[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]






  DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2019

_______________________________________________________________________

                                 HEARINGS

                                 BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED FIFTEENTH CONGRESS

                              SECOND SESSION

                                __________

  SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND 
                URBAN DEVELOPMENT, AND RELATED AGENCIES

                   MARIO DIAZ-BALART, Florida, Chairman

CHARLES W. DENT, Pennsylvania       DAVID E. PRICE, North Carolina
DAVID P. JOYCE, Ohio                MIKE QUIGLEY, Illinois
JOHN ABNEY CULBERSON, Texas         KATHERINE CLARK, Massachusetts
DAVID YOUNG, Iowa                   PETE AGUILAR, California
DAVID G. VALADAO, California
TOM GRAVES, Georgia

NOTE: Under committee rules, Mr. Frelinghuysen, as chairman of the 
full committee, and Mrs. Lowey, as ranking minority member of the full 
committee, are authorized to sit as members of all subcommittees.

                Doug Disrud, Cheryle Tucker, Carl Barrick,
                 Jennifer Hollrah, and  Matthew Anderson
                            Subcommittee Staff

                               __________

                                  PART 5

                                                                 Page
Department of Housing and Urban Development..................       1
Rail Stakeholders............................................     109 
Department of Transportation.................................     187 
Office of Public and Indian Housing..........................     331 
Members' Day.................................................     369 
Office of Housing............................................     415 
Federal Highway Administration, Federal Transit 
  Administration, and U.S. Maritime Administration...........     479 
  
  

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               __________

                                   ______
		 
                     U.S. GOVERNMENT PUBLISHING OFFICE 
		 
31-244                    WASHINGTON : 2018                 


























                      COMMITTEE ON APPROPRIATIONS

                                ----------                              
             RODNEY P. FRELINGHUYSEN, New Jersey, Chairman


  HAROLD ROGERS, Kentucky \1\          NITA M. LOWEY, New York
  ROBERT B. ADERHOLT, Alabama          MARCY KAPTUR, Ohio
  KAY GRANGER, Texas                   PETER J. VISCLOSKY, Indiana
  MICHAEL K. SIMPSON, Idaho            JOSE E. SERRANO, New York
  JOHN ABNEY CULBERSON, Texas          ROSA L. DeLAURO, Connecticut
  JOHN R. CARTER, Texas                DAVID E. PRICE, North Carolina
  KEN CALVERT, California              LUCILLE ROYBAL-ALLARD, California 
  TOM COLE, Oklahoma                   SANFORD D. BISHOP, Jr., Georgia
  MARIO DIAZ-BALART, Florida           BARBARA LEE, California
  CHARLES W. DENT, Pennsylvania        BETTY McCOLLUM, Minnesota
  TOM GRAVES, Georgia                  TIM RYAN, Ohio
  KEVIN YODER, Kansas                  C.A. DUTCH RUPPERSBERGER, Maryland
  STEVE WOMACK, Arkansas               DEBBIE WASSERMAN SCHULTZ, Florida
  JEFF FORTENBERRY, Nebraska           HENRY CUELLAR, Texas
  THOMAS J. ROONEY, Florida            CHELLIE PINGREE, Maine
  CHARLES J. FLEISCHMANN, Tennessee    MIKE QUIGLEY, Illinois
  JAIME HERRERA BEUTLER, Washington    DEREK KILMER, Washington
  DAVID P. JOYCE, Ohio                 MATT CARTWRIGHT, Pennsylvania
  DAVID G. VALADAO, California         GRACE MENG, New York    
  ANDY HARRIS, Maryland                MARK POCAN, Wisconsin
  MARTHA ROBY, Alabama                 KATHERINE M. CLARK, Massachusetts
  MARK E. AMODEI, Nevada               PETE AGUILAR, California
  CHRIS STEWART, Utah
  DAVID YOUNG, Iowa
  EVAN H. JENKINS, West Virginia
  STEVEN M. PALAZZO, Mississippi
  DAN NEWHOUSE, Washington
  JOHN R. MOOLENAAR, Michigan
  SCOTT TAYLOR, Virginia
  ----------
  \1\ Chairman Emeritus

                       Nancy Fox, Clerk and Staff Director

                                   (ii)

 
DEPARTMENTS OF TRANSPORTATION, HUD, AND RELATED AGENCIES APPROPRIATIONS 
                                FOR 2019

                              ----------                              
                              
                              

                                           Tuesday, March 20, 2018.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                                WITNESS

HON. BENJAMIN S. CARSON, SR., SECRETARY, UNITED STATES DEPARTMENT OF 
    HOUSING AND URBAN DEVELOPMENT
    Mr. Diaz-Balart. The subcommittee will come to order.
    Good morning, everyone. Today, we welcome Secretary Ben 
Carson from the Department of Housing and Urban Development to 
discuss the fiscal year 2019 budget. It is hard to believe that 
we are discussing 2019 when we haven't quite finalized 2018.
    As I have stated in the past, Mr. Secretary, you have one 
of the most difficult and one of the most important jobs in the 
country. I think our country is blessed and fortunate to have 
somebody with your level of commitment. And so we are grateful 
for what you are willing to do for our country, and we want to 
thank you.
    HUD's mission is to create strong, sustainable inclusive 
communities and quality affordable homes for the American 
people. Achieving this mission is by no means an easy task.
    HUD administers many housing and community development 
programs that millions of citizens rely on. And HUD also 
receives billions of dollars in disaster recovery grant funds 
that are critical to helping communities recover after a 
disaster. And Mr. Secretary, I want to thank you for always 
being accessible and always being willing to work with this 
chairman and the members of the subcommittee and the Members of 
Congress. So thank you for that.
    Additionally, Ginnie Mae and the Federal Housing 
Administration together hold a large, a very large portfolio, 
and are critical to the stability and growth of the housing 
market, and, obviously, the economic health of our Nation.
    HUD is requesting a total of $41.24 billion in new budget 
resources for fiscal year 2019, and that is below the fiscal 
2017 enacting level.
    Now, I would note that this budget request was developed 
prior to the recent bipartisan budget deal that lifted the 
sequester for 2 years and raised the cap on both defense and 
nondefense discretionary spending. So we all need to keep that 
in mind, that that was before we had the new numbers that we 
are all dealing with now.
    I think this significant bipartisan breakthrough sets the 
stage for us to take really immediate action to deal with and 
invest in our Nation's future.
    Much of this additional nondefense discretionary spending 
will be targeted towards addressing the needs of our Nation's 
infrastructure, something that the White House has been very 
emphatic about, and I think a lot of us support.
    I want to emphasize that this subcommittee considers 
housing to be a critical part of infrastructure. For that 
reason, we will be investing in the housing priorities under 
the jurisdiction of this subcommittee.
    In some respects the administration's budget request for 
all agencies and departments has really been overcome by events 
due to this budget caps deal. But obviously, we owe a fair 
hearing on the budget proposal before us today, understanding 
that it will change.
    Once again, this year the budget request proposes to 
eliminate a number of programs that are important to some of 
our mayors and cities and small towns. Mr. Secretary, we have 
had conversations about the Community Development Block Grant 
Program and the Home Program, in particular.
    We have had very strong bipartisan support for these 
programs over the years, as you know, and we continued funding 
them last year. I assume, I think we can all assume that some 
of those decisions will be reflected in the 2019 budget year as 
well.
    We greatly appreciate your concerns, however, and look 
forward to continuing to work together to make sure that these 
programs remain as efficient and as cost effective as can 
possibly happen.
    We also understand that the Department has been developing 
a rent reform program. These reforms will make changes to 
existing rent rules across HUDs Rental Assistance Programs and 
introduce other requirements.
    As you know, these reforms are outside of this committee's 
jurisdiction and must be addressed first by the authorizing 
committee.
    Now, I will tell you, while the previous administration did 
not always submit its specific legislative proposals to the 
authorizers, it is my understanding, Mr. Secretary, that you do 
intend to do so. That would be a major step in the right 
direction, and we thank you for that.
    I think it is important to consider all new ideas and 
proposals that make our limited dollars go farther, as far as 
possible, and we look forward to seeing the details of these 
rent reform proposals when they are finalized. So, again, we 
look forward to that, Mr. Secretary.
    Mr. Secretary, again, thank you for your service to the 
country. I look forward to continuing to work with you. We have 
a very good relationship, and I think that is helpful to make 
sure that together we can address our Nation's housing and 
economic development needs, all while, obviously, being 
accountable to the taxpayer.
    Let me yield to my friend, the ranking member, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I am happy to join you 
in welcoming the Secretary of the Department of Housing and 
Urban Development, Dr. Ben Carson. We welcome you to your 
second appearance now before this subcommittee.
    HUD's mission is to provide affordable housing, to foster 
community development, and to protect both renters and 
homeowners from discrimination, and these missions are as 
important, possibly more important than they have ever been.
    Access to stable and affordable housing has broad positive 
impacts. It leads to better health, better education outcomes, 
higher lifetime earnings, especially for children. Providing 
families with affordable housing improves lives. It can lift 
entire communities. Without safe housing, how can we expect 
people to find and maintain employment, to go to school or to 
raise a family.
    Yet today, in no state in this country, can a person 
working full-time at the Federal minimum wage afford a two-
bedroom apartment at the fair market rent. In addition, just 
one in four families eligible for Federal housing assistance 
gets the help they need. That is 25 percent. What does that say 
about our national priorities?
    For years nearly all of HUD's affordable housing and 
community development programs have been underfunded compared 
to demonstrated need. These programs serve some of the most 
vulnerable people in our society: The elderly, the disabled, 
children, veterans, single parents trying to make ends meet. It 
is not an exaggeration to say that America, the most prosperous 
Nation in the world is in the midst of a housing crisis.
    Unfortunately, the Department's fiscal 2019 budget request 
doubles down on last year's request, which was roundly rejected 
on a bipartisan, bicameral basis. Apparently very few cues have 
been taken from the discussion last year of that first Trump 
administration budget.
    So it is doubling down this year. This year's request, 
$41.2 billion, offset by $10 billion in receipts, total budget 
authority would be lower than the fiscal 2017 enacted level by 
approximately $7 billion. That is 15 percent.
    Since more than three-quarters of HUDs budget is devoted to 
simply maintaining current residence in housing, cuts of this 
magnitude would disproportionately impact community development 
and other grant programs. For example, community development 
block grants, a flexible source of funding for hundreds of 
urban and rural communities to help meet the needs of low and 
moderate income people will be totally eliminated.
    The Home Program, the largest Federal block grant of State 
and local governments designed exclusively, to produce 
affordable housing for low income families, the most flexible 
money we have in the HUD budget. Eliminated.
    Even the SHOP program, the SHOP program is best known 
because of the use Habitat for Humanity makes of it. Other 
reputable nonprofits engaged in the Sweat Equity Homeownership 
model. SHOP, eliminated.
    Now, my colleagues and I have heard from hundreds of local 
elected officials and housing leaders in our districts. Their 
message is very, very clear. These programs play a critical 
role in the creation and preservation of affordable housing and 
community facilities.
    Unfortunately, there is even more. Yet again, the budget 
request proposes eliminating the Choice Neighborhoods 
initiative, a highly-successful program that leverages outside 
investments to transform and revitalize whole neighborhoods. 
And in a new wrinkle the Department's request would eliminate 
the Public Housing Capital Fund, despite a massive maintenance 
backlog in our deteriorating public housing stock.
    Finally, the Housing Trust Fund, which doesn't even 
constitute part of our discretionary budget authority, would 
again be eliminated by this request. These mandatory funds are 
derived from contributions by Fannie Mae and Freddie Mac. The 
Housing Trust Fund has only recently been tapped by the States, 
but it is already being used to finance the development, 
rehabilitation and preservation of affordable housing for low 
income people.
    So, sweeping program eliminations, drastic cuts in what 
remains. That is simply unrealistic. It is unacceptable. I 
would say if the Department wanted to ensure that Congress 
would not take a budget request seriously, then the mission has 
been accomplished.
    And I haven't even touched on the numerous reductions 
proposed in the budget. When you look at core housing 
assistance program, like Section 8 vouchers, it appears that 
the Department's requests are inadequate. Current low income 
housing could be at risk of losing assistance. In other words, 
we actually lose ground on the subsidized housing front.
    I always want to register my serious concern with the 
Department's so-called rent reforms, which would essentially 
shift HUD program costs on to residents. Raising minimum rents, 
eliminating long-standing deductions for medical expenses and 
other costs could have serious repercussions for the people who 
rely on housing assistance.
    And as the chairman just stated, if such changes are to be 
considered, and they really don't seem like very good ideas to 
me, but if they are to be considered, they are best left to the 
authorizing committee.
    Mr. Chairman, the current state of housing in America 
should force us to ask tough questions about our national 
party. What kind of country do we want to be? What kind of 
community do we want to be? How do our inherited values 
translate into our present hopes and aspirations and what we 
make real through this appropriations process.
    Looking at this budget proposal, I have to conclude that 
Trump administration's priorities are elsewhere. It is a 
heartless request. How else can you put it? It demonstrates a 
pinched and narrow vision of our country.
    Before I close, I want to register my frustration about 
several major ethical lapses that have occurred at the 
Department and that we will want to talk about. Failure to 
control funds and provide legally-required notifications to 
Congress is bad enough, but what is even more disturbing are, 
apparently, false public statements that attempted to obscure 
the truth about the Secretary's involvement in this matter as 
well as the reassignment of a whistleblower who brought these 
problems to the public's attention.
    These mistakes are apparently compounded by roles that the 
members of the Secretary's family have taken at the Department. 
Public office is a public trust. Even the appearance of 
impropriety can severely damage our institution, so I want to 
give the Secretary the opportunity to address these issues and, 
of course, encourage you to be as responsive and forthcoming as 
possible.
    So we do look forward to the testimony today. We look 
forward to working with the Secretary and with colleagues on 
the subcommittee to ensure that HUD has the resources that are 
necessary to carry out its vital mission.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you very much, Mr. Price.
    Mr. Secretary, your full written testimony will be 
included, obviously, in the record. And you are recognized for 
5 minutes, sir. Thank you very much.
    Secretary Carson. Thank you, Chairman Diaz-Balart, Ranking 
Member Price, and members of this subcommittee. Thank you for 
inviting me here today to discuss the President's fiscal year 
2019 budget request for the Department of Housing and Urban 
Development.
    The President's 2019 budget proposes more than 41 billion 
for HUD, a 1.4 percent increase over last year's request. We 
believe this is sufficient to effectively administer our core 
programs, continuing need of assistance to those individuals 
and families whom we currently serve, especially the most 
vulnerable populations, the elderly and persons living with 
disabilities.
    In addition, the requested level of funding for the Housing 
Choice Voucher Program will continue to support the same number 
of households we currently serve and should not result in the 
termination of any housing vouchers.
    HUD's budget would also make a significant investment to 
continue the fight to end homelessness. Our budget proposes a 
record $2.4 billion to support thousands of local homeless 
assistance programs across our country.
    As a doctor for many years, I am all too familiar with the 
effects of lead exposure on the developing brain. As a result, 
we are requesting $145 million to ensure that homes are free of 
lead-based paint hazards and other dangerous contaminants 
especially for families with small children.
    I also recognize that we, as a Department, need to do a 
better job to ensure the funds we spend not only meet all legal 
requirements, but that we respect these funds ultimately belong 
to the public. Consequently, I have directed HUD's new Chief 
Financial Officer, Irv Dennis to design and implement a 
transformation plan and lead an internal task force within HUD 
to combat financial mismanagement. Irv has more than 36 years 
of private sector experience and is the perfect person to bring 
that kind of business acumen to the task.
    Mr. Chairman, in spite of the billions of dollars we have 
spent as a Nation trying to keep pace with the capital needs of 
our public housing stock, it simply hasn't worked. In fact, we 
are falling further and further behind each day.
    This budget recognizes that we need another way. HUD is 
proposing to pivot from the current financially unsustainable 
public housing model and working with public housing 
authorities, seek a new way to produce and preserve the 
affordable housing that so many families need.
    We are asking for the authority to give local public 
housing authorities the flexibility to use their operating 
funds to support their capital needs, and we are proposing to 
convert many more distressed public housing units to a project-
based Section 8 financing model through the Rental Assistance 
Demonstration or RAD program.
    To date, RAD has simulated more than $5 billion in private 
investment to preserve this housing. Simply put, RAD is 
working. The budget proposes to open the door wider and allow 
more communities to participate in this innovative approach.
    HUD is also supporting sustainable homeownership through 
programs at the Federal Housing Administration. Building 
household wealth through homeownership remains a keystone to 
helping Americans climb the economic ladder of success. That is 
why we have taken several steps to ensure FHA can continue to 
be a reliable source of mortgage financing for years to come.
    I am also here to today to repeat a request you have heard 
from us for many years now from several administrations. We 
absolutely need to invest in FHAs information systems. FHA is 
built on a mainframe that is over four decades old. Staff at 
our homeownership centers still work on paper case files 
creating inefficiencies and posing numerous quality control 
issues.
    Mr. Chairman, I want to pivot to HUDs efforts to aid in 
recovery from last year natural disasters when our Nation was 
hit by three devastating hurricanes and destructive wildfires 
and mudslides in California. HUD is supporting the long-term 
recovery that is taking shape in Texas, Florida, Puerto Rico, 
the U.S. Virgin Islands. Clearly, we have a lot of work ahead 
of us.
    Since last September, Congress has appropriated more than 
$35 billion through HUDs Community Development Block Grant 
Disaster Recovery Program. We have already allocated 7.4 
billion appropriated in September and will be allocating 
another 28 billion. Nearly every program office at HUD has 
staff working on disaster recovery, many of whom have 
volunteered to travel to disaster stricken areas and serve on 
the front lines. My prayers are always with those who are still 
struggling. We will continue to stand with them throughout the 
recovery process.
    Mr. Chairman, HUDs essential mission is to provide safe, 
fair, and affordable housing for the American people. Our 
mission also supports opportunity and self-sufficiency so that 
families can move toward economic independence. I am eager to 
work with Congress and all the members of this committee to 
achieve what I believe are our common goals to better serve our 
fellow Americans.
    Thank you.
    [The information follows:]


  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
    Mr. Diaz-Balart. Mr. Secretary, thank you very much.
    Members, we are going to proceed in the standard 5-minute 
rounds, alternating sides. And obviously, recognizing members 
in order of seniority as they were seated at the beginning of 
the hearing with some caveats. So you are going to give me some 
flexibility because we have other hearings taking place, so if 
we have folks that chair other hearings and they do come by, we 
may have to skip ahead of some of you all. So I apologize for 
that.

                               FURNITURE

    Mr. Secretary, there has been a great deal of news coverage 
on the issue about the furniture, the dining room set. 
Obviously, oversight and proper management of funding is 
something that we take very seriously on the subcommittee. And 
as you know, we sent a letter to the GAO and to the HUD 
Inspector General to look into the alleged systematic misuse of 
funds dating back to 2008.
    I appreciate the efforts you initiated last week to 
reassess the Department's internal financial controls, as you 
mentioned, and I trust your new CFO will lead this task force 
effectively. Will you please just take a minute to explain to 
this subcommittee what happened, and also go into, if you can, 
some of the more specifics about the new financial controls to 
enhance the Department's fiscal strength and integrity.
    Secretary Carson. Well, thank you for that opportunity. 
First of all, when I assumed the position, I was told that 
traditionally secretaries redecorate their office.
    I came in, I looked at it. You know, I am not really big 
into decorating. If it was up to me, my office would probably 
look like a hospital waiting room. But at any rate, you know, I 
invited my wife to come in and help me downstairs at the 
subbasement. We have a bunch of used furniture. We went down, 
made a couple of changes, had some drapes added, which were 
down in the basement also, and some blinds for the window. The 
total cost of renovation, $3,500.
    A few months later, I was told that the dining room set 
needed to be changed. I said, why. Because people are being 
stuck by nails, a chair collapsed with somebody sitting in it. 
It is 50 years old. I said, okay, we can potentially do that. I 
asked my wife, also, to help me with that. They showed us some 
catalogs, the prices were beyond what I wanted to pay. I made 
it clear that just didn't seem right to me. And, you know, I 
left it with my wife.
    I said, you know, help choose something, but I said, the 
money that is going to be used, we need to take care of the 
deputy secretary's office and, you know, whatever is left over, 
you know, take care of the dining room furniture.
    It was very important to do that, and I realize that. But I 
had so many other things to do at that point. You know, I had 
no assistant secretaries. I had no deputy secretary. You know, 
I was running from place to place dealing with a lot of 
important issues, so I really wasn't that concerned about 
furniture.
    You know, the next thing that I, quite frankly heard about 
it, was that this $31,000 table had been bought. I said, what 
the heck is that all about. Investigated. Immediately had it 
canceled. Not that we don't need the furniture, but I felt that 
that was excessive.
    There were reports that, you know, I said that I had no 
involvement. I always said what my involvement was in it. You 
know, it makes for a wonderful story. ``Carson wants to, you 
know, take down the budget, but he wants to buy this expensive 
furniture.'' But it bears no resemblance to the truth.

                         HUD INTERNAL CONTROLS

    But we did use that opportunity to say what internal 
controls allowed this to happen in the first place. Because we 
have been spending a lot of time looking at what is going out 
externally. And, you know, there are a lot of issues. And we 
finally got a CFO in December, and we have been able to address 
those, but now we have added, you know, things that are closer 
to home to make sure that this kind of thing doesn't happen 
again.

                             HOUSING FIRST

    Mr. Diaz-Balart. Mr. Secretary, let me ask you, and we are 
not going to have a lot of time so I may have to do it later as 
well, talk to you a little bit about homelessness and Housing 
First. I appreciate your working to prioritize assistance to 
homeless assistance programs in your budget.
    I have seen firsthand in places like Hialeah and Miami, as 
you have, by the way, the effectiveness of these dollars on the 
ground. Has the Housing First approach worked due to reduce 
homelessness in communities? Does it really work? Is that a 
model that works? Can you provide us with some success stories?
    Secretary Carson. Sure. Through our Continuum of Care 
program, for which we have asked $2.12 billion. You know, we 
are able to aid 750,000 individuals through over 7,000 
different programs.
    Housing First works very well because it actually costs 
more money to keep somebody on the street than it does to take 
them off the street. Many studies have shown that. But we 
believe in Housing First, second and third. Housing First means 
you get them off the street. Housing second means you diagnose 
the reason that they are on the street in the first place, and 
housing third means you actually treat that. And, you know, 
that, I believe is what real compassion is all about. And, you 
know, homelessness is something that I believe we have the 
ability to actually extinguish in our lifetime in this country.
    Mr. Diaz-Balart. Thank you, Mr. Secretary. I, later, would 
like to talk to you about how do we expand our efforts to reach 
particularly challenging individuals like those suffering from 
mental health. But we will continue those conversations.
    Secretary Carson. Okay.
    Mr. Diaz-Balart. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman.

                               FURNITURE

    Mr. Secretary, let me pick up on the issue of the furniture 
just to clear this up and make certain that we are clear on 
what has transpired but also what kind of plans you have going 
forward.
    There appears to be some contradiction in the record about 
your statements to the press indicating early on that you had 
no knowledge of this purchase.
    Secretary Carson. I never----
    Mr. Price. That is not what you said today.
    Secretary Carson. I never said that to the press.
    Mr. Price. Well, your spokesman, HUD spokesman, Raphael 
Williams, this is a CNN report, initially denied the Carsons 
had any involvement in the dining set selection. Ms. Carson and 
the Secretary had no awareness that the table was being 
purchased, he told CNN last month. And then HUD's, the same HUD 
spokesman went further and said, didn't order a new table and 
so on.
    A few days later, you personally addressed the issue saying 
you were surprised by the price tag, was having the order 
cancelled, and there were other reports having to do with some 
ambiguity----
    Secretary Carson. Sir, I would respectfully----
    Mr. Price [continuing]. About your taking responsibility.
    Secretary Carson. Yeah, I would respectfully say that I can 
tell you what I said. I can tell you what I did. I do not 
intend to be responsible for what anybody else said.
    Mr. Price. And there is no problem with a much-cited 
Facebook post either.
    Secretary Carson. The Facebook post is quite accurate.
    Mr. Price. All right. We will include that in the record 
and other materials that we will document what I am talking 
about.
    [The information follows:]


  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
          
    Mr. Price. And I take your answer that this is simply not 
accurate, that you took responsibility, full responsibility 
from the beginning.
    Secretary Carson. Absolutely.
    Mr. Price. All right. Then there is the matter of the 
failure to notify Congress of the purchase. That, as you know, 
is required by law. This was only a notification requirement. 
Yet, your office was aware of it at the highest levels, 
apparently, according to some email traffic that we have seen. 
You didn't do that.

                             WHISTLEBLOWER

    And then there is the whistleblower. Whistleblower made the 
public aware of these issues, was reassigned, she said, 
demoted. I would ask you to address that. Of course, the best 
idea might have been to listen to her, but retaliating against 
staff who were attempting to get high-ranking officials to obey 
the law is inappropriate and possibly illegal.
    Now, you have put out a statement announcing new internal 
controls and management practices. That is a good thing. Of 
course, these procedures are already in place. That is the 
inconvenient fact. And as the whistleblower pointed out and the 
internal emails demonstrate, you and your wife were involved in 
the selection of the set, your senior staff knew about the 
notification requirement.
    So old procedures, new procedures. All the procedures in 
the world are not going to help as long as they are not 
followed. So I do hope you can give us your assurance here this 
morning that the rules will be followed going forward. That you 
will make sure this doesn't happen again, and that you will not 
punish people in your organization who are trying to ensure 
that the rules are being followed.
    Secretary Carson. Well first of all, let me just say, I 
don't know who this whistleblower is. You know, all of that is 
news to me, quite frankly. And I would never be involved in, 
you know, repercussions to people like that. That is not who I 
am. I don't believe that that is an appropriate thing to do.

                           INTERNAL CONTROLS

    And as far as, you know, the controls are concerned, I 
think there are ways that they can be--ways that they can be 
enforced so that you don't ignore them. And those are being put 
into place. As far as the reporting is concerned, it is my 
understanding that the facilities, people felt that the dining 
room table was actually dangerous and it was a facilities issue 
not a decorating issue.
    Mr. Price. And the notification requirement, was there an 
awareness of that?
    Secretary Carson. I don't think there is a notification 
requirement for facilities issues as there is with decorating 
issues.
    Mr. Price. Well, the internal email traffic does indicate 
that your staff was aware of the notification requirements. 
They clearly were not met.
    Secretary Carson. It was never discussed with me. And as I 
said, I was dealing with running an organization with virtually 
no secretarial help.
    Mr. Price. And you are denying that any kind of retaliation 
occurred against the whistleblower?
    Secretary Carson. Wouldn't even dream of such a thing. It 
is totally absurd.
    Mr. Price. All right. Hereto, we will furnish for the 
record, the accounts of this and, of course, be happy to 
receive any further response on your part as to how this has 
been handled.
    Secretary Carson. I did believe in the whistleblower 
program. I endorsed it.
    Mr. Price. That was my next question. Your testimony is 
that you believe in the protection of whistleblowers.
    Secretary Carson. Absolutely.
    Mr. Price. And you intend to act on that.
    Secretary Carson. No question.
    Mr. Price. Going forward. All right. Thank you. Thank you, 
Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir.

                             CDBG AND HOME

    The gentleman from California, Mr. Valadao.
    Mr. Valadao. Thank you, Mr. Chairman.
    Thank you, Secretary Carson, for being here today. The 
budget request proposes to eliminate funding for several HUD 
block grant programs that provides funding directly to states 
and local governments, mainly the Community Development Block 
Grant, the Home Investment Partnerships Program and the Self-
Help Homeownership Opportunity Programs.
    In proposing to eliminate these programs, the budget 
request says that it devolves affordable housing activities to 
state and local governments. A, does HUD have a role to play in 
supporting local government's efforts related to affordable 
housing and community development? If so, what would that role 
look like in the absence of these programs?
    And B, how would HUD expect state and local governments to 
fill the gap left by these program eliminations? In particular, 
how does HUD anticipate that less affluent communities would 
address their affordable housing needs in the absence of funds 
that they may have otherwise received through these programs?
    Secretary Carson. Thank you for that question. Yes, HUD 
does have a role to play. The Federal Government does have a 
role to play. And I think it is a facilitating role.
    Recognizing that, you know, these are very expensive 
endeavors to deal with, and recognizing that the programs that 
you mentioned, CDBG, Home, et cetera, have played very 
important roles. We also recognize that sometimes the funding 
has not been targeted appropriately to low income individuals.
    It doesn't mean that we don't appreciate what has been 
done, but we have a very good solution for that. And that is, 
you may be aware of the Opportunity Zones Program, which allows 
capital gains interest investment, to be put into the zones 
that are designated by the governors. And you are able to 
actually pool this capital. And that will work extremely well.
    So in terms of, for instance, the gap funding that is 
frequently provided by the Home program, you will have that on 
steroids. And we will already be involved with HUD with many of 
these redevelopment programs and will be able to guide that 
funding.

                           HUMAN TRAFFICKING

    Mr. Valadao. All right. Last month, I hosted a roundtable 
in my district to discuss some of the challenges law 
enforcement and community groups are facing.
    One of the challenges they mentioned was a lack of 
resources to get human trafficking victims away from their 
abusers and place them in safe housing.
    How is HUD working with local organizations to ensure that 
they are given the vital tools necessary to give victims of 
human trafficking the support they need, and how does this 
budget request help strengthen capacity-building at the local 
level, ensuring that rural communities to better assist this 
vulnerable population?
    Secretary Carson. Well, of course, we are very concerned 
about human trafficking, about domestic abuse, about being able 
to get these people into a safe zone, which is one of the 
reasons that we requested $255 million for the Emergency 
Solutions Grant Program and $40 million for Rapid Rehousing.
    These are issues that, you know, concern our entire 
society. And they will have our complete attention. You know, 
as far as the rural areas are concerned, obviously some of the 
solutions that work in densely populated areas don't work as 
well there. And we are looking for solutions for them as well 
through multiple of these programs. But also one of the things 
to recognize is there is a tendency in rural communities to 
want single-family housing, as opposed to multi-family housing, 
for obvious reasons.
    One of the things that has not been used to great effect 
has been manufactured housing. A lot of times when people think 
of that, they think of trailers and trailer parks. But in fact, 
manufactured housing today looks just like site-on-site 
housing. Beautifully done, much less expensive, rapidly put 
together. But the reason that it hasn't expanded to the degree 
that it can is because of the dense regulatory forest that 
people have to go through in order to enact it.
    We are looking at that because we recognize that with 
single family housing, manufactured housing represents 10 
percent of it, 22 million Americans.
    So consequently, it is something that is vitally important, 
that is why we are taking a top-to-bottom look at those 
regulations that are preventing the use of it adequately in our 
rural areas.
    Mr. Valadao. On the victims of sex trafficking, that is 
something that obviously law enforcement and some of these NGOs 
in my communities are looking for ways to get people out of 
those situations as quickly as possible, to help get them out 
of that life and obviously keep them safe. So I hope that you 
are really looking at the bureaucracy there and the process so 
that we can speed that along and help these people as soon as 
possible.
    Secretary Carson. Thank you for your concern about that. It 
has been a topic of much discussion in this administration.
    Mr. Valadao. Thanks.
    Mr. Diaz-Balart. Thank you, sir. The gentleman from 
Illinois, Mr. Quigley.

                             WHISTLEBLOWER

    Mr. Quigley. Thank you, Mr. Chairman.
    Dr. Carson, you just said you don't know who the 
whistleblower is?
    Secretary Carson. I don't know this person.
    Mr. Quigley. If not, she is hiding in plain sight. I mean, 
Helen Foster has been on TV for some some time.
    Secretary Carson. I still wouldn't recognize her if she 
walked in here today.
    Mr. Quigley. Okay. Well, it implies that you weren't aware 
of what was going on in these situations as well as this--I 
mean, if we have it, everybody else has it, and I assume you 
did, the email chain beginning February 2nd of last year, going 
up for an extended period of time, August 29, 2017, raising all 
these issues in quite contradiction to what you have just 
testified.
    Is it just that you are not aware of those situations?
    Secretary Carson. Tell me specifically what contradictory 
statement there is?
    Mr. Quigley. Well, in terms of your knowledge of this and 
how this was purchased, whether it should have been reported to 
Congress.
    Secretary Carson. Everything that I have told you right now 
is the truth.
    Mr. Quigley. But you are aware that she is out there. You 
are just saying you don't know who she is?
    Secretary Carson. I don't know who she is----
    Mr. Quigley. But you know----
    Secretary Carson. I would have never gotten involved in any 
kind of repercussions.
    Mr. Quigley. Repercussions aside, you know who she is 
because she has been on TV. You just don't know her personally, 
which is a distinction without a difference.
    Secretary Carson. Let me put it this way. Before this whole 
thing became a newsworthy item, if it really is, I would not 
have known who she was.
    Mr. Quigley. But to be, just to be clear, you now know who 
the whistleblower person is? That doesn't mean you know her.
    Secretary Carson. I recognize the name, yes.

                                 LGBTQ

    Mr. Quigley. Okay. Last year when we were doing this, I 
asked you questions about important training materials designed 
to prevent discrimination against LGBTQ individuals that were 
purged from the HUD website.
    You assured me during that hearing that these documents 
were taken down just to ensure that the policies in them were 
effective and they would return to the website, quote, ``as 
soon as possible.''
    According to all published reports, they are not returned 
to the website. There is a lawsuit now involving this and the 
Department of Justice. This is, again, training materials made 
in part to help homeless shelters make sure they were providing 
equal access to transgender people.
    So where are we from last year when you said they would be 
returned to the website as soon as possible?
    Secretary Carson. It is a very complex issue. We finally 
got a general counsel in December. You know, this is March. So, 
yes, it has been since we have gotten a general counsel, 
something that we have been looking at.
    Remember, it is complex. You are dealing--we obviously 
believe in equal rights for everybody, including the LGBT 
community, but we also believe in equal rights for the women in 
the shelters and shelters where there are men and their equal 
rights. So we want to look at things that really provide for 
everybody and doesn't impede the rights of one for the sake of 
the other. So it is a complex issue.
    Mr. Quigley. How would----
    Secretary Carson. And it has been on our agenda. We have 
talked about it quite a bit since we have finally gotten a 
general counsel.
    Mr. Quigley. How would protecting the rights of transgender 
homeless potentially impact the rights of, as you----
    Secretary Carson. I will give you an example.
    There are some women who said they were not comfortable 
with the idea of being in a shelter, being in a shower and 
somebody who had very different anatomy.
    Mr. Quigley. So it is your intention that the general 
counsel who came on, when?
    Secretary Carson. December.
    Mr. Quigley. December. Will spring into action and now 4 
months later have an answer for us. It is now really a year 
from last year by the time you are getting around to this----
    Secretary Carson. I don't think you would have wanted us to 
deal this without a general counsel, would you?
    Mr. Quigley. Well, I would assume that there is somebody 
involved with legal rights at an ongoing basis at HUD, dealing 
with not just this issue, but a host of other issues that 
involve legal matters that you claim to be concerned about, as 
you just described.
    Secretary Carson. I would like to work with you----
    Mr. Quigley. Who has been doing this for the last year?
    Secretary Carson. I would love to work with you on this. 
And I would particularly be very interested in your ideas on 
how we protect the rights of all the people involved. I would 
be very interested, sir.
    Mr. Quigley. And I would love for you to come to Chicago 
and meet with the LGBTQ community as well as the transgender 
community to help you, and whomever your general counsel is, 
better understand the issues that they face and the 
extraordinary concerns that we have already, that unfortunately 
we haven't acted upon in the last year.
    Secretary Carson. We are happy to hear from anybody who has 
good solutions to how you protect everybody's rights.
    Mr. Quigley. So you would agree to sit down with the LGBTQ 
community, myself, and the transgender community to help you 
understand this?
    Secretary Carson. Absolutely.
    Mr. Quigley. Thank you.
    Mr. Diaz-Balart. Thank you, Mr. Quigley.
    Mr. Graves has generously agreed to allow the ranking 
member of the full committee who has a relatively busy schedule 
these days, I am not quite sure why, but she does. So thank 
you, Mr. Graves, for volunteering to do that.
    Mrs. Lowey, it is a privilege to have you here.
    Mrs. Lowey. And thank you, too, distinguished Chairman, and 
thank you to the distinguished member, Mr. Graves, and welcome 
to the committee.
    Secretary Carson. Thank you.

                                 HOPWA

    Mrs. Lowey. Mr. Secretary, the request would reduce funding 
by $26 million for housing opportunities for persons with AIDS 
which enables communities to continue their efforts to prevent 
homelessness and sustain housing stability for approximately 
49,175 economically vulnerable households with individuals 
living with AIDS/HIV.
    Given the evidence that housing stability is one of the 
strongest indicators of retaining HIV primary care and 
preventing the spread of HIV, why would you reduce, rather than 
increase, funding for this program?
    And let me just say, in my interaction in my community, 
there is more need for this program rather than less. And how 
do you expect communities to make up for the lack of funding?
    Secretary Carson. Well, first of all, I don't disagree with 
you that more funding is better for that program. And for 
virtually all the programs, quite frankly.
    You know, last Friday, we crossed the threshold of a 
national debt of $21 trillion. If we continue to accumulate----
    Mrs. Lowey. Did you discuss that--excuse me. When you were 
passing the tax cut, was that on the table? Did they talk about 
that at all?
    Secretary Carson. I wasn't at that table, but I will tell--
--
    Mrs. Lowey. But your colleagues, I am sure, you were part 
of an adviser to the President? Wouldn't you bring it up?
    Secretary Carson. Here is the point: If we continue to 
accumulate debt at this rate, by the year 2048, which is only 
30 years from now, every penny that the government takes in 
will be used to service the debt.
    There will be no money for any programs, HOPWA, CDBG, or 
any programs at all.
    Mrs. Lowey. Except for the tax cut.
    Secretary Carson. There won't be any money for any 
programs. And that is what we need to start thinking about. 
This really should not put us on opposite sides. We should be 
figuring out how we can work together to take care of the 
problem that you just mentioned, which is a very important 
project.
    And, you know, I have visited, you know, some of the 
housing developments for people with AIDS. It is very 
impressive some of the things that have been done. You know, I 
have talked to the people in the communities who didn't want 
them there at first, who now love them and support them very 
much.
    You know, this is something that is beneficial to our 
society. I agree, and I wish we had money for everything. But 
we have to make hard choices. But having said all that, you 
know, the final budget authority comes from Congress. The 
administration simply makes suggestions. And whatever monies 
are provided, we will use them in a most efficient and 
effective way to continue the progress we are making with 
people with AIDS.
    Mrs. Lowey. I wish I could have taped your comments because 
I am in the middle of negotiating the omnibus. As you know, it 
is not coming to the floor until Thursday now. And it seems to 
me that there are people in the administration who have had 
major input into some of these decisions. But I will move on.

                                  CDBG

    Mr. Secretary, as I previously mentioned, your budget 
eliminates CDBG from 2005 to 2017. We know this program is so 
important. It has helped over 1.435 million low and moderate 
income persons. It is created or retained 401,992 jobs, 
benefited over 139 million low and moderate income persons 
through public services like job training, meals and other 
services to the elderly, assistance to local food banks. Every 
$1 that we spend on CDBG leverages an additionally $4.09 in 
non-CDBG funding. And it affects every single district 
represented in this room.
    Could you tell me why you propose to eliminate this 
program? It does so much good for our communities. And if your 
budget request were to become reality, how do you plan to fill 
the hole that this elimination would create?
    Secretary Carson. Well, I don't disagree with you that it 
has done some very good things. There is no question about 
that. But, again, the same budgetary argument that I made 
before still stands. You can change the name of the program. It 
is all going to stand.
    Nevertheless, we do have a way to take care of the good 
things that CDBG does, and that, again, is through the 
Opportunity Zones Program, which will bring in up to $2.2 
trillion in money to substitute for that program and to provide 
for infrastructure problems. You know, there is a lot--I 
suspect we may be asking ourselves how can we use all this 
money. We are going to be doing that. We are going to be 
working with you to do that. We are going to make sure that the 
good things that happen with these programs continue to happen.
    Mrs. Lowey. The Chairman has been very generous with time, 
so let me just say in conclusion, I really look forward to 
working with you. And I am sure whether you are a Republican or 
a Democrat, there will be many people, not just in my district, 
who will say, what? The CDBG program is going down the tubes? I 
think that is a real problem with it. Thank you.
    Secretary Carson. Not the good things that happen with it. 
Believe me.
    Mrs. Lowey. Well, I look forward to having a conversation 
with you.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, Mrs. Lowey. And let me again, 
once again, thanks Mr. Graves for volunteering to let our 
ranking member go ahead. Thank you for doing that.
    Mr. Graves, you are recognized.
    Mr. Graves. Thank you, Mr. Chairman. And always happy to 
yield to the ranking member of the full committee in hopes that 
it had might expedite these negotiations of getting the 
government funding bill underway and resolved.
    Mrs. Lowey. My goodness. I certainly hope in your role as a 
very important Member of the majority, that we can expedite 
these discussions that have been going on.
    As you know, the omnibus now is not being introduced until 
Thursday. We are supposed to leave on Friday. That sounds like 
a miracle plus 10.
    Mr. Graves. That is a day early, if I remember right.
    Mrs. Lowey. That is pretty good.
    Mr. Graves. Yeah.
    Mrs. Lowey. Thank you. I look forward to working with you. 
I appreciate it.
    Mr. Diaz-Balart. Thank you again. Mr. Graves, you are 
recognized for 5 minutes.
    Mr. Graves. Dr. Carson, thank you again for joining us. And 
let me thank you for your many decades of service and just 
caring for people. You have a servant's heart, and we know 
that. And I know that there are those here today that are a 
little critical of some things that have been in the news, but 
you were swift to respond, and I am grateful for that.
    And so I would like to redirect back to the purpose of your 
Department and what you do, and if you could help us just a 
little bit more with some of your vision.
    This committee also oversees transportation, and we have 
had a lot of discussion in the Transportation Committee about 
public and private partnerships. And my understanding, after 
reading a little bit about one of your projects is that there 
might be that opportunity as well in your Department.
    And so I was hoping you might share with us a little bit 
about the EnVision Center Demonstration project and your goals 
there and what you hope to see?

                            ENVISION CENTERS

    Secretary Carson. Well, thank you very much. You know, 
there is a verse in the Bible that says without a vision, the 
people perish. So initially we called them vision centers, and 
then we figured people would think they were getting glasses, 
so now we call then EnVision Centers. But, you know, the whole 
idea is to really juxtapose the need with the resources.
    You know, and traveling throughout this country, I have 
discovered that we have an enormous number of people who 
actually care. And who have resources. And who are willing to 
use those in a philanthropic way. We also have an enormous 
amount of need. But the two generally don't tend to meet each 
other.
    We want to provide an opportunity for that. A lot of times 
we ask young people, What do you want to do? And you get a 
blank stare. Oh, maybe they want to be a basketball player or 
something, but you don't get a whole lot of choices. The fact 
of the matter is, there are a thousand choices, and EnVision 
Centers will expose them to what those choices are and how to 
get there.
    We will also be a site for mentorship. We have a lot of 
people, millions of people who would be great mentors, but they 
don't have a good mechanism for doing that. We will also help a 
lot of the young women, for instance, who get pregnant early on 
and, you know, go into a dependent situation to be able to 
hookup with the resources that will take very good care of 
those children and allow her to get her GED or her associates 
or her bachelors. To become independent, more importantly, to 
teach that to her children and break the cycles of dependency 
which cause the roles to keep growing and cause the Federal 
Government's expense to continue to go up.
    You know, all the people are our resources. They are our 
best resource. And we want to aim our efforts at actually 
developing the people. Houses are nice, no question about that, 
but they are only a part of what is needed to provide the 
development of people. And that is what the EnVision Centers 
are all about.
    Mr. Graves. That is great. I agree with you that in our 
communities we have so many people who want to give, they want 
to help, and they want to take care of their community. And 
that is really what community is all about.
    Secretary Carson. Right.
    Mr. Graves. And sometimes government gets in the way of 
that. And so what I appreciate about your new demonstration 
project here is that you are giving communities that 
opportunity, once again, to invest and to take care of those 
that are truly a part of them and help them get to a better 
place in life where they all know they want to be.
    Secretary Carson. Exactly.

                              FHA LENDERS

    Mr. Graves. If I could just shift gears, and one final 
question as it deals with FHA lenders. Early in your tenure, 
you expressed an interest in curbing the use of false claims, 
the False Claims Act to punish FHA lenders for some minor 
errors and oversights.
    Can you just give us an update on that and what steps have 
you taken and such?
    Secretary Carson. Yes. You know, the problem was that many 
of the lenders were basically moving away from FHA because, you 
know, a lot of immaterial mistakes were putting them in great 
financial jeopardy.
    Now, in no way do we condone those bad actors who, get in 
and take advantage of people. Slam them as hard as you can, no 
problem. And we are never going to cover for them. But we want 
a system that makes it easier for our citizens to realize their 
dreams. And FHA is particularly aimed at those first-time home 
buyers, you know, minorities, people who frequently don't seem 
to have the same advantages with the private lending market. 
And we want to make sure that we enhance their chances of 
realizing the American Dream.
    We are working with the Department of Justice on the False 
Claims Act, and I think some of the lending community is 
recognizing that, and they are starting to come back. And all 
of that is good for American consumers.
    Mr. Graves. Right. You are absolutely right. Mr. Chairman, 
thanks again for having us this morning. And Dr. Carson, thanks 
again for your service.
    Secretary Carson. Thank you.
    Mr. Diaz-Balart. Mr. Graves, thank you very much. We are 
honored to have the chairman of the full committee. I remember 
James Brown used to be called the busiest man in show business. 
This is the busiest man.
    Mr. Frelinghuysen. Work horse, not show horse.
    Mr. Diaz-Balart. Right. This is the busiest man in 
Congress. So, again, Mr. Chairman, it is a privilege to have 
you here.
    Mr. Frelinghuysen. Well, thank you Chairman Diaz-Balart. 
Let me thank Chairman Diaz-Balart and Dr. Price for their 
leadership of the committee. And let me also recognize, 
obviously, your very distinguished career as secretary and now 
in a previous life as being a very well-known medical doctor of 
high repute.
    So let me just address this to your staff. You have been 
Secretary for a year and you and I have really not become 
acquainted. And may I say, I often say in my opening remarks, 
the power of the purse resides here in the Appropriations 
Committee.
    I would like to be, better acquainted with you. I think the 
staff needs to bring you up. As a chairman, I have keen 
interest in a lot of your programs.
    Secretary Carson. Well thank you. Maybe you can come over 
for lunch if you don't mind falling out of a chair.
    Mr. Frelinghuysen. I am not sure I need the lunch, but I 
think it is important for us to talk about our priorities.
    This is the one, two or three budgets which gets, it is 
going to get a lot of money in this 2018 budget process. And I 
want to thank, even though we haven't rolled out our budget, 
you should be very grateful, as I am sure you have already 
expressed or will shortly to the chairman, the way that he and 
Dr. Price have put that money to use. But I would like, 
obviously, to have some opportunities myself----
    Secretary Carson. Sure.

                                VETERANS

    Mr. Frelinghuysen [continuing]. To get to know you. I have 
a keen interest in what we are doing on behalf of veterans. I 
have a keen interest in what we are doing in terms of housing 
with people with disabilities. So I would like to use this 
opportunity as an offer to----
    Secretary Carson. Okay.
    Mr. Frelinghuysen [continuing]. Get together with you as 
soon as possible.
    Secretary Carson. Thank you.
    Mr. Frelinghuysen. So we can work much more closely 
together. Thank you, Mr. Chairman.
    Secretary Carson. Thank you.
    Mr. Diaz-Balart. Thank you, Mr. Chairman.
    The gentlewoman from Massachusetts. You are recognized, Ms. 
Clark.

                               FURNITURE

    Ms. Clark. Thank you, Mr. Chairman. Thank you for being 
here, Mr. Secretary. I want to go back to some of your 
testimony around this dining room table and the purchase of 
furniture.
    There is a memo from your senior staff dated February 28, 
2017, talking about this $5,000 threshold before you have to 
notify the Appropriations Committee about spending on furniture 
and having to do with the personal alarm system being installed 
at your home.
    Is it your testimony that you knew nothing of these 
requirements?

                              ALARM SYSTEM

    Secretary Carson. No one discussed that with me. An alarm 
system at my home was discussed with me by security, and they 
suggested that perhaps there was money to take care of that. I 
decided that I did want an alarm system, but that I would pay 
for it myself.
    Ms. Clark. So you never saw this memo?
    Secretary Carson. No, I never saw the memo.
    Ms. Clark. And nobody ever mentioned these limits or 
notification requirements?
    Secretary Carson. I had no discussion about that.
    Ms. Clark. Okay. These items that were purchased were from 
an interior design firm in Baltimore, Maryland, by the name of 
Sebree and Associates. Did you personally select that firm?
    Secretary Carson. No, I didn't know about that firm.
    Ms. Clark. Do you or your wife or any member of your family 
have a relationship with that firm?
    Secretary Carson. We do not. I will say, to their credit, 
when we canceled the order, they didn't impose any penalty. So 
all the money has been returned to the U.S. Treasury.

                               FURNITURE

    Ms. Clark. Okay. And this furniture was selected by your 
wife. Is that correct?
    Secretary Carson. A style and a color were selected by her.
    Ms. Clark. Fabrics, that sort of thing?
    Secretary Carson. With the caveat that we were not happy 
with the pricing and they needed to find something.
    If anybody knew my wife, they would realize how ridiculous 
this was. She is the most frugal person in the world.
    Ms. Clark. So when did you become aware of the pricing?
    Secretary Carson. When the article came out.
    Ms. Clark. When the article came out?
    Do you know Aida Rodriguez?
    Secretary Carson. Yes.
    Ms. Clark. And she certainly had the quote on the pricing. 
That was just never shared with you before this?
    Secretary Carson. Like I said, I dismissed myself from this 
issue because I had many much more important things to deal 
with.
    Ms. Clark. Is your wife involved in any other decisions 
regarding taxpayer money or funding or purchasing at HUD?
    Secretary Carson. None whatsoever.
    And her question about all this was: Can we buy used 
furniture? Why can't we buy used furniture? And we found out 
that we didn't have a way of doing that.

                       FAMILY INVOLVEMENT AND OGC

    Ms. Clark. So lots of talk about the furniture and your 
wife. Does your wife have any office space or a HUD email?
    Secretary Carson. She does not. My wife comes to my office 
when we have an engagement to go to, so that we can go to it 
together. That averages out to about once a week.
    My wife is a very friendly, gregarious person. She talks 
with staff. But she has nothing to do with HUD policy and has 
no desire to have anything to do with HUD policy.
    Ms. Clark. So last summer you also allowed your son to help 
organize an agency listening tour in Baltimore, against the 
advice of HUD ethics lawyers. Following this listening tour, 
did your son enter into any business relationships with any of 
the attendees?
    Secretary Carson. He did not. He makes 100 percent sure 
that he stays arms length away from any such things.
    I discussed the tour with him before. The reason he got 
involved in the first place is because they were having some 
difficulty discovering who the right people were to speak to in 
Baltimore. I suggested that he knew just about everybody there 
and they should talk to him.
    Ms. Clark. Have there been any other incidents when you 
have chosen to ignore the advice of HUD ethics counsel?
    Secretary Carson. Well, HUD's ethics counsel suggested that 
it might look funny for my son to be there. I discussed that 
with him and left it up to him.
    I am not a person who spends a lot of time thinking about 
how something looks. I realize that that is not the way of 
Washington, and that is a lesson that I have learned.
    Ms. Clark. You have recently asked the HUD inspector 
general to investigate your family's role and influence at HUD. 
Can you tell us why you felt that was necessary?
    Secretary Carson. Yes. Because I know that these things 
just linger and linger, and I know that there is nothing there 
to find. So why not just go ahead and get it dealt with?

                        MOVING TO WORK EXPANSION

    Ms. Clark. Can you provide me a timeline on when HUD is 
going to begin the Moving to Work expansion, specifically when 
HUD will be accepting applications for the first cohort?
    Secretary Carson. Well, the Moving to Work program has had 
variable results. When it was put into place, metrics were not 
put into place. And this is the reason that we need to add 100 
more to it, with metrics in place, so that we can see what the 
actual impact is.
    Ms. Clark. What is the timeline for establishing this?
    Secretary Carson. In terms of the timeline, I would be 
happy to have someone give that to you. I do not know what the 
timeline is.
    Ms. Clark. Okay. It has been 2 years also since Congress 
authorized regional MTWs. Have you made any progress on that?
    Secretary Carson. Again, I would be very happy to have the 
group that is working on that discuss that with you.
    Ms. Clark. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Before I recognize Mr. Joyce, Mr. 
Secretary, is it true that this whole thing ended up costing 
$3,500?
    Secretary Carson. $3,500 for the office decorations, that 
is right--which is considerably less than the historical norm, 
by the way.
    Mr. Diaz-Balart. I just want to make sure that we kind of 
put things in perspective.
    Mr. Joyce.
    Mr. Joyce. Thank you, Mr. Chairman.
    And, Dr. Carson, thank you for being here.
    I was trying to compute on my phone what $31,000 amounted 
to in a $41.244 billion, and it just doesn't go that high. I am 
sure that has got to be less than 0.00001 of a percent of the 
HUD's budget.
    But, anyhow, before I start, I do want to touch base on 
something that you had brought up earlier about the modular 
home.
    Secretary Carson. About the what?

                             MODULAR HOMES

    Mr. Joyce. You were talking about modular homes and how 
well they are constructed.
    Secretary Carson. Oh, yes.
    Mr. Joyce. And it is interesting, I happened to look at a 
number of those factories, and they say those homes are much 
better built than houses in the field, because, like any 
factory, it is exact and the measurements are perfect and the 
wood is cut to order versus trying to make do if you are out in 
the middle of a field trying to make things happen.
    Secretary Carson. It is very impressive.
    Mr. Joyce. Yes. If there is a way we could do that, that 
would be fantastic.
    Last year you and I were just starting in, but we had an 
opportunity to talk about blighted housing and the problems 
that develop in larger inner-city tracts, where it appeared 
that local governments end up owning a lot of the blighted or 
dilapidated houses in order to try to clean up the blocks, if 
you will.
    As you are well aware, that is where, unfortunately, 
activity for drug dealers takes place, crimes take place inside 
those. But I have seen substantial progress, thanks to you, in 
my district and the State. But, as you well know, there is 
still work that can be done.
    Can you speak to the challenges that continue to face 
blight elimination and urban demolition?

                             BLIGHT REMOVAL

    Secretary Carson. Well, you have accurately pointed out 
that it is a significant problem. It drives down home values, 
creates a nice habitat for criminal activity. That is one of 
the reasons that we have allocated significant funding for 
blight removal.
    But also encourage the grantees in the various cities to 
make that a priority. They have done a very good job of that, 
for instance, in Detroit. I think they are having a sustained 
revival now, for the first time.
    For many decades it would start and then it sputters out, 
but it is really working now. And I think one of the reasons is 
because Mayor Duggan has recognized the terrible effect of that 
blight.
    Mr. Joyce. We are envious of that in Cleveland.
    Can you explain to us, as appropriators, how we can 
continue to reduce the red tape and guarantee the efficiency of 
the funds that are given to you to reduce blight?
    Secretary Carson. Well, the first thing we have to do is we 
have to recognize it as a problem. The red tape issue is a very 
difficult issue to get through, as you know. Bureaucracy and 
red tape go together.
    What we have to do is, when we are talking to the 
applicants, make it very clear that that is a priority and that 
preference is given in situations where they are paying 
attention to that issue.
    Mr. Joyce. I have heard from community developers and low-
income housing authorities in my district, as we continue to 
make progress in the residential blight elimination, we should 
begin assessing the need for commercial and industrial 
demolition.
    Large destructions, including abandoned hospitals, 
factories, stadiums, and schools, are costly to tear down. The 
properties pose a unique opportunity for public-private 
partnerships to stimulate large-scale investment and community 
development.
    What type of role do you see HUD potentially playing in 
commercial and industrial demolition?
    Secretary Carson. Well, it doesn't all have to be 
demolished, as you indicated. Some of it can be rehabilitated.
    I was in South Carolina with Senator Scott, and one of the 
textile mills had been converted to apartments--that were 
beautiful, quite frankly, and were filling very quickly. And 
that had encouraged the development of other commercial 
activity around that site.
    So I think there are some innovative ways that that 
commercial blight can be converted, as well.
    Mr. Joyce. And there are ways in which HUD is now working 
with local developers, be it in South Carolina or other places, 
to do that?
    Secretary Carson. Absolutely.
    Mr. Joyce. That is fantastic, sir.
    And, also, as you rightly point out, the fact that we know 
that crimes occur in these areas, they also help tear down 
neighborhoods and a good neighborhood that goes sour because of 
a few of these things. So the ability we have to go back there 
and take those blighted buildings out, any help you could give 
us at this time would be fantastic, sir. Thank you very much.
    Secretary Carson. It will continue to be a high priority 
for us. Thank you.
    Mr. Joyce. Thank you for your time, Mr. Secretary.
    I yield back, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, Mr. Joyce.
    The gentleman from California, Mr. Aguilar.
    Mr. Aguilar. Thank you, Mr. Chairman.

                               FURNITURE

    Mr. Secretary, just for the benefit of my colleagues, too, 
I mean, I hope you understand the importance that we feel our 
role plays in providing input and oversight of your agency and 
Department. So while I can appreciate that you have stayed 
within the statutory cap that was set by Congress when it comes 
to the furniture amount, I think some of the emails show at 
least the intent to get beyond that initially.
    And so I appreciate that once this became public, matters 
were addressed. I think what some of us have concerns about is, 
absent this being public, what would have happened, and would 
we have remained at that cap.
    So I think it is important that you understand we view our 
role to be thoughtful in setting the budget for your Department 
and making sure that individuals are treated correctly.
    Secretary Carson. Much appreciated.
    Mr. Aguilar. So it is in that intent that we ask these 
questions.
    Do you or your staff use personal email to communicate 
about HUD policy? I can understand that as a result of this 
individuals maybe on your team are upset that these became 
public. Do you or your staff use personal email to communicate 
about agency policy?
    Secretary Carson. I do not, and I am not aware of my staff 
doing that.
    Mr. Aguilar. They have been counseled that that may not be 
appropriate?
    Secretary Carson. Correct.
    Mr. Aguilar. Okay. Thank you.

                            FHA LOAN LIMITS

    Mr. Secretary, I believe we also have a responsibility when 
it comes to these programs to achieve the American Dream for 
homeowners. And one of the policies that we have worked with 
your staff on, and the committee on, is FHA loan limit policy 
for consumers out of competitive loan programs, specifically 
loan limits for MSAs that can be distorted because of the large 
geographic area of those MSAs.
    I represent San Bernardino County in California that has 
the largest metropolitan statistical area, spanning 27,000 
square miles. The housing market includes very rural and very 
urban areas. And cities within that MSA have a median home 
price ranging from $250,000 to $550,000.
    Consequently, cities closer to Los Angeles have a higher 
price, obviously, with respect to FHA loan limits, and some of 
the cities in the district also have much lower median prices, 
and this can lock out consumers for a chance to buy a home in 
their desired location.
    The fiscal year 2018 THUD appropriations report directed 
your Department to study whether the geographic size distorts 
FHA loan limit calculations for distinct subareas, such as 
cities. My office sent along the report's language to your 
staff, so, hopefully, you will have a chance to take a look at 
it.
    What steps has HUD taken to address the committee's request 
for that language?
    Secretary Carson. I suspect that you recognize that loan 
limits are the purview of Congress, that we don't have the 
ability to change those. But we are very happy to work with you 
and provide technical assistance in whatever is needed.
    We look forward to receiving those documents from you. I 
think this is a very important issue. And geographic areas do, 
in fact, impact it.
    Mr. Aguilar. Okay. So you would be open to having a call or 
a meeting in your office to chat about these issues?
    Secretary Carson. Absolutely.
    Mr. Aguilar. Okay. Because I think that HUD can do more in 
this regard. I understand the statutory context that the 
committee has, and we will work to address that. But I think 
that there are some issues that we can work on together to help 
resolve this.
    Secretary Carson. Very happy to.
    Mr. Aguilar. And I appreciate the Committee's willingness, 
and yours, to do the same.
    One more question, Mr. Secretary. I understand that HUD is 
requesting an information technology fee that would be assessed 
on FHA lenders. This concerns me because some of the largest 
home lenders have been issuing fewer mortgages insured by FHA.
    The FHA program is critical to many Americans, especially 
Latino communities. In 2016, nearly 60 percent of mortgages 
made by Latino families were insured by the Federal Government. 
Passing along costs to lenders may further discourage the 
largest lenders from issuing mortgages insured by FHA and 
raising concerns about access that communities have for low- 
and moderate-income families to have an affordable loan.
    Why should IT upgrades come from lenders as opposed to 
traditional processes?
    Secretary Carson. Well, thank you for that question.
    First of all, I appreciate the role of FHA, particularly 
with first-time home buyers and minorities, and we want to 
expand that as much as possible.

                              FHA SYSTEMS

    Having said that, FHA has a portfolio approaching $1.3 
trillion, and, yet, we have an archaic technology platform from 
which we work, which puts people at risk. We need to update 
that.
    So you are looking at a $25 charge per loan, which is like 
0.00000001 percent, and that even can be waived in any case of 
extreme hardship. So I think you have to look at that 
perspective.
    I can't emphasis this more strongly than anything I am 
talking about today: We have to get the IT systems at FHA up to 
par. We are putting a lot of money and a lot of people in 
jeopardy by continuing this.
    By the way, this fee that we are talking about, this $25, 
it has a 4-year sunset on it. And it will raise about $20 
million a year, which is only a fraction of what is needed to 
maintain the system.
    Mr. Aguilar. Thank you, Mr. Secretary. I look forward to 
seeing, if you move forward with this, a detailed plan on how 
that would be spent, so we can have a conversation on that, as 
well.
    Secretary Carson. No problem.
    Mr. Diaz-Balart. Thank you very much, Mr. Aguilar.
    Chairman Culberson is running between hearings, so I want 
to thank the committee for your flexibility.
    Mr. Culberson.
    Mr. Culberson. Thank you, Mr. Chairman. I appreciate you 
recognizing me. I am chair on the Commerce, Justice, Science 
hearing next door, so thank you very much for recognizing me.
    Secretary Carson, you are well known for your compassionate 
heart. And you are dear good friends with my pastor, Dr. Ed 
Young. I know you know the Houston area well. You were so well 
respected and loved there.
    I wanted to urge you to keep us in the forefront of your 
mind, the people of Florida and the people of Texas, who are 
really suffering as a result of these terrible hurricanes that 
hit Texas, with Harvey, 53 inches of rain in an area the size 
of New Jersey the largest housing disaster in the history of 
the country. The people of Florida.
    Secretary Carson. Absolutely.

                                CDBG-DR

    Mr. Culberson. But I have thousands of constituents, who 
are still living on the second floor of their homes, with 
either no sheetrock, or very little sheetrock, on the first 
floor. My brother has been living in a trailer in his driveway 
since the storm. My wife's sister's home was destroyed. 
Everyone we know, either family members or people we know, have 
suffered as a result of the storm.
    I know you inherited a massive agency with a lot of 
inertia. It has got to be frustrating, I know, for you, sir. 
But if I could ask you to just keep those folks in the 
forefront of your mind and how they are suffering and how this 
cold winter has been no fun for a lot of them. It snowed a 
little bit in Houston, and has been no fun. Really difficult.
    And one of my greatest frustrations in dealing with the 
Federal Government has been the slowness of the CDBG-DR program 
administered by HUD. It is very frustrating to see the 
slowness. I have discovered there is $500 million from 
Hurricane Ike still stuck at GLO waiting to get out.
    So I wanted to ask you a couple of things you could do 
immediately, right away, that would help immensely the people 
of Florida and Texas, and that is to waive the 70 percent 
requirement on the CDBG-DR money. That is under your 
discretion. The statute gives you the authority to waive that 
70 percent of the money go to low- to moderate-income and go to 
50-50.
    It would make a huge difference for the people I represent, 
who have sunk their entire life savings into their home, who 
are living on the second floor, have exhausted their savings, 
have drained, in many cases, taken money out of their 401(k)'s 
to pay for the repairs. We really need your help.
    What is the status of that? You have done it in other 
disasters. You have waived it and gone to 50-50. That is 
urgent.
    Secretary Carson. I would say it is done on an as-needed 
basis. In Texas, the first tranche of relief from Congress was 
the $7.4 billion. Texas ended up with about $5 billion of that. 
Utilizing the 70 percent LMI formula, that means 30 percent 
could go outside of that. You would be talking $1.5 billion.
    If, in fact, that turns out not to be adequate----
    Mr. Culberson. It is not. It is not adequate.
    Secretary Carson. [continuing]. Certainly we have formulas 
and we will look at it.
    Mr. Culberson. We made the request. This is really urgent, 
that you waive. This has been done in other disasters, as you 
say, on an as-needed basis.
    You are very familiar with the city of Houston and the 
people of west Houston, who have, again, sunk their entire life 
savings into their home. They are not wealthy, but the formula 
would treat them as wealthy, and it is just not appropriate. It 
is urgently needed in this situation. And you would provide 
immediate relief to those homeowners if you will waive the 
rule.
    Can you tell me when you expect that to happen? We made the 
request many months ago. The storm hit at the beginning of 
September, end of August.
    Secretary Carson. I will talk to our CPD department and see 
what the status of that is.
    Mr. Culberson. It is really urgent.
    I also wanted to ask, if I could, about the status of the 
infrastructure unmet need. The Bipartisan Budget Act provided 
an additional $28 billion for HUD CDBG-DR funding, but $16 
billion was traditional funding in grants to States. There was 
a $12 billion set-aside for mitigation projects, to help us 
protect against the next storm, and that money for unmet needs 
is still sitting there.
    What is the status of allocating that infrastructure unmet 
need money to the State of Texas?
    Secretary Carson. Well, the moneys from the second tranche, 
a third of them have to be allocated by April the 10th. So a 
lot of that will be allocated by that time, within the next few 
weeks.
    Mr. Culberson. And the additional $28 billion of CDBG-DR 
funding provided in the Budget Act in February, what is the 
status of that, allocating those funds, to get them out the 
door and in the hands of taxpayers who urgently needed?
    Secretary Carson. A third of that will be allocated by 
April the 10th. The rest of it has to be allocated before the 
end of the year.
    Mr. Culberson. Would you give this your personal attention?
    Secretary Carson. Absolutely.
    Mr. Culberson. It is urgent.
    Thank you so very much.
    Secretary Carson. No, I completely sympathize with 
individuals, particularly in an area that was intentionally 
flooded. I can't imagine what those people feel like.
    Mr. Culberson. That has been the worst part, that the gates 
were opened. The water had stopped, the rain had stopped, the 
gates opened, and here comes the water. My brother was one of 
those people.
    Secretary Carson. I understand, absolutely.
    Mr. Culberson. It is just near and dear to my heart.
    Thank you very much.
    Mr. Diaz-Balart. If I may, Mr. Culberson, let me personally 
thank you, because, obviously, Florida was hit hard as well. 
But everybody who has been hit hard owes you a great deal of 
gratitude for your leadership and your aggressive insistence on 
getting this done. So thank you for your leadership.
    Mr. Culberson. Thank you, Mr. Chairman. The Florida and 
Texas delegations worked together beautifully on this.
    Mr. Diaz-Balart. Mr. Dent, you are recognized, sir.
    Mr. Dent. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary.
    Secretary Carson. Good morning.

                                HUD-VASH

    Mr. Dent. As you know, it came to light last December that 
the VA was going to reallocate funding from the HUD-VASH 
program, which helps the most vulnerable veterans facing 
homelessness, and, instead, spend this money on other VA 
services. Only a day or so later, after receiving a great deal 
of negative feedback, the VA reversed its decision and 
announced there would be no changes to the HUD-VASH program.
    I understand that this decision was made within the VA. But 
given that there are both HUD and VA components to this 
program, could you tell me if you or your Department had any 
conversations with the VA prior to the decision being made, 
and, if so, what was the feedback you provided?
    Secretary Carson. Well, I certainly had an opportunity to 
speak to the Secretary about this, because I heard the rumors 
that they were going to reallocate the funds, and each time he 
assured me that that was not going to happen. I had two or 
three conversations with him about that, and that was always 
the outcome of the conversation.
    Mr. Dent. How will you ensure that your agency is in 
communication with the VA, or other agencies, when there are 
important decisions like this one in the future?
    Secretary Carson. Well, we talk frequently. The Cabinet has 
a very open conversation policy. So that is not going to be an 
issue.
    Mr. Dent. Okay. Thank you.
    Next question, I want to turn to your budget request for 
this year. And as was the case last year, the request does not 
contain any funding for the HUD-VASH program.
    Can you elaborate on your agency's rationale for this 
request? And how do you envision this program working in the 
future and, ultimately, working toward the goal of ending 
veterans homelessness?
    Secretary Carson. Well, first of all, I recognize that 1 
percent of our population protects the other 99 percent, and we 
owe a great deal to the veterans, no question about that.
    The HUD-VASH program is responsible for the 47 percent 
reduction in veteran homelessness. It is a tremendous program. 
HUD provides the housing vouchers, and the VA provides the 
wraparound services. It is a very good model of interagency 
cooperation.
    The reason that we didn't ask for more is because we have 
adequate vouchers already. We have the ability to reissue 
vouchers. And when we get to a point where we need more 
vouchers, believe me, we will ask for more.
    Mr. Dent. Thank you for that.

                           HOUSING COUNSELING

    I would like to also now quickly move to housing 
counseling.
    Last year, in the fiscal year 2018 budget, you had 
requested level funding for the Housing Counseling Assistance 
Program. As you know, this program provides housing counseling 
services to homeowners and tenants, both pre- and post-
purchase, and can help struggling homeowners prevent 
foreclosure and assist in avoiding difficulties in the first 
place. So, in fact, as time has gone on, more people are using 
these services for pre-purchase counseling and fewer are using 
it for delinquency issues.
    In reviewing this year's fiscal year 2019 budget, your 
request for this program is $10 million below the currently 
enacted level, and it is even lower than the amount that you 
had requested last year.
    Given the continued demonstrated need for these services, 
especially in light of the major hurricanes that have 
devastated some of our housing markets, can you tell me a 
little bit more about how you arrived at this year's funding 
request for the Housing Counseling Assistance Program?
    Secretary Carson. Again, it goes back to the concerns about 
our national debt, our deficit. So we are looking to trim where 
we need to.
    That is not in any way to say that housing counseling is 
not warranted. In fact, the statistics would show us that those 
families that receive housing counseling default at a rate of 
about 30 percent less than others.
    So it is an important program, and whatever funding we have 
for it, we will use it effectively to try to make sure as many 
families as possible benefit from that.
    Mr. Dent. I only point out that a couple of years ago, we 
consolidated some of these housing counseling assistance 
programs into this one line. So the program has taken a bit of 
a hit in recent years, and so there has been a consolidation. 
So I want you to be aware of this. This is really the only 
substantive line right now to help those folks.
    I found in my own district that a number of people who have 
been involved with counseling have been able to prevent some 
bad situations. And there are many others who wish they had 
been in counseling prior to the 2008 crisis that could have 
averted some bad situations.
    Secretary Carson. No, you are right. We have about 2,100 of 
them active around the country, and we want to use them to the 
greatest effect.
    Mr. Dent. Thank you, Mr. Secretary.
    I yield back.
    Mr. Diaz-Balart. Thank you, Mr. Dent.
    Again, thank you also. I know you have been a great leader 
on the issue of housing counseling, and you have talked to a 
lot of us, including me, many times. So we will continue to 
work with you. Thank you.
    The gentleman from Iowa, Mr. Young.
    Mr. Young. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. We have covered a lot of issues 
today. Some issues that my colleagues have covered I was going 
to cover, and I won't be repetitive. We have covered everything 
from veterans housing programs to counseling to tables.

                           LACK OF TECHNOLOGY

    I am going to go in a different direction. But I do want to 
dovetail on what Mr. Aguilar was talking about. Just at the 
very end, you were talking about the IT platforms, and how you 
said that the technology, or lack thereof it, incompatibility 
of it all maybe, is putting people at risk.
    How many different systems are there at HUD that you have 
to patch together and that you are dealing with? How subpar are 
they? And how worried are you about this?
    Secretary Carson. I am very worried about them. We are 
trying to bring them now under a single umbrella so that we can 
provide the appropriate oversight accountability.
    I can't even begin to tell you how serious an issue it is 
and how much at risk it puts us.
    Mr. Young. When you say bring it under one umbrella, you 
are talking about one pinpoint Chief Information Officer who is 
overseeing everything----
    Secretary Carson. Yes.
    Mr. Young [continuing]. Or putting it under one umbrella of 
one system that talks to each other?
    Secretary Carson. Both. I want to have a principal person 
who is responsible. And then, of course, he will have different 
arms of responsibility going down to the different segments.
    But we need to have a system whereby I can say: How much 
money in this grant to Cincinnati has been spent and for what 
purpose? I need to be able to find that out right away. It 
shouldn't take me 3\1/2\ months to find that out.
    Mr. Young. No, it shouldn't. Okay. Thank you for that.
    And when you talk about putting people at risk, are you 
talking about the integrity of the security of the system in 
terms of cybersecurity----
    Secretary Carson. Absolutely.
    Mr. Young [continuing]. And people trying to hack and steal 
people's identity or their personal or financial information?
    Secretary Carson. We are getting 2,000 to 3,000 hack 
attempts a week.
    Mr. Young. Goodness. Okay.
    Has that been consistent since you have been leading over 
there at HUD?
    Secretary Carson. We get about that many FOIAs also. But, 
yes, it has been quite consistent.
    Mr. Young. Yeah, the numbers, they correlate, I guess, 
maybe.

                             RURAL HOUSING

    Let me just pivot to something else: rural housing. I 
represent a very rural district. It is a very unique district. 
I have got the most populated county in the State of Iowa, Polk 
County, in my district.
    Secretary Carson. I have been there.
    Mr. Young. I have seen you. We thought maybe you would buy 
a house there.
    And then we have the least populated county in the State, 
Adams County, in southwest Iowa.
    What are some of the actions HUD has taken to help 
alleviate the lack of rural housing that we need? And where are 
you going with this? What are your challenges? And what do you 
see as solutions?
    Secretary Carson. Well, as you probably know, there is a 
multiagency council, led by agriculture, to deal with the 
issues of housing, to deal with the issues of communication, 
because, as you know, there is no broadband access in many of 
those counties, which I think is inhibitory, to look at 
education. So that, obviously, is going to continue.
    But, as I mentioned before, I believe one of the biggest 
things that we can do for rural housing is to eliminate the 
huge regulatory burdens that we have on manufactured housing. I 
think this is an area that has been underutilized and will 
provide a tremendous advantage for us in the future.
    Mr. Young. I would love to work with you on knowing what 
some of those regulatory burdens are with manufactured housing.
    Secretary Carson. Oh, believe me.
    Mr. Young. I appreciate what you do. I appreciate the heart 
that you have for people ultimately with what you do. And thank 
you for being here today.
    Secretary Carson. Thank you very much.
    Mr. Young. Thank you, Mr. Chairman.

                           REVERSE MORTGAGES

    Mr. Diaz-Balart. I want to thank the gentleman.
    Mr. Secretary, I am going to throw two quick issues at you. 
One of them is home equity conversion mortgage programs, or 
reverse mortgages.
    A November 2017 article stated that HUD's own data shows 
that the default rates have increased 646 percent in 2016. 
There are also studies, for example, that show default rates of 
those mortgages were 10 percent following the housing crisis.
    I am, frankly, a little concerned about that program, and I 
want to work with you to kind of dive into it and make sure 
that our seniors are protected. I am not sure if those default 
rates are actually accurate or not. Supposedly, there are huge 
numbers of seniors defaulting, which is, obviously, something 
that is unacceptable. Those are folks that have to be 
protected.
    So not really a question, but just to let you know that 
that is something that I want to, if we can, soon, let's get 
together and let's figure out what we can do to make sure that 
those senior citizens are protected.
    Secretary Carson. Well, it is a huge issue, the ability of 
seniors to age in place. The people who put the program 
together had very good intentions, but they didn't put it 
together very well. So we inherited a mess and had to take some 
pretty severe, stern remedies. I think it has largely stemmed 
the tide in terms of the disaster that was occurring there.
    But we were draining from the MMIF $12.5 billion over a 9-
year period. That was ridiculous.
    Mr. Diaz-Balart. That is a huge percentage, too, these 
mortgages or these products.
    Secretary Carson. Exactly. So we understand that problem 
and are dealing with it very effectively.
    Mr. Diaz-Balart. Good. And I look forward to it, because 
that is an issue that we need to make sure is working for the 
folks that it is supposed to be working for, which are our 
seniors.
    Secretary Carson. Absolutely.
    Mr. Diaz-Balart. I think there is some question whether it 
is doing that.

                               DISASTERS

    Obviously, the State of Florida and other parts were hit 
harder by the hurricanes. Actually, the district that I 
represent was hit rather severely.
    So there are areas, for example, like Everglades City and 
Plantation Island and Chokoloskee and Immokalee, those are 
folks that are just anxious to work with the State to get back 
on their feet. So anything that you and your team can do to 
help them prepare for a long-term recovery plan would be very 
helpful.
    Secretary Carson. Absolutely.
    Mr. Diaz-Balart. And I look forward to continuing working 
with you on that.
    Any idea as to where the action plans--because, obviously, 
the States and the territories have to come up with an action 
plan--any idea where they are, Texas, Florida, Puerto Rico, et 
cetera?
    Secretary Carson. Well, we are in constant communication 
with them.
    One of the things that, hopefully, people have noticed is 
that we have made an effort to work with the local agencies and 
the State agencies, with FEMA, with SBA. We have made an 
attempt to get rid of a lot of the regulatory burden so that we 
could get money into people's hands much faster, and we will 
continue to do that throughout the entire process.
    Mr. Diaz-Balart. Mr. Secretary, part of that, which is kind 
of new, right, which I am very proud of, is this mitigation 
emphasis. About a minimum of $12 billion is appropriated to 
deal with mitigation activities.
    Secretary Carson. Absolutely.

                               MITIGATION

    Mr. Diaz-Balart. It is one of the things that we have 
talked about here all the time, about making sure that we don't 
keep throwing good money after bad, right? We know these storms 
are coming again.
    Secretary Carson. I was thinking about, when the gentleman 
was talking about his brother-in-law who was living on the 
second floor, and one of the things that we are looking at is 
what kind of materials can we use instead of traditional 
drywall. There are a lot of things that are aquaphobic, they 
push water away rather than soak it in, and we need to start 
looking at some of those things.
    Mr. Diaz-Balart. Well, I look forward to working with you. 
And, also, if you have any specific plans to make sure that 
States are prepared to spend those mitigation funds 
effectively, again, so that we don't have to continue to have 
these huge costs in both taxpayer money, but also, obviously, 
suffering for the folks out there.
    So I look forward to working with you. And I think we have 
to be very aggressive to make sure that those funds are well 
spent by the States.
    Secretary Carson. Absolutely.
    Mr. Diaz-Balart. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman.

                      PUBLIC HOUSING CAPITAL FUND

    Mr. Secretary, I would like to turn to public housing, and, 
in particular, the budget proposal for the Public Housing 
Capital Fund.
    Last year you proposed slashing that fund by 68 percent. 
That is the principal source of Federal funds to preserve 
affordable housing for more than 2 million citizens. You 
proposed that in the face of a backlog now approaching $50 
billion in public housing deferred maintenance.
    Now, of the 1.1 million households who depend on Federal 
public housing, due to the failures of the private housing 
market, more than half include fixed-income seniors, people 
with disabilities as heads of household.
    So we opposed those proposed cuts, as you know, last year. 
But instead of taking this lesson to heart, you are now 
proposing to totally eliminate the Public Housing Capital Fund.
    Now, I listened carefully to your testimony this morning as 
to how you propose to deal with that. It appears you are 
effectively merging the capital fund into the operating fund. 
You just said that.
    Secretary Carson. Yes.
    Mr. Price. But then you proposed cutting the operating 
fund. You are proposing cutting that by 25 percent from the 
fiscal year 2017 enacted level.
    And then you went one step further. I want to ask you if I 
have this right. But you went one step further. You want to 
eliminate a lot of public housing and move everyone into the 
voucher program versus RAD conversions.
    Now, RAD conversions are used in my district. They can work 
well. But it appears you are looking at virtually a wholesale 
conversion. But if that were the case, wouldn't we see some 
increase in funding for that?
    We need to see a corresponding increase in your request for 
new Section 8 vouchers, but that is not in the budget either.
    So what am I missing here? I am trying to follow the money. 
But it appears that the funds are cut for one program, then you 
move it into another program that is also cut, and then you 
move it into another program that is also cut. What is going 
on?
    Secretary Carson. I appreciate the question, and I 
understand your perspective.
    The fact of the matter is what seem to work extremely well 
are the RAD conversions, moving away from the whole concept of 
public housing, quite frankly, and changing it to communities 
that are holistic and well developed. And that is going to be 
one of the primary purposes of the opportunity zones. That is 
going to release an enormous amount of money to be able to do 
just what you are talking about.
    It is going to be a little bit of an adjustment to move 
from the idea of public housing, because that is what we are 
used to, but I think this is going to work much better.
    Mr. Price. Opportunity zones? Okay. Does that somehow 
compensate for everything I have said here this morning? You 
are just defaulting on that billions, tens of billions of 
dollars in public housing maintenance. Supposedly that is just 
not going to be addressed.
    And then, secondly, operating funds for public housing 
slashed. I mean, that is not even adequate for operating, much 
less absorbing capital expenses.
    And then RAD. If we are going to go to RAD, we need some 
additional Section 8 vouchers.
    How do opportunity zones compensate for any of that? And 
how does the money flow? That is what I am trying to do, follow 
the money.
    Secretary Carson. Well, if you have been following the 
money, you know that capital neglect has continued to grow. You 
say it is $50 billion now.
    Mr. Price. That is, I think, a good estimate, yes.
    Secretary Carson. When I came into this office, it was $26 
billion. And it seems like, traditionally, over the last many 
years it just continues to grow.
    Mr. Price. $26 billion is a 2010 figure.
    Secretary Carson. Yeah. So what that says to me is that 
maybe we need to be looking for a different model. Maybe we 
need to be thinking about a different way to do this, something 
that actually works. That is why we are doing it this way.
    Mr. Price. Could I ask you, Mr. Secretary, is the fact that 
public housing needs maintenance, just as any facilities need 
maintenance, why is that an indication this doesn't work? That 
is the basic question.
    And then, to the extent that we need both maintenance and 
operating funds, how can you slash both?
    Secretary Carson. But that maintenance cost continues to go 
up.
    Mr. Price. Of course. That is the way maintenance works. 
That is the way maintenance of highways works, and that is the 
way maintenance of many facilities work.
    Secretary Carson. It doesn't have to work that way, because 
when you look at a lot of the communities that have been 
changed through public-private partnerships, the private sector 
becomes very interested in that development and maintains that 
development because their income stream is associated with the 
viability of that.
    Those are the models that work, and, particularly, when we 
make them multi-income facilities. I think that is a much 
better way to proceed than the way that we have been doing it 
in the past.
    Mr. Price. Well, I know my time has expired. I would say 
that----
    Mr. Diaz-Balart. Why don't you, if Mr. Dent doesn't have 
any questions, why don't you proceed?

                             GENTRIFICATION

    Mr. Price. All right. I do want to explore this. And I 
would like to turn to the issue of gentrification, if we might, 
just briefly.
    I am just puzzled by this. I admit to being puzzled by 
this. I have seen the RAD conversions work very well. I am not 
disputing that this is a good solution for many communities, 
for many housing authorities. It has worked very well in 
Durham, North Carolina, for example.
    But that begs the question of what happens to this public 
housing stock. Is the implication just that we abandon public 
housing, that we conclude it, quote, ``hasn't worked''?
    Secretary Carson. We change it.
    Mr. Price. Well, but in the meantime it is a very, very 
messy prospect, isn't it, all this deteriorating housing stock 
just deteriorating further, no funds to address that?
    Secretary Carson. Well, you might be interested to know 
that in their reserves Public Housing has over $4 billion.
    Mr. Price. We are talking $50 billion. We are talking $50 
billion in maintenance needs. And I just reiterate, this isn't 
an indication of program failure, this is just how maintenance 
works with any facilities.
    Secretary Carson. Well, I agree with you that we need to do 
things, but we need to be looking toward a different way, a 
different solution.
    And, again, you mentioned the opportunity zones. 
Opportunity zones present a splendid opportunity to do the very 
same thing that the RAD program does for these facilities that 
you are talking about, and most of them will tend to be in the 
opportunity zones of the States.
    Mr. Price. Well, I think this subcommittee, in a bipartisan 
fashion, has demonstrated an openness to innovation here, and, 
in particular, to the RAD program.
    What I think isn't credible is simply choking off the 
funding for existing public housing, both operating and 
capital, and then not putting additional voucher money into the 
RAD program, assuming that is where we are going. That just 
isn't credible as a budget proposition.
    Secretary Carson. Well, actually, more money has been put 
into our request for the RAD program.
    Mr. Price. The money, as I understand it, the money in your 
budget for increased vouchers has to do with holding present 
Section 8 holders harmless, it does not make room for major new 
RAD conversions.
    Secretary Carson. Well, I will tell you this, because we 
may not come to a complete agreement on this: Whatever the 
final budget is, we are going to use that money very 
effectively and very efficiently.
    Mr. Price. We will certainly hope to collaborate with you 
to make sure that is true.
    If I may, Mr. Chairman, let me just raise a question. This 
can be answered briefly, but it is mainly a signaling of a 
concern. And it is not the first time you have heard that, it 
is not the first time I have mentioned it, or other members.
    Gentrification. We are grappling with this all over the 
country, as you well know. Economic development is leading to 
rising rents, rising property values, displacing long-term 
residents and businesses. We know this new growth can bring a 
lot of opportunity and improvements, but the benefits aren't 
usually equally shared. Displacement disproportionately impacts 
communities of color.
    So every community in my district is dealing with this. It 
is true across the country. There are lots of forces--market 
forces, zoning laws, other factors--that contribute to 
gentrification and displacement.
    We need to make sure HUD is part of the broader 
conversation and can play a constructive role in mitigating 
these consequences.
    I know you have thought about this. I know plenty of 
communities are dealing with it. I wonder to what extent you 
consider gentrification and related economic displacement as a 
concern of Federal policy, and what your plans are going 
forward to tailor HUD programs to more effectively address this 
and give communities resources to address it.
    Secretary Carson. Well, the key thing we want to do is make 
sure that people have choice, people can go where they want to 
go.
    One of the things that I am sure you have discovered is 
that when you are looking at urban areas and you say to people, 
``I want you to move out here,'' they don't want to move out 
there. They actually want to stay where they are. They just 
want it to be the right kind of community.
    And when we have taken some of the worst places, you look 
at East Lake in the Atlanta area, I mean, it was like the 
epicenter of crime and poverty. And through the public-private 
partnerships it is now an ideal community. Their problem is now 
everybody from the outside wants to move into there.
    That is the kind of problem that we should have. We should 
be making places so nice that everybody wants to move in there, 
rather than worried about the other way around.
    Mr. Price. Well, let me just say that we addressed this in 
the fiscal year 2017 omnibus, as you know, asking for a more 
formal report from HUD about strategies and best practices to 
address displacement of lower-income families and longtime 
residents from urban areas. This is a report that is past due.
    I think it would be very helpful if you would finalize 
those thoughts in a more formal way and give us a basis for 
future collaboration.
    Secretary Carson. Okay. Will do.
    Mr. Price. Thank you.
    Secretary Carson. Thank you.
    Mr. Diaz-Balart. Thank you, Mr. Price.
    Mr. Secretary, let me just hit you with one last issue. You 
have been exceedingly forthright.

                                 HUD IT

    We talked earlier about HUD's information technology 
system, and you mentioned your concerns. I think it is more 
than valid.
    Since 1991, the IG has reported that HUD lacks an 
integrated financial management system. And since 2003 HUD has 
been working to replace its current core financial management 
system with, frankly, minimal, minimal success.
    This subcommittee has tried countless times to help HUD 
modernize its IT system, but projects always end up costing 
much more than anticipated and the results do not measure up to 
what was promised. And you mentioned your concern about why 
that is so important.
    GAO published a study last year on the cost estimates HUD 
developed for four selected IT investments, and only one 
project more than minimally met GAO's best practices on 
comprehensive, well-documented, accurate, and credible cost 
estimates.
    So we know how desperately HUD needs to revitalize its IT 
system--you have been, obviously, keen on that--invest in new 
technology. But, we can't keep spending good money after bad 
money.
    Now, your new CIO brings a great deal of experience and 
expertise in his new role. I commend, frankly, your decision to 
conduct a top-to-bottom analysis on the IT system before 
deciding where to target funding and where to target 
investment.
    This is something you have inherited, Mr. Secretary, much 
of the IT issues. But now that you have had over a year, or 
about a year, to assess HUD's information technology system, do 
you have any plans to revitalize HUD's IT infrastructure? How 
can we ensure that the implementation will actually be 
successful and that the dollars that this committee provides 
will be well spent?
    Again, this is a frustration that we have had. It is an 
issue that I know you are very concerned about. So I would like 
to throw that at you.
    Secretary Carson. Well, first of all, our legacy systems 
require about $250 million a year just to patch and maintain. 
So in 4 years you are talking a billion dollars just thrown 
down the toilet.
    We are in the process of moving to a cloud platform right 
now. That process has already started.
    But we actually are going to need a significant upfront 
amount of money, like $500 million, to really convert ourselves 
over to the modern technology platform. And we can keep 
patching and throwing away money, or we can do what needs to be 
done and fix it for good.
    Mr. Diaz-Balart. Mr. Secretary, I want to thank you. Again, 
I know that this is something you are really focused on. It has 
been a huge, huge frustration, to say the least.
    Secretary Carson. It is a linchpin.
    Mr. Diaz-Balart. It is. And you mentioned that it, frankly, 
gets to the point where it is risky not having an IT system 
that is adequate and works.
    So let me thank you, Mr. Secretary, and the HUD staff, for 
your answers and for your participation, your willingness to 
take on tough issues that have been lingering there for HUD, in 
some cases, for decades, and including the issue of the 
furniture, which you have been very, very aggressive about 
dealing with.
    The committee staff will be in contact with your budget 
office regarding questions for the record. Mr. Secretary, I 
know that we have a number of questions that may be submitted, 
and I would imagine that a lot of members have questions, as 
well.
    If you would please ask and work with OMB to return the 
information for the record to the subcommittee within 30 days 
from Friday so we will be able to publish the transcripts of 
today's hearing and make informed decisions when crafting the 
fiscal year 2019 bill that is already well in progress.
    Mr. Price, any final comments?
    Mr. Price. No. Thank you.
    Mr. Diaz-Balart. Mr. Secretary, the country is lucky to 
have your willingness to serve, and we thank you for your 
service. We look forward to continuing to work with you.
    Secretary Carson. I appreciate the spirit of this 
committee. You have been very, very respectful and kind. Thank 
you.
    Mr. Diaz-Balart. Thank you.
    With that, the hearing is adjourned.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                         Wednesday, April 11, 2018.

        RAIL SAFETY AND INFRASTRUCTURE--STAKEHOLDER PERSPECTIVES

                               WITNESSES

STEPHEN GARDNER, EXECUTIVE VICE PRESIDENT, AMTRAK
ED HAMBERGER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION OF 
    AMERICAN RAILROADS
JOHN FRY, PRESIDENT, DREXEL UNIVERSITY
JAMES DERWINSKI, CEO/EXECUTIVE DIRECTOR, METRA COMMUTER RAILROAD
    Mr. Diaz-Balart. We call the subcommittee to order today. 
We have convened a panel of key rail stakeholders to hear your 
perspectives on rail, and safety, and infrastructure, and so we 
know that the rail network is obviously a critical component of 
our transportation system and frankly of the national economy.
    And it carries one-third of U.S. exports, and delivers 5 
million tons of freight, and transports about 85,000 passengers 
every day via intercity passenger rail. And obviously commuter 
rail, as we know that number is even higher.
    So, in today's hearing we are going to discuss the 
significance of rail. Of rail to the country, to the nation, 
its effect on our national economy, and consider obviously the 
funding needs as we develop the '19 Bill, and the funding needs 
for this critical mode of transportation.
    And obviously, particularly as we turn our attention to 
crafting our 2019 Bill, it is important to listen to the 
stakeholders. And we want to thank you once again for your 
involvement.
    Our distinguished panel today consists of some of the key 
players in this area. So, I would like to welcome you. Stephen 
Gardner, Executive Vice President of Amtrak is here, there you, 
good to see you. Ed Hamberger, President and Chief Executive 
Officer of the Association of American Railroads; how are you, 
sir? Good to see you. James Derwinski, CEO and Executive 
Director of the Metra Commuter Rail; and Mr. John Fry, the 
President of Drexel University. Thank you all for being here.
    As you know recently there was a significant bipartisan 
breakthrough in Congress which we are all happy about, that 
sets the stage for us to be able to invest in our nation's 
future, including the program under the jurisdiction--and the 
programs under the jurisdiction of this Subcommittee. And that 
is exactly what we do.
    We passed the recent Omnibus 2018 Bill, and this 
Subcommittee invested over 10 billion in new infrastructure. 
Our Appropriations Bill was, in many respects, an 
Infrastructure Bill, the Infrastructure Bill. There has been a 
lot of speculation, a lot of talk about wanting to do things in 
infrastructure, a lot of different ideas, but this is real, the 
money is on the table, and we are very proud of that.
    So, the Bill provides a total of 3.1 billion for the 
Federal Railroad Administration which is an increase of more 
than 1.2 billion over the 2017 enacted level.
    We provided increases to every FRA account, again, ranging 
from research and safety accounts, to Amtrak and to 
infrastructure and safety grant programs. All of these programs 
are vital. They are incredibly important for our nation's rail 
system.
    And the bill also provided substantial funding increases to 
the Federal Transit Administration Programs, plus $1.5 billion 
for TIGER Grants, a huge increase from the 2017 enacted level. 
And again, these are infrastructure investment, these fund 
levels will allow us to make critical investments in real 
infrastructure, address the maintenance backlog, which is 
something that we have been talking about, and have been 
concerned about for so many years, to ensure the state of good 
repair, and to increase the safety of our rail systems in 2018.
    And we expect to continue, by the way, to make critical 
investments in our nation's rail infrastructure in 2019. Again, 
with all the talk of infrastructure, this Subcommittee's work, 
in essence, is real. It is not theory, it is real money now, 
which, again, I think is important.
    So we would like to hear from our panel today, about 
frankly your views; your views on rail infrastructure and 
safety, the importance of the rail system to our communities, 
and frankly to our national economy as a whole.
    And what we in Congress can do to make sure that our nation 
continues to move forward in that direction, continues to make 
the right choices, we want to make sure that the taxpayer money 
meets our common goals. To continue to improve safety, address 
the state of good repair backlog, and to balance our economic 
competitiveness.
    And so you are here today as key partners and key leaders 
in those efforts, and so, you know, I thank you for spending 
your time with us here today.
    And with that, I would like to yield to my dear friend, and 
the Ranking Member Mr. Price. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I am pleased to be here 
this morning, and to welcome this diverse group of witnesses, 
to talk about rail safety and infrastructure. So, thanks to all 
of you for joining us.
    I also want to congratulate our Chairman, and the entire 
Subcommittee for our successful conclusion of the Fiscal 2018 
Appropriations process. It was, admittedly, six months late, 
but we got it done, and the end result was a bipartisan product 
that fulfills key priorities for members on both sides of the 
aisle.
    I was getting, and over this break, I was getting a very 
positive reaction from all around my district about this bill, 
and told them I was reminded of Churchill's dictum that, of 
course we did the right thing, we always do the right thing in 
democracies, we just try everything else first. That is sort of 
what one was reminded of the way this went.
    But as the Chairman has stressed, the result was especially 
positive for critical transportation and housing programs that 
this Subcommittee oversees. So, it is a good investment, a good 
set of investments, and this of course includes rail, the 
largest rail investment in nearly a decade.
    So this is a particularly appropriate panel to hear from 
today, whether it is freight rail moving goods, or passenger 
and commuter rail moving people, rail remains a critical mode 
of transportation, a major economic engine for our country.
    I am interested to hear about the challenges and 
opportunities facing our rail stakeholders, the investment 
priorities, positive training control implementation, the 
future of commuter and intercity passenger rail.
    The rail ecosystem is complex. The various industry and 
government entities operating within the system simply have to 
work together if it is to run smoothly.
    So, I hope this hearing will continue to facilitate these 
working relationships and help inform our Subcommittee as we 
shift our attention to the Fiscal Year 2019 Appropriations 
Bill. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Let me also, on the onset, say that I know 
you are all aware there is a number of hearings going on at the 
same time. And so, we will have people coming in and out, and 
so, ahead of time I want to thank you for your understanding 
and your patience for that.
    So, we will proceed in the standard five-minute round, when 
we get to the questions. But now, you know, obviously your full 
testimony will be submitted for the record.
    Let me just find my page here. So, Mr. Gardner, thank you 
again, and as I said, your testimony will be submitted for the 
record. And you are recognized.
    Mr. Gardner. Good morning. Thank you, Mr. Chairman. And 
thank you Ranking Member Price, and the whole Subcommittee, for 
your time today in this hearing on rail safety and 
infrastructure. My name is Stephen Gardner, I am Amtrak's 
Executive Vice President and Chief Commercial Officer.
    It is my pleasure to testify before you today. Before 
beginning, on behalf of the entire company I want to thank all 
the members of the Subcommittee and their staffs for the 
impressive and urgently needed funding provided to Amtrak and 
passenger rail this year.
    And I particularly would like to note our sincere 
appreciation in regard for Chairman Frelinghuysen, who has been 
a longtime ally and passenger of ours during his 23 years 
serving the district.
    Second, I would like to thank my colleagues here at the 
table, as well as Secretary Chao, and Administrator Batory in 
the U.S. Department of Transportation, for their partnership 
and support of Amtrak.
    The FY'18 Appropriation Bill provides 1.94 billion for 
Amtrak's Northeast Corridor and National Network, nearly $450 
million more than last year's level; this much-needed funding 
to support long-standing and critical infrastructural project 
on the NEC, and allow Amtrak to continue to improve our assets, 
and our operations across our national network.
    This strong support moves us past maintaining the status 
quo and into an era of addressing our twin challenges of old 
and unreliable assets, and growing passenger demand. We look 
forward to working the Subcommittee as we progress the 
programming of these funds, and as you consider funding levels 
for FY'19.
    Equally important the Bill included several--funding for 
several DFT programs, such as the Federal State Partnership 
Program, CRISI, which also includes funding for important PTC 
implementation, and FTA's Capital Investment Program.
    We are pleased to see Congress provide DOT with these 
critical tools to support rail, and we intend to work with our 
various partners to pursue all appropriate grand opportunities 
once the official funding notices are made available by DOT.
    The Department is our closest partner, and we have a strong 
working relationship with its leadership and staff. Together, 
we will collaborate in FY'18 and beyond, on the best ways to 
advance intercity passenger rail across the nation.
    Taking together your Subcommittee and this Congress have 
made historic investments in passenger rail that we believe 
will serve as a foundation for a new era of modernization and 
improvement.
    We are confident of the increasing relevancy of intercity 
passenger rail will make a big mark in the century ahead. 
Population growth, greater organization and increasing air and 
highway congestion and a generation shift--taken together, 
these investments are going to be a huge boost of support for 
Amtrak. We stand ready to work with our partners to advance 
critical construction projects on the NEC, and launch a new 
phase of improvements across the national network, which 
includes the state supported of the long distance routes that 
carried over 19 million of our 31 million riders last year.
    We plan to invest in purchasing new locomotives and rolling 
stock, making station improvements, strengthening safety, 
building partnerships or service expansion and improvement with 
our state, commuter partners and host railroads. Against these 
investments we will continue to drive improved operating 
performance and revenue growth as part of our efforts to reduce 
our net loss while modernizing our services.
    We have already begun analyzing our network structure and 
fleet plan for opportunities to better match capacities to 
demand, reducing efficiencies and bring innovation to our suite 
of products and services.
    The significant challenge we face in improving our products 
is our on-time performance. As you know, Amtrak is dependent on 
28 host railroads for the vast majority of our routes, and poor 
OTP on these routes has reached crisis levels in many cases, 
following 5 years of increasing delays.
    The largest cause of delays is freight train interference 
which is often caused as a result of host railroads failure to 
provide Amtrak's trains preference over freight transportation 
as required by law.
    To address this growing problem, Amtrak is requesting 
Congress to provide the Private Right of Action, so that Amtrak 
can enforce its preference in court, just as any other company 
would have the right to go to court if its rights were being 
violated.
    We look forward to working with Congress to find a solution 
to what has become an existential crisis and challenge for our 
national network services.
    Finally, we remain diligently focused on working together 
with our host and tenant railroads to implement PTC in 
accordance with the 2018 deadline. And ultimately achieve PTC 
levels of safety across our entire network.
    Guiding this process is Amtrak's New Safety Management 
System that is helping to drive a more proactive and 
collaborative safety process, and the mitigating risk and 
hazards before they turn into incidents.
    As you begin your work in FY'19, we hope that the FY'18 
enacted levels will serve as the new baseline for funding, for 
passenger rail service, the service that is so critical to this 
nation, and to your constituents.
    We are confident in Amtrak's ability to become the safest 
and most efficient passenger railroad in North America, but we 
need your continued capital investment to address our many 
challenges.
    We owe our customers and your constituents nothing less. 
Thanks so much for the opportunity to testify. And I look 
forward to your questions.
    [The information follows:]


 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    Mr. Diaz-Balart. Thank you, sir. Mr. Hamberger, over to 
you, sir.
    Mr. Hamberger. Good morning, sir. Thank you very much, 
Chairman Diaz-Balart, Ranking Member Price, Members of 
Subcommittee, thank you for being here today on such a busy 
day. And thank you for the opportunity to testify.
    And I am seated between two very important members of the 
AAR, who I think will address the passenger issues, so I am 
going to focus my comments on the freight side of the House, if 
that is all right.
    You have quite properly have been focused on Federal 
funding opportunities and challenges over the past year, 
congratulations on moving your bill. But I am here to repeat a 
declaration that you have all heard before from the freight 
rail industry. We spend private money so taxpayers don't have 
to.
    The privately-owned freight rail industry has spent an 
average of $26 billion a year of its own funds in recent years, 
more than 100 billion in the last four years alone. This 
equates to roughly $74 million in private funds ploughed back 
into our nation's freight rail networks every day of the week, 
52 weeks of the year for the past four years.
    In fact, less than 1 percent of freight rail transportation 
investments involve public funds. And these investments have 
resulted in dramatic safety improvements. A well-maintained 
railroad is a safe railroad. The result is a record low train 
accident rate that has fallen 80 percent since 1980, and 45 
percent since 2000.
    A large chunk of that private sector money has gone to 
positive train control, about $10 billion by the end of this 
year, and I am pleased to say that every class one railroad 
will meet or exceed the statutory deadlines, and at the end of 
this year, we expect to have over 80 percent of the 54,000 
miles required by the statute in revenue service with PTC.
    While railroads invest billions of dollars of their own 
each year, they continue to face unnecessary hurdles and 
regulatory and permitting processes. All too often our safety 
regulatory structure is overly prescriptive with no specific 
safety outcome in mind. On the contrary, regulation should be 
based on a demonstrated need, and should be outcome-based.
    Relatedly, infrastructure projects, including rail, 
consistently face burdensome delays in getting permits at the 
federal, state and local levels. Congress has acted in this 
area, and I was pleased to see the MOU announced by the 
administration earlier this week.
    Turning to Federal funding issues, the rail industry does 
apply the work of this Committee, and successfully completed 
the FY'18 Funding Appropriations Bill. That included robust 
funding across Federal transportation programs, including 
passenger rail, Amtrak and commuter railroads.
    Such funding helps these railroads achieve a state of good 
repair, and I was particularly pleased to see that you provided 
money in the Consolidated Rail infrastructure and Safety 
Improvement Grant Program, to help in the first instance our 
commuter rail partners move forward on implementing PTC. It is 
not a lack of will, but there has been a resource challenge for 
some of the commuter rail systems across the country.
    Another area that you have funded is the TIGER Program. We 
support funding for public-private partnerships, one of the 
premiere public-private partnerships is the CREATE Program in 
Chicago which Mr. Quigley is very much aware of, which has a 
dramatically improved service through Chicago for both freight 
and passenger, both Amtrak and Metra are members of that 
program.
    Another P3 Program, the Section 130 Federal Grade Crossing 
Program, has also demonstrated great success. In 2016 grade 
crossing collisions were down 42 percent from 2000, injuries 31 
percent, and fatalities down 38 percent, but trespassing deaths 
continue to be our biggest challenge in the safety arena and 
more must be done there.
    What is not included in an Appropriations Bill can be just 
as important as what I included. Time and time again, advocates 
for larger, heavier trucks have attempted to use the 
appropriations process to insert legislation that would allow 
for bigger and heavier trucks on our nation's roads, highways 
and bridges.
    Such riders have no place in the appropriations process, 
and should be litigated in their respective committees of 
jurisdiction. This is especially true given the consistent 
underpayment by trucks into the Highway Trust Fund, and the 
general insolvency of that fund.
    The Trust Fund is structurally deficient, with over $143 
billion in general fund transfers in the past 10 years just to 
keep the fund solvent. And I draw your comparison to the $25, 
$26 billion that the private rail industry spends each year to 
compete with the trucks.
    The policymakers should be focused on establishing a 
sustainable trust fund that is fully supported by the users of 
the nation's highway infrastructure. We would support a weight-
distance tax, much similar to one being used in the State of 
Oregon.
    The freight and rail industry applauds the hard work of 
this Committee, and successful passage of the FY'18 Funding 
Bill, and look forward to working with all of you on the 
Committee, and the Committee turns to FY'19.
    Thank you for your time. And happy to take any questions 
you may have. Thank you.
    [The information follows:]


  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
    Mr. Diaz-Balart. Thank you. And now we are going to 
recognize President Fry. By the way, you know, I saw you were 
accompanied by a mutual friend of ours, Michael, who is out 
there in the audience. If you haven't had an opportunity to 
meet his mom, make that a priority. Anyways, Mr. President, 
thanks for being here.
    Mr. Fry. Thank you, Mr. Chairman. I am John Fry, the 
President of Drexel University. We are located in University 
City in West Philadelphia. This is home to one of the largest 
concentrations of educational and medical research institutions 
in the country. And I also serve as Chairman of the Chamber of 
Commerce for Greater Philadelphia.
    So, I am speaking today as a member and representative of 
the Coalition of the Northeast Corridor, which is a group of 
business and institutional leaders that advocates for 
investments in the Northeast Corridor Rail system. Our 
Coalition includes university presidents, like myself, as well 
as national and international companies that rely on the 
Corridor to conduct commerce and ensure that their employees 
arrive reliably and safely to work each day.
    On behalf of our Coalition I would like to take a moment to 
thank the Committee, Mr. Chairman, your distinguished 
colleagues for your public service.
    In addition, I would like to recognize you for your 
contributions to support additional funding for rail safety and 
your investments in rail infrastructure improvements. Thank you 
for the opportunity to testify regarding one of the most urgent 
challenges facing the United States economy.
    So, the Northeast Corridor collectively accounts for about 
30 percent of all American jobs, and contributes approximately 
3 trillion annually to the U.S. economy. If the Northeast 
Corridor were its own country, it would have the world's fifth 
largest GDP.
    That productivity is driven by the Northeast Corridor, 
approximately 7 million jobs, roughly a third of all jobs 
across the region are located within 5 miles of a Northeast 
Corridor rail station. The system carries more than 820,000 
passengers every day.
    A non-partisan Federal Commission found that if the 
Corridor were to shut down, the American economy would lose 
more than $100 million a day. These metrics are staggering, and 
what I am about to say is therefore so alarming, that the 
Northeast Corridor is simply crumbling and in its current 
state, it is actually an economic crisis waiting to happen.
    So, we know what needs to be fixed. We know how to fix it, 
and we know how much it will cost to fix it. A non-partisan 
Federal Commission found that more than 50 billion is needed to 
repair and modernize the system, and the longer we wait, the 
more expensive that fix will be.
    So I would like to briefly mention several Northeast 
Corridor cities with projects that are currently in need of 
Federal support. The Baltimore and Potomac Tunnel, 
Philadelphia's plans for overhauling 30th Street Station, the 
Connecticut River Bridge, Boston's efforts to repair the 
Ruggles Street Station, in Rhode Island officials want to 
rebuild the old Pawtucket/Central Falls Station.
    In New York and New Jersey it is no secret there is great 
interest in advancing the Gateway Project, and right here in 
D.C. Union Station simply cannot handle modern service demands.
    When we talk first about rebuilding American 
infrastructure, these are the projects that should be among the 
first on the list. And none of these projects stands alone; 
they are part of a larger network that services the national 
economy.
    Must we continue to gamble with our own citizens' safety, 
and our own national economy, hoping with fingers crossed that 
a tragic or catastrophic event will not occur on our watch? 
This work must be done, or our nation will be irreparably 
damaged.
    Of course there have been many positive steps. Our 
Coalition applauded Congress and the President for approving 
the recent Federal spending package which includes more than 
$21 billion for infrastructure grants, and additional funding 
for Amtrak and railway projects.
    But we have so much more to do, and the solution, like so 
many large challenges, is to embrace the problem and commit to 
a comprehensive solution.
    The plan put forward by the non-partisan Northeast Corridor 
Commission which prioritizes and addresses the Northeast 
Corridor's crumbling infrastructure in order to avoid a 
catastrophe.
    So I would like to leave you with this thought. It would be 
a grave mistake to think of the dire problems facing the 
Northeast Corridor as just a regional challenge or an urban 
problem. The economic consequences of continued inaction are a 
problem for our entire nation.
    On behalf of the thousands of American workers, students 
and families represented by our Coalition, I urge you to 
continue to invest in the Northeast Corridor. I don't really 
see much of a choice here.
    And once again, I am really grateful that I have been given 
the opportunity to testify today. The Coalition for the 
Northeast Corridor looks forward to working with you, and we 
welcome any opportunity to meet with members of your Committee 
to continue to discuss the issue.
    Thanks for your time.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Diaz-Balart. Thank you, sir. And finally, Mr. 
Derwinski.
    Mr.  Derwinski. Thank you, Mr. Chairman; Ranking Member 
Price, Members of the Subcommittee. I am pleased to be here 
today to speak with you.
    My name is Jim Derwinski, and I am the CEO and Executive 
Director of Metra. A little background on Metra, it is a 
suburban commuter rail system in Chicago covering Northeast 
Illinois, a six-county area, 3,700 square miles.
    We are a Legacy system, and Legacy systems have a knack of 
picking up the pieces from the '70s when passenger service 
really went into decline. And because of that we inherited, 
basically, all of the infrastructure that we have to operate 
on.
    We provide 78 million trips a year, 288,000 trips a day, 
and we do it on some of the oldest infrastructure in the 
nation. We reduced congestion, as all commuter rails do, we 
reduce emissions footprint as anybody would do when we put that 
many people on the trains and take them off the roads.
    It is estimated without Metra there, 27 more highway lanes 
would actually have to be built. The infrastructure within 
cities does not allow for any more highway building. Everything 
has built up around them. We really are a large part of the 
economic engine that drives Chicago, and just like many other 
big agencies like ours.
    We have two major goals. Our number one goal is, operate 
safely. We operate on 11 different lines. We operate with two 
PSA carriers, our freight partners at the BNSF, and the Union 
Pacific who operate services for us with our name mark on it.
    It is a complicated system. As we move 691 trains a day, 
through those 11 lines, we are in a territory that operates 
1,400 trains a day with the freight partners Amtrak, and then 
some South Shore from Indiana.
    It is a complicated territory, 13 different railroads have 
to interact, which is why it is so important to create projects 
to actually keep moving forward.
    Being a Legacy system, and maintaining a Legacy system 
gives us some marks, some marks that may not be the best things 
to talk about, but it is what it is. Our locomotive fleet is 
the oldest in the country at 29 years old, an average age. Our 
oldest locomotors right now in service were built when 
President Ford was in office.
    Our commuter cars date back to 1953 when Eisenhower was in 
office. 65 years old today and the average age of our commuter 
car is 30 years old. And we have 1,100 pieces of equipment, 40 
percent of which actually predate the existence of Metra.
    So, we have been working toward this over the last 34 years 
to replace that fleet, but we need a lot of help with that 
infrastructure need. We have 822 bridges that we pass over 
every day, combined with Metra's bridges and the freight 
partners. Half of those bridges are over a century old. The 
oldest bridges that we are currently working on right now, 
actually date back to Grover Cleveland's second term, 1896. And 
we continually have to work with aging infrastructure. And we 
do that at 93 percent on time. Our state of good repair to 
achieve that, they estimate we need to put a little over a 
billion dollars a year into our infrastructure. Currently, 
right now, with our federal formula funding, we're getting 
about $174 million. So a little bit short.
    We thank the Congress for passing the omnibus. It gave us 
an extra $15 million. Certainly, we're going to put that to 
good use, and we're going to put it to good use very quickly.
    Metra historically receives from the State of Illinois 
capital funds. Our last capital fund through from the State 
came in 2009. So we're really now fallen behind the curve.
    When PTC came around, we had to shift a whole bunch of our 
capital money into PTC to get it up and running which made us 
defer the actual rehabs and overhauls and purchases of the 
rolling stock which puts us in the predicament that we're in 
today. And we're also thankful for the inclusion in the 
Consolidated Rail Infrastructure Safety Improvement Fund. We 
look forward to tapping into that fund in the future as safety 
on the railroads is our number one priority.
    Our challenges even go farther because we're seeing a 
decline in ridership. There's a little bit of a different 
demographic. People may not be working 5 days a week downtown. 
They have different modes of travel. And certainly, looking at 
the millennials and the greener footprint that they want. They 
want rail, but it's a different nature that we're seeing right 
now. Because of that, we've seen operating costs rising and the 
revenues going down. We literally, every year right now, have 
to raise rates. This in fact probably is pushing some of our 
riders away.
    We thank Congressman Quigley and the Illinois Delegation 
for giving us a $20.2 million grant to help us finish PTC. We 
are on track to implement PTC, full compliance with the 
Congressional mandate. The 75th Street Corridor CREATE Project, 
that is what I would say is our number one priority to work 
with the freight railroads. That particular corridor has been 
identified as a pinch point and will actually benefit multiple 
states around Illinois just to move that traffic through the 
area.
    Again, I would like to thank the Committee for the 
opportunity to speak today. I thank Congress for its continued 
support of commuter rail agencies like Metra and public 
transportation as a whole. Metra is looking forward to working 
with Congress to look at discretionary programs that would 
dedicate monies toward commuter railroads. I would be happy to 
answer any of your questions. Thank you.
    [The information follows:]
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    
    Mr. Diaz-Balart. Thank you, sir. We'll proceed in the 
standard five-minute rounds, side by side, recognizing members 
in order of seniority as they were seated at the beginning of 
the hearing. And so as we all know, be mindful of the five-
minute rule.
    I'll begin again on the issue of PTC and so we continue to 
see some accidents taking place that potentially could have 
been avoided with PTC. And so this Subcommittee tried to 
address that in the 18 omni by increasing funding for the 
Consolidated Rail Infrastructure and Safety Improvement Grant--
I love the catch name--program to $593 million. And again, also 
specifically setting aside $250 million for PTC grants.
    And so the bill also provides as some of you mentioned, $10 
million for FRA contract support to analyze PTC plans that 
railroads submit. We're hoping that--and that's the plan--that 
this funding will minimize administrative delays and to ensure 
that as many entities as possible can meet the deadline which 
is December 31st, 2018.
    Let me start with you Mr. Derwinski. Many community rails 
are having difficulty achieving full PTC installation. How 
helpful is this funding to commuter rail give that there are 
other barriers, obviously, with full deployment? And do you 
believe that this will have an impact?
    Mr. Derwinski. Yes, I believe it'll have an impact. One of 
the biggest problems with the PTC when it first came out was 
the fact that this technology wasn't developed yet. So the 
curve just to get the technology up and then of course the 
manufacturers that needed to actually ramp up production to 
such a level, some commuter rails that may not be behind the 
curve right now, I think started a little bit too late. Here at 
Metra, we are poised to have all of our equipment installed by 
this October on the weigh side, on the rolling stock, and we'll 
actually be in revenue service demonstration on one of our own 
lines. So we'll be meeting that mandate and we'll be taking a 
few years longer to be fully compliant with everything.
    But I think the monies in some cases right now are going to 
help offset, like what we had to do which is offset money in 
the past. We had to shift, basically, capital dollars that 
would have been for infrastructure and in our case, if we could 
repurpose and move monies around, that would help us 
tremendously right now.
    Mr. Diaz-Balart. Well and we'd like to eventually hear some 
other ways that we can help entities like yours and other 
transit entities meet the deadline. I think it would be 
important to hear from you all on that.
    Mr. Hamberger, we know how much you all spend in general, 
but how about in PTC? And what other barriers do folks in your 
organization have to deal in the PTC?
    Mr. Hamberger. By the end of this year, the freight 
railroads will have spent $10 billion since 2008 in developing 
the technology, testing it, and then deploying it. We will have 
100 percent of the miles installed, all of the locomotives will 
be outfitted, the spectrum will have been purchased, and the 
employees will have been trained.
    At the end of 2017, we had a little bit over 50 percent of 
the 54,000 miles in revenue service demonstration. At the end 
of this year, it'll be 80 percent. The one issue that we did 
have some concern about is FRA resources to be able to approve 
all of the safety plans. I think that you're funding that and 
the 18 Bill will go a long way toward providing the resources 
they need.
    Mr. Diaz-Balart. Mr. Gardner, any comments on PTC?
    Mr. Gardner. Thank you, Mr. Chairman. Amtrak is in a 
slightly different position because we've long been a leader in 
PTC implementation, had completed half of the northeast 
corridor nearly two decades ago and the remainder of the main 
segment here about 2015. We're making good progress to fill in 
the few remaining gaps across our infrastructure, and making 
good progress with Ed's members and with Metra and Mr. 
Derwinski on making sure that over majority, certainly the vast 
majority of our system and all the routes that are required 
that PTC is installed or that carriers have met the 
requirements for an extension.
    So we are making good progress. For Amtrak, the critical 
issue is not funding at this moment. We are fully funded to 
complete our work in this year. But there is additional costs 
that we expect to come to the company and essentially to our 
state partners for installation of PTC on various host 
railroads where the requirement for the installation is the 
presence of Amtrak trains. So the funding you've provided could 
be very important and helpful for this, and we appreciate it.
    Mr. Diaz-Balart. Thank you. Seeing that I'm running out of 
time, let me recognize a ranking member, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I'd like to address a 
matter that is of particular importance to my state, but it has 
national importance as well as we contemplate what it's going 
to take to develop these regional rail networks that can offer 
improved passenger service in a number of corridors. I must 
say, President Fry, your cataloging of the needs of the 
northeast corridor is very sobering. We know that we must 
address those needs and that they're not going to get any less 
expensive if we face delays.
    We're interested in the southeast in passenger rail service 
and we have plenty of indications that this is viable. North 
Carolina has been a national leader on this. We have invested 
in our passenger rail service. We utilized Recovery Act dollars 
to the tune of $520 million to make critical upgrades from 
Charlotte to Raleigh, and that service today is first rate 
service and it's increasingly popular. And so we know that the 
next step in that Washington to Atlanta service that we 
envision, the next step is Raleigh to Richmond. And that is on 
its way. We have the tier two environmental impact study 
finalized. In December, we signed a memorandum of understanding 
with the FRA about future development along the corridor and so 
forth. So we're on our way.
    Now we in this omnibus bill have included some additional 
appropriations that are going to be helpful I think as we 
piece-by-piece get these corridors in shape. Right now, we're 
building a multi-modal union station in downtown Raleigh with 
the help of TIGER funds. We have a nice increase in CRISSY 
which of course, one grade crossing at a time, lets us improve 
these routes.
    So I mainly am addressing Mr. Hamberger and Mr. Gardner 
here, but I wonder if you could comment on this prospect and in 
particular, what it's going to take? What role Amtrak, the host 
railroads play as we develop these corridors? What would the 
next steps look like? Other than funding, what do you 
anticipate being barriers that must be overcome?
    Mr. Hamberger. Thanks, Steve. You've been a little bit more 
involved in the day-to-day. I'll defer to you and then----
    Mr. Gardner. Sure. Thanks, Ed. Congressman Price, we're 
very supportive of expansion of service and, in general, we see 
state corridors and short-distance corridors as the future of 
intercity passenger rail across the country, and would concur 
with you that the southeast is a place that we believe is ripe 
for development of corridor expansions. We've got a number of 
great city pairs and you've mentioned several here that we 
think are excellent candidates for multi-frequency, reliable 
passenger service, and really the contribution that can be made 
here in reducing congestion and providing mobility.
    So for these types of services, I think three things really 
are required. Certainly as the Subcommittee has helped address, 
we need a strong and stable partnership of funding between the 
federal government, the states, and Amtrak. We need willing and 
strong cooperation with host railroads where their 
infrastructure is involved. Here you've got, obviously, a route 
that formerly used by CSX and available hopefully as part of 
this service.
    And last but not least, you need strong service planning 
and great multi-modal connections in the cities and communities 
that you serve so that people can make use of these services 
and get to their final destination. I think FRA has done an 
excellent job leading the service development work there and as 
a strong partner with us to look at service expansion. But we 
believe it is the path to the future, and Amtrak is anxious to 
focus our efforts and energy, including additional funding 
we've received now, and hopefully receive in the future, to 
build the kind of partnerships necessary to bring service to 
these corridors and expand on the base we've got.
    Mr. Hamberger. May I? Speaking on behalf of the host 
railroads, they take it very seriously the role that they play. 
And if you go back and take a look at the high-speed rail 
grants, I think, what?--$10 billion of Recovery Act money--
every one of those projects did get to a contractual agreement 
between Amtrak, the state, and the host railroad. I know that 
Norfolk Southern was a good partner in the Raleigh, Durham, to 
Charlotte, and I believe CSX is at the table with you now 
getting into Richmond. And the big issue for them, you 
mentioned permitting so I'll just emphasize that it is still an 
issue for everybody. But the big issue is, will there be enough 
capacity to provide the service that the passengers need, but 
also the service that their customers need to compete not only 
here but on world markets through exports off the east coast 
port, for example, in your case.
    So it really is a matter of having enough capacity which 
comes back to resources--enough capacity to serve both the 
passenger needs but also the customer base on the freight side.
    Mr. Diaz-Balart. Thank you. Mr. Joyce.
    Mr. Joyce. Thank you, very much. I wanted to discuss 
Facebook with you since that seems to be sucking up all the 
oxygen in this town.
    Mr. Hamberger. I am not a member, sir. Sorry.
    Mr. Joyce. Just kidding. I wanted to go back to something 
we talked about when you were here in November of 2017. We 
started to talk about safety.
    Mr. Hamberger. Yes, sir.
    Mr. Joyce. And obviously, you had cited some statistics 
about safety early on here and how some of these things are 
coming down. I was wondering what programs are you seeing as 
being most effective so far? Because I know this is an issue 
with my Chairman.
    Mr. Hamberger. The Section 130 Grade Crossing Program has 
been very effective, and it is important to keep that set aside 
because otherwise I'm afraid those monies would oftentimes lose 
out at the state level. And when I started this job a few years 
ago, the statistics were about a thousand fatalities a year. 
We're now down to under 300. It's still 300 too many, but it's 
been a successful program.
    As far as the spending goes, I think that would be the 
number one. Other programs that are important of course is drug 
testing. I know that's an interest of yours. The Transportation 
and Infrastructure Minority Subcommittee just issued a report 
that shows that in the rail industry, we have a very low random 
drug testing positive rating. But I think having that program 
out there is important. And the fact that it was expanded to 
the Maintenance of Way employees we support. HHS just expanded 
the panel of opioids to be tested for. They've come up with 
four. I think they're a little bit behind the marketplace and 
we would suggest, particularly given the crisis, you know, 
we're not immune to that. We would like to see that panel 
expanded by HHS.
    Mr. Joyce. I certainly appreciate it, and you grabbed the 
second part of my question was what the fine job that you had 
been doing that. So let's jump even farther forward. What do 
you see as problems going forward and where can we properly 
help you with funding to make sure that we continue to run a 
safe and effective railroad?
    Mr. Hamberger. The one issue that we have in the drug 
testing arena is that a lot of our Maintenance of Way work is 
done by contractors. Many of them are small businesses, 
minority owned businesses. And the current rule has the 
responsibility for drug testing those employees of contractors 
on the railroads, including Metra, I believe, and Amtrak, I 
guess, as well. And so we have asked for FRA to figure out a 
way--it's sort of awkward to go in and test someone else's 
employees, and to figure out a way, and we'd be glad to work 
with them. I think you provided some money to the FRA, in fact, 
to set up a demonstration project. And we've been doing since 
the 1980s, so we have a little experience. So I think, you 
know, we'd be glad to work with FRA to figure out how to get 
drug testing on those 30,000 employees.
    We also have petitioned the FRA to expand to the one last 
segment of the employee base that is not currently covered by 
drug testing, and that is the mechanical departments, the folks 
who work on the rolling stock.
    Mr. Joyce. Is there something we can do as appropriators to 
help incentivize safety and safety concerns going forward?
    Mr. Hamberger. Let me get back to you on the record for 
that. I don't have anything that springs to mind other than 
making sure that the FRA has the resources to, you know, carry 
forward on the drug testing.
    Mr. Joyce. Well, certainly, I appreciate your time here 
today and I apologize because we also have other hearings at 
other committees, so if I get up and leave, I don't want you to 
think it's because we're not deeply interested in the concerns 
regarding your industry. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, Mr. Joyce.
    Ms. Clark. Thank you, Mr. Chairman, and thank you to all 
the panelists for being here today. And I too have to get up 
and leave, so it is nothing that you said. But I want to go 
back to the northeast corridor. And thank you, President Fry, 
for pointing out 30 percent of all jobs and a key part of our 
economic development as a region and as a country.
    The northeast corridor commission, Mr. Gardner, estimates 
there is a $38 billion backlog in state of good repair and 
improvement projects. Does that estimate match Amtrak's 
understanding of the scope?
    Mr. Gardner. Yes, Congresswoman Clark. We've got a huge 
backlog of expense here related to the state of good repair of 
the infrastructure. That number's actually likely to climb this 
year, as every year we defer those investments so the costs 
push out and they grow. And the northeast corridor commission, 
we are a member. We work collaboratively together with great 
leadership from the Department of Transportation and the states 
and many of our commuter partners on the northeast corridor. So 
that is a number that is built between all of the owners of the 
system which reflect Amtrak and three states. And that is an 
accurate number and it's a huge requirement to keep this 
incredible asset in service.
    It's done so much, we've doubled the number of trains and 
ridership since Amtrak took over the majority of the asset in 
1976. The needs for greater service reliability and increased 
capacity are readily apparent, yet we rely today on assets as 
old as Canton Viaduct in Massachusetts is the 1830s. We've got 
a tunnel between Baltimore and Washington that's 1873.
    So these assets have done a fantastic job for the American 
people. They've earned their retirement. It's time to replace 
them with modern facilities that can last the next hundred 
years. And that's where we are. We're making good progress on 
that path, but funding like the funding that the Subcommittee's 
provided this year is essential for us to really begin in 
earnest this work.
    Ms. Clark. Can you give us the sense with the new funding 
that we know will not do everything that you want to do, what 
projects you will be able to start on?
    Mr. Gardner. Well we've got a whole series of projects that 
are either in the design phase or nearing construction or ready 
to construction. We've been working on programming those funds. 
We've obviously just received the appropriations completion 
here and will work with the Department of Transportation as we 
get the funds to Amtrak and program them.
    Some of the big priorities we have are pretty well know. 
One is that Baltimore Potomac Tunnel that I mentioned in 
Baltimore. There's the Susquehanna bridge which is similarly--
it's a little younger, but over a hundred years old.
    Ms. Clark. 110, though.
    Mr. Gardner. That's right. Yep, exactly.
    Ms. Clark. That's pretty good.
    Mr. Gardner. And we've got two other bridges in Maryland 
that are close behind them, Gunpowder River and Bush River 
bridge. Working up the corridor, we have of course our portal 
bridge in New Jersey, our Hudson tunnel program. We've got East 
River tunnel work that we need to do, ongoing work in Penn 
Station today, Connecticut River bridge in Connecticut. There's 
a long list of assets and we've been advancing them sort of as 
far as we can with the dollars we have. And it's really these 
next critical investments that will help bring us to 
construction.
    In order to do that, of course, we have to have strong 
partnerships from our commuter railroads and our states and 
from the federal government. And we're working to put together 
those programs and plans so we've got solid financial plans and 
can move forward through the grant process with the Department 
of Transportation.
    Ms. Clark. I wondered as you go forward with these 
projects, in your testimony, you noted that east coast storms 
have generated not only significant new repairs but also loss 
in ridership. How does weather resiliency--how does that fit 
into the projects that you're planning?
    Mr. Gardner. Congresswoman, that's an excellent question. 
We have faced four very significant events here in March that 
have cost the company a significant amount of revenue and lost 
ridership. Probably most damaging associated with these 
incidents were the impacts to our electric traction systems, so 
the overhead wires that supply both power to our trains and 
also signal power. So we've both had to incur expense to clean 
up, so to speak, and repair and lost revenue.
    Now we feel confident in our ability to reduce expense and 
continue to grow ridership here hopefully for the remainder of 
the year and make that up, but we are undertaking a very 
significant tree cutting program, currently, because what 
happens is in the high winds and we have heavy snows, the trees 
fall and they knock down our wires. And our catenary is 
vintage--at least from the southern end of the corridor, is 
vintage 1934, and is in need of significant replacement. 
Thankfully, because of funds provided by Congress, we undertook 
a complete renewal of a portion of catenary in New Jersey which 
has allowed us to develop the prototype for additional 
improvements on the whole south end. But we now need to pursue 
the funding to do that.
    Ms. Clark. Great. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. Mr. Hamberger, short 
line and longer lines on PTC. Are both of them kind of on the 
same track, no pun intended, to get to the deadline on this? 
And are there different PTC systems? And if so, how do you 
ensure interoperability?
    Mr. Hamberger. Getting right to the heart of the matter, 
sir. Let me take the second part and then I'll come back to the 
short lines if I might.
    The one remaining huge challenge is, in fact, 
interoperability because each railroad has its own IT platform. 
They have different locomotives made by different manufacturers 
and then you have to make sure that the spectrum does not get 
interfered with in, particularly, Chicago where 14 railroads 
have--you know, a Amtrak train will operate over two or three 
different pieces of track. And so that is the challenge. And so 
what the experts have done, as I understand it, is they have 
written a common code so that all of the back office servers as 
they're called, the IT systems can talk to one another, that 
they can talk on a bilateral basis to every locomotive. And 
then you have to make sure that the employees are trained on 
run-through service to be able to operate a locomotive that is 
a foreign locomotive from another railroad.
    Amtrak has a particular challenge because they have their 
own system on the northeast corridor which is different than 
the system in the rest of the country. So that is the technical 
challenge to make sure that interoperability can occur. Using 
Amtrak as an example, I know that they are currently in 
laboratory testing with several class one railroads, have 
finished that and are now in field testing to make sure that 
the communication link actually works and that the right data 
are coming through. So that is the challenge.
    With respect to the short lines, they have a different 
statutory deadline and at some point by the end of 2020, their 
locomotives to operate on a fully implemented class one 
railroad will have to be outfitted with PTC compliant equipment 
so that that is probably their next deadline.
    Mr. Young. Okay. Thank you for that. Mr. Gardner, funds can 
be scarce and it's nice to try to find funds wherever you can 
get them. I see recently that Amtrak put a notice out to 
employees that they'll no longer operate charter services or 
special trains effective immediately. Do you know what brought 
about that decision? And weren't there some funds there that 
could be very valuable to your system because funds being so 
scarce, you try to get it wherever you can get it?
    Mr. Gardner. Thank you, Congressman. So actually our policy 
is not to stop running all charter or special moves, it's to 
simply constrict the number of routes that we operate over and 
the type of services we run so that we are gaining the kind of 
additional revenue that we do need, and that is part of our 
charge. But we're doing so with a minimum amount of disruption 
and distraction away from our core business.
    A number of the existing sort of charter moves that Amtrak 
had undertaken in the past involved us running one-off routes 
off our core network onto various host railroads, and frankly, 
exposing the company to new operating challenges and safety 
risks particularly in this era of our focus on PTC. So our goal 
here is not to stop offering these types of services, but to 
focus those services on the routes that we currently operate 
over where we can use equipment that we are confident in and we 
can do so where the requirements on our end are manageable, are 
not a distraction, do not divert our core staff away from the 
job of becoming fully PTC implemented, focusing on improving on 
time performance and providing a great customer service for our 
customers.
    Mr. Young. I appreciate that. I would ask that you just 
work with those non-profits and historical societies who many 
times are full of passengers. Those groups that they love 
trains and it brings a new generation of appreciation, those 
who have appreciation for trains as well.
    Really quick, Mr. Fry, thank you for that. I would just ask 
that you work with those groups, Mr. Gardner.
    Mr. Fry, do you think there should be just one PTC system, 
kind of like air traffic control?
    Mr. Fry. Yes. I think that makes sense. I'm not an expert 
in PTC systems, but you know, you want to get everything tied 
together for sure, given what's going on out there with 
multiple rails using the same tracks.
    Mr. Young. Okay. I'd like to have a further conversation 
about that with you maybe in the office or offline here. I 
yield my time. Thank you, gentlemen.
    Mr. Fry. Mr. Chair, if I might be so bold to offer to come 
in and see Mr. Young on that as well with some of our experts 
on--I'm sure I did not do it justice on exactly how the----
    Mr. Diaz-Balart. We only have so much time, so you did 
fine. Thank you.
    Mr. Aguilar.
    Mr. Aguilar. Thank you, Mr. Chairman, Mr. Ranking Member. 
Thank you, folks, for being here.
    Mr. Gardner and Mr. Hamberger, in your written testimonies, 
you both discuss the importance of the TIGER program. The 
Chairman and the Ranking Member and Congress has gone to bat 
for these programs and protected them the past two years. This 
year, in the President's budget submittal, he once again 
proposed to zero out that funding. Can you talk a little bit 
about your thoughts on the TIGER program and where else we can 
continue to grow investing in national infrastructure.
    Mr. Hamberger. Let me jump in on this one first, Steve, if 
that's all right. On the TIGER program, it took the freight 
railroads a major leap of faith to agree that something called 
a public railroad was a good idea quite frankly because there 
was a fear that once public money came in, then public strings 
would be attached and someone else would be running our 
railroad. Early in this century, a decision was made that if we 
could talk about a public, private partnership where public 
money was spent to pay for public benefits but the private 
sector stepped up and paid for the private benefits, then that 
would be an arm's length transition. We could go forward and 
projects would be built that independently would fall beneath 
the hurdle.
    And Chicago was a great example of that where working with 
Cook County and the city and the state, Metra, Amtrak, we are 
able to through modeling and some of those technical 
discussions about where the benefits of fall are mind numbing 
but at some point you come to an agreement on what the 
allocation of the costs matching the benefits are and it has 
paid great dividends for the city of Chicago for the freight 
railroads and the passenger railroads and would not have 
happened but for public private partnerships. Now it is easy 
for the private part to come up with its money but where does 
the public come up with its share and that is where something 
like the TIGER program is invaluable.
    Mr. Gardner. Congressman, its, rail finds itself in a 
unique position because the normal highway programs in Title 23 
do not permit even though they fund a variety of other 
transportation investments, the one investment that they will 
not sort of, that is not eligible there is inner city passenger 
rail investments generally. So the TIGER program and programs 
like it that are aimed at a broad, multi modal base are a 
unique and important source of investment.
    As Ed said, we have approached the program as partners, as 
partners with host railroads, with states, with local 
communities to make improvements and it has been I know an 
important vital feature for a number of projects that otherwise 
just had a hard time finding a home in the current federal set 
of programs. So it has been very important.
    Mr. Aguilar. Appreciate it. Mr. Gardner, Amtrak announced 
that beginning in 2019 obviously you won't run on tracks that 
haven't fully implemented PTC. What steps are you taking to 
work with partners to ensure that that deadline is being met 
for later this December?
    Mr. Gardner. Well, thank you. We have approached the end of 
this year with first, absolute dedication and focus to try and 
gain implementation across the network. We have had excellent 
leadership from Administrator Batori, we have had a great 
working relationship with all the class one railroads and with 
Ed and his team and I think we are making very significant 
progress across the network.
    Having said that, we still at the end of the year will find 
several situations where PTC is not yet fully implemented and 
operational. There will be a whole host of carriers who have 
qualified for alternative schedules through the FRA and have a 
longer period of time. We hope most of that time will be 
necessary for interoperability testing, that the systems will 
be up and operational and working and providing an increased 
level of safety but the kinks are still being worked out 
between the various systems and carriers.
    So for those routes we are focused on analyzing the risks 
and hazards that might be present in this period of time before 
PTC is fully operational and undertaking any kind of additional 
actions or mitigations we need to to ensure we have a common 
level of safety across our network. We owe it to our 
passengers, to our employees to have a single level, single 
sort of standard of safety so that when you get on an Amtrak 
train you know you are in safe hands. And we are going to be 
working to do that.
    For those carriers that have not qualified for an extension 
and we hope that those are very, very few, there may be 
portions of--well, there will be portions of our routes where 
we will not operate over. We cannot operate over a line that is 
not qualified for an extension. We hope that those, again, are 
very few and we will be working with every carrier who we think 
might be in that case to try and avoid that kind of situation. 
We hope that they qualify but we are prepared to cease service 
rather than operate if it is not really within our power to do 
that.
    And lastly, there are a number of portions of the network 
that have exemptions from that have qualified for and received 
exemptions from PTC implementation. We are going back to look 
at those because ultimately our standard is we believe PTC is 
part of a modern passenger rail system and we want to see PTC 
levels of safety across our network. We are going to be looking 
to those areas, analyzing them and seeing what kind of safety 
improvements can be made and the appropriations bill did 
provide additional resources for us up to 50 million dollars on 
our national network to be able to make investments to improve 
safety in those areas. So that's a top priority for us.
    Mr. Aguilar. Thank you. Appreciate it. Thanks, Mr. 
Chairman.
    Mr. Diaz-Balart. Thank you. As I mentioned in my opening 
statement, actually no, Mr. Valadao, your timing is perfect.
    You are recognized, sir.
    Mr. Valadao. Thank you, Chairman. I apologize, I had a 
constituent group outside that I had to visit with. A few 
different questions. One, the Administrations FY 2019 budget 
for the federal FRA request 202 million for safety and 
operations, a reduction of roughly 10 percent from 221.7 
million that we appropriated in 2018. How do you view this 
efficiency of this request for FRA to address its rail safety 
responsibilities? Any one of you can take that. I mean, 
obviously it is a concern and some of us, at least on my side 
of the aisle had an issue with a little train safety ourselves 
not too long ago and that has kind of hit close to home.
    Mr. Hamberger. Given the demands at FRA to analyze and 
approve what will be a blizzard of paperwork, it seems to me 
that they are going to need every resource they can get to make 
sure that railroads can continue on schedule with FRA approval. 
So I would--I don't know where that 20, that 10 percent was 
coming from but I certainly would hope that there is enough 
there for in the PTC arena.
    Mr. Valadao. So and then FRA's 2019 budget request proposes 
to offset a portion of FRA's rail safety cost by opposing 15 
million in fees on railroads. Have, has the FRA discussed this 
with any of you? Do you guys have any thoughts on that?
    Mr. Hamberger. They have not discussed it with us. It is a 
hardy perennial that shows up in just about every budget going 
back as far as I can remember and, you know, no other surface 
transportation mode has a user fee to pay for, you know, their 
safety regulators at OSHA or Formexa, whatever and so we have 
long opposed it and would urge you to oppose it.
    Mr. Valadao. All right. And then FRA's 29 request shows 
roughly 2000 highway rail grade crossing incidents each year 
and FRA expects that number to increase due to increases in 
train and highway traffic during the next decade. What can be 
done to improve safety at the highway rail grade crossings?
    Mr. Hamberger. I think there are two things. One is as I 
mentioned earlier the section 130 grade crossing program which 
helps communities provide in some cases a minimal level of 
safety but in other cases, quad gates. And then secondly is 
support for operation lifesaver and the FRA just started I 
think with federal highways or Formixa, a program of public 
awareness.
    What we too often see in the recent, it is not so recent 
anymore but a GAO report found that over 90 percent of grade 
crossing accidents are caused by driver error. And we now have 
cameras on the head end of most of our locomotives and it is 
frightening quite frankly to see what happens as the locomotive 
is coming down toward the crossing, the gates are down and the 
guy three cars back decides well, he is going to make a run for 
it and, you know, it doesn't always work out. So but a lot of 
that is public awareness and I think support of the operation 
lifesaver. They have got an ad campaign and then a very 
aggressive local through the states, a local campaign to try 
to, you know, various statements. But it, you know see tracks, 
think train. It takes a mile for a train to stop, you know, 
that just, that people don't think about. So that I think would 
be a second area.
    Mr. Valadao. So this is just a personal question. When the 
crossing guards come down, is that enough time for a train to 
stop?
    Mr. Hamberger. No. They come down 30 seconds ahead of time 
before the locomotive will get there. At 60 miles an hour a 
freight train takes, you know, a mile to stop
    Mr. Valadao. All right. And then regarding automating train 
operations, some are advocating that Congress require that 
trains be operated by two person crews in order to promote 
safety. But for highway vehicles companies are enthusiastically 
pursuing automated vehicles which are seen as having the 
potential to greatly improve safety by removing the leading 
cause of highway crashes, human error. Would automated train 
operations improve rail safety and if so how?
    Mr. Hamberger. Well, clearly we are moving into that 
direction, spending 10 billion dollars on positive train 
control. And I believe that the implementation of positive 
train control supplies the redundancy that some think is 
necessary. I would point out that around the world most trains 
operate with one person in the cab. I know that Amtrak has 
conductors back on the passenger cars but for anything under 
four hours, they only have one person in the cab.
    And so I think having PTC in operation would address 
perhaps some public concern and I would close by just drawing 
your attention to a proposed regulation that has been withdrawn 
by this administration from the last administration. And on 
page 7 of their regulatory impact analysis, the FRA stated we 
do not have any data to show whether or not two people in the 
cab is safe or less safe than one person in the cab. And at a 
hearing at the Transportation Infrastructure Committee and now 
two years ago then NTSB chairman Mr. Hart was asked if he 
thought two people in the cab would be an improvement in safety 
and he said that he has no data to indicate that.
    Mr. Valadao. All right. Well, I appreciate the time and I 
apologize, I'm another one of the members that is going to have 
disappear so I hope that is no reflection on the importance of 
this so. Thank you.
    Mr. Diaz-Balart. Thank you, sir. Let me go, you know, so 
3.1 billion dollars in rail from the, in the OMNI which this 
committee is very proud of and one of the things that can help 
us leverage that is obviously P3's as some of you have talked. 
So let me start with a couple of the questions to President 
Fry. And so I understand that the 30th Street Station 
redevelopment in Philadelphia involves again public and private 
funding.
    If you could just tell us a little bit about that project 
and what entities are involved, what benefits this project 
could have number one. And number two, is so we also provided 
250 million dollars for federal state partnership for the state 
of good repair. And could this grant program benefit this 
project that I am asking you about or projects like that and do 
you believe that it could encourage further public private 
partnerships?
    Mr. Fry. Sure. Well, I mean, one of the themes today is 
lack of funding and another theme today is public, private 
partnerships. And so even before I could maybe just say a word 
about the 30th Street district plan, I should tell you about 
something called Schuylkill Yards which is being developed on 
14 acres of university property immediately to the west of 30th 
Street Station. Literally touching the edge of the station.
    That is a private development project, all private monies. 
3.5 billion dollars to be invested over the next 20 years to 
develop 7 million square feet of commercial, academic, 
research, retail, residential and public space. It is under way 
and we are about a year into it. The first four projects are 
either coming out of the ground or tenanted or about to be 
built about 1.5 of that 7 million square feet. That's 
completely private funds.
    And the reason I mention that is that as we speak, this is 
underway in the 30th Street district plan which we completed in 
partnership with Amtrak and Septa which is our regional rail 
and Penn Dot which is the state agency, has developed a plan 
that basically can take that investment and leverage it many 
times over. And so we have a project that is actually underway 
where someone is going to spend 3.5 billion dollars on making 
Amtrak's holdings a lot more valuable than they are right now 
and so it makes sense for us to proceed into the implementation 
of this 30th Street district plan. I know Steve and his 
colleagues have documented the various phases that would be 
required to get this moving.
    And then to your point about the 250 million dollars, I 
mean, just taking a portion of that and beginning the 
implementation of a 30th Street district plan would I think 
stimulate public, I am sorry, private interstate in this in 
significant ways.
    So the answer is that there is so much value that we can 
unlock that I think can support some of the points that we are 
talking about here in terms of investing in safety and giving 
everyone what they need to operate, you know, these railroads 
at the highest level but in addition the multiplier effect from 
a local employment standpoint is enormous and we are one of the 
20 cities where Amazon is taking a look at us and I can tell 
you that the development that I just talked about is the 
leading one in Philadelphia. So this is it they found to work.
    Mr. Diaz-Balart. Great. Sticking with the P3's, let me go 
to the Chicago region now, the Create Program. And that is what 
70 projects now are underway that will improve the, you know, 
the regions rail and roadway infrastructure, et cetera. And I 
guess its billions of dollars in benefits so the question to 
both Mr. Hamberger and Mr. Derwinski is both of you have 
firsthand experience with passenger and freight. The bottleneck 
issue, right, of Chicago which is I believe I have heard is one 
of the worst in the country. It is one of the busiest in the 
country so talk to me a little bit about the benefits of the 
Create Program to deal with not only the bottleneck issue but 
just in general. And I don't know which one of you want to----
    Mr. Hamberger. Can I start? I started in 1999 actually and 
at that point it took 43 hours for a rail car to make its way 
across Chicago. We are now down to 25 hours. Which is by my 
math a 42 percent decline. And which is a substantial progress. 
A lot of that is because of the investments through Create but 
there are other things that have happened.
    The industry has created something called CIROC. I know it 
stand for something, Chicago Integrated Rail operations Center. 
Where Amtrak, Metra and the freight railroads operating are 
collocated, have all of the network in front of them and make 
decisions on operations. In addition although the number of 
cars and the number of trains has increased, as Chicago has 
occasionally become clogged, the railroads have decided that 
there are other ways to interchange and there used to be that 
one in every three freight rail cars either originated, 
terminated or transmitted through Chicago. That is now one in 
four as the railroads have looked at other ways to hand off and 
so the service has gotten better, unit trains and intermodal 
trains are getting through in about half the time they did in 
1999. But I think it has had good impact for Metra as well.
    Mr. Derwinski. Yes, absolutely. Any time we can do a major 
project where we are actually going to separate the railroads, 
we are in a great spot. Freight train delays typically are 
highest in our top three of reasons for delay. Not because they 
are not trying to work. Like he said CIROC works. They actually 
look almost 24 to 48 hours out as trains approach but then, you 
know, things happen. Mechanically, structurally, weather and we 
try to work through it. The only true answer is these Create 
projects that will actually physically start separating and of 
course the roadways making them much safer as well.
    Our big concern of course in all of these as Mr. Hamberger 
indicated earlier, is our side of the funding and where does 
that come from? Some of these projects now are much beyond the 
scope of the work that we can handle with the limited funding 
that we get in.
    Mr. Hamberger. We would love to how this subcommittee out 
there and it is just a site to behold to see an Amtrak train or 
a Metra train going on a fly over at speed, 70 miles an hour 
while there is a freight train rumbling along underneath. It 
is, you know, it is really the way to speed things through.
    Mr. Diaz-Balart. Thank you. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I want to pick up on 
Mr. Aguilar's line of questioning about PTC implementation and 
the time table we are facing and I address this mainly to 
Amtrak and the AAR.
    Of course this is a critical priority, it is a major 
challenge all of you have said that as we approach the 
implantation deadline. Dozens of railroads, passenger, and 
freight must work collaboratively with each other, with the 
federal government, with various equipment manufactures to 
install, test and deploy PTC technologies and ensure that they 
are interoperable. So we are on task.
    I do understand though that the process can become more 
complicated with state supported routes and that is where I 
want to ask for some further clarification. The North Carolina 
Department of Transportation has its own locomotives but it 
partners with Amtrak to operate both the Carolinian and the 
Piedmont lines. NC Dot is seeking access to Amtrak's back 
office servers for their PTC software. They are also working 
with freight railroads to ensure the right PTC equipment is 
installed and operational on the tracks that they share.
    So how are Amtrak and the freight railroads approaching PTC 
implementation with respect to state supported routes 
specifically? And are you confident that passenger service will 
be maintained on these routes after the December 31 deadline? 
And if not, what steps need to happen between now and the end 
of the year to ensure service won't be interrupted?
    Mr. Gardner. Thank you, ranking member. There are a subset 
of the state partners who have their own rolling stock. In this 
case, in particular locomotives and cab cars that need to 
receive hardware and software to make them compatible with the 
PTC system.
    So North Carolina is an example of one of those states and 
at kind of a basic level, the equipment owners need to install 
the proper equipment and then that equipment needs to be tested 
and certified in certain instances and then we will use the 
system that exists for the host railroad on the wayside and 
with the back officer server.
    So are actively working with the states that are in this 
situation but have their own equipment, primarily some states 
in the Midwest and on the West Coast in addition to North 
Carolina. And I think we feel confident about the installation 
of that equipment and it is over time throughout the year the 
federation and of our respective servers and then the 
integration of that equipment into the fleet. Additionally, 
Amtrak has its down locomotive fleet that has its installed 
equipment so in the rare instance where we might have a carrier 
who has a locomotive that has not, the installation has not 
progressed, we of course could use our locomotive in those 
services to try and maintain the service. So we feel that there 
is a good path with the various state supported services 
related to equipment.
    Now there are some routes that I mentioned before that are 
on the state supported network where the infrastructure may be 
the issue with the host railroads but on the equipment side we 
primarily are focused on the locomotives and making good 
progress with the various states.
    Mr. Price. Good progress equals sufficient progress in 
terms of the timeline we are facing?
    Mr. Gardner. Yes. We believe so and again we have, since we 
have our own locomotive fleet with installed hardware that is 
ready to go.
    Mr. Price. Yes, but that is a, but that is a distinct to 
second best option substituting your own.
    Mr. Gardner. Absolutely. That is definitely Plan B so the 
Plan A would be we are not doing the installation on the 
equipment so it is up to the manufacturers and the owners of 
the equipment to complete the hardware installation on the 
locomotives. When that is done, we are confident we will be 
able to integrate the equipment into our network.
    Mr. Price. Okay. Mr. Hamberger?
    Mr. Hamberger. I think Steve addressed sort of the generic 
way to approach it. By definition each class one railroad will 
have 100 percent of its equipment installed by the end of this 
year or be in violation of the statue and they will in fact 
have it. So all of the wayside detectors and the communications 
equipment will be installed. I don't know enough about the 
specifics of the North Carolina state supported routes to be 
able to address that per say. I do know looking at Mr. Aguilar 
that in southern California, Metra link is already completed 
interoperability testing with BNSF and is in field testing with 
UP but I will get for the record, sir, the answer from NS and 
CSX where they are from their standpoint for North Carolina.
    Mr. Price. Thank you very much.
    Mr. Diaz-Balart. Mr. Aguilar.
    Mr. Aguilar. One follow up on that, Mr. Gardner. We fully 
support the implementation of PTC and maybe this is a deviation 
to Mr. Price's state supported question. I know that there are 
segments that do not have to be PTC compliant and where your 
line, where you're proposed, you have proposed to end service 
along the southwest chief route because a portion of that 
segment through New Mexico is not compliant and is not proposed 
to be compliant because of some mainline track exclusions I 
believe.
    So I guess my concern is, you know, some of those stops 
include Las Vegas, Flagstaff and the community that I represent 
in San Bernardino, so this is running through Raton Pass which 
is not required to comply with PTC which is I think where I am 
going with this. How will Amtrak work with stakeholders to 
ensure that services continued along routes like this where a 
portion is not required to comply with PTC?
    Mr. Gardner. Thank you. Well, so on the southwest chief 
route we have two situations. One, we have the rail runner 
segment which is New Mexico DOT which runs from Albuquerque to 
Lamy and their commuter railroad they have the infrastructure 
and that responsibility of either achieving the alternative 
schedule or complete compliance. So we are focused on their 
progress there.
    And then the section that goes east from there across Raton 
is a main track exception for the service. So we are as I 
mentioned before, for these routes that are excluded, we are 
doing full risk analysis to understand what we believe the 
remaining risk is in these instances. We have got a team of 
folks led by our new chief safety officer looking at all of 
these areas and trying to come up with what we think is the 
safest course here for these services.
    So for sure if as I mentioned in those instance where a 
carrier has not qualified for an exception or an extension, 
excuse me, we will not be able to operate. In these areas where 
exemptions exist, we are undertaking this work now to see what 
we believe the safest course is and we will be working with the 
respective carriers there. If we have an instance where a 
portion of the route is not--is--does not have PTC and we 
believe that presents issues for us, we will be making that 
clear. But looking for alternatives certainly we will be able 
to serve portions of the route where we have PTC in service but 
there may be in parts of our network where we believe PTC is 
required. And particularly that route has high operating speeds 
and we need to make sure that we have a single level of safety 
across our network.
    Mr. Aguilar. Who give the mainline track exclusion because 
that is based off of a low hazardous and low passenger so----
    Mr. Gardner. The Federal Railroad Administration.
    Mr. Aguilar. What is your timeline for this deeper dive 
from your safety officer and team?
    Mr. Gardner. We are, we have started already. We have got a 
whole series of them across the country and we intend to have 
decisions by this summer around each of these areas.
    Mr. Aguilar. And in the----
    Mr. Gardner. And again we have also received some 
additional funding to be able to try and put in place 
mitigations whether they be technological, operational, or 
otherwise for those areas.
    Mr. Aguilar. In the meantime do you let the locals know 
that this line is being threatened or how does that roll out an 
announcement and public facing side gone?
    Mr. Gardner. Yes. Well, so we have as our CEO recently 
testified, we have made it clear generally that we are looking 
at all these exemptions and we are in contact with all the host 
railroads that have these routes and we will stay in close 
contact here as we undertake the work and make sure that we 
keep both Congress and the communities and partners we have 
informed as we go through the work.
    Mr. Aguilar. Thank you. Appreciate it. Thanks, Mr. 
Chairman.
    Mr. Diaz-Balart. We have spoken today a lot about the 
importance of the rail investments in the northeast corridor 
including New York and New Jersey. I know that Amtrak has been 
working on that for a long time and has done some work even 
determining the economic benefit of its projects in the region.
    One significant project and it was already kind of brought 
up is the Hudson Tunnel. It is an old tunnel. It carries 
820,000 passengers a day so needless to say it is a vital 
tunnel not only to New York, New Jersey and the northeast 
corridor but to the entire economy of the United States.
    So, Mr. Gardner, the President issued an executive order to 
reduce the time it takes for the environmental reviews with the 
goal of completing environmental impact statements within 24 
months and I believe that the review of the Hudson Tunnel is 
nearing the 24 month timeline. Any idea what the situation is 
regarding the Hudson Tunnels EIS?
    Mr. Gardner. Thank you, Mr. Chairman. Yes. We have, we had 
a somewhat audacious goal when we started the process for the 
environmental work on the Hudson Tunnel project and that was to 
take what we thought would be a four year typical EIS process 
and compress that down to two. And I can say that we have had 
tremendous support from Secretary Chao, from all of the DOT up 
to this point to achieve really streamlining sort of an 
exemplary picture of what a compressed and yet fully effective 
EIS process can be.
    So we are very close to the end. We, the project team has 
completed the New Jersey transit led the environmental work in 
support of the, of all the sponsors and funded by Amtrak and we 
are hopeful the department will complete its work soon and I 
think it stands as a model of how projects and environmental 
work can move forward and the huge benefits it has to advancing 
both the outcomes, the positive outcomes of the programs and 
also reducing costs.
    Mr. Diaz-Balart. And how much in essence, there has got to 
be a cost if there is delays as well so any idea what that, 
what are we dealing with there?
    Mr. Gardner. Absolutely. We are scheduled to start 
construction in 2019, in the middle of 2019, on the project. 
The two projects of phase one of this program the Hudson Tunnel 
Program--Hudson Tunnel Project and Portal Bridge are 
collectively almost $15 billion over the decade or more that 
they last. So, any delay naturally leads to inflationary cost 
that will increase prices over time. If--we are on schedule now 
to start the program in 2019, we hope to keep that schedule, 
and we feel confident working with all our partners we can. But 
if we delay construction starting in 2019, it could cost us up 
to a million dollars a day in increased cost for this big 
project.
    Mr. Diaz-Balart. Let me for the file, you know, from your, 
in essence, private sector perspective, talk to me about the 
importance of the real infrastructure assets in the Northeast 
Corridors. In other words, what are the implications of the--if 
we had a failure in any of those assets, the implications not 
only for the economy regionally or locally, but potentially 
nationally?
    Mr. Fry. Yeah. No, I think a lot of business would start to 
shut down in Philadelphia, you know, when you think of our 
largest company, which is Comcast, you know, the need for them 
to be here in Washington, the need for them to be up in New 
York because of NBC Universal. You take that and you multiply 
that by many companies within the city. I know our university, 
which is a research university, has a huge number of people 
going up between, you know, Philadelphia and New York, down to 
Washington. I mean, just that the--probably the greatest asset 
that we have in Philadelphia is our location of the 
transportation and infrastructure. That is sort of what we sell 
as our competitive advantage. And so, beyond just the logistics 
of not being able to do our work day today, it also undermines 
sort of our big pitch, that this is sort of a growing, vibrant 
city with probably the best set of transportation conditions 
around. And so, you know, that is how we sort of brand 
ourselves. And how we have done, you know, how we have 
approached this whole Amazon opportunity as an example of how 
the transportation and infrastructure is to our competitive 
advantage as a city and as a region.
    Mr. Diaz-Balart. Let me now shift to Mr. Gardner and Mr. 
Derwinski and the--again, going back to the FY-18 Bill provides 
a significant increase in three, frankly, very important grant 
programs. So, Federal State Partnership, the State of Good 
Repair grants, the Consolidated Rail Infrastructure, and Safety 
Investment grants, and the TIGER grants. And so, to both of 
you, how will these grant programs benefit your organization 
and what types of projects potentially will benefit 
specifically anything that you can think of?
    Mr. Derwinski. Well, of course, there is a competitive 
process. So, the implications that we have clearly will be 
toward the safety aspects, where we can look at the Great 
Crossings, the bridge renewals and in some cases some core 
capacity type of infrastructure things where we could work with 
Amtrak. We have a couple corridors in there where the literally 
the rail infrastructure itself, if re-developed, if expanded, 
will allow not just us, but the region to economically grow. We 
feel that, you know, the competitive process is good and it is 
our job to go ahead and put forth our best effort in that 
process.
    Mr. Diaz-Balart. Comments, Mr. Gardner?
    Mr. Gardner. Yeah, I would echo those. I think our focus is 
on addressing both areas of safety where we can that--where 
additional investments could be made and we are looking at a 
series of possibilities. For the grant programs that are 
discretionary, we really see it as opportunities to strengthen 
our partnerships with both the state and commuter railroads and 
the host railroads together. So, to find those areas where we 
can address chokepoints, capacity limitations, elements that 
are impeding either the ability to grow service or to provide 
reliable service.
    So, we think there is huge opportunities there and we are 
very interested, of course, in also expanding service to new 
corridors or increasing frequencies. Part of that essentially, 
a very big portion is, is equipment and so, looking at 
opportunities where there might be a limited chance to start 
down the path of equipment for new service. So, we think 
together, the--this suite of grant programs and the additional 
funding of Amtrak is provided directly, particularly for our 
Northeast Corridor investments, really starts us down a path of 
being able to improve the network in a major way.
    Mr. Diaz-Balart. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I will have additional 
questions to submit for the record. But before we adjourn, I do 
want to turn to President Fry because he touched on the 
multiple dimensions of this redevelopment effort that 
Philadelphia is involved in where transportation and multimodal 
transportation becomes then the catalyst for all kinds of 
economic development. There is widespread discussion across 
this country of just this phenomenon and this impact of transit 
and transport--and intercity rail. And it has, you might say, 
the two halves of this Subcommittee together as we focus not 
just on transportation, but also on housing, community 
development, the kind of patterns of development that 
transportation decisions inspire and make possible.
    So, I am just asking you to go a step further and talk 
about that aspect of the redevelopment effort that you are in 
involved in, the importance of intercity passenger rail, 
multimodal transportation connections to the community 
development that you are involved in.
    Mr. Fry. You know, it is a vivid opportunity for us. If you 
take a look at this 30th Street District Plan that we worked on 
together with him prior to some of the other constituencies, 
you know, the opportunity there is a 16 to 18 million square 
foot development over a long period of time right in the middle 
of the city. What is important about this is that immediately 
north of that development is a Federal Promise Zone.
    It was one of the 5 original Federal Promise Zones that 
were designated by President Obama back in 2013, which means 
that is a very, very high poverty district, low educational 
attainment, very high on employment, and it is an isolated 
community, isolated in part because of the railyards. The 
railyards have really sort of, you know, formed a barrier 
between the prosperous University City and Center City 
precincts and then the rest of the northern part of West 
Philadelphia, you know, which is really in such a state of 
difficulty.
    By doing this kind of development, we can essentially fuse 
these neighborhoods together, first, I think, physically. But 
then also when we think about the level of development that is 
going on, construction jobs, permanent jobs of all types, and 
the opportunities for employment for people have been un or 
underemployed, you know, in these neighborhoods for years and 
years, it is a pretty important way of taking all the assets of 
an innovation district, tying it in an inclusive growth way to 
a Federal Promise Zone, and seeing prosperity and opportunity 
and hope for a lot of people who do not have it right now. And 
So, I am absolutely convinced that the work that we are doing 
is, you know, the real estate developmental is--almost is the 
least of it. The societal impact, I think, is incredible.
    And we do not have time today, but we are working on a 
significant set of investments in public education, affordable 
housing, job training through the West Philadelphia Skills 
Initiative to enable all of the above to occur. And So, the 
catalytic activity, though, is what is happening around that 
station right now.
    Mr. Diaz-Balart. You said what?
    Mr. Price. Thank you.
    Mr. Diaz-Balart. I am sorry, what?
    Mr. Price. Thank you, Mr. Chairman. Oh.
    Mr. Gardner. Just say, if I could, I just would like to 
recognize John. He--Drexel and John in particular have been a 
huge catalyst, I mean, because--is the best word, really, to 
drive this kind of smart development around stations. We at 
Amtrak have been fortunate to partner with him and his 
leadership here has been tremendous. Our goal is to take these 
assets that we have, 30th Street Station, which is a 
monumental, extraordinary station, one of our jewels, and to 
leverage that asset, to create additional investment that 
really serves two purposes: one that allows us to address some 
of the longstanding State of Good Repair expenses that exist at 
stations like these.
    So, in this case, we are just nearly finishing a $70 
million facade job; that is just to keep the facade of the 
building in place. These are all, of course, historic 
landmarks. We have to keep them in great shape; it is our 
stewardship role. But it is also to centralize development, 
jobs, and housing near our nodes of transport because that 
creates for us the long-term ridership base at growth. Really, 
we are at our best when we connect central city business--
central business districts in cities to other central business 
districts.
    And John's leadership and vision there has been tremendous 
at this station and we are already similarly pursuing programs 
in Chicago and Baltimore, which take the assets that we have 
and use them to create greater value for communities and to 
help reduce our need for federal investment from you all So, 
that we can take care of some of our own infrastructure issues 
in partnership with the private sector.
    Mr. Price. Thank you very much. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Chairman, I know--thanks 
for being here. I know you have got--again, you Chair another 
Subcommittee and you have been running around, So, thanks 
again.
    Mr. Dent. Multiple hearings this morning. Thank you all for 
being here and especially Dr. Fry, thank you for being here 
from Drexel. My daughter lives right next door to 30th Street 
Station. I know it very well and I am glad that you are here 
representing the City of Champions. That said, yeah, we won, 
you know, we won the Super Bowl, just want to remind you, and 
the NCAA Championship----
    Mr. Diaz-Balart. The good thing is that you do not rub it 
in much.
    Mr. Dent. No, I just--we, you know, we are very modest and 
humble about these things. I would like to just quickly just 
say to Mr. Gardner, if I could, I would like to talk about what 
this Committee did last year and the significant--we recognize 
there are significant needs within the Northeast Corridor 
provided substantial funding to address its backlog on the FY18 
on the bus. The $250 million was provided for the Federal State 
Partnership Investment for State of Good Repair Program. This 
was an increase of about $225 million over the '17 level and as 
you also know, this program provides assistance for the 
rehabilitation of transit infrastructure and with this large 
increase to the State of Good Repair Program and the potential 
influx to Amtrak, how are you making sure that this funding 
will be used effectively and in a timely manner? And I suppose 
that I open this question to others on the Panel as well if 
they have any insight. So that, Mr. Gardner.
    Mr. Gardner. Thank you, Congressman. The Federal State 
Partnership Investment is a water ship movement. It is a huge 
increase and well-timed because we have a number of significant 
projects that are ready to either take that next step in final 
design or move to construction. One of the critical things for 
us is--and really, it is required in the program is that we 
have a strong partnership with commuter railroads who share in 
the use of these assets. So, core to getting effective programs 
underway and I think making our way through the grant program 
and through the selection process is strong partnerships with 
our commuter railroads and good combination of local funding 
and Amtrak support to go after these investments. When we 
have--we are looking forward to the process that is soon to be 
underway to go after those additional funds and we will be 
working with all of our commuter partners to find the right 
match; create the priorities and then pursue the investments.
    Mr. Dent. Anything you might like to add to Dr. Fry, I am 
sorry, I came in late for your presentation about all the good 
work that you are doing down at Drexel in West Philadelphia 
with respect to 30th Street which is--I am in your neighborhood 
all the time and I just see a lot of good things happening. 
Anything you wanted to add from what you said earlier?
    Mr. Gardner. Well, I think that catalyzed a lot of that 
frankly, is the great relationship and partnership we formed 
with Amtrak. I mean, from the very beginning, we have been with 
Amtrak thinking about our combined holdings are economic 
development, impact and possibilities. The partnership we 
formed to create the 30th Street District Plan. Probably had 
well over 20, you know, constituencies anchored by Amtrak and 
Drexel, but also joined by Septa and PennDOT and the City of 
Philadelphia and the University of Pennsylvania goes on and on. 
And what has happened is there has been a big network effect to 
that, that has tied together a lot of the sort smart 
development around the station. We have talked about 
School.I.arge which I mentioned to your colleagues previously, 
but that is three and a half billion dollars of private capital 
that is flowing into that area. There is no sort of 
underwriting of that by state or local or federal government, 
so it shows you the power of this kind of development to, you 
know, catalyze the kind of things we are talking about in the 
30th Street District Plan. Getting that station squared away, 
which is what Steven's colleagues are doing and having so many 
other possibilities that would pivot off of that in a public/
private partnership is only going to take the success that you 
see today and just push it so much further. So, I think the 
opportunities are bright, but it is all routed in a public/
private partnerships. And a sense that, look at all your 
assets, including your real estate assets when you are 
undertaking those kinds of improvements to rail.
    Mr. Dent. Well, yeah, just--I just want to commend 
everybody because with not only 30th Street, but with Cira 
Centre, Evo and all that investment and what is going on at the 
University Science Center, it is really exciting so, just 
wanted to commend you for that. I would like to shift to Mr. 
Hamberger quickly, if I could on the issue of trade and with 
this Administration's efforts to renegotiate NAFTA, its 
recently announced tariffs on steel, aluminum and potential 
trade action with regard to China, I was hoping that you could 
share with me how you believe these actions could impact your 
industry's investment and infrastructure more generally. As 
members of the Appropriations Committee, we have an interest in 
showing our investments at the maximum positive impact possible 
and I would like to hear your perspective about how factors 
outside of our Committee's direct control might affect those 
efforts.
    Mr. Hamberger. Thank you very much for that, Chairman Dent 
and as a native Pennsylvanian and former staff member for the 
Pennsylvania member, may I just say the delegation of this 
Committee and Congresswoman sitting next to you.
    Mr. Dent. Thank you for that.
    Mr. Hamberger. And I did hear you mention the 76ers and the 
Phillies are at 5 and 5--so I mean, we got a lot of 
opportunity.
    Mr. Dent. And the Flyers are about to win the Stanley Cup.
    Mr. Hamberger. There you go. All right, so--getting back to 
the question at hand. We have always known sort of intuitively 
the trade was important to the freight/rail industry and you 
missed my opening where I emphasized and I know you know this, 
but for the record, 99 plus percent of the investment in the 
freight/rail industry comes from private sector. We have to do 
it the old fashion way, we earn it. And so we did a study in 
the Spring of '17 and found that fully 42 percent of our car 
loadings; 35 percent of our revenue come directly from export 
and import traffic. That does not count indirect. For example, 
in Peoria, Illinois, there is a caterpillar plant that exports 
just about a hundred percent of its finished product, mining 
equipment around the world. We counted that as part of trade 
because we carry that to the port. We did not count the steel 
coming in, the components that went into manufacture that 
finished product. So, 42 percent and 35 percent understates the 
importance of trade to the freight/rail industry. Fifty 
thousand jobs are directly related to that 42 percent of our 
car loadings. About a third of that is north, south NAFTA and 
so, we have been very aggressive meeting with the 
Administration and taking part with the Chamber and NAHEM and 
others in trying to get this across, you know, to the 
administrators--to the Administration what impact this would 
have. The steel tariff, of course, had--you know, we put in 
miles and miles and miles of track and some of that does come 
from Japan where they are the only manufacturer of something 
called head-hardened steel which is needed to be able to move 
the 286,000 pound of car loads of grain, coal and other 
commodities. So, that would have a direct impact on us. 
Obviously, it would have some potential positive impact on 
domestic, so I do not know what it would do to the mix of our 
traffic, but it would certainly impact the cost of our doing 
business if that tariff went into effect. And then, if the 
trade war happened, obviously, there would be, you know, just 
disastrous repercussions.
    Mr. Dent. Yeah, just my time is over, so I am just going to 
conclude this by saying that a lot of the rail traffic and 
freight/rail traffic in our own community----
    Mr. Hamberger. Of course.
    Mr. Dent [continuing]. Comes out of your Port Elizabeth, 
Newark and that offloaded rail in the city----
    Mr. Hamberger. Right.
    Mr. Dent [continuing]. Of Bethlehem and elsewhere and we 
have a lot of----
    Mr. Hamberger. Yeah, it--we try and get the point across 
that it would and I think the market is making that point as 
well that if this were to come to fruition, it would be a 
disaster.
    Mr. Dent. Thank you. I yield back.
    Mr. Diaz-Balart. I want to thank the gentleman in 
particular for his sports humbleness.
    Mr. Dent. I am an Eagles fan. I cannot help myself.
    Mr. Diaz-Balart. Let me thank the panel. I think this has 
been frankly, very, very interesting.
    Mr. Hamberger. Mr. Chairman, may I be so bold.
    Mr. Diaz-Balart. Please do.
    Mr. Hamberger. I did not make a connection between two 
questions I had on autonomous trains and on grade crossing 
safety in an autonomous vehicles. We have suggested to the 
Department of transportation and I would suggest that you might 
want to support as the guidance regulation, whatever the 
Department ends up promulgating with respect to autonomous 
vehicles, something that we think they should take a close look 
at is having that technology take into account grade crossings. 
Google has already, under the previous Administration, put 
grade crossing into Google Maps, so as you are driving along, 
you can be alerted that there is a grade crossing up ahead. As 
I mentioned the GAL has found that 90 percent of grade crossing 
accidents are driver error. And so, if the technology were 
programmed that it would not allow the driver to go around that 
gate that is down and that it would stop at the grade crossing, 
I think there might--I am sure there is probably an override 
system in there somewhere, but it seems to me that, that would 
certainly in the first instance, help mitigate and lower the 
number of grade crossing accidents. So, I just wanted to get 
that on the record and I apologize for extending----
    Mr. Diaz-Balart. No, I appreciate that. Thanks.
    And again, thank you to every one of you. I think this has 
been a very helpful. The Committee staff will be in contact 
with you all regarding any questions for the record; any 
answers you might want to add. We would ask that you return 
that information for the record to the Committee within 30 
days. That would then allow us to be able to publish it--
publish the transcripts of today's hearings. Mr. Price, any 
further comments?
    Mr. Price. No, thank you.
    Mr. Diaz-Balart. With that then, the hearing is adjourned. 
Thank you very much.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                          Thursday, April 12, 2018.

                      DEPARTMENT OF TRANSPORTATION

                                WITNESS

HON. ELAINE CHAO, SECRETARY, U.S. DEPARTMENT OF TRANSPORTATION
    Mr. Diaz-Balart. Let's call the subcommittee to order.
    Today, we welcome Secretary Elaine Chao to testify on the 
fiscal year 2019 budget request for the Department of 
Transportation.
    The fiscal year 2019 budget request for the Department of 
Transportation is $15.9 billion in discretionary budget 
authority and $75.9 billion in total resources. That includes 
obligation limitations for surface transportation and aviation 
programs.
    I would note that this budget request was developed prior 
to the Bipartisan Budget Act that lifted the sequester for 2 
years and raised the discretionary budget caps. And I think we 
should all keep that in mind.
    The bipartisan deal set the stage for us to take immediate 
action last month to invest in our Nation's future and to 
rebuild our roads, our railways, and our airports.
    And the 2018 THUD bill invests nearly $11 billion in new 
transportation and housing infrastructure. And, again, I want 
to thank the chairman for a very generous allocation.
    So what we just did in the omnibus, in the omni, showed 
that this committee does real infrastructure. That is real 
money. And so I would note that we made these investments 
without adding to the bureaucracy. We literally just wanted to 
make sure that we did not add bureaucrats, bureaucracy, and we 
did none of that.
    I would also note that if you take what we did to invest in 
infrastructure, just us here on this subcommittee alone, and 
extend it over 10 years, you get over $100 billion in 
infrastructure investment in transportation and housing alone.
    And so, again, this is over half of the $200 proposal that 
the administration is putting together, and that is something 
that Congress has been talking about putting together.
    Well, this subcommittee did that. And again, thank you, Mr. 
Chairman, for allowing us that, I think, very generous 
allocation, which allowed us to do a big downpayment on the 
infrastructure commitment that we have all been talking about.
    So, again, my point is that this is real, this committee 
does real infrastructure, as we did in the omnibus. And I 
believe that, hopefully, we will be able to do that again in 
fiscal year 2019.
    Madam Secretary, I don't think that you will see support on 
this committee for massive reductions. And, as I mentioned 
before, your budget was done before the budget, the 2-year 
negotiated deal.
    Obviously, this is not to say that we should not look at 
wherever we can make smart reductions to ineffective programs, 
but I think there is a consensus in this subcommittee that we 
have to continue to invest wisely in infrastructure, something 
that we all want to do.
    There is no doubt that we need to improve our roads, our 
bridges, and our railways to bring them to a state of good 
repair. And we also must continue making good progress to 
modernize our air traffic control system, which is the most 
advanced, the most complex, and the safest system in the world.
    The administration had proposed general outlines for a 
larger infrastructure initiative. And we have not yet seen the 
specific legislative proposals for this initiative, but know 
that we are ready and we are anxious to work with you on that.
    I also agree that we should have a discussion on how to 
innovate, how to incentivize, how to streamline, but, right now 
we can move forward with authorized programs, something that 
this subcommittee worked hard to do, particularly building on 
the bipartisan FAST Act. And we just did that in the omnibus, 
and we intend to focus on authorized programs once again as we 
get to work on the fiscal year 2019.
    Just a reminder, I think most people know the next fiscal 
year is less than 6 months away, but we are ready to move 
forward.
    Secretary Chao, I will tell you, and you know this, but I 
think it is important to say it publicly, I have always enjoyed 
our frank and open conversations. And I appreciate your 
appearance before us today to discuss how we can invest in 
America and get our country moving again efficiently and 
effectively.
    Now, I would be remiss if I didn't before take a moment to 
express my deepest sympathies to the families and loved ones 
who lost their lives during that horrible pedestrian bridge 
collapse at Florida International University last month. It 
goes without saying that we must leave no stone unturned to 
make sure that something like that is avoided in the future and 
that it never happens again.
    I am grateful that the Secretary immediately mobilized the 
NTSB to start an investigation, and they are doing that. I also 
would be remiss if I didn't--and, Madam Secretary, I hope you 
don't mind me saying this--but we were all shocked by what 
happened. And before I was able to call the Secretary, she 
called me to offer her prayers, her thoughts and her prayers to 
the victims, but also her help.
    So thank you. Thank you for being there in such a difficult 
moment for the community that I am blessed to represent.
    With that, again, before we open up to the Secretary's 
testimony, let me recognize my friend and the ranking member of 
the committee, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I am pleased to be here 
this afternoon as we examine the fiscal year 2019 budget 
request for the Department of Transportation.
    Secretary Chao, we are glad to see you again, and we 
appreciate your joining us today.
    Infrastructure service is the foundation for our economy 
and our quality of life. It facilitates the flow of goods and 
services. It connects people to employment and educational 
opportunity. The condition and the performance of our 
infrastructure is critical for the Nation's health, welfare, 
and economic competitiveness.
    Unfortunately, our country has been steadily falling behind 
our international peers when it comes to investing in the 
infrastructure that is required in the 21st century economy. 
The American Society of Civil Engineers estimates that there is 
a U.S. infrastructure funding gap of $2 trillion over the next 
decade. According to Federal statistics, 70,000 bridges, 1 out 
of every 9, are classified as structurally deficient.
    The U.S. economy is expected to lose almost $4 trillion in 
GDP between now and 2025 if this infrastructure gap is not 
addressed. In other words, we have every reason to be mindful 
of the cost of not facing up to our infrastructure crisis, and 
I do not think crisis is too strong a word.
    That is why it is disappointing to see that the U.S. 
Department of Transportation for the second year in a row has 
put forward a budget that is woefully inadequate for the task 
at hand. The request largely adheres to the funding levels 
agreed upon in the FAST Act for programs that rely on trust 
fund dollars. But overall budget authority would be cut by 
nearly $3 billion, or 15 percent.
    The brunt of these funding reductions would fall on 
discretionary accounts designed to advance public transit, 
rail, and other multimodal projects that are critical to our 
Nation's transportation future.
    For example, the highly competitive and oversubscribed 
TIGER program would be eliminated in the President's budget. 
Capital Investment Grants that advance critical transit 
projects across the country would once again be drastically 
curtailed, so that only projects with existing grant agreements 
might receive funding.
    The result would also slash resources for Amtrak and rail 
infrastructure grant programs. And it once again includes 
unrealistic assumptions about air traffic control 
privatization, while reducing key safety facilities and 
operations accounts at FAA.
    The budget request also stands in stark contrast to the 
recently enacted fiscal 2018 omnibus appropriations bill, which 
passed on a bipartisan basis and was signed into law by the 
President last month.
    The omnibus triples funding for TIGER. It brings New Starts 
funding to the highest level in recent memory. It fully funds 
FAA activities. It includes billions of additional funding 
above the authorized levels for formula programs, for highways, 
transit, and aviation. And it represents the largest Federal 
investment in rail since the Recovery Act almost a decade ago.
    So I want to congratulate our chairman, Mr. Diaz-Balart, 
our subcommittee colleagues, for advancing legislation that 
meets the priorities of so many Members on both sides of the 
aisle. It does represent a downpayment toward improving our 
Nation's infrastructure.
    So, Madam Secretary, I hope you will clarify how your 
proposed budget, which would in many cases slash these 
bipartisan investments, undo what has just been done, how would 
this move our country forward? The request appears quite 
similar to last year's budget, and that budget was roundly 
rejected on a bipartisan basis.
    I also look forward to hearing how the Department will 
administer the new funding provided in the omnibus, especially 
when it comes to the Capital Investment Grants programs. It is 
my expectation that the Department will distribute this funding 
efficiently and effectively, while adhering both to relevant 
statutes and to the directives of the Appropriations Committee.
    Before I close, I would also like briefly to note my alarm 
at reports in the media that indicate Republican leadership is 
working with the White House to develop a rescission package, 
to claw back and cancel certain nondefense spending, including 
in the 2018 omnibus appropriations package.
    This action would not only damage critical programs that 
Americans rely on, it would undermine the entire appropriations 
process and the good faith and the trust on which it depends. 
It would be a betrayal and it would make future bipartisan 
agreement much more difficult to achieve.
    Madam Secretary, I look forward to your testimony today, 
working with you to ensure vital transportation programs are 
adequately funded.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you very much, sir.
    Now we are privileged to have the chairman of the full 
committee.
    And as I mentioned in my opening statement, Mr. Chairman, 
because of--and you have to make tough choices--but because of 
your allocation, this subcommittee, your committee, your 
subcommittee was able to make, I think, historic investment in 
infrastructure. So thank you for that hard work, and we are 
grateful for that.
    And with that, we welcome the chairman for any remarks he 
may make.
    Mr. Frelinghuysen. Thank you, Mr. Chairman, for the time 
and for your strong leadership of the committee, along with 
your very able ranking member, Mr. Price of North Carolina.
    I also want to welcome Secretary Chao to the Appropriations 
Committee again.
    Madam Secretary, we look forward to your testimony and to 
hearing your frank and candid views on a wide range of issues.
    As I say at every meeting, the power of the purse lies in 
this building. It is the constitutional duty of Congress to 
make spending decisions on behalf of the people we represent at 
home. And Chairman Diaz-Balart and Mr. Price have spent the 
increased fiscal year 2018 allocation from the caps deal wisely 
on your behalf from that agreement.
    Furthermore, Mrs. Lowey and I look forward to rapidly 
concluding our work on the fiscal year 2019 bills with the same 
amount of oversight and forethought.
    The Gateway Project is a prime example of the 
infrastructure investment that will promote greater economic 
and national security benefits as it affects 20 or more States 
who use the East Coast rail system and whose passengers and 
freight depend on this narrow access point in New York and New 
Jersey known as the Gateway, the trans-Hudson River tunnels.
    Madam Secretary, the necessity of this project is quite 
clear. I remain angered by the administration's opposition and 
very calculated indifference towards the project. And this 
posture from an administration which claims to be 
infrastructure-centric is totally unacceptable.
    Some have suggested that partisan considerations by the 
White House and some in my own party are at work here. I should 
hope not. To me, this is a national priority, above politics, 
by two States that bore the brunt of September 11, 2011, those 
terrorists attacks, and more recently Superstorm Sandy.
    I needn't remind the committee that $900 million Chairman 
Diaz-Balart put in the House-passed bill this last September 
was available for other eligible authorized projects around the 
Nation, not just for the Gateway. Sadly, we had an 
administration fixated on removing it entirely during the 
budget negotiations, and I was heavily involved in those 
negotiations.
    The Gateway Project is vital to the Northeast, and it will 
be completed sooner or later, despite opposition. After all, 
the Northeast rail corridor is the most heavily used passenger 
line in the entire United States, serving more than 750,000 
people every day on more 2,200 intercity and commuter trains.
    Quite honestly, I worry about the possibility of a 
catastrophe in one of those tunnels. So there are potentially 
homeland and national security implications as well short-term, 
and to use your own words, Madam Secretary, into perpetuity. 
God forbid if one of those tunnels were to fail for any reason. 
The negative economic and national security implications would 
ripple across the East Coast and the Nation.
    I repeat, Gateway will be built, if not during your tenure, 
Madam Secretary, then thereafter.
    And in closing, may I thank Chairman Diaz-Balart and Mr. 
Price for providing the needed funds for such projects, not 
only potentially Gateway, so we can go forward, admittedly with 
a lesser amount, but nonetheless a strong start.
    I am incredibly grateful to the committee for making sure 
that the money was there for these projects. It was less than 
we wanted, but I think we have got a good foundation.
    I yield back the balance of my time.
    Mr. Diaz-Balart. Thank you very much, Mr. Chairman.
    I would now like to welcome our distinguished ranking 
member of the full committee, Mrs. Lowey, for any remarks that 
she might have.
    Mrs. Lowey.
    Mrs. Lowey. Thank you very much. And I would like to thank 
Chairman Diaz-Balart and Ranking Member Price for holding this 
hearing. And I welcome Secretary Chao before this committee.
    It is clear that the United States must invest to improve 
our infrastructure. Our airports, bridges, tunnels, electric 
grid, schools, hospitals, ports, and sewers are in desperate 
need of updates to make them work more efficiently and 
effectively for the American people.
    You have spoken before Congress in favor of President 
Trump's infrastructure plan, but, unfortunately, his plan fails 
to invest in the public good and instead places significant 
infrastructure projects in the hands of private corporate 
interests.
    Last month, Congress passed the fiscal year 2018 omnibus 
appropriation bill, which provided $27.3 billion for the 
Department of Transportation, an increase of $8.7 billion from 
fiscal year 2017. We provided $1.5 billion for TIGER grants, 
$2.525 billion in new funding for highway grants, $1.94 billion 
for Amtrak, $800 million in new funding for transit formula 
grants.
    So Congress has given your Department robust funding to 
make serious investments in projects that would improve 
infrastructure in our country.
    And I also would like to say, I echo Mr. Frelinghuysen's 
sentiments and express to you just how important the Gateway 
Project is for my district and the movement of people and 
commerce up and down the East Coast.
    Gateway will create a one-seat connection for my 
constituents in Rockland County to commute into New York City, 
something that commuters and working families have needed for a 
long time.
    So I just want to make it very clear. Congress has given 
your Department robust funding to make serious investments in 
projects that would improve infrastructure in our country. Yet, 
I am puzzled that your Department requested a 19 percent 
reduction in discretionary spending on programs that directly 
support infrastructure improvements and development.
    I am deeply disappointed by your proposals to eliminate 
programs that are proven to work, like TIGER. TIGER is one of 
the most valuable, important programs I have been working with 
since I have been in Congress. And to privatize air traffic 
control operations, which does not have even enough support to 
pass the House, let alone the Senate. I am really puzzled, 
Madam Secretary.
    Overall your budget fails to reflect what should be the 
priorities of your agency and proposes to destroy the progress 
we can make as a result of the fiscal year 2018 spending bill 
that was just enacted.
    So, Madam Secretary, I really want to thank you for being 
here. I have a feeling there are other forces, other people, 
who may have input into this proposal, which most of us on this 
dais reject. And I do hope we can work closely with you and 
explain the value of the investments that, for some of us, who 
have been working in this job for a while, and you have been 
here for a while, we really understand how important these 
programs are. And I do hope we can have a positive, strong 
relationship and not include a 19 percent reduction in 
discretionary programs.
    Thank you very much.
    Mr. Diaz-Balart. Thank you very much.
    Secretary Chao, again, Madam Secretary, your full written 
testimony will be included in the record. You are recognized 
for 5 minutes. And, again, it is a privilege to have you here.
    Secretary Chao. Thank you, Chairman.
    Chairman Diaz-Balart, Ranking Member Price, and members of 
the subcommittee, thank you for the opportunity to discuss the 
President's fiscal year 2019 budget request for the Department 
of Transportation. I look forward to working with all of you to 
continue our joint efforts to provide the American people with 
safe and reliable transportation systems.
    The President's budget request and the $200 billion 
provided for his infrastructure proposal work together to 
provide new ideas for using our financial resources wisely, 
expanding our partnerships with State and local governments, 
and encouraging private sector involvement where appropriate. 
These changes provide a path forward to improve our 
transportation infrastructure quickly without dramatic 
increases in Federal spending that would stifle economic growth 
and job creation.
    The President is requesting $77 billion for the Department 
of Transportation. This budget would promote two of our highest 
priorities, advancing the safety of our Nation's transportation 
systems and preparing for our future transportation needs. 
About 80 percent of these dollars will fund State and local 
surface transportation projects of their own choosing.
    The President's request also includes funding targeted 
toward new technologies and innovation. These funds will help 
us address the opportunities and challenges posed by 
integrating emerging technologies and systems into our 
transportation network safely and efficiently. For example, the 
President's budget proposes more than $73 million for unmanned 
aircraft systems and $18 million for automated driving systems.
    While not included in the original budget release 
materials, the President's budget request also includes $300 
million to support the replacement of two of the oldest ships 
in the Maritime Administration's School ships fleet. These new 
assets will enable us to continue to meet the training needs of 
our future merchant mariners as the current ships are retired.
    At the same time, the President's budget request calls for 
reforms to several major programs and the manner in which they 
are traditionally funded. These programs are ideal candidates 
for the new programs outlined in the President's infrastructure 
proposal.
    As you begin your consideration of the President's budget 
request and his infrastructure proposal, we will continue to 
focus on our new responsibilities. The recent passage of the 
fiscal year 2018 Omnibus Appropriations Act included increases 
to many of the Department's vital safety programs. It also 
provides a downpayment of resources that acknowledges the 
President's vision of quickly investing in our Nation's 
infrastructure.
    The Department is assessing the requirements and 
instructions in the act and is identifying the steps needed to 
responsibly administer this funding and the new programs 
provided.
    Thank you again for the opportunity to appear before you 
today to discuss the President's fiscal year 2019 budget, and I 
look forward to continuing our partnership on transportation 
issues on behalf of the Nation. And I will be happy to answer 
your questions.
    [The information follows:]

 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    
    Mr. Diaz-Balart. Thank you very much, Madam Secretary.
    Members, we will proceed in the standard 5-minute rounds, 
alternating sides, and, obviously, recognizing the members in 
order of seniority as they were seated at the beginning of the 
hearing. And I don't have to tell you to be mindful of your 
time because both questions and answers will be within that 5 
minutes.
    Madam Secretary, the fiscal year 2018 omni provided $2.64 
billion into the Capital Investment Grant programs. As you 
know, the House and the Senate both placed a huge priority on 
continuing the authorized transit Capital Investment Grants. 
That is a program that has gotten wide bipartisan support with 
an emphasis on moving projects through the pipeline and leading 
to the expectation, that those full funding grant agreements 
would go forward and they would be signed and those projects 
that have met the criteria would move forward.
    And so this year there was an inclusion of a new provision 
in the law that requires 80 percent of the Capital Investment 
Grants to be obligated by December 31, 2019. And so typically 
those funds are available until they are expended, until they 
are spent, but there is this different language and different 
change in the law. And it is because we wanted to show how 
important it is to use that money, to put it to good use as 
soon as we can, because they are important programs.
    So there are many critical projects that are ready to go 
and waiting for the Federal commitment. And I just wanted to 
ask you, how do you plan to execute those funds by that 
deadline? And again, the deadline is December 31, 2019. It is 
not a lot of time.
    Secretary Chao. No, it is not a lot of time at all. In 
fact, the omnibus gave the Department about $12 billion over 
what the President's request is. That is a lot of money.
    So we are in the process of reviewing what the omnibus 
says, what it requires, what its instructions are. It has taken 
us about 2 weeks just to understand what the omnibus says. It 
was passed on March 23, and we are diligently working to 
fulfill the wishes of Congress.
    Mr. Diaz-Balart. Great.
    Secretary Chao. But I do think the time is very tight.
    Mr. Diaz-Balart. It is.
    Secretary Chao. On the TIGER grants, on the $1 billion 
additional in the TIGER grants, $1.5 billion basically with 
INFRA grants. And then we have the first round of INFRA grants 
coming out by June, hopefully. And then we have got the INFRA 
grants in the omnibus, which is another huge tranche. So the 
timelines are very, very tight.
    I just want to make that point, understanding that we will 
do our very, very best, obviously, to fulfill that.
    Mr. Diaz-Balart. So your intention is, obviously, to do 
that?
    Secretary Chao. Absolutely.
    Mr. Diaz-Balart. But we understand. Which is why we are 
hoping to get the 2019 bills done in a more timely fashion.
    And, Madam Secretary, you know, as you have been down there 
in my area of the State of Florida, they have been working for 
years on a transit plan to submit to the CIG pipeline. And, 
hopefully, they can get those parameters and those guidelines 
taken care of. And I want to thank you for going down there and 
seeing it firsthand. So we will hopefully be able to have that 
eventually in that pipeline.
    My colleague Mr. Visclosky has a transit project that has 
been in the planning stages since the 1990s, so I guess I 
shouldn't be as frustrated as I feel about the situation in 
South Florida. Which is why, again, we are very committed to 
those programs. And I am glad to hear of your efforts.
    In another area, in the Federal-State partnership for State 
of Good Repairs, which is another authorized program that 
received an increase to $250 million for this program, DOT has 
not yet published a Notice of Funding Opportunity, not only for 
the 2018, but also for the 2017 amounts. Do you have any idea 
when you expect to have those published for both the 2017 and 
the 2018?
    Secretary Chao. We hope to have that very soon.
    Mr. Diaz-Balart. And any idea if you can put them both 
together and do them both? Or is it 2017 or 2018?
    Secretary Chao. There are two separate. First, there are 
two separate NOFOs. And then there are two separate years as 
well.
    Mr. Diaz-Balart. Right.
    Secretary Chao. So it is certainly our intent to try to get 
that out as quickly as possible.
    Mr. Diaz-Balart. Right.
    Secretary Chao. But last year, obviously, was a transition 
year, and there were people, obviously, who were not in the 
agencies. And so that was a bit of a slow start. But as soon as 
we are getting people, we are turning them out as quickly as we 
can.
    Mr. Diaz-Balart. I am glad to hear that. And I thank you, 
Madam Secretary. I, obviously, have a number of other 
questions, but I try to lead by example and not exceed my time.
    So with that, let me recognize the ranking member.
    Mr. Price. Thank you, Mr. Chairman.
    Madam Secretary, I would like to focus in on the Capital 
Investment Grants in transit and ask you to elaborate on the 
funding timetable, the funding plans for these grants.
    Hereto, the fiscal year 2018 omnibus bears little 
resemblance to the fiscal year 2018 budget request or the 2019 
budget request, so you have some funding and administering to 
do that you hadn't fully anticipated perhaps.
    But this is no longer a hypothetical. We have had some 
frustrations when seeking answers about how programs are going 
to be administered and executed, but now it is no longer a 
hypothetical. We have got to get this done. And that is why I 
want to ask you to provide some specifics.
    We know what investment in transit does for our 
communities, improving local mobility in high density 
corridors, addressing our energy, environmental, economic 
challenges. We have got to move ahead.
    The process, of course, is multifaceted, and I would like 
to ask you to provide here, if you can, or for the record 
otherwise, some documentation of exactly how projects have been 
moving through the pipeline. How many projects entered the 
project development phase so far this fiscal year? How many 
projects moved from project development and into engineering so 
far this year? How many projects moved from engineering into 
full funding grant agreements, that is construction so far this 
year?
    I am pleased, I know that you have recently taken steps to 
sign some Small Start grant agreements. I wonder when you are 
going to begin signing full-funding grant agreements for New 
Starts and Core Capacity projects.
    And, of course, in asking you this and in raising this 
whole subject, I am asking to you pledge to move projects in a 
timely way, projects that meet the statutory criteria, through 
the project pipeline and to move them through in ways 
commensurate with the funding level provided in the 2018 bill.
    Secretary Chao. Congressman Price, let me assure you that I 
am a partaker. I have been a user of the transit system. I grew 
up in New York City. As an immigrant, we had no car, so I would 
basically take the subway all the time and the bus system. So I 
am very well aware. And we all support transit systems that aid 
mobility and connectivity around our country, especially in our 
urban centers.
    $12 billion is a lot of money. The short answer to your 
question is, we are going to do everything we can to get the 
moneys out. But just in Federal transit alone there has been 
$2.255 billion in additional funding. That is a lot to absorb. 
We are trying to see what these programs require, whether there 
are any additional prerequisites for releasing them. And these 
projects are complicated.
    So to your first point, about how many are in the project 
development, how many are in the engineering, and how many can 
advance to construction, let me answer that first. In the past 
fiscal year, three projects have entered the project 
development phase. There is San Bernardino in West Valley, St. 
Paul, Minnesota, Kansas City, Missouri, Indianapolis, Indiana.
    In the past fiscal year, there have been no projects that 
have been approved in the engineering phase because FTA is 
conducting the risk assessments before approving them. There 
are two projects that are awaiting advancement for this reason, 
the Los Angeles Westside section 3 and the San Francisco BART 
Core Capacity.
    And you are right, a number of Small Starts have received 
construction grant awards this past year, and they include Fort 
Lauderdale, Jacksonville, Grand Rapids, SMART California, 
Everett, Washington, and Kansas City.
    These are complicated, multiyear projects. So sometimes it 
is not us who are delaying it, but because the particular 
project is not ready to go on to the next phase. But please be 
assured that we understand what you are saying to us, and it is 
just our wish as well to be able to move this money out as 
quickly as these projects are ready and eligible.
    Mr. Price. Well, thank you. I will take that as an 
affirmative answer to my request for a pledge to move projects 
that meet the statutory criteria through the project pipeline.
    Do you have any exact estimate as to when you might begin 
signing full-fund grant agreements for New Starts and Core 
Capacity projects, agreements as opposed to the Small Starts?
    Secretary Chao. No, I really don't because Small Starts--
they are called Small Starts for a reason. They are a little 
bit less complicated, and they are smaller in dollar and in 
scope. So these larger ones, we don't have a policy against 
them, but it has to be done on a case-by-case basis.
    Some of them are not ready. Others have to go through--
there is a process. It is not as if I am the one that signs off 
on all of this. There is a queue. There is a process. And we 
will evaluate each project on a case-by-case basis.
    Mr. Price. Well, of course, it is true that you have more 
money than anticipated. On the other hand, we are talking about 
the current fiscal year with an amount of money that is more 
along the lines of past appropriations and with expectations 
that we would see some movement in advance of the new 
appropriation being fully determined.
    Secretary Chao. Congress has given us aggressive deadlines. 
And as I mentioned, we will do our very, very best, and I hope 
that we will definitely meet them, because I don't want to have 
another conversation with you again.
    Mr. Price. Thank you.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you. I thank the ranking member.
    Mr. Valadao, the gentleman from California.
    Mr. Valadao. Thank you, Chairman.
    Thank you, Secretary, for your attendance today.
    I applaud the recent steps the Department of Transportation 
is taking by granting an additional 90-day extension of the 
agriculture exemption from the electronic logging device 
mandate.
    Livestock haulers in my district and across the country 
have a challenging task of balancing both the safety of 
motorists and the health and welfare of animals that are being 
transported. That is why I diligently worked to include 
language in the fiscal year 2018 THUD appropriation delaying 
implementation of the electronic logging device mandate for 
freights carrying agricultural commodities such as livestock.
    It is clear the electronic logging device rule and the 
existing hour service rules do not adequately accommodate this 
subset of the trucking industry.
    Stakeholders have expressed the need for flexibility when 
it comes to Hours of Service for electronic logging devices to 
properly address concerns and provide sufficient training in 
education for uniform compliance and enforcement. While 
motorist safety remains a top priority, so does the welfare of 
our animals.
    What long-term solutions do you recommend to ensure both 
motorist safety, as well as animal welfare? Would the Federal 
Motor Carrier Safety Administration be willing to work with the 
livestock and insect industry to provide further exemptions or 
flexibility under the Hours of Service Rule?
    Secretary Chao. Last year you raised this issue, and I hope 
that we have at least been responsive, not only to you but to 
all the Members in the rural States and districts that face 
this issue.
    The Department, FMCSA, has engaged in multiple discussions 
and briefings, and I don't want to call them educational 
sessions because it sounds kind of arrogant, but sessions in 
which the Department explains, or FMCSA, the agency, explains 
what these rules are.
    We just got confirmed Ray Martinez, who is the 
administrator for the FMCSA, and I have given him the request 
and the directive that among his first priorities is to meet 
the stakeholders who are concerned about this issue, meet with 
the Members who are concerned about this issue. And I believe 
that they are doing so.
    Having said that, this is a very difficult issue, because, 
as you mentioned, it is not an issue that is just the waiver or 
the exemption. It really hits upon an underlying issue, which 
is the Hours of Service. That is a law that was passed by 
Congress on a bipartisan basis.
    So we have to do what we have to do under that statute to 
the best of our ability. We have given two waivers. The first 
90-day waiver, the second 90-day waiver, which just began on 
March 18, 2018.
    But the exemption that you are talking about is very 
strictly prescribed. And, again, it touches upon, as you 
mentioned, the Hours of Service. We will do as much as we can 
within the intent of that statute, but we are limited in what 
we can do.
    Mr. Valadao. Well, and they have reached out and we have 
spoken with--we are working on getting more opportunity out 
into the district so that some of my locals have the 
opportunity to hear from FMCSA about how this goes into play. 
But we have to continue the dialogue to make sure this works 
out the way we need it to.
    Because just today I heard a story from a trucking outfit. 
One driver was pulled over. And the owner of the truck actually 
called and asked the highway patrolman to release the truck and 
they can keep the driver. But there were animals stuck on the 
side of the road in a truck for 8 hours.
    If you can imagine, that is not a situation we want to 
have. And if that plays a role, or if we don't have the ability 
to move these animals, there is a welfare issue that needs to 
be addressed and paid close attention to.
    Secretary Chao. Yes.
    Mr. Valadao. Since I have a few more seconds, a city in my 
district applied for a Buy America waiver back in January of 
2017 to purchase a new lower-polluting refuse truck with 
Congestion Mitigation and Air Quality funding. I understand 
that this waiver was approved yesterday, but only because it 
was submitted prior to the Buy American, Hire American 
executive order.
    The Federal Highway Administration has announced it is 
revaluating the Buy America waivers for vehicles and equipment 
because of the executive order. Do you have a timeline of when 
this reevaluation will be completed? And how long will it take 
to determine vehicles and equipment waiver applications going 
forward?
    Secretary Chao. Each application is different. And it takes 
a long time because, again, these are complicated cases. We 
want to be fair.
    I will say that this administration has been much, much 
tighter in terms of granting waivers for Buy America 
provisions. As the President has said, his theme is Buy 
American, Hire American. So these waivers are tougher to come. 
And we have to report back to the White House on every single 
waiver.
    Mr. Valadao. So you don't have a timeline?
    Secretary Chao. We try our best, but it can take a long 
time.
    Mr. Valadao. Any idea what ``long time'' means?
    Secretary Chao. It depends on the case. I will be more than 
glad to have my people talk to your staff. But they are 
complicated.
                          buy america waivers
    The Department is taking a holistic look at its Buy America 
processes across its Operating Administrations in an effort to find 
efficiencies and ensure consistent application of Buy America 
requirements across the Department. We hope to have some additional 
information in a few months.
    As for specific waivers, the Department carefully reviews them on a 
case-by-case basis as expeditiously as possible.

    Mr. Valadao. That would be helpful.
    Thank you. I yield back.
    Mr. Diaz-Balart. I thank the gentleman.
    Mrs. Lowey, the ranking member of the full committee.
    Mrs. Lowey. Thank you, Mr. Chairman.
    Madam Secretary, it took 445 days for President Trump to 
nominate a leader for the National Highway Traffic Safety 
Administration, leaving NHTSA without a leader at its helm. 
This is so disturbing, particularly in light of the trends, the 
increasing trend of deaths on American roads.
    NHTSA may be behind on important work to prevent drunk and 
impaired driving, including the Driver Alcohol Detection System 
for Safety Program. I wrote a letter to President Trump to 
remind him that NHTSA needs an administrator, and I am glad he 
finally listened.
    Could you explain to me what caused the delay to nominate 
Deputy Administrator Heidi King?
    Secretary Chao. You will like her very much. She is a very 
nice person, very capable.
    I think this whole confirmation process is very 
troublesome. There are delays in the nomination part of it, and 
then there are also extensive delays in the confirmation part 
as well.
    The FBI clearances are taking so much longer. And the OGE, 
Office of Government Ethics, is taking so much longer, as well.
    We who are in the departments would love to see these 
nominations spring forward sooner, announce sooner. But, again, 
that clearance process is really, really long now. And then 
once they come out, it has been tough to get them confirmed in 
a reasonable period of time as well.
    Mrs. Lowey. Well, I hope you watch it carefully.
    Secretary Chao. Absolutely.
    Mrs. Lowey. Because this is so important to keep people 
safe on our roads.
    Another issue that I have been following is sleep apnea and 
rail safety. I was really disappointed by the agency's decision 
to withdraw the Federal Motor Carrier Safety Administration and 
Federal Railroad Administration's joint and advance notice of 
proposed rulemaking on obstructive sleep apnea.
    As you know, it has been cited as a contributing factor in 
multiple crashes, including the Spuyten Duyvil crash in 2013, 
the Hoboken crash in 2017. And I have many constituents who 
were on both trains. Scores more were impacted as loved ones 
were injured or lost their lives.
    So it is really shocking to me that the Department of 
Transportation would ignore a pressing problem that was already 
on its way to being solved.
    Can you tell me why did the Department turn its back on 
addressing obstructive sleep apnea and other health disorders 
that may interfere with an operator's ability to carry out 
their safety responsibilities? Was there data that the 
Department relied on that led to the decision to withdraw the 
proposed rulemaking?
    And if you can tell me what concrete actions will the 
Department undertake to make sure that obstructive sleep apnea 
does not contribute to any more deaths on American roads and 
railways?
    Secretary Chao. We are not at all unconcerned about this 
issue. In fact, we are very concerned about the whole array of 
sleep-impaired influences on overall safety in driving.
    So we would like to take a more holistic approach, and we 
are taking a look at what are the, again, the array of 
impairments to driving at night, to sleep impairment, that can 
contribute to this. So that study about sleep apnea is the 
wrapping to a much larger holistic approach.
    Mrs. Lowey. Can you give me an idea, and I hope you stay in 
touch, the progress of this study and how long will it take? 
And are you satisfied that it is moving as effectively as it 
should?
    Secretary Chao. I don't have a specific timeline, and I 
will get back to you.
    [The information follows:]
                     status of the sleep apnea rule
    The Federal Motor Carrier Safety Administration (FMCSA) and the 
Federal Railroad Administration (FRA) initially posted an Advance 
Notice of Proposed Rulemaking (ANPRM) on March 10, 2016, concerning the 
prevalence of moderate-to-severe obstructive sleep apnea (OSA) among 
individuals occupying safety sensitive positions in highway and rail 
transportation. The ANPRM was withdrawn on August 4, 2017 following the 
determination that existing safety programs and rulemakings can address 
fatigue risk management.
    Safety is the Department's top priority and DOT still believes that 
regulatory action is best focused on addressing fatigue risks 
holistically, rather than focusing on just one specific source of 
potential fatigue, OSA.
    Currently, the FMCSA is working to update the 2015 "Bulletin to 
Medical Examiners and Training Organizations Regarding Sleep Apnea" to 
include the Medical Review Board's August 2016 recommendations. This 
bulletin is intended to ensure that medical examiners fully understand 
their role in screening drivers for OSA, identifying drivers at the 
greatest risk of having OSA, and referring only those individuals to a 
sleep specialist for testing. The Agency continues to encourage drivers 
and their employers to use the North American Fatigue Management 
Program (NAFMP) (http://www.nafmp.org/index.php?lang=en). The NAFMP is 
a voluntary, fully interactive web-based educational and training 
program developed to provide both truck and bus drivers and carriers 
and others in the supply chain with an awareness of the factors 
contributing to fatigue.
    Additionally, the FRA plans to fully implement the Fatigue 
Management Plans, statutorily mandated by The Rail Safety Improvement 
Act of 2008 (RSIA). This entails the System Safety Program and Risk 
Reduction Plan final rules which address all aspects of fatigue in rail 
operations.

    Mrs. Lowey. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you.
    Mr. Dent, you are recognized, sir.
    Mr. Dent. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for joining us this afternoon.
    Secretary Chao, I would like to start by addressing a 
proposed program within the administration's infrastructure 
plan, specifically the plan would establish the Infrastructure 
Incentives Program, which would provide grants for a portion of 
the cost of certain infrastructure projects.
    In evaluating projects for selection, the agency would 
examine how an applicant would be able to secure and commit new 
non-Federal revenue for infrastructure projects. In 
Pennsylvania, the State already acted to modernize its 
infrastructure revenue stream in 2013 by increasing the gas 
tax. Actually, they eliminated the gas tax and uncapped the oil 
franchise tax, but it was an increase at the per gallon, was 
the effect of it all.
    Given the White House's blueprint, could you tell me how 
the plan would take into consideration the important choice 
that Pennsylvania has already made to secure infrastructure 
revenue? So we have already done our bit. And then more 
generally, how would the blueprint take into consideration 
revenue that has been raised in the last few recent years?
    Secretary Chao. Great.
    The infrastructure, I think the issue you are talking about 
is lookback. Is that----
    Mr. Dent. Yeah.
    Secretary Chao. Yeah, Okay.
    The Infrastructure Incentives Program, it is different, but 
it is a new way of trying to see how we can fund and finance 
our public infrastructure.
    Infrastructure is very important. We all acknowledge that. 
I think where we differ is how do we finance it, how do we fund 
it.
    The Infrastructure Incentive Program, as provided in the 
President's proposal, will provide for targeted Federal 
investments, it would encourage innovation, streamline project 
delivery, and will also transform the way that infrastructure 
is designed, built, and maintained.
    The Department will award grants using the six evaluation 
criteria laid out in the infrastructure proposals. And these 
criteria include the dollar value of the overall project; the 
applicant's ability to secure and commit new sustainable 
investments using non-Federal revenue; three, the applicant's 
ability to secure new operational services, such as maintenance 
or rehabilitation using non-Federal sources; and the 
applicant's procurement and project delivery policies that 
encourage efficiency in project delivery and operations.
    I have got just two more. And then number five is the 
applicant's incorporation of new and evolving technologies. And 
number six, the project's ability to spur economic and social 
returns on investment.
    Pennsylvania has been very prescient. It has been very 
farsighted. So it has gone ahead and done a lot of things and 
funded and financed a number of its overall infrastructure 
proposals.
    Mr. Dent. The point I want to make, on your second point, 
you said new revenue, I think.
    Secretary Chao. New sustainable revenue investments, yeah.
    Mr. Dent. New sustainable. So a State like mine----
    Secretary Chao. You did that.
    Mr. Dent. We did it.
    Secretary Chao. Yeah.
    Mr. Dent. Now, the question is, how new is new?
    Secretary Chao. So this is an issue which was brought to 
our attention. So I think we were trying to balance how do we 
try to encourage States to incentivize and commit new 
sustainable investments but not penalize those who have already 
had the courage, the foresight to do it.
    So I think the compromise was to come back with a 3-year 
lookback.
    Mr. Dent. Three-year lookback. That might not be enough, 
because we really were ahead of the game on this and we made a 
massive investment.
    Secretary Chao. Our intent is not to penalize.
    Mr. Dent. Yeah. Okay. Well, we will have to follow up. I am 
sure Chairman Schuster will be all over you on this one, too.
    But just a final question, an issue regarding safety, and 
this time as it relates to autonomous technologies. As the 
development of these autonomous vehicles moves forward, it is 
inevitable that we will at some point see major cyber attacks 
against these systems. Not only is it important to protect 
against these attacks to prevent their direct negative impacts, 
but also I believe that addressing these concerns is crucial to 
securing the public's trust in these new technologies.
    So could you tell me how the Department is engaging with 
the developers of autonomous technology to address issues 
related to cybersecurity? And can you also tell me about any 
potentially difficulties that the developers or your Department 
have identified as particularly challenging or worrisome?
    Secretary Chao. First, let me talk about, we all know--
well, maybe we don't--the benefits of self-driving cars are 
many. Ninety-four percent of accidents occur because of human 
error. If somehow we can reduce that component, we actually can 
make driving safer.
    Also, self-driving cars, autonomous vehicles is a 
tremendous avenue for newfound freedom for the disabled and for 
the elderly. So those are the good things. But there are also 
legitimate public concerns about safety, security, as you 
mentioned, and also privacy.
    So we are committed to addressing all those legitimate 
public concerns. And as regulators, we want to be responsible, 
but not hamper the innovation and the creativity that is so 
much a hallmark of America.
    So the cybersecurity issue is something that we have been 
in discussion with the law enforcement agencies as well as 
Department of Homeland Security and also the Defense 
Department.
    Without, obviously, getting in too much of the details, we 
can imagine that an autonomous driving system, when hacked, can 
become a weaponized tool. So we are very much aware of that.
    We are putting forward guidance. We are coming out with A 
Vision for Safety 3.0. That should come out in August of this 
year and it will also address some of these cybersecurity 
issues.
    Mr. Dent. Thank you, Madam Secretary.
    Mr. Diaz-Balart. The gentleman from the great State of 
Illinois, Mr. Quigley.
    Mr. Quigley. Thank you, Mr. Chairman.
    Mr. Chairman, Madam Secretary, I want to associate myself 
with the remarks of the full committee chairman when we began 
this hearing, because this is a special committee, 
Appropriations, I think particularly when we are talking about 
infrastructure. Because I should care just as much about 
Gateway as he or anyone else should care about rebuilding the 
Blue Line in Chicago, because it speaks to the whole country 
and our economic opportunities that we care about each other 
and recognize in a sense that we are stronger together than 
divided.
    So it is pretty clear that the chairman was referencing his 
concerns that this project wasn't put in the omnibus for 
political reasons. I think the reasons that were used could 
create problems nationwide and everybody on this committee 
should care about that.
    You made recent statements at the House Transportation and 
Infrastructure Committee that implied that RRIF and TIFIA loans 
are considered part of the Federal share of the project. In the 
past, loans, given that they are repaid with local funds, were 
considered part of the local share.
    In fact, your 2017 notice of funding opportunity for INFRA 
grant programs stated, quote, ``Funds from Federal credit 
programs, including TIFIA and RRIF, will be considered non-
Federal funding.''
    Yet some months later, and I have the quote here, in the 
context of another project, the one the chairman talked about, 
these loans are being considered as Federal funding.
    This will be a substantial departure from existing and past 
policy, and I am concerned that the administration's ambiguity 
on this subject will have a chilling effect on infrastructure 
loan programs nationwide, the very programs that this 
administration is relying on to leverage State and local funds 
for infrastructure.
    So I would certainly appreciate some clarity on this issue.
    Secretary Chao. I totally agree with you that the reasons 
for the supposed cluster of nine projects between New York and 
New Jersey as being precedent-setting is one that concerns me 
as well. Because, in the CIG program, there is a process. 
People have to get in line, they have to fulfill the 
requirements, and they have to take their turns. And no 
political pressure is going to take one of those projects, put 
it at the head of the line, ahead of all other projects, which 
is what is happening in this particular case.
    In terms of the INFRA, there are different kinds of 
programs. Different programs will have different regulatory and 
statutory requirements. But I do----
    Mr. Quigley. But the specific findings----
    Secretary Chao. But I do not believe that TIFIA and RRIF 
were ever considered, not under this administration, as part of 
the local share.
    I often use this example: You are buying a house. You have 
to put 20 percent down. You are going to get an 80 percent 
mortgage. And then you are going to go back to the bank, ask 
for another loan for 20 percent, and use that 20 percent as a 
downpayment for the equity. It doesn't work like that. I mean, 
Sarbanes-Oxley or Dodd-Frank wouldn't let that happen.
    Mr. Quigley. Again, your 2017 notice of funding 
opportunities: ``Funds from Federal credit programs, including 
TIFIA and RRIF, will be considered non-Federal funding.''
    Secretary Chao. That was for the INFRA grants. That is 
different. They are different programs, and there are different 
statutory requirements.
    Mr. Quigley. There was never the distinguishing before. You 
are----
    Secretary Chao. Oh, I don't think so. I think they were 
all--there is a whole array----
    Mr. Quigley. You are finding an excuse to kill the project.
    Secretary Chao. No, no, no, not at all.
    Mr. Quigley. You are finding an excuse not to----
    Secretary Chao. I used to live in New York. I mean, my 
family is in New York. So I know the transportation system up 
there very well.
    Mr. Quigley. So what is the difference between----
    Secretary Chao. I think there is----
    Mr. Quigley [continuing]. The percentage required for TIFIA 
and RRIF than the one you are talking about, the 20 percent----
    Secretary Chao. Because they are different programs with 
different statutory requirements.
    Mr. Quigley. But there is still the Federal share.
    Secretary Chao. No, I am----
    Mr. Quigley. If they are Federal loans, they have to be 
paid for.
    Secretary Chao. No. Different programs will have different 
requirements. That is why it is kind of hard to explain, also.
    Mr. Quigley. Give me a shot at figuring it out. If it 
requires a local payback of the loan, no matter what the 
program is, it is still a local share, right?
    Secretary Chao. No. It depends on the pro--it depends on 
the----
    Mr. Quigley. Why does it depend on the program?
    Secretary Chao. Because that is what--these programs are 
different, and so they have different requirements. And it is 
very--it is not consistent.
    Mr. Quigley. The only thing that should be consistent----
    Secretary Chao. But it is not set by us.
    Mr. Quigley. If the local government has to pay back the 
loans, that is a local share. Are we on the same page on that?
    Secretary Chao. I think we are going to have to 
respectfully disagree, because--and that is why--I am not 
interested in arguing. I am interested in trying to find common 
ground.
    Mr. Quigley. I am trying to find out what the answer is.
    Secretary Chao. But if you are asked to put 20 percent in 
equity, you can't go off and get a second loan and use that 
loan as part of your equity.
    Mr. Quigley. But you acknowledge that we do that with at 
least one program.
    Secretary Chao. It depends on the program.
    Mr. Quigley. But we do it with at least one program, what 
you just described. So we are doing it with one program but not 
the other programs. Why?
    Secretary Chao. Yes. That is correct.
    Mr. Quigley. But what is the difference?
    Secretary Chao. Because different programs have different 
statutory requirements.
    Mr. Quigley. There is no--nothing in the statute deals 
with----
    Secretary Chao. Okay. I don't want to argue, but I will 
take a look at----
    Mr. Quigley. The whole point of arguing is to try to find 
out what the answer is, and I still don't have an answer.
    Mr. Diaz-Balart. Okay. Let's try to allow----
    Mr. Quigley. I am just trying to protect the chairman's 
project.
    Mr. Diaz-Balart. No, I get that completely, and----
    Secretary Chao. No, we understand. And I certainly don't 
want to get involved in an argument, so let me--I will take 
another look at that. But----
    [The information follows:]
       consideration of tifia and rrif loans in regards to infra
    Projects which are awarded INFRA funding may also utilize Federal 
credit assistance from the TIFIA or RRIF program-provided that the 
overall level of Federal assistance, including grants and loans, does 
not exceed 80 percent of the total project costs. 23 U.S.C. 117(j)(2) 
establishes this limitation.

    Mr. Quigley. It is so much more fun to sing ``Kumbaya'' and 
not get anything done. I understand.
    Secretary Chao. No, no. We want to get things done too. But 
I think, you know, there is going to be some disagreement on 
this, so let's try to work through it.
    Mr. Diaz-Balart. And I would ask members--and, again, I 
don't want to interrupt when there is a conversation going on, 
but I am going to ask members to try to stick to the time 
limit, if possible. But I do appreciate--I think it is 
important to have these conversations.
    The vice chairman, a heartbeat away. But don't get any 
ideas, Mr. Joyce.
    Mr. Joyce. Why, thank you very much, Mr. Chairman. And I 
have no ideas.
    But I do have a few questions for you, Secretary Chao. And 
thank you very much for being here today.
    A few weeks ago, your department held a public meeting to 
get feedback on the draft Automated Vehicles 3.0 framework and 
identify activities that can accelerate the safe rollout of 
those vehicles.
    Can you discuss the feedback from this event and 
specifically the role proving grounds will play in this process 
in the future?
    Secretary Chao. First of all, I want to thank you for your 
interest and focus on that. Preparing for the future, in terms 
of emerging technologies, is very much a part of the 
responsibility of this department.
    In the last administration, it was decided that 10 cities 
or 10 areas would be selected so that they can be a place where 
autonomous vehicles can go. And, supposedly, it was the seal of 
Good Housekeeping.
    Mr. Joyce. Uh-huh.
    Secretary Chao. It really was nothing more than, we 
believe, some marketing ploy that really was quite unfair to 
other cities and areas that were not selected.
    So we were concerned about how the criteria for selection 
occurred; why were only certain cities selected and not others. 
And, frankly, we saw no criteria that was--I am being 
questioned now, but, you know, we saw no criteria for 
understanding why these 10 proving grounds were selected. One 
suspicion was that it was to be selected and then funding was 
to continue. We thought that was too cynical a thought, but, 
indeed, we now have funding for these areas.
    So we don't believe in command and control. We do not 
believe in selecting one place over another. We believe in full 
competition. And we hope that cities and regions that are 
interested in this area will welcome new technology and do what 
they can to promote greater technological advancement, 
transformational technology.
    So we did not view that these 10 proving grounds were that 
important, thinking that this opportunity would be available to 
every region, every city that wanted to partake. But in light--
but go ahead.
    Mr. Joyce. And I like your thinking on that, because in 
Ohio we happen to have the Transportation Research Center 
attached to----
    Secretary Chao. Just missed it.
    Mr. Joyce [continuing]. That is attached to the Ohio State 
University. And we were hoping that you would consider or could 
explain to me if you have any plans to expand this pilot 
designation program, given the industry demand.
    Secretary Chao. We actually had not. But given that there 
is now funding provided in the omnibus and--you know, how do we 
address the disparity between the 10 that have been selected in 
2016 and many, many other worthy cities and regions, 
localities, counties that can also participate? We haven't 
quite solved that issue, and if you have some thoughts, we 
would appreciate your wisdom.
    Mr. Joyce. Well, certainly, with competition in the 
marketplace, the Buckeyes have always proved to be dominant on 
the football field, much to the chagrin of my chairman's 
University of Miami, but, we certainly would enjoy an 
opportunity to be able to compete, going forward.
    Shifting gears, if you would, I would like to discuss the 
Maritime Security Program. I understand the Department has had 
a tough time enforcing cargo preference among other agencies 
and contractors. To that end, Congress passed legislation in 
2008 as part of the National Defense Authorization Act which 
deems your department the final authority for cargo preference 
enforcement.
    What can we do as appropriators to help ensure that cargo 
preference laws are followed?
    Secretary Chao. I am a tremendous advocate of the U.S. 
Merchant Marine Fleet, the Jones Act including, and also the 
cargo preference. So we have been strong supporters of that in 
the interagency process. There are some others who are not 
supportive, but, currently, I don't see any developments along 
that front.
    And in the MSP program, obviously, the omnibus has 
increased it to the full funding that was requested by the 
operators.
    Mr. Joyce. And is there anything we as appropriators can do 
to help you to that end?
    Secretary Chao. I think that goal has been met, the funding 
has been reached, and the cargo preference enforcement, I 
think, has been--by this department, has been enforced.
    Mr. Joyce. And I also----
    Secretary Chao. We would never have refused help from 
appropriators.
    Mr. Joyce. And my concern is the maritime industry and our 
sealift capacity have reached a diminished state. If we lose 
more ships and mariners, we will lose our ability to support 
our Armed Forces, which you had touched on.
    What additional tools does the Department need in order to 
help us move forward in strengthening our U.S. flag fleet?
    Secretary Chao. It is a very, very tough issue. And I think 
the best way to discuss that is if we can have a conversation 
with you and your staff.
    I am actually considered an expert in transportation, 
especially maritime transportation, and so I know U.S. flag 
shipping very, very well. It has been a long-term issue for 
many years. At the very least, I think we can, right now, hold 
the line, protect the Jones Act, protect cargo preference.
    And, again, there are other agencies within the executive 
branch that do not agree, but--and then, finally, the MSP 
program, as I mentioned. Yeah.
    [The information follows:]
                       maritime sealift capacity
    Congress' support for the Maritime Security Program (MSP), the 
Jones Act, and Cargo Preference ensures that a U.S. flag commercial 
fleet and a trained American mariner force are ready and ``on call'' to 
meet DOD requirements, all while preserving a minimal but critical U.S. 
role in global sea trade. However, the Department must address the 
long-term issue of not having enough U.S. flag commercial ships and 
trained U.S. mariners to fully crew the Government-owned sealift fleet 
in a major extended conflict. The GAO is currently completing an audit 
of the MSP program, and we look forward to receiving the final report 
and reviewing any recommendations they may have to address this need.
    According to MARAD, the Nation requires at least 225 large, 
oceangoing U.S.-flag ships to employ enough mariners to meet sealift 
requirements during a major conflict. As of February 1, 2018, there are 
181 such vessels in the Jones Act and international fleets, leaving a 
shortfall of 44 ships. DOT and MARAD are exploring ways to increase the 
U.S. flag international fleet. The Department looks forward to 
discussing both short and long-term solutions to this problem with 
Congress and industry to develop a shared vision for the marine 
transportation system.

    Mr. Joyce. Thank you.
    And I am running out of time, but I just wanted to thank 
you for the leadership that you have shown. I would like to 
continue to work with your department, especially when it comes 
to the matters involving autonomous vehicles.
    Thank you, Mr. Chairman.
    Secretary Chao. Thank you.
    Mr. Diaz-Balart. Thank you, sir.
    The gentlelady from Massachusetts.
    Ms. Clark. Thank you, Mr. Chairman.
    And thank you, Secretary Chao, for being with us.
    And I want to continue on the maritime topic. And I do 
thank you for your commitment to the State maritime academies.
    And Congress has appropriated $300 million to replace the 
TS Empire State. Thank for your support in this process. And I 
wondered if you had a sense when construction might begin.
    Secretary Chao. There is actually a second ship, the 
Massachusetts State----
    Ms. Clark. Well, I was coming to that. Let's get right to 
that. So the $300 million, I know, under your proposal, that 
was going to be a shared amount for refurbishing of both of 
those ships, at 56 and 52 years old. I know you understand very 
well the importance of having new ships.
    But now that we have separated them, the TS Kennedy is also 
in dire need of replacement. So would you support those 
replacement costs in the fiscal year 2019 budget?
    Secretary Chao. Actually, we have an amendment to the 
budget in which we have requested another $300 million.
    Ms. Clark. Okay.
    Secretary Chao. So that actually could be the second ship.
    Ms. Clark. Right.
    Secretary Chao. So it was originally thought with the $300 
million, the first tranche, that there can be two cargo ships, 
and those can be refurbished, as you mentioned.
    Ms. Clark. Right.
    Secretary Chao. But if it turns out that we have 
discretionary funds available, that $300 million would be 
available for the second ship, that would be a more ideal 
proposal.
    Ms. Clark. Great.
    Secretary Chao. So, as for construction, there is a lot to 
be done before construction.
    Ms. Clark. Okay.
    Secretary Chao. And we don't have, you know----
    Ms. Clark. But you see both of those ships, in the end.
    Secretary Chao. I think the second $300 million is in the 
amendment to the President's budget for 2019.
    Ms. Clark. Thank you.
    On the topic of marines, the United States merchant marine 
academies. I know that you must share our concern about the 
reports of sexual harassment, sexual assault at the academy. 
The events that led to the cancellation of the Sea Year 
program, training program, in June of 2016 were deeply 
troubling, and the subsequent suspension of the USMMA soccer 
team and soccer season, and continued reports of sexual 
misconduct on campus.
    All of this highlighted in the March report by the 
inspector general's office that indicates the academy has 
failed to complete many of the recommendations that they had 
before them. About 45 percent of the 138 recommendations were 
completed. And a lot of this had to do because there were 
vacancies in key positions, including a vacancy in the Civil 
Rights Director position.
    One further example I found particularly disturbing is that 
the academy's sexual assault incident reporting form did not 
even include a field to identify a perpetrator, if known. This 
was not corrected until November of 2017, just a few months 
ago.
    So my question to you is, do you share these concerns? And 
what specific steps since becoming Secretary have you taken to 
make sure that the academy fulfills its duty to keep all of its 
students safe, all of the merchant marines, the young people 
from my district and across the country who go there? And what 
are you specifically going to do to make sure that these 
recommendations from the IG are met?
    Secretary Chao. Of course I am concerned about it. And, in 
fact, when I came on board on February 1, 2017, the issues at 
the U.S. Merchant Marine Academy was among the very, very first 
topics that came to my attention, that I specifically asked 
about and began to address.
    This issue was complicated. You did mention this November. 
We have been working on this since last February, as I 
mentioned. There were complicating issues because, without 
going too much into the personnel issues, there were counter-
charges and challenges. There were----
    Ms. Clark. To the form?
    Secretary Chao. No, not to the form; to the whole issue.
    Ms. Clark. Okay.
    Secretary Chao. So there were criminal, there were civil 
charges. There were also the IG and the Justice Department. So 
there were many agencies that were involved.
    But just because the form was not changed did not mean that 
we were not on it. We have been paying very much attention. The 
Administrator of the Maritime Administration was not confirmed 
until the summertime, or even September 23, I think. So Admiral 
Buzby is now confirmed and on the job. He spends an enormous 
amount of time up at Kings Point.
    There was another problem, obviously, also, of academic 
excellence, with the accreditation issues. So there were many--
and, also, relationships with the alumni. There were a whole 
host of issues up there. And with the new Administrator coming 
on board, this has taken up an enormous amount of his time. I 
have been up there a number of times.
    So, of course, we do not--we will not tolerate any such 
behavior. And we are in the process of changing people, hiring 
a new civil rights officer.
    I don't say this with any comfort, but I do think we are 
seeing an increase in reporting. And we see that as positive, 
meaning that people feel safer in coming forward.
    So I understand your concern about this, because we talked 
about it the last time that I was here. I think the situation 
is improving. We will be more than glad to give you a report, a 
full report. But we also know that this requires constant 
vigilance.
    And this is a wonderful industry for young people to have 
their careers in. It has a very important national security 
aspect. And we want to make sure that young people, young men 
and women, who are going through this program are not only 
learning a trade, a profession, but that they are safe as well. 
So I am all over this.
    [The information follows:]
  
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
       
    Ms. Clark. All right. I am way over my time, but I 
appreciate your offer to give us a more comprehensive report, 
and we will be following up with you. Thank you.
    Mr. Diaz-Balart. And, again, it was important, too, because 
I think this is about as important of an issue as we will ever 
deal with. So thank you for your leadership on that.
    And, Madam Secretary, thank you for yours also.
    And, as far as the NSMV, the ship, we will continue to 
talk. Because, as you saw, this subcommittee, I think, did a 
pretty good job. And, Madam Secretary, I know that is something 
that you have been advocating for. And as we develop the 2019 
bill, we will have to look at what our next step is--what our 
next step is.
    Mr. Young, great State of Iowa.
    Mr. Young. Thank you, Mr. Chairman.
    Secretary Chao, welcome. Thank you for being with us here 
today.
    I want to tag-team on my colleague's comments, Mr. Valadao, 
regarding electronic logging devices, the ELD. As you know, 
there is a waiver out there to delay that for agriculture, 
specifically livestock. But it is really an underlying issue 
about hours of service. It is a difficult issue. You have 
recognized that. We have all recognized that as well.
    It seems, though, maybe it can be simplified if we cut it 
down a little bit by category, and maybe we can find a 
permanent solution for at least livestock. Because I imagine 
that we are just going to continually do 90-day, 90-day kind of 
waivers----
    Secretary Chao. I don't know whether you can do 90 days 
forever either.
    Mr. Young. Yeah.
    Secretary Chao. Not that I don't want to.
    Mr. Young. Sure. So do you think we should just be both 
working together to advocate a permanent solution at least for 
livestock so there can be some certainty there?
    Secretary Chao. Well, I am certainly very open and willing 
to work on this issue. And I think it would also help if 
Members would work with other stakeholder groups that feel very 
differently as well. Because, obviously, this is a very 
difficult issue. There are opinions on both sides--multiple 
sides. The hours of service is an issue, and I have actually 
encouraged legislative action on clarifying that.
    Mr. Young. Uh-huh. I have had a lot of talks back in the 
district on this, and from those----
    Secretary Chao. It is heartbreaking. The stories are 
heartbreaking.
    Mr. Young. Yeah.
    Secretary Chao. Yeah.
    Mr. Young. And I have invited the head of the FMCSA to come 
out and maybe----
    Secretary Chao. Good.
    Mr. Young [continuing]. Just hear these stories. I know 
that the head already hears them, but just get on the ground. I 
think it is very, very important.
    The Highway Trust Fund hasn't been self-sustaining in a 
while, and we seem to be finding funds from the general 
treasury to borrow and to put over in there to keep it going.
    There is a lot of great new technologies out there, new 
vehicles, new fuels out there. There is a big concern that I 
have always had out there, that everyone out there on the roads 
is not paying to play, and that some are out there using our 
roads and not really paying into the Highway Trust Fund.
    And how fair is that? And how do we approach this disparity 
in a fair way? Has the Department been looking at some 
alternatives? I mean, I have been, and there are a lot of 
different ones out there. But it seems like we have to address 
this at some point in a real way, instead of doing what we have 
always been doing.
    Secretary Chao. Well, the wear and tear on roads is real. 
And the heavier a vehicle is, the more damage that it does. And 
vehicles are getting heavier and heavier. And the twin--there 
are now newer technology that has the twin containers--I am 
not----
    Mr. Young. Uh-huh.
    Secretary Chao. So that creates more wear and tear on an 
already stressed and aging infrastructure.
    So, as to how best to address that, the truckers have 
agreed that they actually want a gas tax. And the question is, 
what are other ways in which to increase revenue? And, 
unfortunately, I don't have a good answer for you on that, in 
that we don't really have an agreement----
    Mr. Young. Yeah.
    Secretary Chao [continuing]. Within the administration on 
how to proceed.
    Mr. Young. Would you agree--and this is not a ``gotcha'' 
question, but it seems to me that everybody who is on the roads 
should be paying something. I mean, the new technologies, the 
electric vehicles and those kinds of things, are awesome, but 
you have to pay to play, it seems.
    Secretary Chao. We actually have looked at vehicles-
traveled mileage user fees of some sort.
    Mr. Young. Right.
    Secretary Chao. But we have run into--there has been 
opposition registered by those who fear having an electronic 
chip----
    Mr. Young. Yeah. The privacy issue. I get it. Yeah.
    Secretary Chao [continuing]. Embedded in their vehicle that 
would, again, infringe upon the privacy issues.
    So I think the next--we have the infrastructure proposal 
coming up, we have reauthorization coming up, so I think we are 
going to talk more and more about these issues, because we have 
to come to some kind of a consensus on the way forward.
    Mr. Young. Well, thank you for your open-mindedness on this 
and being part of the solution on this to try to think of new 
ways to make sure that people are paying their fair share in 
this, and the pay-to-play aspect of this, and that we get away 
from, kind of, the funding mechanisms that we have been doing 
before, where we are not--the Highway Trust Fund hasn't been 
self-sustaining and we keep doing what we are doing. So thank 
you for being here and being part of the solution.
    Secretary Chao. Thank you.
    Mr. Diaz-Balart. Thank you.
    The gentleman from sunny southern California, Mr. Aguilar.
    Mr. Aguilar. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for being here.
    The TIGER program, as the chairman and the ranking member 
both mentioned, is a popular program here with this committee 
and in Congress and provides important infrastructure projects 
that I can personally attest to.
    One in my community, the Redlands Passenger Rail Project, 
was an $8.7 million TIGER grant program that I advocated for 
first as a local city council member and local mayor. That is a 
project that will create thousands of jobs and contribute to 
our economy by providing low-income residents with alternative 
and affordable transit routes.
    I have a quote that you gave that said ``TIGER grants are 
direct Federal investments in projects that will improve our 
surface transportation at the national, regional, or local 
level.'' I completely agree. However, for the second fiscal 
year in a row, the administration has proposed to zero-out the 
program.
    Why continue to zero-out the program even though you 
understand the importance that it provides to our 
infrastructure?
    Secretary Chao. Well, we were hoping that the TIGER grants, 
the INFRA grants, would somehow be wrapped into the 
infrastructure proposal.
    There are so many different grant programs now scattered 
throughout the whole department. The TIGER and INFRA grant, for 
example, come out of the policy shop. When I was at the 
Transportation Department over, you know, 20 years ago--I won't 
tell you exactly how many years--policy was a strict policy 
shop. Somehow, because of the FAST Act, the policy shop is now 
an operational arm of dispensing grants, and yet that is not 
the structure.
    So we are struggling a bit, now, especially, with so much 
money coming into the Department. We have to get that money out 
really quickly, because there are deadlines coming. And we are 
talking about an avenue, a channel, a funnel that has 
traditionally not had this much money go through them.
    So we want to invest in infrastructure. We were just hoping 
that with the TIGER and INFRA grant that it would be part of 
the infrastructure proposal.
    Mr. Aguilar. So you don't disagree with the program; you 
disagree with how it is administered within the agency?
    Secretary Chao. Well, the other thing, also, is we weren't 
supposed to have earmarks. So, coming back to the government 
after all these years was kind of confusing, also, to see now 
these different projects that are specifically, kind of, 
designated. So that is another, kind of, confusion.
    But we want to invest in infrastructure. We want to do so 
in a fiscally responsible and efficient way that will be good 
for the community and for the country.
    Mr. Aguilar. Back to the capital investment grants, I know 
many of my colleagues have touched on this before, but specific 
to the review process, one of the criteria, one of the 
evaluation criteria, among many, is population density. And 
since population density is a component of the process, 
applicants, obviously, from more urban areas are more 
competitive when it comes to the grant side.
    The current framework doesn't provide that equal access to 
cities that might be emerging or growing or even from 
disadvantaged areas and highly congested highways.
    How is the Department objectively rating these projects so 
that applicants from regions transitioning from suburban to 
urban are not penalized?
    Secretary Chao. Are you talking about the infrastructure 
proposal or the current TIGER and INFRA?
    Mr. Aguilar. No, no, no. I am talking about the current 
CIG, the current capital investment grant. It is one of the 
criteria, the evaluation criteria, for CIG.
    Secretary Chao. Oh, I think you make an excellent point. 
Most of the CIG grants actually go into urban areas.
    Mr. Aguilar. Right. And I guess what I am saying is, you 
know, the current change of our demographics and geography, you 
know, how can we in the future, you know, better capture those 
emerging and growing communities that are becoming more urban 
and will be? If infrastructure and transportation should be 
investing in where the issues may lie in the future, how are we 
capturing that, from a policy perspective?
    Secretary Chao. Well, we try to do that in the President's 
infrastructure proposal by focusing more on suburban and also 
rural areas. In some years, rural areas have only received 
about 7 percent of the overall funding.
    Mr. Aguilar. Can you share with me an example within the 
infrastructure proposal where a suburban designation, as you 
just mentioned, a suburban or rural----
    Secretary Chao. There is actually a section that would be 
devoted to rural America.
    Mr. Aguilar. You mentioned suburban. So are there any 
examples----
    Secretary Chao. Yeah, so I think that--it depends on what 
you call ``rural.'' Some of them are, like--it is defined as 
250,000, which in some areas could be defined as ``suburban.''
    Mr. Aguilar. I am sure Mr. Young and Mr. Valadao and I 
would probably all have different definitions of what ``rural'' 
might mean----
    Secretary Chao. Yes.
    Mr. Aguilar [continuing]. In different parts of the 
country. So I would welcome more discussion and dialogue about, 
you know, how we reach----
    Secretary Chao. You are concerned about rural and suburban 
areas.
    Mr. Aguilar. Correct. Well, I am just----
    Secretary Chao. Yes. No, no. I just want to----
    Mr. Aguilar. Yeah. Yeah. I am concerned that some of those 
growing communities that are growing in population much faster 
than the rest of the Nation, that they adequately receive 
designation and that the criteria doesn't punitively affect 
them in a negative way where they would be scored less within 
our current framework as an emerging community. That is my 
point.
    Secretary Chao. I understand.
    Mr. Aguilar. Thank you, Madam Secretary.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir.
    And from that State way up north from where I am from.
    Mr. Graves. That is right. That is right.
    Mr. Diaz-Balart. How are you, sir?
    Mr. Graves. Mr. Chairman, thank you.
    Madam Secretary, good to see you. Thank you for your many 
great years of service and joining us today. And 
congratulations on your first year--just over your first year 
of being Secretary of Transportation.
    Secretary Chao. Thank you.
    Mr. Graves. As you know, just over a year ago, March 30, a 
few weeks after you took your new helm here, one of the busiest 
stretches of Georgia's roads was impacted. 225,000 people or so 
travel I-85, and yet it collapsed during a fire one evening 
during rush hour. But with your help and the President's help, 
Federal assistance was flowing immediately, and I want to thank 
you for that. I want to thank you for your swift response and 
for your many visits you have made to our State as well.
    But I know you are aware of this, and I just wanted to lay 
it out for the record and for the committee, that the Georgia 
Department of Transportation had contractors, including C.W. 
Matthews and D.H. Griffin and others, on site with inspectors 
and demolition crews beginning work before the sun came up the 
very next day.
    And it was determined that all the spans across this 
interstate, a hugely busy interstate--three spans southbound, 
three spans northbound--had to be removed and replaced, with 13 
million pounds of debris. And demolition was completed just 7 
days after the accident, construction on the new columns 
beginning. C.W. Matthews had crews going 24/7. And just very 
swiftly, 43 days after this tremendous accident and removal of 
debris and new construction, it was opened up.
    And so it wouldn't have been possible, though, without your 
help and the President's help and certainly the contractors. 
But it was done a month earlier than anticipated, and it was 
because regulations were streamlined, your assistance was very 
swift, the private sector was very engaged and was relied on. 
And so I want to commend you, the Georgia Department of 
Transportation, the contractors, everybody involved.
    And, all that being said, it was rather remarkable. And we 
don't see that happen often with transportation projects, that 
something can go from beginning to end in 43 days, and a new 
construction project.
    So is there anything you can share with us--and hopefully 
you have had a chance to reflect--on, were there any lessons 
learned from that, anything that we can do as a Congress or 
anything you can do in your position? Or is there anything that 
our States have learned from the success of this project that 
might help future projects?
    Secretary Chao. A lot of credit really goes to your State 
and your State Department of Transportation and also your 
Governor. Your Governor was very prescient in staging EMTs and 
highway police around the I-85 intersections at key points so 
that when this accident occurred the police moved in right 
away, within literally 10 minutes.
    And then your Department of Transportation was very 
prescient, in that they were coordinated, they were organized, 
they knew what to ask us for so that we could give the response 
quickly. So, within literally 2 hours of their initial 
notification and request, we gave them $10 million, because 
they had all the papers ready, the documentation was there.
    This also shows that, under certain emergency criteria, we 
can actually streamline the permitting process. Because the 
permitting process was what was taking the most time. And the 
permitting process included concurrently working on some 
surveys, getting agreement within the community as to what was 
duplicative, getting MARTA to be a willing and enthusiastic 
partner in taking some of the passenger load off of the 
highways. I mean, it was a wonderful partnership between the 
State, local, and Federal government.
    And I think, under emergency circumstances like these were, 
everyone's attention is focused. Where the permitting processes 
can be streamlined, it really makes a difference.
    Mr. Graves. Well, thank for your work on that.
    And for the committee and chairman, you should know, I 
mean, ahead of time and under budget a project was completed in 
transportation. So it can be done.
    And so, Madam Secretary, I hope that--there are some great 
lessons to be learned--even outside of emergency situations, if 
there are opportunities to streamline regulations or 
coordination could be a little better, that you would point 
that out and help our States as they are trying to squeeze 
every penny they can out of these limited resources we have.
    But thank you again for your great help there.
    Secretary Chao. That is an excellent point, Congressman, 
that I wanted to echo as well.
    When we have these permitting delays, they actually add to 
the cost and the risk of a project. So, if we can streamline 
the permitting process without compromising the quality, you 
know, of the environment--we all care about the environment. 
Because that is always the one criticism lodged. No, we are 
talking about just doing away with--using commonsensical ways 
to cut red tape and, in so doing, actually save time for these 
projects and, thus, save money and reduce the risk factor as 
well.
    Mr. Graves. Thank you.
    Secretary Chao. Thank you.
    Mr. Diaz-Balart. Thank you. I thank the gentleman.
    Madam Secretary, if that is alright with you, we can do 
another round. We will do it shorter, 3 minutes, if you can 
stay for that.
    Secretary Chao. That is fine.
    Mr. Diaz-Balart. By the way, I would be remiss--I notice my 
former LD, Miguel Mendoza, is in the audience. He was working 
so hard I almost didn't recognize him.
    So, Madam Secretary, let me shift our attention a little 
bit now to the ports. That is something that I know you know a 
lot about and have always been very supportive of, and I don't 
have to tell you the importance to our economy.
    So can you discuss what potentially you can do or are doing 
to prioritize port infrastructure projects? And so, especially, 
for example, programs like TIGER and INFRA, where DOT is making 
funding decisions, is there a way to emphasize and to make sure 
that ports have a better shot at those pots of money, and other 
places?
    Secretary Chao. Well, certainly, the ports are a part of 
the infrastructure proposal of the President. And Chairman 
Shuster--I know that is another committee--was a tremendous 
proponent of the Harbor Maintenance Fund, which, actually, is a 
great program as well. We have also the maritime highway 
programs. So I think we just need to not forget that ports are 
part of the infrastructure of our country as well.
    Mr. Diaz-Balart. Yeah. And I would like to work with you 
on, again, whether it is through TIGER or INFRA--or, for 
example, are there other opportunities for Congress to maybe 
clarify, you know, what authority you may or may not have to 
better support some potential port projects?
    For example, TIFIA, as you know, is a loan program which 
has a large unexpended balance, you know, that, hopefully, 
potentially, could support tens of millions in additional 
projects. And I would love to see if there are ways that--and I 
will follow up with you--to see if there are ways that we can 
look out how, from the current pots of money out there--and you 
mentioned that there are so many different pots of money out 
there--that we could look at working together to kind of 
emphasize the ports, because, as you know, that is a big part 
of our economy.
    Secretary Chao. Great.
    Mr. Diaz-Balart. So I look forward to working with you on 
that.
    Secretary Chao. Of course.
    [The information follows:]
                         tifia port investment
    TIFIA can be used to help finance surface transportation 
infrastructure projects located within the boundaries of a port 
terminal that facilitate direct intermodal interchange or transfer of 
goods into and out of a port. The types of port projects that TIFIA can 
support, include improvements to wharves, piers, docks and waterborne 
mooring infrastructure.
    In addition, other eligibilities include infrastructure or assets 
that facilitate more efficient transfer of goods between ship and 
shore, between vessels, and into and out of the port such as container 
lay-down areas, rail-mounted gantry/ship-shore cranes, and berths. If a 
project satisfactorily meets eligibilities, including a 
creditworthiness review, a TIFIA loan can provide long-term debt at a 
low fixed rate of interest with flexible amortization, thereby lowering 
overall project costs.

    Mr. Diaz-Balart. Mr. Price?
    And, by the way, notice that I am below my 3 minutes.
    Mr. Price. Thank you, Mr. Chairman.
    Madam Secretary, many on the dais today, including our full 
committee chairman, have spoken about the Gateway project in 
New York and New Jersey. At one time, this project was number 
one on President-elect Trump's priority list of emergency and 
national security projects, but that was then.
    I want to be clear: This is a national project with 
national benefits. Each week, constituents from my district 
board the Amtrak Carolinian line, and they travel across the 
Portal North Bridge and through the Hudson Tunnel. So, while 
this tunnel may be located just outside New York City, the 
benefits from high-capacity passenger rail accrue to the entire 
country. And I believe that delaying this project will only 
raise costs in the long term, because we have to get it done.
    So let me turn our attention to what I am arguing is a 
related matter--namely, the Southeast Rail Corridor. This 
corridor would increase connectivity between Atlanta, 
Charlotte, Raleigh, Richmond to Washington, D.C., and up the 
main line of the Northeast Corridor.
    Amtrak has already expanded the Northeast Regional Service 
to Richmond and Virginia Beach. And we have made great strides 
in upgrading the Raleigh-to-Charlotte leg, with the help of 
Recovery Act funds.
    The fiscal 2017 omnibus contained a million dollars to 
stand up the Southeast Rail Commission, modeled after the 
Northeast Corridor Commission, to coordinate rail investments 
in the corridor. So my question is quite simple: Please provide 
us an update on your plans for establishing this commission.
    Secretary Chao. I will do so. I am not very familiar--I 
will do so. Yeah.
    [The information follows:]
                     southeast corridor commission
    The Federal Railroad Administration (FRA) is working with the North 
Carolina Department of Transportation (NCDOT) to obligate the $1 
million appropriated under the FY17 Consolidated Appropriations Act to 
stand-up the Southeast Rail Commission.
    FRA has been collaborating with rail stakeholders in the Southeast 
region over the last two years to develop a Regional Rail Plan that 
outlines a 40-year vision for intercity passenger rail service in the 
region. A component of this long-term vision is to identify the 
institutional and governance structures necessary to support a high 
performing regional rail network.
    NCDOT will serve as the grantee for the $1 million on behalf of the 
states of Virginia, South Carolina, Georgia, Florida, Tennessee, the 
District of Columbia, and the existing Virginia-North Carolina 
Interstate High Speed Rail Compact to formalize and institute the long-
term governance model for the Southeast Rail Commission.

    Mr. Price. All right. Thank you.
    Mr. Diaz-Balart. Madam Secretary, since we have a little 
bit more time, let me just hit you with one final question. And 
that is that the FAA--I will wait until----
    Secretary Chao. I was trying to get an answer----
    Mr. Diaz-Balart. No, absolutely. Please.
    Secretary Chao. I was trying to get an answer----
    Mr. Diaz-Balart. Right. Take your time.
    Secretary Chao [continuing]. For Congressman Price, but I 
don't think I have that one. Let me answer it for the record.
    Mr. Diaz-Balart. And I appreciate you trying to do that for 
the ranking member's question.
    The FAA has utilized advisory committees to collaborate--
and this is on aviation--collaborate with aviation stakeholders 
to advance innovation and safety and to modernize, frankly, our 
air traffic control system. And the NextGen Advisory Committee 
includes both FAA and industry professionals and has helped 
focus and advance FAA's effort to modernize our air traffic 
control system.
    So, last year, by the way, we had members of the NAC meet 
with the subcommittee here to discuss how we can improve our 
air traffic control system. And so we think the NextGen 
Advisory Committee represents just a phenomenal example of 
public-private partnerships that has clearly been a priority of 
the administration and of his--of the President and his 
administration.
    So, given the interest in the advancement of FAA's NextGen 
programs, we would really hope and expect that you would advise 
us in advance of any plans to change the NAC's mission, the 
structure, or the charter. And we would really hope that, if 
there are going to be any changes there--because we have worked 
with them--if you could let us know ahead of time.
    And it would be great if we could hear from you and get 
that assurance from you. Because, again, we have worked with 
them. We see their value. And we would like to make sure that 
we are in the loop if there are any changes that are going to 
take place.
    Secretary Chao. We will do so.
    Apparently, you are talking about the Radio Technical 
Commission, I think, as well.
    Mr. Diaz-Balart. Yes, ma'am.
    Secretary Chao. They are currently in contract negotiations 
to hopefully, I think, gain the Commission's agreement to 
continue to support these advisory committees.
    So we are very committed to the work of the committee. 
There is some requirement to recharter, according to the 
Federal Advisory Committee Act requirements, but we will keep 
you in----
    Mr. Diaz-Balart. That is great. And that is what I would 
like. Let's stay in contact on that. It is just--again, it is a 
group that we have worked with rather closely over the years 
and find them to be very helpful. And, it is because it is all 
of the, you know--it is a lot of the stakeholders are there.
    Mr. Price, further questions, comments?
    Mr. Price. One further question.
    Mr. Diaz-Balart. Absolutely.
    Mr. Price. I appreciate the chance to ask it.
    It has to do with a matter that, I am sure, Madam 
Secretary, we talked about last year--namely, the controversy, 
it is fair to call it, at that point, about the way your 
department and other departments responded to oversight 
requests.
    Let me just recall what you said to Ranking Member Nita 
Lowey at that point. You said, ``It has always been my history 
to work with both sides. I have always done it that way and 
will continue to do so. But there is a precedent that oversight 
questions are handled in a certain way. Again, we are not 
talking about requests for data or information needed for 
developing legislation or any information a Member needs to 
help constituents.''
    I bring this up because Democratic colleagues on the 
Transportation and Infrastructure Committee tell me that when 
they recently requested copies of positive train control 
implementation reports they were told to go to a website. They 
were simply----
    Secretary Chao. We are pretty transparent.
    Mr. Price. ``Go to the DOT website.'' Well, I will--''Go to 
the DOT website.'' And when they went there, this is what they 
found.
    Secretary Chao. Well, that is--I don't think that is right.
    Mr. Price. Well, there it is. This is the best we could do, 
apparently.
    Secretary Chao. Well, let me definitely check into that. 
Yeah.
    Mr. Price. Heavily redacted, heavily redacted reports that 
made it impossible to make any sense of it. You couldn't view 
data. You couldn't assess the progress you are making toward 
complying with the law or understand what further legislation 
might be required.
    So I do hope you will follow up on this. Is this an 
isolated incident, or is this the response that you----
    Secretary Chao. No. We try to be----
    Mr. Price [continuing]. Typically give to data requests? 
And do you think we are entitled to full, unredacted copies of 
such documents?
    Secretary Chao. Well, we certainly want to be transparent. 
And I don't know what happened on that page with the PTC, 
because we actually have a great story.
    I personally have gotten involved on this issue. I sent a 
letter to all of the CEOs of rail and transit, telling them 
that their deadline is coming, December 2018, and that they 
need to get ready for it.
    We have been having stakeholder meetings. The newly 
confirmed FRA Administrator, Ron Batory, and his team have met 
with over 41 rail companies, transit, and they are continuing 
to meet with suppliers.
    So we actually have been very transparent, and we thought 
that we would have just put it all up there. So let me take a 
look at that.
    Mr. Price. Thank you. I hope it is an aberration and would 
appreciate whatever steps you need to take to correct this. 
Thank you very much.
    Thank you Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir.
    Madam Secretary, let me first thank you again for your 
participation today, for your answers, and, again, for your 
willingness to step up as you have. The committee staff will be 
in contact with your budget office regarding questions for the 
record.
    I do want to mention one more time, on a personal note, my 
gratitude for your sensitivity and--frankly, your just--what is 
the right word--your willingness to step up, come forward 
immediately after that tragedy of the overpass at FIU and how, 
again, as I mentioned, before I was even able to call you, you 
called me. And so thank you for that.
    Madam Secretary, I know there will be a number of other 
questions that will be submitted. And so I would ask, please, 
that you work with OMB to return the information for the record 
to the subcommittee within 30 days from Friday, which will 
allow us to publish the transcripts of today's hearing and, 
obviously, so we can continue to make informed decisions as we 
put together the fiscal year 2019 bill.
    Mr. Diaz-Balart. Mr. Price, any further comments?
    Mr. Price. No.
    Thank you, Madam Secretary.
    Mr. Diaz-Balart. Madam Secretary, I look forward to 
continuing to work with you.
    Secretary Chao. Thank you.
    Mr. Diaz-Balart. With that, this hearing is adjourned.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    

                                           Tuesday, April 17, 2018.

   DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--OFFICE OF PUBLIC AND 
                             INDIAN HOUSING

                                WITNESS

DOMINIQUE BLOM, GENERAL DEPUTY ASSISTANT SECRETARY FOR PUBLIC AND 
    INDIAN HOUSING
    Mr. Diaz-Balart. We will call the subcommittee to order 
now. Good morning.
    Today we welcome General Deputy Assistant Secretary for the 
Office of Public and Indian Housing, Dominique Blom, from the 
Department of Housing and Urban Development, to really discuss 
the Fiscal Year 2019 Budget Request for those programs 
administered by public housing authorities, and obviously our 
partners in Indian Country.
    The core mission of PIH is to provide residents with the 
dignity of a safe, decent and affordable place to live, and at 
the same time provide opportunities and incentives for economic 
self-sufficiency, obviously, and also independence. Fulfilling 
this promise is one of the most fundamental roles played by the 
Federal Government and communities across the country.
    A role that will consume over 40 percent of HUD's net 
budgetary resources this fiscal year, and so in light of this, 
the Subcommittee gathers today to dedicate special attention to 
those critical elements of the HUD Budget Request.
    For the fiscal year 2019, the HUD request is 24.5 billion 
in new budgetary resources for PIH programs, which is a rather 
dramatic reduction from fiscal year, the 2018 enacted level.
    Now, as I said before, to be fair, the request was 
formulated before the recent bipartisan budget caps deal, and 
the passage of the Omni--of the Omnibus.
    So, obviously, I am curious to learn about what those 
numbers may look at, and what you are looking at as well for 
any potential changes.
    It is critical for us to understand how this request can 
afford two years of rent inflation without, frankly, 
potentially cutting off support to vulnerable families, who 
rely on HUD for their housing.
    Once again, I want to acknowledge that in the wake of the 
Caps, of the Caps Deal and the 2018 Omnibus, the 
administration's budget request has been somewhat overcome by 
events, and because, again, this was done before those new 
numbers, but it is a relevant representation of the 
administration's priorities, that is what the budgets are, and 
we look at it that way in principle. So, I look forward to 
hearing from our witness today.
    We also understand that the Department is working on a yet-
to-be-released legislative proposal to reform how PIH programs 
work, and that these reforms impacted, potentially impacted the 
formulation of the budget request.
    Now, as you know, such reforms are outside of our 
jurisdiction as appropriators, because again, it is 
authorizing, those are the Authorizing Committee. So, while we 
look forward to the administration's reform ideas, fiscal year 
2019 is less than six months away, and we are moving full steam 
ahead and, again, we had the responsibility in the Subcommittee 
to adequate--fund the PIH and its state and local partners, as 
they currently function.
    So, again, we look forward to your testimony. We want to 
thank you for your service and for being here, and look forward 
to continue working with you on such a huge issue for the 
Subcommittee, Full Committee and for the entire Congress and 
the country.
    And now let me recognize my friend and my partner, the 
Ranking Member, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I would like to join 
you in welcoming the Acting Assistant Secretary for Public and 
Indian Housing, Dominique Blom, Ms. Blom, thank you for your 
good work and for being with us today.
    HUD's Office for Public and Indian Housing administers a 
wide range of housing programs that provide critical lifelines 
for millions of low-income Americans.
    These programs include tenant-based Section 8, traditional 
public housing, Native American Housing Block Grants, Choice 
Neighborhood Grants, VASH vouchers for veterans, and several 
Resident Self-Sufficiency initiatives. And totally they account 
for more than $30 billion in annual funding.
    These programs serve some of those vulnerable people in our 
society, the elderly, the disabled, children, veterans, and 
single parents trying to make ends meet. Unfortunately, studies 
from HUD and other sources indicate that more and more families 
are struggling to pay rent.
    Calls for housing, transportation, medicine, education, all 
of them keep increasing. At present only one of four people are 
eligible for Federal rental assistance can receive it because 
of funding restraints. At a time when we should be making 
housing a front-burner issue in this country, and we seem to be 
falling further behind.
    This is not a reality any of us should be comfortable with, 
in fact, it should force us to ask tough questions about our 
values and our priorities.
    Given the fact that last year's budget request was roundly 
rejected on a bipartisan and bicameral basis, it is surprising 
and disappointing to see the administration doubling down in 
its fiscal 2019 request. The request includes 41.2 billion in 
funding offset by 10 billion in receipts. The total budget 
authority provided in the request would be lower than the 
fiscal 2017 enacted level by approximately $7 billion or 15 
percent.
    This request is especially alarming in the context of the 
recently-enacted 2018 Omnibus, which included a long, overdue 
10 percent increase to the HUD budget.
    For example, HUD's 2019 request for 18.7 billion for 
tenant-bases Section 8 renewals is more than 800 million below 
the 2018 enacted level. This request could lead to current 
voucher holders losing their assistance.
    If I am right about this, I hope HUD will concede the fact, 
and then provide the Subcommittee with revised budget estimates 
as soon as they possibly can.
    The budget request also proposes eliminating the Choice 
Neighborhoods Initiative, a highly successful program that 
leverages outside investment to transform and revitalize 
struggling communities.
    We have seen this program and its predecessors, HOPE VI, 
work to great effect in North Carolina and many other places 
across the country. And I feel confident in saying there is no 
other program in the HUD portfolio like it; that has a similar 
comprehensive impact.
    The 2018 Omnibus provided 150 million for Choice 
Neighborhoods, the most funding in the program's history, and I 
do want to commend HUD from promptly releasing the 2018 Notice 
of Funding Availability so soon after the Omnibus Bill was 
signed into law. We commend you for that.
    Returning to the 2019 request, the Department will 
eliminate the Public Housing Capital Fund, despite a massive 
maintenance backlog in our deteriorating public housing stock. 
This decision was viewed alongside the request for 100 million 
in new RAD subsidies, implies that HUD intends to phase out 
public housing.
    If the intent behind this proposal is to move all public 
housing to Section 8 funding streams via RAD conversions, then 
we have a data corresponding increase in funding for Section 8. 
This is conspicuously absent from the request, so we need 
further explanation. What is going on here? What is 
anticipated?
    Finally, I would like to once again register my concerns 
with the Department's so-called rent reforms which would 
essentially shift HUD program costs onto residents. Raising 
minimum rents, imposing work requirements, eliminating long-
standing rent deductions for medical expenses and other costs. 
All this could have serious repercussions for the people who 
rely on housing assistance. And, as the Chairman has said, if 
such changes are to be considered they are best left to the 
authorization committees.
    Ms. Blom, I look forward to your testimony today, in 
working with you and my colleagues to ensure that the Office of 
Public and Indian Housing has the resources necessary to 
complete your vital mission.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Ms. Blom, your full 
written testimony will be included in the record. Again, thanks 
for being here. And you are recognized.
    Ms. Blom. Good morning. Thank you for having me. Good 
morning Chairman Diaz-Balart, Ranking Member Price, and Members 
of the Subcommittee. Thank you for inviting me here today to 
discuss our work in HUD's Office of Public and Indian Housing.
    I am Dominique Blom, the General Deputy Assistant Secretary 
for PIH.
    Our mission has three parts. One is to ensure safe and 
affordable housing for low-income families; two, to create 
opportunities for residents' economic self-sufficiency and 
independence, and three, to ensure fiscal integrity by our 
program partners who administer our funds and the residents we 
collectively serve.
    PIH manages a range of programs for low-income families, 
including the Public House Program, the Housing Choice Voucher 
Program, and programs that serve the Native Americans, like the 
Indian Housing Block Grant.
    Our programs total more than $30 billion in the fiscal year 
2018, funding accounting for more than half of the Department's 
budget.
    I am a Senior Executive among HUD's career staff have I 
have served the Department through several administrations in 
several different capabilities. I am honored to represent PIH 
here today, as we await the confirmation of our Assistant 
Secretary Nominee, Hunter Kurtz.
    Among the guiding principles that drive PIH programs is 
providing local communities with the flexibility to best manage 
their affordable housing resources. My team is also driven by 
the desire to support HUD-assisted households with housing 
opportunities and then sending them on a path towards self-
sufficiency. And Secretary Carson testified last month to this 
committee, the 2019 budget includes some difficult choices.
    However, we believe that the request ensures that HUD can 
continue to serve the most vulnerable populations, specifically 
the elderly, and persons living with disabilities.
    Despite millions of dollars in investment over the last 75 
years, the remaining one million public housing units across 
the nation, an estimated capital needs of over 25 billion with 
that figure growing annually by 3.5 million.
    This is a problem that requires a comprehensive and 
collaborative approach for many partners. The administration is 
working on transforming public housing by providing public 
housing authorities with a range of tools to accomplish what 
years of shrinking funds have failed to do, reposition public 
housing onto a more stable platform.
    One of the ways we are doing this is through the Rental 
Assistance Demonstration. RAD has enabled PHAs to general an 
additional $5.4 billion in private and public investment to 
construct or rehabilitate hundreds of thousands of units. RAD 
is a proven approach to recapitalize the nation's at-risk 
public housing stock.
    In fiscal year 2019 we hope to receive funding for RAD, to 
make this a viable preservation strategy for properties with 
severe capital needs.
    Thank you for lifting the RAD limit to 455,000 units. You 
are helping PHAs move forward with recapitalization strategies 
and ultimately provide better housing for thousands of families 
across the country.
    To further help PHA's repositioning their public housing, 
we have updated our policy on demolitions and dispositions, and 
we are evaluating the cost-effectiveness of funding certain 
public housing units, through a subsidy program.
    Our goal is to give PHAs greater flexibility to manage 
their properties, but also ensure that families remain assisted 
while providing them with greater housing choice.
    For Fiscal Year 2019 Funding Request also reflects our 
focus on putting families on a path towards economic 
independence. The Family Self Sufficiency and Jobs Plus 
programs connect residents to job search, job training, 
financial education, child care assistance, and many other 
services.
    The programs have changeable results that create real 
change in residents' lives. The FSS Program, more than half of 
those who graduate go on to become homeowners. And the Jobs 
Plus Program has helped place 2,500 residents into part-time 
and full-time employment.
    Building off the success of the HUD Veteran Affairs 
Supportive Housing Program, we have made great strides in 
implementing the Tribal HUD-VASH Demonstration Program in 
partnership with the VA.
    As of this month, 320 Native American Veterans have 
received case management services, and 273 veterans have been 
housed using the Tribal VASH Program.
    Our VASH Programs have provided 144,000 veterans with 
housing assistance and supportive services since 2008. 
Fostering long-term stability in preventing future returns to 
homelessness.
    In closing, PIH programs have advanced HUD's mission to 
provide, safe, fair and affordable housing for American people. 
PIH is committed to improving the lives of low-income families, 
by increasing flexibilities for our local housing partners, and 
increasing incentives and opportunities for self-sufficiency.
    I have been in public service at HUD for nearly 25 years, 
and believe the value of affordable housing for communities, 
and more importantly for the families that live there.
    Thank you for the opportunity to speak with you this 
morning. And I look forward to answering your questions.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Diaz-Balart. Thank you, again, for your testimony, for 
being here, but more importantly, for your service.
    Ms. Blom. Thank you.
    Mr. Diaz-Balart. So, we will begin with the usual, the way 
we always do it, right, alternating, and depending who got here 
when, 5-minute rounds. Is that all right, Mr. Price?

                          PUBLIC HOUSING CUTS

    Mr. Price. Yes, it is.
    Mr. Diaz-Balart. All right. So, I will begin. The request 
for public housing slashes funding by more than a half, and the 
budget also includes $100 million for Section 8 conversions, 
and 30 for--$30 million, I should say, for demolitions. So all 
this is characterized as a strategic reduction, a strategic 
reduction to public housing.
    And again, as I mentioned before, obviously I get it that 
all the numbers were before the Omni and before even Bipartisan 
Budget Deal.
    But as soon as you can, if you can explain the rationale 
behind those kind of proposals, and those rather dramatic 
reductions in public housing?
    Ms. Blom. Thank you very much for the question. In looking 
at this first from the big picture, the national budget and 
looking to see that the President is dedicating funds to 
national security and defense.
    Given that, within the HUD budget, the Secretary is 
determined that there are priority programs that first needed 
to be funded, first, ensuring that those who are the most 
vulnerable, receive protection, so the elderly and the 
disabled; second, to ensure that families and individuals who 
are homeless today receive assistance, and for those that are 
affected by lead-based paint, that we are going more to assist 
those families.
    Within that context, that then means that there are very 
difficult choices that the Department needed to make, and 
unfortunately that meant reduced funding for the public housing 
program.
    But I think what we are seeing here is a shift from public 
housing as we know it, to putting public housing on a more 
sustainable platform that being the Section 8 Program.
    As a result of that, we are asking for additional funding 
in the fiscal year 2019 budget, $100 million for the Rental 
Assistance Demonstration (RAD) to ensure that the RAD Program 
remains successful and viable.
    As a result of RAD we have had over $5.4 billion of funding 
dedicated to public housing, making that stable in long-term 
housing resource for families for years to come.
    We also believe that smaller housing authorities will need 
assistance of demolition funding, that where smaller housing 
authorities have distressed property, they don't receive enough 
capital funding, even with prior year's funding, to be able to 
demolish that severely distressed housing.
    So, $30 million of demolition-only funding, we believe will 
help particularly small housing authorities reposition their 
public housing. And, again, the Department is seeking 
additional funding for tenant-protection vouchers. We believe 
that this is critical to provide housing authorities and the 
residents the ability to reposition public housing, and to 
provide residents with choices.
    Mr. Diaz-Balart. And I understand again that, you know, you 
are dealing with different numbers, and so it would be helpful 
however--are you all planning to do an amendment? Because here 
is the issue, we are putting these bills together now, we are 
pulling the bill together now, and so I think it would be 
helpful for all of us to have, you know, an updated, of what 
some of your priorities may be, now that we do have different 
numbers.
    Because otherwise, we frankly do it with very delinquent--
from the administration which I think is a shame; and so, I 
think, any idea if you all are looking at doing an amendment?
    Ms. Blom. So, for now, the fiscal year 2019 budget stands 
on its own, that reflects the President and the Secretary's 
priorities for the Department of Housing and Urban Development.

                       PUBLIC HOUSING DEMOLITION

    Mr. Diaz-Balart. You mentioned demolition, and so, you 
know, the taxpayers have invested for a long, long time on 
housing stock, right? And any idea how many of those, 
potentially could be lost, if we don't adequately fund it?
    And I know that you have--again, you mentioned you have 30 
million for demolition. You mentioned that some of those are 
for older buildings that are, you know, obviously problematic, 
but any idea if we could lose stock if we don't adequately fund 
it? Or, how many more we would have to demolish if we don't 
potentially, adequately fund them.
    Ms. Blom. Sure. Thank you. The strategy here is that we are 
reposition public housing. So, overall, there should not be a 
tremendous loss of affordable housing units in the community. 
This is the reason why the Department is asking for additional 
funding, for tenant protections, up to $140 million that is $60 
million more than what we would need in an average year, 
because we want to be able to dedicated those resources to 
housing authorities as a result of demolitions that may be 
occurring with the $30 million, as well as other repositioning 
strategies now that we have provided more flexibility.
    We don't want to see a net reduction of affordable housing 
in communities.
    Mr. Diaz-Balart. Thank you. Mr. Price, you are recognized, 
sir.
    Mr. Price. Thank you, Mr. Chairman. Madam Secretary, I want 
to pursue the same line of questioning, because while I don't 
doubt that there are overall constraints, self-imposed 
constraints, I must say, by this administration to low-ball 
housing in general, and public housing in particular, even 
granting that, the tradeoffs in this budget proposal, just 
don't make sense to me, so I want to ask you about them.

                           TENANT PROTECTIONS

    First of all the Tenant Protection Vouchers, I don't 
understand why that is an answer to any of this. We always have 
a certain amount of money for Tenant Protection Vouchers, there 
is a certain turnover there that we have to deal with.
    It doesn't seem to me that that request is of sufficient 
magnitude to deal with the dislocations we would anticipate 
from other aspects of the budget.
    But maybe you can help me out. You are talking about 
slashing the Public Housing Capital Fund by 68 percent. That is 
the principal source of funds to preserve housing for more than 
two million citizens.
    Now, we didn't accept this last year, or anything like it, 
but instead of taking that lesson to heart, the administration 
is now doubling down, proposing to totally eliminate the 
capital fund. It appears you are merging the capital fund, and 
that the operating fund, but then you are also cutting the 
operating fund by 25 percent from the fiscal 2017 level.
    The Omnibus increases the capital fund, so I just don't 
understand. This is totally unresponsive to the Omnibus, and 
internally, just in terms of the tradeoffs, it doesn't make 
sense.

                    RENTAL ASSISTANCE DEMONSTRATION

    Now, what about RAD? What about rental conversions? Well, 
if you envision RAD conversions as some kind of answer to this, 
then wouldn't we see a corresponding increase in Section 8 
funding for new people who will be served by vouchers? And then 
what about these housing authorities for whom, for whatever 
reason RAD isn't the answer?
    Please, help me figure this out.
    Ms. Blom. Thank you very much, for the question. When we 
look at the PIH Budget Request, the principles behind our 
requests are three-fold. First, that we want to ensure that the 
residents who are currently receiving Housing Choice Vouchers, 
can continue remain in their housing.
    For the budget request that we put forward, anticipated 
that there would be no terminations from the program. That is 
the most important factor when looking at the PIH budget, which 
then meant that, unfortunately, funding that traditionally has 
funded the public housing program, was used to ensure that 
families continue to be housed in the Housing Choice Voucher 
Program.
    The second principle behind the PIH budget; is for economic 
self sufficiency, this is the reason why the Department 
continues to seek funding for the Family Self-Sufficiency 
Program, and the Jobs Plus Program.
    And then third, asking for some additional funding for 
repositioning of public housing. It is the reason why we are 
asking for the $100 million of RAD so that despite decreases in 
the funding request for the capital fund and the operating 
fund, that 30,000 units of public housing would continue to be 
repositioned through the rental systems demonstration.
    That we continue to ask for increased funding for the 
tenant protection account, so that housing authorities can 
reposition their developments through utilizing low-income 
housing tax credits, and other funding sources.
    It is those three principles behind the PIH budget, 
dedicating funding towards specific ways that housing 
authorities can reposition, provide assistance to low-income 
families, and also ensure that residents who receive Housing 
Choice Vouchers continue to remain in their homes.

                              ROSS GRANTS

    Mr. Price. Well, as to the encouragement of self-
sufficiency, it would make more sense if you actually were 
increasing those accounts, right? But you have referred now 
twice to the Jobs Plus, you are cutting that by 5 million in 
this budget.
    The Resident Opportunities and Self-Sufficiency Grants, or 
ROSS grants, you are proposing to totally eliminate. And you 
are flat-funding the Family Self-Sufficiency Grant. So what 
kind of answer is that?
    I mean, how? It just doesn't add up. That is my point. I 
don't think the Tenant Protection Grants are increased in 
anything like the magnitude that they will take to offset these 
dislocations. And then it is just like everything is being cut. 
You are transferring these funds, from one account to another 
supposedly, but then it all ends up being flat-funded or worse.
    Ms. Blom. So, I would have to say that this budget reflects 
very difficult choices that needed to be made. Ideally----
    Mr. Price. Excuse me. Choices, who are the winners? Can you 
tell me that? Choice implies some win some lose. What wins 
here?

                          HUD BUDGET INCREASES

    Ms. Blom. So, in the overall HUD Budget, we see increase in 
homeless assistance programs, we also see increases in the 202 
and 811 programs, and also increases for lead prevention. So, 
those are the main areas where HUD sought increased funding, 
which unfortunately meant that there was some reductions in the 
public housing account.
    Mr. Price. We will explore this further. It strikes me that 
202, 811 and I'm very, very eager to see those programs thrive, 
it doesn't appear that there is a direct pipeline, so to speak, 
from the people you are cutting. And we want to have it 
documented that nobody loses their housing here, and that we 
are talking about a no-net-loss proposition. That needs to be 
verified.
    But the 202 and 811 programs, it seems to me that is 
largely irrelevant, those programs need to thrive, but it is 
not going to take care of the people coming out of public 
housing under these proposals.
    Ms. Blom. So, for the public housing program we are looking 
to see how housing authorities can receive more flexibility, so 
that they can reposition their development so that public 
housing residents are living in safe and decent housing long-
term. And that will mean that over the next several years, 
looking to access additional tax credits for housing 
authorities, being able to leverage other funds, so that there 
is still affordable housing for public housing residents.
    Mr. Price. Well, we are certainly going to need to do that, 
because even if nobody was going to lose their housing under 
these proposals, you are talking about 25 percent of the people 
who need and would be eligible for this kind of support, not 
getting it.
    It is not at all unusual in our communities to have 
hundreds, thousands of people paying 60, 70 percent of their 
income in rent. It is a crisis. And we need a budget that 
addresses it.
    Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. But I just want to make 
sure that I was clear about, so you did an amendment that was 
after the deal before the Omni, and so I just look forward to 
continue working with you on that.
    Great leader in the Subcommittee, the gentleman from 
California, Mr. Valadao.

                          MOVING TO WORK DEMO

    Mr. Valadao. Thank you, Chairman. Thank you. General Deputy 
Assistant Secretary. My question: in 2016 Congress authorized 
and expansion of the Moving to Work demonstration which HUD is 
currently implementing. There are public housing agencies in my 
district that are interested in participating in expanded 
moving toward demonstration.
    I understand from your testimony that the Office of Public 
and Indian Housing Plan to announce the first round of the 
expansion, the Public Housing Agency at some point this year. 
Do you have a specific timeline on when the expansion will take 
place? How many PHAs do you expect to be included in this 
round? And what is your timeline or the rest of the 100 that 
were authorized?
    Ms. Blom. Thank you very much, for allowing me the 
opportunity to let you and the Committee know where we are with 
our MTW expansion. Thank you very much for authorizing 100 new 
agencies to be added to the program.
    We are currently in the process of updating the notice that 
governs the expansion program. We call that the operation 
notice, it is going through the final review at HUD and then it 
will be published in the Federal Register for public comment 
again for a 30-day period. At the time that we published that 
operations notice for public comment again, we will be 
publishing our--what we call our selections notice. This is the 
notice that will add the first cohort of MTW agencies to the 
program. We are anticipating that 30 out of the 100 agencies 
will be added this way and it will be testing the MTW 
flexibilities themselves. Dow do the combined funding of MTW, 
as well as the statutory, regulatory flexibilities allow 
smaller agencies to be able to provide enhanced self-
sufficiency and housing choices for families.

                            PHA FLEXIBILITY

    Mr. Valadao. Aside--I am sorry. Aside from moving to work 
fiscal 2019 HUD Budget request includes a number of proposals 
that could provide similar flexibility for a small public 
housing agencies, can you discuss those proposals and how they 
might relieve administration burdens and promote more 
flexibility for small and rural public housing agencies?
    Ms. Blom. The Senate has proposed a bill, Senate, 2155, 
that the Department endorses and supports that will provide 
smaller agencies with more flexibility. Reduced schedules for 
HUD inspection of public housing units, as well as reduce 
inspection at housing authorities need to administer for the 
Housing Choice Voucher Program. But aside from that, the 
Department is looking to see how can we reduce burdens for 
small PHAs. We are very eager to be able to finalize the less 
remaining components of HOTMA which was enacted in 2016 which 
would provide smaller rules, larger agencies with more 
flexibility to be able to administer their Housing Choice 
Voucher Program. So, we continue to look to see how we can 
ensure that we are reducing burden for small PHAs.
    Mr. Valadao. What is that doing using the current statutory 
authority to relieve these administrative burdens and promote 
more flexibility?

                                 HOTMA

    Ms. Blom. So, our main vehicles today are looking at 
implementation of HOTMA, which I just spoke about. We are also, 
as part of our regulatory reform, have pulled back several 
regulations that would affect small and large housing 
authorities. We are no longer seeking to implement our physical 
needs assessment. We are no longer putting enhanced 
requirements for demolitions and dispositions. Those are some 
of the ways, not just for small agencies, but all agencies that 
we are hoping to reduce burden.

                                HUD VASH

    Mr. Valadao. All right, let us switch--change a little bit 
here, topics. The district I represent continues to experience 
Veteran homelessness, as do other parts of California and the 
country as a whole. As a most recently published point in time 
count for 2017, the counties in which the district is located 
has 346 Veterans that are homeless. The HUD budget for fiscal 
2019, proposes no new funds for the HUD VASH Program which has 
been used in the district to help homeless Veterans find 
housing. Can you walk me through the process of how the 
Department determined to not request new VASH vouchers and I 
understand parts of the country are underutilizing VASH 
vouchers. How are you encouraging public housing authorities to 
quickly utilize these vouchers and help homeless Veterans?
    Ms. Blom. Right. Thank you. The Department cares very much 
about our homeless Veterans and for that reason, we continue to 
administer the HUD VASH Program as well as the Tribal HUD VASH 
Program. With regard to traditional VASH, the Department is not 
seeking additional funding in fiscal year 2019 because we 
believe that given the funds that Congress has already 
appropriated, it is sufficient to be able to address the 
current need. What we have seen in some jurisdictions is that 
they have with their current allocation of VASH vouchers been 
able to serve all of the Veterans that are looking to be 
housed. Where there is a surplus of vouchers, we are now 
working with those communities along with the VA to see how can 
we redistribute those funds, first within that same community 
to address other homeless Vets who are not eligible under the 
VA requirements. And to the extent that, that entire community 
may not need HUD vouchers. We are looking to see how we can 
distribute those HUD vouchers across the country for higher 
need communities.
    Mr. Valadao. Thank you, Mr. Chairman, I yield back.
    Mr. Diaz-Balart. The gentlelady from Massachusetts is 
recognized.

                              RENT REFORM

    Ms. Clark. Thank you, Mr. Chairman. Thank you for being 
here with us today. One of the questions I had is the budget 
justification from HUD submitted to this Committee states that 
the Department will be proposing a legislative package of 
comprehensive rental assistance reforms. I believe those were 
promised in March. It is now the middle of April. I know my 
office has asked repeatedly to get a copy. And we know that the 
FY19 budget according to your testimony incorporates these 
rental reforms, which leads me to believe that you have 
finalized them if you were able to calculate your budget on 
them. So, is that correct? Do you have a final reform proposal 
and can we see it?
    Ms. Blom. Yes. So, thank you very much for the question on 
our rental reform program. We are finalizing the rental reform 
program and in the next few weeks, the Department anticipates 
being able to release that rental reform legislation to the 
Hill and begin the conversation about rent reform; how we can 
create a more simplified way to calculate rent; how we can 
encourage work through tri-annual re-certifications instead if 
annual re-certifications and how we can treat our residents 
with dignity. So, we believe that this is the beginning of a 
conversation with your Committee and authorizers to be able to 
look to see how we can create a more simplified transparent and 
more dignified way of calculating rent for all of our HUD 
assisted renters.
    Ms. Clark. So, how is the rent reform incorporated into 
your budget proposal if it is not finalized?
    Ms. Blom. So, we did create some estimates that we use as 
part of our calculation for the amount of funding that we are 
asking for the Housing Choice Voucher Program. It did not 
impact the request of funding for the public housing operating 
fund. So, we did have some estimates for that, but from the 
time that the budget was released to now, there have been 
refinements to that. And we look forward to having a discussion 
with you on that budgetary impact as well as the more important 
policy discussions that we look to have on rent reform.
    Ms. Clark. And do you have a final date for release at this 
point. You said a few weeks, more or
    Ms. Blom. Yes. We anticipate in the next couple of weeks, 
that it will be released and we will be able to further discuss 
with you and other members the fine points to our rental reform 
proposal.
    Ms. Clark. Okay. Also, as part of your budget 
justification, you said that the current rent structure and 
HUD's rental assistance programs create disincentives to 
employment and stable family formation. Can you define for me 
what HUD means by the phrase, ``stable family formation''?
    Ms. Blom. Yes, let me provide a little bit of context and 
then I will answer that question directly. What we see today is 
part of our rent calculation, is that every time a resident--is 
it increase in wages or goes from not working to working, there 
is a 30 percent tax on that residence income. So, likewise, if 
a person is added to the household, whether that is a parent; 
whether that is a husband or a wife, if that additional person 
is added to the lease, there is automatically a 30 percent 
increase in the rent that needs to be collected. So, we believe 
that by having tri-annual re-certifications instead of annual 
re-certifications that it will allow families who are currently 
not together on the lease to be able to be together on the 
lease and that way live together in that home.
    Ms. Clark. So, it is nothing to do with the definition of 
stable families like, a single mom or a grandparent raising a 
child, or----
    Ms. Blom. It would be stable family formation, which could 
be a husband and wife. It could be an individual with another 
family member joining into the family to be able to help with 
providing good parenting; parental role models for the children 
that are living there.
    Ms. Clark. So, you are looking at increasing mandatory 
minimum rents and increasing tenant rent contributions. How is 
this going to incentivize stable family formation?
    Ms. Blom. So, I think that component of the rent reform is 
less about stable family formation and more about ensuring that 
our assisted housing programs can be viable for the long-term; 
that we are looking for shared responsibility for the rent and 
for the cost of public housing--the Housing Choice Voucher 
Program and the multi-family programs that given budget 
constraints, that the HUD budget along is not enough to be able 
to ensure that all those families that are currently housed can 
remain housed. For this reason, we are asking for a sharing of 
responsibility and for residents to be paying a little bit 
more.
    Ms. Clark. All right. My time is expired, thank you, Mr. 
Chairman.
    Mr. Diaz-Balart. Thank you. Mr. Joyce. Mr. Joyce. I think 
you can go unless you are--you need a little more time to 
prepare, we can give that to you, but--
    Mr. Joyce. Oh, no, I am fine.
    Mr. Diaz-Balart. You are always ready, Mr. Joyce. You are 
always ready.
    Mr. Joyce. I was going to defer, but I appreciate it. Thank 
you. Thank you very much for being here today and I understand 
the work HUD is doing to encourage families to achieve economic 
self-sufficiency and independence. Can you elaborate on the 
work the Jobs Plus Program has done to support work readiness 
for fulfill community workforce needs and promote quality job 
placement?

                               JOBS PLUS

    Ms. Blom. Yes, so our jobs plus program has been 
implemented since 2015 starting with fiscal year '14 funds. And 
each year, we have been able to add more housing authorities 
into the program. This program allows housing authorities to 
focus on a particular development and release re-saturate 
develop with a culture of work, as we call it, since this is 
where all of the work-able individuals are expected to work 
where housing authorities and other service providers provide 
supports to enable individuals to work. So, additional support 
such as transportation; childcare; if there are any health 
issues; and ensuring that people become trained and ready to be 
employed. This has been a successful program. We have seen 
increases in income as a result of that, as well as more 
individuals who are employed. Today, we have over 2,500 
individuals that have become employed, either from not employed 
at all to part-time or to full-time employment over the last 
several years.
    Mr. Joyce. So I take it because of the success, you have 
plans to expand this program?
    Ms. Blom. So, as part of the fiscal year 2019 budget, we 
are not asking for an increase in funding. Instead, we are 
asking for $10 million of funding for the Jobs Plus Program, so 
that we can continue to fund the housing authorities and 
support residents.

                            CAPITAL REPORTS

    Mr. Joyce. Speaking of the housing units themselves, I 
understand that you have estimated capital repair needs in 
excess of $25 billion. I have also read the estimates that 
10,000 public housing apartments are lost to disrepair. How 
does your office work with public housing authorities to assess 
and prioritize repair needs? And how will your budget address 
capital repair needs of our current public housing 
infrastructure to ensure housing quality standards are met?
    Ms. Blom. So, housing authorities determine locally what 
their capital needs are. Housing authorities each year go 
through a capital funding process where they identify their 
highest risks work items. Whether that is roofs; whether that 
is windows; the repairing of brick facades; major systems; and 
that given the amount of capital funds that they receive each 
year, plus other ways to leverage resources through the Low 
Income Housing Tax Credit Program and other local and state 
funding, they prioritize their needs to be able to make repairs 
to their public housing.
    Mr. Joyce. Will your budget be able to address those needs 
going forward or?
    Ms. Blom. What we have seen over the last decade is that 
there simply has not been enough funding appropriated by 
Congress to be able to keep up with the need. Back in 2010, a 
report was issued that showed that there was $25 billion of 
capital needs and as we see with annual appropriations, simply, 
that is not enough to be able to keep up with the capital needs 
across the nation. I think for that reason, we are looking at a 
different way to support public housing units long-term and 
that we believe by moving to a Section 8 Program through RAD 
and through other ways; through project basing assistance which 
was permitted through HOTMA that we will be able to put public 
housing units on a much more stable platform using Section 8.
    Mr. Joyce. I take it that is your plan going forward and on 
how you are going to replace the stock that is in disrepair 
by----
    Ms. Blom. Yes, sir.
    Mr. Joyce [continuing]. Going to those methods.
    Ms. Blom. Yes.
    Mr. Joyce. Thank you. No further questions.
    Mr. Diaz-Balart. Thank you, sir. Mr. Aguilar, thanks for 
your patience.

                      INDIAN HOUSING BLOCK GRANTS

    Mr. Aguilar. Thank you, Mr. Chairman. Madam Secretary, I 
wanted to talk a little bit about Indian Housing Block Grants. 
Sam Adwell banned a mission Indians as a tribe in my district 
that has benefitted from the Indian Housing Block Grant Program 
which provides for a series of activities on reservations that 
support the community. Funds are used for construction, 
rehabilitation, acquisition of buildings to create 
affordability opportunities on tribal lands. The Indian Housing 
Block Grant Program received an increase in the recently passed 
omnibus and a change from prior years though. A hundred million 
of this funding will be awarded via competition. A strategy 
that we used last during the American Recovery and Investment 
Act. So, can you talk with me a little bit about how that will 
work, specifically, I think, first, how that worked during the 
RO portion, when we last implemented this type of funding?
    Ms. Blom. Yes. Thank you very much for the opportunity to 
be able to talk about the programs that we serve for Native 
Americans. The Indian Housing Block Grant's additional funding 
for a hundred million dollars will be able to make tremendous 
impact on tribal communities. Thank you very much to this 
Committee for additional appropriations for that much needed 
housing that we need on reservations. When we look at the 
Recovery Act, we saw that tribes were able to utilize those 
funds for construction of new housing, rehabilitation of 
housing, construction of health services and community services 
and infrastructure. We believe as part of the additional 
hundred million dollars appropriated in fiscal year 2018 that 
tribal entities will be able to fully utilize those funds for 
projects that they have in their communities. We will 
prioritize that funding for construction and rehabilitation for 
housing units.
    As we know, through the Indian Housing Study, there is a 
tremendous need for housing units. Sixty-eight thousand units 
of affordable housing is needing on--needed on Indian 
reservations. We will also prioritize the funding for those 
tribal entities that have the highest need and the highest 
capacity.
    Mr. Aguilar. Will any be excluded, will any uses be 
excluded? You mentioned--I appreciate you walking me through 
the priority fund--the priority list rehab and construction and 
those that need it the most, but will any of your uses be 
excluded from the possibility of use?
    Ms. Blom. We are just at the beginning stages of developing 
our Notice of Funding Availability for that program, so it has 
not yet been determined if there will be any types of 
activities that will be excluded, be we are happy to talk with 
you further about that to receive your input.
    Mr. Aguilar. I appreciate it. Can you talk to me a little 
bit about what this means if there is tribes you visited and 
others kind of on the ground, what this looks like and the 
change that some of these tribal lands will be benefited by 
these resources?
    Ms. Blom. Yes. So, what we have seen as a result, dedicated 
funding through the Recovery Act and now with this hundred 
million, that this hundred million dollars will have a 
tremendous impact on tribal communities. In the past, through 
the Formula Program, it spread across 567 tribes, which means 
that particularly for those smaller tribes that they are not 
able to amass the amount of resources that they need to make a 
major impact in their community. So, we do believe that the 
hundred million dollars in dedicated funding through a 
competition will allow tribes to have impacts on a grander 
scale than what they are able to do with the formula funding. 
To be able to do larger construction projects for new homes, to 
be able to do larger infrastructure projects and to be able to 
create the community centers and health centers.
    Mr. Aguilar. Great. I think it is a great use and I think 
that this is something that obviously the Committee wants to be 
supportive of. We want to make sure that it is done right, as 
do you. I hope that you get an opportunity to visit some of 
these rural tribes, as well that need it the most. Because 
there are access to--whether it is medical professionals and 
others who provide resources throughout these Native American 
lands, they are deprived of a lot of things. And so I think 
that these resources do go a long way. I appreciate the 
Committee allocating more funds to this category and look 
forward to working with you, as that notice put out, to make 
sure that we put it forward in the very best way possible.
    Ms. Blom. Thank you.
    Mr. Aguilar. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Mr. Young. You are 
recognized, sir.

                       RURAL COMMUNITIES AND RAD

    Mr. Young. Thank you, Mr. Chairman. Welcome. We had 
Secretary Carson here not too long ago and I raised a question 
about some of the real needs we have in rural America with 
housing. And he acknowledged that was a fact and that the--you 
are all working on trying to address this issue. Can you talk a 
little bit about how the rental assistance program was working 
in rural communities, what is being done? Just give me a 
snapshot of where we are and where we would want to go and how 
we get there.
    Ms. Blom. Thank you very much for the question on how the 
Department is surveying rural communities. With regard to the 
Rental Assistance Demonstration Program, we have seen that that 
has been successful for smaller housing authorities and those 
in rural communities. So, we are very pleased by that. We are 
also looking to see how we can streamline that program to make 
it easier for smaller housing authorities so it is less 
burdensome and less costly. We also believe that we need to 
provide additional strategies for smaller agencies. One way 
that we are doing this is we are looking at what is called the 
Voluntary Conversion Program. This is where housing authorities 
can convert their public housing from traditional public 
housing to a voucher program. Do a Section 8 Program through 
the programs if the development needs a cost that it is more 
cost effective to provide housing through a voucher----
    Mr. Young. Are you seeing that want and that need and that 
trend to go to that platform of Section 8?
    Ms. Blom. We are seeing that. We are seeing that is a much 
more stable platform. I think we see that through the demand of 
the Rental Assistance Demonstration that was fully subscribed 
before Congress lifted the cap to 455,000 units. And we believe 
in another year that, that new limit will be fully subscribed. 
We are seeing a tremendous demand for the RAD program, which 
signals to us that housing authorities believe that the Section 
8 Program is much more stable and viable long-term.
    Mr. Young. You talk about that in your testimony about 
streamlining that process to cut the regulatory bread--red tape 
to--from--to move to that Section 8 platform. That red tape, is 
that something that can be taken care of at the administrative 
level or do you need Congress to help you with that or is there 
a legislative fix on that that you need help with?
    Ms. Blom. With regard to the Rental Assistance 
Demonstration Program, we believe that we have the tools within 
our controls, especially given the waiver authority that is 
part of the Rental Assistance Demonstration to be able to make 
a more streamlined program for smaller housing authorities. And 
so we believe we have that ability.
    Mr. Young. If you find out that you do not, would you let 
us know?
    Ms. Blom. Absolutely.
    Mr. Young. Okay.

                      REDUCING OVER-INCOME LIMITS

    Ms. Blom. We are happy to work with you.
    Mr. Young. In 2015, the HUD OIG Study found that as many as 
about over 25,000 families who resided in public housing had 
income that exceeded the 2014 eligibility limits. As a result 
of the findings of the report, what are you doing about it? Why 
is this happening? What steps has HUD taken to reduce the 
number of over-income families living in public funded housing 
to allow maybe those on a waiting list to receive those 
services? What is happening there and what are you doing about 
it?
    Ms. Blom. Yes. So, thank you very much for the question on 
how the Department is addressing those families that are over-
income. We are currently in the process of developing a Federal 
Register Notice that will be issued in the next several months 
that will begin to implement the provisions in HOTMA, which 
provided a cap on the income that families can receive and 
still be eligible for public housing and asked for a two-year 
transition period where those families are over-income. We will 
then follow that with a regulation that we are hoping to 
publish by the end of the calendar year that will fully 
implement those provisions in HOTMA. We do believe that this is 
a way to be able to transition those higher-income families 
then to a market-based program and to free up units for other 
families on the waiting list.
    Mr. Young. For those that exceed the eligibility limits, 
what is--what percentage of that do you think is that?
    Ms. Blom. There is about one percent that we are over the 
limit, but I will say that most families are just slightly over 
the limit. There are only very few that are well above the 
limit who could be affording a market-rate rent.
    Mr. Young. Thank you.
    Ms. Blom. Mm-hmm.
    Mr. Young. No more questions. Thank you, Mr. Chairman. I 
yield back.
    Mr. Diaz-Balart. Thank you very much, sir. Earlier this 
month, the President signed an executive order to--in essence, 
calling all agencies, right, to strengthen work requirements 
for folks that are on federal assistance and with different 
goals, including to invest in federal programs that are 
effective at moving people into workforce and out of poverty. 
So, can you outline for us what HUD and the PHAs, including 
MT--MTWs--I am having a hard time putting words into phrases 
this morning; I apologize. What they currently do to 
incentivize or require recipients to seek employment? And what 
are you doing--how is that working?
    Ms. Blom. So, the President signed that executive order on 
April 10th, seven days ago, so the Department is looking at 
that executive order and seeing how the Department would be 
able to carry out the tenants that are part of that executive 
order. One of the themes of that executive order is work and we 
see that as part of our rental rent reform proposal that will 
be released in the next several weeks. But I would say that as 
part of our budget justification, that we are not requiring 
work, right? We are incentivizing work, but the proposal does 
not require work. But we have seen through the MTW program that 
several MTW agencies do have work requirements. We have seen in 
Atlanta how a work requirement or an educational attainment 
requirement is a way to incentivize residents to become self-
sufficient.
    Mr. Diaz-Balart. So, what happens, though--all right. So, 
you incentivize somebody to get a job, which is great because 
work is so empowering, obviously. But then all of a sudden, do 
you then in essence get kicked off because your income is too 
high? So, how do you deal with that sort of cliff?
    Ms. Blom. As part of our rent reform proposal, you will see 
that there are hardship exemptions. So, we do not want as a 
result of our rent reform to have families be unstable and have 
the threat of homelessness. That is precisely what we want to 
guard against. So, you will see as part of our rent reform 
proposal that there is consideration for hardship exemptions. 
We are not imposing additional work requirements or increase 
rents on elderly and disabled, but for those that are work able 
and have an unforeseen circumstance, there will be hardship 
exemptions.
    Mr. Diaz-Balart. Right. Those are ones who are struggling, 
but how about those that are doing well? In other words, they 
start working, their income goes up, and then all of a sudden, 
they potentially can get disqualified potentially, right, from 
benefits, including HUD benefits. And so that is--those are--
that kind of cliff of folks that potential could do better, 
would like to do better, but then all of a sudden, they lose 
their benefits, including potentially housing when they do 
better. And those are the issues that we have been kind of 
grappling with.
    Ms. Blom. We want to ensure that we are incentivizing work, 
that we are not penalizing individuals as they have increases 
in income. That is one of the reasons why we are seeking the 
triannual re-certification, so that as residents earn more that 
they are able to keep more than what they could under the 
current system. But we are happy to continue the discussion 
with you and with other members to be able to see how we can 
refine the reform proposal so that it works for residents and 
it works for multi-family and public housing owners, as well as 
for the government.

                              SECTION 184

    Mr. Diaz-Balart. I look forward to working with you. Let me 
just quickly go to--Secretary Carson has focus on the need to 
increase home ownership and opportunities for home ownership. 
And I think one of those programs that has encouraged private 
lending on reservations is the Section 184 Indian Loan 
Guarantee Program. I was actually able to say that for a 
change, right? And so as you know, under this program, HUD 
guarantees loans made by private lenders and therefore, they 
can charge lower rates. So, if you could briefly tell me how 
this process has been going and how is it working and do you 
think it is effective and how does--how can we make sure that 
it remains being an effective program?
    Ms. Blom. The 184 Program is our cornerstone for home 
ownership in Native American countries. This has assisted 
Native Americans, as well as others to be able to live on 
tribal lands. The 184 Regulation has been in existence for over 
20 years and we are in the process now of consulting with 
Native American tribes and tribal-designated entities to be 
able to revise those regulations to enhance them and make them 
more effective for Native Americans and for others. So, we are 
involved in 11 meetings across the country for tribal 
consultation. We will then provide a revised regulation 
specifically to Native Americans for their review before that 
regulations go for public comment.
    Mr. Diaz-Balart. Great, I am glad to hear that. And Mr. 
Price.
    Mr. Price. Thank you, Mr. Chairman. Madam Secretary, I want 
to return briefly to our earlier discussion about the programs 
that may somehow absorb some of the transfers out of public 
housing that would be necessitated by your budget proposals. I 
express some skepticism that the 202 and 811 programs for the 
held--house--for the elderly and disabled would be likely 
places where these tenants would land. But I do want to say 
that I appreciate your expression of support for those 
programs. The administration's proposal for 202 is a decrease 
as you know from the fiscal 2018 enacted in the omnibus. And 
your proposal for housing for the disabled is a reduction from 
both 2017 and 2018. So if we are going to put great stock in 
those programs, we are going to have to have adequate funding.
    I am happy to say that the funding provided in the omnibus 
will make possible for the first time in years some modest new 
construction in both programs. And I think that will serve our 
communities well and we look forward to working with you to 
make sure that it turns out that way, that these increases are 
realized and in housing and our communities.

                                  RAD

    So let me return now to RAD, there has been a lot of 
discussion of RAD this morning. You obviously put great stock 
in it and a lot of our housing authorities do as well. The 
omnibus expanded RAD from 25, 225,000 units to 455,000 units 
and that's welcome news for many authorities like the Durham 
Housing Authority in my district. A lot of high capacity PHA'S 
are able to use this flexibility to recapitalize public housing 
priorities, provide quality housing for low income residents.
    However, as you know, the experience has not been uniformly 
positive and that's what I want to ask you about. A recent GAO 
report concluded that HUD does not accurately assess private 
sector leveraging, in many cases has not. Has not always 
tracked and monitored the effects of RAD conversions on tenant 
household and most importantly the report concluded that HUD 
hadn't fully developed processes to ensure tenant protections 
and by tenant protections I mean quite simply, no displacement 
of low income residents as a result of conversion.
    So I would like here this morning and then in writing to 
elaborate an indication of how HUD is going to implement these 
GAO recommendations and then what steps particularly you're 
going to take to ensure tenant protections and long term 
affordability are integrated into each and every RAD deal. And 
this does relate to my earlier questions about the cuts that 
you're proposing to public housing, capital and operating 
funds.
    RAD doesn't happen all at once. It takes years. What 
happens in the meantime? These cuts suggest that in the 
meantime may be a real problem. And just to help us gauge that, 
how many units to date have been converted and closed? And what 
does this suggest about the pace that you've projected as to 
the kind of timeframe we are talking about here for these 
conversions.
    Ms. Blom. So a lot of things to talk about. With regard to 
the Rental Assistance Demonstration and the GAO report that was 
recently issued, we are, we take the issues and the concerns at 
GAO seriously. We want to ensure that we are implementing a RAD 
program that does protect residents and does recapitalize the 
public housing units. We will continue to work with the GAO to 
see how we can improve that program and we are happy to provide 
you in writing how we plan to do that.
    Several years ago the department did issue a new notice 
with regard to ensuring that housing authorities were properly 
relocating and offering residents the right to return. And as a 
result of that, I would say over the last year there has been 
much more consistency and uniformity of ensuring that residents 
are protected when a development is converting through the 
Rental Assistance Demonstration.
    To date, there have been over 88,000 units of housing that 
have converted to the Section 8 program. Many of those that 
have been recapitalized as a result of other investments to 
those developments. The pace has increased over time and we 
anticipate it will continue to increase over the next several 
years.
    But I think you are right. It is going to take some time 
before the, you know, hundreds of thousands of units will be 
converted to the Section 8 program. This is a voluntary program 
from housing authorities and it requires many partners and 
stakeholders to be working together. So I think over the next 
several years we will continue to see an uptick in the program 
but it will take many years for housing authorities to 
recapitalize their developments.
    So one of the reasons why we are also looking at other 
tools now besides RAD. We are looking at providing additional 
flexibilities to housing authorities with regard to demolitions 
and dispositions and repositioning those developments through 
programs other than RAD. We are looking at our voluntary 
conversion program and simplifying that for smaller housing 
authorities and we are also looking to see how we can release 
the declaration of trust for these properties so that housing 
authorities can then singularly own them without restrictions 
but again as part of the departments tenant protection request, 
asking for additional authority to provide tenant protections 
for those properties that would be released from the 
declaration of trust.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir.
    Yes, ma'am, you are recognized.

                            202/811 PROGRAMS

    Ms. Clark. Thank you, Mr. Chairman. In your budget 
justification it repeatedly says that current elderly and 
disabled households will not be impacted by the rent reforms 
and increases in rent. There is such an emphasis on current 
that I am assuming that future households will be impacted 
including elderly and the disabled. Is that correct?
    Ms. Blom. Yes, that is correct that the congressional 
justification does speak to current residents. The department 
will be releasing the rent reform legislation over the next 
several weeks and then we are happy to have further 
conversations with you and others on the types of protections 
and the types of increases in rent that we are seeking for all 
assisted residents.
    Ms. Clark. Okay. With the work requirements, I believe I 
heard you say that the triennial evaluation will apply to the 
work requirements as well as to the rental income evaluations, 
is that right?
    Ms. Blom. So we are looking for triennial recertification's 
on income which will mean that residents would have to provide 
documentation with regard to their income every three years 
instead of every year. And so as a result of that, where 
residents have increases in earnings whether because they are 
working more, because they are, have received a raise or they 
went from not working to working. Over that three year period 
they will not be penalized with having to pay a higher rent 
even though they are earning more.

                            RECERTIFICATION

    Ms. Clark. Okay. And that will be a requirement for--the 
PHA's get to elect to do work requirements under your proposal? 
Is that right?
    Ms. Blom. Yes.
    Ms. Clark. And so but that will be a requirement for all 
PHA's who elect to do further work requirements that that be a 
three year recertification?
    Ms. Blom. We are looking for all housing authorities to 
have a three year recertification instead of a one year 
recertification and we believe that this is to the benefit of 
all PHA's to reduce their burden and----
    Ms. Clark. Yes.
    Ms. Blom [continuing]. Administrative costs as well as that 
to the residents. In addition to that, housing authorize can 
elect to establish work requirements.
    Ms. Clark. Okay. But that's great.
    Ms. Blom. Separate.

                             MOVING TO WORK

    Ms. Clark. All right. Thank you. I had a question too about 
the expansion of moving to work and the MTW's and we authorized 
back in 2016 regional MTW agencies and in fact Cambridge 
Housing in my district and Boston Housing Authority put 
together a proposal that was rejected by HUD that said they 
still needed to evaluate the many legal and programmatic 
questions this new concept presents.
    So here we are two years later. Can you tell me what 
progress has been made and have you approved any applications 
for this designation?
    Ms. Blom. So the department has been working on creating 
the framework for this regionalized concept for MTW agencies 
and we are planning on issuing a notice on that by the end of 
the fiscal year. That would then allow existing MTW agencies as 
well as agencies that will be added to the program to form a 
regional MTW agency.
    So to date we haven't yet approved any PHA's, existing MTW 
agencies to be working together and former regional housing 
authority.
    Ms. Clark. Okay. So by the end of the fiscal year you think 
that you will have those?
    Ms. Blom. Yes. We are planning on issuing a notice by then 
so that then housing authorities could apply to the department 
for the regional MTW status.

                           DOMESTIC VIOLENCE

    Ms. Clark. And I just wanted to touch briefly in my 
remaining minute on domestic violence and wondering if you 
could tell me sort out what is the state with HUD and do you 
need help from us on looking at domestic violence programs, how 
we respond when a family that's receiving assistance has an 
incident, family members leave for safety reasons.
    Can you talk about that framework? I realize I'm not 
leaving you any time to do this but if it's too hard to go into 
now we would love to follow up with you and see if there are 
parts in the system where we can be helpful.
    Ms. Blom. We would be happy to continue the conversation 
with you to see how we can address domestic violence in public 
housing and through our housing choice voucher program. 
Absolutely.
    Ms. Clark. Okay. Thank you. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Mr. Aguilar.

                              SECTION 184

    Mr. Aguilar. Thank you, Mr. Chairman. The chairman got to 
one of my questions. He was reading my notes which he does 
occasionally on Section 184. Again I will just put in a plug. 
We sit so close together. I will just put in a plug that, you 
know, that is a program that I support, you know, has worked 
and just from a raw leveraging perspective, I mean, such a 
small budgetary amount leveraging hundreds of millions in new 
housing stock really is something that we need to kind of think 
through and to think how we can, you know, grow that program to 
maximize the effectiveness in tribal country. Picking up on Ms. 
Clark's comment about moving to work, within the 2016 
consolidated appropriation I think it mentioned specifically 
100 new PHA expansion she was talking about regional, the 
regional concepts which is interesting and innovative and 
something we need to support but out of the 100 new is that the 
piece you are talking about has the June NOFA?
    Or I guess my questions is out of the 100 that was 
mentioned specifically within the 2016 appropriations, how many 
have we designated?

                      GUIDELINES 100 PHA EXPANSION

    Ms. Blom. We are in the process today of establishing the 
guidelines and the rules associated with that 100 PHA 
expansion. Later this spring we will be publishing the notice 
for public comment that provides for those guidelines but at 
the same time we want to be able to start adding MTW agencies 
to the program. So at that same time we will be issuing a 
notice inviting our first group of agencies to join the 
program. And then still in fiscal year 2018 we will have a 
second notice to invite the second group of MTW agencies to 
join.
    So while it has taken us some time to stand up the program, 
we believe that we are on the cusp of now quickly being able to 
invite agencies to apply to the program. That is separate from 
Representative Clark's question with regard to regionalism. 
Separate from that we will be issuing a notice by the end of 
the fiscal year to allow existing MTW agencies so really 
affecting right now those 39 agencies that are part of the 
program to see how they can create a unified administration of 
their programs to--in a regional way.
    Mr. Aguilar. Okay. So 39 existing consolidated 
appropriations added 100 you indicated two tranches basically 
that those would be let out. Equal, you know, 30/70, 50/50, 
what is that look like within your timeframe?
    Ms. Blom. The first as we call them, a cohort.
    Mr. Aguilar. Cohort.
    Ms. Blom. We anticipate having about 30 agencies 
participate in that and then the second cohort would be a 
smaller group. It will be looking at rent reform and the exact 
number hasn't been determined yet but I do anticipate it will 
be smaller than 30. Leaving then two additional cohorts to fill 
the additional slots available for the 100 PHA expansion.

                      ADMINISTRATIVE FLEXIBILITIES

    Mr. Aguilar. Okay, got it. Within that context, you've also 
proposed administrative flexibilities for those additional 
PHA's. So can you talk to me about what type of flexibility, 
what type of new flexibility you are looking to propose within 
that subset?
    Ms. Blom. With our MTW program, we want to provide very 
similar flexibilities to what the existing 39 agencies have 
today. Where we have provided less flexibility it's so that we 
can isolate the effects of that policy issue that we are trying 
to study. So that is the one incidence where we would not 
provide as many flexibilities to a certain cohort because it 
would impede the evaluation of that policy area. With the 
notice that we published several months ago, we indicated to 
the public these are the types of flexibilities that the 
department is going to be offering as part of the MTW 
expansion.
    So it, we are publicly on record of those types of 
flexibilities. We are making some minor changes to that with 
the public notice that will be issued in the next few weeks 
which will again go through another public comment period.
    Mr. Aguilar. Would the PHA's view that change in 
flexibility as being more helpful or less helpful than the 
initial cohort I suppose? So you are basically saying that they 
may not have the types of specific programmatic contexts and 
framework this next cohort as the existing moving to work 
functions, correct?
    Ms. Blom. There are only very limited instances where they 
would not have the same types of flexibilities.
    Mr. Aguilar. Okay.
    Ms. Blom. So one is if they weren't legally permitted in 
the first place, we're not offering those to the expansion 
PHA's and then if that type of flexibility would impede the 
evaluation of that policy area we are not providing for that 
flexibility. So that was spelled out as part of the initial 
notice.
    Mr. Aguilar. Okay. Otherwise they would be the same?
    Ms. Blom. Yes.
    Mr. Aguilar. Okay.
    Ms. Blom. More or less.
    Mr. Aguilar. I appreciate it. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Let me throw 2 questions 
at you, and again thanks for your willingness to stick around.

                              HUD REFORMS

    So based on your experience with previously enacted 
legislation bills, what potentially is a realistic timeline to 
implement reforms once Congress enacts them? So I'm not going 
to hold you, you know, know that for example the actual 
proposals, some proposals are still under review so I'm not 
going to hold you to the timelines and things like that but 
just, you have had a lot of experience so roughly what are some 
of those timelines once Congress does pass those reforms?
    Ms. Blom. So I will say it really depends. It depends on 
how complex that legislative changes and those new statues are. 
So for instance under the MTW program, Congress provided us 
with a 7 year implementation for that program and we do believe 
that we will be able to achieve that.
    With regard to the regulations that need to be issued to 
implement HOTMA it has taken us some time to do that. We 
implemented those provisions that were self-implementing very 
quickly through notices. We have also issued other federal 
registered notices to make other provision applicable. And now 
we are in the final rule making stage for the additional 
provisions in HOTMA to be able to provide those flexibilities 
to housing authorities.
    I want to give you my commitment that I am working with the 
team to ensure that we are implementing those HOTMA provisions 
as quickly as possible with the goal of having proposed rules 
available for public comment by the end of the calendar year.
    Mr. Diaz-Balart. The reason I'm asking this is because 
there are some reforms that are in essence, you know, cooked 
into the numbers, in your budget, right. And so obviously we 
are already in the process up to the 2019 bill so it's highly 
unlikely that even if Congress were to act super quickly which 
is a question if we can do that, right, whether we would be 
able to benefit from those savings now.
    So any idea if that were to be the case that we wouldn't be 
able to benefit from those reforms to save us some money? Any 
idea how much of a hole potentially would have to be filled in 
order to just keep delivering the same level of services that 
we are now?
    Ms. Blom. With regard to the rent reform proposals, the 
department did anticipate that the implementation of rent 
reform would happen later in the fiscal year so that not all of 
the reductions in funding would occur as soon as October 1. But 
I think you're asking the question how much funding would be 
required to ensure that residents who receive housing choice 
vouchers today continue to receive them at the beginning of 
October 1 and we are happy to provide that figure for you.

                            ENVISION CENTERS

    Mr. Diaz-Balart. Great. That would be helpful. One of 
Secretary Carson's main priorities, I have heard him say that, 
is the envision centers initiative and so I understand that 
these centers will coordinate services to facilitate self-
sufficiency and enable individuals and families to graduate 
from HUD assisted housing which is a great, great goal and so 
do you want to, can you briefly explain the concept of the 
envision centers and how these centers will be implemented?
    Ms. Blom. Sure. Thank you for the opportunity to talk about 
envision centers. This is something that is very important to 
Secretary Carson and that we want to establish throughout the 
country. We received robust feedback from housing authorities 
and others that are interested in establishing envision centers 
which would be places where residents, HUD assisted residents 
as well as others can come for job training and assistance, for 
health and wellness, for educational services, and where other 
federal agencies will be able to provide assistance along with 
HUD assistance.
    So we do see this as a way to capitalize on investments 
that are already occurring in localities and working with the 
partners and the stakeholders already on the ground to be able 
to establish these envision centers.
    Mr. Diaz-Balart. Any idea of what kind of funding might be 
required to actually implement to successfully implement these 
envision centers?
    Ms. Blom. As part of the Fiscal Year 2019 budget, the 
administration is seeking 2 million dollars to evaluate the 
envision centers. But we believe that the funding is already 
available on the ground with investments that Congress has 
already provided as well as nonprofit and philanthropic funding 
that will be able to support the envision centers.
    Mr. Diaz-Balart. That's great. Mr. Price.
    Mr. Price. Well, thank you Mr. Chairman. Madam Secretary, I 
want to wrap up also with some questions that you can deal with 
here orally and then supplement for the record if you wish.
    One has to do with the research program accompanying the 
moving to work initiative and the second has to do with the, 
our efforts of some duration to provide workforce housing in 
Indian country.

                             MOVING TO WORK

    The fiscal 2017 omnibus expanded the moving to work 
demonstration as you know from 39 to 136 agencies. One of the 
components of this expansion was a rigorous research 
requirement to evaluate the effectiveness of various aspects of 
the program. HUD at that point convened a research advisory 
committee charge with recommending polices for studying areas 
for further research in other words.
    This is a change from how the moving to work demonstration 
operated in the past and it should provide rigorous evidence of 
the effectiveness of the policy options in the program. I think 
Congress has amply shown our commitment to the research by 
providing robust resources for MTW research in each of the past 
2 fiscal years.
    So I wonder here this morning if you could provide a brief 
update on the research program for the moving to work expansion 
and elaborate on your experience with the research advisory 
committee and what policy interventions were recommended.
    Ms. Blom. Thank you very much for the opportunity to talk 
about the research component and the public process associated 
with the expansion of MTW.
    Thank you very much for the 10 million dollars of funding 
specifically dedicated to be able to evaluate and research the 
policies that we will be studying as part of the expansion. The 
Federal Advisory Committee that the department established had 
MTW, existing MTW agencies, residents and HUD staff as well as 
researchers form this committee. That committee provided to the 
Secretary four recommendations on the cohorts that would be 
part of the expansion.
    So first, to look at the MTW flexibilities themselves and 
to be able to evaluate that. Second, to look at rent reform. 
Third, on work requirements and then fourth on landlord 
incentives.
    So the department is taking the advice of the research 
committee and we will be implementing four cohorts over the 
next several years with two of those cohorts being initiated 
still in 2018.
    And then with the research funding, we are already working 
with our policy developed and research team at HUD to be 
putting together the research framework on how we are going to 
be evaluating those four policy areas for study.
    Mr. Price. Thank you and we will see if there are details 
on any of this that we need to ask you to elaborate further for 
the record.

                              SECTION 184

    Well, in the time remaining, let me turn to an important 
topic. This too concerns the fiscal 2017 omnibus. It contained 
1.7 million for loan guarantees in the Section 184 loan 
program. And it was aimed at increasing the supply of housing 
for skilled and professional workers in Indian country. These 
loan guarantees would leverage more than 400 million dollars in 
new housing units for skilled workers. That's a big problem. 
The recruitment of doctors, nurses, teachers, lay enforcement 
officers in Indian county. It's often difficult and the lack of 
suitable housing is an important part of the problem.
    So I just would appreciate us, an update on the status of 
this program. What HUD is doing to encourage tribes and 
tribally designated housing entities to participate in the 
program.
    Ms. Blom. Thank you very much to this committee and for 
Congress for providing the additional lending authority to 
specifically target professionals so that they can live on 
Native American land. So this ensures that teachers and doctors 
and police are--have homes on triable designated properties.
    We have gotten the word out to our TDHE's to ensure that 
they are aware of this additional authority and also thank you 
to Congress for providing expansion to our technical assistance 
resources so that now we can use technical assistance funding 
to be able to put together guidance to our tribes and TDHE's on 
this program to ensure that this additional authority is used 
to support housing for professionals.
    Mr. Price. What kind of assessment do you have even though 
it's probably a preliminary as to whether this is working?
    Ms. Blom. I will need to get back to you on who tribes have 
used the authority to date and in the past that they have this 
authority but now that it's specifically targeted to it so we 
will be able to provide you with that data very shortly.
    Mr. Price. You have the data at present or what would be 
the timeframe when we would get a preliminary assessment?
    Ms. Blom. Let me check with my team and then we will get 
back to you on the data that we currently have as and the 
timetable for that.
    Mr. Price. Thank you very much. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir.
    Madam Secretary, first let me say that your deep knowledge 
and experience was evident once again in this hearing so we 
thank you for your service and for your work for the folks that 
you are serving.
    Ms. Blom. Thank you.
    Mr. Diaz-Balart. Let me thank you again and your staff, the 
HUD staff for your answers and for participating in this 
committee and the staff will be in contact with HUD's budget 
office regarding questions for the record. Any questions, I'm 
sure there is going to be other questions.
    I would ask you that to please work with OMB to return the 
information for the record to the subcommittee within 30 days 
from Friday and that would allow us to publish the transcript 
of today's hearings and again as we put this 2019 bill together 
to allow us to have to make informed decisions.
    With that, Mr. Price, any further, any final comments? 
Closing comments?
    Mr. Price. No, thank you. Thank you, Madam Secretary.
    Mr. Diaz-Balart. Thank you very much. Looking forward to 
continuing to work with you.
    Ms. Blom. You're welcome. My pleasure.
    Mr. Diaz-Balart. Thank you all. Meeting is adjourned.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

                                         Wednesday, April 18, 2018.

                          MEMBERS' DAY HEARING

    Mr. Diaz-Balart. Let us call the subcommittee to order. 
Good morning, and welcome to this year's Member Day 
subcommittee hearing.
    Today we welcome our distinguished colleague, so far, 
colleagues to testify on their priorities for the Department of 
Transportation, Housing and Development, Fiscal Year 2019, 
obviously under the leadership of our Full Committee Chairman, 
our Distinguished Chairman, we brought back at his insistence, 
hearing days, in order to give every member the opportunity to 
express their priorities and their concerns, and their wishes 
for this Subcommittee and or the entire Committee. So, 
obviously we want to remember to be involved in the 
Appropriation's process, and their views are so important.
    So, with that I want to recognize my friend, my partner in 
this Subcommittee, the gentleman from North Carolina, Mr. 
Price, for any remarks that he might care to share with us.
    Mr. Price. Thank you, Mr. Chairman. I join you in welcoming 
our colleagues, one by one, to talk about their priorities in 
our area of jurisdiction. This is a good idea to make our 
hearing platform available to colleagues. And we look forward 
to hearing from them. Thank you.
    Mr. Diaz-Balart. Thank you. So, we were just talking about, 
we are starting with a member who understands this process as 
well as anybody. And so I appreciate your passion, 
particularly, for Capital Investment Grant Program. And, you 
know, I want you to know that last week at our DOT Hearing I 
mentioned, by the way, a little project that I know you have 
been working just since, I believe, is it the 1890s or the 
1990s, right?
    Mr. Visclosky. Eighteen.
    Mr. Diaz-Balart. Eighteen, 1790s? Well, we brought that up, 
sir, to Secretary Chao. And, you know, I know that your project 
is in the CIG pipeline currently, and we want to make sure that 
projects, including the one like yours, which has taken way too 
long, continue to move through the project--through that 
pipeline.
    We are also having a model hearing with the FTA next week, 
where the FTA Administrator will be testifying, and as I am 
sure you are already aware we have reached out to your staff 
extending you an invitation, hopefully to participate. I know 
you are going to be busy in that time, but if you are 
available, we would love for you to participate, if possible, 
in that hearing, to address your concerns with the Acting 
Administrator.
    And so, any comments, Mr. Price?
    Mr. Price. No. Welcome to our friend. We look forward to 
his testimony.
    Mr. Diaz-Balart. Thank you. Sir, you are recognized.
                              ----------                              

                                         Wednesday, April 18, 2018.

                                WITNESS

HON. PETER VISCLOSKY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    INDIANA
    Mr. Visclosky. Mr. Chairman, first of all, I thank you 
holding testimony for outside witnesses and other members. I do 
think it is an excellent idea for the Committee at large. 
Secondly, as a member of the Committee I understand the time 
constraints, but felt compelled to take some of your time 
today, and Mr. Price's, to thank each of you from the bottom of 
my heart for your help over the last several years on the 
Capital Investment Grant Program, which has not directly 
benefitted our district yet, but has benefitted this country, 
by growing the economy and putting us in a place for fiscal 
year 2019.
    I want to thank all of the members of this Subcommittee, 
and I want to thank your staff for all of your work. You 
clearly understand the implications of this program.
    I would, in reference to your other remarks, a quote from 
an article from March 15, 1990, during another Congressional 
Election, when I was criticized in the Democratic Primary by of 
my opponents for suggesting that regional planners must develop 
a tax that is needed to help finance this railroad, knowing we 
would have to come up with half the money.
    That was March of 1990. We have. And I appreciate the fact 
that this Subcommittee understands the importance of that 
Capital Investment Grant Program.
    I just want to make two points. One, since 1970, the First 
Congressional District today now has over 73,000 less school-
aged children in it, because our young people have not stayed. 
I am convinced this investment is going to retain and attract 
young people and grow our economy.
    Secondly, in this day of upset, politically, I am pleased 
to note that two General Assemblies ago, it was then Governor 
Pence who signed State funding into place for Part 1 of this 
program. It is Governor Holcomb who has signed the second piece 
of legislation. Senators Donnelly and Young support this 
legislation, Ms. Pilarski and I do.
    We have four counties involved, two controlled by 
Democrats, two controlled by Republicans. They have set their 
differences aside, and agreed, because of the value of this 
program.
    So, from the bottom of my heart to reward that good 
behavior over these last 30 years, I can't thank you enough. 
And that concludes my testimony.
    Mr. Diaz-Balart. Thank you, sir. I do want to mention and 
something that will not surprise you. But this Subcommittee 
works really closely together. And so, you know, there are some 
urban members, there are some rural members in the 
Subcommittee, and we all understand that we have to do what is 
right for the country, and it hasn't been--we haven't had any 
partisan, real partisan battles, we work really closely 
together.
    Obviously, a big part of that is I think our Ranking Member 
who, as you know, one can agree or disagree with him, but he is 
always a gentleman, always a gentleman. And so we have that 
added to the tone. And I want to thank the members of the 
Subcommittee for, again, working in such a collegial way.
    So, Mr. Price, any comments, questions?
    Mr. Price. Excuse me. I didn't realize I was wired here. 
Thank you.
    No. I have no questions. I do want to commend our colleague 
for his testimony, and also for the spirit in which he has 
worked on this for so many years, understanding that the 
transportation alternatives we need to develop, and certainly 
need to develop in the Greater Chicago area, the area that we 
are talking about here, that these do require support at all 
levels of government, and support in both parties, both 
chambers, that we need all hands on deck.
    And he has exemplified that spirit, and I commend him for 
it. I thank him for his testimony.
    Mr. Diaz-Balart. Thank you. Thank you, sir. Thank you very 
much. Thank the gentleman from New York, and we appreciate you 
being here. This is your Committee, and so we want to hear what 
is on your mind, and how we can be helpful. So you are 
recognized, sir.
    Mr. Suozzi. Thank you, Mr. Chairman. As you see my name is 
Suozzi----
    Mr. Diaz-Balart. Suozzi, Suozzi, I apologize. I apologize.
    Mr. Suozzi. Okay. Thank you so much, Mr. Chairman, for 
taking the time----
    Mr. Diaz-Balart. With a name like Diaz-Balart, I am careful 
to----
    Mr. Suozzi. I didn't know how to say yours either.
    Mr. Diaz-Balart. Right, absolutely. Well, there are 
different reasons for that though. Anyway, I apologize. Go 
ahead, please.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. THOMAS SUOZZI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 
    YORK
    Mr. Suozzi. Thank you, Mr. Chairman. And thank you, Mr. 
Price, I really appreciate you taking the time to be here as 
well. And Congressman Young, thank you so much for being here 
also.
    I am here today to talk about an issue that affects many 
places throughout the country, certainly it affects my district 
as well, and that is airport noise. I am the Chairman, the Co-
Chairman of a group called the Quiet Skies Caucus, Eleanor 
Holmes Norton also serves on as well. Congressman Quigley and 
Congressman Lynch are also Vice Chairs of it, coming from major 
metropolitan areas in Boston and Chicago. But it is a problem 
throughout the country, over 40 members of the Quiet Skies 
Caucus; it is a bipartisan group as well.
    And it is not my written testimony, but just so you 
understand, it is a part of NextGen, we have changed the flight 
patterns throughout the country.
    So, in the old days, the flights would come in at this 
level, and would spread out the noise from airplanes amongst 
this big group, but under NextGen it has been narrowed like 
this, so it is faster, it is cheaper, it is safer, but the 
people that live under the flight path now on this very narrow 
takeoff and landing patterns are very much affected by constant 
traffic coming over their homes.
    So, NextGen is a new phenomenon that has affected a lot of 
residents throughout the country that not only live right near 
the airport, but live anywhere within the flight path for 
landing or for takeoffs.
    I am home to the Third Congressional District along the 
North Shore of Long Island and Queens, two airports in the 
region, LaGuardia and JFK, so two of the busiest airports in 
the country. So I am very familiar with this problem, and the 
effects that are caused by noise pollution and airplanes. And 
also another issue I am going to bring up, which is 
helicopters, and the effect it has on people's lives.
    We have been talking with the FAA, and they have given us 
commitments to study flight patterns, to look at disbursal from 
the NextGen system. They have said they will do health surveys, 
they are going to create a central complaint system, they are 
going to do a better job on community outreach, but it is 
unclear that they are going to be acting in a timely basis. It 
is very difficult to get them to move forward on a lot of these 
different issues.
    So we are asking for your help in two ways. I have a 
specific set of requests related to the entire Quiet Skies 
Caucus that will affect the entire country that relates to all 
of my colleagues on the Quiet Skies Caucus. And then I have a 
second request that is specific to my district, related to 
helicopter noise. So, one is regarding the whole country with 
Quiet Skies Caucus, the second is, separately, related to my 
district specifically.
    So, a couple different requests that we are asking for from 
the Quiet Skies Caucus, we are asking to include funding for 
the FAA to study health impacts of airplane flights on 
residents exposed to a wide range of noise and the air 
pollution levels.
    Second, we are asking the Subcommittee to include report 
language that directs the FAA to evaluate alternative metrics 
to the current day/night level, DNL 65. We think it should be 
lowered to a lower level, such as the use of noise sampling and 
other methods.
    In the old days 65 may have been an acceptable idea when it 
was disbursed like this, but now the constant level of traffic 
over these few homes, or these limited number of homes, we need 
to lower that DNL level.
    The DNL was developed over 10 years ago at 65, but again, 
the world has changed dramatically because of NextGen. DNL, 
just so you know, expresses an average noise level based on 
annual aircraft operations for an entire calendar year, and it 
doesn't really do a good job of capturing the devastating 
effects of NextGen over our communities.
    My second set of requests; is specific to my district in 
New York 3. Thousands of my constituents in northeast Queens 
are bombarded daily by helicopter noise, and it gets a lot 
worse in the summer when people's windows are open, but also 
with the increased traffic of people traveling from Manhattan, 
or from other parts of the city of New York, I have got Queens 
in my district, it is part of the city of New York, but then 
out to the vacation spots, very wealthy people taking 
helicopters to go out there.
    Well, there was a new route put in place called the North 
Shore Route back in 2016 through 2020. The problem is, there 
has been a tremendous byproduct of that route in the 
constituents that live in Northeastern Queens, and they have 
been bombarded with constant helicopter noise.
    It is a very complicated issue related to the bridges that 
are in the area, the airplane traffic in the area, but the 
helicopters, as you know, are not that heavily regulated.
    So I am asking the subcommittee to include in the fiscal 
year 2019 Appropriations Bill language; that would direct the 
review of regulations around helicopter noise, and assess three 
different things.
    One, the noise impacts of regulations for communities, and 
communities in locations where aircraft are landing or taking 
off; two, enforcement of applicable flight standards including 
in the requirements for helicopters to remain at or below 2,500 
feet mean sea level; and three, the availability of new routes 
to reduce noise impacts, including the institution of all water 
route over northeastern Queens, the County of New York.
    If the helicopters could simply travel over the water for 
the entire route, it would solve this problem, because no homes 
are under the water, obviously.
    So that would be a solution to this problem, but we are 
going to need some help from the FAA, and from this committee 
to direct them to look at that.
    So, that is my testimony. And I thank you so much for your 
time. I am sorry if I went over.
    Mr. Diaz-Balart. No. Actually, thank you so much for being 
here. Now, I don't know if you are aware, I know you are of 
that, and again, a lot of the credit goes to Mr. Quigley of our 
subcommittee, so on the 2018 bill, we did quite a bit, to start 
the process, including adding staff to New York, specifically 
to deal with the noise issue.
    And secondly, in the 2018 Bill there is also, we did add 
that language that you mentioned to study the DNL, and so we 
will obviously be looking at it when we put together the 2019 
bill. It is important that you came to talk to us about this, 
and we thank you for your input. But this committee has been 
very sensitive to try to accommodate their members.
    Mr. Suozzi. And Congressman Quigley does a great job on 
this issue and is really very heavily affected by all these 
issues as well.
    Mr. Diaz-Balart. Absolutely. Mr. Price.
    Mr. Price. Just to elaborate for a moment. The helicopter 
traffic that you are talking about, these helicopters take off 
all over the place. Is that right?
    Mr. Suozzi. Yes, but they mainly take off from Manhattan. 
But, yes, they take off from all over the place.
    Mr. Price. And they are headed to eastern Long Island?
    Mr. Suozzi. Right, up to the vacation spots of the 
Hamptons.
    Mr. Price. So, this problem you are identifying is not 
particular related to LaGuardia, to helicopter traffic at that 
airport?
    Mr. Suozzi. That is correct, but LaGuardia is very closely 
situated to where the problem takes place. It is not related to 
LaGuardia, no.
    Mr. Price. I see. Well, we will take what you say under 
advisement. It sounds like a relatively new problem, and one 
that has intensified.
    Mr. Suozzi. It has actually gone on for years. It is just 
that we are bringing it to everybody's attention now, and 
people are really--you know, the challenge with a lot of these 
issues is, you know, there seems to be an impression that a lot 
of those people that are complaining are just cranks, and they 
are just overemphasizing.
    It is really clearly obvious based upon, not only the 
conversations with my colleagues, conversations with my 
constituents, that NextGen is a major problem that caused--you 
know, it is a lot of benefit to NextGen, but a major problem 
for these people that are in the flight paths now, the NextGen 
flight paths, it is a new phenomenon that are heavily impacting 
people, and the helicopters is a new phenomenon back from 2016 
when they changed this North Shore route and it has affected 
this one community very negatively.
    Mr. Price. Thank you. And thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Thank you, sir. Mr. 
Correa? How are you, sir? Thanks for joining us, and we look 
forward to hearing what we can do to help you.
    [The information follows:]

 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
       
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. JOSE LUIS CORREA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    CALIFORNIA
    Mr. Correa. Mr. Chairman Diaz-Balart, and Ranking Member 
Mr. Price, and Congressman Young, thank you very much for the 
opportunity.
    I am here today to talk about our heroes, our warriors, our 
veterans that come back from fighting all over the world to 
protect our freedoms. And many come back with invisible wounds 
that don't seem to heal. I am here to talk homeless veterans. I 
am here to talk a robust funding for programs that provide 
assistance for homeless veterans.
    As a member of the House Committee and Veterans Affairs, I 
am asking this Committee, asking you, please, provide 47 
million for the Housing and Urban Development Veterans Affairs 
Supported Program, commonly known as HUD/VASH Program for 
fiscal year 2019, which is consistent with the 2017 funding 
levels.
    According to the most recent 2017 Annual Homeless 
Assessment Report issued by HUD, there are about 40,000 
homeless veterans throughout the country. And as I said, no 
veteran that has served our country, none of these heroes who 
have served our great nation should be left homeless.
    As the gatekeepers of taxpayer money, and keeping the 
promise to make our young men and whole when they come back 
from serving, it is our responsibility to make sure that we do 
everything we can to get homeless veterans off the street.
    My state, the State of California, is home to the biggest 
number of veterans in the country. Sadly, we are also home to 
the greatest number of homeless veterans in the United States, 
over 11,000.
    California is followed by the States of Florida and Texas, 
who are the second and third highest number of homeless 
veterans in this nation.
    I am going to make my comment short, and say, gentlemen, 
ladies and gentlemen, I hope you agree with me and provide that 
funding for homeless veterans, the way they deserve to be 
treated by this great country.
    Mr. Diaz-Balart. Thank you, Mr. Correa. And this 
Subcommittee is very, very sensitive to that. And one of the 
things that we--and by the way, because of the leadership of 
our Full Committee Chairman, and the Ranking Member as well, we 
have got a pretty good allocation, as you know for 2018, so we 
were able to put on top of the $500 million annually just to 
keep the folks that we have in there. We did an additional $40 
million in 2018.
    We don't have our allocations yet, but just know that this 
Subcommittee is very, very sensitive. We have been able to I 
think do some good things. And we thank you for your passion. 
And just know that we are going to stay in touch with you. Stay 
in touch with us. We hope to be able to, again, continue to do 
the good work that we started, no, we didn't start it, but that 
we were able to add to in 2018.
    Mr. Price.
    Mr. Price. Thank you. And I also want to commend our 
colleague and assure him that your request has bipartisan, 
bicameral support as evidenced in the final outcome of the 2017 
and 2018 appropriations. The problem of homelessness and of 
under-resourcing of housing support is a problem that our 
country must simply come to grips with more adequately and of 
course this budget that we are reviewing now for 2019 is an 
important part of that.
    But I think there is wide agreement that the veterans' 
population is a special case, because of the needs of this 
population, because of the way they have served this country. 
And so it is appropriate I think that one segment of this 
housing support be singled out for those veterans.
    And it does have widespread support in a way that other 
housing programs haven't always had, and so we have made 
headway.
    And I would like to know if you have the California figures 
on veterans' homelessness, and how much headway we have made in 
reducing that. I know in our state it has been cut in half, in 
North Carolina.
    But it needs to be zero, or as close to zero as we can make 
it, and so I commend you for your focus on this particular 
group of people. It is a deserving group of people, and we need 
to reflect that in our budget. So, thank you for being here.
    Mr. Correa. Thank you, Mr. Chairman Diaz-Balart, and 
Ranking Member Price. We have an all-volunteer military, these 
young men and women don't ask, they go and serve the country. 
And as I said before a lot of them come back with those 
invisible wounds, still not healed, and many of them end up in 
our streets, homeless.
    In California we have over 11,000 homeless vets. We are 
working hard. In Orange County, my county, working really hard, 
but I think partnering with the Federal Government with your 
assistance would go a long way to helping us as elected 
officials, keep our promise and commitment to our veterans.
    Your words are very positive. I welcome them. I sit, again, 
on the Veterans Affairs Committee. Let us work together in 
partnership and make sure we do the right thing for our heroes. 
Thank you very much for the opportunity.
    Mr. Diaz-Balart. Thank you. Again, I just want to also 
thank the Ranking Member for those words, which I think really 
sums up the feeling of the subcommittee. Thank you.
    Mr. Correa. Absolutely, gentleman. It is not a partisan 
issue. It is an American issue, it is a moral issue. Thank you 
very much.
    Mr. Diaz-Balart. Thank you very much. Are you ready, sir? I 
want to make sure that you have a little time to get your 
thoughts in order. But while you do, I will let you know that, 
again, we thank you for your participation. We are here to 
listen to you, and I have had the privilege to work with you in 
the past, and have been able to get some good things done for 
the country. So, I appreciate you, one again coming in front of 
this Subcommittee.
    [The information follows:]
 
 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. ADRIANO ESPAILLAT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    NEW YORK
    Mr. Espaillat. Thank you, Chairman; and Ranking Member 
Price, and Chairman Diaz-Balart.
    This Subcommittee hearing and the decision that come out 
are very important to the constituents that I represent in the 
13th Congressional District in New York City.
    First and foremost, I want to thank you because the Rental 
Assistance Demonstration Project, RAD, was included this year 
in the Fiscal Year 2018 Omnibus Legislation. Saving the 
Lakeview Apartments in East Harlem, one of the last remaining 
Mitchell-Lama buildings in that area, there is a dire need to 
maintain and secure affordable housing in that particular 
section of the city.
    So, with your cooperation, Mr. Chairman, Mr. Ranking 
Member, we were able to save 446 units, apartments for families 
that live right off of Fifth Avenue. The market rate of those 
apartments would have driven the rents through the roof, and 
because of your efforts and your help we were able to keep them 
affordable, and keep those families there. So I want to thank 
you.
    It has been a long-standing priority of mine, and I want to 
thank the Chairman and the Ranking Member for their tireless 
efforts and time working with me since I became a Member of 
Congress to ensure that Lakeview's affordability remain by 
providing comparable market rent.
    The current area fair market rent cap is 120 percent, and 
through the legislative language, Lakeview will be able to 
receive a significant increase in the cap to meet the gap in 
street rent, to market rent, and keep rent affordable for its 
current tenants.
    The other issue that is very important to me in the 
district, is public housing. The New York City Housing 
Authority has 400,000 people in it. It is larger than many 
cities across the country, and the district has the highest 
concentration of NYCHA, New York City Housing Authority, units 
in the entire country.
    As I said, New York City is the home to the largest public 
housing in North America, known as NYCHA, and NYCHA is 
responsible for 176 public housing apartments that house over, 
just slightly over 400,000 residents.
    NYCHA serves low-income tenants including recipients of 
Housing Choice Voucher Program, Project-Based Vouchers, and 
Veterans Affairs Supportive Housing, HUD programs. For NYCHA to 
effectively service tenants, it requires a commitment to robust 
funding for public housing, for the Public Housing Operation 
Fund, or the day-to-day operation of NYCHA, and long-term 
projects of rehabilitating the units.
    So, NYCHA has a lot of challenges. One of those challenges 
is capital. They have a big deficit, $17 billion, and some feel 
that when it is reassessed it can go as high as $26 billion 
deficit for capital repairs. That means bollards, roof work, 
pointing, windows, elevator work.
    And so this winter we saw a tremendous crisis--many of us 
tend to do in the very cold winter months. So, they really need 
the infusion of capital dollars. They also need the infusion, 
obviously, of Section 8 vouchers, the rental assistance. And 
over 123 Section 8 housing vouchers are dually administered by 
the New York City Housing Authority and also New York City's 
Housing Agency. The increase to the additional moneys in the 
fiscal year 2018 omnibus will better accommodate for needs, so, 
this year's budget was helpful in increasing not only the 
capital, but also increasing by 40 percent the operational 
budget and I think 5,000 vouchers for Section 8. So, I hope 
that we get our fair share of those particular increases in 
NYCHA. Therefore, with a total of $30.3 billion allocated for 
Section 8 and public and Native American housing, I urge the 
Committee to dedicate at least $22.8 billion to fully fund all 
existing vouchers for their Housing Choice Voucher Program, 
Section 8 Rental Assistance for fiscal year 2019.
    As I said earlier, public--the Capital Fund is an important 
one for New York City housing that is transitioning in 
leadership right now, as we speak. HUD's most recent capital 
needs assessment shows a deficit of $26 billion. So, actually, 
they have already made the assessment. I said that their 
deficit was $17 billion. That is the old deficit; it has 
ballooned now to $26 billion in capital repairs. And that is--
of course, is roofing, so I am proposing a--I am proposing that 
the Public Housing Capital Funding be increased to a level of 
at least $5 billion in fiscal year 2019. So, that is important. 
Obviously, we cannot make all these repairs in a short period 
of time. They will have to be staggered in. So, we feel that a 
$5 billion allocation is a good one. We also have the proposals 
for the community development grants.
    In the past calendar year and even now, the utility and 
flexibility of community development go--block grants cannot be 
underscored. In New York City alone, community development 
block grant money has been used to repair over 19,000 
households of multifamily buildings. Investing in a single 
family or multifamily in NYCHA, we have a resilience program 
has yield dividends in surplus of the investment. So, community 
development block grants are very important and I want to thank 
the Committee for allocating $3.3 billion in fiscal year 2018 
and urge the Committee to fund this vitally important program 
at the maximum amount, if possible, in 2019.
    Finally, Mr. Chairman, I have a particular project that I 
wanted to discuss with you that involves public safety. And you 
have seen how unfortunately, there have been several terrorist 
tracks--attacks, one in New York City on the West Side Highway 
and several across the country and across the world. The use of 
vehicles to basically run down pedestrians. And so, I am 
calling on the Committee to consider the funding of bollards. 
Bollards are structures that will impede vehicles from being 
used as a terrorist weapon to kill civilians, as it was done 
in--unfortunately, in the West Side Highway New York City and 
many places across the world and some other places across the 
country. We feel that this is a sensible and practical measure 
that will save peoples' lives and we--I have presented the Stop 
Act, which will stop the threats on pedestrians that will help 
fight back on terrorist attacks. So, I will consider--I would 
love the Committee to consider funding these--this particular 
project.
    With that, I close, Mr. Chairman, and I again, want to 
thank you for your efforts to help out Lakeview and for your 
efforts to bring funding to NYCHA. And I think that we have a 
lot more to do, but I want to continue in a very collegial and 
bipartisan fashion to work with you to make sure we accomplish 
that.
    Mr. Diaz-Balart. Let me----
    Mr. Espaillat. Thank you so much.
    Mr. Diaz-Balart [continuing]. Let me--again, I would be 
remiss if I did not mention your just tireless leadership and 
advocacy. You have been--you--I mean, heck, you had barely 
gotten sworn in and you were already jumping on us on these 
issues. And so--and we do listen. We do----
    Mr. Espaillat. Okay.
    Mr. Diaz-Balart [continuing]. Listen and so I know that you 
know that we raised the cap on the program on RAD to 455,000 
units and also expanded the use of RAD for the elderly program. 
And so just know that we do listen to you.
    Mr. Espaillat. Thank you.
    Mr. Diaz-Balart. And you mentioned--you were very gracious 
in thanking us, but frankly, we have to thank you for your 
leadership. You got some big things done for your constituents 
and also you mentioned Public Housing Capital, which we did--we 
were able to put a substantial increase of--an increase of $750 
million, which is substantial and again, full funding of 
Section 8. So, again, just know that the Subcommittee works 
very closely together. We have been listening to you and we 
look forward to continuing working with you.
    Mr. Espaillat. Thank you so much. Thank you, Chairman.
    Mr. Diaz-Balart. Mr. Price.
    Mr. Price. Thank you. I also want to thank you for your 
advocacy. Everything you said this morning, just now, is 
relevant to our 2019 deliberations. We have made headway, as 
the Chairman says, on most of these items in 2017, 2018 by 
virtue of bipartisan budget agreements. But the adequate 
funding of public housing repair and maintenance, the support 
for CDBG, and funding a reasonable number of RAD conversions 
where those are the chosen path forward for housing 
authorities, all of those are on our agenda and we thank you 
for underscoring there for us.
    Mr. Espaillat. Thank you so much. Thank you. Thank you, 
sir.
    Mr. Diaz-Balart. Gentlewoman from Washington is recognized. 
Thank you again, for being here. Always a pleasure speaking to 
you.
    [The information follows:]


   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. PRAMILA JAYAPAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    WASHINGTON
    Ms. Jayapal. Thank you so much, Chairman Diaz-Balart. Turn 
that on. Thank you so much, Chairman Diaz-Balart for having me 
here, Ranking Member Price, thank you, Members of the Committee 
for the tireless work that you have done. I think we saw some 
very, very good results in the omni and I think I am probably 
going to mention some of the same issues that my colleague just 
mentioned, as well, because frankly, coast-to-coast, rural and 
urban, these are the issues that we are tackling. And so, I 
want to talk about both housing and transportation.
    My District, which is Washington's 7th Congressional 
District, it includes Seattle. It is not limited to Seattle, 
but it includes Seattle. Housing affordability is one of the 
biggest challenges that we face. Seattle's median home value is 
$740,000 and home value skyrocketed by 18 percent. I know, it 
is--believe me, having lived there for so long, it is stunning 
to see what is happening. Skyrocketed by 18 percent in 2017 
alone. Median rent prices--here is another staggering figure--
$2,500. And Seattle is expected to have the highest cost of 
living increase in the United States this year. And as the cost 
of living increases, it is our responsibility to ensure that 
our low and middle-income families can continue to call Seattle 
home.
    Because costs are rising so steeply, we have had an 
incredible increase in homelessness. And I actually 
participated in what is called the One Night Count to end 
homelessness. This year's annual Point-In-Time Count of persons 
experiencing homeless totaled 11,600 people, homeless 
individuals living in King County, with 5,485 living 
unsheltered, 70 percent of whom are in Seattle. And many of 
these are Veterans, they are members of the LGBT community, and 
sadly, increasingly members of our young people, our youth.
    And I just have to say, we have a lot of highways that run 
right through Seattle and so when I was out on the One Night 
Count, to see the staggering disparities between the incredible 
wealth that we have--we have skyscrapers everywhere, a lot of 
boom and business everywhere in Seattle--but increasing numbers 
of tents under the freeways, which is now sort of the only 
place that these tents can go. Federal Funding goes an 
incredibly long way to addressing this issue, eradicating 
homelessness, and expanding access to affordable housing. And 
so, thank you for the work that you did already in fiscal year 
2018 and for 2019, we are urging increases in Section 8, 
community development block grants, and the McKinny-Vento 
Homeless Assistance Grants. These are essential for our local 
governments and non-profits working to end homelessness and 
expand affordable housing.
    The Seattle Housing Authority has a patchwork of funds to 
ensure that people like Marvin--and I always like to bring 
stories of my constituents because I think it is easy to think 
about these things in numbers. But for me, it is based in 
people and lives. So, people like Marvin can transition from 
years of addiction and experiencing homelessness in Seattle's 
most dangerous areas to now his situation, seven years of 
sobriety, a stable job, and an apartment of his own. Jill, a 
single mother, aspiring to be a nurse, who gained affordable 
housing, she is now enrolled at Seattle University's College of 
Nursing. These Federal Funds that you allocate every year are 
critical to changing peoples' lives. They allow them to have 
the stability to get back on their feet and pursue their dreams 
and education, the workforce, and life.
    I want to specifically mention Section 8, which I know my 
colleague was just mentioning. That has been essential to my 
District in particular. We did receive $17.7 million in Section 
8 Funding. And for fiscal year 2019, I am hoping that you will 
appropriate $22.8 billion for Section 8 and specifically $20.6 
billion for renewals, $110 million for new vouchers, $1.9 
billion for administrative fees, and $190 million to renew 
approximately 14,000 mainstream vouchers.
    Mr. Chairman, the dedicated organizations that are working 
on these issues do stretch the funds as far as they possibly 
can and I did not plan this. This is--this was not a plant, but 
it so happens that the executive director of the Low Income 
Housing Institute happens to be in D.C. today. She is here. 
LIHI used a combination of funding sources to construct Marian 
House, which is a mixed use affordable housing apartment 
building, 49 studio apartments, 20 of which are affordable for 
homeless youth, 29 of which are for low-wage workers who are 
just getting their start in the workforce. So, they really do 
incorporate crucial wrap-around services and that is what the 
Federal Funding allows us to do.
    Our downtown emergency service center uses the McKinny-
Vento Homeless Assistance Grants to house some of our most 
vulnerable populations in both traditional emergency shelters, 
as well as innovating setting--innovative settings that embrace 
the Housing First model. Last year, my District received about 
14 million in funding for these programs and we are really 
urging an increase for fiscal year 2019 to 2.8 billion.
    I also wanted to briefly mention how important the housing 
opportunities for Persons With AIDS program is because for 
people living with HIV and AIDS, they are far more vulnerable 
to experiencing homelessness and it also reduces the 
transmission of HIV, improves patient health, and saves cost on 
emergency and in-patient services. Last year, my District 
received about $2 million in HOPWA funding and the need 
continues. I am urging an increase in fiscal year 2019 funding 
for that program to $393 million.
    And then I just want to mention a couple of important 
transportation projects. The first is passenger train safety 
and the second is around general transportation projects. 
Regarding passenger rail, as you know, Mr. Chairman, in 
December of 2017, the Seattle area became the latest community 
to experience tragedy when the Amtrak Cascades 501 traveling 
from Seattle to Portland, carried 80 passengers and seven crew 
members, derailed near Olympia. Three Washingtonians died and 
nearly a hundred were hospitalized. So, for our communities in 
the Pacific Northwest, this terrible incident--accident was a 
stark reminder of how badly we need to invest in passenger rail 
safety.
    The FY 2018 omnibus, I want to thank you, included nearly 
$2 billion for Amtrak and my hope is that the national network 
of passenger rail will be robustly supported with a serious eye 
towards passenger rail safety. We think it is very important 
that no new lines come onboard without those controls in place, 
but we do need to make sure that we increase the funding 
quickly so that people can put those safety measures into place 
so that we never have such accidents.
    Finally, Mr. Chairman, very pleased that the Subcommittee 
provided a-hundred million in fiscal year 2017 under the 
Capital Investment Grant Program for a very important program 
in my District, it is the Sound Transit Lynnwood Link Extension 
that connects North Seattle to Lynnwood. This is the area--we 
have Boeing just above the District. All of our housing and 
much of our employment is being pushed to expand beyond 
Seattle. If we do not have transportation that connects to the 
port that helps get goods from Eastern Washington or apples or 
all of the things that we export from Eastern Washington in, if 
we do not have clear transit that connects north south, we are 
going to be in trouble. So, this is a critical project for us.
    Sound Transit last month submitted all of the work to the 
Federal Transit Administration in order to execute the full 
funding grant agreement this summer. But unfortunately, we have 
not seen a response from the Department of Transportation to 
live up to the side of the deal that says the--that, ``Yes, we 
are going to release these dollars.'' So, Secretary signature 
on FFGAs guarantees that our communities do not get left 
footing the bill for the federal share of these critical 
projects. This is a project that really took all of the funding 
sources that we have. We got the state to commit. We do need 
the federal commitment in order to move this forward. And so, I 
was very pleased that the Subcommittee included language in the 
2018 omnibus that sets a clear deadline for the Department to 
commit to releasing the funds. And I hope you will help us to 
continue to push for a very quick release and push the FDA to 
implement the law and sign those FFGAs so we can get to work on 
putting those funds to good use and leveraged use, which I 
think is one of the most important things in the federal 
dollar.
    So, with that, Mr. Chairman, I thank you very much again 
for all of the work that this Committee has done on these 
critical issues that, really, for our District in Seattle, 
remarkably difficult time for us as people struggle with these 
astronomical rents and housing prices and homelessness. Thank 
you, Mr. Chairman.
    Mr. Diaz-Balart. Let me just thank the gentlelady for being 
here, but not only being here because we have had the 
opportunity to talk----
    Ms. Jayapal. Yes.
    Mr. Diaz-Balart [continuing]. At other times and--by the 
way, those numbers are astonishing.
    Ms. Jayapal. Yeah.
    Mr. Diaz-Balart. They are.
    Ms. Jayapal. It is----
    Mr. Diaz-Balart. They are hard to almost comprehend, right? 
And so again, thank you for--as you know, we did have that $250 
million for PTC because, you are absolutely right, there are 
some accidents that potentially could have been avoided all 
together and that is--I do not know if it makes it worse, but 
it makes it clearly--well, if it is avoidable, we need to avoid 
it. And so, this Subcommittee has been very committed and also, 
that $2.6 billion for transit CIG, which are historic highs. 
And again, we--this Committee is committed to it. We actually 
also--on the last issue that you mentioned in the hearing with 
the Secretary, we actually brought that up.
    Ms. Jayapal. Oh, great.
    Mr. Diaz-Balart. And so we do have the language, but we 
also want to make sure that--because they are going to--they do 
not have a lot of time and so we are going to be on top of 
that, to make sure that what the Committee has put there and 
Congress has approved actually takes place. And I think the 
Secretary was very helpful and very amenable, understanding 
that they are going to have some challenges because of the 
timeline. But, Mr. Price, any comments, questions?
    Mr. Price. Thank you. I want to join in thanking our 
colleague for really a remarkable survey of the importance of 
the Subcommittee's work to a city like Seattle. It is striking 
how many points of contact there are. And I would say your 
story is not atypical, just speaking about my own District and 
others I know about. Affordable housing has risen to the top. 
It should have been at the top all along, but it has certainly 
risen to the top now of challenges we are facing and it is 
very, very clear that the way development is going, the way 
gentrification is going, that the market forces are not going 
to take care of this on their own. On the contrary, they are 
going to price many of our fellow citizens out of housing. And 
you have, of course, documented that, but you have also shown 
where some of the solutions may lie. So, we thank you for your 
testimony.
    Ms. Jayapal. Thank you so much.
    Mr. Diaz-Balart. Thank you. Mr. Graves, gentleman from 
Louisiana. While he comes up, Mr. Graves is not an 
appropriator, but I do not think there are many people in 
Congress that have had more of an impact, particular on the 
Relief Bill. The hurricane and fires and the supplemental that 
Mr. Graves, he has been a staunch leader. I appreciate, by the 
way, thank you for spending all the time with us individually. 
Your work and your knowledge has been invaluable and I want to 
thank you. So, again, you have your fingerprints all over the 
omni, you have your fingerprints all over the relief bill, and 
so we want to thank you for your leadership.
    [The information follows:] 


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. GARRET GRAVES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    LOUISIANA
    Mr. Graves. Mr. Chairman, Congressman Price, thank you very 
much for the opportunity to be here today. Garret Graves from 
South Louisiana.
    We have had the opportunity to discuss this a bit, but I 
think it--I think it is really important to reemphasize. When 
you take a step back and look, since 1980 we have had somewhere 
around 220, 230 disasters in this country that have cost over 
$1 billion. And, in fact, when you add it all up, including the 
$180 billion dollars that we spent on the 2017 disasters, this 
nation spent about $1.5 trillion responding to disasters. And 
an important component in addition to all the FEMA funds is 
what your Subcommittee does and the community development, 
block grant, disaster recovery funds.
    In the case of Louisiana, we had a little-known storm that 
actually wreaked havoc in August of 2016. We had a storm that 
was a 1,000-year storm. The Red Cross at the time and I believe 
it was the National Flood Insurance Program indicated that at 
the time it was going to be the 4th most costly flood disaster 
in U.S. history. This thing was not well-known, it did not get 
a lot of attention or press, but it, again, it wreaked havoc on 
many in South Louisiana.
    To date, the Subcommittee has provided approximately $1.7 
billion to the State of Louisiana and community development, 
block grant, disaster recovery funds, and they are being used 
for a program in Louisiana called Restore Louisiana to provide 
assistance to homeowners and businessowners that have been 
adversely affected. Let us keep in mind, Mr. Chairman, with a 
1,000 year flood, approximately 80 percent of the homes and 
businesses that flooded were outside of the flood plain and 
didn't have flood insurance. I apologize because the graphic 
shop had some problems this morning, but you get the point here 
anyway, despite the gap, that one $1.7 billion is what you 
provided. The first allocation was about $430 million in 
September of 2016, over a year and a half ago. Second 
allocation in December of 2016, approximately $1.2 billion and 
the third allocation, which I believe was May of 2017 that was 
around 50. But here is the point. So, we're talking of this 
actually happening over a year and a half ago. You have been 
very helpful in working with us in providing $1.7 billion. This 
chart is from our local newspaper, largest circulation in the 
state and I believe it was the first week in March. A disaster 
a year and a half ago, you provided first allocation of funds a 
year and a half ago. Sixty million dollars has been distributed 
to homeowners. Again, I want to be clear this is a chart that--
a graphic that was done the first week of March. It has been 
updated since then. I do not know what the current number is. 
Seventy million dollars is what has been paid to the contractor 
to administer this program. Mr. Chairman, you and I have talked 
about this and I know that there are a lot of fingers we can 
point, at the federal government. The reality is this is 
inexcusable. It is just unacceptable. These are flood victims 
and thousands and thousands of these people are still living in 
gutted homes; living in tents; living in moldy, unsanitary 
conditions because they do not have an option. Now, I know this 
gets outside of your subcommittee's jurisdiction, but to add 
insult to injury, many of these people are living in trailers. 
FEMA has come in and said that they are moving the trailers on 
May 15th. Well, if these people do not have access to the 
dollars to get back into their homes, what alternative do you 
have? There is a total disorganized effort here that is 
revictimizing the survivors of these floods and I think it is 
unfortunate and I would love to work with you as well as others 
in ensuring that the victims of Hurricane Harvey, Irma, Maria 
do not experience these same disasters and we are able to fix 
this as well.
    Mr. Diaz-Balart. If I may interrupt you and just to let Mr. 
Price know. We met with him, was it yes--a couple days ago, but 
we have had multiple meetings with him and he has been--
frankly, has been--as bringing this up totally documented and 
so we committed to him that we are going to try to figure out 
what is holding it back and--because we do not really know and 
so, Mr. Price, I look forward to--because I know you are going 
to be--both of, by the way, as you know, are very sensitive----
    Mr. Price. Yes.
    Mr. Diaz-Balart [continuing]. Not only because just as 
Americans, we need to be, but on top of that, we live in states 
that have had the same kind of, you know, we get hit by storms 
as well, so, Mr. Price, we will get together and see how we can 
coordinate to make sure that we get to the bottom of this 
because this is obviously a major problem, an unacceptable 
problem that we need to figure out.
    Mr. Graves. You mentioned--right, you do not want to point 
fingers, but we do need to figure out what is holding us back. 
What the problem is because that is clearly unacceptable, and I 
do not know if you have any comments, Mr. Price.
    Mr. Price. I agree and we are all in on this disaster 
relief and the way we need to support one another because the 
kind of human catastrophe you describe, I do not think that is 
too strong a word is what this spectrum of assistance is 
supposed to avoid. And we are not only talking about CDBG here. 
We are talking about the full range of FEMA support and so, we 
appreciate your advocacy and we will, of course, continue to 
work with you.
    Mr. Graves. Thank you, we have to get to the bottom of it 
and again, as I said before, I cannot thank you enough for your 
leadership. You have been exceedingly well informed and 
frankly, every time I sit down with you and I talk with you, I 
learn and so just know that we are going to work together. We 
are going to get to the bottom of it. Well, I certainly do 
appreciate it and I understand some of this may be outside this 
subcommittee's jurisdiction potentially, if it is in our----
    Mr. Price. We will work with our colleagues.
    Mr. Graves. But we do need to identify these problems 
because it certainly is going to continue to be problematic to 
other disaster victims. If I can just quickly, two other 
things, Mr. Chairman. One, this duplication of benefits issue 
where folks have applied for a loan through the SBA because 
they were told to do so. Maybe they were given a loan, maybe 
they were not. In either case, they are prohibited from 
accessing some of the grant funds available from Community 
Development Block Grant because it is considered a duplication 
of benefits. I would argue that a grant and a loan are two very 
different instruments that do not duplicate one another. Those 
people that were proactive and sought the loan and took the 
advice of the--of FEMA officials and did what they were told to 
do are now being penalized they are not being allowed to get 
access to grants. We did pass a Bill through the House of 
Representatives on December 21st that addressed this. The 
Senate has not taken it up to date, but I just wanted to 
highlight this, is that I do think it is a policy problem and 
that there is this perception that a grant and a loan are the 
same thing. Lastly, Mr. Chairman, right now, we have about a 
hundred billion dollars in the Corps of Engineers that are 
backlogged, a hundred billion. We are appropriating somewhere 
around one to $2 billion a year. You can do the math. Just 
based on inflation, you will finish that backlog approximately 
never. And what you have done through the Community Development 
Block Grant Flood Mitigation Funds, I want to commend you for 
that. That is a huge deal. I talked when I opened up about $1.5 
trillion in disaster spending. It is unaffordable. We are on a 
trajectory that is completely unsustainable. You, leaning 
forward and being proactive with those flood mitigation 
dollars, that is going to save multiple times the funds in 
disaster recovery. It allows us to stop this reactive nature of 
our disaster policy in the United States and begin leaning 
forward and being proactive. I really want to commend you for 
doing that. I think it is very important. We may need to 
address a technical issue with the available of those dollars 
to advance some core authorized projects that do not have 
resources available. With that, I just want to thank you very 
much for an opportunity to be here and look forward to 
continuing to work with you.
    Mr. Diaz-Balart. Well, thank you. Again, we look--we are 
going to get you some answers because, not only do you deserve 
it, but the American people deserve it. And again, I cannot 
thank you enough for your leadership. Look forward to continue 
working with you.
    Mr. Graves. Thank you very much. Appreciate it.
    Mr. Diaz-Balart. Mr. Kildee. How are you, sir?
    Mr. Kildee. I am well, thank you.
    Mr. Diaz-Balart. Thank you for coming before the 
Subcommittee today.
    Mr. Kildee. Thank you very much.
    Mr. Diaz-Balart. You are recognized, sir.
    There you go. If there is a button there on----
    Mr. Kildee. Oh, there we go.
    Mr. Diaz-Balart. Now, we are talking. All right.
    Mr. Kildee. The sound of my own voice. It is music.
    [The information follows:] 
    
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
     
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. DANIEL KILDEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    MICHIGAN
    Mr. Kildee. Well, thanks for taking a few minutes. I can do 
a 1-minute speech. I can do a 20-minute speech easily. Five 
minutes is a bit of a challenge, but let me do what I can. What 
I would like to discuss with you is the need for what I think 
is a much more robust Federal role in the health, both 
financial and social economic health of America's cities and 
towns. I think the history of the country, let alone the 
history of the world shows us that where people live and work 
in proximity to one another, they are far more creative. They 
are ingenuous, they are inventive, ideas are commercialized and 
I think to a great extent in this country, particularly at the 
federal level, we have taken--essentially abdicated our--what I 
think is a unique responsibility to support strong cities and 
towns. To a certain extent, it feels as though in recent years 
at the federal level, we have been essentially adopting a 
hippocratic oath fighting essentially to do no harm and I was 
pleased frankly, in the most recent budget that we saw for the 
first time in a very long time an increase in two programs that 
are really two of the remaining programs to support strong 
cities. The CBDG Program and the Home Program. That was a step 
in the right direction, but I think it falls, at least from my 
perspective quite short of what our--the emerging needs in 
these places. Many cities in this country are facing a kind of 
fiscal stress that is really difficult for us to get our heads 
around. My own hometown of Flint, while it could be considered 
an extreme example, is only just that in its example. It is 
just an example. The way state governments, in particular, have 
viewed these places, it is as if cities are the municipal 
corporations that were formed to provide services to them. And 
what we know, of course, is that cities are not the municipal 
entity. Cities are social and economic organisms and so, while 
many state governments have taken the position as was the case 
in my hometown, that you can essentially bankrupt a city. You 
can deal with its obligations; you can get them to a balance 
sheet level of solvency. Unlike typical corporations, you 
cannot sell off the parts and dissemble that corporation. There 
is still a living and breathing community left behind. I 
believe that the next big institutional failure that we will 
see in this country is the collapse of the whole subset of 
American cities. What we saw in my hometown of Flint, with the 
water crisis, a community that just now, after 4 years of not 
being able to drink the water is being told that they no longer 
have to draw every ounce of water from bottles like this. 4 
years. Think about the economic and social impact on that 
community.
    If Flint were some sort of an anomaly, if the cause of the 
water crisis for example was a mistake or a storm or some 
catastrophic event, rather than what I think is the natural 
result of disinvestment in older industrial cities particularly 
cities large and small that have had significant population 
lulls, high concentrations of poverty and it could be left 
behind even with the next wave of federal investment absent 
some specific support for those places, we are going to see 
more Flint, Michigan's.
    Last point I will make and this is in the context of not 
just conventional support for cities at I think the federal 
government could play a great role in but the concern about the 
unintended consequence of what might feel like a really big 
down payment on investment and community and that is a national 
infrastructure bill. Certainly not the way the President has 
framed it. The notion for example that a place like Flint and 
the state of Michigan could come up with 80 percent of the 
money to have fixed this water system. If they had 80 percent 
of the money already, they would have been spending it a long 
time ago.
    But here is my bigger concern. In the 1990's post war 
growth and expansion was coupled with a huge investment in the 
interstate highway system which in the net was a big boon for 
the country. Increased our productivity, our connectivity, 
helped lots of growth occur. But it also had this unintended 
consequences of efficiently emptying out many of the places, 
many of the older communities that were having a tough time 
making the transition to the next economy.
    Here is my worry. Absent a significant essentially martial 
plan for these distressed communities, and absent a really 
thoughtful approach, the next wave of significant investment 
could actually be a repeat of that phenomenon. And I am deeply 
concerned that unless Congress and the federal government 
understands that while states have the principle role, we are 
not absent from this discussion nor is the federal interest 
absent from the health of these communities and we really need 
a focused effort.
    Otherwise, Flint will not have been the anomaly that many 
people think it is. It will have been a warning that we failed 
to heed. So I am hopeful that the modest increase that we have 
seen recently is a signal that there is an openness and a 
recognition that we need to do much, much more.
    Mr. Diaz-Balart. All right. Let me thank you for again 
coming in front of the subcommittee. Just as you know in the 
2018 omnibus it was an increase of 10.6 billion dollars. And so 
there is a lot of talk about infrastructure but this Congress 
and this subcommittee has done it. This is a real investment 
into infrastructure and also if you look at HUD, it is a 1.9 
billion dollar increase so this was a very generous allocation. 
We don't know what is going to happen for the 20, you know, for 
the next year's budget. And we don't have the allocation for 
this one yet but I will tell you that the full committee 
chairman and the ranking member have been very generous with 
the subcommittee and so rest assured that, you know, we are 
committed to obviously investing in infrastructure.
    One final point that I do want to make and I know you are 
aware of this. We focus so much as we need to, that is what 
this committee does, the full committee on in essence 30 cents 
on the dollar and yet we ignore 70 cents on the dollar which is 
growing exponentially and so one of these days we are going to 
have to obviously and that is not something that this committee 
can do, but Congress is going to have to, Congress and the 
Administration is going to have address the other 70 percent of 
the spending which is frankly creating some big issues with us 
and debt and everything else but again that is for another day 
but we can't just continue to ignore 70 cents and only focus on 
the 30 cents which is more and more challenging.
    Mr. Kildee. There is no question. One little stat that I 
will throw out because I think the Flint experience is one that 
is instructive. For the lack of about 20 million dollars to 
completely retrofit the city's lead service lines, the federal 
government and state government now just in the last 3 years 
have spent over half a billion dollars to repair the damage 
done by the failure to market that initial investment. So the 
point I think that I know you are well aware of is that there 
is spending and there is spending. And sometimes spending just 
gets a bad name but spending in the name of preventing massive 
future costs is a really wise investment that we ought to be 
considering and I know you do so thank you for that.
    Mr. Diaz-Balart. Thank you. Mr. Price.
    Mr. Price. Thank you for giving us a broader perspective on 
our work here. I think sometimes we are focused on preventing 
harm as a witness said earlier. We have the sense, justified I 
think, that most if not all HUD accounts have long since been 
under resourced and the same is less true on the transportation 
side but there is plenty of underinvestment there as well.
    Just in the limited time we have, since you are bringing a 
broader perspective to this, I wonder if you, you are clearly 
not advocating simply an incremental approach. As you survey 
the programs under this subcommittee's jurisdiction, are there 
some that are more vital than others in to the kind of 
situation you are describing? In your experience or as you 
project future needs?
    Mr. Kildee. Well, yes. The issue for me, the interesting 
part of that question is I think to a great extent I believe 
there is a need for a specific set of new initiatives around a 
specific subset of cities. I do support and agree that the 
programs that this committee has jurisdiction over, 
particularly when we look at CDBG and home, those are important 
programs for communities across the spectrum but where I think 
we have failed is in recognizing that there is a, this subset 
of cities for whom even marginal increases in those resources 
are a small offset to what has been dramatic loss of their 
locally available resources due to regional changes in the 
economy, the emptying out of those places.
    My hometown of Flint is such a good example but there are 
so many others. But this is a city that once had the highest 
per capita income in the United States. Highest per capita 
income in the United States. Not only in my lifetime but in my 
working career and now is the poorest city in America.
    Forty-five percent of the people in Flint live below the 
poverty line. 58 percent of the children live below the poverty 
line. So the notion that an incremental approach is helpful is 
true. But there are something in the neighborhood of 50 cities 
and towns and I am not talking about just big places but some 
places of 20 and 30 thousand population even smaller for which 
modest increases in existent programs not only are only 
incremental but those communities don't even have the capacity 
to manage what they are doing. There needs to be some kind of 
an approach that is far more robust for those specific highly 
distressed communities.
    Mr. Price. The capacity to manage what about the capacity 
to pursue these, this support. Has that been a problem as the--
--
    Mr. Kildee. Very----
    Mr. Price. Has the city had the capacity to go after what 
is available?
    Mr. Kildee. They do not and it is a god point because when 
we see communities go through this financial collapse, the last 
programs to be cut are the basic services of a civil society. 
For example, police and fire. The first programs to be cut are 
the management capacity like for example in my own home town 
until very recently there was not a city planner. There was no 
one in the planning department. Not a person at any desk. So 
when programs such as the most recently adopted program around 
opportunity zones come along, absent some simply are missed. 
They don't have--either--because you have been very generous 
with your time.
    I invite any member to come to my hometown and I am 
planning another visit soon mainly to point out that it wasn't 
just this water crisis. The kind of physical austerity that has 
been imposed on this community, largely because it is left to 
itself to raise revenue to provide the basics elements of a 
civil society. The--beyond anything you might comprehend there 
is a, sometimes in a city of 100,000 people there might be 4 
police officers. And this is a city that has high crime. The 
parks are not mowed. The streets are never maintained. This is 
my hometown.
    My wife and I were visiting another community and we saw a 
street sweeper and it was as if we were looking at a unicorn. 
We never see a street sweeper. The kind of austerity that these 
communities are experiencing is the type of austerity that they 
have no capacity to climb out of and that is why I think there 
is a social and economic cost that is born by the entire 
country which argues for a more robust federal involvement in 
this specific subset of cities and it is really my argument is 
that it is not just the programs that are in existence now but 
there needs to be a recognition that there is this looming 
institutional failure in a smaller set of cities for which the 
existing programs are just not really adequate to deal with the 
problems they are facing.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Gentleman from Nevada. How are you, sir? 
Great, thanks for being here.
    [The information follows:]
 
 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                         Wednesday, April 18, 2018.

                                WITNESS

HON. RUBEN KIHUEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    NEVADA
    Mr. Kihuen. Thank you. Good morning. Chairman Diaz-Balart, 
Ranking Member Price and my colleagues on the Subcommittee on 
Transportation, Housing and Urban Development, thank you so 
much for this opportunity to testify in front of your committee 
this morning to talk about some important issues impacting 
Nevada on transportation infrastructure, especially the I-11 
project as well as the need for affordable housing in the state 
of Nevada.
    Mr. Chairman, as you know our nation's infrastructure is 
crumbling with the American Society of Civil Engineers giving 
the United States a D plus. To fix this, we need to invest in 
our nation and rebuild our roads, our bridges, tunnels, ports, 
and airways.
    One such project underway is the I-11 projects which is an 
interstate highway that will eventually span from Arizona's 
border with Mexico to Montana's border with Canada. This 
project will link Las Vegas and Phoenix which are the only two 
adjacent cities in the nation with populations of more than 1 
million people that are not currently linked by an interstate. 
Once completed, this project will mark the first new 
infrastructure addition to the 47,856 interstate highway 
systems since it was deemed complete in 1992.
    Not only will I-11 serve as an important link between major 
metropolitan areas in the southwest, it will also serve as a 
vital link for rural communities in Nevada's 4th Congressional 
district which as you know, Mr. Chairman, is the third largest 
congressional district in the country, covers almost 55,000 
square miles. And so it is critical that the I-11 corridor does 
not and I repeat does not bypass towns in rural Nevada 
including Mina, Looning, Hawthorne, Walker Lake, Shers and 
Yerington which would cost these communities the economic boost 
that would come with the development of I-11.
    In particular, Mr. Chairman, I-11 is vital for the 
Hawthorne Army Depot. In order to meet personnel demands and 
ensure that our, ensure our national security.
    I-11 is a type of infrastructure project our country needs. 
It will not only improve our nation's crumbling infrastructure 
and create jobs but it will also make possible a key 
international trading route that will improve tourism, mobility 
and economic growth. I-11 is critical for the State of Nevada 
and I ask that this subcommittee make this major infrastructure 
project a reality and reject any proposals to toll our nation's 
highways and bridges.
    Mr. Chairman, in addition to the I-11 project, I strongly 
urge this committee to continue funding the TIGER program, the 
grant program. These TIGER grants are a valuable funding tool 
for state and local governments and have provided millions of 
dollars to the state of Nevada over the years. These grants 
have been essential in maintaining our existing infrastructure 
and providing for future needs.
    In addition to transportation, one of the most critical 
issues facing my constituents in the State of Nevada is access 
to affordable housing and neighborhood stabilization. As many 
of you know Nevada was the hardest hit state in the country 
during the housing crises. While the State of Nevada is in a 
much better place than it was during the recession, the pain 
from the housing crisis continues to this day.
    As my constituents know, Nevada led the nation in 
foreclosures for more than 5 years during the recession. In 
2010 Nevada's mortgage delinquency rate peaked at 10.7 percent, 
one of the highest in the country. Only last year did this rate 
come down to the national average of just 1 percent.
    As homes are being foreclosed upon and families were being 
forced out of their homes, many Nevadans were pushed into the 
rental market. Due to a drastic slowdown in new home 
construction, more Nevadans were competing for fewer units. In 
fact, only 10 affordable housing units in Las Vegas are on the 
market for every 100 low income people seeking a rental. At the 
same time, HUD rental assistance decreased giving a one, two 
punch to Nevada families.
    The HUD housing choice vouchers play an integral role in 
helping low income families, the elderly and people with 
disabilities afford these safe and sanitary housing in the 
private market. Many of my constituents rely on this program 
and I urge the committee to fully fund the housing choice 
vouchers.
    Another important program to ensure strong sustainable and 
inclusive communities is through the community development 
block grant program which was discussed earlier, Mr. Chairman, 
which provides communities with the resources and needs to 
address community development needs. Even though this program 
has been highly effective in seeking to ensure decent, 
affordable housing, the Trump Administration has proposed 
eliminating the CDBG program. For Nevada, this will mean a loss 
of nearly 20 million dollars in funding. This is why I am 
asking the committee to fully fund the CDBG program so that the 
state and local jurisdictions in Nevada and across our nation 
can thrive.
    And finally, Mr. Chairman, I would like to discuss the 
importance of the Native American Housing Block Grant Program 
which is critical for these, for those living in Indian 
country. Native Americans are twice as likely to live in 
poverty compared to the rest of the country with homes that are 
overcrowded and in need of repairs. To address these housing 
needs, the Native American Housing Block Grant Program can be 
used for housing development and assistance. We owe it to our 
nation's tribes to provide them with affordable and decent 
housing which is why I urge the committee to fully fund the 
Native American Housing Block Grant Program.
    Mr. Chairman, ranking member and members of the committee 
so you can see Nevada has many housing and transportation needs 
that fall under this committee's jurisdiction. And that is why 
I am asking you to continue to fund these vital programs that 
invest in and improve our infrastructure to help working 
families across the 4th Congressional District and across the 
country. Thank you for this opportunity to testify in front of 
your committee.
    Mr. Diaz-Balart. Let me thank the gentlemen for being here 
and--obviously this subcommittee listens to its member. And we 
are very grateful to the full committee chairman and the 
ranking member. We had a very, very strong allocation for 2018 
and so you mentioned a number of issues and let me just say in 
TIGER for example, we were able to increase that to 1.5 billion 
dollars which by the way is a billion dollar increase. I think 
it is a billion dollar increase over frankly the historic high 
as far as I know. 2.5 billion dollars for new highway grants. 
That is new money that went to the states. 750 million 
dollars--755 million dollars for Native Americans for housing 
which is an issue that I know is of great concern of yours. And 
19.6 billion dollars for Section 8 which is full funding.
    And so we were grateful to get a, we don't know what our 
allocation is going to be for the 2019 bill but we are very 
grateful, are very grateful that not only did we get a very 
strong allocation and I think this, I am very proud of the work 
that this subcommittee did in allocating those funds I think 
wisely and those decisions are made after a lot of work. A lot 
of hard work. A lot of tough negotiations and so that is why I 
am always grateful to my ranking member. He and I work as a 
team and so I think this, again I am very proud of that 2018 
omni and let's see what we can do right for the 2019 bill. Mr. 
Price.
    Mr. Price. Thank you, Mr. Chairman. I agree with the 
comments you have made. We, I have no questions but I do want 
to commend our colleague for advocating for a range of programs 
that clearly are important to his constituents and important to 
the country. So we are looking forward as the chairman says to 
our allocation and to being able to make use of the input you 
and other members have provided this morning. Thank you.
    Mr. Diaz-Balart. Thank you, Mr. Price, and thank you, sir, 
and by the way we are going to need help because once we put 
the bills together we are going to, it requires the votes. And 
so we are going to need everybody's help to not only get it 
through committee because this committee will get it through 
the committee one way or another, right, Mr. Price? We will get 
it done but we are going to need everyone's help to get it 
through the floor.
    Mr. Kihuen. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. So thank you for being here today.
    Mr. Kihuen. Thank you, Mr. Chairman. Thank you, ranking 
member.
    Mr. Diaz-Balart. Mr. Price, I believe that concludes the 
members who had asked to testify in front of the subcommittee. 
We appreciate their testimony and as I said earlier everyone's 
written statement will be included in the record. Mr. Price, 
any closing remarks?
    Mr. Price. No, thank you.
    Mr. Diaz-Balart. Thank you, sir. With that the subcommittee 
is adjourned.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

                                         Wednesday, April 25, 2018.

  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--OFFICE OF HOUSING AND 
                     FEDERAL HOUSING ADMINISTRATION

                                WITNESS

DANA WADE, GENERAL DEPUTY ASSISTANT SECRETARY FOR HOUSING
    Mr. Diaz-Balart. Let us call the subcommittee to order. 
Good morning, everyone. And I apologize. As you know, they 
called votes and so it kind of threw our schedule off a little 
bit.
    We are pleased to welcome the General Deputy Assistant 
Secretary for the Office of Housing, Dana Wade, by the way, you 
are a Floridian, are you not?
    Ms. Wade. Yes, I am.
    Mr. Diaz-Balart. North Florida?
    Ms. Wade. That is correct.
    Mr. Diaz-Balart. That is correct. Wonderful part of the 
country. And, again, from Department of Housing and Urban 
Development. Ms. Wade is here to testify in the fiscal year 
2019 budget request for the important and really diverse 
programs administered by HUD's Office of Housing.
    And so the mission of the Office of Housing is to 
contribute to building and preserving healthy neighborhoods and 
communities, maintain and expand home ownership, rental housing 
and healthcare opportunities, and to stabilize credit markets 
in times of economic disruption.
    And to carry out this mission the Office of Housing 
oversees the Federal Housing Administration which is the 
largest mortgage insurer in the world, in the planet. As well 
as regulates the housing industry.
    It provides rental assistance to more than 1.6 million 
families through the project-based rental assistance and 
housing for the elderly, and the housing for persons with 
disabilities programs.
    I note that this subcommittee, in a non-partisan way, has 
supported these vital programs, and in the FY-18 Omnibus we 
provided funds to actually create additional housing, 
affordable housing units for these vulnerable populations. 
These programs, I do not have to say, are critical to 
individual communities across the country, to people, as well 
as to our national economy as a whole.
    The fiscal year 2018 Omnibus provided $12.7 billion 
budgetary resources for the Office of Housing, and for fiscal 
year 2019 the request from HUD is $12.2 billion which is a 
reduction of $436 million from the 2018 enacted level.
    Now, as I have stated before, to be fair, the request was 
formulated prior to the bipartisan budget cap deal, and also 
prior to the passage of the negotiated FY 2018 Omnibus. But, 
obviously, it is critical for us to understand how the proposed 
level would affect programs under, again, the Office of 
Housing's portfolio. So, you know, how it would affect 
potentially vulnerable families who rely on HUD programs.
    We also understand the Department's working on a 
legislative-- actually, that is right, has just released a 
legislative proposal to reform how its rent subsidy programs 
works, and these reforms impacted the formulation of the 
request.
    So as the members of this committee know, such reforms are 
outside of our jurisdiction, and, obviously, I look forward to 
the Administration's reform ideas, and we will look at those 
with great detail and a lot of interest.
    Fiscal year 2019 is less than six months away and, 
obviously, this subcommittee must write a bill now that 
adequately funds housing programs as a currently function, and 
again, because of the people that depend on them.
    Ms. Wade, I greatly appreciate your appearance today before 
us to discuss those issues. Because, obviously, we want to make 
sure that we meet our nation's affordable housing needs, and 
ensure our housing policy supports affordability, as well as, 
obviously, our economy, and more importantly, those that depend 
on these programs while, crucially, being accountable to the 
taxpayer.
    So with that, let me yield to my friend and partner the 
ranking member of the subcommittee, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I would like to join 
you in welcoming Dana Wade, the General Deputy Assistant 
Secretary for the Office of Housing and the Federal Housing 
Administration. Ms. Wade, thank you for being here today. We 
look forward to your testimony.
    HUD's Office of Housing administers several critical 
programs that affect the lives of tens of millions of 
Americans. For example, the Federal Housing Administration, 
FHA, is the largest mortgage insurer in the world with more 
than $1.3 trillion in its portfolio. FHA policies have an 
enormous impact on the nation's housing market and the overall 
economy. We look forward to receiving an update about FHA's 
ongoing activities during our hearing today.
    I am also planning to ask some questions about the Section 
202 and Section 811 programs for the elderly and disabled, 
respectively. These programs provide a measure of independence 
and dignity to some of society's most vulnerable individuals. 
In North Carolina and across the country these programs have 
successfully leveraged the resources and expertise of nonprofit 
groups and faith organizations to meet local community needs. I 
was pleased to secure additional funding in the 2018 Omnibus. 
That is the first new funding or funding for new construction 
in these programs in years to create nearly 2,000 additional 
units of 202 and 811 housing. So I look forward to hearing how 
HUD plans to administer these new resources.
    HUD's Office of Housing also oversees the Housing 
Counseling program. While this account receives a modest 
appropriation, just $55 million last year, it does pack a large 
punch. Research confirms that HUD approved housing counselors 
create better outcomes for consumers by helping them improve 
their credit, reduce debt, and avoid foreclosure. Hundreds of 
thousands of people benefited from these services last year 
alone, and I am concerned that HUD has proposed nearly a 20 
percent cut to this program in the 2019 request.
    Finally, I want to once again register my concerns with the 
Administration's so called rent reforms. We have not seen a 
detailed proposal yet, but I understand the Secretary is 
unveiling it today. From what we do know, these reforms would 
essentially shift HUD program costs onto residents, raising 
minimum rents, imposing work requirements, or eliminating long-
standing rent deductions for medical expenses and other costs 
could have serious repercussions for the people who rely on 
housing assistance. Moreover, if such changes are to be 
considered they are best left to the authorizing committee.
    Ms. Wade, I look forward to your testimony today and 
working with you to ensure that HUD's Office of Housing and the 
Federal Housing Administration have the resources necessary to 
carry out your mission. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. If I may, it is great to 
have somebody here who has been in the process, understands the 
process, and the fact that you are a Floridian, obviously, adds 
a lot more to your resume. So your full written testimony will 
be included in the record, and with that, you are recognized 
for five minutes. Thank you for being here.
    Ms. Wade. Thank you Chair and ranking member, and members 
of this subcommittee thank you for inviting me here today to 
discuss our work in the Office of Housing and the Federal 
Housing Administration. As a former Congressional staffer 
having worked on both the House Budget Committee, the Senate 
Appropriations and Banking Committee I have a great respect for 
the role that Congress has in setting the budget and providing 
oversight of government spending.
    The Office of Housing's programs focus on making housing 
affordable for individuals and families. For 83 years FHA has 
provided opportunities for Americans to build equity through 
home ownership and climb the economic ladder. To meet our 
objectives we must operate programs that are sustainable for 
borrowers, renters, and taxpayers.
    More than 8 million, mostly first time and low to moderate 
income homeowners count on FHA. In addition, HUD's multi-family 
rental properties provide more than 2.5 million affordable 
rental units. Importantly, taxpayers stand behind everything we 
do, including FHA's book of business. This is a responsibility 
that demands prudent management of our programs.
    For fiscal year 2019 we requested funding to develop a 
stable technology and risk management platform to ensure 
continuity of our operations and to avoid financial losses. 
FHA's current platform which supports more than $1.3 trillion 
in insurance in force is built on a 40 plus year old mainframe 
system. The risk that outdated technology presents to FHA, and 
by extension, to taxpayers is significant. FHA's viability 
depends on financial stability too. This Administration has 
already taken several actions to safeguard FHA's Mutual 
Mortgage Insurance Fund, or MMIF, a few which I will highlight 
today.
    One of our first actions was to suspend a premium reduction 
for FHA single family insurance program. Had the reduction 
taken effect, the MMIF capital ratio would have fallen below 
FHA statutory requirement of 2 percent to 1.67 percent.
    We also took action last year to improve the fiscal 
condition of FHA insured reverse mortgages called home equity 
conversion mortgages, or HECMs. Since fiscal year 2009 FHA 
insured HECMs have resulted in an estimated cost of $14.5 
billion to the MMIF. We cannot rule out the possibility of 
future losses. We will continue to protect seniors who 
currently depend on HECMs to age in place, while also ensuring 
that FHA's forward program and, ultimately, taxpayers do not 
have to subsidize the reverse mortgage program.
    This Administration has also taken action to reduce risk to 
taxpayers by restoring long-standing FHA policy on property 
assessed clean energy, or PACE, obligations. Property 
encumbered with PACE will no longer be eligible for an FHA 
insured mortgage. Taxpayers should never have another lien jump 
in front of FHA mortgage.
    In fact, we will remain diligent in protecting the MMIF and 
borrowers from default risk wherever possible. Although, FHA's 
core business for forward mortgages has seen positive 
performance we also see certain trends and indicators of 
potential defaults. For example, we have seen increases in high 
debt to income ratios, increases in the use of down payment 
assistance, and increases in the number of cash out refinances. 
We have also seen a change in composition in FHA's portfolio. 
Depository institutions now represent less than 15 percent of 
lenders, compared to about 45 percent in 2010. Many banks have 
stayed away from FHA because of perceived legal liability 
stemming from the government's use of the False Claims Act. Bad 
actors, let me be clear, bad actors will have no place in our 
programs, but we do not want to see the False Claims Act used 
to penalize FHA lenders for minor mistakes.
    Secretary Carson and I and our general counsel are 
committed to reviewing and addressing this issue with the 
Department of Justice. We are actively involved in discussions 
on this topic. We are also actively reviewing HUD rules on 
manufactured housing which is a critical component of 
affordable housing in the United States. Our goal is to reduce 
undue burdens while ensuring that HUD promotes affordability, 
quality, durability, and safety.
    And, importantly, I would like to thank this committee for 
supporting our goals for HUD multi-family housing which is a 
cornerstone for renters seeking a safe and affordable place to 
live. Specifically, the fiscal year 2018 Omnibus increases the 
cap for the Rental Assistance Demonstration, or RAD. This will 
allow us to continue the much needed recapitalization of our 
nation's aging housing stock while leveraging private capital 
and offsetting taxpayer risk. We believe RAD is key to 
improving the quality of life for low income and very low 
income renters.
    And, finally, I want to also thank this committee for your 
support of our efforts to respond to the devastating 
hurricanes, wildfires, and mudslides that occurred this and 
last year. We immediately stepped up to assist borrowers and 
renters impacted by the disasters. These efforts continue to be 
a priority, and I am grateful and also so thankful to the hard 
work of my staff in the Office of Housing and at HUD.
    Thank you and I am happy to answer any questions that you 
have today.
    [The information follows:] 
    
   
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Diaz-Balart. Thank you very much for your testimony. I 
will tell you that a lot of the things that you said were music 
to my ears. We will proceed in the standard fashion if that is 
all right with everyone, and so let me start with something 
that you already talked about regarding the MMIF.
    Obviously, just a short few years ago the fund finally 
reached its statutory capital reserve ratio of 2 percent and 
six years ago this fund was forced to draw $1.7 billion from 
Treasury to cover projected losses on loans it guarantees. And 
so I know that HUD has taken, you have taken, steps to 
stabilize that fund to protect both the FHA borrower and the 
taxpayer, and you mentioned that a little bit in your 
presentation.

                                  HECM

    So my first question has to do with the home equity 
conversion mortgage which you just mentioned, and I do not have 
to remind you, since you are a Floridian, that I happen to 
represent a lot of folks that utilize this.
    And so there was an article in 2017, an AARP article, that 
stated that HECM default rates increased by 646 percent in 
2016. There was also another study by Ohio State that stated 
that the default rates on HECM mortgages increased 10 percent 
following the housing crisis. So if that would be accurate, if 
it is accurate it appears the HECM program is, potentially, 
hurting the very population it is meant to protect. Obviously, 
it was devised to help seniors stay in their homes, but, 
obviously, there are a lot of questions. So let me start with 
this, are those real numbers? Did the HECM default rate 
increase by 646 percent in 2016? And, if not, what is the 
default rate and is that improving? What is the real situation 
here?
    Ms. Wade. Well, I want to say, first of all, that number, 
the 646 is a largely misunderstood number, and we are working 
to get to the bottom of defaults that would happen while the 
borrower is still in the home, largely due to failure to pay 
taxes and insurance. And we would be happy to sit down with you 
and your staff can go over some of the numbers. But the one 
thing I want to stress is that HECM does continue to be a 
financially and operationally challenged program. As I 
mentioned, the economic value is negative 14.5 billion.
    And it is certainly something that when we look at our 
fiduciary responsibility to maintain a 2 percent capital 
reserve ratio, we are concerned about HECM, we are closely 
monitoring it. We did take steps to try to put future loans on 
a fiscally sustainable path moving forward.
    However, we still have a legacy book of business of old 
loans, and we are seeing some trouble there, and continuing to 
assess that situation. But, yes, this is definitely an issue 
and reverse mortgages, in general, that continues to weigh on 
the Mutual Mortgage Insurance Fund.
    Mr. Diaz-Balart. Clearly, and obviously there is also the 
issue of, again, there are in some cases, it doesn't seem to be 
helping those that it is trying to help. And so do we have an 
idea as to why seniors are defaulting, and again those numbers, 
and I know look forward to continue this conversation, but 
there are some that are clearly defaulting, and do we have an 
idea as to what the main reasons are behind those defaults?
    Ms. Wade. Seniors, I think if it is due to a lack of 
information of the commitments under the HECM Program or the 
reverse mortgage program, lack of information on, you know, 
taxes and insurance obligations, I think there are some 
solutions. We are looking at housing counseling programs and 
better leveraging those to provide adequate information to HECM 
borrowers so that they know what to do if they face a potential 
default due to taxes and insurance losses.
    You know, however, I believe there are some numbers that, 
at least that I have seen, that do not fully take into account 
some of the changes that were made a couple of years ago to the 
HECM program that require financial assessment, and life 
expectancy set aside, which we believe, had some positive 
impact on reducing the number of TI defaults.
    But it is obviously something we are monitoring very 
closely. We know, you know, we have a commitment to make sure 
that the obligations under HECM are as transparent as possible, 
to the seniors who rely on this program to aging in place.
    Mr. Diaz-Balart. And I appreciate some of those changes, 
but obviously then the question is, how about the folks that 
didn't have--before those changes took place, so you have 
seniors out there, and I represent a number of them that come 
to see me. That in essence, firmly believe that they didn't get 
the information that they should have gotten. Are they kind of 
out of luck, because they were there before these changes took 
place?
    Ms. Wade. No. We would certainly uphold all of our 
obligations to make sure that we provide transparent 
information to them, and if it is, you know, by ramping up the 
use of our housing counseling program, I think it could be an 
effective tool to help borrowers who are duress who current 
have HECM loans. But certainly, we will do everything that we 
can to try to put forward solutions that will allow a positive 
workout with these types of situations.
    Mr. Diaz-Balart. And I know you are committed to that, and 
I look forward to working with you.
    Ms. Wade. Thank you.
    Mr. Diaz-Balart. Mr. Price.

                              SECTION 202

    Mr. Price. All right. Thank you, Mr. Chairman. Let me turn, 
as promised, to housing for the elderly and housing for the 
disabled. Section 202 housing for the elderly, it is the only 
Federal program that specifically addresses the need for 
affordable elderly housing, 400,000 units produced today, for 
low-income elderly households, rental housing under the 
program.
    The average annual general income for these households is 
$13,300. Demand for the program is high. HUD has been able to 
provide only to 1 in 3 seniors, for 1 in 3 seniors who are 
qualified for this assistance.
    Despite that, the Trump administration's request is 77 
million below the recently-passed Omnibus. It doesn't allow for 
new construction. By contrast, I am very proud that we 
increased, in the Omnibus, the number of seniors who can be 
assisted. We provide $105 million for capital advances and 
project-based rental assistance contracts.
    This is the first time since fiscal 2010 that new units 
will be added. About 1,100 new units we estimate, a good start. 
So, what are your plans for implementing this new construction 
funding? What mix of capital advances and PRACs do you 
anticipate using, or considerations will go into that decision-
making? And what is your timeline for issuing another, so 
funding availability?
    Ms. Wade. I understand. Thank you so much for that 
question, and I think you are absolutely right, Section 202 is 
a program that is designed for a population that is, you know, 
among the most vulnerable in the country, low to very low-
income seniors. And it is a program that is priority for us. 
When we were writing our budget for FY 2019, we did not yet 
have the bipartisan budget deal that raised the discretionary 
caps, so the baseline that we were working off of was the FY 
2017 baseline.
    But we are very appreciative to this Committee for 
supporting Section 202. We, it is a priority for us as well, 
and certainly for the additional funding, actually two things 
with 202. You know, allowing 202 to become a part of RAD, that 
is a tremendous step forward to being able to help as many 
elderly renters as possible.
    And in addition what you had mentioned, the 105 million for 
capital advances in the recent budget deal, which we really 
appreciate. We have already started working on it, and I know, 
as you know, there was 10 million that was provided for FY 
2017, that could have been either used for capital advances for 
new units, or for preservation, and we had already taken steps 
to kind of strategizing, and put together a plan of how to 
utilize and most effectively leverage that funding.
    So we actually do have some ideas in place that we plan to 
use to further the goals of the 105 million that is provided in 
the FY 2018 budget. We would be happy to sit down with you and 
your staff anytime to discuss this.
    Mr. Price. Well, we would like to do that. Can you give us 
now an estimate of when we might see another funding 
availability?
    Ms. Wade. We are looking to do a number of those, and my 
hope is that some of the NOFAs, or Notice of Funding 
Availabilities, will be released this year, and probably next 
year as well.
    Mr. Price. All right. We would like to nail that down as 
much as we can, and of course get this money out into our 
communities.
    Ms. Wade. Yes, sir.

                              SECTION 811

    Mr. Price. Let me just, in them remaining ask you, 
essentially, the same question about Section 811. Here, too, 
the budget request is disappointing but, on the other hand, we 
have the Fiscal '18 Omnibus to build on. And we did secure 82.6 
million in that bill, for new capital advance, and project 
rental systems awards to create new housing, again, the first 
time since 2010 that we have been actually adding units.
    We also directed HUD to prioritize the creation of new unit 
configurations that comply with the obligations under the 
Homestead court decisions. Many states, including mine, have 
struggled to integrate disabled individuals into community-
based settings.
    So I hope this funding will help us alleviate that problem, 
and of course enable communities across the country to create 
more housing for the disabled.
    So, how are you going to implement the new funding for the 
new construction? How are you planning to comply with the 
Committee's specific direction about Homestead? And what 
progress have you made on that question? And is there a 
timeline?
    Ms. Wade. Thank you for that question as well. With regards 
to Section 811 housing for persons with disabilities, that is 
also a priority, and it also targets some of our nation's most 
vulnerable, the low to very low-income persons with 
disabilities. And we are very appreciative for the 80-plus 
million for capital advances so that we can utilize that and 
leverage that to produce additional units of housing.
    This is something we will be--we are still in the early 
stages of planning and strategizing, we obviously want to this 
moving as quickly as possible.
    And, you know, it is another topic that we would be happy 
to sit down with you. We certainly support compliance with the 
Homestead decision on integrated housing, and we very much took 
note of the direction of this Committee to follow that.
    Mr. Price. All right. That there too, I will take you up on 
the offer, and look forward to--the Homestead decision and the 
mix of formats here for housing for the disabled, does create 
some complexity, but there is a clear need. There is a clear 
need for the capital advances, and for the projects that that 
would fund, and there is a clear need of course for giving 
people who are eligible access to housing in the community.
    And so, we look forward to making some headway here for the 
first time in a long time, some new opportunities to provide 
this housing. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Mr. Valadao. Thank you, 
sir.
    Mr. Valadao. Thank you, Mr. Chairman. Thank you for your 
attendance today, I appreciate the opportunity to listen and 
ask some questions here.

                              FHA LENDING

    As you know the Federal Housing Administration plays a 
significant role in providing credit for first-time low to 
moderate-income and minority homebuyers. However, aggressive 
application enforcement of the False Claims Act has negatively 
impacted banks' ability to participate in FHA lending. In 
October, before the House Financial Services Committee, 
Secretary Carson was asked about the future of the FHA, and 
specifically about the government's recent use of the False 
Claims Act, as a means to extract settlements from mortgage 
lenders engaged in FHA lending.
    I understand from your testimony Secretary Carson is 
committed to reviewing and addressing these concerns, stemming 
from the False Claims Act with Department of Justice, and both 
Departments are now actively involved in discussion on this 
topic. Can you tell me the status of your work to address this 
problem?
    Ms. Wade. Congressman, I appreciate the question. And, you 
know, first of all, we do not believe that the False Claims Act 
should be used to penalize lenders for minor mistakes. And, you 
know, the False Claims Act is really, it is a blunt instrument, 
it should be used as a tool of last resort.
    We are in active discussions pursuant to the Secretary, to 
Secretary Carson's direction, with the Department of Justice, 
and we are reviewing a couple different things including HUD's 
definition of materiality. We think materiality should be 
consistently applied, it should be transparent, it should be 
well defined.
    We are looking at things like our defect taxonomy, which is 
essentially a ranking of our defects by tier and, you know, 
discussing kind of how HUD used each tier of defect, and we 
want to provide as much clarity as possible to lenders so we 
can really apply the rule of law, and be as transparent as 
possible with them.
    Mr. Valadao. So, the Agency has earned some praise for 
changes embedded in this loan defect taxonomy, which alerts 
lenders to mistakes that could subject them to penalty. What 
progress has been made towards improving and fully implementing 
the FHA's defect taxonomy?
    Ms. Wade. Yes, it has been implemented in our Lender Review 
System, you know, but I said, we are taking another look. We 
want to look at it with a fresh set of eyes, to make sure that 
we are being as clear and consistent as we possibly can. I 
think the marketplace depends on certainty.
    Mr. Valadao. Next, we have seen success in credit risk 
transfer programs at Fannie Mae and Freddie Mac, in de-risking 
taxpayers, and diversifying their counterparty exposure. 
Secretary Carson has stated that HUD staff were exploring 
whether FHA or Ginnie Mae could engage in risk-sharing 
transactions to similar benefits in terms of reducing taxpayer 
exposure and risk in the system impacting homeowners. Can you 
please provide an update on your efforts?
    Ms. Wade. That is a great question, and thank you for that 
too. We do have the authority, and that is right to engage in 
risk-sharing transactions. And, you know, I think the goal of 
that would be to reduce the overall taxpayer exposure in the 
housing markets, which is quite outsized right now.
    Our first priority is looking at FHA's own credit box, to 
make sure that we are making sustainable loans, good loans to 
borrowers that they can afford to repay. So, that will be a 
first step, but we are engaged in some pretty early-on 
discussions on, you know, what risk-sharing would look like, 
and potentially how could we reduce taxpayer exposure. As you 
know, FHA guarantees 100 percent of the loan. That is not how 
it is in other government agencies, such as the VA.
    Mr. Valadao. Would FHA benefit from any expanded legal 
authority in this regard?
    Ms. Wade. We would be happy to come to Congress, after we 
do a thorough evaluation, and have that discussion with you.

                           HOUSING COUNSELING

    Mr. Valadao. All right. So, on the housing counseling, 
HUD's Housing Counseling Assistance Program provides 
competitive grants to how to approve housing counseling 
agencies to use for a range of housing counseling services. 
What are the challenges of providing housing counseling 
services in more rural areas? How does HUD attempt to ensure 
that Housing Counseling funds reach these rural areas?
    Ms. Wade. For rural areas, and housing counseling, you are 
right, there are some special challenges that more densely-
packed areas do not face. I think the HUD Housing Counseling 
Program last year counseled over a million potential home 
buyers and renters. I have got about 130,000 came from rural 
areas.
    The things that housing counselors do, it does take a 
little bit of an extra effort, we have a lot of counselors who 
are willing to drive very far to make sure that borrowers can 
get the information that they need, you know. With housing 
counseling it is oftentimes to make the largest financial 
decisions of their lives. So, we are looking to facilitate 
housing counseling in rural areas as much as possible.
    Mr. Valadao. Does that witness greater success in rural 
areas versus urban areas when it comes to impact of housing 
counseling? If so, how are you working to bridge that gap?
    Ms. Wade. You know, I would really have to back and study 
it to measure the relative effectiveness. But I think you ask a 
very good question, and I am happy to get back to you on that 
topic.
    [The information follows:]
 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    
    
    Mr. Valadao. Thank you. And I yield back.

                            FHA LOAN LIMITS

    Mr. Diaz-Balart. Thank you, sir. Mr. Aguilar.
    Mr. Aguilar. Thank you, Mr. Chairman. Thank you, Ms. Wade. 
I appreciate you being here. According to HUD's fiscal year FHA 
Report, and your testimony to us today, more than 33 percent of 
all FHA borrowers were minority home buyers. The program is 
critical to creating a path to home ownership for minority 
homeowners as you know, but these communities also live in 
high-cost areas that may present challenges accessing these 
programs.
    For example, the district I represent, Southern California, 
there are cities in which the FHA loan limit is lower that the 
cities' median home price. These are cities with a high 
percentage of Latinos living in the city that want to utilize 
the FHA Loan Program.
    Living in a city with a high median home price, above the 
FHA loan limit means many consumers in the region can't utilize 
the existing program to buy a home. Because this program is so 
critical to borrowers I am concerned about some proposals from 
industry stakeholders to reduce FHA loan limits. Would you 
support reducing FHA loan limits? And what about those 
individuals who live in high-cost areas?
    Ms. Wade. Congressman, as you know, FHA's loan limits are 
set by statutes, they are actually set in the National Housing 
Act as amended by the Housing and Economic Recovery Act, and 
they are currently set at 115 percent of metropolitan 
statistical area. Median price of each MSA, which is based on 
the highest price in the county of the MSA, and we understand 
that this Committee did include language in the appropriations 
report, directing us to study the issue of large-lot land size, 
counties and their impact on loan limits.
    We are happy to do this, we are happy to perform that. And 
I think our Policy Development and Research staff is already 
hard at work looking at this issue.
    Mr. Aguilar. Yes. But you wouldn't support--so would you 
support, look, we understand that that is said in the statute, 
but would you folks submit information to us that would reduce 
or raise the median income price that would make it more a cost 
affordable.
    Ms. Wade. I think the thing that we would want to do is 
complete the study first and thoroughly evaluate it using all 
of the data and the analysis.
    Mr. Aguilar. What types of programs do you think work 
within minority communities to offer that level of assistance, 
to offer that ability to place folks in homes?
    Ms. Wade. I think you are right. You know, FHA is a very 
critical program to minority communities and allowing minority 
communities and families to climb the economic ladder of 
success. You did cite 33 percent of FHA. Homeowners are 
minorities, and that is certainly a focus of ours. I think FHA 
has been a useful tool to allow that, and we are happy to 
discuss with you other ways to expand the effectiveness in 
those communities.
    Mr. Aguilar. Sure. Also in your testimony you stated that 
FHA programs should be targeted, on page three of your 
testimony. Can you expand a little bit of what you mean by 
targeted? Do you support restricting the FHA loan limit program 
to only first-time home buyers?
    Ms. Wade. I think, well, it is currently 82 percent, so it 
mostly serves, it mostly serves first-time homebuyers, and low 
to moderate income and minority homebuyers. And I think 
targeting it, really just means we want, you know, no matter 
who is a qualified borrower for FHA, we want them to be in a 
loan that they can afford, that they have a good ability to 
repay.
    And so targeting it, means striking the right balance 
between, you know, appropriately calibrating our ability to 
protect the capital fund as well as getting borrowers 
protecting homeowners from getting into a mortgage that they 
can't build equity, and cannot afford to maintain.
    Mr. Aguilar. Would you support, you said 82 percent, that 
is also in your testimony, would you support the program being 
exclusively for first-time homebuyers?
    Ms. Wade. We have not put forward any proposals to do that, 
I think targeting really just means to trying to run the best 
programs, and the most sustainable program, and focusing on our 
mission.

                            FHA CONDO POLICY

    Mr. Aguilar. Sure. In 2016 Congress passed H.R. 3700, the 
Housing Opportunity through Modernization Act, and the bill 
included a provision that is meant to streamline the process 
for condos, for applying for FHA to participate in the loan 
program. Proposed rule for the modification of the FHA 
requirement for condos, was issued September 2016. Can you 
share with us the timeline for HUD to publish a final rule on 
the condo policy?
    Ms. Wade. Yes. And thank you for that question. We are 
moving as expeditiously as possible. We have come to almost the 
final stages of our HUD Review, and we hope this is a rule, and 
the Condo Rule is a very critical rule for first-time 
homebuyers. And for that, you know, for the homeowners who we 
hope to target, that will allow them to have access to FHA 
Program and non-FHA-approved buildings.
    And we think, you know, it is really, this is a really 
important step forward especially as so many cities and 
communities face issues with affordability, that we think the 
Condo Rule is really going to make a positive impact. So, we 
want to move it forward as quickly as possible. We are doing 
everything that we can, and we have come to the very final 
stages of our HUD review in our HUD process.
    Mr. Aguilar. Final stages, so we can look forward to seeing 
that soon?
    Ms. Wade. We are hoping within a couple months, and 
definitely this year. And by the way, we will brief you on, we 
are happy to come and brief you on that issue as well.
    Mr. Aguilar. Thank you. I appreciate it. Thank you, Mr. 
Chairman.
    Mr. Diaz-Balart. Thank you, sir. Mr. Joyce.

                          MANUFACTURED HOUSING

    Mr. Joyce. Thank you, Mr. Chairman. And welcome, Ms. Wade. 
Manufactured housing makes up a key segment of the affordable 
housing industry. Report language from the recent Omnibus 
directs the Department to reconsider burdensome rules regarding 
the completion of manufactured homes. How do you intend to 
develop a solution that ensures the safety of consumers while 
minimizing cost and burdensome requirements on manufacturers?
    Ms. Wade. Thank you for the question. Manufactured housing 
and HUD's role in manufactured housing is critical, it is a 
critical priority to us, which is one of the reasons why I 
instituted a top-to-bottom regulatory review of all 
manufactured housing rules and policies. And our plan, so that 
review was completed a couple months ago, we solicited public 
feedback; we are currently going through all the comments.
    We received over 400 comments and about 150 of those were 
unique. So, people really, in groups and interested parties 
really did weigh in on this. It is really important to kind of 
gather the data, and do our due diligence. And what our plan is 
to present the Manufactured Housing Consensus Committee, which 
is the independent Federal Advisory Committee with the findings 
based on the regulatory review, and give them the opportunity 
to weigh in.
    Mr. Joyce. What guidance should we expect to see or 
stakeholders, and being issued to the stakeholders on this 
issue?
    Ms. Wade. Well, there are a variety, I think, of policies 
and rules, in particular, that we are looking at. You know, 
such as On-site Completion of Construction, and other rules, 
the Frost-Free Foundation Rules, we mentioned a couple rules, 
even just the safety and construction standards, which is 
really what HUD is directed to produce, under the statute, 
under the guiding statute of 2000.
    So, it is a really critical priority that we move forward 
with all of this, and those will all be priorities, we will, 
you know, look at all of those, in particular the safety and 
construction standards. The Federal Advisory Committee is due 
to meet in a couple months, so we will be able to provide more 
information to you then.
    Mr. Joyce. In a few months?
    Ms. Wade. Yes.
    Mr. Joyce. Okay.
    Ms. Wade. But rest assured, this is a top priority for us. 
We acknowledge the vital role of manufactured housing is and 
affordable source of housing in this country.
    Mr. Joyce. In the past year, manufactured housing has 
played an especially important role in the recovery efforts. 
Obviously with disasters, wildfires, hurricanes and storms. 
With a continued industry growth what challenges have you seen 
so far with the program?
    Ms. Wade. I think the challenge is, there are couple. We 
want to make sure that HUD acknowledges the very important role 
that states play in this program. And the partnership that we 
have with states, and we want to make sure that we have the 
best working relationship, and that we are able to accomplish 
our mandate under the statute which is to put forward rules 
that promote quality, durability, affordability and safety. But 
I think engaging the states is a top priority for us.
    Mr. Joyce. It certainly was of key interest to Governor 
Kasich, who expressed concern that too many people are dying in 
manufactured homes over the last year. And so do you believe 
that the state and local planning agencies are better equipped 
to oversee on-site completion and/or inspections?
    Ms. Wade. I think they are critical partners in everything 
that HUD does with respect to its activities within the Office 
of Manufactured Housing.
    Mr. Joyce. Thank you. I yield back, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. Ms. Clark.
    Ms. Clark. Thank you, Mr. Chairman. And thank you Assistant 
Secretary Wade for being with us today. I truly appreciate it.
    I would say that your budget justification is somewhat of a 
study in contradictions. On the one hand, you have stated that 
public and private housing development has substantially failed 
to keep up with growing demand for affordable rental housing. 
So much so, there are only 38 units available for every 100 
extremely low-income people.
    You also set forth that specifically with Section 202, our 
housing for the elderly, your justification states, HUD is only 
able to provide assisted housing to one in three seniors who 
qualify.
    And, again, in Section 811, for housing for persons with 
disabilities, your justification states there is an estimated 
188,000 non-elderly disabled persons living in nursing homes 
who could potentially be transitioned at great savings to 
Section 811 units.
    Despite all of this, in your justification, it appears that 
your only policy proposal is to raise the rents, to put out a 
new formula that you just rolled out, I guess, officially about 
a-half-an-hour ago, going up to 35 percent of gross income.

                              RENT REFORM

    Can you explain to me how are you going to use this new 
rental money, and how specifically, how many new 202 and 811 
units are going to be built with that rent increase?
    Ms. Wade. Thank you for the question. And, you know, I 
think first of all, the Rent Reform Proposal is intended to 
provide as many opportunities for individuals and families to 
be able to climb the economic ladder as possible, given our 
budgetary constraints.
    You know, going specifically to what you mentioned, the 202 
and 811 programs, we did develop our budget prior to the 
Omnibus Bill, and to the Bipartisan Budget Deal, where the 
budgetary caps were raised. However, with the increase in 
funding, and with the additional funding for capital advances 
for Section 202, and Section 811, we want to do everything we 
can to spend that money as efficiently and effectively as 
possible.
    And, you know, in particular, with regards to 202, you are 
right, there is a lot that we can do. I think that the 
composition in a way that the seniors are living their lives 
has changed. And there is a lot that we can do to integrate 
supportive services, in particular through use of the Service 
Coordinator Grants, and programs like that, so that seniors can 
live for longer, and more independently.
    Ms. Clark. I guess I am trying to figure out, and I 
understand we have had some intervening positive news since you 
wrote this, but you highlighted all the problems, and the 
proposal was only to raise rents.
    Just let me give you one example from my district. Carol, 
who lives in Cambridge is 76 years old, she has a sizeable 
deduction for medical expenses, but under the new formula her 
rent would increase almost over $3,100 a year, if we went off 
the gross income, you know. How does that help us with the 
shortage?
    Ms. Wade. I guess to be clear, under the rent reform 
proposal put forward, there will be no changes in rent for the 
elderly and the disabled, they will be held harmless as part of 
this proposal.
    Ms. Clark. Current years?
    Ms. Wade. For 14 years, yes, for a number of years. In 
addition, really, the only component is not raise rent, it is 
actually, this is a proposal where there is a lot flexibility, 
a lot of reduction and administrative burden, I think 
acknowledging the very real budgetary constraint that we face. 
But in particular, I think, reducing the barriers that a lot of 
the residents, whether it be public housing assisted residents, 
or multi-family assisted residents, that they face to kind of 
working a lot of the disincentives there, including the really 
burdensome income certification process.
    So, another really important component of this proposal 
that I would like to stress is that, this would require or it 
would allow income certification every three years, to avoid 
the disincentive to work, and climbing up the economic ladder.
    Ms. Clark. And I agree with you that triannual 
certification is a positive, but I think that with the disabled 
and elderly populations that we are talking about, these rent 
incomes have to somehow be tied to HUD specific plans, and we 
can maybe have a discussion more in-depth about exactly how you 
plan to expand public housing. Because as we look at some of 
your RAD conversion plans, you know, it is not clear to me what 
the commitment is to robust public housing that HUD has?
    Ms. Wade. I would be happy to have that discussion. And 
thank you.
    Ms. Clark. Thank you.
    Mr. Diaz-Balart. Thank you very much. Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. Colleagues, hello; it 
is nice for you to be with us today. Thank you. We are going to 
be losing one of colleagues here on this Committee, Mr. Dent, 
of Pennsylvania, who has been a great advocate for housing, and 
specifically for the Housing Counseling Assistance Program.

                           HOUSING COUNSELING

    You talked a little bit about that with my colleague, Mr. 
Valadao of California. HUD's budget request for FY'19 included 
$45 million dollars for housing counseling assistance; and this 
$10 million less than the fiscal year 2018, the Consolidated 
Appropriations Act that we just passed.
    This is a great program, it provides critical training for 
consumers every day, at every stage of the housing process, 
from homelessness, to budgeting from the home, and to teaching 
skills to prevent foreclosure. How can HUD continue to 
effectively carry out the mission of this program, given HUD's 
requested cut in this funding?
    Ms. Wade. I appreciate the question on housing counseling. 
Housing counseling continues to be a priority for us. I think 
what we are dealing with is scarce number of dollars, and so 
that means, we have to use every dollar as efficiently and 
effectively as possible. We are looking at a lot of different 
ways, that we can maximize the value of every dollar spent on 
housing counseling, as I said.
    You know, I think it is really important for a lot of 
renters, first-time homeowners to know that they can turn to a 
housing counselor for independent and unbiased advice, and it 
is a huge financial decision that they are making. It is an 
incredibly valuable program, walks borrowers through things 
like budgeting and creating their own financial assessment to 
see if they are ready for home ownership.
    And quite frankly, I think, you know, I think a lot of 
housing counselors don't get enough credit, because they 
provide a lot of information to borrowers that they wouldn't 
otherwise receive. And sometimes they answer is, you are not 
quite ready for home ownership, but let us get you on that 
path, and maybe it is a few years away. So, you know, we fully 
support the Housing Counseling Program, and we want to just 
make sure it is as effective as possible.

                              IT SECURITY

    Mr. Young. Thank you. That is good to hear. Looking at your 
testimony, and speaking with other agencies and departments, 
the information technology infrastructure had some challenges 
in many areas. A lot of it is aged, and not up to date, a lot 
of different systems trying to talk to one another within an 
umbrella.
    I worry about cyber security, I worry about the proprietary 
information that people have who may--you may help Americans 
out there with housing, and maybe some other personal 
information. Their financial information, that is within those 
systems.
    I worry about identity theft and fraud, and I wonder, are 
you worried about hackers? How are you making sure that this 
proprietary information, financial information of those that 
you are seeking to help is actually being protected?
    Ms. Wade. I think we should always be very vigilant in 
doing everything we can to protect borrowers when it comes to 
personally identifiable information. And I believe this is one 
of the reasons why FHA so desperately needs IT funding. Because 
right now, we have 400,000 paper-based case files, these are 
the files of the borrowers.
    And they are at our homeownership centers across the 
country with sometimes 300 pages in each case file, so that is, 
if you add it up it is a 120 million pieces of paper every 
year. I think moving to a paperless and secure environment 
where, you know, it would have to be our goal if we were to be 
able to upgrade our technology that we would put in place the 
absolute best systems for protecting personally identifiable 
information that would meet or exceed their private sector 
standards.
    Again, it is something you always have to be vigilant 
about. I believe the risk is very great though, due to our 
Legacy systems, and I think an upgrade will allow us to do a 
better job, quite frankly, in protecting this kind of 
information.
    Mr. Young. Good. Because there is an industry out there of 
bad people, very nefarious folks out there around the world 
trying to steal people's identify, and a lot of times they 
start with the most vulnerable who are going through economic 
ladder, and seeking assistance, I mean the help they need 
sometimes from the Federal Government.

                            FHA FEE PROPOSAL

    The administration's budget includes a new administrative 
fee on FHA mortgage lenders, the proposal would charge $25 per 
FHA-backed loan to generate $20 million for IT improvements. I 
understand the FHA IT systems we talk about, they are four 
years old, the registration system I think experienced about 75 
outages maybe in 2017 from what we understand. A similar fee 
has been proposed for a number of years, in the past the 
industry has strongly objected to this proposal.
    Did you coordinate with or reach out the industry this year 
regarding the fee, and do you believe you have addressed their 
concerns?
    Ms. Wade. I think it is always very important to get the 
feedback of not only the industry that will help us implement 
something, but also Congress. And we wanted to certainly work 
with you and interested parties. I believe, and so you are 
right there, there has been an IT fee requested in the past, 
and from what I understand the concerns with that it was not 
well defined enough.
    I think a portion of it was used for salaries and expenses. 
I don't think there was a time limit on it, and I think it is 
very, very important that we are good stewards of whatever 
funding we would be lucky enough to receive for IT. I believe 
it is our job to manage this, and to create a roadmap, and to 
provide as much as specificity on what exactly our needs are, 
and what we would do with that funding. I think that is likely 
what would get the industry more comfortable with it.
    Mr. Young. Yes. I would be interested to know what you 
would do with that funding, and if it would increase the cost 
for borrowers seeking FHA guaranteed loans.
    Ms. Wade. Well, we would do this. The whole point I think 
of making an investment in IT at FHA would be for the purpose 
of serving our borrowers. I think borrowers actually, you know, 
face a lot of headaches when an FHA system goes down, when 
there is an outage, and it can last up five days. That is a 
delay, you know, in them getting a loan. So I think, the system 
would really have to be designed with borrowers in mind.
    Mr. Young. Thank you for being here today. I yield back.
    Mr. Diaz-Balart. The time you don't have?
    Mr. Young. I take that back.
    Mr. Diaz-Balart. But you used it very wisely, I may say. 
Madam Secretary, let me go back to the MMI, and so as you know 
the prior administration reversed HUD policy, it was in July 
2016, and began allowing FHA mortgage and properties, mortgage 
and properties with PACE loans. And so last year the new 
administration returned to HUD's original policy, which then 
makes that policy consistent with the Federal Housing Finance 
Agency's policy.

                               PACE LOANS

    The FHFA prohibits, for example, Fannie Mae and Freddie Mac 
from producing or refinancing a mortgage with an existing 
first-lien PACE loan. So, now I understand, right, is that now 
FHA loans are not to be in the second-lien position period.
    Ms. Wade. Mm-hmm.
    Mr. Diaz-Balart. So, let me ask you, why did HUD return to 
the original and consistent policy on PACE. I would like to 
kind of understand what your thinking is. I actually was very 
vocal in supporting the new administration doing that, but I 
just want to see if I can understand your take on that.
    Ms. Wade. Thank you. Thank you for your support. The real 
issue and the fundamental issue is that no other lien or 
assessment should ever be allowed to jump in front of FHA 
Mortgage Insurance, especially for property improvement. I 
think that is a pretty grave concern for us. We also think that 
it violates the tenants of the National Housing Act which 
states clearly, there shall be no other lien coming before FHA. 
It puts the taxpayer at risk.
    Mr. Diaz-Balart. That is the statute?
    Ms. Wade. It is in the statute.
    Mr. Diaz-Balart. Right. So, potentially, actually, and I 
hadn't thought of this, but potentially to even, again, 
lawful--against statute?
    Ms. Wade. We are evaluating the legality. Yes.
    Mr. Diaz-Balart. That is interesting. That is interesting. 
And so let me also then, again, as I said, the MMI, does a 
second lien position potentially create greater risk to the MMI 
Fund, and again, or potentially, with the taxpayers?
    Ms. Wade. Yes. It does.
    Mr. Diaz-Balart. Is that something that was looked at?
    Ms. Wade. Absolutely, and in fact the number one concern 
was risk to taxpayers. In the event of a default, you know, if 
there was another lien that was going to be paid off before FHA 
that is really a problem for FHA. And in fact, I think the 
entire foundation of the FHA Program would be put at risk if we 
allowed that sort of thing to happen.
    Mr. Diaz-Balart. Let me also then, throw something else, 
which is obviously in a traditional sense. Right, lenders they 
will determine risk associated with the loan and charge 
interest rates corresponding to that risk. And so, a loan that 
is in a second-lien position typically has a higher interest 
rate, right, than a loan in the first-lien position.
    And so, would you be concerned, or is one of the things 
that you all looked at whether, for example, FHA loans, sooner 
or later, and again, with the change that the last 
administration did, could potentially even increase the cost of 
homeownership, to the very populations that we are trying to 
serve, like those vulnerable populations, potentially by 
increasing interest rates? Or is that not something that was 
looked, and is that inaccurate? Would that be an inaccurate 
thing for me to say, that that could happen?
    Ms. Wade. I think that is a great point, and in fact I 
believe if it is a borrowers that is already, say, cost-
burdened with a PACE lien or an assessment. You know, adding 
that to an FHA mortgage insurance, that just kind of increases 
their payment burden, so that would definitely be an area of 
concern for us.
    Mr. Diaz-Balart. And again, I have nothing against, 
obviously, folks doing that in their home that is great. As a 
matter of fact, in our house we did it, because my controls all 
that. But the concern would be, again, potentially risk to the 
taxpayer, to the MMI Fund, and potentially increasing rates, 
right?
    Ms. Wade. You are exactly right.
    Mr. Diaz-Balart. So that would be accurate? In other words, 
I am not saying that is not potentially accurate. And those are 
some of the considerations that you all looked at?
    Ms. Wade. Yes, we definitely looked at the overall risk and 
how that would burden the borrower.
    Mr. Diaz-Balart. But we didn't do anything through PACE 
loan, so just so we are clear, very clear about not doing that, 
but anyways. Mr. Price.

                           HOUSING COUNSELING

    Mr. Price. Thank you, Mr. Chairman. Let me briefly revisit 
the matter of counseling assistance. It has come up many times 
today. You have been I think uniformly positive in your 
comments about the guidance that this provides to consumers, 
and the positive results we get from serious engagement an 
counseling assistance.
    So, it does raise the question, why the administration is 
cutting the program, when it is providing clearly needed 
services, and having success? So, let me ask you exactly what 
it implies, what the request implies. The lower funding level, 
you say in the request will allow HUD to provide these services 
to about 950,000 consumers. How many consumers are you able to 
provide services to now, at the Fiscal '18 enacted level of 55 
million?
    Ms. Wade. You were right. 950,000 is the level of our 
consumers in our Fiscal Year 2019 Budget Request. And I think 
really represents a tough choice for us. You know, it is a 
slight decrease compared to the status quo. It is a tough 
choice, it also is something, you know, we have been directed 
really to use. Use the funding as efficiently and effectively 
as possible.
    You know, one example is, the average age of an FHA 
borrower is about 36 to 38. These are very, I would say, 
technologically savvy, and Internet savvy borrowers, and I 
think as the younger subset of the population becomes 
interested in homeownership, there are things that we can do 
from an educational perspective that provide a lot more of this 
information online.
    We are investigating that, you know, obviously that is not 
the solution for everyone, but I think the important thing is 
we just have to spend every dollar that we receive very wisely.
    Mr. Price. Okay. The question is how many can you serve at 
the fiscal '18 level? In other words, 950,000 is a reduction 
from what?
    Ms. Wade. From about a million.
    Mr. Price. From about a million, all right. You are 
conducting research and I applaud you for that, to ensure that 
the Housing Counseling Program remains effective. Can you 
provide an update about your follow-up research to HUD's 2017 
baseline study about the impact upon buyer education?
    Ms. Wade. I will have to look at it. I believe that is 
still in process. But as soon as it is completed, we would be 
happy to you and to this Committee and provide that update with 
more specificity.
    [The information follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
     
    Mr. Price. All right. It is clearly relevant, has the 
potential to be relevant to these discussions that we are 
having about funding levels, and program utilization.

                              RENT REFORM

    All right, let us return to rent reform. We now know that 
the Secretary is going to propose to set the family monthly 
rent contribution, at about $150 per month, which is three 
times higher than the current minimum.
    He is going to eliminate certain deductions when 
determining a tenant's rent, such as medical and childcare 
costs. Proposals are going to include work requirements, this 
is going to affect 4.5 million families. Let me just remind us, 
90 percent of public housing households are either elderly or 
had disabilities, they worked or had recently worked, or were 
subject to work requirements through another program.
    So, that is 90 percent.
    It is not clear whom this impacts, and also what the point 
is of this requirement, and particular making huge claims about 
how much money this is going to save here, and how many more 
people can be served if these requirements were to be imposed. 
These look like vulnerable populations to me, and it is one 
thing to say we are not going to affect current tenants, what 
about future tenants? They are not going to be any less 
vulnerable.
    The same, well, think about the 202 population, the Section 
8 population--I mean the 811 population, the average 202 
household, $13,300 in income. For the disabled population two-
thirds of these people that we are talking about have 
developmental disabilities or chronic mental illness.
    Where is this going to come from? But let me just ask you 
one very specific question, and anything you want to say in 
general about it, I will welcome. But how much consultation 
have you really done in putting this together with other 
agencies who administer other forms of assistance, or job 
training, requirements?
    Do these reforms fit with other requirements? For example, 
the SNAP benefits, has anybody really figured that out? I know 
the administration always talks about not being overly burdened 
with regulations but, you know, these folks have requirements 
from other branches of government from other programs. Are we 
making sure that they are not overly burdened? Have you 
coordinated with other agencies in formulating these proposals?
    Ms. Wade. I think you bring up a very important point. And 
I appreciate that; that it is incredibly important because 
there is so much overlap between different and different 
agencies, to coordinate with other agencies. You know, we had 
coordinated. I think we can do more, I think especially now 
that we put forth a proposal. And it really is a proposal that 
we are open to discussing it with Congress. We want to make 
sure that you have as much information, and this is really 
something that begins the dialogue.
    And, you know, we feel the same way about consulting with 
other agencies, we would be happy to take whatever feedback 
would help us, you know, put together the best possible 
proposal to serve. And most people, you know, will also point 
out, on the elderly and disabled, the proposal does hold 
elderly and disabled populations harmless.
    You know, that does affect 202 and 811 as well as project-
based rental systems. About 47 percent of those in PBRA are 
elderly, 17 percent are disabled.
    Mr. Price. Future tenants as well present tenants?
    Ms. Wade. In the future there will--there will be changes 
in the future. You are correct?
    Mr. Price. That was my question, why would you expect those 
populations to be any more affluent or any less vulnerable?
    Ms. Wade. I think that the issue that we are presented with 
is that we have limited resources and we are just trying to use 
them as effectively and efficiently as possible.
    Mr. Price. Well, I know my time has expired, but I must 
say, of course we all want--we all want to serve more people, 
we all want to make the most of limited resources, but if in 
the name of that, we are squeezing, just mercilessly squeezing 
the populations we are already serving, and just making it 
impossible to make ends meet, that doesn't look like much of an 
achievement.
    And I do think that thinking about these other benefits and 
these other programs; it looks like that should take place at 
the front end that kind of consultation. Not just put these 
proposals out there, and then cleaning it up. Why don't we have 
a well-worked out proposal to begin with, and one that is 
coordinated across government?
    Ms. Wade. What we propose is a framework, and again it is 
something that we are open to discussing. It certainly is a 
statement of priorities. But, you know, we are happy to make 
sure we can do everything we can to maximize our consultation 
with you and other agencies.
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you, sir. We have been joined by 
Charlie Dent, and it sounds like you are working on these days, 
right? It sounds like you have got a whole appropriations 
subcommittee to put together. But thank you for--your name was 
invoked a little while ago, and again, your leadership on all 
issues, but particularly on the housing, will be greatly 
missed, greatly missed.
    Mr. Dent. Thank you. Thank you, Mr. Chairman, and Ranking 
Member for your strong leadership on all these issues related 
to housing and transportation. It is much appreciated.

                           HOUSING COUNSELING

    And just a couple things; I know that my colleague, I think 
Mr. Young, might have already touched on the Housing Counseling 
Program. But I wanted to briefly ask about one other aspect of 
your testimony on this particular issue. In your testimony you 
briefly mentioned that you intend to focus on serving those 
affected by disasters. Can you tell me a little bit more about 
how you will be planning on doing that?
    Ms. Wade. Yes. In fact, this is one particular aspect of 
the Housing Counseling Program that I am very proud of. The 
Network of Housing Counselor supported by HUD stepped up 
immediately, and said, what can we do to help the disaster, and 
they have been a critical link in providing homeowners impacted 
by disaster, including those who were unsure about their 
financial future, with as much information to get them back on 
their feet as possible.
    Helping to explain some of the programs that HUD has, and 
the Office of Housing has to help them. So, I am very proud of 
the work that the Housing Counselors have done. In particular, 
we are looking at, potentially, providing an additional tranche 
of funding that has already been appropriated specifically for 
these purposes. And we would be happy to come in and brief you 
on this issue with greater detail.

                            FHA FEE PROPOSAL

    Mr. Dent. Thank you. My second question deals with HUD's 
budget requested an FHA be provided, the authority to collect 
$25, a $25-fee per loan from FHA lenders. The fund would be 
used to upgrade FHA's IT system, to protect against outages and 
security risks.
    In this Committee we have heard a great deal about the need 
to upgrade this infrastructure, and the risk of continuing down 
the current path, while I am encouraged to see the 
administration taking steps to address this outdated 
infrastructure it is certainly important, that the plan in 
place to effectively implement these particular IT solutions. 
How are you and your Agency preparing to potentially use this 
funding proposed in your budget, and from what we have heard on 
the issue in the past, solving HUD's and FHA's IT problems will 
require more than just dedicating additional funding?
    Ms. Wade. That is exactly right. We have to provide 
details. You know, and I think we have to provide a specific 
roadmap so that you can feel confident that you are funding 
something that is going to succeed. And you know, it is 
critically important, it is a top priority for us to have the 
necessary funding to upgrade FHA's IT systems.
    You know, as I mentioned, yeah, IT, FHA is a $1.3 trillion 
platform that is running off a 40-plus-year-old mainframe 
system. It is beginning to break. We are sort of at the 
breaking point. In fact, we have already seen some fractures. 
There were about 73 outages last year alone. You know, our 
homeownership centers deal with something around 120 million 
pieces of paper a year.
    So, it is a critical, it is a critical need that we have to 
address, and in particular, you know, I think it will be us 
putting together what will really help it succeed, it is us 
putting together the details, and making sure that we are 
providing as much information as possible.
    You know, I think the first step on this road, would 
certainly be to move towards a more paperless environment. Away 
from the physical hardcopy of the case binder, the case file 
for the homebuyer. I think that would create a lot of positive 
benefits including more certainty on the front end, at 
origination.
    You know, Fannie and Freddie have invested a lot of money 
in technology over the past decade, and Fannie Mae, in 
particular, can do something called Day 1 Certainty with Reps 
and Warranties. We are not able to do this, and this does 
affect our ability to do quality control. Most of that happens 
on the back end, and I think that is a pretty big risk for 
taxpayers.
    Mr. Dent. Thank you. Mr. Chairman, I have no further 
questions.
    Mr. Diaz-Balart. Thank you, Mr. Dent. Actually, Mr. Dent 
just reminded me of another issue I wanted to toss your way, 
when you were talking about disastrous emergency. But this 
deals with the fact that HUD has the authority to issue these 
foreclosure moratoriums right after a disaster. And the policy 
requires lenders to stop or delay the initiation of a 
foreclosure proceeding for 90 days.

                         DISASTERS/FORECLOSURES

    And so, obviously, as you know, a lot of the country was 
hit hard this last session, season, hurricane season in 
particular. Do you have an idea of the status of foreclosure 
moratorium HUD has issued in response to Hurricanes Irma, Maria 
and Harvey? Any idea what those would be?
    And also just, look, has this been an effective tool, to 
allow borrowers the time they may need after a disaster to get 
back on their feet?
    Ms. Wade. Mr. Chairman, thank you for that question. We did 
automatically provide a 90-day foreclosure moratorium, dealing 
with those impacted by Hurricanes Irma, Maria and Harvey----
    Mr. Diaz-Balart. I know that at least in case of the 
Florida you extended it, right?
    Ms. Wade. That is right.
    Mr. Diaz-Balart. Right.
    Ms. Wade. And we did extend it for another 90 days, and 
that has since expired, and I think the way that I view a 
foreclosure moratorium it is successful in the sense that it 
allows, it allows borrowers some breathing room to get back on 
their feet, when they are faced with a devastating storm. You 
know, like Hurricane Irma, there were a lot of borrowers who 
just needed that time to recover, and honestly it gives them 
also more time, so that they can kind of talk to the servicer, 
figure out what their options are.
    Under FHA we provide a lot of options for borrowers who are 
impacted by disasters. We provide up to a year and we require 
servicers to provide up to a year of forbearance. We have a 
special disaster loan modification that is tailored for 
disaster-impacted borrowers.
    We also rolled out a new tool that I think will be 
particularly useful in places like Florida, in places like 
Texas, which is allowing a partial payment of claim for 
disaster-impacted borrowers. There is really a second loan that 
allows them to roll their missed payments or their arrearages 
into a second loan that sits on top of the FHA mortgage. And I 
think, you know, we are hoping that this will really be useful, 
and this will allow borrowers to become current.
    Mr. Diaz-Balart. That is great. That is great. Mr. Price, 
any further questions, comments?
    Mr. Price. No further questions. Thank you. I appreciate 
the testimony and look forward to working with you on the bill.
    Ms. Wade. Thank you.
    Mr. Diaz-Balart. Let me thank you again, for your 
testimony. By the way, when I was looking through your bio, it 
has a line that says that, you know, you have a keen 
understanding of how banking and housing policy impact the 
affordability of affordable housing, and also the taxpayer 
commitments, and by extension our neighborhoods and community 
as well.
    I will tell you it is refreshing to be able to speak to 
somebody who does get it, and understands the impact of all of 
these decisions that are made all the time. So, I just wanted 
you to know that I am very grateful that you are doing this.
    There may be some other questions, and so I would--some of 
them will probably be submitted later.
    I would ask you, please, if you could work with OMB to 
return information for the record to the Subcommittee within 30 
days from Friday. That again will allow us to publish the 
transcripts of today's hearings, and as we put together our 
bill to make informed decisions. And obviously I look forward 
to continue working with you, as we put the bill together.
    Again, Mr. Price, thank you. No parting thoughts, words of 
wisdom?
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Diaz-Balart. Thank you. Thank you very much.
    Ms. Wade. Thank you.
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    
                                          Thursday, April 26, 2018.

 DEPARTMENT OF TRANSPORTATION--FEDERAL HIGHWAY ADMINISTRATION, FEDERAL 
        TRANSIT ADMINISTRATION, & U.S. MARITIME ADMINISTRATION,

                               WITNESSES

REAR ADMIRAL MARK H. BUZBY, ADMINISTRATOR, U.S. MARITIME ADMINISTRATION
BRANDYE HENDRICKSON, ACTING ADMINISTRATOR, FEDERAL HIGHWAY 
    ADMINISTRATION
K. JANE WILLIAMS, ACTING ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION
    Mr. Diaz-Balart. Let us call the subcommittee to order. 
Today we welcome the leadership of three of Department of 
Transportation model administrations to discuss Fiscal Year 
2019 Budget Request.
    So, we are pleased to have Admiral Buzby, who is the 
Administrator of U.S. Maritime Administration. Admiral? Brandye 
Hendrickson, Acting Administrator of the Federal Highway 
Administration. Thanks for being here. And also, Jane Williams, 
Acting Administrator of the Federal Transit Administration. 
Again, we are pleased to have the three of you here.
    Each of you play a critical role in maintaining really the 
strength of our nation's transportation infrastructure, whether 
it is our roads, our bridges, our trains, buses and ships, et 
cetera.
    The Fiscal 2019 Budget Request proposes $696 million for 
the Maritime Administration, $45.8 billion in total budgetary 
resources for the Federal Highway Administration, and $11.1 
billion in total budgetary resources for the Federal Transit 
Administration. These are, obviously, all below the 2018 
enacted level.
    Now, I have said this multiple times, and we have had other 
witnesses come in front of us, this budget request was 
developed before the recent Bipartisan Budget Act, that lifted 
the sequester for two years, and raised the discretionary 
budget caps.
    So, the budget request, in some respects, and I think we 
all need to recognize this is outdated because of the changes 
that took place afterwards. I don't think a lot of you will see 
support on this Committee for the deep cuts, two important DOT 
programs. However, it is important to hear from you what those 
priorities are, and what you are thinking, and what you are 
looking at.
    As you know, last month the President signed the FY 2018 
Omnibus, which obviously is a negotiated product between the 
House, the Senate and the White House, and I am proud that this 
bill provides really a significant down payment on our nation's 
infrastructure. And we have all been talking about that for a 
long time, and I know that there are other plans out there, but 
with this Congress, again negotiating with the White House, and 
particularly the subcommittee. and this Committee has done, is 
a very, very large down payment on infrastructure that we all 
have been talking about for such a long time.
    So, this includes an additional $2.5 billion in 
discretionary highway funding to rebuild our nation's roads and 
bridges; $2.6 billion for capital investment grants and to 
support major transit projects. And I would like to outline 
that that is the highest level ever funded, and something that 
I am very pleased with.
    Four hundred million to help them modernize their bus 
systems, another $400 million for transit systems to maintain 
the state of good repair, and we know that there is a huge 
backlog in that account, but at least we were able to address 
it in some way; $980 million for the Maritime Administration, 
including $300 million for a new school ship, and $121 million 
for the United States Merchant Marine Academy.
    Again, what we just did recently in the Omnibus showed that 
this Committee actually does real projects, real 
infrastructure, and again, it is not theoretical, this 
Committee has done it.
    And so, we now turn; however, now that we have got the Omni 
out of the way, and again I think we have some good--a lot of 
things to be proud of in that Omni. We turn to fiscal year 
2019, and we look forward to making further, whether strategic 
investments in our infrastructure, but also making sure that we 
protect, and we remain accountable to the taxpayer, to those 
who pay their bill.
    So, this is an infrastructure committee, and we will 
continue to move our country forward in the right direction. We 
will hopefully continue to, if it is the will of the 
subcommittee, and I am very proud of the work that the 
subcommittee has done, and we will be able to move forward, 
continue to move forward, and continue to invest in some key 
infrastructure areas that we severely need.
    So, again, I want you to know that each of you that play an 
important role in these efforts. And so, I am grateful for your 
testimony. I look forward to your testimony.
    And with that, let me yield to the distinguished Ranking 
Member, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I am happy to add my 
welcome to our witnesses this morning. And I look forward to 
this hearing. We are going to hear testimony from the 
leadership of several agencies. The Federal Transit 
Administration, the Federal Highway Administration, the 
Maritime Administration. So, thanks to all of you for being 
here.
    Our transportation infrastructure continues to serve as the 
foundation for our economy and our quality of life. The 
condition of the performance of that infrastructure, the 
condition and performance of our infrastructure are critical 
for the nation's health and welfare, and economic 
competitiveness.
    As the panel before us demonstrates, America's 
transportation network is also extremely complex and varied, 
and interrelated. We rely on public transit to move large 
numbers of people safely and efficiently in our high-density 
corridors, our Federal-aid highways and bridges ensure the 
reliable flow of goods and services in all 50 states in a 
variety of climates and terrains, and waterborne 
transportation, that serves as the linchpin for international 
trade, shipping and port operations, along our coasts and major 
rivers.
    Now, these different modes are often viewed as distinct 
components, but in reality we know they are all connected. 
USDOT, Congress and this subcommittee must continue to work 
together to ensure seamless integration among modes 
particularly as emerging technologies offer new opportunities, 
and new risks for our transportation system.
    I look forward to our discussion today about the challenges 
and opportunities facing our nation's transit systems, and 
especially how FTA plans to administer the Capital Investment 
Grants Program. This subcommittee provided robust funding for 
new starts, small starts and core capacity projects, and 
resources being put to good use in communities across the 
country.
    The recently-enacted Omnibus also contains approximately 
2.5 billion in new highway funding, above and beyond the FAST 
Act authorized levels. So, we are looking forward to an update 
about when this funding is going to be made available, the 
State Department of Transportation and other eligible grantees.
    Meanwhile, the Omnibus provided significant new funding for 
our nation's maritime operations including resources for the 
decommissioning of the aging NS Savannah, and the procurement 
of a new training ship for the State Maritime Academies. We 
will need additional information about how MARAD plans to 
execute these challenging projects.
    I also want to express my concern about sexual harassment 
at the U.S. Merchant Marine Academy. The DOT Inspector General 
in March noted that gaps in the Academy's Sexual Assault 
Prevention and Response Program limit its effectiveness.
    We need for MARAD and USDOT leadership to offer sustained 
attention to this problem and to take concrete steps to address 
it.
    So, I look forward to today's discussion. I appreciate the 
Chairman's willingness to hold this hearing, as we begin 
formulating our Fiscal 2019 Appropriations Bill. Thank you.
    Mr. Diaz-Balart. Thank you, sir. And so, again, your full 
statement will be submitted for the record. And, so we will 
start with you, Admiral. You are recognized for three minutes.
    Admiral Buzby. Good morning, Chairman Diaz-Balart; Ranking 
Member Price, members of the subcommittee. First, let me say 
thank you very much for the $980 million in funding provided to 
the Maritime Administration in the fiscal year 2018 
appropriations bill and for the opportunity today to discuss 
the President's fiscal year 2019 budget priorities for the 
Maritime Administration.
    The President's budget request for MARAD is focused on 
increasing the competitiveness of the U.S. flag fleet, 
investing in education and training of the next generation of 
merchant mariners, and supporting the maritime industry's 
commercial and national security objectives.
    Our country's economy is dependent on its maritime assets 
and efficient freight movement, and while our nation's economy 
relies on foreign trade, the U.S. commercial presence in the 
international maritime domain has been at historic lows over 
the past several years.
    Only 81 ships remain in international commerce, carrying 
less than 2 percent of our annual foreign trade. We must 
increase the size of the U.S. flag fleet engaged in foreign 
trade to ensure sufficient capabilities to support Department 
of Defense sealift requirements.
    The Maritime Security Program or MSP, for one, ensures 
access to U.S. flag ships and ocean-borne foreign commerce, and 
the intermodal logistics networks to move equipment, military 
equipment and supplies during armed conflict or national 
emergency.
    For FY 2019, $214 million is requested for MSP, providing 
$3.6 million for each of the 60 ships currently enrolled in the 
program, while it is fully recognized that this request is less 
than the authorized level for MSP, it reflects the hard choices 
as the Administration pursues rebuilding DoD capabilities. The 
Department strongly supports MSP, and recognizes the critical 
contribution it plays in this nation's security.
    MARAD also maintains a fleet of government-owned merchant 
ships and a National Defense Reserve Fleet, or NDRF, which 
includes 46 Ready Reserve Force vessels that are used to 
transport military cargo for critical operations.
    These vessels were activated to provide relief efforts 
following Hurricanes Harvey, Irma and Maria, and in the past 
year supported DoD with the largest round of ammunitions 
sealift operations in decades.
    The ability to accrue these government-owned surge sealift 
assets requires maintaining an adequate pool of qualified U.S. 
merchant mariners in peacetime.
    The United States Merchant Marine Academy educates and 
trains the next generation of leaders who will serve as 
officers aboard commercial ships, and commissioned officers in 
our Active and Reserve Armed Forces.
    The President's FY 2019 Budget Request includes $74.6 
million for the Academy with $70.6 million going toward 
operations, and another $4 million directed for capital repairs 
and improvements in its buildings and infrastructure.
    Here I want to reaffirm that MARAD, the DOT and the Academy 
take sexual assault and sexual harassment at the Academy and at 
sea, very seriously. The Academy has made progress in improving 
its prevention and response efforts, but we recognize more work 
needs to be done. Funding in the FY'19 budget request will 
allow us to continue these efforts.
    MARAD also provides funding assistance to the six State 
Maritime Academies which graduate about three-quarters of the 
entry-level Merchant Marine Officers annually. The President's 
FY'19 budget requests $24.4 million for the State Academies, 
including $22 million for maintenance and repair of the 
Federally-owned school ships, and $2.4 million to fund the 
Student Incentive Program.
    I want to thank Congress again for providing the $300 
million in the FY'18 appropriations bill for the construction 
of our new National Security Multi-Mission Vessel, to be used 
to train young mariners and respond to national emergencies. To 
continue this effort $300 million is requested in FY'19 to 
replace the outdated training ship school fleet.
    Finally, MARAD and DOT are grateful to Congress for 
providing full funding in the FY'18 appropriations bill to 
complete decommissioning of the nuclear ship Savannah.
    The President's FY'19 budget requests additional funding 
for MARAD's Ship Disposal Program, which includes funding to 
continue safe storage of the ships during decommissioning. Mr. 
Chairman, I thank you for the opportunity to present this 
testimony and I look forward to working with you on advancing 
maritime transportation in the United States.
    [The information follows:]
    
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Diaz-Balart. Thank you, sir. Administrator Hendrickson.
    Ms. Hendrickson. Thank you. Chairman Diaz-Balart, Ranking 
Price and Members of the subcommittee, thank you for inviting 
me today to discuss the President's Fiscal Year 2019 budget 
request for the Federal Highway Administration. I am pleased to 
appear beside my FTA and FHWA colleagues. The President 
requested $46 billion for Federal Highway which is the amount 
authorized under the fourth year of the FAST Act.
    FHWA has made significant progress in implementing the Act 
and the President's budget request ensures that FHWA will 
continue to invest in projects that improve roadway safety, 
repair aging bridges and highways, and facilitate the movement 
of freight. Importantly, the budget supports FHWA's 
transportation performance management approach which will 
ensure that federal dollars are invested wisely as states are 
responsible for meeting performance targets. Safety is FHWA's 
top priority and the President's budget request includes 
funding for important safety initiatives such as the Highway 
Safety Improvement Program.
    This program is essential to reducing traffic fatalities 
and serious injuries on all public roads. The budget also 
ensures investment in our nation's most traveled highways by 
requesting funding for FHWA's Formula and Block Grant Programs. 
These programs provide necessary resources to states to allow 
them to improve the condition and performance of interstates as 
well as other Federal-aid Highways. The President's budget 
request also makes needed investment in our freight 
infrastructure recognizing the efficient movement of people and 
goods is vital to our economy.
    This request reflects FHWA's commitment to promoting 
innovation to address current and emerging transportation 
issues. Most notably, with regard to autonomous and connected 
vehicles. Supporting our efforts to better understand what is 
needed to safely accommodate automated systems in the highway 
infrastructure. FHWA's operating expenses are supported, 
including our dedicated and professional, the strength of our 
organization.
    Finally, I would like to provide the Committee with a brief 
update on our implementation of the recently enacted Omnibus 
which provided funding for the remainder of this fiscal year. 
In addition to funding the regular Highway Program, Congress 
also appropriated an additional $2.5 billion in discretionary 
highway funding from the General Fund. $1.98 billion of that 
amount was set aside for highways, bridges and tunnels eligible 
under the Surface Transportation Block Grant Program and I am 
very happy to report that funding has recently been issued.
    Mr. Chairman, thanks again, for the opportunity to appear 
before you today and for your commitment to FHWA's programs. I 
look forward to answering your questions.
    [The information follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
 
    Mr. Diaz-Balart. Thank you. Now, Administrator Williams. 
Thank you.
    Ms. Williams. Thank you, Chairman Diaz-Balart, Ranking 
Member Price and Members of the subcommittee and thank you for 
inviting me here today to discuss the President's fiscal year 
2019 budget request for the Federal Transit Administration. At 
FTA, we share Secretary Chao's departmental priorities: safety, 
infrastructure investment and preparing for the future.
    The FTA budget request reflects these priorities. Overall, 
FTA's request totals $11.2 billion, which includes $9.9 billion 
to fund mandatory programs at FAST Act levels, representing a 2 
percent change from FY18. The remainder, $1.2 billion, will go 
towards discretionary programs and administrative expenses. I 
would like to talk first about safety.
    Since being granted safety authority in MAP-21, FTA has 
established a robust safety oversight program. The FY19 budget 
request includes $163 million to continue our significant 
safety duties. A top priority for FTA leadership is the 
certification of state safety oversight programs under the new, 
stronger standards required by Congress and MAP-21 and the FAST 
Act. I would like to take this opportunity to reiterate that 
all affected states must be certified by April 15th of 2019. If 
any state misses that deadline, by law, FTA must withhold all 
transit funding from that state. We have made great progress so 
far with 11 of the 30 states now being certified. But there is 
still much to be done. I look forward to working closely with 
officials in all the remaining states to help them achieve FTA 
certification.
    Part of safety is maintaining a State of Good Repair. FTA's 
FY19 budget request includes $10.8 billion in funds for transit 
agencies to address their infrastructure needs. FTA's formula 
grant programs cover transit services of all sizes and types, 
such as $4.8 billion for urbanized areas; $3.4 billion for 
State of Good Repair, buses and bus facilities; and $936 
million for rural communities, seniors and individuals with 
disabilities.
    FTA shares the commitment to delivering projects with more 
local choice and less red tape, which is one of the core tenets 
of the infrastructure package, proposing $200 billion in 
federal funds to unlock at least $1.5 trillion in further 
investment. Sponsors of public transit projects will be able to 
access funding through the new infrastructure initiatives that 
offers them more autonomy, less burdensome federal regulation 
and expedited project delivery. While encouraging creative 
financing mechanisms that allow our communities to capture the 
value of their public transit investments, the President's 
proposed infrastructure programs will be a more streamlined 
funding source for major transit capital projects. That is why 
FTA'S FY19 request proposes to limit funding for the Capital 
Investment Grants program to $1 billion which would go toward 
existing commitments to projects with signed grant agreements.
    Our approach to major capital projects is a new one, but 
one that we believe would deliver better results for transit 
nationwide. The same principle holds true of our Public 
Transportation Innovation program for which our budget requests 
$28 million. FTA will continue to promote innovative business 
models that have the potential to dramatically improve safety, 
reliability and efficiency in public transportation.
    Finally, apart from our FY19 budget request, I want to 
commend this Committee and this Congress for appropriating 
funding for FTA's Emergency Relief Program. When I first joined 
the FTA in August of last year, I was immediately confronted 
with the challenges of Hurricanes Harvey, Irma and Maria in 
quick succession. And those devastated many of our local 
partners in Texas, Florida, Georgia, Louisiana, the Virgin 
Islands and, of course, Puerto Rico. At FTA, we are working 
quickly to get the emergency relief funding out to our grantees 
to reimburse them for their emergency expenses and to fund 
projects that will help them rebuild even stronger and more 
resilient than before. Again, I thank you for inviting me to 
join you today and I look forward to answering your questions.
    [The information follows:]
    
    
    
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Diaz-Balart. Again, thank you very much for your 
testimony. Let me start with Administrator Hendrickson and the 
Accelerated Bridge Construction has been touted as an 
innovative approach to reduce costs, time, et cetera. Now, I am 
sure you are aware of the pedestrian and bridge collapse in 
Miami-Dade County which was a horrible tragedy. Now, that was 
using prefabricated elements, a common technology under ABC 
Construction. Can you kind of provide us an overview of what 
Accelerated Bridge Construction entails and does it have a good 
safety record for bridges and that kind of--because obviously, 
that is something that left us all very shocked. And is this an 
anomaly or is this a problem? What are looking at? I mean, it 
is obviously a problem, what happened there, but I am saying, 
is this, you know, how safe is this process?
    Ms. Hendrickson. Thank you for that question. Obviously, 
safety at the Department of Transportation and Federal Highways 
is the number one priority and any fatality on U.S. roadways is 
unacceptable and too many. However, Accelerated Bridge 
Construction (ABC) techniques have been tried and true, you 
know, across the country and are a key part of our every day 
counts program. They have been--we promoted accelerated bridge 
construction through this program since 2011 in various ways of 
delivering that model have been successful across the country. 
So, we continue to work very, very closely with the NTSB on 
their investigation on the FIU pedestrian bridge tragedy and 
look forward to understanding from that investigation the cause 
of the collapse and we will work very quickly to get that 
information out to the public to ensure that if there are any 
improvements to the process that those get communicated very 
quickly.
    Mr. Diaz-Balart. And I appreciate your agency's continued 
cooperation and work with the NTSB. We all look forward to that 
investigation. Because we ought to make sure that whatever we 
have to do to make sure that something like that is not 
repeated is done. So, thank you for that background.
    Administrator Williams, we obviously recently passed the 
Bill that provided $2.46 billion in capital investment grant 
program, which I mentioned before, a historic number. And 
again, it is to ensure enough funds are available to--for all 
the projects that are currently--have been executed, full 
funded grant agreements and for other projects that are ready 
and expecting grant agreements this year and so, I know--
obviously, I know that you will execute this program in 
accordance to the will of Congress, but I just want to make 
sure that everybody is clear just for the record that is the 
intent of this Committee in Congress to have projects that have 
successfully gone through the FTA's rating and evaluation 
process. That they meet those requires. Again, that they 
receive an executed construction agreement. And so, we all want 
to see the qualified small start projects, core capacity 
projects, new start projects receive grants--those grant 
agreements.
    Two weeks ago, when the Secretary Chao was here, she had 
reassured us that she would continue to move those projects 
through the pipeline and I just wanted to make sure that, that 
is your understanding as well and that is your commitment as 
well----
    Ms. Williams. It is.
    Mr. Diaz-Balart [continuing]. To ensure that those projects 
continue to move through the process.
    Ms. Williams. It is, Chairman Diaz-Balart. Thank you for 
the question. We are continuing to look at the FY18 Omnibus. As 
you mentioned, it is the historic highwater mark for the FTA 
and so, we are looking very closely at that and continuing the 
process for the projects through the program according to 
statute. And, of course, it always is our intent to follow the 
law of Congress and so, we will work diligently with project 
sponsors to move them through the program; through Small 
Starts; through New Starts; and Core Capacity.
    Mr. Diaz-Balart. And I appreciate that, so you are willing 
to obviously work with those sponsors to make sure they get 
their ducks in a row and then----
    Ms. Williams. Absolutely.
    Mr. Diaz-Balart [continuing]. Right. And are you currently 
reviewing any applications? Do you know if your department is 
currently reviewing any applications and what the timelines may 
be for some of those reviews?
    Ms. Williams. We do have a pipeline of projects that is 55 
strong and those projects are all at different stages of the 
statutory criteria meeting those deadlines. And so, we are 
continuing to process those. As you may recall, we just signed 
three additional Small Start grant agreements earlier this 
month and so we are continuing to process those projects 
through the statutory requirements.
    I have to tell you that when I came to FTA, you know, I was 
confronted with megaprojects that had lots of problems and 
severe cost overruns. And so, looking at projects, such as HART 
and MBTA and the like, we took a step back and said, you know, 
we have to be good stewards of the taxpayer dollar and to make 
sure that we know what the risks are and the assessments are 
done and that we truly put out the very best transit projects 
we can. And so that has been our commitment to do since I 
arrived in office.
    Mr. Diaz-Balart. Appreciate that. Let me also just--I am 
going to ask Mr. Valdao to take over the gavel for a little 
while, while the Ranking Member is recognized. There are a lot 
of other hearings going on, so I am going to have to step out 
to go to another hearing, but I obviously will return, so, Mr. 
Price.
    Mr. Price. All right, thank you, Mr. Chairman. I am going 
to follow-up on your line of questioning and also the line of 
questioning we were pursuing with the Secretary when she 
appeared before the subcommittee earlier this month. And this 
would be focused on FTA.
    As you know, members have been frustrated on this 
subcommittee when we have asked these questions about how 
programs are going to be administered and executed. So, we 
appreciate the chance to bring some further clarity to this 
today.
    The Fiscal '18 Omnibus rejected the administration's 
approach to transit and I am sorry to see that approach 
repeated in the 2019 proposal, but I think we have spoken 
pretty clearly. We have a record amount, $2.6 billion for 
capital investment grants. The Omnibus contained language that 
requires the FTA to allocate 85 percent of the funding by the 
end of the calendar year, 2019. I think we know the importance 
of this investment. We have seen at Tacoma, other places across 
the country. Delays add costs; delays sideline well paying 
construction jobs. We need to make sure this program is 
expeditiously and responsibly executed. I am pleased with those 
small start agreements that you have begun to sign. When you 
refer to a pipeline of 55, I assume you mean all sorts of 
agreements.
    When are you going to begin signing? Can you give more 
precise information when you are going to begin signing full 
funding grant agreements for new starts; for core capacity; and 
the remaining small starts projects? Let me just ask a question 
of questions here all at once and I will let you address them. 
Is there any policy, formal or informal, that would limit the 
number of grant agreements in a single state? Any policy we 
should know about there. I understand that the FTA undertook an 
extensive review of these projects last year, in fact you have 
referred to that. And can we expect a more expeditious process 
this year? So, I would appreciate your addressing these very 
specific timeline issues.
    Ms. Williams. Thank you, Ranking Member Price. I am not 
aware of any policy that limits or caps a single state to a 
certain number of projects. That is not a policy that we 
currently live under in FTA, and so I would tell you that that 
is not something I have ever heard mentioned in any place in 
the Department.
    What I would say is that, you know, what I was saying to 
the Chairman early on, you know, coming into FTA and being 
confronted with projects that have Full Funding Grant 
Agreements that are suffering serious cost overruns, and then 
with our first Small Start Grant Agreement to the Wave 
Streetcar Project in Florida, we were very concerned with that 
project moving forward, and has yet to move forward today. I 
understand that bids will be opened today, which is good news, 
and hopefully that project will be back on track.
    But we have suffered about a six-month delay, and that is 
Federal taxpayer dollars that are waiting to be used, and are 
not available to be used for other projects. And so, a lot of 
these projects, as you can imagine, are quite complex and it is 
very iterative.
    My staff at FTA is phenomenal at working with our grantees 
to make sure that we process those projects through the program 
and according to the statute. And we will continue to do that, 
as we look at each of the merits of the projects individually.
    Mr. Price. Can you give us a timeline on when we might 
expect some of these FFGAs to be signed? Especially in the New 
Starts and core capacity areas.
    Ms. Williams. As you can imagine, the Full Funding Grant 
Agreements are for the larger projects, the New Starts and Core 
Capacity tend to be much larger, obviously, than the Small 
Starts. And so they take a bit more time. I can tell you that I 
don't specifically have a project in front of me that is ready 
today for assigning of FFGA. And so when that occurs, we will 
continue to process that through the program like we do all 
projects, and we will continue to do that according to the 
statute.
    Mr. Price. The 55 projects in the pipeline, and not one is 
ready today.
    Ms. Williams. No, we have three that had just entered into 
engineering. We have one specifically in California that is 
nearing completion, that we will be looking at closely, in 
Orange County. We have two additional that are waiting to go 
into engineering, which is our last, you know, they enter into 
project development, and sometimes they spend two years in 
project development before they progress to the engineering 
side.
    And so we, you know, work with them to get their funding 
plan in order and their project justification in order to make 
sure that they rate well in our program, and are eligible for 
funding.
    Mr. Price. Are there any additional Small Starts that are 
ready to go, like maybe Tacoma? I understand Tacoma is more 
than ready.
    Ms. Williams. It is, and we, in fact, are at the very end 
stages of reviewing that project, and I hope to have a very 
positive answer for you, soon, on that.
    Mr. Price. All right. We look forward to that. This Omnibus 
language requiring FTA to allocate 85 percent of the funding by 
the end of the calendar year 2019, I assume that is well 
understood.
    Ms. Williams. It is, absolutely is. And we will work very 
hard to meet that deadline, sir.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Valadao. All right. Well, I am going to recognize 
myself here for the next five minutes. I was next in line so. 
My question for Administrator Hendrickson. The Buy America 
Waiver, a city in my district applied for a Buy America Waiver 
back in January of 2017, to purchase a new lower polluting 
refuse truck with Congestion Mitigation and Air Quality 
funding.
    I understand that this waiver was approved earlier this 
month, but only because it was submitted prior to the Buy 
America and Hire America Executive Order. The Federal Highway 
Administration has announced that it is reevaluating the Buy 
America Waivers for vehicles and equipment because of the 
Executive Order.
    Do you have a timeline for when this evaluation will be 
completed, and how long it will take to determine vehicles and 
equipment waiver applications going forward?
    Ms. Hendrickson. Thank you. Promoting jobs here in America 
is a huge priority for this Administration, and we take every 
application for a waiver very seriously, and judiciously review 
every single request to ensure that the maximum content of 
American materials is included.
    And so, as we review these projects and materials in the 
waiver request, you know, we do so with the Executive Order, 
and the intent to promote American workers as a top priority. 
We did, you know, new guidance is under review as you 
mentioned, and we really hope to provide applicants with the 
questions, and that the information that we are hoping to 
receive from them in their application process, to facilitate 
the processing of those waiver requests, and anticipate that 
that guidance will be released very soon.
    Mr. Valadao. Any idea what that means, very soon? Is that a 
week, a month?
    Ms. Hendrickson. Hopefully, within the next few months.
    Mr. Valadao. All right. Well, I appreciate that. And then 
on the FAST Act, the FAST Act made the movement of freight a 
top priority, a national priority of funded Freight Formula 
Program which is under the control of the states. San Joaquin 
Valley is the hardest of California's Central Valley, and 
contains 5 of the 10 most productive agriculture counties in 
the United States, and generates an enormous of agriculture, 
and other freight traffic.
    What assurances can you give us that mostly rural areas, 
like the San Joaquin Valley, will receive a fair share of the 
National Highway Freight Program, and other formula funds?
    Ms. Hendrickson. Absolutely. You know, the Administration 
is absolutely committed to promoting the movement of goods and 
services. We all understand that funding for infrastructure is 
critical to ensuring a very robust economy, particularly in 
rural America. So, in all of our grant programs, in all of our 
discretionary funding opportunities that we have, we take the 
rural component very seriously, and prioritize it as the main 
criteria, and just would reassure you that throughout all 
programs that we have, and we consider rural, particularly 
freight mobility in rural areas as the top priority.
    Mr. Valadao. I appreciate that. One of the things that we 
struggle with, and California is a little bit different than 
many other states because it is such a large state, sometimes 
we get overshadowed by the Los Angeles, San Francisco 
communities that have--I would say a larger population. And so 
we always want to make sure that when resources are going out 
to the governors, that states like California, we have a little 
more opportunity to fight for those dollars, because our 
communities always feel like they are overlooked, and we really 
struggle.
    The Fiscal Year 2018 Omnibus Appropriations Bill added 
almost $2 billion to Surface Transportation Block Grant Formula 
funds, the Act requires that 53 percent of the these funds are 
sub-allocated in the states by population, but the remainder 
can be spent anywhere in the state. What is the status of the 
distribution of these funds?
    Ms. Hendrickson. I am happy to announce that those funds 
were distributed yesterday.
    Mr. Valadao. Oh, wow. All right. And again, this comes to 
the rural, can you give any assurances that rural areas would 
not be neglected in the spending of these funds?
    Ms. Hendrickson. Sure. So, those funds go to the states, 
you know, through our formula program, and so it would be up to 
the states to make the determination where those funds are best 
utilized. We have, you know, the President's Infrastructure 
Proposal, and all of our grant programs do put a heavy emphasis 
on rural America, and projects in areas that you just described 
would be, you know, very competitive for those dollars.
    Mr. Valadao. All right. Well, thank you. My time has 
expired. I would like to recognize Ms. Clark for five minutes.
    Ms. Clark. Thank you, Mr. Chairman. And thank you to all 
the panelists for being here today. Admiral Buzby, I would like 
to follow up on some the questions I had for the Secretary of 
Transportation. And I really commend you and want to thank you 
for your commitment to the State Maritime Academies.
    And in particular for your work to replace the TS Empire 
State, and the TS Kennedy at 56 and 52, even though I fall 
right in between those ages. These school ships are in dire 
need of replacement. And the good news is the FY'18 Omnibus 
included $300 million to replace the TS Empire State.
    And I understand this is a little different than the 
proposal that the Administration put forth, but I think it is a 
very positive step. I wondered if you could tell me where we 
are in the process. Is the design complete? Has a contractor 
been selected?
    Admiral Buzby. Thanks for the question, and I am very 
excited to talk about this, this is, building a large ship in 
the United States is a big deal, and we are especially pleased 
it is going to be a training vessel. This country has never had 
a purpose-built training ship, so this will be a real first, 
and I really appreciate the generosity of Congress to put this 
appropriation in early.
    So, where we are in the process? It is a very mature 
design, again, Congress has funded us pretty well over the last 
several years to do that design work, and so consequently we 
are in a very good place to go into construction true to 
design. Where we are going to go with this immediately is our 
acquisition plan, which has not been fully approved by the 
Secretary yet, but the concept is that we will have a ship 
construction manager who will actually oversee the 
construction.
    And this ship construction manager, which will be led by a 
contract, will actually be a U.S. shipping company who has 
recent experience building a ship in U.S. ship yards.
    Ms. Clark. You anticipated another question. That is great.
    Admiral Buzby. So, there are several of those companies. We 
have recently built a lot of new Jones Act ships, large tankers 
and containerships, so we have--actually we have some company 
with very recent experience, current experience in working with 
our U.S. shipyard, to build a fairly large ship.
    So, we will have that ship construction manager oversee the 
actual construction of the ship. We will have a separate 
contract for what I would call a QA, quality assurance 
technical overseer, who will ensure that all the design 
standards are being met, and all of the safety standards are 
being met. Both of those will report to our Program Office in 
the Maritime Administration.
    So, timeline wise, we are going to have an Industry Day 
here next month, where we invite all interested parties to come 
over to our headquarters to look at the design, and talk about 
our acquisition plan.
    We hope to get that construction manager under contract by 
mid-summer, and we hope to then, you know, let the construction 
by the very first part of the calendar next year, and then step 
right up. And then it will be about a 26 to 28-month 
construction time, once that contract is let.
    Ms. Clark. Great. And I know that the funding is for the TS 
Empire State, obviously, from Massachusetts, I would love to 
see the TS Kennedy go forward as well. And I think we have had 
some good discussions. We know that would need to be another 
$300 million that is appropriated in FY'19. But I wondered if 
you could talk a little bit about what the cost savings would 
be, if we were able to do these two ships at once.
    Admiral Buzby. Yes. Our estimates are at this point, that 
if we can get to a two or a three-ship build, that the second 
ship, if we can procure two together, that would get the price, 
the unit price down from about 300 to about 280, or so, and we 
are looking at probably 260, if we can get, you know, further 
ships under that sort of contract.
    So, it will all depend on the learning curve of the yard 
that gets chosen ultimately, but if it follows any other 
shipbuilding procurement program, we will see some definite 
savings in multi-ship procurements.
    Ms. Clark. Great. Thank you very much. And a brief time, 
maybe we will have a second round, but I will leave it at that, 
and hopefully we will have a second round. I am getting the nod 
to go ahead.
    So, I did want to--you mentioned it in your testimony, your 
written and verbal testimony you gave today, but I just want to 
say, my continuing concerns about the sexual harassment and 
assault claims at the Merchant Marines.
    When we look at the report that came out, and less than 
half of the goals that were set were met, there were key hiring 
positions that were not filled in a timely way.
    I understand that you acknowledge there is work to be done, 
but I did wonder at this point, the State Maritime academies 
are not subject to Title IX, and unlike other service 
academies, are not subject to the uniform code of military 
justice. Do you believe it is time that Congress made those 
changes?
    Admiral Buzby. Well, but Kings Point is not subject to 
Title IX, as you suggest. I think it is probably time to take a 
good look at, you know, our process. We do have a process and 
it does work. I mean, there was a recent court ruling actually 
last week, that verified the process that we do have in place 
is constitutional, and it does uphold, you know, all rights of 
all parties concerned.
    But we are the only academy, Federal academy that is not 
under UCMJ, so we are an outlier in that respect. It is not as 
easy just to say, okay, we are going to go under UCMJ, there 
are a lot of pieces that have to be done. I think it is 
probably worthwhile looking in detail at all of those things 
that would be required to do that.
    I think Title IX is not a good fit at all, just the 
elements of it don't really fit at all. UCMJ is probably a 
closer achievable goal, but we still need--there are many 
things that have to be considered before we go and just say, 
let us go that route. So, yeah, a study is probably worth 
doing.
    Ms. Clark. Okay. Thank you. Thank you, Mr. Chairman.
    Mr. Valadao. I would like to recognize Mr. Aquilar for five 
minutes.
    Mr. Aguilar. Thank you, Mr. Chairman. You look pretty 
comfortable in there. A lot of people had to get sick this 
morning, in order to for you to be there though. I just want to 
point that out. So, saved by the bell, here.
    Thank you, folks for being here. Thank you for your 
generosity, Mr. Chairman, and for not recognizing yourself 
before my turn.
    Administrator Hendrickson, fiscal year 2018 will be the 
first year of the Nationally Significant Federal Lands and 
Tribal Projects Program will be funded. The Omnibus 
appropriates $300 million for the program, which provides 
funding for the construction rehabilitation of transit projects 
on tribal lands.
    In the district I represent there are tribes, and in 
California and throughout the Southwest there will be tribes 
who are interested in taking advantage of this program. How do 
you plan to administer the program, and what factors would be 
used in awarding a grant? And when do we expect the NOFO to be 
published?
    Ms. Hendrickson. We are working very hard right now on 
putting all of the components necessary for the NOFO together, 
and as you said, $300 million was allocated for the Nationally 
Significant Federal Lands and Tribal Projects Program in, 
again, like the first time that it has been funded.
    So, we anticipate that NOFO will be ready very soon. The 
requirements are that it is, you know, a minimum of $25 million 
project, and that NEPA has been completed. So, those will 
certainly be aspects of the NOFO when it is released.
    Mr. Aguilar. And those are some of the larger aspects of 
the program?
    Ms. Hendrickson. That is right.
    Mr. Aguilar. And in California, as you know, we have 
utilized programs in the past that have allowed us because we 
have a more rigorous sequel process, environmental clearance. 
Will that same type of discussion be allowed in coordination 
between NEPA and SEQUA as you have in normal transportation 
projects?
    Ms. Hendrickson. We will definitely consider that as a part 
of our consideration of the project.
    Mr. Aguilar. Okay. I appreciate it. One more question, I 
guess, broadly on tolling, in the White House National 
Infrastructure Plan, they proposed that states receive more 
flexibility, authorized tolling on interstate highways. The 
report states that tolling might serve as a major source of 
revenue for infrastructure investment, and indicates that tolls 
have the ability to generate additional funding for 
infrastructure projects.
    If a state authorizes and moves forward with tolling on 
interstate highways, what type of oversight regulations do you 
think are appropriate for the Department and agencies to 
implement, in order to provide that fair oversight that is 
necessary?
    Ms. Hendrickson. The President's Infrastructure Proposal 
does suggest that restrictions on tolling existing in 
interstates could be lifted if deemed appropriate by the state, 
so it would be a state decision to determine whether that was 
appropriate for that state.
    Those funds would then be required to be reinvested into 
the infrastructure for, you know, maintenance of those 
facilities or other facilities that are eligible for Federal-
aid funding.
    Mr. Aguilar. If asked, what does that mean? What types of 
safeguards can we put into law, or at the Department level to 
ensure that those dollars do go back? I mean, just a highlight. 
I mean, we always just want to be very careful if we are mixing 
Federal dollars with, in some cases, you know, local 
transportation dollars as well, if there is self-help 
communities like many.
    In our communities some states have had mixed results with 
tolling as well. Some are supporters of it, and some have had 
negative experiences. So, what other types of things should we 
be looking at from the policy perspective to ensure that those 
dollars do go into those programs?
    Ms. Hendrickson. So, I would just offer that, you know, at 
Federal Highways, we have offices and professional staff in 
every state. And those employees work very closely with our 
state partners to administer the Federal-aid Highway Program as 
it exists today, to ensure that the investment of those 
Federal-aid dollars are in line with the law. And so I fully 
anticipate that oversight can be accomplished within the 
existing structure of the Federal Highway Administration. 
Having our staff that are located in each state to oversee the 
administration of those funds would be appropriate.
    Mr. Aguilar. I appreciate it. Thanks for the interest. 
Thanks, Mr. Chairman.
    Mr. Valadao. Thank you, Mr. Aguilar. I would like to 
recognize Mr. Young for five minutes.
    Mr. Young. Mr. Chairman, thank you. You look different, 
more hair I think.
    Mr. Valadao. Oh.
    Mr. Young. Thank you for being here. I appreciate it. You 
know, the Highway Trust Fund hasn't been self-sustaining for 
quite some time now, resulting in several years of general fund 
transfers to make up the coupling of a stagnant gas tax, and 
emerging technologies.
    From your view, what is the best way to addressing the 
shortfalls in the Highway Trust Fund? And I want to preface 
with this that, we have got a lot of new technologies out 
there, and not everybody is--I don't believe everybody is 
paying their fair share into the Highway Trust Fund who is 
using our roads and bridges.
    And I think it should be pay-to-play kind of system. If you 
are going to use it, you should pay into it. I know a lot of 
times you will look to Congress to solve these problems, but we 
need a partnership here, we need some ideas on how to make sure 
that this fund is going to be there. Are you working internally 
on any kind of solutions on this, and what are conversations, 
and how can we work together to make sure that this is 
sustaining?
    Ms. Hendrickson. So, the Highway Trust Fund is projected to 
have enough cash to cover expenditures through fiscal year 
2020. As of March of 2018, the total balance in the Highway 
Trust Fund is about $52 billion, and $38 billion of that in the 
Highway account. The Administration is, you know, committed to 
considering all options for the----
    Mr. Young. How about promoting any options?
    Ms. Hendrickson. At this point, all options are on the 
table. We do have a grant program within Federal Highways, the 
Surface Transportation Systems Funding Alternatives Program. It 
has awarded 15 grants since its inception, totaling about $30 
million that looks at creative funding mechanisms for 
transportation infrastructure.
    Mr. Young. When will we have some findings on that?
    Ms. Hendrickson. We have just issued a Notice of Funding 
Opportunity in April for this round of grants, and 
approximately $18 million is available this year for an award, 
and applications are due to us by July 15th. We continue to 
be----
    Mr. Young. And so their findings would take two, three 
years, or in ten years? What is the timeline we are----
    Ms. Hendrickson. We anticipate that the results from some 
of past studies will be available in the coming year, as we 
continue to develop outreach efforts and, you know, we work 
with our different stakeholders including states to advance 
some of the ideas that they put forward in their grant awards.
    Mr. Young. Thank you. Regarding the FTA, as the 
transportation and kind of mobility landscape changes, what 
regulations and reporting changes is the FTA considering to 
make public-private partnership easier for public transit 
agencies?
    Ms. Williams. Specifically, I mean, we are looking at value 
capture as one of the areas where we can really increase what 
transit actually is already doing, and by doing so, between 
that and the expedited project delivery, being able to produce 
and get projects funded quickly and on the street quickly, 
being able to draw some of that private investment into 
transit. And so we are working very closely with our partners 
to do that.
    Mr. Young. So, you have expedited and non-expedited? I 
mean, why isn't it just expedited?
    Ms. Williams. The expedited pilot program is actually 
something that in the present infrastructure, you know, most of 
the infrastructure plan talks about a lower Federal investment. 
In the Expedited Project Delivery Program we actually increased 
that to a 50 percent share from the Federal Government in order 
to entice projects to come into that program.
    And it has been authorized for quite some time, but we have 
never had anyone interested. And so, now I am happy to tell you 
that we do have grantees that are interested in coming into 
that, so it is an expedited delivery within 120 days, and a 
maximum share of 50 percent. And so we are waiting for those 
grantees to come to us with those expedited projects, so that 
we can consider them.
    Mr. Young. Okay. Is there consideration of allowing public 
transit agencies to count the rides that come through public-
private partnerships as part of their NTD, their National 
Transit Database reporting?
    Ms. Williams. I would have to ask about that. I am not sure 
if that is underway or not, but I would be happy to get back to 
you on that.
    Mr. Young. Do you have any reason why it shouldn't be 
counted?
    Ms. Williams. No. No, I do not.
    Mr. Young. Okay.
    Ms. Williams. I just want to confirm that that is the case.
    Mr. Young. All right. We will follow up on that. Thank you 
for being here, everybody.
    Ms. Williams. Okay. Sure.
    Mr. Young. Thank you, Mr. Chairman.
    Mr. Valadao. I would like to, one, thank you for that 
compliment earlier. Admiral Buzby, the Fiscal Year 2018 Omnibus 
provided 121 million for United States Merchant Marine Academy, 
including 52 million to address the Academy's capital 
improvement plan, and backlog, and maintenance repairs.
    I know Ms. Clark mentioned some of the boat, or at least 
one ship. But how will this funding impact the Academy and the 
cadets, and what projects will this address?
    Admiral Buzby. Thank you for the question, sir. This was a 
very big, important plus up for the Academy. We have had a 
capital improvement program that we have been embarking upon 
for several years now. We have gotten through all of our 
barracks, and upgraded all of them.
    Our Mess Hall has been redone, and now we are beginning to 
work through our academic buildings. Because of the amount of 
space limitation we have, we have only been able to do one 
project at a time, because we could only displace one set of 
laboratories, classrooms, that sort of thing, at a time. So, we 
have been in a sequential sort of mode.
    This additional funding gives us the ability to now do a 
lot of projects in parallel. We can get after some of the other 
priorities that we need to get after including completely 
revamping our medical center, the hospital, that is in 
significant need of upgrade and modernization, it allows us to 
get after construction with student activity center.
    The current one is in a house that is over 100 years old, 
becoming very difficult to maintain, and quite frankly we have 
outgrown it. So, it gave us the ability to do that, and also to 
construct a new field house.
    Again, our current facility, while it has served us well 
since 1943, it has been there since 1943, and we need, you 
know, some modern facilities, plus infrastructure, there is you 
know, just basic utilitarian sort of work that needs to be 
done. So, this plus up enables us to get after those in a real 
way, and really upgrade the facility.
    Mr. Valadao. Any specifics on ships as far as revamping or 
purchasing new ones?
    Admiral Buzby. No. To this point, we have a different 
training model. Our midshipmen go to sea in the U.S. maritime 
industry, so they take advantage of actual working merchant 
ships out in the fleet. We have a smaller training vessel, the 
training vessel Kings Pointer, which is used for more local, 
weekend, daily sort of operations to build seamanship skills, 
and we also use it when we need to, to make sea days if people 
fall short. So, it is well suited for its operations, so we 
really don't need a large ship at Kings Point, it is just a 
different training model.
    Mr. Valadao. And have you analyzed the effect that the 52 
million will have on the backlog in maintenance and repairs?
    Admiral Buzby. We have, it is going to enable us to really 
take a big bite out of that, and address some serious 
shortfalls that we have had and the maintenance of this 75-
year-old plant. This year is our 75th Anniversary of opening 
the Academy, and a lot of that infrastructure is that old or 
older. So, this enables us to really get after some of those 
real key investments that we have to make to keep that plant 
current.
    And quite frankly, as a place where mothers are going to 
want to send their kids. I mean, when they look at our campus, 
compared to other places, you know, you can see where there has 
been some need, this will address that need.
    Mr. Valadao. And then you have provided a little bit of a--
the subcommittee with some of the updates on the projects that 
are being addressed. Is there a chance, or can you update the 
Committee on some projects that still need to be addressed? 
This will be important on the fiscal 2019 process.
    Admiral Buzby. The--on our current priority list of capital 
improvements, the field house that I mentioned with the 
investment that we have earmarked right now, is just to do the 
engineering and planning for it--not the actual erection of the 
facility. So, that is going to have to be addressed in the 
future budget considerations. And there are a couple of other 
smaller ones that we have to kind of get after, but that's 
probably the major big one that was still on the outside of our 
current plan.
    Mr. Valadao. All right. Well, thank you and I am going to 
go ahead and recognize Ranking Member, Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. Let me pose a question 
to all three of our witnesses involving transportation 
technologies and cyber security. We all know that these 
technologies portend an exciting future for transportation. We 
often focus on autonomous vehicles and unmanned aircraft, but 
really they are new transportation technologies that are going 
impact every mode of transportation. They are going to depend 
deeper communication between the many complex participants 
within each mode. If communication networks are not properly 
secured, these advanced transportation technologies could 
become an appealing target for cyberattacks and cyber 
vandalism.
    Already, we have read of incidents and with electronic 
message signs and ransom wear on transit system computers. 
Failing to address these issues could lead to catastrophic 
consequences in the future. So, I do want to ask each of you, 
what steps are your administrations taking to ensure that new 
transportation technologies integrate cybersecurity into the 
design from the very beginning? And what efforts are you taking 
to ensure that legacy systems become cybersecure? Why don't we 
start with MARAD.
    Admiral Buzby. Thank you, Sir. It is a great concern for 
us, especially in the area of autonomous vessels and limited 
manning type vessels. Most ships today sailing seas rely on GPS 
position technology. A GPS signal is a very weak signal and it 
is very easily spoofed; it is very easily interrupted, which in 
a ship that is operating autonomously could lead to some pretty 
dire consequences. So, this is a major concern that as we are 
looking down the road and working with industry and potentially 
moving into more autonomy in vessels, we have a working group 
with a couple along with the Coast Guard and industry to look 
at specifically how we address this sort of threat going down 
the line. It already exists in the maritime world. In Maersk 
Line, just last summer, suffered over a $300 million hit to 
their terminal operations due to a cyber hack. So, it is a very 
real issue and most companies, although they believe they have 
fairly good security, really do not. And where it gets even 
more critical, is those civilian companies are the ones that 
carry--are going to carry the majority of our sea lifts in a 
time of national emergency or crisis. We do business with them, 
DOD and MARAD do business with these companies and so, our 
systems interface with their systems and leads to some 
potential significant vulnerabilities.
    Working alongside U.S. Transportation Command, we are 
proactively looking at information sharing regimes where if one 
operator sees an attack and can notify everybody else to get 
their guards up and also, how we work through the continuity of 
operations sort of thing. So that if someone does get attacked 
and our systems do go down, how do we fight through? How do we 
continue to deliver the goods to our soldiers and sailors? So, 
it is a real challenge for us in the maritime world.
    Mr. Price. Thank you, Ms. Hendrickson.
    Ms. Hendrickson. So, this is obviously a big concern in an 
area where we are--the technology is rapidly progressing in 
terms of what we have done so far. We have had several 
stakeholder events at DOT, including industry, academia and the 
government to look at issues surrounding autonomous vehicles, 
including cybersecurity. At Federal Highways, we recently 
issued a Request for Information that will hopefully gather 
input from industry; from planners; from government officials 
that will then inform us regarding what the needs are and how 
best to prepare for this technology that is coming. And then, 
we do plan several listening sessions for the remainder of this 
year at various locations across the country that will include, 
you know, getting feedback and information from industry and 
academia to further advance our work in this. We have an 
ongoing research project within Federal Highway regarding AV as 
well. So, this is absolutely one of the key priorities of the 
Department and cybersecurity is absolutely a big concern of all 
of ours.
    Mr. Price. Thank you. Ms. Williams.
    Ms. Williams. Absolutely. Our innovation office is working 
on this issue as we speak to address how this plays out in 
transit specifically. We do have demo projects out on the 
street now that will continue to look for areas to address the 
threat of cybersecurity. We just issued, about six months ago, 
two requests for comments. Those comments from industry on how 
AV plays in the transit space and what we need to work in 
industry in order to look at cybersecurity specifically, but 
also other areas of concern within the industry with regard to 
AV and I will not repeat what my colleagues have said regarding 
the department's lead on this in AV Summit that we have had. 
So, at the risk of being redundant.
    Mr. Price. All right, thank you. There is no question. This 
is a critical area and if any of you want to supply for the 
record, an elaboration of your remarks or complementary 
information that, that would be helpful. We need to have a good 
benchmark going forward of the range of these efforts. Thank 
you. Thank you, Mr. Chairman.
    Mr. Valadao. Thank you, Mr. Price. I would like to 
recognize Mr. Young.
    Mr. Price. I just want to follow-up. Thank you, Mr. 
Chairman. I just want to follow up on Mr. Price's--where he 
was--where I want to take this now with his lead. And that is, 
with the autonomous vehicles, cybersecurity, information 
networks, these vehicles have to talk to one another. Are you 
working with the FCC as well to make sure they are the proper 
and clear in communications routes; whether it is white space 
of the spectrum to make sure everybody can talk to one another? 
Because when you have these working groups, it is great with 
the industries and the private sector out there. They are 
pushing these new technologies, but there has got to be a way 
for everything to talk to one another. How is that being 
integrated and how are you working with the FCC or any other 
government agency for that matter to make sure that can happen 
fluidly and safely?
    Ms. Hendrickson. I am not personally aware of the 
interaction that's been ongoing on with the FCC on this issue. 
I know----
    Mr. Young. Do you think it is pertinent or then--I'm just--
--
    Ms. Hendrickson. I think it is certainly, you know, worth--
important to explore all the issues surrounding that, so, yes, 
I think it is pertinent. Within Federal Highway, I would say 
though that we are working very closely with industry, but also 
making sure that we understand from the government planning 
side and really understanding what the needs are so that we can 
plot a path forward without stifling innovation.
    Mr. Young. Any other comments from anybody else on that? 
That's fine. Thank you, Mr. Chairman.
    Mr. Valadao. Thanks, Congressman Young. I would like to 
recognize Ms. Clark, 5 minutes.
    Ms. Clark. Thank you, Mr. Chairman and at risk of a very 
bad pun, I see our seniority on this Committee is on the fast 
track today. Admiral Buzby, I would like to go back for a 
second to some of the concerns at the academy around sexual 
assault and harassment. And in light of this report's 
conclusions that you received earlier, are you confident about 
the students will be adequately protected during this year's 
Sea Year Training Program?
    Admiral Buzby. Yes, ma'am. The short answer is absolutely. 
I have great confidence that they are in a secure environment 
right now. We have been very meticulous in our vetting of the 
companies and there are 17 companies right now that are cleared 
to carry our mid-shipmen during sea year. We have personally 
vetted all of their programs to ensure that they meet our 
standards. We meet with the management of those shipping 
companies. And by and large, I must say, they have great 
programs in place. I think there is renewed emphasis now. I 
think our mid-shipmen are going to sea better equipped, better 
educated and better understanding of the environment. We are 
equipping all of our midshipmen here beginning this fall with 
satellite communication devices so that if they get into a 
situation far from port, they can call back to the Academy and 
seek some assistance or report their situation.
    Ms. Clark. And what would the protocol be when they're--
something happens? It is a great improvement. I'm glad to hear 
you are going to have the satellite communications by the fall, 
but then what happens when these calls are made? What plans and 
procedures have been put in place?
    Admiral Buzby. So each midshipman basically has a--is 
assigned a mentor when they arrive at the Academy. Someone on 
the staff or faculty that they are assigned, but then they can 
develop a relationship with their--on their own. So, while they 
are at the Academy, if they have an issue, they can go to this 
mentor. When they are away at sea, currently, the way the 
program works now is there is a ship's officer on the ship that 
is designated as their mentor. We are modifying that now with 
the introduction of the satellite communication, so that ship 
can reach back to their academy mentor and have that same 
relationship. So, if they have a situation, they can call that 
person up and say, ``I am having a problem out here at sea,'' 
and those mentors are trained to reach out to the sexual 
program coordinator at the Academy and that then, starts a 
process. And the midshipman has a choice of making either a 
restricted or unrestricted report. That is entirely up to them. 
Whether they--if it is restricted, they just note that 
something has occurred, and it is--there is no further action. 
It just enables them to receive support. If it is an 
unrestricted report then, an entire investigative process 
begins, with potential for all the way up to prosecution. That 
is up to the individual, the shipman, but to get back to your 
initial question. I am very confident that we are putting our 
midshipmen into a safe environment.
    Ms. Clark. And are the protocols that you just described, 
are those new? Have you made changes to those?
    Admiral Buzby. The--in terms of the mentor?
    Ms. Clark. The mentor and sort of the process after one of 
these--the restricted and un-restricted--
    Admiral Buzby. That has been in place, you know, kind of 
from the beginning. We have modeled our program after DOD's 
program for restricted and unrestricted, so there is good 
continuity there. There is a good understanding of how that all 
works. Just for instance, this academic year since August, we 
have had 12 reports--midshipmen have reported 12 instances, 
four of which were at sea; eight of which were not at sea. Some 
restricted. Some unrestricted. And all of those have been 
adjudicated. I think the positive news there is that is the 
most reports we have had in, I think, ever. And what we believe 
that portends is there is increased trust in the system. The 
shipmen feel more trusting that they are going to have their 
case represented properly and have it followed through. Plus, 
their peers are going to support them more. I mean this has 
been the instance that we have seen at other service academies 
in the services that they have initial uptick in reports and 
then it dives--the reports go down, the drives and the 
incidents are down as well, so we think we're on the right 
track and the midshipmen have confidence in the system going 
forward.
    Ms. Clark. Thank you. Thank you, Mr. Chairman.
    Mr. Valadao. Thank you, Ms. Clark. I would like to 
recognize Mr. Aguilar for 5 minutes.
    Mr. Aguilar. I am happy to defer to the Chairman who is 
sitting in another seat if he has anything else that is--I did 
have just one more question, Mr. Chairman. I will not take up 
much time here. Administrator Williams, with respect to the 
capital investment grant program and FTA, it is the largest and 
most important discretionary program in my opinion and I just 
wanted a little more clarification on the CIG Grants because 
they do use and I mentioned to this Secretary Chao, existing 
population density is a criteria and one of my concerns with 
that is how we address kind of growing communities. Populations 
and regions that are growing in nature rather than looking out 
of the rearview mirror and saying what is the population last 
year or the last census, you know, how do we capture those 
growing communities? In the region of California that I 
represent, it is the fastest growing in California of 4.4 
million people. It has doubled in the last 15, 18 years. It is 
projected to add 30 percent and go to 7 million; from 4 million 
to 7 million by 2046. So, I just want to make sure that when we 
look at these issues of population density that we are 
accurately reviewing those growing communities and making sure 
that they are given a fair shot when it comes to the allocation 
of CIG dollars. Is that--I do not have a question in that, but 
do you have a comment, or a reflection based off of that?
    Ms. Williams. Yes, I do. Thank you, Congressman. What I 
would tell you is that where the density is growing, the 
projects that come into the CIG program are judged on project 
justification in addition to their funding plan. And so, where 
there is discrepancy, I think at times when you have growing 
communities, they overscale their project. So, they do not 
scale it to the ridership that they have and they look at--too 
far in the distance of what ridership they think they will have 
and that causes the cost benefit analysis to go down, the 
mobility number to go down and the ridership number to go down. 
And then, it is not as competitive in the CIG Program. So, I 
would say low density areas can compete, but you have to be 
very certain that you scale the project to the need you have 
because that project can continue to grow as your community 
grows, but if you try to project what the community will look 
like 10 years from now, it is not going to rate well in the 
statutory criteria in the program. Does that help?
    Mr. Aguilar. Is there--yeah. Is there a way that we could 
better reflect that from a statutory perspective like, that 
kind of forward-looking, rather than the static look?
    Ms. Williams. Well, I think our FTA staff is happy to work 
with your staff and I realize that you had a project in your 
area I think that has requested now to be withdrawn, so my 
understanding is maybe they are going to retool that with that 
kind of principle in mind and we are working very closely with 
them to do that. So, I think you just need to make sure that 
the project you put forward is not looking too far in the 
future of what you think you will need, but basically what you 
think you have right now and you can actually stand behind. So, 
that cost benefit analysis is strong and the ridership and the 
building numbers are strong as well.
    Mr. Aguilar. Okay. I appreciate it. Thank you.
    Ms. Williams. sure.
    Mr. Aguilar. Thank you, Mr. Chair.
    Mr. Valadao. I would like to recognize the real Chairman, 
Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you. Thank you, Chairman and thank 
you for doing this. I know that, by the way, nobody would ever 
make a joke while I was gone about the lack of hair. I know 
that. Of course not, but Admiral, let me ask you about 
Samaritan will first replace the Empire State, right? A 56-year 
old steam propelled ship which I thought was--when I read that 
I frankly was shocked. Again, serving in the State University 
of the New York Maritime College, I understand that if the 
subcommittee were to include additional funding for a 
construction of another ship that the next ship would replace 
the Kennedy, which again is a 51-year old steam propelled ship 
as well. Serving at the Massachusetts Maritime College. Does 
MARAD have a school ship replacement order? And if so, what 
criteria is used for that to determine the order of the state--
the 6-state academies that will receive the new ships and 
finally, did MARAD coordinate with the State Maritime Academies 
on that?
    Admiral Buzby. Thanks for the question, Mr. Chairman. We 
are very excited to even be talking about replacing school 
ships. This is not a conversation that has been had in a long 
time and it is long overdue. The good news is we are going to 
town on getting the first ship contracted for and built. As you 
point out, we will go to New York to replace the oldest and 
largest of our training vessels. In all likelihood, the second 
ship will go to Massachusetts to replace Kennedy which is the 
second largest and second oldest ship. And these two ships are 
important, not only because they are the last two steam ships. 
It is becoming increasingly difficult to maintain and find 
operators for them. But also, because they represent so much of 
our training capacity. We swap and help out the other schools 
from time-to-time. For instance, Texas Maritime, we are 
taking--using the Kennedy to take Texas Maritime cadets out on 
their training cruise this summer. So, that capacity is really 
important, and we count on it. If we were to lose one of those 
two ships, it would cause us great difficulty. So, those are 
the easy first two ships to pick.
    After that, Maine, Texas and California would be the next 
three that we would have to sort out which ones would go next. 
The Maine ship and the California ship are sister ships. They 
were built in the '80s. They are diesel driven. They are in 
relatively good condition. The Texas--but they are also half 
the capacity. They have 300--approximately 300 people per--
which fits those two academies very well. Texas is operating a 
very small ship. It used to be the former training ship at 
Kings Point, as a matter of fact. But it can only take about 50 
people at a time out, which doesn't meet their needs. They need 
about a 300-person ship also.
    So--but they have some constraints down there. The physical 
place where their ship berths is very shallow. So, there is 
significant dredging that would have to occur to accommodate a 
larger ship.
    There are faculty which the faculty typically operates the 
ship. Their faculty is not of sufficient size to man a larger 
ship, plus just the operating costs annually for a large ship, 
you know, would have to be tackled. So, the answer to your 
question is we are going to have to look and factor in all of 
those factors, the material condition of those ships when we 
get to that point of having them replaced to see where the 
major--the most benefit will be to put that third, fourth, 
hopefully, fifth ship down the line.
    Mr. Diaz-Balart. Admiral, while I have your attention, if I 
may, Mr. Chairman, in the Omni, the 18 Omnibus, we complete 
full funding to complete the decommissioning of the nuclear 
ship, Savanna. Can you give us a status of that project? When 
it will be completed, et cetera?
    Admiral Buzby. Yes, sir, Mr. Chairman. That is a 7-year 
project. It is not an insignificant task to decommission a 
nuclear vessel. And--but we have a plan. We have been working 
very closely with the Nuclear Regulatory Commission on that 
plan. We are in the first phase of that plan. There are three 
phases.
    The first phase, there is a two-year period where we 
essentially prepare and get all of the licensing and 
requirements in place. The funding that Congress just provided 
in '18 covers Phase 2 and Phase 3 out to that 7-year point. So, 
it is the majority of the industrial work that has to occur and 
then kind of what I would call the paperwork, sort of clean up. 
So, we anticipate finishing up Phase 1 in the latter part of 
calendar year '19 and then we will go right into Phase 2 which 
is the industrial work. The actual getting into the reactor 
vessel itself; removal of the pipes; removal of all of the 
interferences that, you know, were part of the nuclear circuit. 
We require a dry docking, so it is a fairly significant period, 
but again, we have that all now funded so we can actually carry 
that out and close out our license. I am actually the license 
holder for the--for that vessel. So, we need to go by Nuclear 
Regulatory Commission rules. We have to be finish by 2035, 
which thankfully now, we will be finished well in advance of 
that.
    Mr. Diaz-Balart. And Mr. Chairman, if I may just for a few 
more seconds and we thank you. Again, I apologize to everybody, 
I did have other Subcommittees that are going on at the same 
time that I had to go to, but again and thank you, sir, Mr. 
Valadao, for doing a great job chairing it. You do not look as 
good as the regular Chairman, but you did a great job chairing. 
So, thank you.
    Mr. Valadao. From what I understand, I have a little less 
hair from all the comments I have gotten. I want to thank our 
Panel and DOT staff for your answers and participation. The 
Committee staff will be in contact with your budget office 
regarding questions for the record and I think we did have one 
member that wanted to show up, but I just saw that he is on the 
floor speaking as we speak. So, if you would please work with 
OMB to return the information for the record to this 
subcommittee within the 30-days from Friday, we will be able to 
publish the transcript of today's hearing and make informed 
decisions when crafting the Fiscal 2019 Bill. With that, the 
hearing is adjourned.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                       [all]