change is likely to
reduce payment errors substantially. HUD studies have found that the
medical and disability expense deduction is one of the most error-prone
components of the rent determination process, while errors in the
standard deduction are rare.
The higher $625 standard deduction in SEVRA would be preferable,
since it would come closer to fully offsetting rent increases (on
average across all families) from the scaled back medical expense
deduction (although it would also result in somewhat lower savings).
Some individual households would see higher or lower monthly rents, but
the changes would generally be modest. Congress could provide added
protection for tenants who are adversely affected by allowing HUD to
establish a hardship exemption policy (as AHSSIA would do) and delaying
the effective date of the change to allow tenants to find other ways to
cover out-of-pocket medical expenses.
Simplify deductions for families with children. AHSSIA and
SEVRA would scale back an existing deduction for child care
expenses--which evidence suggests is implemented
inconsistently--by allowing deductions only of expenses above 5
percent of income (rather than all reasonable expenses). At the
same time, it would increase from $480 to $525 a simple annual
deduction that families receive for each child or other
dependent, and index it for inflation. The dependent deduction
recognizes the larger share of family income required to cover
nonshelter expenses when a family has more children.
Base rents on a tenant's actual income in the previous
year. Currently, rents are based on a tenant's anticipated
income in the period that the rent will cover, usually the
coming 12 months. Except when a family first begins receiving
housing assistance, AHSSIA and SEVRA would require agencies
generally to base rents on actual income in the previous year.
This would give tenants an incentive to increase their
earnings, since such an increase would not affect their rent
for as long as a year. It also would simplify administration,
both by making it easier for agencies and owners to use tax
forms and other year-end documentation to verify income and by
reducing the need for midyear rent adjustments for tenants
whose earnings change during the year.
Limit utility allowances based on family size and
composition. AHSSIA contains a provision to limit utility
allowances in the voucher program based on the number of
bedrooms a family is eligible for given its composition, rather
than the actual size of the unit. Today families are permitted
to rent units larger than they are eligible for, but the cap on
the total housing costs the voucher covers (that is, the
payment standard) does not rise as a result. Adopting the
AHSSIA limit on utility allowances would generate savings and
avoid providing families incentives to rent larger units than
they need.
Allow housing agencies to use income data gathered by other
programs. AHSSIA and SEVRA contain a provision that would allow
State and local housing agencies and owners to rely on income
determinations carried out under SNAP (formerly food stamps)
and other Federal means-tested programs, without separate
verification. Currently, housing agencies and owners must
determine and verify income independently, even though this
duplicates work already being carried out by other agencies.
Allowing housing agencies to rely on income determinations made
by SNAP agencies would ease their administrative burdens
considerably, since a large portion of housing assistance
recipients also receive SNAP benefits.
AHSSIA, however, does not include a provision from the December
2010 version of SEVRA requiring State SNAP agencies to make available
to housing agencies income data for families participating in both
programs. It is important that Congress include this requirement, since
without it many SNAP agencies may not provide the needed data.
Flat Rent Changes Offer Promising Way To Raise Revenues
To encourage a mixture of incomes among public housing residents,
current law permits residents to elect to pay a ``flat rent.'' This
policy benefits residents with the highest incomes (who pay less than
30 percent of their income for housing under the policy) but has been
considered reasonable because HUD rules require that flat rents be set
at the ``estimated rent for which the [agency] could promptly lease the
public housing unit''--that is, at the approximate market rent. Data
suggest, however, that existing flat rents are well below market rents
in some areas, which raises Federal costs and can increase funding
shortfalls for local agencies.
AHSSIA includes a statutory change proposed in the Administration's
2012 budget to require agencies to set flat rents no lower than 80
percent of the HUD fair market rent for the area. \11\ HUD estimates
that the provision would reduce public housing operating subsidy needs
by $150 million in the first year and by more than $400 million per
year once the proposal is fully phased in.
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\11\ The flat rent option was authorized by the Quality Housing
and Work Responsibility Act of 1998 (QHWRA). The AHSSIA provision would
also apply to ``ceiling'' rents, which were established prior to the
enactment of QHWRA and are subject to somewhat different rules.
---------------------------------------------------------------------------
As proposed by HUD, AHSSIA would require local agencies to
implement the new policy no later than September 30, 2013, which would
allow agencies some time to phase the policy in. In addition, the bill
limits any increases in rental payments by affected households to 35
percent per year.
Minimum Rent Increase Would Harm the Poorest Tenants
The April version of AHSSIA contains a provision not included in
SEVRA increasing to $69.45 a month the ``minimum rents'' that the
lowest income housing assistance recipients can be required to pay, and
indexing this amount for inflation. Under current law, housing agencies
have the option of setting minimum rents for voucher holders and public
housing residents up to $50. HUD also has authority to set minimum
rents up to $50 in project-based Section 8 units, and currently has set
that level at $25.
The April AHSSIA provision makes two significant improvements over
the minimum rent proposal in the earlier version of AHSSIA that a House
Financial Services subcommittee passed on February 7, 2012:
The subcommittee-passed bill would have required all
housing agencies and owners to charge minimum rents of $69.45,
eliminating the discretion that exists under current law. By
contrast the April AHSSIA provision would permit housing
agencies and owners to set minimum rents below $69.45 for
``good cause,'' unless HUD disapproves the lower rent.
The subcommittee-passed bill made no significant changes to
existing protections for families that would face hardship if
they were required to pay minimum rents. A 2010 HUD-sponsored
study found that these protections help few families: 82
percent of agencies reported providing exemptions to less than
1 percent of families subject to minimum rents, and only 5
percent of agencies said they had exempted more than a tenth of
affected families. \12\ The April AHSSIA bill improves the
hardship requirements to increase the chances that poor
families facing hardship will be exempted.
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\12\ Abt Associates et al, Study of Rents and Rent Flexibility,
prepared for HUD Office of Public and Indian Housing, May 26, 2010,
http://www.huduser.org/publications/pdf/Rent%20Study_Final%20Report_05-
26-10.pdf.
Despite these improvements, the April AHSSIA provision is still
likely to harm many of the Nation's most vulnerable families and
individuals. As many as 500,000 households could be required to pay
higher rents, including families with 725,000 children. While the
improvements described above would protect some families, many are
still likely to fall through the cracks, placing them at risk of severe
hardship and even homelessness. Moreover, is not clear what the
rationale for the increase is. Congress should omit it in final rental
assistance reform legislation.
Rent Demonstration Could Be Useful, but Restrictions Should Be
Tightened
AHSSIA and SEVRA would authorize HUD to conduct a limited
demonstration of alternative rent policies. Such a demonstration is
potentially beneficial. Today's rent rules generally work well,
providing sufficient help to enable the neediest families to afford
housing while not giving higher-income families more subsidy than they
need. In addition, the current system maintains largely identical rules
across programs and localities, making it easier for voucher holders to
move from one community to another (for example to pursue a job
opportunity), for private-sector owners and investors to participate in
multiple programs and operate in multiple jurisdictions, and for HUD to
provide effective oversight.
Most major changes--and particularly those that would result in
sharply higher or lower subsidies for certain families--would carry
substantial risks and tradeoffs. It is possible, however, that some
substantial changes would have significant benefits that would justify
enacting them on the Federal level. For example, a policy of
disregarding some percentage of earned income would carry added costs,
but might encourage sufficient increases in earnings to offset a
sizable share of the cost and justify the change. A demonstration could
offer an opportunity to rigorously test policy alternatives to
determine their costs and benefits relative to the current rules. HUD
is already conducting a rent demonstration at a subset of MTW agencies,
but would need additional statutory authority to extend it to other
agencies.
However, the rent demonstration in AHSSIA and SEVRA should be
strengthened in important ways. It should provide HUD broader
flexibility to identify promising policies, limit the length of the
demonstration to avoid allowing wasteful or harmful policies to remain
in place indefinitely, explicitly require an experimental evaluation,
and clarify that the ``limited'' number of families that can be subject
to alternative policies should be no more than the number needed to
yield statistically valid results.
Streamlining Inspections To Encourage Participation by Private Owners
The voucher program requires that vouchers be used only in houses
or apartments that meet Federal quality standards. AHSSIA and SEVRA
would allow agencies to modestly change the inspection process used to
ensure that units meet those standards. The changes would ease burdens
on agencies and encourage landlords to rent apartments to voucher
holders.
Most significantly, AHSSIA and SEVRA would allow agencies to
inspect apartments every 2 years instead of annually. In addition, the
bills would allow agencies to (1) rely on recent inspections performed
for other Federal housing programs, and (2) make initial subsidy
payments to owners even if the unit does not pass the initial
inspection, as long as the failure resulted from non- life-threatening
conditions. Defects would have to be corrected within 30 days of
initial occupancy for the payments to continue. These provisions would
encourage owners to participate in the voucher program by minimizing
any financial loss due to inspection delays. They also would enable
voucher holders, who in some cases are homeless or experience other
severe hardship, to move into the unit more quickly than under current
rules.
Today, when an inspection of a unit occupied by a voucher holder
finds a violation, the housing agency is permitted to temporarily halt
subsidy payments if the owner fails to address the violation in a
timely manner, and ultimately terminate the subsidy if the defects are
not adequately repaired. AHSSIA and SEVRA would retain this authority
and establish a series of requirements regarding the rights of tenants
and other aspects of subsidy abatement and termination.
SEVRA also includes a beneficial requirement, which Congress should
enact, for housing agencies to provide assistance to help tenants find
a new unit and relocate if the subsidy to their unit is terminated
because of an inspection violation. AHSSIA would make this assistance
optional.
Stabilizing Voucher Funding Rules
One of the most important goals of authorizing legislation
concerning the voucher program should be to establish a stable, fair,
efficient policy for distributing funds to renew voucher subsidies to
the approximately 2,400 State and local agencies that administer the
program. This would enable those agencies to assist more families
within the level of resources provided in annual appropriations bills
than would otherwise be possible.
For the last 9 years, appropriations acts have changed renewal
funding policies every several years. Such instability creates
uncertainty and makes many agencies reluctant to use the funds they
have to serve the number of families Congress has authorized, out of
fear that they will not receive sufficient renewal funding to maintain
payments to landlords. As a result, only about 92 percent of authorized
vouchers are in use, compared to about 97 percent before the changes in
renewal funding policy began--a loss of assistance to about 100,000
families. The reform bills include a package of changes that would
stabilize and strengthen renewal funding policy.
Stable funding formula. AHSSIA and SEVRA would establish as
a permanent part of authorizing law the policy in recent
appropriations bills of basing each agency's funding on the
cost of the vouchers it used in the previous year, adjusted for
inflation and certain other factors. This approach forces
agencies to manage within a limited budget, while also ensuring
that each agency's funding level matches its actual needs.
Stable reserve and offset policy. AHSSIA and SEVRA would
assure State and local housing agencies that they can maintain
a funding reserve of at least 6 percent of the renewal funding
for which they are eligible, but permit HUD to ``offset'' (that
is, deduct from the agency's funding) reserves above that
level. AHSSIA improves on the SEVRA offset policy by extending
it to cover MTW agencies in addition to non-MTW agencies; this
avoids unfairly disadvantaging non-MTW agencies.
In the current funding environment, when agencies may fear that
Congress will not provide sufficient new funding to support all
vouchers in use, a predictable reserve level provides the cushion
agencies need to reissue vouchers to needy applicants on the waiting
list when families leave the program and be confident that they will
have sufficient funds to sustain the vouchers. At the same time, making
clear that HUD will have authority to offset reserves beyond the
permitted amount provides a strong incentive for agencies to put excess
funds to use assisting families.
Permitting agencies to assist as many families as possible
with available funds. AHSSIA and SEVRA would encourage agencies
to reduce the cost of voucher subsidies and stretch their
voucher funds to serve as many families as possible by
restoring flexibility that existed prior to 2003 to assist
families beyond the agency's ``authorized voucher cap.'' Under
a policy adopted in annual appropriations acts since 2003,
agencies are penalized if they use more than their authorized
number of vouchers in a year, even if they can do so with
available funds by reducing per-voucher costs. This policy has
pushed many agencies to use substantially fewer than their
authorized number of vouchers, out of fear of exceeding the
cap.
AHSSIA and SEVRA would remove this chilling effect and assure
agencies that if they took steps to limit costs, they could use any
savings to provide vouchers to more families even if this pushes them
above their authorized voucher level. Vouchers above the authorized
level that are supported by unused prior-year funds would not be
counted for determining the agency's future funding level, so this
incentive would not increase program costs.
Efficient use of funds above renewal formula amounts. When
Congress passes appropriations bills in a timely manner, it
sets the voucher funding level before all the data needed to
know the precise amount agencies will be eligible for under the
renewal formula are available. In recent years, when funding
has exceeded the amount needed HUD has been required to
distribute the extra funds pro rata to all agencies. HUD could
use these funds more efficiently if it had authority to
allocate them to meet unforeseen needs, reward high
performance, or for other purposes. SEVRA provides HUD broad
authority to make such allocations, while AHSSIA provides more
limited discretion. The SEVRA provision would be preferable,
but Congress should enact at least the AHSSIA provision.
Per-Voucher Costs Have Risen More Slowly Than Housing Costs in the
Private Market
While AHSSIA and SEVRA would create important incentives to keep
per-voucher costs low, it is important to note that this would build on
the voucher program's already successful record of restraining costs.
Per-voucher costs have generally risen at a slower rate than housing
costs in the private market. HUD-determined Fair Market Rents (FMRs),
which are based in market rents for standard-quality unassisted units,
increased by 19 percent from 2005 to 2010. As shown in Figure 1, during
that same period per-voucher costs increased by less than 16 percent.
A central reason for this is that housing agencies controlled
voucher costs through their ability to set payment standards, which cap
voucher subsidies and can be set anywhere from 90 to 110 percent of the
FMR (and outside that range under some circumstances). This explanation
receives support from HUD data showing that, on average, voucher
payment standards declined in relation to FMRs from 2005 to 2010.
By incorporating an improved voucher renewal funding policy in
permanent law, AHSSIA and SEVRA would provide agencies--as well as
families with vouchers and private owners--with more confidence that
renewal funding needs will be met in future years, which is
particularly important to maintain program effectiveness in the current
fiscal environment. This approach would not weaken Congress control
over the cost of the program. Congress would still determine the amount
of annual program funding, and if the funds appropriated in a given
year were insufficient to fully fund the renewal formula, HUD would
reduce each agency's funding by the same percentage so funds would
still be allocated based on agencies' relative needs. The provisions in
the bills would simply ensure that, for any given level of funding,
more families would receive the important benefits that vouchers have
been shown to provide.
Easing Income Targeting Rules To Help More Working-Poor Families
Currently, 75 percent of vouchers and 40 percent of project-based
Section 8 and public housing units must be allocated to households with
incomes at or below 30 percent of the median income in the local area
at the time they enter the program. AHSSIA and SEVRA would adjust these
criteria to require that those vouchers and units be allocated to
households with incomes at or below 30 percent of local median income
or the Federal poverty line, whichever is higher. Neither this revised
requirement nor current law restricts a family's income after it is
admitted. \13\
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\13\ A separate provision of SEVRA (but not AHSSIA) would prohibit
families from continuing to receive assistance if their income rises to
a much higher level (generally above 80 percent of local median
income). Currently, there is no income limitation after admission.
Under SEVRA, owners and agencies could opt not to enforce this new
policy in project-based Section 8 and public housing. And families with
incomes above 80 percent of median in most areas no longer qualify for
assistance under the voucher program because 30 percent of their
adjusted income--their required contribution--exceeds the maximum rent
a voucher can cover. Nonetheless, because the SEVRA policy would
terminate assistance for some higher-income families (who would then
typically be replaced by lower-income families who require larger
subsidies), CBO estimated that it would cost $209 million over 5 years.
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This change would give housing agencies greater flexibility to
target working-poor families. Some agencies in low-income areas have
expressed concern that the current targeting criteria prevent them from
assisting these families. At the same time, the change would maintain
the emphasis on assistance for the poor. CBO has estimated that the
reduction in subsidy needs that would result from easing targeting
rules would reduce funding needs by $1.14 billion over 5 years, making
it the largest source of savings in the bills.
The only difference between the bills' targeting provisions is that
AHSSIA fixes language in SEVRA that could allow targeting in project-
based Section 8 developments in Puerto Rico and other U.S. territories
to be raised excessively. The Federal poverty line is not designed to
apply in U.S. territories, and using it to target housing assistance
there would raise the targeting threshold far above 30 percent of the
local median income and shift assistance away from the neediest
families. For this reason, both AHSSIA and SEVRA seek to exempt the
territories from the targeting change, but the SEVRA exemption applies
only to ``in the case of public housing agencies'' located in a U.S.
territory. This would allow sharp targeting increases in project-based
Section 8 developments, which generally are not administered by public
housing agencies. Congress should adopt the more complete AHSSIA
exemption.
Strengthening the Family Self-Sufficiency Program
The Family Self-Sufficiency (FSS) program encourages work and
saving among voucher holders and public housing residents through
employment counseling and financial incentives. Both AHSSIA and SEVRA
establish a stable formula to allocate funds to cover administrative
costs of FSS programs. This formula would replace a competitive process
that has made funding unpredictable and disrupted administration of
local FSS programs.
Unfortunately, residents of units assisted through the project-
based Section 8 program are ineligible for FSS today. AHSSIA (but not
SEVRA) corrects this omission, enabling families receiving any type of
Section 8 assistance as well as public housing residents to benefit
from FSS. Offering participation in the FSS program to project-based
Section 8 tenants would be optional for property owners. Generally,
such tenants would participate in an FSS program operated by a public
housing agency, if one is available that will admit the families.
Owners of properties with project-based Section 8 contracts could also
use funds in their HUD-required ``residual receipts accounts'' to
operate an FSS program independently if it serves at least 25
participants.
AHSSIA also contains other beneficial FSS provisions, including a
requirement that housing agencies with 500 or more voucher and public
housing units offer or expand FSS programs if sufficient funds are
available.
Facilitating Use of Project-Based Vouchers
Both AHSSIA and SEVRA would make it easier for a housing agency to
enter into agreements with owners for a share of its vouchers to be
used at a particular housing development. Through such ``project-
basing,'' agencies can, for example, partner with social service
agencies to provide supportive housing to formerly homeless people or
support development of mixed-income housing in low-poverty
neighborhoods with strong educational or employment opportunities.
Residents of units with project-based voucher assistance have the
right to move with a voucher after 1 year, using the next voucher that
becomes available when another family leaves the program. (When this
occurs, a voucher remains attached to the housing development; the
family moving out of the development receives a separate voucher.) This
``resident choice'' feature and other policies make the project-based
voucher option significantly different from earlier programs that
provided project-based assistance.
AHSSIA and SEVRA increase the percentage of an agency's voucher
assistance that can be project-based from 20 percent to 25 percent, if
the added 5 percent is used in areas where vouchers are difficult to
use, to house homeless families or individuals, or to provide
supportive housing to people with disabilities. AHSSIA adds units that
house veterans or the elderly to the categories that qualify for this
added authority. In SEVRA, agencies would be permitted to project-base
the higher of 25 percent of their authorized vouchers or 25 percent of
their voucher funding, giving greater flexibility to housing agencies
that are able to keep project-based voucher costs low. AHSSIA would
base the limit strictly on the percentage of the agency's authorized
vouchers.
In addition, the bills would permit housing agencies to commit to
project-based voucher contracts with a term of 20 years (the term HUD
permits for contracts under the separate project-based Section 8
program), rather than the 15-year maximum permitted today. The bills
would also permit owners to establish and maintain site-based waiting
lists subject to civil rights and other requirements, allow agencies to
provide project-based vouchers in the greater of 25 percent of units or
25 units in a project, and permit 40 percent of the units in a project
to have project-based vouchers in areas where vouchers are difficult to
use or the poverty rate is 20 percent or less. \14\ These policy
changes would help agencies increase the effectiveness of the voucher
program in rural and suburban areas, where rentals are frequently
scarce and properties tend to be small, and in low-poverty areas in all
types of locations.
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\14\ Both today and under AHSSIA and SEVRA, agencies can place
project-based vouchers in 100 percent of units in developments that
assist the elderly or people with disabilities or provide supportive
services to residents.
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Protection Against Arbitrary Screening of Housing Assistance Recipients
Housing agencies and owners must screen housing assistance
applicants based on several federally required criteria, and can opt to
establish additional screening criteria. AHSSIA and SEVRA would make
several changes to the screening process for the housing voucher
program, including limiting optional screening criteria to those
directly related to the family's ability to meet the obligations of the
lease and requiring housing agencies to consider mitigating factors
before denying assistance. These important improvements would prevent,
for example, denial of assistance to a family with a good record of
paying rent on time but (like many poor families) a weak credit history
for other reasons, and would make it easier to provide housing vouchers
to homeless people and others with an urgent need for assistance who
today might be denied help for arbitrary reasons.
Unfortunately, the current AHSSIA draft drops a provision of some
versions of SEVRA that would have made similar (and equally important)
changes in the public housing and project-based Section 8 programs.
Congress could extend the changes to those programs by restoring the
omitted provisions or simply by giving HUD authority to establish
common requirements for all rental assistance programs.
Both AHSSIA and SEVRA also would add an important protection for
families being shifted from assistance under the public housing or HUD
multifamily programs to housing vouchers due to the elimination of the
existing assistance for the properties in which they reside. The bills
recognize that such families are not new to HUD assistance and should
be considered continuing participants rather than new applicants
subject to initial screening. In addition to protecting families, these
changes also would reduce administrative burdens for housing agencies.
Other Provisions
In addition to these seven core reforms, a series of other
provisions appear in SEVRA, AHSSIA, or both. Several of these
provisions are discussed below:
Local flexibility to adjust voucher payments to accommodate
the special needs of people with disabilities. Housing agencies
today can allow people with disabilities to use vouchers to
rent more expensive units than is permitted for other families,
if this is necessary to accommodate their disability. If this
requires a payment standard above 110 percent of the FMR,
however, the agency must obtain special approval from HUD. This
can create delays that make it much more difficult for people
with disabilities to use vouchers. Accessible units are often
more costly than a typical unit in an area, either because few
such units exist or because they require added investments by
owners.
SEVRA and AHSSIA would allow agencies to provide exceptions up to
120 percent of the FMR for this purpose without approval from HUD.
Because these exceptions would be needed for only a small share of
vouchers, this important provision's cost would be minimal.
Use of vouchers in manufactured housing. AHSSIA drops a
beneficial SEVRA provision that would allow vouchers to be used
to cover loan payments, insurance payments, and other periodic
costs of buying a manufactured home, in addition to the cost of
renting a space on which to place the home. The combined
payments would, however, be subject to the same subsidy limits
that apply to other vouchers.
Currently, vouchers can be used to cover the full range of periodic
home ownership costs for the purchase of a traditional home or a
manufactured home set on land also purchased by the family. But if a
family rents the space for a manufactured home, which is common in some
States, the voucher subsidy is limited to about 40 percent of the
assistance it could otherwise provide, and can only cover the space
rental costs and not the costs of purchasing the home. The SEVRA
provision would allow vouchers to be used effectively in a segment of
the housing market that in some areas is the most readily available
source of affordable housing--and that for many families offers the
most realistic avenue to home ownership.
Fair Market Rents. AHSSIA and SEVRA contain identical
provisions that would make modest improvements to the process
for setting FMRs by streamlining HUD's FMR determination
process and giving housing agencies added authority to protect
families from rent increases stemming from FMR reductions.
Rental Assistance Demonstration. AHSSIA would authorize
$150 million for a 5-year Rental Assistance Demonstration (RAD)
testing the conversion of public housing and Section 8 moderate
rehabilitation units to project-based vouchers or Section 8
project-based rental assistance, and $50 million for similar
conversions of units from the Rent Supplement program or Rental
Assistance Program to Section 8 project-based rental
assistance.
RAD offers a promising approach to preservation of needed
subsidized housing. HUD has just issued a final notice to implement a
version of RAD approved by the 2012 HUD appropriations act. The AHSSIA
RAD provision's most important improvement over the existing version of
RAD is that it would permit public housing units to receive subsidy
levels capped under regular Section 8 rules rather than limiting
subsidies to the amount the units received through public housing prior
to conversion. This would make RAD a more effective and flexible tool,
but only if appropriators provided the needed funds--a step they were
unwilling to take in the 2012 act.
Economic Security Demonstration. AHSSIA contains a
provision not included in SEVRA directing HUD to carry out a
demonstration to rigorously evaluate options for helping to
increase the economic security of housing assistance
recipients, including financial incentives, work requirements,
and other interventions, and authorizes $25 million for this
purpose. Such a demonstration could generate important
information about the effectiveness of policies to promote
economic security. If Congress enacts it, however, it should
specify that new policies may remain in place only during the
demonstration or until otherwise allowed by Congress, to avoid
leaving harmful policies in place indefinitely.
Moving-to-Work. The version of AHSSIA passed by a House
Financial Services Subcommittee in February 2012 contained a
harmful provision permitting an unlimited expansion of the
Moving to Work (MTW) demonstration, which currently exempts 35
housing agencies from nearly all Federal housing laws and
regulations. This would risk deep cuts to housing assistance
over time (due to the block grant funding formula used in MTW)
and harmful policy changes, such as sharp rent increases on
vulnerable families or time limits on assistance even for
working poor families who cannot afford to stay in their homes
without help. Moreover, the sweeping scale of the expansion
would make it impossible to address a key shortcoming of the
existing MTW demonstration--that it has permitted risky policy
changes without carefully evaluating them to determine their
true impact. \15\
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\15\ For further discussion of the risks of posed by MTW
expansion, see Douglas Rice and Will Fischer, Proposal to Greatly
Expand ``Moving to Work'' Initiative Risks Deep Cuts in Housing
Assistance Over Time, available at http://www.cbpp.org/files/1-10-
12hous.pdf, and Will Fischer, Expansion of HUD's Moving to Work
Demonstration Is Not Justified, available at http://www.cbpp.org/cms/
index.cfm?fa=view&id=3590.
The April version of AHSSIA also contains a large-scale MTW
expansion, but the expanded program would be subject to significant
limitations. These include prohibitions on waivers of some key tenant
protections and requirements for rigorous evaluation of the riskiest
policies. If Congress enacts an MTW expansion as part of reform
legislation, it is essential that it be subject to the limitations in
the April AHSSIA bill.
It should be noted however, that even with these limitations MTW
expansion would still pose serious risks. Most importantly, the April
AHSSIA bill would allow large (though capped) shifts of funds from the
voucher program to other purposes, raising the risk that the expansion
would result in many fewer needy families receiving housing assistance
than would be assisted under regular program rules. Moreover, the goals
of MTW, such as testing alternative policies and streamlining program
administration, can be pursued effectively through other, less risky
approaches. Consequently, even the more limited MTW expansion in the
April AHSSIA bill can be justified only if it is critical to the
enactment of comprehensive legislation containing most or all of the
important reforms discussed earlier in this testimony.
Conclusion
The core provisions of AHSSIA and SEVRA would build on the voucher
program's many strengths through a series of measured, targeted
improvements that, taken together, would deliver important benefits to
housing agencies, private owners, and low-income families. Moreover,
because several of the bills' provisions extend beyond the voucher
program, they also would improve the public housing and project-based
Section 8 programs.
It is important that Congress expeditiously enact rental assistance
reform legislation with these key provisions. The need for housing
assistance is unusually high today, with elevated levels of
homelessness and poverty and widespread foreclosures. Yet Congress
appears unlikely to expand resources for housing assistance
substantially, and is likely to consider substantial cuts--on top of
the sharp reductions enacted in recent years to voucher administrative
fees, public housing capital grants, and other housing programs.
At this time, the Nation needs its housing assistance programs to
be as efficient and effective as possible, and the measures in AHSSIA
and SEVRA would take major steps toward that goal. The bills' core
provisions have been fully vetted through deliberations in the past
four congressional sessions, and it is urgent that Congress enact them
this year so that the large Federal savings they would generate--as
well as their many other benefits--can begin to be realized.
PREPARED STATEMENT OF LINDA COUCH
Senior Vice President for Policy and Research, National Low Income
Housing Coalition
August 1, 2012
On behalf of the National Low Income Housing Coalition (NLIHC), I
would like to thank Chair Menendez and Ranking Member DeMint for
holding this important hearing. The Nation's need for the programs
under discussion today is growing. We greatly appreciate your
leadership on HUD's rental assistance programs and your commitment to
the people they are intended to assist.
The National Low Income Housing Coalition (NLIHC) is dedicated
solely to achieving socially just public policy that assures people
with the lowest incomes in the United States have affordable and decent
homes.
Our members include nonprofit housing providers, homeless service
providers, fair housing organizations, State and local housing
coalitions, public housing agencies, private developers and property
owners, housing researchers, local and State Government agencies,
faith-based organizations, residents of public and assisted housing and
their organizations, and concerned citizens. NLIHC does not represent
any sector of the housing industry. Rather, NLIHC works only on behalf
of and with low income people who need safe, decent, and affordable
housing, especially those with the most serious housing problems. NLIHC
is funded entirely with private donations.
Need for Affordable Housing Is Growing
NLIHC analysis of American Community Survey data shows there were
9.8 million extremely low income (ELI) (households with incomes less
than 30 percent of area median) renter households in 2010 and only 5.5
million units renting at prices they could afford, resulting in an
absolute gap of 4.3 million units affordable to ELI households. In
2009, this gap was 3.9 million units. Because higher income households
rent some of the units that ELI households could afford, the gap of
affordable and available units for ELI households in 2010 was 6.8
million; \1\ in 2009, it was 6.4 million.
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\1\ NLIHC. Housing Spotlight: The Shrinking Supply of Affordable
Housing. February 2012. http://nlihc.org/library/housingspotlight/2-1
---------------------------------------------------------------------------
These numbers are equally stark at the State level. In New Jersey,
there is a shortage of more than 189,000 units affordable and available
to ELI households. In South Carolina, the shortage of affordable and
available units for ELI households is more than 79,000.
HUD's Office of Multi-Family Housing Programs/Federal Housing
Administration Deputy Assistant Secretary Marie Head testified in the
House in June that increased market demand for new rental housing is
directly attributable to the fact that ``as many as 3.9 million former
homeowners have been displaced by mortgage distress and are now in the
rental market,'' and the entrance of ``as many as 4.3 million new
renter households'' into the rental housing market. \2\
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\2\ June 7, 2012. House Financial Services Subcommittee on
Insurance, Housing, and Community Opportunity hearing, ``Oversight of
Federal Housing Administration's Multifamily Insurance Programs''.
http://financialservices.house.gov/Calendar/
EventSingle.aspx?EventID=297671
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One result of this influx is that the percentage of renter
households paying more than half of their income on rent and utilities
increased across all income groups between 2009 and 2010, with
extremely low income and very low income (VLI) (households with incomes
less than 50 percent of area median) renters most affected. Seventy-six
percent of ELI renters and 36 percent of VLI renters had a severe
housing cost burden in 2010, compared with 74 percent and 34 percent,
respectively, in 2009. \3\ In New Jersey, households with annual
incomes below $26,607 are considered ELI; in South Carolina, households
with incomes below $17,175 are.
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\3\ NLIHC. Housing Spotlight: The Shrinking Supply of Affordable
Housing. February 2012. http://nlihc.org/library/housingspotlight/2-1
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In New Jersey, the public housing program serves more than 40,000
families with an average annual income of $15,746, and the voucher
program assists almost 63,000 households, with an average annual income
of $15,790. In South Carolina, the State's more than 23,000 rental
assistance vouchers serve households with an average annual income of
$11,000; the average annual income of the State's 15,000 public housing
households is about $10,400. Without HUD assistance, we can be assured
that many of these extremely low income families would be severely cost
burdened or, indeed, would join the ranks of the Nation's homeless
population, which totals more than 630,000 on any given night. \4\
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\4\ ``State of Homelessness in America 2012''. National Alliance
To End Homelessness. Washington, DC. http://www.endhomelessness.org/
content/article/detail/4361/
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As the National Alliance to End Homelessness' annual ``State of
Homelessness in America 2012'' pointed out in January of this year,
``Homelessness is a lagging indicator, and the effects of the poor
economy on the problem are escalating and are expected to continue to
do so over the next few years.'' \5\ It is NLIHC's hope that
improvements made to HUD's housing programs by broad authorizing
legislation will result not only in efficiencies that increase the
number of households served, but also in greater Congressional support
so that homelessness can be prevented and ended in the United States.
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\5\ Ibid.
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NLIHC held a summit of voucher stakeholders in 2005, in response to
upheaval in the housing choice voucher program instigated in the spring
of 2004 by a flawed allocation by HUD of otherwise adequate voucher
renewal funding. This left many agencies with insufficient funds and
ultimately caused the loss of more than 100,000 vouchers nationwide.
Sixty-six people attended, including voucher holders and
representatives from advocacy groups, public housing agencies and their
trade groups, affordable housing developers, housing finance agencies,
HUD, the Office of Management and Budget, financial institutions and
congressional policy and appropriations staff from the House and Senate
and both sides of the aisle.
Many of the recommendations made by those at the voucher summit
have been included in various iterations of the Section 8 Voucher
Reform Act, the Section 8 Savings Act, and the Affordable Housing and
Self-Sufficiency Improvement Act. These include recommendations
regarding income targeting, rent simplification, portability,
inspections, project-based vouchers and enhanced vouchers.
As we did in 2005, we continue to believe there are many reasons
for Congress to enact broad housing reforms. Since 2005, Congress has
worked on various versions of the Section 8 Voucher Reform Act, the
Section 8 Savings Act, and the Affordable Housing and Self-Sufficiency
Improvement Act. The HUD programs we come together to talk about today
are critical to meeting the needs presented by these data. The housing
choice voucher, project-based Section 8 and public housing programs are
all deeply income targeted and all provide housing stability even if
individual household incomes fluctuate with changing circumstances.
In the fall of 2011, NLIHC worked with other national organizations
to coordinate a letter, signed by more than 810 local and national
organizations, urging the Senate Committee on Banking, Housing, and
Urban Affairs to act expeditiously on housing reform legislation. ``The
savings and efficiencies created by this good Government bill are
needed as soon as possible,'' the letter said. \6\
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\6\ See, letter and NLIHC press release, ``Advocates Urge U.S.
Senate To Act Now on Voucher Reform Legislation''. September 21, 2011.
http://nlihc.org/press/releases/9-21-11
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We are encouraged by this hearing and hope legislation can be
enacted this year that:
Improves the programs from the perspective of assisted
households
Results in savings and efficiencies
Stabilizes voucher renewal funding
Legislation That Improves the Programs From Perspective of Assisted
Households
NLIHC supports several policy changes that would improve the
programs:
Encourage increased earned income while maintaining Brooke
Upon increases in earned income, NLIHC supports reforms so that
most families would not have to recertify their incomes in between
annual income certifications. This would allow families to hold on to
100 percent of their increased earned income until their next annual
income certification. PHAs and owners, under various versions of the
legislation, would base rents on prior year income. Again, this could
encourage increased earned income by residents.
Early versions of housing reform legislation would expand the now-
narrow Earned Income Disregard to all tenants, allowing the first 10
percent of earned income to be disregarded for purposes of establishing
household rents. Unfortunately, and for cost reasons, that provision
has not been in recent versions of the housing reform bill and the
existing, limited Earned Income Disregard for some residents is
eliminated. NLIHC supports expanding the Earned Income Disregard.
Any housing reform legislation should also revise the frequency of
income recertifications for families on fixed incomes. NLIHC supports
provisions that would require families on fixed incomes to recertify
their incomes once every 3 years, instead of annually as is now the
case. This could lead to less paperwork for fixed income households,
and administrative savings for PHAs and owners.
Critically, these simplifications to the rent-setting process can
be enacted without jeopardizing the Brooke Amendment, named after
former United States Senator Edward Brooke (R-MA). The Brooke Amendment
caps tenant rents at a percentage of adjusted income, today 30 percent,
while continuously connecting each household's rent to its own income.
This ensures affordability and housing stability for each household. If
we cannot rely on every household's rent being affordable, then there
is little value in any housing assistance program.
Payment standard for people with disabilities
To reduce administrative tasks as well as improve the effectiveness
of the voucher program for people with disabilities, NLIHC supports
provisions giving PHAs the authority to increase the payment standard
to 120 percent without having to seek HUD approval as a reasonable
accommodation to persons with disabilities.
Expanding affordable rental stock by improving project-
basing of vouchers
NLIHC supports provisions that have been in most versions of
housing reform legislation that would improve how vouchers could be
project-based into properties, allowing otherwise unaffordable units to
meet the affordable housing needs of the lowest income households.
There are several provisions to improve the project-basing of
vouchers, all of which NLIHC supports including in any housing reform
bill:
1. Changing the limitation on vouchers that can be project-based
from 20 percent of an agency's voucher funding to 20 percent of
an agency's authorized vouchers.
2. Allowing a PHA to use an additional 5 percent of authorized
vouchers to serve persons with disabilities, elderly households
or homeless populations or be used in areas where vouchers are
hard to use.
3. Increasing the number of units a PHA can provide with project-
based voucher assistance in smaller properties.
4. Increasing the maximum contract term for project-based vouchers
from 15 to 20 years.
Improvement to the project-basing of vouchers can help programs
like the Low Income Housing Tax Credit (LIHTC) serve more extremely low
income households in an affordable way. Without additional subsidies,
often in the form of a Housing Choice Voucher, Low Income Housing Tax
Credit units are simply not affordable to extremely poor households.
Vouchers, and project-based vouchers, ensure stable housing as a
family's income fluctuates. Doubling up Federal subsidies in LIHTC
units by adding a voucher makes these units affordable for the
households with the greatest housing needs in the United States.
Without additional subsidy, the Nation's largest subsidized affordable
housing program is simply not affordable or viable for ELI households.
Recent research \7\ from data collected per the Housing and
Economic Recovery Act of 2008 reveals that there are indeed ELI
households served by the LIHTC program, about 43 percent of units
assisting such households.
---------------------------------------------------------------------------
\7\ O'Regan, Katherine O. (NYU Wagner Graduate School and Furman
Center) and Keren Horn (University of Massachusetts, Boston). What Can
We Learn About the Low Income Housing Tax Credit Program by Looking at
the Tenants? July 1, 2012. http://nlihc.org/sites/default/files/
LIHTC_Tenant_Report_2012.pdf
---------------------------------------------------------------------------
It appears, however, based on data provided by the same report,
that without rental assistance these extremely poor households are
paying more than half their incomes for their housing costs, thus
meeting HUD's definition of households with ``severe housing cost
burden.'' The data presented by the report show that 31 percent of ELI
renters in LIHTC units receive no rental assistance, Housing Choice
Vouchers or otherwise. The report also presents data that fully 30.6
percent of ELI households in LIHTC units are severely cost burdened,
paying more than half of their income for rent in these units. Voucher
assistance attached to these units through the project-basing of
vouchers, or provided to these tenants directly with housing choice
vouchers, brings housing affordability and stability to these
households.
Other provisions to improve the programs from the
perspective of assisted households
NLIHC also supports including provisions from past housing reform
bills that would direct HUD to develop new portability regulations that
minimize billing and administrative barriers to portability, provide
public housing agencies and HUD with tools to address excessive rent
burdens as well as concentrations of vouchers in higher-poverty areas
by adjusting payment standards, and allow vouchers to pay for home
payment (since the Quality Housing and Work Responsibility Act,
vouchers only pay for rental of land). All of these provisions will
improve people's access to their communities of choice.
Legislation That Results in Savings and Efficiencies
Overall savings
Any version of housing reform legislation saves Federal resources,
ranging from around $700 million to $1 billion over 5 years. These are
tremendous savings, the vast majority of which are uncontroversial.
Definition for deep income targeting
A major source savings from any housing reform bill would be a
change to how targeting of assistance to extremely low income
households could be carried out. Today, these large HUD programs must
target a certain percent of new housing assistance each year to
extremely low income households. NLIHC supports reforms that would
expand this deep income targeting category to be the greater of
households with incomes below 30 percent of area median income
(extremely low income) or the Federal poverty line. This will help
target assistance to very poor households in rural areas, where incomes
overall are low.
Rent simplifications
In addition to the rent simplification provision discussed above,
requiring fixed income households to recertify incomes every 3 years
instead of annually, housing reform legislation can do much to simplify
the rent setting process. NLIHC also supports the ability of PHAs and
owners to rely on other Federal means-tested assistance programs,
including the Supplemental Nutrition Assistance Program, to verify
tenant income.
Simplifying the deduction of medical and related expenses has long
been a goal of housing reform legislation. Raising the percent of
income that must be exceeded before unreimbursed medical or related
expenses are deducted from income is one way that versions of housing
reform legislation have simplified the complicated rent-setting
process. As the House and Senate have always supported, any such
increase in the threshold for deducting expenses must be coupled with
an increase in the standard deduction for elderly families and families
with disabilities. Hardship provisions to protect households with
outlier medical expenses are also good policy.
Create efficiencies; do not weaken accountability
NLIHC is interested in balancing efforts to create efficiencies
with retaining the programs' accountability, both to local communities
and to Congress and HUD. While efficiencies can bring savings through
reduced program costs, we urge caution when considering exempting
agencies from standards HUD and Congress use today to measure public
housing agency performance. Even exempting the smallest agencies, as
some housing authority groups support, from many Section 8 Management
Assessment Program indicators would remove accountability on key
indicators like accuracy of payment standard calculations, use of all
available vouchers and expansion of housing choice from agencies that
administer a tenth of the Nation's vouchers. Congress's understanding
of how the voucher program, under such circumstances, was actually
meeting the Nation's housing needs would be incomplete if such reforms
were enacted. NLIHC believes that such changes would put rental
assistance programs at risk of reduced funding in the future as
Congress's understanding of their use and impact fade.
Legislation That Stabilizes Voucher Renewal Funding
Voucher Renewal Funding
The need for clear direction to HUD on the allocation of voucher
renewal funding was a primary reason for the development of this
legislation several years ago. The viability and credibility of the
voucher program is rooted in a stable, sufficient and reliable voucher
renewal funding policy. NLIHC supports authorizing language whereby the
annual appropriation of each agency administering vouchers is based on
actual leasing and cost data from the last calendar year, with various
adjustments, including for tenant-protection, project-based and ported
vouchers. NLIHC also supports policies that would support agencies'
over-leasing of vouchers.
NLIHC supports offset and reallocation policies that will bring
additional stability to the program. Offset policies in previous
versions of housing reform legislation, supported by NLIHC, would allow
HUD to offset a PHA's voucher allocation by the amount its reserves
exceeded 6 percent. The HUD Secretary would then be authorized to use
these offsets for a variety of purposes, including for increased costs
due to portability, significant increases in voucher renewal costs
resulting from unforeseen circumstances and reallocating to PHAs to
avoid or reduce any pro-rations of renewal funding.
NLIHC also supports an advance mechanism to PHAs that could act as
a safeguard for agencies that experience a temporary shortfall in
funds. NLIHC supports provisions that allow a PHA to request, during
the last quarter of the calendar year, up to 2 percent of its
allocation to pay for additional voucher costs, including costs related
to temporary over leasing. NLIHC believes that this will give some PHAs
the assurance they need to increase their voucher utilization rates.
These advances would have to be repaid and could not occur in 2
consecutive years.
Minimum Rents
NLIHC does not believe that increasing minimum rents is needed to
create a robust housing reform bill. The latest House draft bill is an
improvement over earlier versions, especially because it would greatly
improve hardship exemptions from minimum rents for households and
because it offers housing agencies and owners the ability to have
minimum rents lower than the bill's $69.45 a month for good cause.
The House's latest proposal impacts households with incomes of less
than $2,800 a year. While it may seem hard to imagine that there are
households with incomes so low, the reality is that these households
exist and the programs keeping them off the street, out of the back
seats of cars at night and out of shelters, are HUD's voucher, public
housing and project-based Section 8 programs. NLIHC supports the House
draft bill's improvements to hardship exemptions. We continue to oppose
any increase in minimum rents, which by definition only impact the
lowest income households.
NLIHC was shocked and disappointed that the Administration
requested increased minimum rents in its FY13 budget request, which it
said could generate $150 million in revenue. ``The Budget Control Act
created spending limits that are so unworkable that the Federal
Government is reduced to picking the pockets of the poorest of the
poor. It is Scrooge-like,'' NLIHC's President and CEO Sheila Crowley
said in a press release on February 13. \8\
---------------------------------------------------------------------------
\8\ NLIHC. Press release: ``President's Budget Request Creates
Grim Outlook for Low Income Housing'', February 13, 2012. http://
nlihc.org/press/releases/2-13-12
---------------------------------------------------------------------------
Bigger Reforms in the Future
NLIHC also supports additional policy proposals to improve the
voucher program. We are very pleased that HUD is moving forward with
its Small Area Fair Market Rent (SAFMR) demonstration. The SAFMR
demonstration project will determine FMRs at the ZIP code level, so
payment standards will more closely reflect local market conditions and
rents by neighborhood. As noted in a 2012 NLIHC paper, Affordable
Housing Dilemma: the Preservation vs. Mobility Debate, ``Going to small
area FMRs would cause `such a redistribution of poor people over time
in metro areas, because there's so many rental units that would be
accessible all of a sudden that aren't accessible now.' '' \9\ HUD will
conduct an evaluation of the demonstration program to determine if
using SAFMRs will increase neighborhood choice for program participants
and increase program efficiency overall. NLIHC is eager to see HUD's
evaluation of the SAFMR demonstration. We are confident that the
results will show that the use of SAFMRs should be adopted nationwide.
---------------------------------------------------------------------------
\9\ NLIHC. Affordable Housing Dilemma: the Preservation vs.
Mobility Debate. May 2012. http://nlihc.org/library/other/periodic/
dilemma
---------------------------------------------------------------------------
Another potential bright spot in the Nation's ability to simplify
the administration of vouchers is to encourage PHAs to join forces and
regionalize voucher administration. Regionalizing voucher
administration, as has been done in several communities across the
country, will result in greater housing choice for tenants and greater
program efficiencies for administrators. Voucher holders in the
metropolitan Washington, DC, area, for example, are restricted from
moving freely within our housing market because of PHA geographic
boundaries. What makes the most sense is for the jurisdiction of the
voucher administrator to match the jurisdiction of the overall housing
market. The voucher program does not naturally do that today, but it
should in the future.
NLIHC also supports creating Federal source of income laws, which
would basically prohibit a landlord or property manager from denying
housing to a prospective tenant because of precisely how they would pay
their rents, or the source of their income. According to the Poverty &
Race Research Action Council (PRRAC), 13 States and dozens of cities
have some version of source of income protections. \10\ Federal source
of income protections could expand the properties and communities where
voucher holders can chose to live. According to an analysis of research
on discrimination in the voucher program in this same report, PRRAC
notes that discrimination against voucher holders contributes to
peoples' inability to use rental assistance vouchers in their
neighborhoods of choice.
---------------------------------------------------------------------------
\10\ Poverty & Race Research Action Council. Keeping the Promise:
Preserving and Enhancing Housing Mobility in the Section 8 Housing
Choice Voucher Program. March 2011. http://prrac.org/pdf/AppendixB-
Feb2010.pdf
---------------------------------------------------------------------------
A real breakthrough would be to make assistance from the housing
choice voucher program an entitlement to those households eligible for
it, or at least for certain populations. Today, the only housing
entitlement programs are for homeowners, and the vast majority of those
resources assist high income households. Moving the voucher program
into the world of entitlements, at least for certain populations, would
demonstrate real commitment by Congress that everyone has a right to
safe, decent, and affordable housing.
Moving to Work
No discussion of housing reform legislation would be complete
without consideration of the Moving to Work (MTW) demonstration
program. The demonstration, authorized in 1996, has been an exercise in
broad regulatory and statutory flexibility for a few dozen housing
agencies and in growing frustration for groups like NLIHC, which seek
to advance housing solutions for the lowest income people. The
frustration comes from the inability of NLIHC, or any other entity, to
know what the impacts of these broad statutory and regulatory
flexibilities have been on the current and future low income residents
of these housing authorities, and on the physical and financial health
of these housing authorities. Yet, housing agencies continue to seek
participation in the MTW program, hopeful that participation will bring
salvation from years of chronic underfunding in the public housing
operating and capital funds and voucher administrative fees.
NLIHC joined several national organizations and HUD early this year
to see whether a compromise could be reached on MTW, a compromise
acceptable enough to all that broader housing reform legislation could
move forward. This ``stakeholder'' group did eventually turn months of
hard decisions and compromises into an agreement on MTW expansion,
which was included in the April 13 version of the House's draft
Affordable Housing and Self Sufficiency Improvement Act.
The stakeholder agreement on MTW would allow up to 500,000 units
administered by high-capacity PHAs to be included in a ``basic'' MTW
program. Units in basic MTW would have the flexibility to streamline
administrative procedures. Up to 25 agencies could also participate in
an ``enhanced'' MTW program, which would have the ability to implement
harmful policies, like rent reform, work requirements and time limits
only if doing so is part of rigorous evaluation protocols. For all,
income targeting, resident rights and housing affordability would be
protected to a significantly greater extent than in the current
demonstration sites.
While NLIHC has agreed to this carefully crafted version of MTW
expansion, history shows that MTW expansion has resulted in the
stalling of housing reform legislation for years. NLIHC would strongly
support moving forward with voucher reform legislation without an MTW
title. MTW legislation could be considered separately, while the
significant savings and efficiencies of a broader housing reform bill
could be taken advantage of now.
Some versions of housing reform legislation, including the most
recent House draft, have included other demonstrations as well (i.e., a
rent policy demonstration and an economic security demonstration). HUD
is already conducting a rent policy demonstration and should not need
additional authority to complete this work. The goals of the economic
security demonstration, and its cost of $25 million, could be brought
into whatever form the MTW demonstration eventually takes, taking on
all the protections for current and future residents, evaluation
components, and size and duration limitations of MTW that would be
necessary to test hypotheses while protecting people and assets. NLIHC
opposes these additional, standalone demonstrations.
National Housing Trust Fund
While enactment of housing reform legislation would generate
hundreds of millions in savings in the near future, NLIHC also
encourages Members of this Subcommittee to support capitalization of a
National Housing Trust Fund, which Congress authorized in 2008. The
National Housing Trust Fund, coupled with the stabilization of HUD's
rental assistance programs by housing reform legislation, could end
homelessness in the United States. Each State has a shortage of
affordable and available units for ELI households. Housing reform
legislation could stabilize existing programs and give Congress the
assurance that these highly efficient programs deserve more Federal
resources. But, we also need to dramatically increase the actual number
of units affordable to ELI households. The National Housing Trust Fund
is the mechanism to accomplish this. NLIHC looks forward to working
with the Senate on ways to capitalize the NHTF.
Thank you for considering our testimony.
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHUMER
FROM KEITH KINARD
Q.1. Improvements to the Project-Base Voucher Program:
The Project-Based Voucher program is a unique tool that a
PHA can use to help create or redevelop affordable housing. A
PHA that operates a PBV program can use it to facilitate the
redevelopment of existing assisted housing or use to create
mixed-income housing in areas that are being targeted for
community redevelopment. The Affordable Housing and Self
Sufficiency Improvement Act, currently pending in the House
Financial Services Committee makes changes to the program that
would enable a PHA to use the PBV program to target vulnerable
populations, provide 100 percent assistance to small properties
and provide additional assistance to properties located in
high-cost markets.
Do you support the changes the Affordable Housing and Self
Sufficiency Act makes the project-based voucher program? How
will these changes help you better serve low-income families in
your community?
A.1. Yes, CLPHA supports the changes that the Affordable
Housing and Self Sufficiency Act (AHSSIA) would make to the
project-based voucher program. The project-based voucher
program is an important tool in the redevelopment and the
rehabilitation of our Nation's public housing stock and the
changes that AHHSIA makes to the program will allow more
housing authorities to utilize this tool. Changing the
percentage limitation so that it is based on authorized units,
rather than funding levels, makes that limitation less of a
moving target because it will be based on a more predictable
measure and will facilitate housing authorities' maximizing
project-basing authority. Raising the percentage limitation by
5 percent for projects that house families with veterans or
that provide supportive housing to persons with disabilities or
elderly persons will better enable and encourage housing
authorities to target those vulnerable populations in their
plans for project-basing. Increasing limits on both the
percentage limitation and income mixing requirements in areas
where vouchers are difficult to use will enable housing
authorities to respond to their local market conditions more
easily. Allowing site-based waiting lists will streamline
administrative procedures considerably. AHHSIA's changes to the
project-based voucher program will increase the supply of
deeply subsidized hard units in communities that truly need
them and make more affordable housing units available to
vulnerable populations.
Another change to the project-based voucher program that
CLPHA believes should be included in AHSSIA would be to allow
housing authorities to attach project-based vouchers to housing
authority-owned structures without following a competitive
process. This would remove a step from the project-basing
process that consumes a great deal of time without adding
value. Additionally, CLPHA notes that in a previous iteration
of the Section 8 reform bill, the project-based voucher
percentage limitation was raised to 25 percent across the
board, with an additional 5 percent targeted to vulnerable
households on top of that raised threshold. CLPHA would prefer
that any subsequent Section 8 reform bill return to that
arrangement.
Newark has already benefited from the project-based voucher
program, and any changes enacted that make the project-based
voucher program more accessible to housing authorities will
benefit low-income communities. Newark currently supports a
200-unit building for the elderly and individuals with
disabilities through the project-based voucher program; the
development receives 100 percent of its assistance through
project-based vouchers. Without the funding flexibility that
the project-based voucher program provides, Newark would not
have been able to address the extensive capital needs of the
building or to upgrade the general amenities available to
residents. The development is now thriving and is a place that
makes residents and Newark proud. Despite this success, Newark
still hits administrative roadblocks in the current project-
based voucher program when trying to structure redevelopment
deals. For the past 4 years, Newark has been in the process of
converting a 220-unit building for the elderly and individuals
with disabilities to a Section Eight Project Based facility. We
are still only 70 percent of the way through the conversion due
to the administrative procedures of the program, in which
Newark was required to competitively procure and ultimately
award the project-based vouchers to ourselves. The provisions
in AHHSIA relating to the project-based voucher program will
not only bring welcome administrative relief, but the
revitalization of public housing for the benefit of low-income
communities.
Q.2. Exempting public housing redevelopment from counting
against a PHA's project-base voucher funding limitation:
The PBV program limits a PHA from project-basing more than
20 percent of its voucher funding. Many PHAs around the country
have been using the PBV program as a tool to redevelop and
rehabilitate its public housing stock. Recently, HUD has
embraced this principle by allowing a PHA to convert its public
housing assistance to a 15 year PBV contract through the Rental
Assistance Demonstration program. Unfortunately, for many PHA's
unable to utilize the RAD program, the 20 percent limitation
may still be a barrier for them to redevelop their own public
housing stock. A simple solution would be to exempt public
housing revitalization that a PHA undertakes from the 20
percent voucher-funding cap. This would then allow a PHA to
continue to reposition its public housing stock and also
continue to use the program in a manner that best serves the
low-income households in the surrounding community.
Would you support a change to the project-base voucher
program that would provide an exception to the 20 percent
voucher funds limitation for PHAs that use the PBVs to
redevelop its own public housing stock? Are there are other
limitations or changes you would make to the RAD program that
would make it easier for a PHA to redevelop public housing in a
manner that protects the Federal investment and provides safe,
decent housing for low-income households?
A.2. Yes, CLPHA supports a change to the project-base voucher
program that would provide an exception to the 20 percent
voucher limitation for all housing authorities that use the
project-based vouchers to redevelop its own public housing
stock. Project-based vouchers have become an essential tool for
housing authorities' efforts to meet their local community
needs, especially for vulnerable populations that require
supportive services. The lifting of the 20 percent cap will
allow housing authorities--particularly those unable to
participate in the Rental Demonstration Program (RAD)--the
ability to preserve hard units for extremely vulnerable
populations who might not be able to find a place to live in
the private rental market.
Housing authorities that are able to participate in the RAD
program will be better able to serve their communities because
RAD incorporates a 20 percent cap exception and increases the
percentage of vouchers that may be project-based in a single
project. However, it would be easier for housing authorities to
redevelop public housing under RAD if a greater percentage of
vouchers could be project-based in a single project. This
change would allow housing authorities to leverage their
project-based vouchers more effectively in redevelopment deals,
which would preserve and redevelop more units of public
housing, and thus ultimately benefit low-income households that
may not otherwise have access to affordable housing that is
both safe and decent.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHUMER
FROM DIANNE HOVDESTAD
Q.1. Improvements to the Project-Base Voucher Program:
The Project-Based Voucher program is a unique tool that a
PHA can use to help create or redevelop affordable housing. A
PHA that operates a PBV program can use it to facilitate the
redevelopment of existing assisted housing or use to create
mixed-income housing in areas that are being targeted for
community redevelopment. The Affordable Housing and Self
Sufficiency Improvement Act, currently pending in the House
Financial Services, makes changes to the program that would
enable a PHA to use the PBV populations, provide 100 percent
assistance to small properties and provide additional
assistance to properties located in high-cost markets.
Do you support the changes the Affordable Housing and Self-
Sufficiency Act makes to the project-based voucher program? How
will these changes help you better serve low-income families in
your community?
A.1. Yes, we support the changes the ``Affordable Housing and
Self-Sufficiency Improvement Act'' (AHSSIA) makes to the
project-based voucher program. Listed below is a summary of our
position on the PBV provisions in the current draft of AHSSIA,
as well as additional PBV legislative reforms we support in the
December 1, 2010, version of the ``Section Eight Voucher Reform
Act'' (SEVRA) as well as regulatory reforms stemming from
enactment of the ``Housing and Economic Recovery Act of 2008''
(HERA).
The Sioux Falls Housing & Redevelopment Commission (SFHRC)
has not, yet, exercised the option of project-basing a portion
of its Section 8 Housing Choice Vouchers. The decision not to
project-base Section 8 Vouchers is based several factors:
First, SFHRC's waiting list is long--approximately 3.5 years
from the time an application is received in SFHRC's office
until funding is available under the Voucher program with
currently over 3,700 households on its waiting list. Most
applicants want the option of locating a dwelling unit that
meets their unique circumstances. The majority of voucher
holders in Sioux Falls have been successful in locating units
that meet their needs and HUD's criteria for approving a
dwelling unit to be placed under a Section 8 Housing Assistance
Payments Contract. It hasn't been necessary for SFHRC to
project-base its vouchers in order to for a voucher holder to
utilize their voucher.
Also, since SFHRC's waiting list is so long and most
vouchers are utilized in a timely manner SFHRC cannot justify
taking the vouchers ``off-line'' and holding them through
turnover/attrition until a project was ready to be occupied.
This would be denying rental assistance to a family that
desperately needs it. While HUD's voucher HAP renewal formula
does account for vouchers committed to a PBV development under
an ``Agreement to Enter Into a Housing Assistance Payments
Contract'', the Department's existing Section Eight Management
Assessment Program (SEMAP) currently does not take this into
account. As a result, Public Housing Authorities (PHA) that
engage in the PBV program that have to take tenant-based
vouchers ``off-line'' are penalized in their SEMAP scores.
Second, the unpredictability of annul housing assistance
dollars makes it difficult to determine the number of vouchers
that can be project-based. Currently, PHAs are allowed to
project-base up to 20 percent of its tenant-based funding. It
is difficult to strategically plan for project-basing vouchers
when the pro-ration and the formula for determining renewal
housing assistance payments dollars changes each year,
depending on the language in the appropriations bill. In
addition, the timeliness of HUD's notices of annual budget
authority makes planning extremely challenging. For example,
for calendar year 2008 SFHRC was not notified of its annual
budget authority until March 14, 2008. The pro-ration was
101.453 percent; however, the formula included an offset for
both Useable and Unusable Net Restricted Assets (NRA) which
decreased available funding.
In 2009 SFHRC received notice of its annual budget
authority for that calendar year on May 5, 2009. The pro-ration
was .991 percent, again the formula included offsets of Usable
and Unusable NRA.
On February 12, 2010, SFHRC was notified of its annual
budget authority for calendar year 2010. The pro-ration was
.995 percent, with no offset.
For calendar year 2011 SFHRC received notice of its annual
budget authority on June 14, 2011. The pro-ration was 98.81
percent, with no offset. For the first time HUD included an
allowance for Family Self-Sufficiency escrow deposits in the
formula used for calculating housing assistance payments
renewal dollars, which increased the dollars for housing
assistance payments. Regrettably, this is no longer HUD's
practice.
On March 1, 2012, SFHRC was notified of its annual budget
authority for calendar year 2012. The pro-ration was .996 and
an offset was included in the formula.
Although the 2.64 percent difference in pro-ration during
these 5 years doesn't, on its face, appear to be much, it does
impact the number of households that can be served and,
consequently if there would be monies available for the
project-based vouchers. It is difficult for SFHRC to estimate
the amount of annual renewal dollars it will receive as some
years there are offsets, some years not.
AHSSIA: Percentage of PAH's ACC Units for Project-Basing Vouchers
Modifying existing laws, as proposed in AHSSIA, so that the
project-based voucher program limitation is based on authorized
units, instead of tenant-based funding levels, will be much
simpler for PHAs and HUD to determine and track.
AHSSIA: Percent of Units That Can Have Project-Based Assistance in a
PHA's Voucher Portfolio
AHSSIA modifies the current limitation on project-basing up
to 25 percent of the units in a project to the greater of 25
percent of the units in a project or 25 units. In areas where
vouchers are difficult to use; in census tracts where the
poverty rate is 20 percent or less; to serve individuals and
families that fall under the McKinney homeless definition; that
house families with veterans or provide supportive housing to
persons with disabilities AHSSIA would allow the PHA to
project-base 25 units or 40 percent of the units in the
project. Current regulations require a cumbersome process to
determine which project should receive project-based vouchers.
Multifamily projects in Sioux Falls tend be 50 units or less.
Under existing law, in projects with 50 units, the maximum
number of vouchers that could be project-based is 12. The
amount of work it would take to project-base the 12 vouchers is
not cost effective. If the limitation is increased to greater
of 25 percent or 25 units, or 40 percent of baseline units in
areas described above it may become cost effective to go
through the process for project-basing vouchers in certain
instances.
Previous versions of this bill defined areas where tenant-
based vouchers are difficult to use under HUD's existing
definition of ``success rate payment standard'', as PHAs that:
(1) established its payment standards at 110 percent of the
40th percentile FMR for a period of at least 6 months; and (2)
established a policy of granting automatic extensions of
voucher terms to at least 90 days; but (3) notwithstanding
these actions, the PHA still has less than 75 percent voucher
holder success rate in finding and leasing units. This
definition of a tight housing market, where tenant-based
vouchers are difficult to use, already has existing regulations
and implementation for PBV program stakeholders. Creating an
open-ended definition subject to formulation by HUD is
unnecessary and given the Department's slow track record for
implementing regulations would be imprudent. We recommend
restoration of the above definition of units located in areas
where tenant-based vouchers are difficult to use.
We also recommend exempting Public Housing assisted
households in a development that is converted to Section 8
Project-based Voucher assistance from the percentage of their
voucher portfolio that they can project-base. In addition, we
recommend that PHAs with existing PBV contracts from
conversions of Public Housing are ``grandfathered.''
Increasing the number of project-based vouchers would
benefit the pro forma used to determine if a project is
financially feasible. It may mean the difference between a
project going forward or not.
AHSSIA: Income-Mixing Requirement
The simplification of PBV program income mixing
requirements in AHSSIA for project-based developments by
allowing PHAs to attach 100 percent of the dwelling units that
serve elderly populations, persons that require supportive
services and for projects that have 25 units or less would make
the program easier to administer.
Downward HAP Pro-rations
Under AHSSIA, an initial Housing Assistance Payments
Contract between a PHA and the owner of a project may be up to
20 years (compared with 15 years under current law), subject to
availability of sufficient appropriated funds for the purpose
of renewing expiring PBV contracts for assistance payments, as
provided in appropriation Acts and in the PHAs' Annual
Contributions Contract (ACC) with HUD. In the event of
insufficient appropriated HAP funds, payments due under PBV
contracts must take priority if other cost-saving measures that
do not require the termination of an existing contract are
available to the PHA. Currently, if PHAs' receive downward pro-
rations in HAP funds for their tenant-based voucher programs,
one of the measures available to PHAs to help prevent them from
having to terminate HAP Contracts and Lease Agreements on
behalf of existing voucher-assisted households, is to lower
their voucher payment standards for newly admitted households
upon turnover and for households relocating from one unit to
another with the benefit of voucher assistance. In those
instances, participants in the tenant-based voucher program pay
between 30-40 percent of their income towards rent and
utilities. Even though the PVB program is a subset of the
tenant-based voucher program, all PBV-assisted households must
pay no more than 30 percent of their income towards rent and
utilities. In other words, when there is a downward pro-ration
in HAP, tenant-based voucher households described above, bear
the full brunt of downward pro-rations.
We understand and appreciate how important it is that PBV
Contracts receive 100 percent HAP pro-rations, even if the
level of HAP appropriated funds results in a downward pro-
ration below 100 percent. However, PHAs that utilize a greater
percentage of their portfolios to PBV assistance will be
disproportionately harmed in their tenant-based voucher
programs as a result of this provision in AHSSIA. In addition
to the language in the bill, NAHRO recommends that PHAs also be
provided the authority to help make up for downward pro-rations
in HAP funds overall, to also opt to raise PBV-assisted
households Total Tenant Payment (TIP) from 30 percent of their
monthly adjusted income to between 30-40 percent of their
monthly adjusted income like the tenant-based voucher program.
Clearly this is a measure that would only be implemented under
downward pro-rated HAP funds, as a way for all PHAs' program
participants to share the burden of such action. Absent this
change, PHAs that may have considered utilizing and/or
increasing the percentage of their units under the PBV program
would face significant financial disincentives in doing so.
Additional PBV Program Legislative Reforms
Listed below is a summary of our position on additional PBV
legislative reforms we supported in the December 1, 2010,
version of the Section Eight Voucher Reform Act (SEVRA).
Site-Based Waiting Lists
A provision to permit owner-managed, site-based waiting
lists, subject to PHA oversight and responsibility, and further
subject to the protection of tenants displaced by
rehabilitation.
Absolute Preference To Prevent Displacement of Existing Eligible
Residents
Any family who resides in a dwelling unit proposed to be
assisted under the PBV program or in a unit to be replaced by a
proposed unit to be assisted under the program, is required to
be given an absolute preference for selection for placement in
the proposed unit, if the family is otherwise eligible for
assistance.
Vouchers Project-Based in PHA Owned Public Housing Properties
A provision to permit PHAs to attach project-based vouchers
to a PHA-owned Public Housing project or site without
undergoing a competitive process. However, PHAs would have to
reflect the project-based initiative in their ``PHA Plan'' and
the units could not receive Public Housing funding. This
process would not change eligibility rules under which PHA can
project base their own units. PHAs would be responsible for any
expenses such as Housing Quality Standards (HQS) inspections
and rent reasonableness determinations.
HAP Contract Term
A provision that would allow the housing assistance
payments contract between the owner of the project and the PHA
to be 20 years.
Lease and Tenancy Provisions
A provision clarifying that lease and tenancy provision
pertaining to Section 8 vouchers shall apply to project-basing
of vouchers, except for requirements concerning the minimum
lease term.
Enhanced Vouchers
A provision allowing enhanced vouchers at mortgage maturity
for properties for enhanced vouchers on prepayment.
Transfer of Vouchers and Budget Authority
A provision to allow PHAs to transfer a portion of its
vouchers and corresponding budget authority to other PHAs to be
used to provide project-based assistance. The bill states that
``HUD shall encourage such agreements and promptly execute the
necessary and contract modifications.
Rents in Units Assisted by Housing Trust Fund
A provision to allow lower rents for vouchers in units
assisted by a Housing Trust Fund, but only with the mutual
agreement of the PHA and owner.
Additional PBV Program Regulatory Reforms
Attached for your review and consideration please find
NAHRO's comments, on behalf of its members, regarding HUD's
proposed rule titled: ``The Housing and Economic Recovery Act
of 2008 (HERA): Changes to the Section 8 Project-Based Voucher
Programs'' (Docket No. FR-5242P-01).
Conclusion
Mr. Chairman, as this Subcommittee seeks to advance a bill
that not only makes sense substantively but politically, we
urge you to consider and ultimately adopt a bill that hews
closely to the December 1, 2010, version of SEVRA and reflects
some of the more thoughtful and constructive provisions in
AHSSI that we identified today. We see no reason, given the
measure of support that the December 1, 2010, version of SEVRA
had and the AHSSIA bill for the most part now has, to either
radically depart from language contained in these constructive
approaches to reform--or worse to start from scratch. The time
for discussion has passed; the time to act is now! With
specific respect to AHSSIA, we are very pleased to see that
your House colleagues made significant progress on a number of
issues important to NAHRO, including to the HQS section, and
also retained important language regarding the establishment of
administrative fee rates by Congress. Certainly there is more
that this Subcommittee can do to improve both bills as we have
noted but, after almost 10 long years of fits and starts, there
is no reason to undermine largely viable products that have
many if not most program stakeholders on board.
On behalf of my colleagues at NAHRO, thank you again for
the opportunity to come before you and express our opinions
regarding this vitally important legislation. We look forward
to working with you.
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHUMER
FROM WILL FISCHER
Q.1. Allowing tenant protection vouchers to be project-based in
order to preserve affordable housing.
Currently, HUD allows some tenant protection vouchers that
are issued to be project-based in order to help preserve
affordable housing and reduce tenant displacement. More
specifically, HUD allows tenant protection vouchers (TPVs) to
be project-based in the ``orphan properties,'' that have no
option for rental assistance contract renewals and no option
for long-term affordability. By allowing owners to project-base
these vouchers, they can then leverage the rental assistance
contracts to recapitalize the property. Further, it helps
protect households that are currently residing in the property
from being displaced and forced to relocate.
With the appropriate safeguards in place, including tenant
consultation and notification, do you believe that making all
tenant protection vouchers eligible for project-basing is an
important tool that will help preserve affordable housing? What
are some other options to preserve affordable housing for low-
income households that are facing possible displacement and
rent increases due to affordability restrictions expiring or
owners opting out of HUD's programs?
A.1. We agree that project-based vouchers are an important
preservation tool to retain affordable units in a property for
the long term. However, project-basing usually is not necessary
to prevent displacement of current tenants. The large majority
of tenant protection vouchers issued when privately owned
properties opt out of Federal assistance are ``enhanced
vouchers'' provided under the authority of section 8(t) of the
U.S. Housing Act, which leaves the choice of whether to remain
in the property to the tenant. Tenants with enhanced vouchers
could be protected from displacement through enforcement of
requirements in existing law for owners to accept the vouchers.
Because of the language of section 8(t), HUD has determined
it does not have the authority to allow enhanced vouchers to be
project based, prospectively or retroactively. Congress would
have to enact new authority to make such project-basing
possible. Section 202(b) of the April 13, 2012, House draft of
the Affordable Housing and Self-Sufficiency Improvement Act
(AHSSIA) would provide this authority.
Congress should enact this provision, but it should
modestly alter the language to cover all situations eligible
for enhanced vouchers (including prepayments in addition to
cessation of rental assistance), require tenant notification
and consultation, and require that HUD provide advance notice
of the standards it will apply for waivers of the requirement
in 8(o)(13)(C) that project-basing be consistent with the PHA
plan and the goal of deconcentrating poverty.
Congress also should drop the language in Section 202(b)
authorizing HUD to waive the limits in 8(o)(13)(B) and (D) on
the percentage of units in a project that can have PBV
assistance and the share of an agency's voucher funds that can
be project based. As is discussed further in the answer to the
next question, HUD should instead exempt all PBVs used to
preserve federally assisted housing from these limits but
establish a new cap of 50 percent on the share of an agency's
voucher program that can be project based for any reason.
In addition, enactment of the improvements to the PBV
program included in Section 106 of AHSSIA would make project-
based vouchers more attractive to owners and effective as a
preservation tool. For example, these changes would increase
the maximum length of project-based voucher contracts from 15
years to 20 years, require public housing agencies to
prioritize making payments due under PBV contracts in the event
of insufficient appropriations, facilitate the maintenance of
site-based waiting lists that comply with fair housing
requirements, set the limit on the share of a PHA's voucher
program that can be project based at 20 percent of the PHA's
authorized vouchers rather than 20 percent of its funding
(making the limit more predictable and expanding project-basing
capacity at most agencies), and allow PHAs to project base an
additional 5 percent of vouchers for specified purposes.
Regarding other options, we have two suggestions:
1. Congress could authorize HUD to provide tenant protection
vouchers for tenants residing in HUD-assisted
properties with maturing mortgages or expiring use
restrictions if sufficient appropriated funds are
available for this purpose after addressing the needs
of tenants in other properties, public or private,
already eligible for tenant protection vouchers.
(Prioritizing already authorized uses of tenant
protection vouchers is important, because if funds are
insufficient families that have been receiving rental
assistance under other programs may be displaced and
unable to afford other housing.)
2. Congress could direct HUD to create a preservation
exchange program that will identify properties that are
at-risk of opt-out and facilitate purchase of these
properties by preservation-oriented entities that will
maintain affordability.
Q.2. Exempting public housing redevelopment from counting
against a PHA's project-based voucher funding limitation.
The PBV program limits a PHA from project-basing more than
20 percent of its voucher funding. Many PHAs around the country
have been using the PBV program as a tool to redevelop and
rehabilitate its public housing stock. Recently, HUD has
embraced this principle by allowing a PHA to convert its public
housing assistance to a 15 year PBV contract through the Rental
Assistance Demonstration program. Unfortunately, for many PHA's
unable to utilize the RAD program, the 20 percent limitation
may still be a barrier for them to redevelop their own public
housing stock. A simple solution would be to exempt public
housing revitalization that a PHA undertakes from the 20
percent voucher-funding cap. This would then allow a PHA to
continue to reposition its public housing stock and also
continue to use the program in a manner that best serves the
low-income households in the surrounding community.
Would you support a change to the project-based voucher
program that would provide an exception to the 20 percent
voucher funds limitation for PHAs that use the PBVs to
redevelop its own public housing stock? Are there are other
limitations or changes you would make to the RAD program that
would make it easier for a PHA to redevelop public housing in a
manner that protects the Federal investment and provides safe,
decent housing for low-income households?
A.2. PBVs are a promising tool for preserving public housing,
and it would be beneficial to ease--but not eliminate--the
limitation on the share of voucher funds that can be project
based if the added project-based vouchers (PBVs) go toward
preservation of public and other federally assisted housing.
Congress could achieve this by exempting PBVs used to preserve
federally assisted housing from the 20 percent cap in
8(o)(13)(B), but providing that PHAs may not under any
circumstances project base more than 50 percent of their
voucher funds (or authorized vouchers, if the change in Section
106 of AHSSIA is enacted).
This 50 percent limit is very important, for two reasons:
First, allowing the majority of vouchers or voucher
funds at an agency to be project based would undermine
the PBV program's resident choice policy. PBV residents
have the right after 1 year to move with the next
available tenant-based voucher. This is a vital feature
of the PBV program, since it enables the owner to
leverage assistance for underwriting purposes and
residents to benefit from the stability of project-
based housing, but also permits residents to move if
needed (for example, to pursue a job opportunity)
without giving up rental assistance.
For the resident choice policy to work well, however, the
pool of tenant-based vouchers must be large compared to
the number of PBVs. If too many of an agency's vouchers
are project based, PBV tenants who wish to move will
experience long waits and few vouchers will be
available to unassisted families on tenant-based
assistance waiting lists.
Second, if agencies project base a high percentage
of their vouchers, lenders may be less willing to
finance rehabilitation with loans that rely on PBVs for
repayment. It is more challenging to foster lender
confidence in project-based vouchers than in Section 8
project-based rental assistance, which has a longer
track record and is backed by direct multiyear
contracts between the Federal Government and owners.
Moreover, Congress has underfunded the voucher program
a number of times in recent years, with the result that
HUD has been compelled to fund agencies at levels
somewhat below the amounts for which they were
eligible. The deepest shortfall to date, in 2006,
reduced agencies' funding by 5.4 percent. Funding
uncertainty and the potential for shortfalls may well
increase in the next decade, given the constraints
already enacted by the Budget Control Act and deficit-
reduction pressures.
Project-based vouchers have been largely insulated from
voucher funding shortfalls because they make up a small
portion of agencies' voucher programs. PHAs can cover
shortfalls through temporary and usually modest
cutbacks to their tenant-based vouchers (for example,
by shelving vouchers rather than reissuing them when
families leave the program) without affecting project-
based owners or their lenders. If an agency were faced
with a shortfall and most of its vouchers were project
based, however, the agency could avoid PBV cuts only by
making such drastic cuts to their smaller tenant-based
program that current voucher holders could be forced to
leave their homes. And if the shortfall were deep
enough and the share of PBVs high enough, it could
become impossible for agencies to avoid PBV cuts. Even
the prospect of this occurring could make lenders less
willing to make loans that are backed by PBV subsidies.
The Moving-to-Work stakeholder agreement incorporated in
Section 401 of the April 2012 AHSSIA draft recognized the
importance of maintaining some limits on project-basing. That
provision would permit MTW agencies to project base more than
20 percent of their voucher programs, but only up to 50
percent.
Another provision of the PBV statute also impedes use of
PBVs for public housing: the cap in section 8(o)(13)(D) of 25
percent on the share of units in a development that can have
project-based vouchers (excluding units made available
specifically for the elderly, people with disabilities, or
families receiving supportive services). This cap is beneficial
and important when PBVs are used in newly assisted
developments, since it encourages mixed-income housing (which
can place greater market discipline on the development's
management). But it makes little sense in developments where
more than 25 percent of the units already receive Federal
housing assistance. It would be helpful if Congress specified
that the cap does not apply when project-based vouchers are
used to preserve federally assisted housing.
While these changes would be worth making, on their own
they likely would expand the use of project-based vouchers to
preserve public housing only moderately. HUD has increasingly
implemented restrictions on public housing demolition and
disposition to further preservation goals. These restrictions
are important, but one of their effects is to impede voucher
conversions solely to finance redevelopment. Moreover, when
conversions are permitted the funding for new vouchers would
need to come from the limited appropriation for tenant
protection vouchers, which has been cut sharply in recent years
and is close to or below the level needed to meet the existing
annual need for new tenant protection vouchers.
RAD, which Congress authorized in 2012 appropriations
legislation, permits conversion of up to 60,000 public housing
units to project-based vouchers or project-based rental
assistance, but prohibits HUD from setting these units' Section
8 subsidies above the amount they would have received through
the public housing operating and capital funds. This funding
restriction, as well as the unit cap, will limit the share of
the public housing stock where RAD is feasible. Large-scale use
of project-based vouchers or project-based rental assistance to
preserve public housing will likely require a decision by
Congress to approve additional conversions and appropriate the
modest increase in voucher or other section 8 funds needed to
set subsidies at adequate levels.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHUMER
FROM LINDA COUCH
Q.1. Allowing tenant protection vouchers to be project-based in
order to preserve affordable housing.
Currently, HUD allows some tenant protection vouchers that
are issued to be project-based in order to help preserve
affordable housing and reduce tenant displacement. More
specifically, HUD allows tenant protection vouchers (TPVs) to
be project-based in the ``orphan properties,'' that have no
option for rental assistance contract renewals and no option
for long-term affordability. By allowing owners to project-base
these vouchers, they can then leverage the rental assistance
contracts to recapitalize the property. Further, it helps
protect households that are currently residing in the property
from being displaced and forced to relocate.
With the appropriate safeguards in place, including tenant
consultation and notification, do you believe that making all
tenant protection vouchers eligible for project-basing is an
important tool that will help preserve affordable housing? What
are some other options to preserve affordable housing for low-
income households that are facing possible displacement and
rent increases due to affordability restrictions expiring or
owners opting out of HUD's programs?
A.1. The National Low Income Housing Coalition (NLIHC) thinks
that project basing vouchers, as either tenant protection or
enhanced vouchers, can be an important preservation tool that
safeguards tenants from increased housing costs and helps
retain affordable rental housing.
In most cases when an owner opts out of a Federal housing
assistance program, residents are issued tenant protection
vouchers that enable them to stay in their homes, or use the
vouchers to move if they choose to. However, there is a small
subset of HUD-assisted properties with maturing mortgages or
expiring use restrictions that are not eligible for tenant
protection assistance once the affordability restriction ends.
The FY12 Appropriations Act provided up to $10 million to
provide tenant protection or enhanced vouchers for residents of
these properties located in low-vacancy areas (the ``Durbin-
Brown'' provisions). The FY12 Appropriations Act also allowed
HUD to project base that assistance, which would preserve a
property's affordability while enabling tenant mobility. Beyond
FY12, Congress should continue and augment appropriations for
tenant protection vouchers for all tenants Durbin-Brown
intended to assist (HUD is making only $6 million available);
plus, the provision should be modified to remove the limitation
to low-vacancy areas.
The ``Merkley-Brown'' provisions of the FY12 Appropriations
Act should also be expanded beyond FY13 in order to allow
ongoing project basing of vouchers, in lieu of tenant-based
vouchers, when Rent Supplement (Rent Supp), Section 236 Rental
Assistance Payment (RAP), or Section 8 Moderate Rehab contracts
expire.
In addition, Congress should amend Section 8(o)(13) of the
Housing Act, explicitly stating that all tenant protection
assistance may be in the form of project based vouchers,
eliminating the 25 percent cap on the number of units that may
be project based at federally assisted housing. The Merkley-
Brown provisions authorized HUD to waive most features of
Section 8(o)(13), but in the Rental Assistance Demonstration
HUD merely raised the cap to 50 percent. Eliminating the cap
and increasing the maximum contract length of a project-based
voucher contract from 15 to 20 years would make project basing
a more attractive and effective tool for preservation.
Finally, Congress should establish a national preservation
inventory that is publicly available and regularly maintained,
requiring HUD to provide each federally assisted property with
a unique numerical identifier. This will help residents,
advocates, and preservation-oriented developers identify
properties that are at risk of leaving the affordable housing
stock so that preservation-oriented developers can take the
necessary steps to preserve properties as affordable housing
for low income people.
Additional Material Supplied for the Record
LETTERS SUBMITTED BY DIANNE HOVDESTAD
NAHRO VOUCHER ADMINISTRATIVE FEE SURVEY RESULTS
STATEMENT SUBMITTED BY DEBORAH DE SANTIS, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CORPORATION FOR SUPPORTIVE HOUSING
STATEMENT SUBMITTED BY KRISTINA COOK, CAE, ON BEHALF OF THE NATIONAL
AFFORDABLE HOUSING MANAGEMENT ASSOCIATION
MEMORANDUM: PROPOSED REGULATORY AND ADMINISTRATIVE REFORMS AND
STATUTORY LANGUAGE
LETTER FROM THE PRESERVATION WORKING GROUP
LETTER TO THE SENATE BANKING COMMITTEE REGARDING SECTION 8 VOUCHER
REFORM
STREAMLINING AND STRENGTHENING HUD'S RENTAL HOUSING ASSISTANCE
PROGRAMS--PART II
----------
TUESDAY, DECEMBER 11, 2012
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:31 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Tim Johnson, Chairman of the
Committee, presiding.
OPENING STATEMENT OF CHAIRMAN TIM JOHNSON
Chairman Johnson. I call this hearing to order.
I would like to welcome the Honorable Sandra Henriquez once
again to the Committee for a hearing entitled ``Proposals to
Streamline and Strengthen HUD's Rental Housing Assistance
Programs, Part II.''
Millions of American families struggle every day to afford
a roof over their heads. Currently, a person with a full-time
job needs to earn about $18.50 an hour in order to afford a
modest, two-bedroom rental at the national average. This is an
amount far above the minimum wage or the income provided by
Supplemental Security Income.
Affordability is not just a problem in the largest cities
in the country. The Sioux Falls Housing and Redevelopment
Commission, for example, has 3,800 families--nearly twice the
number the agency currently serves--on the waiting list for
housing assistance.
HUD's Section 8 Voucher and Public Housing rental
assistance programs help over 3 million households, including
low-income seniors, people with disabilities, and families with
children, find safe, affordable housing. This assistance is
funded by the Federal Government through HUD and delivered
locally through a network of local and State public housing
authorities, or PHAs.
Despite the vital role these programs play in our national
safety net, they face a number of challenges. These include
complex administrative procedures, aging buildings in need of
revitalization, and Federal funding constraints that have local
agencies struggling to do more with less. The strains on local
agencies have become so difficult some PHAs have turned down
HUD-VASH vouchers for homeless veterans--or even shut down
completely--due to a lack of funding to administer the program.
Given these challenges and the Nation's fiscal position, it
is essential that our Federal programs operate effectively and
efficiently.
Earlier this year, Senator Menendez's Subcommittee held a
hearing to gather stakeholders' recommendations for improving
these programs. Many of these focused on commonsense ideas that
have been considered in both House and Senate Section 8 voucher
reform bills in recent years, such as streamlining housing
inspection schedules, simplifying rent calculations, and
improving PHAs' ability to provide new housing opportunities
through the use of project-based vouchers. Some of these
suggestions would also streamline processes in HUD's Section 8
project-based rental assistance programs.
We have invited Assistant Secretary Henriquez here to share
the Administration's recommendations on this important topic. I
look forward to learning where there may be consensus around
commonsense reforms that will strengthen the Section 8 and
public housing assistance programs for our families, local
partners, and taxpayers.
Are there any other Members----
Senator Reed. That is a good question.
[Laughter.]
Chairman Johnson. Jack, do you wish to make a brief opening
statement?
Senator Reed. Mr. Chairman, thank you again for holding
this hearing. It is very important. Welcome, Madam Secretary,
and I look forward to your testimony. Thank you.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you all. And I want to remind my
colleagues that the record will be open for the next 7 days for
opening statements and any other materials they would like to
submit.
Now I will briefly introduce our witness, the Honorable
Sandra B. Henriquez, Assistant Secretary for Public and Indian
Housing at the U.S. Department of Housing and Urban
Development. In this capacity, she has day-to-day oversight of
HUD's public housing and Section 8 voucher programs as well as
HUD's Office of Native American Programs.
Assistant Secretary Henriquez, you may proceed with your
testimony.
STATEMENT OF SANDRA B. HENRIQUEZ, ASSISTANT SECRETARY FOR
PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
Ms. Henriquez. Thank you and good morning. Chairman
Johnson, Ranking Member Shelby, Mr. Reed, and Members of the
Committee, I thank you for inviting me here today to testify
this morning on opportunities for reform of the Housing Choice
Voucher and public housing programs.
The voucher and public housing programs provide critically
important housing assistance in communities across the Nation.
These programs serve extremely poor families, many of whom are
elderly or disabled. Not surprisingly, with the recent
recession, the demand for rental assistance has increased.
HUD recognizes the urgent need to streamline and simplify
its rental assistance programs in order to reduce the
administrative burdens on public housing authorities and to
increase overall efficiency, while also generating Federal cost
savings where possible.
In light of the persistent demand for deeply affordable
rental housing, we are also working hard to preserve public
housing. My testimony today will cover three important
approaches: streamlining and simplifying our programs, further
reforming the public housing oversight structure to strengthen
the portfolio, and increasing flexibility to respond to local
housing needs.
There is broad, external consensus among policy experts and
practitioners for a number of key reforms that will streamline
and simplify HUD's rental assistance programs. In its fiscal
year 2013 budget request, HUD put forward a number of reforms
around which there is consensus, and these include
consolidating the Voucher and Public Housing Family Self-
Sufficiency programs and opening eligibility to multifamily
residents; enacting a rental policy demonstration to test the
effectiveness of different policies and encouraging family
economic dependents and self-sufficiency, and authorizing
biennial inspections for Housing Choice Voucher units to reduce
administrative and financial burden. We are exploring further
streamlining measures that require statutory authority and may
be worth pursuing in fiscal year 2014.
Our commitment to streamlining and simplification extends
to the future of public housing as well. We recognize the
importance of aligning our oversight structure with basic
property management principles. Small public housing
authorities view our existing oversight structure--known as the
``Public Housing Assessment System,'' or PHAS--as increasingly
unworkable. They assert that the program is heavy-handed, that
small housing authorities pose little risk to HUD, and that HUD
should, therefore, scale back its oversight of small agencies.
In response to these concerns, we have taken steps to
adjust how public housing are scored under the system, and we
are willing to change and consider other changes as well.
Broader reform that embraces traditional real estate
management practices will bring substantial administrative
relief to PHAs of all sizes, helping to put the public housing
portfolio on a more solid foundation. Reform of HUD's oversight
structure is the next step on the path established nearly a
decade ago with the implementation of ``asset management''--a
system where accounting, budgeting, funding, and management are
performed at the property level rather than the public housing
level.
The Rental Assistance Demonstration, a top priority of this
Administration, also known as RAD, addresses the contractual
relationship between public housing authorities and HUD. It
offers participating housing authorities the option to convert
to long-term project-based Section 8 contracts which will
enable them to leverage private investment on terms similar to
those available to private property owners participating in
HUD's multifamily programs. We expect that RAD will help to
reverse the loss of public housing units and to preserve the
portfolio going forward.
The Moving to Work Program was authorized in 1996 as a
demonstration as well to provide a limited number of housing
authorities with the statutory and regulatory flexibility to
test practices that increase cost-effectiveness, reward
employment and economic independence, and increase housing
choices for low-income families. MTW has enabled housing
authorities to pioneer innovative approaches to serving
homeless families, building resident earnings and assets,
achieving operating cost efficiencies, and leveraging private
capital.
For example, Home Forward, formerly known as the Portland
Housing Authority, in Portland, Oregon, used project-based
vouchers to provide housing to formerly homeless veterans, and
the building is served by a full-time resident services
coordinator, and services are provided by the VA program.
Flexibility allows Home Forward to provide security deposits to
veterans using VA supportive housing vouchers as well.
The Department is pleased that some of our most important
stakeholders from public housing authorities and low-income
housing advocacy communities were able to negotiate through
their differences over MTW in order to advance broader Section
8 reform. As the Committee crafts its legislation, we hope you
will consider the stakeholder approach.
Mr. Chairman, there is an irrefutable need for rental
assistance in communities across this Nation. At the same time,
there is longstanding consensus on a set of reforms that will
streamline and simplify administration of the Housing Choice
Voucher and the public housing programs. HUD is committed to
improving not only the administration of its programs, but its
oversight of the public housing programs as well, and we look
forward to working with the Committee and our industry partners
to develop a property-based oversight structure.
We also recognize that any expansion of the MTW program
must be coupled with measures to protect tenants, assure
adequate HUD oversight, and evaluate results.
I look forward to your questions. Thank you.
Chairman Johnson. Thank you for your testimony.
As we begin the questions, I will ask the clerk to put 5
minutes on the clock for each Member.
As I mentioned earlier, PHAs in my State and around the
country are struggling to provide services to families given
inadequate voucher administrative funding. How will the
proposals we have been discussing here reduce the burdens on
PHAs, particularly small agencies serving large areas, like
those in South Dakota?
Ms. Henriquez. That is a good question, and thank you very
much. Our proposals to streamline and administer also look at
the options of forming consortia, having smaller agencies band
together in order to have economies of scale in administering
their programs. In addition, we think that there are
streamlined opportunities around inspections, around rent
certifications that could happen particularly for those
families on fixed incomes, and that could happen on a less
frequent basis because that income change is small and is known
year after year.
We also believe that the inspection protocols could move
from annual to biennial, particularly in housing authorities
where there is a known tenant population with less wear and
tear on those units, which indeed may free up housing authority
staff, create efficiencies, economies, and allow housing
authorities to spread their precious resources further to serve
the populations that are housed in those properties.
Chairman Johnson. PHAs in my State have also described
their difficulties in keeping up with regulatory burdens and
paperwork. For example, South Dakotans have mentioned that they
are often asked to submit the same information multiple times.
We must obviously find a balance between the need to provide
appropriate oversight of taxpayer dollars with the needs of
agencies, particularly small agencies who have limited staff
and funding.
Are you examining administrative actions that HUD can take
to reduce burdens on small PHAs?
Ms. Henriquez. Yes, we are examining particularly the
reporting and regulatory burden on small PHAs, and indeed, we
are trying a couple of things in a couple of different areas.
One, as I said earlier, we want to look at what we can do
to streamline across the board.
Two, we are looking at our own data collection systems to
make sure that we ask for it once, we do not ask for it in
duplicative ways, and that when we ask for it, it is
information that we are going to use, not information that we
are not. So we want to make sure that our data collection is as
tight as possible.
In addition, providing regulatory relief to small agencies
in particular, there are some things that we think make totally
good sense from a property management and a monitoring
perspective. We want to take those not just for small agencies,
but we want to take them to scale, because if they are good for
small agencies doing real estate property management, then they
are good for other, larger agencies to do that same work as
well.
And there are other issues around regulatory streamlining
that we would like to talk more with both the Committee and
with small agencies about what they need to really run their
business and balance that with what HUD needs for its own
monitoring. We realize that we need to look at risk and assess
risk, and generally small housing authorities, if you follow
the money, small agencies are less riskier propositions than
larger housing authorities to get the bulk of the HUD dollars.
But we want to strike that balance and make sure that we are
being as effective and efficient with all of our stakeholders.
Chairman Johnson. You have recommended increasing the
medical deduction used in income and rent calculations from 3
to 10 percent of income. Previous versions of the Senate's
SEVRA legislation and the AHSSIA bill under discussion in the
House Financial Services Committee take a broader approach to
simplifying income and rent calculations. These measures would
streamline several deductions in HUD's complicated income
calculations and replace them with higher standard deductions.
Do you support this broader approach to simplifying
deductions?
Ms. Henriquez. Yes, we do support a broader approach to
simplifying. We think that there will be less errors; it will
be easier for residents to understand the changes; it will be
easier for housing authorities' staff to actually compute and
make less mistakes in those computations. We also think that
there needs to be a balance between standard deductions and--
both on standard deductions and pairing that with any changes
in the medical deductions so there is a balanced program. This
is truly not to harm or cause greater cost to be borne by the
most economically vulnerable citizens that we house in our
programs.
Chairman Johnson. Senator Reed.
Senator Reed. Well, thank you very much, Mr. Chairman, and
thank you, Madam Secretary. And as you know, one of the
consistent themes here both from your Department and from the
Chairman's questioning is lowering the dead weight costs, for
want of a better term, on small public housing authorities. You
are trying to do that.
One issue that has come recently to our attention is that
the agency always has recognized that in the awarding of FSS
grants this year, there were some errors.
Ms. Henriquez. Correct.
Senator Reed. You are trying to correct those errors. We
have a housing authority in North Providence that is in that
process. And this is another sort of example of particularly
smaller public housing authorities where, when they have to go
back and redo the work, et cetera, it just adds to their
administrative costs.
But could you give us sort of some insight as to what
happened and what are you doing?
Ms. Henriquez. Yes, thank you for that question. I
sometimes refer to it as ``cosmic convergence.'' There were
several things that went wrong, and they all went wrong at the
same time, and, hence, we find ourselves having made a mistake
in the award and the calculations for those awards for the
Family Self-Sufficiency grants on the voucher side.
As it relates to small housing authorities, or any housing
authority that applied under the NOFA earlier this year, we are
not asking for a resubmission. We are going to reprocess
starting at the point where HUD made its first mistake, and
that was our data pull.
I want to be very clear. The NOFA, as written, made a
point. It said: We will do a data pull from our data base that
looks at the year-long number of families registered under the
Family Self-Sufficiency program at any particular housing
authority. We will post that data on a Web site, and the link
is in the NOFA. So if you clicked on the NOFA electronically,
it automatically took you to that posting.
In addition, we said please check the posting to see the
numbers we have for your particular housing authority, and the
NOFA said if you disagreed with that number, could you please
then submit a supplemental or an ad hoc report to accompany
your submission. And we used then that submission as the way to
calculate the funding for those housing authorities that
submitted the ad hoc report.
Even with that, our data pull was a point in time as
opposed to an entire year, and so it didn't take into account--
you might have had a thousand people at the beginning of the
year, people graduated during the year, and you are replacing
them, and so your number is lower at the point of time pull.
That was mistake number one.
So what we are doing is we are asking--in fact, a letter
went out Friday to all housing authorities that submitted about
750 of them that said we will be reprocessing, here is the
information, this is the reposting, this is where you will find
it, please, again, check the reposting, pull your own numbers,
resubmit, and from that point forward we are going to then
actually reprocess all of those applications and make the
adjustments where people--some people got awards that should
not have, some people got lower awards, some people got higher
amounts than they were due.
When all is said and done, because it is a mistake of the
Department, we do not want housing authorities and cascading
down to residents who use the services of a self-sufficiency
coordinators, we do not want folks to be harmed. And so for
people who should not have been awarded money, we are going to
make available extraordinary admin fees for them so they can
continue, if they have already hired people and made employment
commitments, that they will not be harmed and will be able to
move forward and not have to take a loss and lay people off.
Senator Reed. Thank you, Madam Secretary. Just let me make
two points, because my time is winding down.
One, you in your proposal for essentially merging or
consolidating both the FSS voucher program and the FSS program
for public housing authorities, I think that is part of your
design. That is reflective of legislation that I have
submitted.
Ms. Henriquez. Yes.
Senator Reed. And I think it makes sense.
The second point--and you alluded to it, too--is this
notion of banding together, spreading overhead costs, it is
something I think we should all explore. You know, I am sure
there are communities in South Dakota and New Jersey and Rhode
Island where there is one housing official trying to cope with
all of this in a really difficult climate, and so to the extent
that we can incentivize this sort of coming together, maybe not
formally but through sort of joint services or joint overhead,
that would be very, very good. So any advice you have for us
going forward, we would appreciate that. But thank you, Mr.
Chairman, and thank you, Madam Secretary.
Ms. Henriquez. Thank you, sir.
Chairman Johnson. Senator Crapo.
Senator Crapo. Thank you very much, Mr. Chairman. First of
all, I apologize. I am only going to be able to be here for
just a couple of moments, but I did want to stop by and
indicate to you, the Chair, as well as to our witness and to
the other Members of the Committee that in these difficult
budget times that we see and the understanding that I think we
all have that funding issues are critical, I think it is
important for us to focus on the kind of regulatory activity
that the Department can bring and the focus it can bring to
these housing issues. I think that the deregulation of Section
8 is very critical and important and strengthening, and I would
hope in that process that the Moving to Work Program could get
a strengthening and a renewed strong focus as we move forward.
But I just wanted to stop in and indicate my support for
the process that is moving forward and encourage that we work
closely together on it.
And, again, I apologize. I have been in four places this
hour, and I have got another one to get to. So I apologize, and
I am going to have to step right out.
Chairman Johnson. Madam Secretary, do you have any comments
about these issues?
Ms. Henriquez. We just look forward to working with the
Committee both in strengthening our regulatory oversight that
is appropriate and balancing that with the needs of housing
authorities to get their work done to serve the people who are
housed in those programs. So thank you very much, sir.
Chairman Johnson. Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman, and thanks for
calling this hearing. We had a hearing in the Subcommittee that
laid a foundation, and I am pleased to see the Secretary here
to build upon it.
Madam Secretary, we have been discussing reforms to Section
8 for some time now, and I think there is a tendency to forget
how incredibly pressing the need for action really is.
Affordable housing advocates and housing authorities back in
New Jersey are telling me that these reforms cannot wait and
that they are urgently needed now. So can you give the
Committee a sense of the impact over time if Congress fails to
act relatively soon, after such a long time of having this
discussion, to implement specific reform provisions? What flows
from that?
Ms. Henriquez. That is a really good question. Thank you,
Senator.
I am taking a moment because I want to sort of get
centered, because I think that there are lots of potential
issues that will flow from this.
As you know already, administrative fees, which is the
money that housing authorities get for leasing units under the
Section 8 side, as those fees decrease, the workload does not.
So what they have to do, the kinds of questions they have to
ask, the kinds of documentation that is required on an annual
basis does not decrease in spite of the fact that the funding
to do that work has decreased, which has meant that housing
authorities in some instances have had to lay people off. And
that has led to longer waiting lists for people. Then people
are on waiting lists longer, so they have lived in more
difficult conditions longer.
It has also meant that as you have laid off people with
decreasing funding, that housing authority employees themselves
will find themselves in difficult straits as well.
The way in which we think about how that program gets
managed gets more difficult. The less people but more workload
or similar workload means potential for more error. Potential
for more error means potential for wasted taxpayer dollars. And
so we really do need to think about streamlining so that the
work gets done, the people get house as quickly as possible,
and the operations and the business processes for housing
authorities are streamlined and efficient so that errors are
minimized and maximizes the dollars, the precious resources we
have.
Senator Menendez. I appreciate that. How about housing
authorities refusing to run their voucher programs and turning
down VASH vouchers to assist homeless veterans and the loss of
hard units?
Ms. Henriquez. We have seen that in several instances, and,
in fact, not just VASH vouchers, but we are seeing about a
dozen housing authorities have decided that they are not going
to operate a voucher program anymore, and they have made
arrangements to convey that operation, to consolidate that
operation with another larger housing authority.
It means that the folks who need the subsidy, the
affordability, are not getting served. It means that the amount
of work that it takes to do the job well is not able to be
supported. And it means most of all that we will have homeless
veterans and other families, homeless families, in emergent
conditions, and that should not be tolerated.
Senator Menendez. Let me just quickly--there are some core
reform provisions that I would like to get your comment on. One
is having a stable voucher renewal fund policy that would
create predictability, because I am told it is very hard for
housing authorities to plan for the year ahead when they do not
know exactly what that will do; also to clarify how much money
housing authorities can hold in reserves for a rainy day
without those funds being taken back or offset; and also the
flexibility provisions that are being--that have been discussed
in project-based vouchers, enabling housing authorities to
better assist families, especially elderly and disabled
families, families transitioning out of homeless, to live in
affordable housing communities of opportunity to receive
services onsite.
How would that predictability, clarity in the funding side,
and the flexibility translate into more families served, if it
does translate into that?
Ms. Henriquez. Predictability is something that we would
endorse wholeheartedly. It means that a housing authority can
plan its business moving forward, it will understand its
resources, and it can then tabulate its expenses and figure out
how best to run its program.
I would say that that does not just benefit the housing
authority and its employees; it benefits the residents who are
participating in those programs on the voucher side. We have
heard in the past issues around shortfalls or money not being--
not having sufficient funds to make sure that everybody who
needs to be housed or be renewed, have their voucher renewed,
will be able to do that. And this will make sure that we do not
have to have those discussions again. So tenants will be
protected, and participants would be protected in that regard.
Further, I believe that a fixed formula funding, renewal
funding, will mean that housing authorities are able to buildup
small reserves. It right now is at about 3 weeks, and a 3-week
reserve in a multi-billion-dollar program is really not a lot
of money, particularly when you are running a voucher program
which is tied to market real estate forces. And so while there
are fair market rents and there are limits and so on, the
natural tendency for a housing authority is to want to house as
many people on its waiting lists as possible. That is why we
are all in this business. Having that predictability will allow
them to do that, particularly when it is coupled with
understanding what your reserve levels are and that will not be
swept, and understanding that one of the things we keep asking
for as well is the reallocation authority for the Secretary. So
in some markets, it may be easier to lease, and you may have
more room. And some housing authorities may not be able to
lease as readily, and they will not use all of the money that
has come to them. And so the ability to reallocate so we can
continue to house and maximize housing across this Nation is
something that we would look forward to as well.
Senator Menendez. Mr. Chairman, thank you very much, and
thank you, Madam Secretary, for your answers. I look forward to
working with the Chair and his leadership hopefully in the next
Congress to see if this is something that we within the housing
context could prioritize, because I think there are two shared
goals here: getting more people to have a place to call home
and, second, saving taxpayers' money. So thank you very much.
Ms. Henriquez. Thank you.
Chairman Johnson. You support the idea of permitting PHAs
to form consortia for purposes of forming partnerships to
administer their public housing programs. Congress initially
authorized the use of consortia in 1998, yet I understand
barriers remain to PHAs' taking full advantage of this
authority.
What is HUD doing to remove barriers to use of consortia
and facilitate PHAs' participation in consortia if they
determine it will meet their local needs?
Ms. Henriquez. There are several actions we are taking
right now. First of all, consortia are allowed in voucher-
administering agencies, but not on the public housing side, and
so we are looking to extend the ability to have that happen in
the public housing programs.
In addition, right now under a consortia housing
authorities, let us say three or four housing authorities band
together to get some economies of scale, to simplify their
operations, but they still have to fill out three or four
separate reports to HUD because they are still seen as three or
four separate public housing entities. And so we are looking at
ways--again, this is why streamlining and administrative
flexibility is so important, because we are trying to figure
out ways in which housing authorities could file one report,
for example, that would cover their agencies. We would still
ask each housing authority to file for its own tenants and its
own participants into what we call our PIC data base, which is
our personal information and every single household in the
voucher program on the public housing side. We would ask that
under Family Self-Sufficiency there is one report that is done
that covers what the goals are early on in the program and then
if they have met those goals at a year-end report. And so we
are looking at all sorts of ways--in fact, we have been working
with a number of housing authorities, all range of sizes across
the country, asking them what information do they need to run
their day-to-day business about which they make their business
decisions, and then translating that into what about that
information we could collect and use--since they are doing it
already, that we could then use to monitor them as well so that
we are not asking for different information or in a different
format than they already collect it.
Chairman Johnson. You mentioned your support for the Rental
Assistance Demonstration enacted in fiscal year 2012--or RAD--
in your remarks. Can you update us on the status of this
demonstration? Second, can you also comment on a draft House
proposal to authorize funds for use in this conversion
demonstration and how these funds might be used to preserve
assisted housing?
Ms. Henriquez. Yes, thank you, sir. So the Rental
Assistance Demonstration Program was authorized in fiscal year
2012. It is designed initially as a two-application period for
public housing properties because we knew that there were
housing authorities ready to submit and others who really
wanted to spend some time thinking through their applications
at a later date.
The initial application period ended October 24th, just
several weeks ago. We got a number of applications. That is
still being tabulated in terms of how many, but they range from
small housing authorities to medium to large housing
authorities who have put proposals together, and we can provide
greater tabulation once those initial awards are made. And on
an ongoing rolling basis, applications are coming in after the
October 24th date. We will look at those after this initial cut
has been reviewed.
As you know, the previous bill said that we could get up to
60,000 units in at no cost, and either using project-based
contracts or project-based vouchers. In addition, in that
60,000 cap is also authorizing for multifamily programs, rent
supplement, RAP--rental assistance payments--and Section 8 mod
rehab.
So while we strongly support this program as a way to
preserve public housing to get enough capital infused using
private sector tools, financing tools, to get private money
into the public arena to help rehabilitate and maintain these
properties, we do know that there are a number of properties
for whom this does not work because they have a larger capital
need. And so we look forward to what we have seen in previous
iterations on the House side, additional money going into that
program which would help housing authorities with greater
capital needs leverage greater amounts of private sector
equity.
But what we are seeing, which is really helpful, is housing
authorities using a variety of tools for mixed finance deals to
make this happen. Again, it puts them on the same real estate
platform as everything else in the real estate marketplace,
using the equity from properties to leverage capital
improvement dollars, to make sure that properties are
maintained at current standards and will continue to improve
and continue to be available to serve the people who live there
now and for future generations who need the economic stability.
Chairman Johnson. I would like to thank you, Assistant
Secretary Henriquez, for your testimony and for being here with
us today.
This hearing is adjourned.
Ms. Henriquez. Thank you.
[Whereupon, at 11:09 a.m., the hearing was adjourned.]
[Prepared statements supplied for the record follow:]
PREPARED STATEMENT OF SANDRA B. HENRIQUEZ
Assistant Secretary for Public and Indian Housing, Department of
Housing and Urban Development
December 11, 2012
Chairman Johnson, Ranking Member Shelby, and Members of the
Committee, thank you for inviting me here today to testify regarding
opportunities to reform the Housing Choice Voucher and public housing
programs.
As you know, the voucher and public housing programs provide
critically important housing assistance in communities across the
Nation. These programs serve extremely poor families, many of whom are
elderly or disabled, or both. While the median income of American
families today is just above $50,000, voucher and public housing
families have substantially lower incomes. \1\ Not surprisingly, with
the recent recession, the demand for rental assistance has increased.
---------------------------------------------------------------------------
\1\ The average annual income of voucher program participants is
approximately $12,500; for public housing families, the figure is
slightly more than $13,500.
---------------------------------------------------------------------------
At the same time, we have been tightening our belts at the Federal
level, and HUD recognizes the urgent need to streamline and simplify
its rental assistance programs in order to reduce the administrative
burdens on PHAs and increase overall efficiency. In our FY12 and FY13
budget requests, we included measures that reduce administrative
burdens and increase efficiency, as well as generate Federal cost
savings.
At the same time, and in light of the persistent need for deeply
affordable rental housing, we are working hard to preserve public
housing. For example, the Department's Rental Assistance Demonstration
(RAD) is providing participating PHAs with new options for addressing
the capital needs of properties, enabling them to leverage private
investment on terms and conditions similar to those available to
private property owners participating in HUD's multifamily programs. We
expect that RAD will help to reverse the loss of public housing units
and eventually place the inventory on a more sound, sensible regulatory
footing for the long term. In the meantime, administrative streamlining
is key to holding on to what we have. We also recognize that both
preservation and administrative streamlining will be well served by
continuing--and completing--HUD's transition to a project-based
framework for public housing. HUD recognizes both the necessity and the
wisdom of moving in the direction of an oversight model for public
housing that is more closely aligned with the multifamily project-based
Section 8 portfolio and with traditional asset and portfolio management
principles.
Finally, the Department believes that PHAs should enjoy greater
flexibility to respond to local housing needs, which in some cases
means testing innovative strategies and engaging in partnerships
tailored to local circumstances. The Department recognizes that greater
flexibility must be coupled with measures to protect tenants, assure
adequate HUD oversight, and evaluate results.
Streamline and Simplify
The Department is aware that there is broad external consensus
among policy experts and practitioners for a number of key reforms that
will streamline and simplify HUD's rental assistance programs. In its
FY13 budget request, HUD put forward a number of reforms around which
there is such a consensus. These reforms include:
1. Revising the threshold for medical deductions. The current threshold
for the deduction of medical and related care expenses is 3 percent of
family income. HUD proposes to increase the threshold to 10 percent of
family income. This change would generate estimated savings of $150
million in the first year of enactment ($30 million in the voucher
program, $23 million in public housing, and $98 million in project-
based Section 8).
2. Consolidating the Family Self-Sufficiency program. Currently, there
is a Family Self-Sufficiency (FSS) program for the voucher program and
another for the public housing program. The programs are separate and
administered independently. HUD proposes to consolidate the two
programs and expand eligibility to project-based Section 8 owners,
opening the program to multifamily tenants.
3. Modifying the definition of extremely low-income. In areas where
median incomes are extremely low (e.g., rural areas), working poor
families may be skipped over for rental assistance, even if their
incomes put them below the poverty level. This is the case for the
voucher program, especially, because 75 percent of new admissions each
year must have incomes at or below 30 percent of the area median. HUD
proposes to define an extremely low-income (ELI) family as a family
whose income does not exceed the higher of the Federal poverty level or
30 percent of the area median income. This provision will generate
estimated savings of $155 million (in the voucher program only) in the
first year after enactment.
4. Enacting a rent policy demonstration. Currently, HUD can test and
evaluate different rent-setting policies only at Moving to Work (MTW)
agencies, since other agencies are not authorized to alter their rents
beyond what is permitted in statute. HUD proposes to carry out a rent
policy demonstration at any agency ``for the purpose of determining the
effectiveness of different rent policies in encouraging families to
obtain employment, increase their incomes, and achieve economic self-
sufficiency, while reducing administrative burdens and maintaining
housing stability.''
5. Establishing a flat rent floor. PHAs are required to establish a
flat rent ``based on the rental value of the unit'' and to offer public
housing families the option of paying the flat rent or an income-based
rent. In order to align public housing flat rents more closely with
market rents, HUD proposes to establish a flat rent floor set at 80
percent of the applicable FMR. To assure that no family's rent would
increase by more than 35 percent in any one year, the increase would be
phased in where applicable. Once fully implemented, this provision
would reduce costs by approximately $400 million.
6. Changing the definition of a PHA to include a consortia of PHAs.
Currently, there is statutory authority for PHAs to form consortia for
the purposes of administering the voucher program, but not for
administering public housing. HUD proposes to amend the definition of a
``public housing PHA'' to include a ``consortium of PHAs'' so that PHAs
will be able to reduce their administrative costs and achieve operating
efficiencies by combining their operations, should they choose to do
so.
7. Authorizing biennial inspections for HCV units. Currently, HCV units
must be inspected on an annual basis, regardless of whether such units
have a record of regular compliance with HUD's physical condition
standards. To reduce the administrative and financial burden on PHAs
and high-performing landlords, HUD proposes to authorize biennial
inspections, enabling PHAs to concentrate their inspection resources on
the more marginal and higher-risk units. Importantly, residents would
retain their right to request an inspection.
While each of the above-described provisions requires statutory
authority, we have established a cross-program working group to
identify streamlining and simplification measures that HUD can
implement through regulation or notice and are moving aggressively to
implement these measures. In addition, we are exploring further
streamlining measures that require statutory authority and may be worth
pursuing in FY14.
A Stronger Foundation for Public Housing
Our commitment to streamlining and simplification extends beyond
the provisions identified above. As we look a bit further out on the
horizon and consider the future of public housing, in particular, we
recognize the importance of aligning our oversight structure with basic
asset management principles.
Small PHAs, in particular, view our existing oversight structure--
known as the ``Public Housing Assessment System,'' or PHAS--as
increasingly unworkable. They assert that PHAS is heavy-handed, that
small PHAs pose little risk to HUD, and that HUD should therefore scale
back its oversight of small PHAs. I understand and appreciate these
concerns. We have taken some steps to adjust how PHAs are scored under
PHAS, and we are willing to consider others. We are interested,
however, in pursuing broader reform in this area in the interest of
protecting tenants and the taxpayer's substantial investment in public
housing. Reform that embraces traditional asset management principles
and practices will also bring substantial administrative relief to PHAs
of all sizes, helping to put the public housing portfolio on a more
solid foundation.
Reform of HUD's oversight structure is the next step along a path
whose initial direction was established during the prior
Administration, with the implementation of ``asset management.'' Asset
management entailed movement from a system where accounting, budgeting,
funding, and management were all performed at the agency level to a
system where these functions are now performed at the project level.
Movement along this path picked up a strong head of steam with
enactment of the Rental Assistance Demonstration (RAD), which is a top
priority of the Department. RAD addresses the contractual relationship
between PHAs and HUD. By offering PHAs the option to convert to a long-
term, project-based Section 8 contract, RAD facilitates lending to and
investment in individual public housing properties. Without a doubt,
asset management laid the groundwork for RAD by beginning to build an
operating history at the individual project level. This information is
critically important to the lenders and investors who will be
underwriting public housing preservation transactions under RAD.
Moving HUD's oversight of public housing to a true asset management
model is the next step on the path toward putting the public housing
portfolio on a stronger foundation and reversing the portfolio's
isolation from the affordable housing mainstream. As we move ahead, we
look forward to working with the Committee and our industry partners as
we pursue this important change.
Moving to Work
The Moving to Work (MTW) program was authorized in 1996 as a
demonstration program. The purpose of the program is to provide a
limited number of PHAs \2\ with the statutory and regulatory
flexibility to test approaches to providing housing assistance that
reduce costs and increase cost-effectiveness, reward work and
employment, and increase housing choices for low-income families.
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\2\ There are currently 35 MTW agencies.
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Since its enactment, MTW has enabled PHAs to pioneer innovative
practices around approaches to serving homeless families, building
resident earnings and assets, leveraging private capital through the
project-basing of vouchers and other strategies, and achieving
operating cost efficiencies through streamlined approaches to income
recertifications, inspections, and the calculation of utility
allowances. For example:
Home Forward (Portland, Oregon) made an award of project-
based vouchers to a local not-for-profit organization that
provides housing to formerly homeless veterans. The building is
served by a full-time resident services coordinator, and
supportive services are provided by the Veteran's Health
Administration. Home Forward also uses its single-fund
flexibility to provide security deposits to veterans using
Veterans Affairs Supportive Housing vouchers to lease rental
units.
The King County Housing Authority (KCHA) is able to
leverage its MTW flexibilities to build programs involving
local partners that bring their own sources of funding to the
table. For example, KCHA developed a Resident Opportunity Plan
(ROP) in partnership with the local YWCA; Bellevue College,
Hopelink; and Washington State's Department of Employment
Security. Through the ROP, participating residents receive
wrap-around services and financial assistance so they can
acquire the skills needed to increase their earned income and
ultimately graduate from federally assisted housing. KCHA's
flexibility under MTW provides it with the latitude to refine
the program iteratively and incrementally, improving resident
outcomes as the program progresses, while also supplementing
the sources of funding brought by other partners, which are
typically constrained to particular activities.
The Cambridge Housing Authority implemented a tiered rent
structure that combines elements of an income-based rent and a
flat rent. Rents are established for various income bands and
set at 30 percent of adjusted income at the low end of each
band. This approach, which is combined with a hardship
exemption, produces much-needed rent simplification for both
the PHA and residents.
As you know, the Department supports the principles of MTW,
including appropriate recordkeeping, reporting requirements, and
rigorous evaluation. We look forward to working with the Committee as
it considers potential reforms and improvements to the MTW program.
Conclusion
Mr. Chairman, there is an unquestioned need for rental assistance
in communities across the Nation. At the same time, there is
longstanding consensus around a set of reforms that will streamline and
simplify administration of the Housing Choice Voucher and public
housing programs. HUD is committed to improving not only the
administration of these programs, but its oversight of the public
housing program, in particular. Finally, the Department recognizes that
greater flexibility for PHAs must be coupled with measures to protect
tenants, assure adequate HUD oversight, and evaluate results. Thank you
for your consideration of these comments, and I look forward to
addressing your questions.