[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE FUTURE OF HOUSING IN AMERICA:
50 YEARS OF HUD AND ITS IMPACT
ON FEDERAL HOUSING POLICY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 22, 2015
__________
Printed for the use of the Committee on Financial Services
Serial No. 114-57
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HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
PATRICK T. McHENRY, North Carolina, MAXINE WATERS, California, Ranking
Vice Chairman Member
PETER T. KING, New York CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma BRAD SHERMAN, California
SCOTT GARRETT, New Jersey GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico RUBEN HINOJOSA, Texas
BILL POSEY, Florida WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK, STEPHEN F. LYNCH, Massachusetts
Pennsylvania DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin KEITH ELLISON, Minnesota
ROBERT HURT, Virginia ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina BILL FOSTER, Illinois
RANDY HULTGREN, Illinois DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania DENNY HECK, Washington
LUKE MESSER, Indiana JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota
Shannon McGahn, Staff Director
James H. Clinger, Chief Counsel
C O N T E N T S
----------
Page
Hearing held on:
October 22, 2015............................................. 1
Appendix:
October 22, 2015............................................. 53
WITNESSES
Thursday, October 22, 2015
Briggs, Xavier, Vice President, Economic Opportunity, the Ford
Foundation..................................................... 10
Cabrera, Orlando J., Of Counsel, Squire Patton Boggs; and former
Assistant Secretary for Public and Indian Housing, U.S.
Department of Housing and Urban Development.................... 5
Glover, Renee Lewis, Founding and Managing Member, the Catalyst
Group, LLC..................................................... 7
Husock, Howard, Vice President, Research and Publications, the
Manhattan Institute............................................ 8
APPENDIX
Prepared statements:
Velazquez, Hon. Nydia........................................ 54
Briggs, Xavier............................................... 55
Cabrera, Orlando J........................................... 63
Glover, Renee Lewis,......................................... 70
Husock, Howard............................................... 81
Additional Material Submitted for the Record
Luetkemeyer, Hon. Blaine:
Written statement of the National Multifamily Housing Council
and the National Apartment Association..................... 86
Letter from representatives of the real estate industry,
dated October 20, 2015..................................... 91
Kildee, Hon. Daniel:
Written responses to questions for the record submitted to
Xavier Briggs.............................................. 93
THE FUTURE OF HOUSING IN AMERICA:
50 YEARS OF HUD AND ITS IMPACT
ON FEDERAL HOUSING POLICY
----------
Thursday, October 22, 2015
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10:05 a.m., in
room 2128, Rayburn House Office Building, Hon. Jeb Hensarling
[chairman of the committee] presiding.
Members present: Representatives Hensarling, Royce, Lucas,
Garrett, Neugebauer, Pearce, Posey, Fitzpatrick, Luetkemeyer,
Huizenga, Duffy, Stivers, Stutzman, Mulvaney, Hultgren, Ross,
Pittenger, Barr, Rothfus, Schweikert, Tipton, Williams,
Poliquin, Love, Hill, Emmer; Waters, Maloney, Velazquez,
Sherman, Hinojosa, Clay, Scott, Green, Cleaver, Ellison, Himes,
Carney, Foster, Kildee, Murphy, Delaney, Sinema, Beatty, and
Vargas.
Chairman Hensarling. The Financial Services Committee will
come to order. Without objection, the Chair is authorized to
declare a recess of the committee at any time.
Today's hearing is entitled, ``The Future of Housing in
America: 50 Years of HUD and Its Impact on Federal Housing
Policy.''
I now recognize myself for 3 minutes to give an opening
statement.
In launching the war on poverty, President Johnson told us
its purpose was, ``not only to relieve the symptoms of poverty,
but to cure it and, above all, to prevent it.'' One of the
chief weapons of this war was to be the Department of Housing
and Urban Development, a Cabinet-level agency President Johnson
signed into law 50 years ago this month.
In its history, HUD has clearly achieved good. It has made
commendable progress to aggressively fight immoral and illegal
racial discrimination in housing. It has proven vital to many
of our low-income elderly and disabled citizens and has
undoubtedly made poverty more tolerable.
But it has also dramatically failed to meet President
Johnson's noble aspirations, much less deliver any measurable
results. In fact, poverty levels are largely unchanged since
HUD's creation. With some notable exceptions, HUD's public
housing projects are typically any city's most despairing
places where generations of poverty-stricken families are
warehoused and sealed off from the best schools, the best job
opportunities, and the safest neighborhoods.
It is simply not enough to marginally improve the lives of
the able-bodied poor through perpetual government dependency; a
caring and compassionate society must always have a ladder of
opportunity on which everyone can climb.
Thus, our collective goal cannot be limited to helping
people tolerate poverty; it must be to help them escape
poverty. And whether I have met them at the Salvation Army
women's shelter, Habitat for Humanity homes, or the Jubilee
Center in my native Dallas, I know that is the aspiration of
our low-income brothers and sisters.
We must help find ways for them to provide for their
families, to conquer generational cycles of dependency, and to
have the opportunity to enjoy the dignity of meaningful work.
Most importantly, they must have a chance to enjoy a quality
not measured in dollars and cents: the pursuit of happiness.
We can no longer measure success by taxpayer dollars
expended and new HUD programs launched. Measuring success based
on how many Americans are standing in line for welfare checks
versus earning growing paychecks is a sure sign that the system
has failed.
And now is also the time to acknowledge this fundamental
truth: There can be no real progress in the cause of affordable
housing without recognizing that government policies are often
the impediment: first, by making housing more expensive, up to
30 percent according to some studies, due to regulatory and
zoning restrictions; second, by shrinking paychecks and harming
economic growth through poor policies; and third, by denying
educational choice for families to escape failing schools and
improve themselves.
This hearing will be the first in a series on the future of
housing in America where we will investigate questions that
ought to matter to all Members concerned for the dignity and
well-being of the poor among us. What are the precise problems
HUD is trying to solve? Why doesn't it seem to work? How should
we measure success? And what should we be doing in the 21st
Century?
A decent society has a moral responsibility to help make
affordable housing accessible for the elderly, the disabled,
those who cannot provide for their dependents, and those who
find themselves in hard times and in need of a second chance.
The question here is not, should we honor that commitment, but
how do we best honor that commitment in the 21st Century, and
can we work together on a bipartisan basis to do that?
I now recognize the ranking member for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman.
I would like to thank you and our witnesses for being here
today.
Mr. Chairman and Members, I just returned from a homeless
program. I was there this morning with a few of my colleagues,
including Mr. Cleaver and Mr. Green. We visited N Street
Village, a homeless service provider, which is just footsteps
from the halls of our Capitol.
As this hearing seeks to examine the effectiveness of HUD
programs over the last 50 years, I thought it would be
important to help make the connection between what we have
talked about here in the committee and what HUD is doing to
support providers like N Street Village, which are working on
the front lines of our Nation's effort to end homelessness.
This morning, we spoke with women struggling to find work
and fighting to overcome addiction, physical and mental
illness, and abusive situations. What we saw today is how HUD
programs directly touch and impact the lives of America's most
vulnerable.
We also saw the opposite of the many assertions we have
heard about dysfunction and ineffectiveness at this agency, a
rather ironic charge given productivity levels here in
Congress.
Mr. Chairman, in the wake of a foreclosure crisis that
pushed as many as 11 million families out of their homes, a
fully funded HUD is needed now more than ever before. This is
an agency that, in addition to reducing veterans' homelessness
across the Nation by 33 percent, currently supports 1.2 million
affordable housing units for low-income families through the
HOME program, including almost 500,000 units for first-time
home buyers in rural and urban communities alike.
This is an agency that over the last 50 years has provided
housing assistance to tens of millions of families, 35 million
in the last 20 years alone. This is an agency which has ensured
that 44 million families have access to the American Dream by
ensuring they have mortgages that they can actually afford.
Without question, HUD is the backbone of our Nation's
safety net.
Today, many of our Members have provided examples of HUD at
work in their districts. These pictures demonstrate the
transformative ability of HUD programs, particularly the
Neighborhood Stabilization Program, which has infused over $7
billion into local communities to rehabilitate foreclosed homes
and breathe new life into distressed neighborhoods in every
corner of this great Nation.
However, this good work continues to be misunderstood or
undermined by harmful cuts to these programs. And so I think it
is time for us to truly focus on the good that HUD has done and
commit ourselves to dealing with problems such as homelessness
that really can be addressed.
In addition to the visit that we made this morning, last
week I was at Vermont Village, a project that has been
developed in my district in partnership with the private
sector.
We had Chase Bank involved. We had a private developer. We
had the County of L.A. We had another nonprofit. We had
Enterprise. They all came together and built a wonderful unit,
and it is serving homeless veterans. And the veterans were
there, some in their wheelchairs. They were so proud of all of
these opportunities that are being provided with the help and
direction of HUD.
And so what I wish, Mr. Chairman, is that we could focus in
a bipartisan way on what we can do from this committee in
support of HUD to provide housing and home opportunities for
the least of these. I believe that it is possible.
In Los Angeles, homelessness has risen 12 percent. We have
declared a state of emergency. The County and the City are
coming together and combining resources, but they need help
from us. And so I appreciate this hearing, but I appreciate
that we should actually put more focus on what we can do for
the homeless and for the least of these in providing a basic
safety net for those who need our help so badly.
I will yield back the balance of my time.
Chairman Hensarling. The gentlelady yields back.
The Chair now recognizes the gentleman from Missouri, Mr.
Luetkemeyer, chairman of our Housing and Insurance
Subcommittee, for 2 minutes.
Mr. Luetkemeyer. Thank you, Mr. Chairman.
The Nation's housing system is struggling and, in some
instances, failing. Since 2002, the Federal Government has
thrown more than $550 billion at HUD. Still, Los Angeles has
seen a 12 percent increase in homelessness over the past year.
In New York City alone, there are roughly 122,000 families on
the Section 8 wait list.
When the City of St. Louis opened its wait list in 2007,
the housing authority received more than 27,000 applications in
one week. It was not until late April that St. Louis County
opened its wait list again for the first time since 2010.
While we continue to see the need to grow and opportunities
stall, we experienced a dramatic increase in Federal policies
that drive up the cost of housing and impose an onslaught of
red tape, keeping people in the private sector out of
affordable housing. Our failed housing policies make no sense.
Since HUD Secretary Castro has spent the last year talking
about all he will do to reform housing, to date we have seen
very little in the matter of dramatic advances in HUD's ability
to serve, and no new metrics by which HUD can measure success.
One has to wonder if there is any success to report at all.
The time to talk about what is needed is over. It is time
to reject political rhetoric and push ourselves to do something
to help people in need.
I recently introduced H.R. 3700, the Housing Opportunity
Through Modernization Act. This bill is composed of
noncontroversial provisions which aim to clear out the
regulatory underbrush. Yesterday's subcommittee hearing showed
that there is a tremendous bipartisan support for that effort.
I hope we can continue the collaboration in bringing bolder
changes that are needed to HUD. Let us work together to create
opportunity and choice in housing.
Mr. Chairman, with that, I yield back.
Chairman Hensarling. The gentleman yields back.
We will now turn to our witnesses. Today, we welcome the
testimony of the Honorable Orlando Cabrera, who is today of
counsel to Squire Patton Boggs. He previously served as the
president of an affordable housing developer, and was HUD's
Assistant Secretary for Public and Indian Housing. He is a
graduate of the University of Michigan and the University of
Wisconsin Madison.
Ms. Renee Glover is the founder and managing member of the
Catalyst Group. She previously served as the president and
chief executive officer of the Atlanta Housing Authority for
almost 20 years. She is also Chair of Habitat for Humanity
International, and has worked as an attorney in private
practice. Ms. Glover holds degrees from Boston, Yale, and Fisk
Universities.
Mr. Howard Husock is the vice president of research and
publications at the Manhattan Institute. He previously served
as a director at Harvard University's Kennedy School of
Government, and has authored numerous publications relating to
the non-profit sector and on U.S. housing and urban policy. Mr.
Husock is a graduate of Boston University.
Finally, Dr. Xavier Briggs is the vice president of
economic opportunity at the Ford Foundation. Dr. Briggs also
holds an appointment as professor of sociology and planning at
MIT, and previously served as an Associate Director in the
White House Office of Management and Budget, as well as in
HUD's Office of Policy Development and Research. Dr. Briggs is
a graduate of Columbia, Harvard, and Stanford Universities.
For those who have not testified before, each of you will
be recognized for 5 minutes to give an oral presentation of
your testimony. And without objection, each of your written
statements will be made a part of the record.
Mr. Cabrera, you are now recognized for a summary of your
testimony.
STATEMENT OF ORLANDO J. CABRERA, OF COUNSEL, SQUIRE PATTON
BOGGS; AND FORMER ASSISTANT SECRETARY FOR PUBLIC AND INDIAN
HOUSING, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Cabrera. Good morning, Mr. Chairman, and thank you.
Thank you, Chairman Hensarling, Ranking Member Waters, and
members of the committee for inviting me to testify. I
approached this a bit differently knowing who was going to be
on this panel. The folks to my left are all people I know or
know of. Two of them in particular are both professional and
personal friends and they speak to issues that I think are
critically important, but in which I have less experience.
For example, Renee ran a housing authority, Xavier was a
policy-driven person at HUD entirely, and Mr. Husock knows a
lot more about markets.
I decided that I would bore everybody and go inside
baseball, and inside baseball means to focus on metrics.
The overarching theme of this testimony is not so much
focused on HUD's past or previous impact. Over the decades, HUD
and its many arms have undoubtedly impacted housing policy in
both positive and negative ways. If we know that HUD has
impacted Federal policy unevenly, and it has, I propose that
there is a value in exploring how we can achieve better future
housing policy outcomes.
Better serving all Americans, but particularly the elderly,
the disabled, very low-income, and low-income Americans should
always remain at the core of our Nation's housing policy.
Moving towards a legislative policy that is relevant to our
current century, not the 20th Century, would be a great step in
helping HUD evolve.
Change is inevitable for HUD. Its personnel is aging and
many are retiring. Important institutional memory has been lost
already. Similarly, its current infrastructure is also aging,
making it harder still to capture important and relevant data.
Many believe that one way to improve HUD's impact would be
to begin new programs or housing solutions or do away with
them. Perhaps. But my starting point would be a bit different.
I believe that the way to improve HUD's impact is through the
more adept and intensive use of technology.
More specifically, a critical area at HUD that deserves
focus, careful design, and investment is information
technology. Providing HUD with the appropriate tools that
relate to our century's housing policy model and needs will
produce better outcomes for residents and taxpayers.
There are three essential steps to improving outcomes:
define your desired result; know more about how to measure that
result; and do what needs to be done faster and better than was
previously the case.
In HUD's case, the first step should be to decide that HUD
needs to break away from the silo organizational mold that HUD
uses currently, into a more fluid and flexible organization.
HUD has always depended on silos out of statutory and
operational necessity. Though silos were probably appropriately
designed organizational components decades ago, those silos are
now impediments to improving HUD's capacity to more effectively
serve our Nation.
Essentially, HUD has four basic rules: HUD allocates
resources; HUD insures financial products; HUD regulates
certain stakeholders; and HUD is charged with policing and
prosecuting fair housing violations. That is a relatively
narrow set of tasks which is currently bundled in a far more
expansive organizational setting at HUD.
HUD's organization and activities should be integrated into
an information technology platform that allows it to more
effectively perform those four basic roles in a more seamless
manner than is currently the case.
Secondly, the American taxpayer would benefit if HUD
developed more relevant metrics than those currently being
used. More specifically, Congress should begin by first
providing HUD with the tools that HUD needs to capture not just
better and relevant data, but complex, fluid data that can lead
to defining better outcomes for very low-income and low-income
Americans.
Integrating technology would, for example, allow us to
improve people's lives by measuring and determining better
educational achievements, health care services, and other
important services in a more dynamic way than is currently
possible. That would mean better outcomes for residents and
better efficiencies for the Federal Government.
HUD desperately needs the appropriate tools to obtain
usable, scalable, sharable, and relevant information that all
of HUD's stakeholders can use. Providing HUD with the right
data tools and maintaining those tools will go further towards
creating a more efficient system than nearly any other
investment.
I believe that it would be time well worth the effort to
match desired housing policy outcomes in a new century with the
new century's information technology tools needed to
appropriately achieve those outcomes.
Thank you again for your invitation to testify. I am happy
to answer any questions you may have.
[The prepared statement of Mr. Cabrera can be found on page
63 of the appendix.]
Chairman Hensarling. Thank you.
Ms. Glover, you are now recognized for your testimony.
STATEMENT OF RENEE LEWIS GLOVER, FOUNDING AND MANAGING MEMBER,
THE CATALYST GROUP, LLC
Ms. Glover. Thank you. Chairman Hensarling and Ranking
Member Waters, thank you for the opportunity to speak with you.
I think it is very important when you think about the issue
of housing to remember that America is a nation of immigrants,
so new people will continue to come and new challenges are
going to arise. And poverty is not a static condition; it is
also a function of what happens in the economy and in the
larger social setting.
So I think when you look at how we are making progress, we
have to put it into the context of what is going on in history
and also in the economy, because we made great progress over
the years. And I think if we take an objective measure of the
programs that have been implemented to date, we will see that
many of the families who have been assisted have gone on, have
made progress, and are contributing to our country.
But for the Great Recession--we cannot underestimate the
impact that it had on the housing programs and how families are
faring.
And I think it is now universally accepted that there is
income disparity, and so that has implications in terms of what
type of investment we need to make to have a strong America.
One of the things that I have enjoyed with serving Habitat
for Humanity is that we have observed that not only here in
America, but all over the world, housing is at the center of
everything that is needed to have a great society. It is the
center of great education outcomes, health outcomes, healthy
families, and healthy children, and there are no great nations
without great communities.
So the question is, what should we be doing as a country to
rebuild, because there is no question that America is the
greatest nation in the world. But how do we help everyone in
the country achieve the American Dream?
And Dr. Martin Luther King challenges us to build the
beloved community here on earth. And that means all of us are
God's hands, feet, and heart to build the society. So when you
think about that, we cannot afford to leave one child behind.
And the question is, how do we go about doing it?
In my written testimony, I mention that there have been
several big ideas that have been put forth and have been
implemented successfully. But no program is perfect because
human beings are doing the implementation. So the question is,
can we lift out the lessons learned and best practices to see
what has worked and then do more of what has worked and less of
the things that haven't worked?
So what are the things that we have learned? Well, first of
all, we know that every American needs a decent home and a
great community.
Second, we know that home ownership, where feasible, builds
stability and helps build wealth.
And we have also learned that government must be a part of
the solution. But the question is, how do you go about doing
that?
And so we have learned that providing mobility and choice
is important, that ending concentrated poverty is important,
and I think the HOPE VI program and the Promise Neighborhood,
Promise Zones programs have shown that with people coming
together and connecting the dots, we can make a huge
difference.
I am sure that in all of your different localities, you
have seen that with a small investment and working in public/
private partnerships and leveraging private resources and
creating environments where the foundation community, the
families themselves and the larger community come together, we
can create additional communities of opportunity.
We have also learned that the Section 8 voucher, if it is
implemented appropriately, can provide access to communities of
opportunity. And that is because the families who are using
these resources want better lives for themselves and their
children. I know that with 100 percent certainty.
The other thing is we need to incent innovation. And I
think we have seen that the Moving to Work (MTW) deregulation
program has been very effective in incenting innovation and
creativity and leverage. And so, I would simply say, let us
continue to invest in our families and in our country, and
working together, there is nothing that we can't do.
I appreciate the time and thank you for the opportunity.
[The prepared statement of Ms. Glover can be found on page
70 of the appendix.]
Chairman Hensarling. Mr. Husock, you are now recognized for
your testimony.
STATEMENT OF HOWARD HUSOCK, VICE PRESIDENT, RESEARCH AND
PUBLICATIONS, THE MANHATTAN INSTITUTE
Mr. Husock. Thank you, Chairman Hensarling and Ranking
Member Waters, for the invitation.
As we reflect on the 50th anniversary of the founding of
HUD, the chairman is quite correct that President Johnson
focused his hopes on uplifting the poor. That should mean
helping as many of those of low income as practical, ensuring
that low-income housing is in good condition, and helping the
poor move up toward the middle class.
On these counts, HUD's housing assistance today is falling
short. There is little doubt, of course, that HUD does serve
the poor, often the very poor. Half of households living in one
or more of the one-million-plus public housing apartments or
two-million-plus housing choice voucher units earn less than
$10,000 a year. Many are not, however, moving up the economic
ladder.
HUD data shows that the median tenure in public and
subsidized housing is more than 9 years, 4 years longer than
the time limit for cash public assistance. In New York City,
that figure is 17 years.
Put it this way: The face of HUD is the face of long-term
poverty in the United States. In part, that is a result of the
way that we have structured the rules of the system. And I hope
to offer some suggestions that will have some bipartisan appeal
to improve that situation.
First, a little bit more background. Both public housing
and voucher tenants who work hard to increase their income face
what amount to high marginal tax rates. Unlike private market
tenants who sign a lease at a fixed rent, tenants in HUD's
affordable housing must pay rent equal to 30 percent of their
income. That means the more they earn, the higher their rent.
Just as bad, our subsidized housing system often consigns
the poor to live in the sort of conditions that public housing
was specifically designed to replace. In New York City, for
instance, a 2014 report by the City's Community Service Society
noted mounting resident outcry about elevator breakdowns, water
leaks, and untreated mold, and said that the housing authority
should qualify as the City's largest and worst landlord. A 2010
report by Abt Associates found that the public housing system's
capital needs as a whole topped $21 billion.
It is fortunate then that there are important green chutes
of reform among local housing authorities, chutes which the
Congress and HUD should strongly encourage.
As Renee Glover mentioned, Moving to Work, a waiver program
that has been, to date, limited to just a few localities,
allows the flexibility authorities need.
A 2014 report by Abt Associates found that 20 of 34 Moving
to Work authorities changed their rent rules to encourage self-
sufficiency. Eleven have adopted work requirements, and eight
have adopted time limits for some new tenants, all with the
goal of encouraging upward mobility.
In San Bernardino, California, the housing authority, in
explaining why it has asked for short-term assistance,
emphasizes twin goals: making room for families who qualify for
aid and have faced long waiting lists; and helping current
tenants outgrow the need for help. Self-sufficiency should be
the goal, it says.
Incomes among those admitted to the authority under time
limits have risen by more than 12 percent, employment by more
than 17 percent. I know that in Atlanta, work participation
went from under 20 percent to over 60 percent.
Spreading a Moving to Work approach through all or at least
many of the 3,000-plus public housing authorities would help
align our housing policy with our overall social policy.
There are other imaginative innovations going on. In New
York, Mayor Bill DeBlasio has announced plans to begin to lease
underused public housing open land for new private apartment
construction with ground lease payments available to fund the
system's desperate maintenance backlog.
The fledgling HUD Rental Assistance Demonstration program
can be a means through which authorities avoid being penalized
when they save money. That happens when they reduce operating
costs and find their subsidy is reduced the next year.
A guaranteed fixed-per-unit HUD annual payment can be used
as a bond payment guarantee that can bring in private
investment capital to do such things as upgrade antiquated
heating systems that hemorrhage money.
At its 50th anniversary, it is time for HUD to think about
how it can become not just a funder of housing, but an agency
that can enable and encourage some of the reforms that I have
discussed. At the same time, it must never forsake its fair
housing mission to ensure that any household that can afford a
home or a rental unit not be turned away on the basis of race
or ethnicity.
It should also begin to encourage experimentation with new
housing forums. One of the core ways to make housing affordable
is to have more units in the same amount of land: density. And
HUD can encourage experimentation.
In short, the time is right for HUD to encourage upward
mobility and to foster it and to adjust its rules so that it
does so.
Thank you very much.
[The prepared statement of Mr. Husock can be found on page
81 of the appendix.]
Chairman Hensarling. And Dr. Briggs, you are now recognized
for your testimony.
STATEMENT OF XAVIER BRIGGS, VICE PRESIDENT, ECONOMIC
OPPORTUNITY, THE FORD FOUNDATION
Mr. Briggs. Thank you, Chairman Hensarling, Ranking Member
Waters, and members of the committee.
In light of HUD's 50th anniversary, I would like to begin
by putting policy goals briefly into some historical
perspective.
The earliest goal of Federal housing policy was to help
meet the needs of factory workers and their families when
America entered the First World War. When public housing came
along, there were additional goals. The official ones
emphasized upgrading slums and providing stable, low rents to
workers who had been affected by the Great Depression. But the
large-scale construction that the public housing program
required also served the interests of the building industry and
organized labor.
The same mix of public and private purposes was true for
FHA mortgage insurance, which has benefited millions of
families as well as the real estate industry.
When HUD was created, it inherited this mix of public and
private purposes, but the economic and social contexts for
Federal housing policy has begun to shift in very significant
ways. First, after several decades of economic growth and
broadly shared prosperity in America, cities in many parts of
the country were hit with large-scale disinvestment and
joblessness.
And second, migration patterns had transformed the racial
and economic makeup of cities profoundly. In this context, and
particularly after widespread civil unrest, media accounts and
major works of scholarly research began to ask whether well-
intended housing policies were solving problems or making them
worse.
Lesson one is that these sweeping changes in America meant
that HUD and its congressional overseers began to grapple with
fundamental questions about the proper goals of Federal housing
policy and, by many measures, began to swim against the tide of
larger economic and social trends virtually from day one.
Lesson two is that we have been set back at a great human
and fiscal cost by our inability to agree enough on the goals
of Federal policy, let alone the most effective means of
achieving those goals. Without agreement, we lack adequate
commitment. And without that commitment, we struggle to make
more progress.
Fast forward 50 years from the founding of HUD and this
lack of agreement on fundamental goals manifests in several
powerful ways. First, Federal housing assistance produces
enormous benefits, as you have heard. But we are not focusing
enough resources or reform on the biggest problem: the
structural gap between income and housing costs at the base of
the American economy, especially for the lowest-income
households.
The biggest drivers of this gap by far are local housing
costs and tenant incomes, not HUD's operating capacity or
practices. As wages stagnated after the 1970s, especially for
those earning below the median, and as an older stock of
affordable units was demolished or converted and land prices
climbed significantly in many local markets, millions of the
lowest-income households in America came to face back-breaking
rents, homelessness, or endless commutes to find affordable
housing.
Those two driving factors--along with a policy decision in
recent years to add new vouchers to combat homelessness,
especially among veterans--explain why the total costs of the
voucher program, to cite one example, have grown. It is very
much a function of our strategy since the 1970s to rely
primarily on the private rental market to meet the housing
needs of those who cannot afford decent housing.
It is also increasingly clear that the costs of this quiet
crisis of unaffordable housing show up in children's health,
emotional development, and educational achievement, as well as
adults' health, mental health, and employment. So we pay
severely, both through government spending on health, criminal
justice, and other sectors, and also through lost productivity
and well-being.
Second, several of the most important levers for affecting
the structural affordability gap lie outside HUD's budget and
authority. The Tax Code is the most obvious example. It helps
to modestly expand the supply of affordable rental housing,
most directly through the low-income housing tax credit, but it
also structures the rewards of work, for example through the
earned income tax credit, and it targets most Federal housing
aid, through the mortgage interest tax reduction, to the middle
class and the affluent rather than the very low-income
households who face the most unaffordable costs.
Third, housing assistance has not been designed or funded
to act as a cure-all for poverty. In other words, housing
affordability is a necessary, but not a sufficient, condition
to produce economic mobility and self-reliance.
Fourth and finally, we will exacerbate the challenges we
face if we seek to expand housing assistance only within the
limited geography that contains most affordable housing now.
That is, we will deepen the problems associated with
geographically concentrated poverty if we don't take deliberate
steps toward greater inclusion.
In closing, it is vital to make housing policy a force for
self-reliance and economic mobility. To accomplish this, four
things need to happen. First, we need to go beyond the HUD
budget for leverage. Second, for HUD and other agencies, it is
vital to make our housing delivery system as efficient and
well-targeted as possible. Third, it is crucial that we support
effective pro-work housing policy for households that are not
elderly or disabled. Fourth and finally, we should make
inclusionary housing a full and integral part of the larger
agenda of Federal housing policy to help States and localities
encourage more balanced development and mitigate harmful
segregation.
Thank you again for the opportunity to testify.
[The prepared statement of Dr. Briggs can be found on page
55 of the appendix.]
Chairman Hensarling. The Chair now recognizes himself for 5
minutes.
Ms. Glover, on page seven of your testimony with respect to
work, you mention for non-elderly, able-bodied adults, it
``restores dignity and has proven to be a positive game changer
for families and their children.''
Specifically, you mention in your testimony the Moving to
Work demonstration project and you say that it ``has had
transformational impacts and proven very effective.''
Would you elaborate on your views, please?
Ms. Glover. Yes, thank you. When we adopted the work
requirement for non-elderly, able-bodied families, we did this
in consultation with the residents who were affected by those
policy changes. And what we consistently heard is that the
requirement was the additional boost coupled with an investment
when we had the deregulation agreement and we also were
operating under the HOPE IV grant.
We were able to invest in long-term counseling and coaching
to help families rebuild their resiliency, change their
mindsets, and deal with the actual family problems that they
were confronting.
And in terms of families' self-worth, we heard consistently
from each of the families that work restored dignity and
respect, and it also gave them the ability to have more
mobility and more control over their lives.
And so when I talk about game-changing impacts, this really
was transformational for the families. And all of the research
that has been done shows that not only do the families start
out working, but if they lost their jobs, they have been able
to go back into the workforce and find new jobs and they have
resiliency.
And so the work success has been greater than 90 percent
with the appropriate support and the right policies.
In terms of Moving to Work being transformational, it
allowed agencies in their local communities and certainly in
Atlanta working with the local players to design programs that
work. All real estate is local and it is very hard for anyone
in a central location to devise the solutions for very
different geographies.
Chairman Hensarling. I think I heard all of the witnesses
speak laudably of work programs, but specifically with respect
to the Moving to Work program. Just a show of hands, would each
of you advocate expanding that current HUD program? Just a show
of hands.
Thank you.
Mr. Husock, you actually had some data with respect to at
least one of the Moving to Work programs, in San Bernardino,
where incomes rose 12 percent and employment rose by 17
percent. Have you looked at other Moving to Work programs? Is
the data similar?
Mr. Husock. I have not, but the Abt Associates report that
I cite refers to a number of other programs with similar
results. And as Renee Glover knows well, in Atlanta the work
participation rate was about 18 percent when the work
requirement began and rose to over 60 percent.
I believe that is correct, Renee?
Ms. Glover. That is correct.
Chairman Hensarling. Also, again, I will note that all four
witnesses raised their hand to the Moving to Work question of
expansion.
You mention, Mr. Husock, in your testimony about the, and I
don't know your exact phrase, but essentially punitive marginal
rates for those who expand their employment opportunities. So
what public policy might that suggest?
Mr. Husock. I think within the Moving to Work framework,
and remember there is nothing mandatory in Moving to Work, I
think that is the most important thing to understand, it gives
flexibility to local housing authorities based on their
understanding of local conditions.
But in terms of that specific question, right now if I am
leasing a unit in a public housing authority, my rent goes up
as my income goes up. That is a counterproductive approach.
And so I think the right way to do that, to repair that, is
either to allow under Moving to Work authorities to set fixed
rents; you sign a lease just like you do in the private market.
Or to have--I know in some authorities, they have set so-called
income bands, that is, within a certain framework your rent
will not go up until you earn a good deal more. That would be
second best.
Chairman Hensarling. The time of the Chair has expired.
The Chair now recognizes the ranking member for 5 minutes.
Ms. Waters. Thank you very much, Mr. Chairman.
First of all, let me make sure that the record reflects
that those of us on this side of the aisle, as I am sure on
that side of the aisle, all believe in work. We believe that it
is important for people to have jobs. We also agree that it
gives a sense of dignity and pride to work.
Many of us started working when we were 12 and 13 years
old. I, for example, started working at age 13 in a segregated
restaurant; I cleaned tables where I couldn't eat. So let us be
clear about the value of work and what we think about it.
Because we do not want people to leave with the impression that
somehow there is a difference in what we think about work. We
think that is very important.
Secondly, we need to get some facts on the record. How many
of you believe that HUD is important, it has done credible work
in providing housing opportunities, even though you may
disagree about how to do it better? How many agree that it has
in 50 years been important? Okay, so let us all agree on that.
How many agree that even with new technology and some of
the reset of the recommendations that you may have about not
increasing the rent, that if we are to deal with the unhoused
population in this country, we are going to have to spend
credible resources in order to do it? How many people would
agree with that? Okay. Thank you very much.
Now, let us move to the discussion about Moving to Work.
Who can tell me what percentage of public housing tenants are
physically disabled, mentally disabled, and incapable of being
put on jobs? What percentage of public housing tenants in
America fall into the senior, too old to go to work, too
disabled to go to work, too mentally incapacitated to go to
work? Who knows that information?
Mr. Briggs?
Mr. Briggs. Thank you, Ranking Member Waters. The answer is
a majority of housing-assisted households, particularly those
on vouchers and public housing, face those barriers to work.
They are either elderly or they are disabled. I have spent a
good deal of time with these households and also the work ready
and the working, many of them working poor, but working hard,
and as you said, everyone believes in the pride and the dignity
that comes with work. They are struggling to make ends meet,
they are juggling an awful lot.
But it is extremely important, whether you are looking at
Moving to Work, whether you are looking at Moving to
Opportunity or other important efforts that HUD has launched
over the years, not to be confused about what is attainable for
a given population.
Ms. Waters. Okay. I hate to cut you off, but I only have so
much time. So one thing that we must agree on is that there are
tenants in public housing, no matter what you do with Move to
Work or anything else, who can't live anyplace else but in
subsidized housing, such as public housing, when we talk about
seniors who are too old to work, when we talk about the
disabled, when we talk about the mentally incompetent.
When we went to this program, this homeless program today,
most of the women were 60 to 75 years old. And they are not
going to get hired by anybody, particularly in this market that
we have where people who are graduating from college can't find
jobs. Nobody is going to hire them. How many people really
understand that, that you have people who fall in this age
range who are not going to get any jobs?
How many people understand that this population that we are
talking about is something that we have to recognize is a
population that we are going to have to deal with and subsidize
whether we like it or not?
Now, having said that, how many of you have the statistics
on Move to Work programs that can tell me exactly how many
people who have gotten job training and have moved on to a job?
Where is the data? Where are the stats? Who has that
information in this country?
Yes, ma'am, Ms. Glover?
Ms. Glover. There have been a number of studies done by
economists and universities. And I will commit to this
committee to reach out to the various networks. I think one of
the problems is that the research has been done, but it is all
over the country in different databases or whatever.
And I think it would be magnificent if this committee could
have that information through a central funnel. Because I think
that you will see that the policies that have allowed for
innovation at the local level has yielded tremendously positive
results and--
Ms. Waters. But the point is, we don't have the data, we
don't have the information. Nobody knows. People talk about how
great Moving to Work is, but nobody can tell me exactly what
has been accomplished. We don't have the information.
I yield back.
Ms. Glover. I will get it to the committee.
Chairman Hensarling. The time of the gentlelady has
expired.
The Chair now recognizes the gentleman from Missouri, Mr.
Luetkemeyer, chairman of our Housing and Insurance
Subcommittee.
Mr. Luetkemeyer. Thank you, Mr. Chairman.
And I welcome the individuals testifying today.
Mr. Cabrera, you had some interesting comments a while ago
with regards to trying to have a different model for HUD to be
able to deliver services and provide and support housing in
this country.
One of the problems that Secretary Castro talks about, and
you mentioned as well, is use of technology. They need more
funds to be able to do that, to do the simplest things such as
certifying some of the individuals to be able to do certain
things and different groups to be able to do certain things.
So, that is certainly an area that we need to consider, and
I appreciate you pointing it out.
You also talk about how they need to be thinking outside
the box and redo their model. Can you elaborate a little bit
more on that and give us some ideas and what kind of costs you
are talking about?
And is this something that HUD can restructure themselves
or do we legislatively have to make the changes?
Mr. Cabrera. Absolutely, I would like to pick up where we
just left off on MTW as an example.
Mr. Luetkemeyer. Sure.
Mr. Cabrera. I think the stress over MTW has to do with, I
hate to say this sometimes, but has to do in part with its name
and in part with when it was passed. MTW, from the perspective
I had, really had to do with maximum local flexibility. And in
terms of innovation, I think that is always a good thing,
particularly with high-performing housing authorities. Housing
authorities are State-chartered entities, not just local
entities. They are created by States.
They are created for the purpose of being property
managers, for the most part. That is what they have been since
their inception. Almost until very, very recently, the last
decade, those housing authorities that are more forward-
looking, that have been more transformational, they tend to be
MTWs and the reason that they tend to be MTWs is because they
align their local concerns first as opposed to Federal
concerns. That is why MTW has value.
I am sure that if you were to ask the--I think we are up to
36 or 39--MTW jurisdictions, their statistics on who it is that
has been moved to work, they would tell you, but they would
also tell you, in their own plans, people who should not be
working are not being compelled to do anything. Folks who are
elderly or disabled aren't being compelled because that is
generally the case in most low-income housing plans in most
jurisdictions.
What this is really about has as much to do with how it is
housing authorities operate, have them be bigger market
participants than they currently are, as anything else. Housing
authorities traditionally were not that. Housing authorities
were essentially these trapped, real estate, property
management concerns that had a very restrictive environment.
When you un-trap it, they do some pretty remarkable things.
The other thing I would add is I think one of the things
that people might be missing has to do with competition. There
has to be a more competitive environment in order to improve
results and outcomes and make it a more efficient process. So
much of what we are facing right now in terms of the debate
over, because I think Xavier got it right, the debate is
holding up progress.
But there are some places nobody debates, there are some
things nobody debates.
One of those things is that we have to do this better. And
doing things better necessarily means better and more
competitive settings. So those are just two quick examples. I
am trying to make sure you can ask whatever you want of
somebody else.
Mr. Luetkemeyer. Yes, thank you. That's interesting.
Last week, I had the opportunity to talk to some housing
folks in Great Britain. They have a unique system there, where
17 percent of the people are on public housing. And because
they can no longer afford to support that level of people on
public housing, they are trying to find a way to move some of
them off of the public housing rolls into their own home, and
figure out a way if they can come up--and this obviously
doesn't work with the elderly or disabled, but it does work for
the folks who are gainfully employed or can be gainfully
employed.
And so they get into the public/private partnerships and
some of the rent money, the subsidy goes toward the purchase
of, the lease purchase of the property. What do you think about
something like that? Is it feasible here in this country? It
doesn't solve all the problems, but I think there is a group of
people that this may help. What do you think?
Mr. Cabrera. The British conversion of public housing to a
public/private model depends upon essentially creating
inclusionary areas that are thereafter sold and taxed in order
to fund what we here call down payment assistance. I think from
a market perspective, a lot of market participants would
struggle with that.
The second thing I would say that would need to be worked
out is financing of something like that. It would be a very
difficult thing to finance.
The British system has worked marvelously for Britain
because they work under a different real estate regimen than
the United States. We are both common law, we are both heavily
statutory, but the way that property is owned in Britain is
very different than the way it is owned in the United States,
in many cases.
It is a very difficult question to answer. But certainly,
you see little pieces of that, right, in some parts of the
United States. In California, there are inclusionary--
Mr. Luetkemeyer. I see we are out of time.
I appreciate your response, and I look forward to the
discussion.
Thank you, Mr. Chairman.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentlelady from New York, Mrs.
Maloney, ranking member of our Capital Markets Subcommittee.
Mrs. Maloney. I thank the gentleman for yielding and for
calling this hearing.
And I thank all of the panelists for your work in this
important area. And congratulations to HUD at 50. They have
played an incredible role in the great City that I am
privileged to represent, New York, and I would say the whole
country in building and maintaining affordable housing.
But I am distressed about the future because there is no
funding, there is really no Federal program and housing is so
expensive it is hard for a city or a State to go forward with
their own plans. Specifically in public housing in New York,
there are over 900,000 people on a waiting list to get into
public housing. There is no money for new housing. The money
for maintenance is being cut back dramatically.
One of you testified that the public housing authority was
the worst landlord in the country, but that is because they
don't have the money to maintain the housing.
I think it was Mr. Husock who mentioned the program that
Mayor DeBlasio has come forward to take vacant land or land
within the housing project--the tenants there say they need
that land for playgrounds and for fresh air--and lease it. And
the proposal is that half of the money would go to market rate
to maintain the modernization and the running of the housing
authority because they are running at a deficit, and the other
half would be ``affordable.''
But the tenants in the public housing in my district tell
me that it is not affordable to them. It is really a higher
income than they could ever afford to be in.
So I don't see the future. And even that is not a
sustainable program. Once all the land is leased, you don't
have the money to maintain the affordable housing that is right
there in public housing, which has been a huge success in New
York in assisting low-income households.
The only Federal program that is out there now is the
Housing Trust Fund, and even that is a limited one. And the
first funding awards will be focused on creating affordable
housing. But what we are confronting in New York and probably
in the rest of the country, and I am going to address my
question to Mr. Briggs, is that we can't even afford or the
money is not there to maintain the housing that is already
there so that you do have the broken elevators and everything
else.
And so, where are we going?
Now, the tenants are afraid that if they take their
playground land and put it into affordable housing that they
can't afford to live in, then the next step would be what
happened in Chicago. You tear down the public housing to build
or you start renting the vacant units to market rate. And where
is your very important housing goal of the Fair Housing Act
which is responsible for enforcing and Congress in creating and
has been a positive thing?
So I am really concerned about this. And I think the Ford
Foundation, I am going to publicly ask you to do a study and a
report on where do we go. It is not maintainable, it is not
feasible. And the tenants are very afraid. They don't want them
to take their open land, but then they think their apartments
are next. It is on the water, and it is beautiful housing. They
think their apartments will be next, and they will say, well,
we will rent your apartment out at market rate to sustain the
system.
And right now all of the money coming for maintenance in
public housing is Federal money now, it is all Federal money,
very little from the city and States. Their budgets are
starved. So we face a real crisis for affordable housing.
One of the most popular programs in Congress has always
been the 202 affordable housing program for seniors. There is
now no new money for new starts. All of the money in that
program is now just going to maintenance. So all of the Federal
housing programs are not creating new housing, they are going
to maintaining the system that exists, but not doing it at an
appropriate level because there is not enough money to pay for
the repairs that need to take place to modernize it.
So it is a crisis. I would like to congratulate HUD on 50
years of not only providing affordable housing, but really
economic development, I would say, in this great country,
across this country. But I am concerned about the future
because there is no funding on a Federal level.
I know that the chairlady would support additional funds
and I believe many Democrats, but given the reality of the
makeup of Congress it is not going to be there. So it is a
crisis. And I am asking really for the Ford Foundation and
other foundations to look into what do we do as a Nation for
affordable housing when all of the existing programs are not
being funded to go forward?
Chairman Hensarling. The time of the gentlelady has
expired.
The Chair now recognizes the gentleman from New Jersey, Mr.
Garrett, chairman of our Capital Markets Subcommittee.
Mr. Garrett. Thank you, Mr. Chairman, for scheduling this
very important hearing.
One of the goals of this hearing is to examine the extent
to which HUD has improved access to affordable housing while
reducing poverty, and potential housing innovations designed to
encourage self-sufficiency.
So I am going to begin, Mr. Chairman, maybe with this
comment that may surprise you, that I am going to agree with
our ranking member on a couple of points. The ranking member
made a comment as to how hard it is for even college graduates
to get a job. And she is absolutely right. After 7 years under
the Obama Administration and their economic policies, it is
still hard for a young person to go through 4 or 6 or 8 years
of college and come out and get a job. And still today, she is
absolutely right, and it is deplorable that young people cannot
find work in this environment.
And it is therefore hard for seniors to get a job as well.
And I would look forward to working with the ranking member to
try to reverse a number of these economic policies that have
had a devastating impact on both seniors and college graduates.
The second point that I agree with the ranking member on is
the dearth of data on this matter. Now, that is a little bit
confusing because someone pointed out that in a press release
of the ranking member, she says that numerous studies have
highlighted that Moving to Work demonstration programs have
shortcomings. So I am not exactly sure whether she agrees that
there is a dearth of data or there is data.
But let us take it from what the panelists have said. Ms.
Glover has said there is no coordination of the data that is
out there.
Is that your basic--
Ms. Glover. Yes, the data is there, it is really funneling
it into policies.
Mr. Garrett. Right. And I really do appreciate the fact
that you are willing to go out and try to bring all that data
together so that at the next hearing on this, both the ranking
member and I would have a compilation on that.
But shouldn't the agency that is responsible for doing this
have already collected the data? Hasn't the Moving to Work
program--Mr. Husock, you are nodding your head. How long has
this program been put in place, the Moving to Work?
Mr. Husock. Since 1998.
Mr. Garrett. Since 1998, so it has been in place that long,
but we are still sitting here without a compilation of all the
data. Why is that?
Mr. Husock. Congressman, it is because, as a general rule,
what MTW means is that you are exempt from the Housing Act of
1937. And so therefore, by virtue of that, what HUD has said
is, you are released from all of these things that you are
responsible to us for, including reporting data.
Mr. Garrett. But there are studies out there, right?
Mr. Husock. Yes, but the studies are, how might I put this,
they are somewhat--they bend one way or the other, how about
that?
Mr. Garrett. Should the public be concerned that we have a
Federal agency that is allowing money to be spent and has
absolutely no data to support whether those programs are
working or not? If there are studies out there that are bent
one way or bent another way, shouldn't the public be concerned
that their government really isn't spending the money the most
effective way?
I think they are, because that goes to another point of the
ranking member that I agree with as well. She says the
majority--or actually, Mr. Briggs, you answered this question
for her. Her question was, what is the percentage of people in
public housing who are disabled, who are senior citizens, who
can't work, and you said the majority of the people. And I
think the rest of the panel agreed.
But if we are a country of finite resources, you all agree
there is not unlimited dollars to pay for all these programs,
right? If we are a country of finite resources, don't we really
want to make sure that those limited resources actually get to
the people who need it the most: the disabled, the senior
citizen, the person who can't work because of this disastrous
economy that we are in right now because of this
Administration? So shouldn't the limited dollars actually go to
those people most in need?
Ms. Glover, you seem to be ready.
Ms. Glover. Yes, well, I wanted to--
Mr. Garrett. Yes?
Ms. Glover. --refine the answer.
Mr. Garrett. Okay.
Ms. Glover. The data, in terms of the traditional measures,
whatever the conditions are that are set forth in the Moving to
Work agreements, has been gathered by the Department. Over and
above that, because of the transformational impact, agencies
have gone out to professionals, either economists or colleges
and universities and those who look at the work, to
independently validate and verify the--
Mr. Garrett. I get that, and what the validation would
show, studies or anything else aside, is that the actual
agencies that are running these programs and even more every
day are actually asking to be put into that program.
Isn't that correct, Mr. Husock, that more people want to be
into these programs?
Ms. Glover. Oh, absolutely. And so the reason that HUD may
not have the research and studies is that is over and above the
requirements. But the required data that is needed to validate
is indeed--
Mr. Garrett. Thank you, Mr. Chairman. I think that is
really all the data we need, is that more people want to be in
these programs than before.
Thank you.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentlelady from New York, Ms.
Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman.
And to all the panelists, welcome to la-la land. We suffer
here in Washington from amnesia. For people to say that things
are so bad under this Administration, they are quick to forget
that at the height of the economic crisis, we were losing
roughly 800,000 jobs a month. Obama wasn't in the White House
back then.
The other day in my committee, the Small Business
Committee, they talked about the highest numbers of regulations
issued by any Administration, this one. Well, I put out a
report on analysis conducted by The Washington which that
concluded that the highest numbers of regulations put out by
any Administration was under George W. Bush.
Oh, my Lord.
Anyway, so let us talk about housing.
Mr. Cabrera, many housing authorities, including NYCHA, New
York City housing plan to use an expanded RAD program to
finance public housing repairs. However, we still do not know
the impact of RAD on residents. And HUD has not indicated
whether they will pursue an optional final RAD evaluation that
will include a resident survey.
Do you think it is necessary to fully understand the impact
RAD has on tenants before rushing to expand the program?
Mr. Cabrera. I don't think that the purpose of RAD--I think
the purpose of RAD is focused upon the properties more than
anything else. And the reason for that is because, in the case
of New York for example, there are--
Ms. Velazquez. But who lives in those properties?
Mr. Cabrera. Residents.
Ms. Velazquez. And the program is to serve who? The
tenants, residents, right?
Mr. Cabrera. Residents, but--
Ms. Velazquez. So you don't think that it is important for
us to know or to have any input from those who are going to be
subjected to this program?
Mr. Cabrera. I think it is more important to take--let us
see, there are 153,000 units online for NYCHA right now out of
190,000. And trying to figure out how to put the remaining
37,000 or 40,000 units back online to serve those residents, it
seems to me, would be the higher priority. That is what NYCHA
is trying to do.
Ms. Velazquez. But that has to be coupled--those are not
RAD units, sir.
Mr. Cabrera. No, no, that is not it. Public housing units,
190,000. They have approximately 153,000 units online, if I
recall correctly. Just my recollection.
Ms. Velazquez. Yes.
Mr. Cabrera. It is 10 years old now, but it is rough.
Ms. Velazquez. Have there been any studies conducted to
show RAD or MTW will generate the billions needed from the
private sector? In New York, we have a $17 billion backlog of
needed repairs and improvements. Has there been any study?
Mr. Cabrera. RAD was just enacted out of appropriations in
late 2012. There would be no study because they are really just
now starting. RAD is just now going, they just increased it to
185,000 units, and for some of those units, it makes sense to
refinance and convert, and for others, it doesn't. There would
be no study.
Ms. Velazquez. So before we embark on that journey of
expanding RAD, shouldn't we know what it will accomplish, in
terms of the numbers and the resources that it will bring from
the private sector, before we expand it?
Mr. Cabrera. I think at the end of the day, we already know
when the private sector will get in to finance or not, and they
will get in to finance when underwriting the deal makes sense.
In the case of New York, some of those deals are not going to
make sense, which is why New York is going through the exercise
that it is going through.
But in other parts of the country, it is indispensable to
go through RAD, because they can't otherwise keep the units.
Ms. Velazquez. I am not saying not to expand or not go into
it. What I want to make sure is that the public assets are not
privatized. Because once they are privatized, we are going to
lose them.
Mr. Briggs, the Housing Trust Fund, which should see its
first funding award next year, is the only Federal program
focused on creating affordable housing for extremely low-income
households. Why is this an important piece of Federal housing
policy today?
Mr. Briggs. It is extremely important, ma'am, for two
reasons. One, the source of revenue, mainly Fannie Mae and
Freddie Mac. In other words, it looks beyond the appropriations
envelope which has been insufficient for years and years now to
meet these needs.
And number two, because of the targeting you mentioned.
Without Federal capital, as Mr. Cabrera said, to make these
financings work, they do not pencil out, they will not happen.
Ms. Velazquez. Thank you.
I yield back.
Chairman Hensarling. The time of the gentlelady has
expired.
The Chair now recognizes the gentleman from Texas, Mr.
Neugebauer, chairman of our Financial Institutions
Subcommittee.
Mr. Neugebauer. Thank you, Mr. Chairman.
I want to go back to Mr. Cabrera for just a minute and talk
about these data and the metrics. We have been talking about
Moving to Work and there is not data in one place. And Ms.
Glover makes a great point there.
But if you are an agency and you are going to do pilot
programs, doesn't it make sense for you to measure the success
of those programs?
Mr. Cabrera. As a pilot program for services, absolutely,
yes.
Mr. Neugebauer. Does anybody disagree that if you are an
agency or a company or anybody that is doing a pilot program,
that you should measure the success of that program so that you
can determine whether--because the word ``pilot,'' to me,
means, let us try this on a limited basis and see if it works
on a larger basis.
Mr. Briggs, would you agree or disagree with that?
Mr. Briggs. I would strongly agree with that, sir. However,
as a long-time evaluator and a funder of evaluation--
Mr. Neugebauer. I'm sorry, I don't have time for a lot of
elaboration. But I think I--
Mr. Briggs. No, sir, but I wanted to explain myself.
Mr. Neugebauer. The point I wanted to be on the record here
is that we need--if we are going to have HUD expand its
mission, I am a little perplexed by some of my colleagues who
don't want to do these programs because of the limited
resources.
The whole purpose of doing these programs, RAD, whether it
is Moving to Work, I think Mr. Husock mentioned looking at
ground leases and thinking outside the box, is that we are
trying to expand the resources coming into housing for American
families. But you can't do that if you don't think outside the
box.
But if you are going to think outside the box, it does make
sense to me, and maybe it is just the old accountant in me,
that if we are going to try these things we need to be able to
measure their success.
Ms. Glover, one of the things that I think you said on page
10 of your written testimony is that after a period of
transition of larger agencies to Moving to Work and the
deregulations of smaller agencies is accomplished, the public
housing side of HUD should reposition itself to become an asset
manager and work with its various customers to agree on a set,
desired outcome based on congressional mandates.
What do you mean that HUD should become an asset manager?
Ms. Glover. What I mean is looking at the impact that the
investments that are being made by HUD is having on the
families, the communities, and the cities. And so that is the
skill set. And one of the things that Mr. Cabrera talked about
are the systems in order to do that.
And so when you gather the data, if you can imagine with
over 3,000 housing authorities, there is a lot of data coming
in consistently. And so taking the time to streamline the
systems, agree on outcomes.
I think one of the problems is that too many of the
regulations are so prescriptive that you are measuring too many
things. So if you can simplify it to identify the 5 or 10
things that you want to achieve through a program, and then
bring that data in, then all of this discussion about impact,
data, and all of that will be at the fingertips and you can
push a button and be able to roll up all of that data. So a
good asset manager will be able to have that data readily
available to inform the policymakers.
Mr. Neugebauer. Go back to the Moving to Work. One of the
things that we hear from folks is bringing more capital to the
table. In your experience with Moving to Work, were you able to
attract private sector capital with some aspects of that
program?
Ms. Glover. Absolutely. And I want to just take 2 minutes
on the RAD demonstration. The way the additional capital comes
in for underwriting purposes is that you took the operating
subsidy and the capital funds, which basically made an
underwritable rent that could then be used to go to the private
market because the private investors are going to want to know
if debt is raised that there is sufficient rent to cover not
only the operating costs, but the debt cost.
And by doing public/private partnerships you are able to
attract other resources because the foundations will typically
play their other resources. And so these are complicated deals,
but through leverage and looking at things in creative ways, it
can attract additional resources to the programs.
Mr. Neugebauer. Thank you, ma'am.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Missouri, Mr.
Cleaver, ranking member of our Housing and Insurance
Subcommittee.
Mr. Cleaver. Thank you, Mr. Chairman.
I was interested in the conversation for a lot of reasons.
One, when the question came about when the program started, I
turned to Mr. Green immediately and said it was approved in
1996. I know because I was mayor and ran the HUD housing
authority. Or more accurately, I appointed the board that ran
the housing authority.
The program was actually implemented in 1998. The problem,
and I think we are debating issues that are not the problem,
from my perspective, is that this program is more of a
deregulatory program than it is a Moving to Work program.
I think HUD made a mistake frankly in trying to bill it as
something else. Deregulation of requirements in the voucher
program is what made, in some quarters, the Moving to Work
program attractive. And I think the Moving to Work program,
which started as a demonstration project, can be massaged and
developed into a program that is workable.
And keep in mind, I think it is important to understand
this, that the Moving to Work dollars actually takes money out
of the voucher program and sends it elsewhere. And so it
creates some problems.
One of the assumptions is that private investment or
investors are waiting to become part of this program. I would
like for any of you to address the issue of private investment
and how they are standing in line to invest in the program.
Mr. Cabrera?
Mr. Cabrera. Congressman, it is good to see you, as always.
Moving to Work does not take Section 8 dollars and move them
somewhere else.
Mr. Cleaver. Voucher? Yes, yes.
Mr. Cabrera. Moving to Work removes the division between
Section 8 of the Housing Act of 1937 and Section 9 of the
Housing Act of 1937 to allow fungibility, if that is what you
mean by taking money.
Mr. Cleaver. That is exactly what I mean.
Mr. Cabrera. That is a very different issue. It just
becomes one big pool, not two or actually three divided pools.
So that is the one. It is not so much a correction, it is that
it is not a pool, it is a pooling. And that pooling allows for,
it actually is part of my answer, that pooling allows for the
leveraging of capital in order to undertake many of the
developments that MTW jurisdictions undertake.
And a person who did that marvelously is sitting to my
left. So I am going to let her answer.
Mr. Cleaver. But before--I would like anybody to answer,
even people sitting out there or walking the halls. What I am
interested in is somebody telling me about the private sector
waiting to become involved.
Mr. Cabrera. Oh, I'm sorry, I misunderstood your question.
So what happens is, remember that when you have land that is
public housing it is subject to a deed of trust unless it is
converted out. And so therefore the public housing authority
generally goes out and looks for private sector developers.
Mr. Cleaver. Right.
Mr. Cabrera. They do public/private partnerships. And yes,
most MTWs, candidly beyond MTWs, these days a lot of housing
authorities, MTW and not, are becoming not just property
managers, which is what they traditionally were, but
developers. They go out, and they partner with a developer,
they develop units, using typically, as Howard said, the low-
income housing tax credit or the private activity bond
operation. And they develop it, absolutely that is moving in
that direction inexorably.
Mr. Cleaver. You do understand that the low-income tax
credits are becoming increasingly difficult to obtain?
Mr. Cabrera. Oh, Congressman, I ran a housing finance
agency. They have been difficult to obtain since 1996. They are
a very competitive setting. But private activity bonds are--
private activity bonds generally are upon application because
volume cap is basically flush everywhere.
Mr. Cleaver. Yes.
Mr. Cabrera. So there are options. The point is you have
two options.
Mr. Cleaver. Yes, we are together on that.
Ms. Glover?
Ms. Glover. In terms of what Mr. Cabrera was talking about,
by eliminating the silos between the funding, an agency is able
to devise a strategic plan and say, for example, like with the
issues of homelessness, the support of housing, put the money
in a pool, use that to attract a private sector development
partner to go out to the market to either raise tax credits or
private activity bonds so that the housing can be developed and
supported.
The key thing is that the amount of subsidy that is needed
when added to the tenant rents has to be sufficient so that the
debt service or other requirements can be serviced. And by
having the flexibility of the money, that enables creativity on
the ground as opposed to having to act strictly--
Mr. Cleaver. My time has expired. I'm sorry.
Thank you, Mr. Chairman.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Wisconsin, Mr.
Duffy, chairman of our Oversight and Investigations
Subcommittee.
Mr. Duffy. Thank you, Mr. Chairman.
And I appreciate the panel being here.
I think oftentimes when you talk about HUD and poverty,
there is an urban perspective or urban prism which we look
through. I come from rural Wisconsin and this is the third year
we are hosting a summit, a homelessness and hunger summit where
we bring in all the players who help provide housing and food
assistance to those who are in need, to talk about the bright
spots of who is using the community and programs in the best
way to help the most people out.
I am honored this year that Secretary Castro is going to
come. I think it is important that he sees a little different
perspective on poverty. And we are honored that he is going to
come and participate in our third annual event.
But I hope as we have this conversation, we make sure we
look at everybody who comes across these difficult problems in
their life.
I am not sure if the chairman gave this quote, but in 1964,
President Johnson said, and we have heard this quite a bit,
``We have declared unconditional war on poverty. Our objective
is total victory. I believe that 30 years from now Americans
will look back upon these 1960s as the time of the great
American breakthrough toward the victory of prosperity over
poverty.''
Does anyone on the panel believe that we have actually met
that objective, we have reached that victory?
Mr. Briggs and Ms. Glover, we have?
Mr. Briggs. Thank you, Mr. Duffy.
Mr. Duffy. Yes.
Mr. Briggs. Any skilled evaluator would recommend that we
ask the ``but for'' question: But for HUD or other agencies for
that matter, what would conditions on the ground be, what would
the outcomes be?
But if you ask the question, would poverty be worse and
would the poverty rate be higher, but for HUD, the answer is
unequivocally yes to both those questions.
Mr. Duffy. I am going to reclaim my time because, first of
all, I want to be clear. I agree with the mission, we have to
help people out. And I agree with Ms. Waters, we want to, and I
think the whole panel, our objective should be to put people
back to work.
I'm sorry, Ms. Glover, did you want to add something?
Ms. Glover. I was just going to add that if you put
everything in perspective, not only are the HUD programs
operating in the larger economy, but there are things that
happened to the economy as well. And there is no question that
the great recession was a setback for many people. There are
many more people living in poverty today than there were
before.
And so I think that if you try to keep everything static,
it is not realistic that the larger impact of the economy is
not going to pull some people down.
I think the question is, it is a but for. And people have
risen and they are coming, but we have new people coming into
the economy. So the question is, can we adopt policies that are
flexible enough that we can react and respond to the needs? And
it is important that people are rising up.
Now, the income gap is a huge challenge and we have to stay
focused on building the middle class. That is absolutely the
right focus. But HUD's programs have indeed helped. And I think
the innovations of the last 50 years have been very impactful
and we need to do more of those.
Mr. Duffy. And I am going to give you some more time in one
second, Ms. Glover.
First of all, I don't think the mission of defeating
poverty has been met; poverty still exists in our communities.
And I think that was the mission of President Johnson.
I get concerned because in our communities, I hear there
are a lot of people who have disabilities, but there are
disabilities that they can actually overcome if they get some
assistance and some help. So not long-term disabled, but with
some help, especially for mental illness, they can get out of
the assistance of government and back into self-sustainability.
And I think it is important that we make sure that we
provide that assistance and help to them.
I am not going to ask another question except to Ms.
Glover. I have to tell you, your biography and all the great
work that you have done in the Atlanta housing authority is
absolutely amazing. I have about a minute left. Would you just
kind of recap your story and the successes that you have had in
Atlanta?
Ms. Glover. In the short time I have, we were fortunate to
be able to have great public/private partnerships in solving
very deep issues. And we worked not only with private sector
players, but with the residents, and the larger community. And
it was really about a community coming together to solve
problems where people were living in absolutely deplorable
conditions.
And so we have been able to help families move responsibly
from those terrible places and actually redevelop mixed-income,
mixed-use communities, supportive housing. We have had families
invested in terms of changing mindsets, rebuilding lives, and
building family resiliency.
And so we are going to do more of that and that is
continuing. And we have leveraged--we took $300 million and
leveraged over $3 billion of economic impact and investment.
Mr. Duffy. Not many people have the opportunity to take
dysfunctional organizations and turn them into well-functioning
organizations that actually help so many people. You are one of
the bright spots, so thank you.
I yield back.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Texas, Mr.
Hinojosa.
Mr. Hinojosa. Thank you, Chairman Hensarling and Ranking
Member Waters, for holding this important hearing on HUD and
its impact on Federal housing policy.
I would also like to thank our panelists for testifying
today.
Housing programs under HUD are a lifeline for many of our
children in low-income families, yet we have long waiting lists
for HUD programs.
As we celebrate HUD's 50th anniversary, I urge my
colleagues on both sides of the aisle to work together to
increase Federal investments in innovative programs that
address housing and at the same time take a holistic approach
at helping our disadvantaged citizens move up the economic
ladder.
My first question is for Ms. Renee Glover. As you know,
there has been much talk about consolidating many of the rural
housing programs currently under the United States Department
of Agriculture into the Department of Housing and Urban
Development. Given the difference in the populations and the
geographic areas served by rural housing programs as compared
to HUD programs, as well as the manner in which HUD and the
USDA service their respective housing programs, do you think
consolidation is a good idea?
Ms. Glover. Let me say this. I am not familiar with the
proposal, but the concern would be that resources are not lost
if there is a consolidation. And I think what happens too often
is that the consolidation occurs, but the resources that were
being dedicated to that population aren't following the clients
and customers who are being served.
I think one of the big issues in terms of supporting
families with mental disabilities is that as the State mental
institutions were closed, the thesis was that the resources
that were being dedicated there would follow the families and
then there would be supportive housing developed in local
communities to support those families to be successful.
But what happened is that as those institutions were
closed, the resources didn't follow, they were redirected to
other resources and challenges. So I think the devil is always
in the details.
So I think that a thoughtful approach should be looked at,
but also with the strong recommendation that the resources that
are there not get lost in the consolidation.
Mr. Hinojosa. Thank you.
My next question is for Dr. Xavier Briggs. In 1970 we had
300,000 surplus of low-cost rental units relative to the low-
income rental households. According to the national low-income
housing, today there is a shortage of 7 million affordable
rental units. What are the factors driving the shortages in
affordable housing? What should the Federal Government be doing
differently? And are market-based approaches working?
Mr. Briggs. Thank you, Mr. Hinojosa. You have two main
drivers, sir. You have the drivers holding down incomes and
then you have the drivers driving up costs. In other words,
this is a structural gap that was decades in the making; it
didn't happen overnight.
Mr. Hinojosa. That is right.
Mr. Briggs. And there are significant forces operating on
both the cost side of the equation and the income side of the
equation.
In brief, on the cost side of the problem or the gap, you
have largely local land-use decisions and other factors making
it expensive, in some jurisdictions impossible, to develop
affordable housing or to preserve what we have. And we have
seen a tremendous erosion of supply and that contributes to the
numbers that you cited. That is on the cost side of the
equation.
On the income side of the equation, as the Members know
quite well--this has been widely documented in the media--we
have seen a lot of wage stagnation in this country. The minimum
wage is stuck at a quite low level in inflation-adjusted terms.
So we have had stagnant incomes, limited incomes, rising
housing costs, that produces the kind of shortfall that you
called off.
One clear implication of that applies to Congress as a
whole and not only this committee, with due respect. You don't
want to fight a challenge like that or address a gap like that
with one hand tied behind your back. You need to address both
the income and the cost side of the equation or we won't be
successful. We won't act in a way that is commensurate with the
scale of the problem, which we are paying for in so many
systems, health, education, and beyond.
So, the Tax Code is implicated here. The minimum wage is
implicated here. And yes, local regulations also are implicated
in this gap between income, especially from wages, and housing
costs on the bottom.
Mr. Hinojosa. You have made some very good points and I
wish we had more time to let me ask two more questions. But my
time has expired. I yield back.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Pennsylvania,
Mr. Fitzpatrick.
Mr. Fitzpatrick. Thank you, Mr. Chairman, for calling this
hearing.
And I thank the witnesses for their testimony here today.
I think it is important that after 50 years declaring the
war on poverty and against homelessness and close to $2
trillion spent, it is appropriate that we look back and ask,
how are those dollars allocated and how are they spent?
My first question is for Dr. Briggs. On page seven of your
testimony--and by the way, your background is in urban
planning, and I come from Bucks County, Pennsylvania. I have
lived my entire life in Levittown, which is a community that
was hyper-planned, some say; a lot of returning World War II
and Korea veterans were able to obtain a house in that
community based on the VA mortgage.
But what I noticed growing up in that community was that in
Levittown there seemed to be in the 1970s and 1980s more jobs
than houses. And so, the community was doing well. And in my
experience in looking back, communities that had more houses
than jobs are those that are in trouble.
You say on page seven of your testimony as part of your
solution of making housing assistance a contributor to self-
reliance and economic self-sufficiency, there is a quote from
your testimony: ``It is crucial that we support effective pro-
work housing policy for households that are not elderly or
disabled.'' And you go on to mention that work has long been a
prized and deeply felt goal and that ``Work provides income and
dignity.'' And I agree with all of that.
So my question to you, Dr. Briggs, is, would you support
work requirements for non-elderly and non-disabled, able-bodied
working individuals perhaps as a condition of the Section 8
housing voucher?
Mr. Briggs. Thank you. It really depends on how they are
constructed. Sorry to offer what might be a complex answer and
we want these things to be simple, but they are not.
I don't think that an across-the-board work requirement
would produce the effect that we want to see. There is a
tremendous motivation to work, amongst the great majority of
housing-assisted households. The question is, what jobs are
available? Are we investing in skills? Are we investing in work
supports like child care? And are there good, affordable
housing alternatives available for households that obtain work
and wish to move out?
If you look at the number-one reason people leave housing
assistance, it is because they get work. So the motivation is
clearly there and we need to be extremely careful about across-
the-board requirements.
Mr. Fitzpatrick. But do you support a requirement for work
for able-bodied individuals?
Mr. Briggs. The one answer I can give you is that it very
much depends on how that is constructed. It depends on whether
it comes with supports for child care, intensive skill
investments, the kinds that we see in Jobs Plus.
I also would agree with Mr. Husock that there are
disincentives in rent policy now. And if we change those--as
Jobs Plus did, and it was very rigorously evaluated and
produced, as you probably know, with very significant effects--
that would be a very, very smart way to go and to support work
by very poor households.
Mr. Fitzpatrick. Mr. Cabrera, do you support work
requirements?
Mr. Cabrera. I am very much in the same place as Xavier.
The reason is because here is what happens. If you wind up with
work requirements and you have someone, and I will just come up
with a common example, a single mother with more than one
child, you have just essentially kept her from housing and they
will wind up homeless. So you are going to be dealing with it
as a Federal subsidy on the homeless side.
I am not in favor of compelling that kind of activity
generally. It is just it is something I hope we will work
through, but it is very difficult for me to--
Mr. Fitzpatrick. How about local flexibility, providing
flexibility to State and county housing authorities, public
housing agencies?
And Ms. Glover was responding to a question from the
ranking member earlier on that question of local flexibility
where if you can tailor programs, federally funded programs to
what is happening in a local community, should a local
community be permitted to have some sort of work requirement as
a condition preceding to getting a Section 8 certificate,
especially for those communities where you have generational
poverty and one generation after the other living in the same
community on the same Section 8 housing certificate.
Mr. Cabrera. That is extraordinarily rare, just so I say
it. The concern I have is that compelling thing, we as a
government compelling people to do things in that way is
something I think I am just anathema to. So it is going to be
really hard for me to say yes to that.
Mr. Fitzpatrick. Ms. Glover, you were cut off earlier when
you were responding to the ranking member's question and it had
to do with providing local flexibility to housing authorities.
You had some experience in Atlanta with that. Can you expand on
that briefly?
Ms. Glover. Yes. I think it is very important that the
people on the ground and in the locality have the flexibility
to do the problem-solving, because first, they understand the
conditions, they are able to reach out to the other players.
And on the work requirement, what we did with disabled and
elderly persons is they were exempted from the requirement. But
those families who were able-bodied, we work with the various
civil society groups to do job training, counseling, child
care. We had a whole network of some 60 organizations to
support success. And I think if you provide those types of
resources and the program is both job and/or education, you are
building resiliency and the ability to be successful--
Mr. Fitzpatrick. Thank you.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from California, Mr.
Sherman.
Mr. Sherman. Mr. Chairman, thank you for holding this
hearing today.
We had an interesting subcommittee hearing yesterday on
much the same subject. And I commend, for those of you looking
for more material to read, to look at the transcript of that
hearing.
We dealt with flood insurance, which is important to me,
even though I represent a city built in the desert in the midst
of a drought, and H.R. 3700, which I think has come up in this
hearing, has some excellent provisions to encourage
condominiums.
I own two suburban homes so I am a really bad advocate for
it, but I am an advocate for multifamily housing. It is
affordable, and our homeless problem can also be viewed as just
a housing affordability problem. And we have to help our
struggling families. It is more energy-efficient and even more
energy-efficient than the housing itself is that multifamily
housing is the first step toward a viable mass transit system.
And it offers flexibility.
Told by many that if you buy a place, you really shouldn't
buy a place if you are not pretty certain you are going to be
there for 4 or 5 years, a lot of people can't know where they
are going to live 4 or 5 years from now. Every 2 years, people
suggest that I stop living where I am living and find another
line of work.
[laughter]
With this in mind, Mr. Cabrera, what can HUD do to
encourage the private sector to expand its role in providing
affordable housing? I refer to property owners, managers,
developers. And are there regulations in place at HUD that
discourage private participation in affordable housing?
Mr. Cabrera. I think that the best step forward in terms of
what HUD can do is to provide the market with as much certainty
as it can have and to have reasonable standards that can be
met.
One example is actually cited in my written testimony and
it is in the case of FHA. There is a program, an FHA program, a
very useful program, their 223(f) program, it is a refinancing
program. It helps reposition affordable housing deals that are
already going to be impacting the Federal budget if they go
sideways and helps them become healthier.
And a couple of years ago, HUD revisited its underwriting
guidelines, it increased the reserve requirements in the FHA
program, the 223(f) program, by a multiple, I mean, several
multiples. It was huge. And what it did was it killed deals. So
today you have 50 percent fewer units being financed through
the 223(f) program as there were just 24 months ago.
And similarly, there are other places there that
conversation pops up. It popped up in RAD. So they will make a
rule, the rule negatively impacts the utilization of RAD, the
rule in that case, again, had to do with operating reserves
because what they make is a bureaucratic decision that isn't
aligned with the marketplace and it is--
Mr. Sherman. I am going to try to sneak in one more
question.
Mr. Cabrera. And it gets messy.
Mr. Sherman. We need 300,000 or 400,000 new constructed
apartments every year. Last year, we just got 255,000. That is
up 37 percent from the year before, but it is still inadequate.
In addition, we are losing 100,000 to 150,000 units to
obsolescence and those are the units that are affordable.
Are there any government programs that we can tweak here
that would be helpful in getting some of these 150,000 units
rehabilitated rather than withdrawn from service? And what else
can we do to solve the supply crisis?
Mr. Cabrera. The supply crisis, from a HUD perspective, can
be helped simply by revisiting how it is HUD approaches all
underwriting and facilitating responsible underwriting wherever
it can without adding things that don't make sense in the
marketplace.
Now, I have to laud the prior Administration and the
current Administration. Secretary Donovan did a terrific job of
having that revisited and it improved. That isn't to say that
it improved perfectly. It did not. And I think what happens is
that just knowing HUD as I do, what you see is retrenchment,
and that retrenchment causes static in the marketplace and it
keeps good deals from happening.
One of the things HUD can do is just learn how to get out
of the way. You don't always need to be in the way. You need to
be in the way when the taxpayer is at risk in an unreasonable
way. But there is always going to be risk. If there isn't risk,
there is a problem.
Mr. Sherman. Thank you.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Kentucky, Mr.
Barr.
Mr. Barr. Thank you, Mr. Chairman.
And I thank the witnesses for your testimony.
I represent a congressional district in central Kentucky
where the Lexington housing authority is one of those Moving to
Work programs that has been a great success. Austin Simms, who
runs that housing authority, does a great job and I think is a
model for how the Moving to Work program offers that
flexibility and fungibility of dollars. And they have made it
work very, very well.
I do want to revisit this issue of work requirements that
my colleague Mr. Fitzpatrick was talking about, because I think
that we need to look at work not as a punishment, but as a
blessing that we want to celebrate, a road to self-sufficiency.
And I noted, Mr. Cabrera and Mr. Briggs, your reticence to
fully embrace universal work requirements as a condition of
Section 8 or other public housing assistance. But I want to
challenge you a little bit on that because it seems to me that
if the concern is child care, or if the concern is job training
as a necessary part of that, we could certainly offer that as
part of modernization of a universal work requirement.
So what is it that is holding you back from fully embracing
a work requirement, not as a means of punishing beneficiaries,
but as a means of recognizing that poor people in need of
housing are not liabilities to be managed, but they are assets
and they have tremendous potential if we offer them the
blessing of work?
Mr. Cabrera. Then I think I would answer in the following
way: It shouldn't be a precondition of someone being housed. It
should be structured in a different way such that it is not
compelling someone to work, it is compelling someone to get in
a position to find better work. That is a very different
proposition.
If the issue becomes, look, if you live here you need to
improve the circumstances in which you are in in order to
improve your economic circumstance for your family and for
yourself, I think--I can't speak for my colleagues, but I am
willing to bet my bottom dollar that they will all agree that
would be the right way to go.
What I am concerned about is having as a precondition, is
you cannot live here unless you have a job. That, I think, is
counterproductive.
Mr. Barr. If I could just jump in there. What if it is not
that, but for--and by the way, the Congressional Research
Service is telling us here that non-elderly, non-disabled
households account for a full 45 percent. So it is just not
true, at least according to the Congressional Research Service,
that all of the Section 8 beneficiaries out there, assisted-
housing individuals are elderly or disabled. There are plenty
of non-elderly, non-disabled people out there who don't have
wage income, but yet are receiving taxpayer assistance for
housing.
Any thoughts?
Mr. Cabrera. The vast majority of the people who are
already receiving a wage income and who are receiving, let us
go by each pot, Section 8, work for a living, those people
actually that is not the issue.
I think if I am hearing this correctly, and I am asking to
be corrected if I am not, you are concerned about those who
aren't, who can work, but don't. And if that is the case,
usually it has to do with whether it is we are willing to, as a
Federal entity, help them put themselves in the best position
and condition housing upon that. In that case, sure.
Mr. Barr. And maybe if they are underemployed or need
skills, maybe it shouldn't just be a work requirement, but a
requirement that you are either working or that you are
pursuing some kind of job training, and that as part of that
assistance, there is some child care if that is needed.
Mr. Cabrera. Absolutely. That is the biggest piece. In my
experience, and again I am going to defer to Renee, but in my
experience the biggest impediment for, and the person I have in
mind is a single mother with children, is their children. The
reason they have such a tough time going out there is because
someone has to deal with their children.
Mr. Barr. Absolutely.
Mr. Cabrera. That is why I am saying the training and the
child care is sensible.
Mr. Barr. And that is perfectly reasonable; that makes
sense.
And Ms. Glover, I think to your testimony earlier, that is
how you all did it successfully in Atlanta.
Ms. Glover. That is correct.
Mr. Barr. 1Mr. Briggs, did you have a--
Mr. Briggs. Thank you, sir. Just briefly, so the effects of
any such requirement would depend on a few things, actually
quite straightforward to think about: conditions in the labor
market; provision of work supports; and those other factors
that directly affect families' or an adult's ability to get and
to keep work, let alone to get ahead.
There is a great deal that is appealing in principle about
the compact, Congressman, that you are outlining.
Sadly, I have to note that we have a history as a country
of reneging on some part or another of that deal, either not
funding the child care or not directing TANF funds, State TANF
funds properly to job creation in order to improve labor market
conditions.
There is, I think you are right, sir, great bipartisan
agreement that we should move in this direction. The question
is how, and the different pieces of that compact do need to be
in place.
Mr. Barr. Thank you. My time has expired, but I would love
to work with all of you on crafting that. Thank you very much.
I yield back.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Missouri, Mr.
Clay, ranking member of our Financial Institutions
Subcommittee.
Mr. Clay. Thank you, Mr. Chairman, and Ranking Member
Waters, for conducting this hearing on the future of housing in
America.
Let me start with Mr. Briggs. And I would like to ask about
the effectiveness and cost trends in the housing voucher
program. President George W. Bush's Fiscal Year 2008 budget
request said the Section 8 tenant-based rental assistance
program is the Federal Government's foremost program for
assisting low-income families to rent decent, safe, and
sanitary housing in the private market.
Based on an assessment of the program, this is one of the
Department's and the Federal Government's most effective
programs. This program has been recognized as a cost-effective
means for delivering safe, decent, and sanitary housing to low-
income families, that in fact in nominal terms the average
housing assistance payment per voucher rose from $7,553 in 2010
to just $7,673 in 2014, an increase of only 1.6 percent. During
the same period, rent and utility costs in the private market
rose by 10.6 percent.
If the purpose of today's hearing is to discuss the impact
HUD has had on housing policy in reducing poverty over the past
50 years, it seems that the Section 8 housing choice voucher
program is something we should hold up and celebrate.
Mr. Briggs, what recommendations do you have for how we
might build on the success of this program?
Mr. Briggs. Thank you, Mr. Clay. I have several
recommendations for this committee. The first is to ensure that
funding for the program is sustained as a floor. Congress, this
is both sides of the aisle, have acted, as you are well aware,
to cut veterans' homelessness. That was a direct result of
adding incremental vouchers in the form of VASH as they are
known. That is a direct indicator that this program is this
country's number-one tool for preventing or ending homelessness
on a very large scale.
And as you have heard Orlando and other panelists
underscore, we will pay the costs somewhere, we will pay them
in health, we will pay them in jails, we will pay them in
education systems, in some system if we don't address these
needs. It is tremendously important to fully fund the program.
There are flexibilities. There are connections between the
vouchers and capital subsidies so the vouchers can help to
ensure that the very lowest-income households can lease up in
mixed-income dwellings. Those kinds of things should be
encouraged, in my judgment, by Congress.
HUD is on that road already. It needs the encouragement,
and streamlining can be a part of that.
Mr. Clay. This program is one of the government's most
cost-effective programs. And your recommendation is that we
continue to support it and fund it properly?
Mr. Briggs. That is absolutely right, sir. And from the
standpoint of national policy goals, expanding it would be the
right thing to do. I would add, however, that the big costs in
the program are not driven by HUD practices, but by local
housing costs that HUD doesn't control directly and by tenant
incomes which are a story about what is going on in the wider
economy.
So again, if we want to address this, we need HUD to be at
its best, but we also need more than HUD. This program is
extremely important and effective.
Mr. Clay. Thank you for your response.
Mr. Cabrera, you mentioned the 223(f) program. And a few
years ago, you said HUD increased reserve requirements and it
killed deals. What do you think, in the best of all worlds,
should HUD do now to revise this program?
Mr. Cabrera. The 223(f) programs, like all FHA programs, is
an insurance program. There is a private lender that is lending
the money that is being insured. They are the at-risk party,
the initial at-risk party. And the Federal Government's
responsibility is when the deal goes sideways.
Have faith in the private market. The private market knows
that deal as well as anybody. The person looking for the deal
knows it. The idea that the private market would request or
want or require rather one set of reserves and that HUD would,
in order to get the insurance which would facilitate the deal,
multiply that by 3, 4, or 5 times is a little bit out of
kilter.
Mr. Clay. Thank you for that. I think HUD needs to
reevaluate what they have done.
Mr. Cabrera. Yes, sir.
Mr. Clay. Thank you, and I yield back.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from North Carolina,
Mr. Pittenger.
Mr. Pittenger. Thank you, Mr. Chairman.
And I thank each of you for being here with us today.
I am reading from the HUD Inspector General's report that
was a report from the period through 2014 up through this month
in 2015. And in the report, they identify, I will just read to
you, ``Public housing authorities provide public housing
assistance to as many as 25,226 families whose income exceeded
HUD's 2014 eligibility income limits.''
Going on, they say, ``As a result, HUD did not assist as
many low-income families in need of housing as it could have.
We estimate that HUD will pay as much as $104 million over the
next year for public housing units occupied by over-income
families that otherwise could have been used to house eligible
low-income families in need of housing assistance.''
How do you respond to that, Mr. Cabrera?
Mr. Cabrera. I struggle with that report. There are
considerable inaccuracies in the report that I would love to
have responded to. But the first one is it is 25,000 residents
out of a pool of roughly 990,000. There are always going to be
mistakes. Should we fix those mistakes? Absolutely, I am all
for it. I think that addressing the issue pertinent, but I
think it is important--
Mr. Pittenger. Is that kind of glossed over? Can we fix
mistakes?
Mr. Cabrera. No, I don't think it is being glossed over. I
think what has to happen is we have a system that encourages
how we count income for public housing in very strange ways.
And I don't question that there are people who are wrongly
over-income in public housing.
Mr. Pittenger. Let me give you some income amounts. Los
Angeles, the member with the highest income earned, $132,224.
New Bedford housing, the member with the highest income earned,
$129,789.
Mr. Cabrera. Right. But Congressman, under the Brooke
amendment, 40 percent of public housing units have to be leased
to people at 30 percent of area median income (AMI) and below.
Everything else is really up to the housing authority. And to
some degree, some of those folks are going to be outside of the
bandwidth anyway.
I am not encouraging this, I am not saying the result is
good. I am saying it is not throwing the baby out with the
bathwater--
Mr. Pittenger. You are doing a good job trying to justify
it.
Mr. Cabrera. --it is, let us think about it as opposed to--
let us think about how to solve it as opposed to anything else.
Mr. Pittenger. No, I think that is what we are about here
today is reforming and not glossing over things.
Mr. Cabrera. Right, I would never gloss over it.
Mr. Pittenger. The American taxpayer really deserves
accountability on these dollars.
Mr. Cabrera. Yes.
Mr. Pittenger. And by just assuming, well, these things are
going to happen and it is part of the process, I think the
American people are tired of that. I think they want real
accountability inside of our government and we are not seeing
that when we are showing right now that in New York alone there
are 10,250 people who have over-income housing. Why isn't there
accountability?
Mr. Cabrera. I would rather--
Mr. Pittenger. How do you have people living in housing who
make $129,000?
Mr. Cabrera. I would far rather that resource go to people
who need it than people who don't. I agree with you.
Mr. Pittenger. I think that is what we are about today. It
is not the status quo that should be acceptable. I think what
we are about is bringing reforms in here that make it so we are
really helping the people who need the help. Nobody is saying
we are going to take an eraser and erase it all. But what we do
want to bring is real fiscal accountability back to our
government and this is part of it.
If people are abusing the system, and the American taxpayer
is very tired of that, we need to eliminate the abuse.
Mr. Cabrera. We agree.
Mr. Pittenger. Ms. Glover, do you have any comments?
Ms. Glover. No. My only observation is that we fix the
problem and not just throw the baby out with the bathwater. And
too often, problems are fixed where there aren't any. So target
the correction to the offender and the problem as opposed to
recasting the entire program.
Mr. Pittenger. I think you sense from us our interest and
our commitment to help those who really need the safety net. We
have always been about that. But I think what we are as much
about is making sure that the American taxpayer is protected
and that we not just have a slush fund where there are 100-plus
million dollars that could be given to people who actually have
a need.
Ms. Glover. I couldn't agree with you more.
Mr. Pittenger. Mr. Husock, do you have a comment?
Mr. Husock. Yes. The over-income is certainly a problem.
And Moving to Work (MTW) gives local authorities the chance to
suggest a time limit and that would address that situation
quite possibly.
I think it is just as much of a problem that we have such
long-term tenancies.
Mr. Pittenger. Absolutely.
Mr. Husock. And I would address the committee's concern to
that as well.
Mr. Pittenger. I certainly agree.
Thank you very much. My time has expired.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Georgia, Mr.
Scott.
Mr. Scott. Thank you very much, Mr. Chairman.
The first thing I want to do is say hello to my good
friend, Ms. Renee Glover. Your work in housing and your
contributions to this Nation are just extraordinary and they
are of a soaring magnitude. And we are very grateful for your
work and your service. And I personally have enjoyed working
with you, not only in my tour as Congressman, but as you know,
I served in the State Senate.
But before I get to this, I must respond a bit to what my
ranking leader, Ms. Waters, said. There is this myth that we
need to put to bed about people not wanting to work, and
especially people who want to work so badly.
I represent a district, as you know, Ms. Glover, in the
State Senate before I got here for 20 years that had most of
the housing projects in the City of Atlanta. And I knew then
what the issue was. And that was helping people to get the
jobs. Started that jobs fair there and it all blossomed up
every year, as you recall. We worked with that.
We worked with your formula of using your innovation in
housing to leverage, for you knew that at the core of this is
an economic issue. And each year we would do the jobs fair.
And let me just tell you something, committee members. Last
year, our jobs fair attracted 20,000 people. We were able to
get jobs for 5,522 people, 98 percent of whom were African
American, and most of whom were men. But two categories:
African Americans and veterans.
Now, the reason I mention that is these are the two most
basic groups that are crying out to get help with jobs to help
stay in their homes. And so there must be a structure, an
infrastructure that is built, not only just to moan about this
moving back to work program, yes, but we have to have something
in there that provides the work, job fairs, other kinds of
structures, to be able to make sure because people want to
work. They are not out there not wanting to work.
We have to research and get into these communities and
build that structure in there to get the job opportunities to
them.
Now, Ms. Glover, Carver Homes and Techwood Homes, it is
very important that I kind of set the stage for this because
Carver Homes is located, because many people have been to
Atlanta, but in order to show what you did, Carver Homes is
right there where the Atlanta stadium is, the home of the
Braves. Techwood is up where Georgia Tech is. So if you have
been to Atlanta, you know where that is.
Can you share for us a bit, Ms. Glover, how you have used
this economic leverage and your input in getting jobs for
people in the community and how that worked in the mixed-use
projects that you did in Carver Homes and Techwood Homes?
Ms. Glover. Thank you, sir. And let me return the
compliment to you. You have been a magnificent public servant
and an outstanding Congressman and Senator at the State level.
And I, too, have enjoyed working with you and think the world
of you. So thank you for all that you do.
Mr. Scott. Thank you.
Ms. Glover. In terms of our revitalization of those
communities, we worked with the private sector, the foundation
sector, the supportive services sector so that we could create
communities of opportunity. And those communities were in
terrible condition when we started in the 1990s. The workforce
participation was at about 13 percent and people were
desperately poor. And rather than the families being able to
rebuild their lives, they were trapped structurally out of the
mainstream.
So in working with the families and working with the
private sector, we were able to create a master plan that
leveraged the human potential as well as the real estate
potential. And we always say that all people are children of
God with unlimited human potential, and so the work was
directed to tap into that human potential.
So it is at both ends, so it is working with the real
estate and that leveraged typically 10 to one of the public
dollars that were in either through the tax credit program,
private activity bonds and tax credits, other affordable
housing programs, to close the gap on the development.
And it is a true economically integrated community that had
market rate families, families who needed assistance, typically
40 percent, and these are long-term affordable units and will
always be as long as the ground lease is in effect, at least 60
years, and then tax credit affordable units. And that was
developed and it has been magnificent. We have also developed
single-family homes.
But we also worked with the neighborhood schools. So
housing policy and education policy, too, are important because
we wanted to have great neighborhood schools because that
attracts families through the neighborhood. And so it has been
a very, very impactful and tremendous program.
Mr. Scott. Thank you.
Thank you, Ms. Glover.
And thank you, Mr. Chairman, for giving me that extra
minute.
Chairman Hensarling. The time of the gentleman has
definitely expired.
The Chair now recognizes the gentleman from Illinois, Mr.
Hultgren.
Mr. Hultgren. Thank you, Mr. Chairman.
Thank you all for being here to discuss a very important
topic, something that absolutely impacts all of our
constituents.
And it is so clear to me that home ownership advances the
American Dream, encourages responsible citizens, and promotes
lasting community involvement, which is something we all want.
I believe that the people in my district should have access
to the financial tools they need to be able to invest in this
worthwhile goal to provide a lasting home for their families
and also to build their net worth. Federal housing policy
should reflect our commitment to those Americans who include
home ownership on their list of life and financial objectives.
We should also hold agencies like the Department of Housing
and Urban Development accountable to ensure that Federal
housing programs are exceptional stewards of taxpayer dollars
and meaningful mechanisms through which we can help people out
of poverty.
I am interested in exploring ways that we can more
effectively serve seniors and low-income families in our
communities. And I am grateful for this opportunity to be able
to learn more from you all and the work that you have done.
I want to address my first couple of questions to Mr.
Husock, if that is okay. America is facing significant
challenges when it comes to providing our citizens with
affordable housing. The 5 years ending in 2014, the number of
renter households was up by 4.7 million, while the number of
homeowner households was down by almost 600,000.
The United States is on the cusp of fundamental change in
our housing dynamics as changing demographics in housing
preferences drive more people away from the typical suburban
house.
I wonder if you could offer insight as to what can be done
to prepare our Nation for a more balanced housing policy, one
that recognizes the realities of the changing housing market
that we are facing?
Mr. Husock. Thank you so much. Of course, a lot of what is
a local decision is beyond the reach of HUD. However, I know
that under Secretary Kemp's leadership, there was a good deal
of emphasis that has fallen by the wayside somewhat to call
attention to local communities as to how they may adjust their
zoning codes in a way to encourage balanced construction of
different housing types so as to accommodate the range of needs
that may go beyond and do go beyond, as you point out, a desire
simply for single-family home ownership.
So a lot of these decisions, most of these decisions are
driven by local zoning and land-use decisions. However, HUD can
use its good offices to set an example, suggest model zoning
codes and to call attention to those efforts at the local level
that have been effective.
Mr. Hultgren. Let me ask you specifically, since 1986, the
low-income housing tax credit program has leveraged Federal
dollars with private investment to produce nearly 2.8 million
affordable units. If we still need more affordable housing, how
can LIHTC dollars be further leveraged to provide more
affordable housing?
Mr. Husock. I think as with public housing and housing
first voucher units, we should consider making those units that
are affordable under the LIHTC a short term in the nature of
their assistance because we have long waiting and we have a
limited supply.
And so aligning our housing policy with our overall social
policy we spend as much, if not more on housing choice voucher
as we do on TANF today. And yet, the regulations regarding TANF
dollars and housing choice voucher dollars are very different.
So to make assistance short term and targeted is maybe the
most practical way that we can accommodate more households.
Mr. Hultgren. I have one last thing I want to address
quickly with Mr. Cabrera. How have Section 202 capital advances
affected the market for affordable, supportive housing for low-
income seniors? Has the cessation of funding for these advances
discouraged investors from building affordable senior
developments to add new units?
Mr. Cabrera. The short answer to that is yes, it has
discouraged the production of 202 units. Section 202 has
traditionally been the engine that drives elderly housing.
There is a bitter struggle within the portfolio itself, as FHA
would tell you, because it is very difficult. In some rural
areas where you have 202s, you have performance issues. It is
simply you don't have enough people living there to support the
debt service so that it keeps going if it is alone as opposed
to a grant.
But I think 202 or a vehicle like 202 is going to be an
important conversation to have given that no one here is
getting younger.
Mr. Hultgren. I feel it.
My time is almost done. I will yield back my last 10
seconds.
Chairman Hensarling. The gentleman yields back.
The Chair now recognizes the gentleman from Texas, Mr.
Green, ranking member of our Oversight and Investigations
Subcommittee.
Mr. Green. Thank you, Mr. Chairman.
I thank the witnesses for appearing as well.
And I think the ranking member for her support of HUD.
Mr. Chairman, I will style this brief statement why I
oppose cutting funds to HUD. I oppose cutting funds to HUD
because I have before me an article from the Huffington Post,
dated July 11, 2014. It reads, ``The $400 billion to create a
fleet of F-35 Joint Strike Fighter jets, which as the Hill
points out is 7 years behind schedule and chronically plagued
with misfortunes and incompetencies, could have housed every
homeless person in the U.S. with a $600,000 home.''
I oppose cutting funds to HUD because we currently have a
$38 billion gimmick to fund the military with a separate war
account that has no cap on it. Spend as much as we like on war,
but cap what we spend on peace in terms of homelessness.
And why do I say peace? Because I know how we acquired HUD.
HUD was not acquired easily. Unfortunately, and I don't condone
what happened, but I can tell you the truth, the Watts riots
influenced the creation of HUD: 6 days; 34 deaths; 1,032
injured; 4,000 people arrested; and $40 million in property
damage. HUD was not easily acquired.
There had been an effort to do this for years in this
country. And unfortunately, history records that the Watts
riots influenced the creation of HUD.
I know how we acquired the Fair Housing Act. It was after
the demise of Dr. Martin Luther King that we were able to get
the Fair Housing Act through Congress.
So I am here to protect HUD. I am here to protect it
because I know about the good that it has done, notwithstanding
all of the cuts through the years. The intelligence indicates
that in the last 20 years, HUD has provided housing assistance
to more than 35 million individuals.
The HUD HOME program has produced nearly 1.2 million
affordable housing units, almost 500,000 units for first-time
home buyers. The HOME program has assisted nearly 300,000
tenants in obtaining direct rental assistance. CDBG has helped
over 1.2 million low- and moderate-income persons.
And I tell you, Mr. Chairman, that I oppose cutting HUD.
I am here to hold back the rollback and that is what I see
happening. There are people of good will, by the way, with the
best of intentions, who would roll back to a time when people
were unable to get assistance with rent, unable to acquire the
holistic approach that we just witnessed this morning.
I was with the Honorable Maxine Waters when we were over at
this location right here in this City, that takes a holistic
approach to dealing with housing issues, gets 25 percent of its
funding from the Federal Government, has a $5 million a year
budget. I want to protect that. I want to expand that. I would
like to see that become pervasive. I would like to see it in my
City.
We cannot allow a program that has benefited Americans in
times of need after a crisis, such as what happened in 2008, to
be cut to the bone to the extent that it becomes ineffective.
And I will yield back the balance of my time.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Arizona, Mr.
Schweikert.
Mr. Schweikert. Thank you, Mr. Chairman.
And obviously, once again, I believe our collectively
ultimate focus is actually not the agency, it is the people who
need the services, and are we doing it the best way to touch
the most lives for the maximum benefit.
Mr. Briggs, you have actually a couple of times touched on
what many of us have been fixated on and that is particularly
in our higher-density areas within the country. We have sort of
a two-pronged problem, both income, the ability to earn a
living, but then the cost of housing.
In land-use policy, what some people like to refer to as a
model zoning code, a lot of our urban areas really do lack
creativity and variability in both the way they regulate, but
also the land use.
What can we do as Federal policymakers to turn to those
urban centers and say, you are boxing out the next opportunity
for affordable housing, not because of money coming from us,
but because of the regulatory costs, the zoning costs, the land
use, and actually your NIMBY problem? What can we do policy-
wise?
Mr. Briggs. Thank you, Congressman. I am so glad you asked
this question and asked it the way you did. In many senses,
many communities around the country are federalizing their
costs. And we are not going to make the progress we need to as
a Nation if we don't come at this in more creative ways.
In my judgment, one of the best studies ever done of this
was by the late housing economist, John Quigley. He looked over
a 40-year period and showed very rigorously that we have seen
the problem you underline, this structural gap I talked about
earlier. And a principal driver of it is what economists call
supply constraints and local land-use regulation is among the
most important.
I would suggest approaching this as a question of both
rules and incentives because both have mattered historically.
That is what the record shows. And encouraging through
contingent Federal funding, for example, contingent
investments, both streamlining and more inclusionary approaches
are going to be crucial, in my judgment, to encouraging density
and a greater flexibility of housing types, as Mr. Husock
noted.
Mr. Schweikert. And if you ever see a good article on it,
will you send it our direction? Somewhere in my binder, I have
one talking about how a housing unit built today, about 40
percent of it ultimately is some form of regulation. Now, we
like certain regulations, but I live in the desert and yet some
of the regulations require certain types of construction
materials that are absolutely inappropriate for my part of the
country, but they are within the rule set.
Mr. Briggs. Right.
Mr. Schweikert. So somehow we are going to have to
holistically break this down.
Mr. Briggs. I have a 10-second response, if you will allow
me. I think we will agree that regulations exist for a variety
of reasons, to protect health and safety, to promote
environmental sustainability, including--
Mr. Schweikert. But it also creates barriers.
Mr. Briggs. Absolutely, it is a mixed picture.
Mr. Schweikert. Okay.
Mr. Husock?
And I prefer the words ``on ramp'' instead of ``off ramp.''
If right now you were designing income, job incentives those
things, so let us just use this because it is something I am
familiar with.
I am in Section 8 housing. I am able to get that promotion
in the job because I have been a consistent worker. We know
there is a math problem, there is a disincentive problem where
you make a certain income leap, all of a sudden much of that is
lost over here in the change of your housing cost.
Within seconds, can you share with me a conceptual approach
of what you would do to incentivize accepting that extra work
responsibility and the extra income without being punished on
the other side so it is a reasonable on ramp?
Mr. Husock. Fix the tenant's share at the outset of the
lease and keep that for a fixed period of time, just the way
typical renters in the private sector have a fixed-cost lease.
Mr. Schweikert. Okay.
Ms. Glover, everyone seems to love you. You have an amazing
story here. One of the curiosities I have is knowing some of my
housing projects in the Phoenix area are--rent credit, is also
the discussion of incentivizing work, but the ability to manage
that.
Are you seeing discussions of reaching in and doing things
more creatively, babysitting co-ops, a ride-sharing vehicle
that is actually at the property, things that actually make the
ability to go and work that job using sort of the modern
sharing economy? Are you seeing that adoption anywhere?
Ms. Glover. I think that is the power of local devolution
that you can actually incent those types of things. The great
news is that if you are not constrained in terms of what can be
experimented with and investigated, I think there is a lot of
opportunity.
Mr. Schweikert. So that decentralization and rural changes
from my housing density or housing rules to your creativity to
incentivize folks to have a future.
Ms. Glover. Absolutely. And one other quick observation on
some of the local communities--
Mr. Schweikert. Very quickly.
Ms. Glover. --is that many localities are trying to
subsidize their own budgets, so with the cuts of CDBG and HOME
what you are seeing are impact fees and raising and higher fees
because at the end of the day, we have to connect the dots
because all of these things come together and have impact.
Mr. Schweikert. Yes, that is the other side of the cost
equation.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Minnesota, Mr.
Ellison.
Mr. Ellison. Let me thank the chairman and the ranking
member. I appreciate having this hearing.
My first question is a very quick question. Are the poor
lazy? That is my question. Some of my colleagues made the point
that we need work requirements. I have a panel up here and I
would like to direct the panel's attention to the board.
Under the voucher program, 49 percent of those folks are
elderly or disabled, 33 percent of them have jobs in the
voucher program, so you don't need to force them to work with a
work requirement.
And then you have another percentage of people who are if
you are on TANF, you are a TANF recipient, then there is
another under the voucher, 12 percent, who could be veterans,
who could be people with a whole lot of different stories.
I think the point here, though, is that saying that you
can't have housing unless you have a job, at least for the
voucher program, is probably poorly thought through.
Public housing, same story. People are working and the ones
who aren't working, the greater majority of them are elderly or
disabled.
And then, project-based rental assistance is the same story
all over again.
So Mr. Briggs, is a work requirement smart, is it right, is
it necessary, does it help?
Mr. Briggs. Congressman, thank you. In my judgment, it
misses the point. If the idea is to make work pay and to ensure
that there are work supports, given the ample evidence that
there is a high level of motivation to work, as Members from
both sides of the aisle have said, then let us focus on those
things.
As your data show, many of the assisted households are
either not work-ready or aged out of working age or they are in
fact attached to the labor market. So to some extent, one
wonders about whether we are focused on the wrong issue.
Mr. Ellison. Thank you. I will just move on from there.
Can we get the next slide up, please?
So here is the thing. I have asked for chart one to be
shown on the screen.
According to the Harvard Joint Center for Housing Studies'
report, one in two households spend more than 30 percent of
their gross income on rent and utilities, and one in four
households pay more than 50 percent of their gross income for
rent utilities.
We currently have more than 11 million families who pay
more than half of their income for housing and utilities. And
we know that one in four families eligible for housing
assistance receives it, only one in four. In my district, we
have more than 10,000 low-income families on a waiting list.
So I wonder, Mr. Briggs or any of the panelists, I would
like to hear from Mr. Briggs first, when you consider the
current HUD budget, what percentage of its funds go to help
existing recipients of assistance? How does that percentage
compare with funds available to help cost-burdened families
receive vouchers or gain a slot in a subsidized home?
Mr. Briggs. Mr. Ellison, as the data show, we have this
tremendous gap. The blue line is coming down over the last
several years. That, by the way, is because of the economic
recovery. The underlying data analysis show that is about
improvement in tenant incomes, which is a terrific thing, and a
sign of how we can create more success.
But only about one in four households who are eligible for
housing assistance actually get it. And that is a huge problem.
And again, we are paying costs; we are just paying them in
other systems.
Mr. Ellison. That brings me to the next slide.
It is funny you should mention that. So here, this next
slide, I think, is interesting because we spend more than $270
billion a year on housing. We spend a lot of money on housing,
just not too much of it goes to poor folks.
This chart shows that the bulk of the investment benefits
the most financially well-off because of all of the tax
benefits for home ownership, the mortgage interest deduction,
property tax deduction, capital gains exemption.
In general, upper-income homeowners receive the greater
benefit than do the low-income renters. And why is all this
focus on trying to shrink the small pie we already have for
low-income people trying to find a leg up in this system? Can
anybody talk to me about this?
Ma'am?
Ms. Glover. In one of my recommendations, I recommended
that in the context of overall tax reform, some thought be
given to rebalancing home ownership and rent, but also
directing the assistance to those with the greatest need.
Mr. Ellison. Thank you.
Ms. Glover. And we know we are in resource-constrained
environments, but we need to direct it to where the greatest
need is. And I think that is the rebalancing of the approach.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from California, Mr.
Royce, chairman of the House Foreign Affairs Committee.
Mr. Royce. Thank you very much, Mr. Chairman.
And I thank the witnesses here for joining us today.
As Chairman Hensarling already mentioned, the Moving to
Work program has largely been a success and also an initiative
that the housing authority of the County of San Bernardino has
pioneered to the benefit of many of my constituents.
And I think the extension of preexisting MTW contracts at
public housing authorities, including San Bernardino which has
a rental assistance utilization rate of higher than 90 percent,
has been significantly delayed. It still remains undone.
Mr. Cabrera, let me ask you, what ramifications will the
delay by HUD have on MTW housing authorities? And how is HUD
gutting the original intent of the program, as you referenced
in your testimony?
Mr. Cabrera. Thank you, Mr. Chairman. I think that the real
concern I have about HUD delaying is that eventually those
contracts expire and what you have is a housing authority going
back to the usual rubric, the Housing Act of 1937, and all of
the impacts.
San Bernardino County is currently developing in San
Bernardino itself and they are redeveloping public housing,
their own public housing. That is the kind of thing that will
stall that effort. And that would be the case in San Bernardino
County. That would be the case for the San Diego Housing
Commission. That would be the case for Santa Clara.
It is important that the flexibility that has been inherent
in the MTW agreements that were drafted frankly from 1999,
because it came into being in 1998, through roughly 2008, that
it stay that way.
If you take away that flexibility, you will take away the
capacity of these housing authorities to do as much as they can
do with respect to their properties and their tenants.
Mr. Royce. I appreciate that.
Changing gears, Mr. Husock, when you think about Fannie Mae
and Freddie Mac and the central role they played in the
financial crisis, do you ever ask yourself, if only they had
listened? And I say that because, as you wrote in the pages of
The Wall Street Journal in 2004, ``Federally chartered but
privately owned, Fannie Mae, with a trillion dollars in assets,
is not the riskless public service entity it represents itself
to be.''
And while you and I and then-Federal Reserve Chairman
Greenspan and others cried loudly at that time of systemic risk
regulation, I had a bill to regulate systemic risk there, and
it called for higher capital and less leveraging, it was 100 to
one leveraging, and scaled back GSEs. Sadly, those warnings
fell on deaf ears here on Capitol Hill.
And I don't say this to rehash history, although I think
amnesia, as my colleague from New York mentioned earlier, is
suffered on a bipartisan basis, but rather I hope that we might
learn from the past.
And specifically, I was hoping that you could comment
briefly on the role the affordable housing goals had in the
collapse of the GSEs and the potential impact of reopening the
credit spigot with FHFA this year, calling for the Housing
Trust Fund to be capitalized by Fannie and Freddie.
Is there not a better way to accomplish the goals of home
ownership within a market-based system than replaying this
particular angle?
Mr. Husock. Thank you, Congressman Royce. I am pleased that
somebody dug out that 2004 article, and I am flattered that you
mentioned it for the record.
Mr. Royce. Oh, I have quoted you over the years. So, thank
you.
Mr. Husock. I appreciate that. I worry about the affordable
housing goals, and I worried about them at the time, not
because I did not think home ownership is a valuable asset for
communities. I worry that if lenders are encouraged to make
loans to non-credit-worthy individuals that their neighbors,
their struggling neighbors who are making the payments on their
own houses are going to see their values collapse when
foreclosure strikes in their neighborhood.
And we have seen in the wake of the financial crisis that
is exactly what happened, and that poor and working-class
neighborhoods were the most adversely affected by the
affordable housing goals that have always been advanced in
their name. That is my concern.
And so, I think we would be remiss in continuing those
affordable housing goals and in directing more funds to similar
purposes.
Mr. Royce. Thank you.
Again, I thank these witnesses.
And Mr. Chairman, thank you for this hearing.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentlelady from Utah, Mrs.
Love.
Mrs. Love. Thank you, Mr. Chairman.
And thank you all for being here today.
I am actually encouraged by what I have been hearing from
the panel. And I hope that we wouldn't take these hearings for
granted, that we can come out of this hearing with some good
ideas on how we are going to help our fellow Americans.
First of all, what I would like to focus on today is the
bigger picture, and how HUD can play a part in ending inter-
generational poverty.
I have heard a lot today about how certain well-intentioned
policies and programs to combat poverty, to the defense of HUD,
there are some places where it has helped. But I also believe
that it has resulted in the creation of a bureaucratic and
complex web of HUD programs that eventually, I think, entrench
poverty and act as a barrier to upward mobility.
So just very quickly, have any of you ever been to the
State of Utah? Yes? Okay, it is a great State, right? Okay. My
home State of Utah is actually unique in having adopted and
focused specifically on inter-generational poverty. In fact, in
2012 the Utah State legislature adopted the Inter-Generational
Poverty Mitigations Act. And it is to help identify the
barriers that trap families in inter-generational poverty and
really find solutions to help families break out of those
barriers and achieve a life of dignity and self-reliance.
But it is also very important to note that before that
Act--the Act is actually dealing with a broader perspective,
and housing is a portion of that, and before that we realized
that when we were working on housing stability and having
people get into homes that it was necessary and important, but
it was far from enough to actually end the cycle of inter-
generational poverty.
Which one of the concerns that we have are people coming
in, again, going into the same programs, instead of getting
people completely out of these programs.
So with that being said, one of the questions I have for
you, Ms. Glover, is you actually mentioned that local
governments have to have the flexibility to do what they need
to in terms of helping out with housing. What are your thoughts
about giving local government or what do you think we can do to
give them more flexibility to deal with these problems on a
local level?
Ms. Glover. Thank you very much for the question. I think
that is why there has been so much discussion about Moving to
Work. It is an unfortunate name for a program that really is
about eliminating the overregulation, if you will, of providing
housing in a locality.
Mrs. Love. Yes.
Ms. Glover. And what it seeks to do is that it allows the
local authority working with local players, local service
providers, local foundations to solve the problem in that
jurisdiction. Utah is very different than Georgia, California,
and so on and so forth.
Mrs. Love. That is right.
Ms. Glover. And so I think in a responsible way, and if
there are articulated and agreed outcomes and performance
metrics, you can take the same dollars that are being allocated
and put it into a pool, come up with a strategic plan, and then
implement the things that are solving problems in that
locality, be it homelessness, be it supportive housing needs,
be it elderly housing. It also incents other players to come
and participate because it also creates certainty.
And I think one of the things that Mr. Cabrera talked about
is investors want to know, well, what is the playing field
going to be so that they aren't constantly reacting to
changing--
Mrs. Love. Thank you. I have two more questions I have to
get to, in seconds.
The other thing I wanted to say is, do you believe that HUD
needs to interface with some other interventions to help break
the cycle? I feel as if we are being a little too micro instead
of macro, instead of looking at all the other pictures to try
and see what we can do to make sure that poverty is something
that we actually break, inter-generational poverty. I think it
can be done.
Mr. Cabrera. Like many Federal agencies, HUD handles data
very haphazardly. And it is not because of HUD; it is because
of their tools. I think given where we are, some serious
thought has to be given to how you track certain outcomes that
you want using data. And I think that goes toward, for example,
the Inter-Generational Poverty Act.
Mrs. Love. Yes. I would just like to mention that all of
those programs are outcome-based also. And that is why Utah has
done so well.
Thank you.
Chairman Hensarling. The time of the gentlelady has
expired.
The Chair now recognizes the gentleman from Arkansas, Mr.
Hill.
Mr. Hill. Thank you, Mr. Chairman.
I thank you and the ranking member for convening this
hearing.
And I thank the panel for their patience, and for staying
for such a long period of time.
I want to thank Chairman Luetkemeyer for joining me in
Little Rock and visiting our public housing authority and
taking a tour of both elderly facilities as well as both old
and new as well as hearing plans for some new RAD projects in
Little Rock that I think will be quite, quite interesting and
quite beneficial to the community.
Also, in listening to the conversation this morning, I
really do think we need to defend helping people and not defend
the agency, not confuse the defense of 50 years of HUD versus
the programs and ideas and concepts of helping people better
their lives and getting out of poverty. So I want to associate
myself with the gentleman from Arizona's comments in that
regard.
And also, just speaking to the ranking member's opening
statement, I think about 16 percent of HUD residents are over
62, was one of the things that she raised. And about 46 percent
are actually working age.
So I really do think this idea of getting our communities
to work well to get people in public housing off with solutions
for child care, transportation, getting to work is so very,
very important, since 46 percent of people in public housing
are of working age, not retired. I want to leave that concept
here, floating around the room.
Mr. Cabrera, my first question for you is, since 80 percent
of HUD's budget is really distributed either through the
formulas that go out to the public housing agencies or into the
Section 8 program, if we got the technology investment you
wanted, could we have fewer than 7,800 people working at HUD,
do you think?
Mr. Cabrera. I think you are going to have fewer than 7,800
people working at HUD no matter what, over time.
Mr. Hill. How would you see technology? At the public
housing authority in Little Rock, one of their biggest
complaints, and Ms. Glover may have a view on this as well, was
just terrible back-office IT support for their mission.
Mr. Cabrera. I think that is right. I think one of the
problems is, look, whatever data HUD collects, it essentially
is used to report to you and to the American people. That data
is extremely uneven; sometimes, it is very, very good. So one
that comes to mind, one data point that comes to mind that is
very good is VMS data.
Mr. Hill. What does that mean?
Mr. Cabrera. VMS is voucher management system data. It
gives you a very good picture month to month about utilization
once the data is scrubbed. Why is that? Well, it is because
over time we have put in tools in order to minimize the misuse,
the fraudulent use of Section 8.
So we have become very, very good at looking at VMS data to
report back to Congress how that is going, mostly because
Section 8 is the biggest pot, if you think about $19.7 billion
and add another $9 billion, that is a lot of money.
But at the end of the day, what it really means is that a
lot of the other tools are left by the wayside. And one of the
things, just as someone who developed and as someone who was in
other parts of housing, that I think would be a worthwhile
endeavor would be, what are the things that we want to know
that housing is being used for positively across subsidy pools.
So if I am thinking about someone who is elderly, there are
points of contact. How are kids being educated?
Mr. Hill. Those are very good examples.
Ms. Glover, I appreciated the comment, and Mr. Briggs, too,
on rents. All of you have addressed rents. Mr. Husock, as well.
I think you all had good points, good comments.
What about the individual savings accounts that are a part
of HUD's program? Did you use those in Atlanta to help people
have that fixed rent, qualify for the fixed rent, and then put
money in savings so they are saving money for down payment
assistance? That is part of the HUD program, I wondered if you
took advantage of it?
Ms. Glover. We did. And we were able to do it more
powerfully with the Moving to Work deregulation because we were
then able to partner with foundations and other organizations.
And so, we didn't have to use the program that was prescribed
by HUD; we were able to design it so that it worked with the
people who had deep experience in working with those types of
accounts.
Mr. Hill. Thank you.
Mr. Chairman, my time has expired.
Chairman Hensarling. The gentleman yields back.
The Chair now recognizes the gentleman from Pennsylvania,
Mr. Rothfus.
Mr. Rothfus. Thank you, Mr. Chairman.
I thank the panel for joining us this afternoon, and for
being here for a few hours to talk about the 50th anniversary
of HUD.
It is good to see you again, Mr. Cabrera.
I would like to tell you a little bit about an organization
in my district and get some feedback. This organization is
called Hearth. It provides transitional housing services to
victims of domestic violence, under the continuum of care
program. It is a great organization that is truly saving lives
in western Pennsylvania. In accordance with its mission, Hearth
houses women seeking shelter from abusive relationships.
Earlier this year, they were told by Allegheny County that
by serving only women, they were in violation of HUD guidelines
and would lose funding. In a subsequent conference call, HUD
indicated that Hearth could continue serving women if the
county agreed. Unfortunately, Hearth has found itself at an
impasse and its funding for the 2016 Fiscal Year lapsed without
a resolution.
Based on your experience, is it that your sense that HUD
rules allow agencies such as Hearth to serve sub-populations,
including domestic violence victims?
Mr. Cabrera. I think I am speechless. HUD has adopted all
the concepts in VAWA for now a decade-plus, right, with
reauthorization. Women are a special classification
constitutionally. I am struggling to understand how that would
be the determination on the one hand.
On the other hand, as you well know, I am not terribly
surprised. And I think that you are highlighting one of the
problems, and that is there is a rigidity to policy decision-
making that causes those kinds of results, that really has to
be revisited.
Mr. Rothfus. Does it seem fair that Hearth would lose
funding just for helping women?
Mr. Cabrera. Unequivocally, no. But not knowing the greater
facts, not knowing if there is something else, some other
dynamic that I am unaware of, just on the facts that you have
portrayed to me, I am struggling with that one.
Mr. Rothfus. Thank you. In your testimony you argue that
housing policy services and value to the taxpayer would improve
if HUD encouraged more competition, not less.
Can you give some examples of ways that the Federal
Government can increase competition in the affordable housing
sector?
Mr. Cabrera. The best example I know is the one I just was
involved with. So in the case, for example, of performance-
based contract administration, that is a very large contract,
it roughly can be as high, on occasion, as an $845 million
contract. HUD went out and undertook a NOFA. And in that NOFA,
HUD added rules that are not supported in law and that killed
the competition from one of the competitors most naturally to
be a competitor, public housing authorities.
And essentially, it culminated in a lawsuit. That lawsuit
has been resolved. The plaintiffs, the public housing
authorities and their instrumentalities, won that lawsuit.
Thankfully, I was part of that team. And it is a great example
of what HUD should not do.
I think what happens is that there is this press to make a
lot of people happy and HUD, in so doing, makes no one happy.
And I think that one of the things that HUD needs to do better,
I think it is also in my testimony, is it needs to listen
better in terms of what it is trying to accomplish and who can
take them there within the context of the Acts that govern HUD,
in this case the Housing Act of 1937, FDCAA, and CICA.
Mr. Rothfus. Mr. Husock, you have written extensively about
the inherent flaws of HUD. In your testimony, you argue that at
its core HUD was predicated on a deeply pessimistic view about
American society that the new urban poor of the 1960s, the
minority poor, would not be able to advance up the
socioeconomic ladder as had their predecessors in poor city
neighborhoods.
As we look towards reforming HUD and improving the
prospects of Americans who receive housing assistance, what are
some of the programs or practices that follow from HUD's flawed
pessimistic foundation? How can we put HUD on a more optimistic
footing?
Mr. Husock. Yes, and that is why I have been trying to be
constructive in my testimony, whatever doubts I may have had
about the original wisdom.
I think that incentivizing work and self-improvement for
those who are able-bodied and able to work or within HUD
housing lies at the core. It would align our housing policy
with our social policy as embodied by the Temporary Assistance
to Needy Families program and the Welfare Reform Act of 1995.
I think incentivizing work and making sure that people have
the support they need, as Xavier Briggs and everybody on this
panel have said, work incentives must be provided along with
work supports. But incentivizing work and self-improvement, I
think that would be the biggest change.
Mr. Rothfus. I yield back.
Chairman Hensarling. The time of the gentleman has expired.
The Chair now recognizes the gentleman from Maine, Mr.
Poliquin.
Mr. Poliquin. Thank you very much, Mr. Chairman.
I appreciate you scheduling this terrific and very
important hearing.
I thank all of the folks who are here to testify today.
It is my opinion as a Member of Congress that there are a
handful of really important things that we do in the Federal
Government, one of which is to protect our country and protect
our citizens. National security is of paramount importance.
Then, we need to make sure we create the building blocks,
the cornerstones for a stronger economy, one that grows, let
the private sector grow, create jobs as you go along that path
such that folks have more opportunities to life with paychecks
and more freedom.
I also think our Federal Government is in the business of
compassion. We need to make sure that those who are unable to
help themselves or those who need a hand up, that we help them.
Now, I needn't remind everybody in this room, because we
talk about this on a regular basis, that we have already paid
our bills and we are $18 trillion in debt as a nation: $18
trillion. And the annual debt service payments, the interest
payments today on that debt is about $230 billion a year, about
twice what we spend in veterans' benefits. So we are in one
heck of a hole.
Now, what that means to me as a Member of Congress, and I
am sure to all of us public officials, is that we need to
stretch every dollar as thin as we can because it is a limited
resource and we are fiduciaries of taxpayer money.
When I was State treasurer up in Maine, I sat on our public
housing authority board. They have been doing stuff the same
way forever. And I asked them a couple of questions at a board
meeting that seemed to stump them, very simple questions.
Number one, do we have a waiting list for families trying to
come out of the cold? Now, Maine has long winters, and we have
the oldest housing infrastructure in the country. Do we have a
waiting list? And there was no good answer, but we pieced it
together the best we could. There are about 6,000 families in
the State of Maine looking to get out of the cold.
And I asked them another question, what does it cost? What
does it cost to build these affordable apartments, the
subsidized apartments? And you would have thought that I
mentioned that the world was flat; they just didn't have an
answer. The board didn't know. The folks in the front office
sort of knew, but never told the board.
The bottom line is, we are spending about $300,000 for one-
bedroom apartments in Maine when the average price of a single-
family home on a quarter acre with three bedrooms, two baths,
and a garage was half that price.
Now, where is the compassion? We are in the business of
helping people? How in the dickens can you help people come out
of the cold, put a warm roof above their heads so they can
raise their families, or elderly folks coming out of the cold?
We are spending twice what we should be, I would argue 2 or 3
times what you should do on public housing. Let us make that
dollar stretch.
Now, we changed the rules up in Maine. We gave developers
incentives to drive down the costs of those units instead of
just artificially and continuously approving cost overruns. We
said, you don't need solar panels on the roof that never have a
payback. And we drove down the cost of these units by about 35
percent. By the time I left, it was still going down, and we
helped hundreds more people. That is the compassion that we
need to do with limited resources in this country.
So my question to you, Mr. Cabrera is, as you have been in
the development space, HUD is a big organization with a lot of
moving parts. Do we have room at HUD within this bureaucracy to
drive down the cost of public housing so we can help more
people?
Mr. Cabrera. HUD doesn't build public housing.
Mr. Poliquin. But do we have incentives for those that do,
that we can use to help stretch that dollar?
Mr. Cabrera. You would be stunned at what has been done
thus far. That is what asset management was for; it was to
basically drive down the cost centers at public housing
authorities.
If I had to guess, the housing authority that you were on
the board of was probably using the low-income housing tax
credit.
Mr. Poliquin. Somewhat, yes, but still a Section 8.
Mr. Cabrera. So if that is the case, that is less a public
housing issue and it is more a development issue.
Mr. Poliquin. Do we have the data, Mr. Cabrera, to know
what these units are costing us? Do we even have that data?
Mr. Cabrera. Yes, there is data, it is just not from the
Federal Government. It depends upon where you are. You can wind
up in places where the per-unit cost is considerably less than
$300,000. You can wind up in places where the per-unit cost is
more. But keep in mind that those units generally serve people
for 50 to 55 years.
Mr. Poliquin. Let us all be mindful that we have to stretch
these dollars and to help as many people as we can.
Thank you all very much.
Chairman Hensarling. The time of the gentleman has expired.
There being no other Members in the queue, I would like to
thank our witnesses for their testimony today. Thank you for
your patience as well.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
This hearing stands adjourned.
[Whereupon, at 12:57 p.m., the hearing was adjourned.]
A P P E N D I X
October 22, 2015
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