[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
HUD'S ROLE IN RENTAL ASSISTANCE:
AN OVERSIGHT AND REVIEW OF LEGISLATIVE
PROPOSALS ON RENT REFORM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND INSURANCE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
APRIL 25, 2018
__________
Printed for the use of the Committee on Financial Services
Serial No. 115-88
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
31-434 PDF WASHINGTON : 2018
HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
PATRICK T. McHENRY, North Carolina, MAXINE WATERS, California, Ranking
Vice Chairman Member
PETER T. KING, New York CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma BRAD SHERMAN, California
STEVAN PEARCE, New Mexico GREGORY W. MEEKS, New York
BILL POSEY, Florida MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin DAVID SCOTT, Georgia
STEVE STIVERS, Ohio AL GREEN, Texas
RANDY HULTGREN, Illinois EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina KEITH ELLISON, Minnesota
ANN WAGNER, Missouri ED PERLMUTTER, Colorado
ANDY BARR, Kentucky JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania BILL FOSTER, Illinois
LUKE MESSER, Indiana DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine JOYCE BEATTY, Ohio
MIA LOVE, Utah DENNY HECK, Washington
FRENCH HILL, Arkansas JUAN VARGAS, California
TOM EMMER, Minnesota JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana
Shannon McGahn, Staff Director
Subcommittee on Housing and Insurance
SEAN P. DUFFY, Wisconsin, Chairman
DENNIS A. ROSS, Florida, Vice EMANUEL CLEAVER, Missouri, Ranking
Chairman Member
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
STEVAN PEARCE, New Mexico MICHAEL E. CAPUANO, Massachusetts
BILL POSEY, Florida WM. LACY CLAY, Missouri
BLAINE LUETKEMEYER, Missouri BRAD SHERMAN, California
STEVE STIVERS, Ohio STEPHEN F. LYNCH, Massachusetts
RANDY HULTGREN, Illinois JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania DANIEL T. KILDEE, Michigan
LEE M. ZELDIN, New York JOHN K. DELANEY, Maryland
DAVID A. TROTT, Michigan RUBEN KIHUEN, Nevada
THOMAS MacARTHUR, New Jersey
TED BUDD, North Carolina
C O N T E N T S
----------
Page
Hearing held on:
April 25, 2018............................................... 1
Appendix:
April 25, 2018............................................... 27
WITNESSES
Wednesday, April 25, 2018
Fischer, Will, Senior Policy Analyst, Center on Budget and Policy
Priorities..................................................... 7
Gentry, Richard C., President and Chief Executive Officer, San
Diego, California Housing Commission........................... 10
Russell III, William O., President and Chief Executive Officer,
Sarasota, Florida Housing Authority, on behalf of the Florida
Association of Housing and Redevelopment Officials............. 5
Todman, Adrianne, Chief Executive Officer, National Association
of Housing and Redevelopment Officials......................... 9
APPENDIX
Prepared statements:
Fischer, Will................................................ 43
Gentry, Richard C............................................ 28
Russell III, William O....................................... 81
Todman, Adrianne............................................. 57
Additional Material Submitted for the Record
Cleaver, Hon. Emanuel:
Letter from the G7U Housing Organization led by the National
Low Income Housing Coalition............................... 87
HUD'S ROLE IN RENTAL ASSISTANCE:
AN OVERSIGHT AND REVIEW OF LEGISLATIVE PROPOSALS
ON RENT REFORM
----------
Wednesday, April 25, 2018
U.S. House of Representatives,
Subcommittee on Housing
and Insurance,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:12 p.m., in
room 2128, Rayburn House Office Building, Hon. Sean Duffy
[chairman of the subcommittee] presiding.
Present: Representatives Duffy, Ross, Posey, Luetkemeyer,
Stivers, Hultgren, Rothfus, Zeldin, Trott, Cleaver, Beatty, and
Kihuen.
Also present: Representative Perlmutter.
Chairman Duffy. The Subcommittee on Housing and Insurance
will come to order. Today's hearing is entitled, ``HUD's Role
in Rental Assistance: An Overview and Review of Legislative
Proposals.''
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. Without objection, the
members will have 5 legislative days within which to submit
extraneous materials to the Chair for inclusion in the record.
Without objection, members of the full committee who are not
members of this subcommittee may participate in today's hearing
for the purpose of making an opening statement and questioning
witnesses.
The Chair now recognizes himself for 3 minutes for an
opening statement.
I first want to thank our witnesses for their participation
in this hearing today as we continue to look at how we can
reform various programs at HUD that are intended to provide
low-income families with taxpayer-assisted housing while
incentivizing self-sufficiency and increasing the opportunities
for employment.
I will just note that we are starting a bit late because we
did have votes on the floor and it has taken a while for
everyone to get to the committee room, so I apologize for that.
Now, if you watched last week's hearing, you will know that
we are participating in Speaker Ryan's A Better Way agenda with
the goal of fighting poverty. We received a number of good
suggestions that we hope to address in the discussion drafts
presented last week and I am looking forward to suggestions and
takeaways from this hearing today as well.
While last week, we highlighted how we can reform HUD's
Housing Choice Voucher Program to further the goal of self-
sufficiency, it also became clear that there are other issues
in HUD's housing assistance programs that require our
attention.
One consistent theme from last week's hearing was how to
incentivize public housing authorities to focus on the person
they are helping through policies on setting appropriate rents.
We should from time to time review our laws to see where
improvements can be made.
Today, it is incumbent upon us to make sure the system is
helping those in need while ensuring taxpayers' funds are
effectively and efficiently used. We must also remember why
these programs are here and do what we can to reduce the
limitations holding back our PHAs' (public housing agencies)
ability to tailor solutions to families and individuals who
come with different circumstances.
I want to reiterate that I truly believe we don't evaluate
and measure the success of these programs by how much money we
spend. Instead, we should measure success by how many people we
move out of poverty and into self-sustainability.
Today, we will be looking at a proposal from our Vice
Chairman Mr. Ross, to help families and individuals that are
negatively impacted by the current income-based rent setting
formulas. The reforms in Mr. Ross' proposal will provide
options for PHAs through rent-setting policies to incentivize
housing assistance recipients to earn higher wages.
Allowing rent to be tailored to a family or individual's
own situation will help assist them to become self-sufficient
with the ultimate goal of those families at some point not
needing taxpayer assistance. Whether it is through the Family
Self-Sufficiency Act, voucher mobility, or ensuring a path
toward independence for our foster kids, I want to make sure
that we are breaking down the walls that are keeping our
families in a cycle of poverty from one generation to the next.
I believe Mr. Ross' legislation will help in that effort
and I look forward to hearing from our panel, getting their
feedback and insight on Mr. Ross' bill and what we might do to
improve it and make it better.
With that, I now recognize the gentleman from Missouri, the
Ranking Member, Mr. Cleaver, for 5 minutes.
Mr. Cleaver. Thank you, Mr. Chairman. I am not sure I will
need the entire 5 minutes, but let me also welcome those of you
who are here in the role of providing us with testimony and
information. We appreciate your presence.
This hearing centers on housing rent reform legislative
proposals offered by Congressman Ross titled, ``Promoting
Resident Opportunity Through Rent Reform.'' And as always, I
appreciate a conversation on suggestions to improve Federal
housing programs.
Having a stable home is a crucial component for children to
succeed, for the elderly to thrive, and for our veterans and
the disabled to have a place, a safe place to stay. And we have
had study after study after study cite the importance of
affordable housing for our communities and I have firsthand
experience of the impact.
The proposal we are considering today would allow public
housing authorities to adopt new rent models for public housing
and housing choice voucher programs. Specifically, the
legislation would allow for tiered rent systems, stepped rent
systems, rent based on gross income, shallow subsidy vouchers,
or any other rent setting policy that is approved by HUD.
I have a number of concerns that these models could lead to
large rent increases for families as well as the elderly and
disabled. I also believe that a program this varied would be
very hard for HUD to oversee administratively.
Additionally, just last week, we discussed the importance
of enhancing voucher mobility to allow families to move from
one area to another. This discussion draft would greatly
increase, from my perspective, barriers for mobility as each
PHA may be overseeing drastically different rent models. In my
hometown, for example, there were and are three distinct public
housing developments.
Last, Congress then-Housing and Insurance Subcommittee
Chairman Luetkemeyer and I co-sponsored the Housing Opportunity
Through Modernization Act, HOTMA. This legislation made huge
strides in improving and streamlining our public housing
services. The bill passed unanimously in the House and was
later signed into law.
Currently, HUD is working on finalizing a number of HOTMA's
provisions and I look forward to seeing this process completed.
But I have to tell you and I don't think this has anything to
do with partisan politics, maybe I am wrong, but there is some
frustration on my part that HUD seems to be slow-walking the
implementation of this program. It is like they are saying so
much to do and so little desire to do it.
And unless we as a committee, an oversight committee,
demand that HUD carry through with legislation that we
approved, I don't think we are going to get any results from
this or any other piece of legislation. So, it seems to me that
we shouldn't put any other legislative business before the full
Congress until we have the implementation of what we have
already approved. Or HUD needs to come in and explain something
to us.
So, Mr. Chairman, with that, I yield back the balance of my
time and look forward to a discussion.
Chairman Duffy. The gentleman yields back.
The Chair now recognizes the Vice Chair of this
subcommittee, the gentleman from Florida, Mr. Ross for 2
minutes.
Mr. Ross. Thank you, Chairman, and thank you for holding
today's hearing. Our proposal is to reform HUD's method of
calculating rent for beneficiaries of our rental assistance
programs.
And thank you to our outstanding panel for joining us to
share your expertise and your thoughts related to my
legislation, the Promoting Resident through Rent Reform Act or
the PRO Rent Reform Act of 2018.
As most of you know, under the current rent regime, once a
family is selected to receive HUD assistance, the rent they pay
is generally based on 30 percent of their adjusted income. This
is the essence of our income-based rental assistance model.
There are an estimated 4 million families served by HUD's 5
main rental assistance programs and some 3,300 housing
authorities embedded in communities across the Nation charged
with administering these programs.
For years, we have forced our PHAs to administer a one-
size-fits-all policy that zeros out what should be a strength
of our system, the proximity and sensitivity PHAs have to meet
the needs of their local community. In addition to one-size-
fits-all policy we force PHAs to use itself, is deeply flawed.
It is well-documented that income-based rents create an
effective tax on success. Each time a tenant earns a raise or
gets a new job, the cost of their housing chases after them.
For most of us, a pay raise means more disposable income to
save for the future or spend on household needs, but for the
rent-assisted families, it just means higher rent for the same
living space.
Not only does this paradigm discourage work, it also limits
a resident's opportunity to practice managing their own
budgets, makes rent calculations complex and burdensome, and
punishes dual earning two-parent households. The discussion
draft of the PRO Rent Reform Act that we will examine today
aims to address many of these shortcomings.
It does so by empowering PHAs in the local communities
through the very public annual plan certification process to
select from a menu of alternative rent options, one which is
better suited to serve the needs of their residents. To be very
clear, the draft also ensure that if a PHA and its community
likes the current system, they can continue to use it.
There are few additional important reforms in this bill
including a shallow subsidy for families on a waiting list and
a move to a bi-annual income recertification which I look
forward to discussing with the panel.
In closing, I want to emphasize that this is a discussion
draft. It is not a final product. I am hopeful that today's
hearing will produce insights on how we may improve upon this
legislation, and I am eager to work with my colleagues on this
subcommittee to develop a bill that we can win bipartisan
support.
I thank you and I yield back.
Chairman Duffy. The gentleman yields back.
I do want to welcome our panel. Thank you, for being here
today and for offering your insights and intelligence on Mr.
Ross' bill. With that, I am going to re-recognize Mr. Ross for
the introduction of our first witness.
Mr. Ross. Thank you, again, Chairman.
It is my pleasure to introduce Mr. William Russell,
President and CEO of the Sarasota Housing Authority in my home
State of Florida. Mr. Russell joins us today representing the
Florida Association of Housing and Redevelopment Officials,
FAHRO, where he serves as a member of the board of directors
and as chair of FAHRO's advocacy committee.
Mr. Russell began his tenure at Sarasota in 2005 following
3 years working for the U.S. Department of Housing and Urban
Development as a Deputy Assistant Secretary for Public Housing
and Voucher Programs. When he first came to Sarasota, William
Russell took over a HUD-designated troubled agency at the
beginning of a rare Federal receivership.
In just a few short years, he was able to transform the
agency into a consistent high-performer in all areas and he
continues to push the envelope seeking innovative ways to serve
his community. We are fortunate to have Mr. Russell joining us
today to share insights from his many years working alongside
low-income families to help provide them with a place to live
and an opportunity to thrive.
I would like to thank him and all of the FAHRO members for
partnering with me in an effort to fix our misguided rental
assistance policies, the negative effects which they may
experience firsthand almost every day.
Mr. Russell, we are very much looking forward to hearing
your testimony and thank you again for taking off from your
important schedule to join us in this panel today.
I yield back.
Chairman Duffy. Mr. Russell, welcome. And I would just note
that when you get introduced by a member from your home State,
you get a very lengthy introduction. It's probably not offered
to everybody else, but it is nice to have you here.
We next welcome our second witness, Mr. Fischer, the Senior
Policy Analyst at the Center on Budget and Policy Priorities.
Welcome.
Ms. Todman is our third witness, the CEO of the National
Association of Housing and Redevelopment Officials. Welcome,
Ms. Todman.
And finally but not least, Mr. Gentry is the President and
CEO of the California Housing Commission.
To all of you, welcome. In a moment you will all be
recognized individually for 5 minutes to give an oral
presentation of your written testimony.
Without objection, the witnesses' written statement will be
made part of the record following their oral remarks. Once the
witnesses have finished presenting their testimony, each member
of this subcommittee will have 5 minutes within which to ask
the panel questions.
I would just note that on your table, there are three
lights. It is pretty simple. The green light means go. The
yellow light means that you have 1 minute left. And the red
light means that your time is up, pretty straightforward.
Your microphones are sensitive so if you don't hear
yourself speaking, the microphone is probably not on, so just
make sure when you are speaking you do have the microphone
activated. They are sensitive, so speak directly into them.
With that, Mr. Russell, you are now recognized for 5
minutes.
STATEMENT OF WILLIAM RUSSELL
Mr. Russell. Good afternoon, Chairman Duffy, Vice Chair
Ross and Ranking Member Cleaver and members of the
subcommittee.
My name is William Russell, and I appreciate the
opportunity to testify today on behalf of the Florida
Association of Housing and Redevelopment Officials, which
represents 84 housing authorities. I am a FAHRO board member
and chair its advocacy committee.
Last summer, FAHRO developed a rent reform proposal which
we shared with Congressional and HUD staff. We are very pleased
that Vice Chair Ross has embraced our proposal and incorporated
it into the discussion draft before you today.
Housing assistance should serve as a springboard of
opportunity for the families we serve. However, current policy
says to HUD-assisted families, the more you earn, the more you
will pay in rent. There is little incentive to do better, only
a promise of higher rent.
Our families are not well-served by current policy. We must
ask ourselves these questions. Why would we keep a rent policy
that discourages our residents from increasing their earned
income, that is so complicated to calculate income and
exclusions and deductions that it causes hundreds of millions
of dollars in errors.
That says if you quit your job voluntarily, we will
immediately drop your rent to the absolute minimum under the
law, that taxes two-parent households by charging more rent for
two incomes rather than encouraging it by allowing two working
adults to share the rent.
Current rent policy has the same economic cliff effect that
plagues many Federal anti-poverty programs. When families are
on the verge of earning more and doing better, they peer over
the edge of an economic cliff and see the benefits they stand
to lose, such as food stamps, child support, and housing
assistance. It is not surprising that some hesitate to lose
that assistance and take a precautionary step back. We must
correct this if we want families to reach their full potential.
My written testimony provides several real examples of
families making decisions to avoid rent increases and perceived
economic instability. But let me discuss one recent example of
that.
A resident of ours found a job earning $35,000 a year
working for an insurance company. Once her case manager
notified her of her new rent portion which is around $800, she
decided to quit her job shortly thereafter. Her rent was then
dropped to the statutory minimum rent of $50 and when the $75
utility allowance was applied for her unit, the housing
authority paid her $25.
Promoting resident opportunity through rent reform will
improve things in three important categories. This reform will
reduce barriers to economic advancement, provide reasonable
options for local housing agencies to optimize economic
opportunities in their community, and offer real simplification
in how income and rents are calculated and the frequency of
having to recertify income, thereby reducing subsidy errors and
administrative burden on local agencies.
The bill offers multiple rent options for housing providers
and also allows them to develop other rent policies that HUD
can approve. Several of these options offer a real improvement
over current policy and will help families make economic gains
without being penalized.
I provide more comments on each option in my written
testimony and believe there is something here for every agency
to work with to meet the needs of their community and their
families.
The shallow subsidy voucher is an optional policy tool to
address the need for housing assistance that far exceeds
available vouchers and causes agencies to close their waitlists
for years on end. The shallow subsidy option offers families
the rent assistance they need, that is the difference between
covering their rent and being severely rent-burned or even
homeless.
In closing, I am grateful and honored to have the
opportunity to appear before you today and provide testimony on
the current HUD rent policy as well as the PRO Rent Reform
discussion draft. As more families do better and graduate from
assisted housing, more units become available to assist other
families, and we will be able to serve more families over time.
I ask that you give serious consideration to changing the
current rent policy to encourage, not penalize, economic
advancement and wellbeing.
[The prepared statement of Mr. Russell can be found on page
81 of the Appendix.]
Chairman Duffy. Thank you, Mr. Russell.
The Chair now recognizes Mr. Fischer for 5 minutes.
STATEMENT OF WILL FISCHER
Mr. Fischer. Thank you, Chairman Duffy, Ranking Member
Cleaver, members of the subcommittee for the privilege to
testify before you today.
I want to start by emphasizing how much difference rental
assistance programs make in the lives of low-income Americans
today. They help more than 5 million low-income households keep
a roof over their heads. A great majority of those are elderly,
people with disabilities, and working families.
Research shows that they are the most efficient and
effective tool we have for reducing homelessness and housing
instability. So, these are effective and important evidence-
based programs under the current rules.
That said, it is still important for policymakers to look
for ways to strengthen them even further and the HOTMA
legislation that this committee developed is a great example of
that. That included a whole set of careful policy changes
including substantial rent reforms that, once HUD implements
them, will streamline administration, encourage work, and trim
costs, while at the same time keeping in place the key program
standards that have made rental assistance effective.
Going forward, I think any changes beyond those in HOTMA
should be done in an evidence-based manner. The Congress has
directed HUD to conduct two major rent reform evaluations,
which once they are completed will provide findings on a whole
range of alternative rent policies including many of those in
the bill that we are discussing today. I think it would be hard
to justify enacting those proposals on a large-scale basis
until those evaluations have been completed and you can assess
what the impact of those policies is.
I want to turn now in a little more detail to the bill. I
think it would be a step in the wrong direction for a few
reasons. It would radically alter the public housing and
voucher programs in ways that would make them less effective.
The first reason is that it would result in large rent
increases for low-income people that would increase hardship,
evictions, and homelessness. It would allow HUD to increase
rents on elderly people and people with disabilities by an
unlimited amount. It would also allow very large rent increases
for non-elderly, not-disabled people, for example the tiered
rent option in the bill would raise the minimum rent that
housing agencies can charge to the lowest income families by
more than $500 on average per month.
The second big concern is that the bill is not well-
designed to support work, I think increasing earnings and
employment among rental assistance recipients is a really
important goal, but there's no evidence that these proposals
would do that and a lot of them seem more likely to have the
opposite effect.
So, just for example, the bill would allow very large rent
increases on working poor families who can't afford rent, who
can't afford market rents on their own. That would place them
at greater risk of eviction, which would just make it harder
for them to keep a job and raise their earnings.
I think if policymakers want to support work that it will
be better to focus on initiatives like Jobs Plus or Family
Self-sufficiency, which provide financial incentives and
service coordination but don't put families at risk of
displacement and hardship. And the Family Self-Sufficiency Act,
which the ranking member and the Chair sponsored and which the
House passed overwhelmingly late last year would be a big step
in that direction that would strengthen the Family Self-
Sufficiency program.
The third big concern is that this would make rental
assistance much more complicated because this would allow the
3,800 State and local housing agencies that administer public
housing and vouchers to each pick their own rent rules. Already
having that many agencies is a complicated system that makes it
much more difficult for voucher holders to move from one
community to another including to higher opportunity
neighborhoods with good schools that will have important
benefits for kids.
I know there has been bipartisan concern about this
including the hearing that was held last week on legislation to
promote regional cooperation to support voucher mobility. This
bill would go in the opposite direction by creating much more
fragmentation and complexity. A family that wanted to move
would have to navigate a complex patchwork of local rent rules,
frequently 10 or more in a single metropolitan area just to
figure out where they could use their subsidy and have a
reasonable rent burden.
In addition, the complexity would make it much harder for
HUD to provide oversight over how taxpayer funds are used, and
that is important because HUD oversight has played a central
role in reducing payment errors by local housing agencies in
the past.
In summary, I would urge the committee to set aside this
bill. I think the most important concrete steps that can be
taken in the near term to improve rent rules and support work
are, first, for HUD to issue the regulations to implement HOTMA
so that those reforms can begin to take effect and, second, for
Congress to finish the job and enact the Family Self-
Sufficiency Act so that program can help more families to earn
and save and build a better future for themselves.
So thank you again for the invitation to testify today and
I will be happy to take any questions you have.
[The prepared statement of Mr. Fischer can be found on page
43 of the Appendix.]
Chairman Duffy. Thank you, Mr. Fischer.
Ms. Todman, you are now recognized for 5 minutes.
STATEMENT OF ADRIANNE TODMAN
Ms. Todman. Good afternoon, Chairman Duffy, Ranking Member
Cleaver, and members of the subcommittee. I am Adrianne Todman
and I am the CEO of NAHRO and thank you for inviting me to
testify today.
This year, NAHRO celebrates its 85th anniversary as a
membership organization for the affordable housing and
community development industry. Our 20,000 members provide
homes for more than 7.6 million people across the country in
urban, rural, and suburban America.
Rent reform is a concept that has been discussed and
debated for decades. The current approach to rent was
established in the 1960's when Congress capped public housing
rent at 25 percent of residents' income and then in 1981 raised
the rental cap to 30 percent.
While income-based rents are a well-intentioned measure,
the unintended side effect is that this rent structure deprives
housing authorities of the financial support needed to operate
and maintain public housing. This is why the operating subsidy
is such an important tool for housing agencies and more
importantly the residents that they serve.
While various important rent initiatives were authorized in
HOTMA, they were not necessarily all-encompassing nor did they
provide any alternative rent determination structures for
housing agencies.
We deeply appreciate Congress' efforts in streamlining the
current rent recertification process through HOTMA, but most
PHAs are still extremely limited in how they are allowed to
charge their tenants rent.
Just this week, we had our Washington Conference and we
walked around and talked to some of our members about their
thoughts about rent reform. A director out of Michigan said all
agencies, but particularly small ones, need flexibility and
local control to meet the needs of their low-income families.
Another senior housing official out of Texas focused on
consistency and complexity. Real rent reform needs to address
the two biggest issues with the current system, lack of
transparency and consistency, and errors caused by this
complexity. A sensible approach would simplify the calculation
while ensuring that the subsidy is adequate for the local
market.
Currently, the only agencies allowed to shape and implement
rent reform are Moving to Work agencies. And these agencies, it
is important to note, have said they have done so gradually and
cautiously. This includes many years of policy development,
consensus building, and resident buy-in. As these rent reform
proposals must be included within their Moving to Work plan,
they must undergo a rigorous public comment before moving
forward.
This subcommittee has posed several questions to this
panel. One question was around the error safeguards. Moving to
Work agencies have provided many examples of how hardship
exemptions can be created so that there is rent reform but also
protecting the interest of the residents.
In order to help residents achieve self-sufficiency and
give them greater access to employment or career opportunities,
many Moving to Work agencies have provided case management
services, in fact, many of them rely on those case management
services in order to have their rent reform initiatives be
successful.
Another question the committee has posed is whether or not
rental assistance programs contribute to an overreliance on
Government assistance. According to HUD's Picture of Subsidized
Housing database, the vast majority of public housing program
participants and voucher recipients are either already working
or are households headed by disabled or elderly individuals.
But many critics of income-based rent believe it acts as a
disincentive to work and adding family members to the list.
Another question was whether or not there needs to be--
policymakers should ease regulatory burdens on housing
providers and I think that that is a resounding yes. I think
that many housing authorities would say to you that given the
amount of regulatory burdens that they have, they spend so much
time on compliance and not enough time and energy in helping
families in their homes.
Although regulatory streamlining will help, no amount of
regulatory streamlining will make up for the extremely deep
cuts to programs that help support our Nation's most vulnerable
people and help to develop and revitalize communities. While
NAHRO is deeply committed to regulatory reform, NAHRO notes
that this reform does not replace the need for adequate funding
for these essential programs.
The final question was around flexibility to structure
rent. Sadly, HUD has not yet implemented the components of
HOTMA that speak to this, so I agree with our previous two
panelists that we do look forward to HUD putting those
regulations in place and we should really look at what has
happened inside the Moving to Work agencies on how these
different rent structures have been in place.
Many of the proposed rent determination methods included
here are already in effect across the country. But Moving to
Work agencies have had the advantage of resources to really do
the kind of case management and other initiatives that really
help residents move out of or to live well inside their units.
Thank you, Chairman Duffy, for inviting me to testify today
and I am happy to answer any questions that you may have.
[The prepared statement of Ms. Todman can be found on page
57 of the Appendix.]
Chairman Duffy. Thank you, Ms. Todman.
Mr. Gentry, you are now recognized for 5 minutes.
STATEMENT OF RICHARD GENTRY
Mr. Gentry. Thank you, Chair Duffy, Ranking Member Cleaver,
and the other members of the subcommittee. Thank you for having
me here today.
I will point out in starting my career in the affordable
housing industry spans almost 46 years and I have had the
privilege of working in a number of cities across the country
during that time period.
The agency that I have led for the last 10 years, the San
Diego Housing Commission, provides Federal rental assistance to
more than 15,000 low-income San Diego households on the voucher
program and also operates 189 Federal public housing units.
In addition, we operate a number of city and State finance
programs as well in addition to the Federal. We also are one of
the 39 public housing agencies nationwide to have received a
Moving to Work designation from the Department of Housing and
Urban Development. The Moving to Work status, as Ms. Todman
just indicated, gives those of us who are fortunate enough to
have that designation, the flexibility that created innovative
cost-effective approaches to provide housing assistance to the
low-income families and customers whom we serve.
Based on the breadth of my experience, and I will point out
that I was a CEO both in Austin, Texas and in Richmond,
Virginia in the past, as well as also spending some
considerable time in the private sector, I would submit that
there are two guiding principles that should guide our housing
programs nationwide, one is achieving the greatest benefit for
the low-income families, the customers whom we serve, and the
second is maximizing efficiencies in the expenditure of
taxpayer funds. If there is a third item, it is far down the
list from those two.
With these principles in mind, the right time to rent
reforms, I believe, can enhance the effectiveness of both the
Section 8 Voucher Program and also the Public Housing Program.
I think there are two extremes, one currently in effect and one
that has been proposed in the past that misses the mark. The
current practice of utilizing income-based rents I think misses
the mark by creating marked disincentives for productive
behavior. In fact, in many cases, as Mr. Russell pointed out,
they can be confiscatory and it can hinder, if not prohibit,
gainful activities on the part of our customers.
I think the other extreme is that of term limits, which I
think can serve the purpose of penalizing families frequently
for being poor and not giving those families the help that they
need to hopefully move up and out of their current situation.
In San Diego, I will point out that there are two efforts
that we kicked off as part of our Moving to Work experience
that made our rent reform work I think exceptionally well. The
first is that in October 2010, we opened our Achievement
Academy. The Achievement Academy is a learning and resource
center, a computer lab with programs that emphasize career
planning, job skills, and personal financial education.
Achievement Academy staff known as Work Readiness
Specialists are assigned to work with families on a customized
plan for educational and employment objectives. Since 2011,
more than 4,000 individuals have received one-on-one assistance
from the Achievement Academy. And we have helped some 1,053
participants to date get placed in jobs and some 590 to get
better jobs in their future.
We set the Achievement Academy up on purpose before we
started altering rents in order to give the residents a leg up.
About 8 months after the Achievement Academy opened, HUD
approved our Path to Success rent reform initiative on June 21,
2011. This Path to Success program was created to encourage
Housing Choice Voucher families to become more financially
self-reliant with help again from the Achievement Academy. This
initiative was first started in 2011 with a 2-year initial
process. The first rents were implemented on July 1, 2013.
Under our Path to Success program, we identified families
as work-able or elderly/disabled. A household that is work-able
with at least one adult under 55 years old, not disabled and
not a full-time student between the ages of 18 and 23. I will
point out that the average annual income of our approximately
6,200 work-able families in this time period has increased 25
percent from 2011 to 2017, a 6-year time period.
All other households who are considered elderly/disabled,
they do not participate in this program and they are held
harmless. I would also point out that in addition to a minimum
rent, which is based on the minimum wages for California
families, we also instituted tiered rents for families that do
have earned incomes who are in that policy set and we have seen
great success in this program.
And that concludes my testimony, Mr. Chairman.
[The prepared statement of Mr. Gentry can be found on page
28 of the Appendix.]
Chairman Duffy. Thank you, Mr. Gentry.
The Chair now recognizes himself for 5 minutes for
questions. Maybe just first off, the panel agreed that outside
of those who are elderly or disabled that it should be a goal
that we should move folks through the assistance to self-
sufficiency? Does anybody object to that concept? Do you all
agree with that? OK. Good.
Ms. Todman. Well, let me just--I don't suggest that it is
not something that I would disagree with, I just think that we
need to be cautious on the practical application of that.
Chairman Duffy. Right. But as a goal, how we get there we
could discuss and debate, but that would be a noble goal of
those who can get out, we should try to encourage that. And is
it fair to say that if we have someone in one of our programs
that, again, is potentially going to get a raise, someone who
might have the opportunity to work more hours or overtime or
get a new job that pays them a little more might be a little
tougher job but to get more money from it, if that benefit is
taken from them because they pay higher rents, is it a fair
human assessment that that is a disincentive? Does anybody
disagree with that concept?
Mr. Fischer?
Mr. Fischer. So I think an important clarification is that
for the great majority of folks on rental assistance, the great
majority of families on rental assistance because of the
incentives that are provided by other programs like the earned
income tax credit and the child tax credit, they are going to
be better off working in a low wage job than they are not
working. So I think it is important to recognize that those
families are better off working than they are not working.
Chairman Duffy. But I am talking about this program, where
you have a disincentive, some of that extra earned income is
going to be taken away from you. At first blush, it will tell
you it makes sense. If you make more money, you should pay more
for your rent. At first blush, that makes a lot of sense until
we look at human behavior and then we might say, well, oh, my
gosh, if I work harder and earn more and I just have to give
that away in increased rents, I am not going to work harder. It
seems like that is common human nature.
Mr. Russell, do you agree with that concept?
Mr. Russell. I do agree with that. And one of the examples
that I talk about in my rent testimony is the dual income
couple and they had a goal of becoming homeowners. So they
decided they would actually both be willing to work a second
job to get ahead and help save up to buy a home. And I would
think that would be something we would want our housing policy
to support.
And as soon as they started working that second job and
increasing their income, as you said, the rent jumped up, and
was chasing after that increased income and they finally just
said what is the point of working a second job if we can't even
get ahead? So they pulled back and they didn't--they kept their
current jobs, but that incentive to work harder and do better
and save up and buy a home of their own, they felt like that
whole effort was being defeated by the rent policy.
Chairman Duffy. And this may be shocking. Mr. Ross is a
Republican who introduced this bill and Republicans are
allegedly always trying to take money away from people and
say--I think that--but a common sense policy this is, I think
people are better off if we care about people's lives and what
gives them worth to make sure we give them a roadway to self-
sufficiency and to let them keep a little more of their hard-
earned money to get to that bridge point where they can make it
on their own. In the end, aren't we better off as a society,
letting them keep a little more at the frontend, in the long
run they are the ones that get to step out and get out of the
programs and thrive and not just survive.
Mr. Gentry, do you agree with that?
Mr. Gentry. Yes, sir, I do. I point out that if you are a
behavioralist which I am and you believe that people respond to
sanctions as well as to incentives, that we want folks to
engage in the American Dream of being able to be productive--
Chairman Duffy. Right.
Mr. Gentry. --and to be self-sufficient insofar as
possible. Now, there may be some folks who are elderly/disabled
or have other issues and need to be taken care of.
Chairman Duffy. That is right.
Mr. Gentry. And I think that to understand some of the
objections to this, we need to make sure that if folks have a
hardship situation or if they need some time to work their way
into understanding how to work in a productive setting, that
those kinds of opportunities can be made available to them. I
think that is where the San Diego's Achievement Academy has
been greatly successful. And, again, I will point out that in
the 4 years, 2013-2017, we showed an average income increase
among our work-able families of 25 percent.
Chairman Duffy. Yes. My time is up, but I want to ask a
quick question because this is meaningful the way I view the
world and I think what evidence would show us is that it is not
always possible. But if we can raise our kids in a two-family
home, it is probably better for the kids. And the odds of
poverty are diminished with a two-family home. Does this
program, the way it is structured today, disincentivize
marriage in a two-family home?
Mr. Russell?
Mr. Russell. We believe it does. When we look at the
demographics of our families and we compare it to the
surrounding community, it doesn't match up in terms of the
disproportionate number of single female head of households
that occupy our units. I was raised by a single mom so it is--
Chairman Duffy. Kudos to single moms.
Mr. Russell. Yes. But certainly, I think it would be
positive for our community and our kids to have more two-parent
households in our communities. And quite frankly, the policy
just discourages that.
Chairman Duffy. And if it is a benefit, we should try to
structure our policy to incentivize it instead of having a
policy that may be a disincentive to marriage or a husband and
wife. My time is way over. Thank you for answering my
questions.
The Chair now recognizes the Ranking Member, the gentleman
from Missouri, Mr. Cleaver for 5 minutes.
Mr. Cleaver. Thank you, Mr. Chairman.
Let me first of all say to the gentleman from Florida.
Well, even before I say that, when you started out you said
FAHRO instead of FAHRO and in my district, FAHRO doesn't poll
well. So I was obviously a little nervous. But thank you.
It is important I think for me to say, I agree 100 percent
with the concept of your outline of legislation. And as you are
thinking about it, I think it might be important for some of
the things that I have said to at least be considered or maybe
even more appropriately from what our distinguished panel says.
And I am interested, Mr. Fischer, HUD right now is going
through this rent reform demonstration to test the impact of
higher rents and calculating rent based on gross income.
And so, I think that the report is due out--2020, 2020
something like that. And so, what I was trying to say perhaps
and articulate was that I am concerned about implementing
proposals without the results of the programs we just put in
place. Is that a legitimate concern? Just based on your
information presented to us.
Mr. Fischer. Yes, I think that is absolutely a legitimate
concern. These evaluations, the Rent Reform Demonstration they
are doing now and some that they plan as part of Moving to Work
expansion are going to test tiered rents, stepped rents, the
whole range or a whole range of alternative policies. And we
will know much more about what they do after those evaluations
are completed.
Mr. Cleaver. Thank you. Ms. Todman, last week, weeks start
running together if you are in this place, but we considered a
proposal either last week or the week before about increased
mobility, which I support completely.
But will that proposal be a barrier to this--be a barrier
to tenant mobility, given that neighboring PHAs could possibly
have different rent models?
Ms. Todman. So, I had the great honor of running a housing
authority in my previous life. And one of the things that we do
is when a resident is ready to, in this case port out into
another agency, as the welcoming agency, we sit down with
residents and guide them in terms of what the rules and
regulations are inside of that housing authority.
So, I do think that--I don't see that the bill--the bill
does need some perfecting, but I don't see in and of itself
that it would be a disincentive for families to move from one
place to another. In its current state, I think that families
will move based upon the current state of their household and
their housing needs.
Mr. Cleaver. Thank you.
Now, my final question. Mr. Gentry, as I stated earlier, I
think this is a very good concept and hopefully it will develop
into a very good piece of legislation. But I don't know how HUD
can possibly administer this program, adding some additional
program management, when we have actually been cutting HUD's
budget year after year after year.
So, I am wondering about the administrative burden that
will fall on HUD and the additional dollars went to communities
under grants, to my knowledge we are not expanding anything
administratively. So, is that a legitimate concern, Mr. Gentry?
Mr. Gentry. Yes, sir. I think it is. However, I don't think
we should limit the application of a good idea based on the
lack of ability of a group of folks to implement it. I think
that the good idea should be implemented and then the
administration should be required to keep up quite frankly to
make sure it does work.
I will point out, too that the way I look at it and I do
believe in mobility, allowing people to make a choice in where
they live, what they do, where they want to work, how much of
that money they can keep for themselves as much as they can.
But I think mobility should be economically up, should be a
primary factor rather than looking for another place to move
to. And already, if you move from one community to another, you
are going to work--encounter differences and a lot of different
factors where you move to.
So the way I look at it is not using our organizations or
our programs as the way to protect our people who are work-able
from the larger economy. But to help those people fully engage
it.
Mr. Cleaver. Yes. I agree with you. All the studies show
that if you move from a lower income area to a higher income
area, that mobility does create a whole new world for the PHA
resident. I yield back. I am sorry, Mr. Chairman.
Chairman Duffy. The gentleman yields back.
The Chair now recognizes the author of the underlying bill,
the Vice Chairman of this subcommittee, the gentleman from
Florida, Mr. Ross, for 5 minutes.
Mr. Ross. Thank you, Mr. Chairman.
I will remind the members that this is a working draft. And
my good friend from Missouri raises some good points and I
apologize on my initial pronunciation of the acronym. I think I
was hooked on phonics at the time, so.
But my concern and the reason I think this hearing is
important is because I don't believe nor do I ever think that
the intended goal of public housing with very few exceptions
was to create permanent housing.
In fact, I think just the opposite. I think it is, has been
in its initial conception as a starting point for those to do
what many Americans have done throughout the history of this
country and that is to be able to gain economic growth and go
up in a mobile fashion throughout their community into a
successful livelihood.
In fact, work is actually synonymous with dignity. Dignity
is a byproduct of work. And so, what we have here is not that
one size is going to fit all. And I think we would all have to
agree that whatever housing policies are in New York City
aren't going to work in Laramie in Wyoming or in Lakeland,
Florida or in New Orleans, Louisiana.
We have to have some sense of flexibility and those
flexibilities, I think, are dependent upon the communities with
which those public housing residents live. And so, what we have
seen here and what we have today that I am very grateful for is
some testimony from witnesses who have experienced the
innovative programs, the Moving to Work program, Mr. Gentry
has.
Mr. Russell's program in Sarasota, Florida. Ms. Todman's
efforts in Washington, D.C. All of these are based upon
incentives to allow people to improve their social and economic
situation. I think that is what the intended purpose of our
public housing programs are.
And so, what I would like to do, Mr. Russell, some
stakeholders have expressed concerns that the PRO Rent Reform
Act is too complicated for PHAs to implement and that it is
unlikely that communities will ever take advantage of the
flexibility to choose a new rent calculation method. Do you
agree with that?
Mr. Russell. I don't at all. I think, I know your bill
includes an option to basically have a housing authority to
say--
Mr. Ross. An option, correct.
Mr. Russell. An option to stay with the status quo. And I
think that is a fine option to have in the bill, but I can't
imagine a housing authority deciding to stay with the status
quo. Just, again, given the complexity, the errors, we get
audited for compliance with these complex rules every year.
Our auditors come in and audit our book, but they also
audit our compliance. And it is really hard to have no findings
on compliance because this rent policy is so complicated.
Mr. Ross. And why do you think it is important for
alternative rent options to be included in the statute as
opposed to having HUD promulgate a rule to bring about that
reform?
Mr. Russell. Well, I think the options that are laid out in
the bill are I think reasonable options. They are options that
have been demonstrated in the Moving to Work program.
Obviously, you included a provision where someone could be
creative and propose a new option to HUD for their
consideration. But I think giving HUD the full discretion to
put out options.
Mr. Ross. That would adversely impact your current program
today, wouldn't it?
Mr. Russell. Yes.
Mr. Ross. Yes, it would. And you have been pretty
successful. It is impressive to see what you have done from a
borderline agency.
Mr. Gentry, the Moving to Work program, that is something
that we are delighted that we have been able to see activated
here even though it is on a pilot project. How long did it take
you to put together your Path to Success program and how
resource intensive was the project?
Mr. Gentry. I moved to San Diego in late 2008 and the
Moving to Work program had been suspended, believe it or not,
prior to my arrival. We reactivated it in January 2009. And
Moving to Work, oh, I am sorry, the Path to Success program we
kicked off 2 years later.
We wanted to institute the Achievement Academy first
because we saw that before we started talking about improving,
helping a resident improve their economic livelihood, we needed
to have a mechanism to help them do that.
So, it took us about 2 years to grow into that and then
another 2 years to get the program fully functioning and
implemented, so that when we hit the ground running on the new
rents, both the new minimum rents and the new rent tiers in
July 2013, we needed to have a good program developed, which we
did.
We also needed to publicize and communicate it among our
residents which we did--we spent 2 full years doing that. So it
took about 4 years, sir, to make it ready in the way we wanted
it to. But when we kicked it off, it started hitting on all
cylinders all at once in 2013.
Mr. Ross. The tiered rent scheme has not been a problem at
all, has it?
Mr. Gentry. No, Sir.
Mr. Ross. Thank you. My time--
Mr. Gentry. And the tiered rent is not unlike--this is
April, income taxes. It is not unlike tiered taxes, so that you
get the benefit of the income within those tiers before your
income picks up. We also re-examine our families every other
year.
So you get a full year's benefit before an increase in
price kicks in. And then what we have also done with the
residents is make sure that--and again, we are heavily a
Section 8 agency mainly because we transferred most of our
public housing to vouchers also early during my tenure in San
Diego.
So, we have almost 16,000 vouchers, 189 public housing
units. So in the voucher program, as people's income rises,
eventually they don't need the program anymore. We are easy to
transition. I will point out, however, and this is true
nationally as well as in San Diego, well over half of our
participating families or individuals are elderly or disabled
and those are off the table and for those the old rents apply.
Mr. Ross. Absolutely. Thank you. I yield back.
Chairman Duffy. The gentleman yields back.
The Chair now recognizes the gentleman from Nevada, Mr.
Kihuen for 5 minutes.
Mr. Kihuen. Thank you, Mr. Chairman, and thank you, Mr.
Ranking Member.
I thank you all for being here this afternoon. I just have
a couple of quick questions. The first one to Mr. Fischer.
During the recession as you well know, Nevada was ground zero
for the housing crisis. Thousands of Nevadans lost their homes
and many were pushed into the rental market. Nevada is now
facing an affordability crisis, with a shortage of more than
81,000 affordable and available rental homes for extremely low-
income renters despite many of them working full time.
In Nevada, to afford a two-bedroom rental home at HUD's
fair market rent, a person would need an annual income of
$37,462. However, there is no State in the U.S. where a person
working full time at the Federal minimum wage can afford a two-
bedroom apartment at fair market rent.
Wage inequality in this country continues to grow. The
average minimum-wage worker in my State earns less than $18,000
a year. So my question is, what will be the impact of the Ross
bill on individuals who are already working full time, but
still cannot afford the cost of rent in the private market?
Mr. Fischer. Well, it would allow very large rent increases
for those families. In some cases hundreds of dollars a month.
Those would be increased, like you said the families are doing
their best to make ends meet and make a living. They don't have
the ability to cover those costs. They would have to divert
money away from other basic needs, things like clothing or
school supplies. And ultimately, they face a much higher risk
of eviction and being left without a home.
And the impact of that is going to fall most heavily on the
kids in those families who could lose their homes and have
those other harmful effects.
Mr. Kihuen. Thank you.
And a quick follow up, there are many who argue that the
families who will receive this Federal rental assistance who
are able to work are not working. What does the data tell us
about this assumption?
Mr. Fischer. The overwhelming majority of people on rental
assistance are elderly, have disabilities, or they are workers.
So there are 85 percent that either are elderly, have a
disability, work, or recently were among the people who are
left.
A lot of them are--have other health limitations that don't
qualify as a disability, but make it very difficult for them to
work. There are others who are responsible for--who care for
young children or for disabled adults and don't have access to
affordable care for those people. And so, the share of people
who are readily able to work and don't is very small.
Mr. Kihuen. Thank you. And just one more question, while
there is virtually no evidence that the punitive rent increases
actually encourage work-able individuals to work, there is
substantial evidence supporting the effectiveness of the family
self-sufficient program.
Can you talk a little bit about why this is a better
approach to encouraging self-sufficiency?
Mr. Fischer. Sure. The family self-sufficiency and the
related thing is the Jobs Plus demonstration, and both of these
are programs that provide financial carrots. They provide
financial incentives for people to raise their earnings, but
they don't pull the rug out from under working families or
other people and risk causing hardship in the way that the rent
increases in this bill would.
And so for both of those programs there have been
encouraging research findings that show very large earnings
increases and I think that they are both promising ways to go
forward and help. I think we all agree the goal is which to
help these families raise their earnings and succeed.
Mr. Kihuen. Correct. Thank you, Mr. Fischer. And then my
last question to Ms. Todman. Thank you again for being here.
The Ross discussion draft does not provide any additional
resources for case management, job training, or other services
that would help residents take steps to increase their earned
wages.
In your experience, how important are these kinds of
supportive services in achieving success for families?
Ms. Todman. They are certainly very, very important. And
there is a distinction between what Moving to Work and non-
Moving to Work has been able to do from my testimony. But I
will say this much. Non-Moving to Work agencies are actually
very, very well-equipped to partner and to create collaboration
at the local level even without the additional resources.
I think what allows the Moving to Work agencies to do is to
create their own program in a way and be more intentional. But
there are thousands of examples across the country where
housing authorities have partnered with their local department
of employment services or non-profits to be able to afford
those kinds of case management for their residents.
Mr. Kihuen. All right. Thank you, Ms. Todman. And I yield
the balance of my time, Mr. Chairman.
Chairman Duffy. The gentleman yields.
The Chair now recognizes the gentleman from Illinois, Mr.
Hultgren for 5 minutes.
Mr. Hultgren. Thank you, Mr. Chairman.
Thank you, all. I appreciate your work and your testimony
here today.
Mr. Gentry, if I can address my first question to you, and
listening to your testimony, it seems to me that you have some
understanding of the affordable housing needs in Chicago and
the rest of Illinois from your time with the National Equity
Fund in Chicago.
Despite inflation, the current minimum rent for non-Moving
to Work agencies of $50 has not been increased since 1998. On
page eight of your testimony you state that as of July 1, 2015,
households with one work-able person, work-able person pays a
minimum rent of $300.
I have several questions if I could. I will give them to
you all and then if you can touch on the ones that you feel
able to discuss, that would be great. One, do you believe that
a minimum rent standard is good public policy and if so why?
How do we address the concerns that some residents have
absolutely no income and how do they even survive? What would
be the effect of a minimum rent increase across the board for
all agencies?
And then what types of hardship exemptions and processes
should be in place to make sure the minimum rent policy doesn't
have unintended adverse consequences to those who truly are
unable to afford at least $50 a month?
Mr. Gentry. Well, the short answer is it depends.
Mr. Hultgren. Next.
Mr. Gentry. The longer answer is that if you notice in my
paper, San Diego has no minimum rent if you are not work-able.
If you are elderly, disabled, hardship situations for a
relatively short period of time, there is no minimum rent.
Our assumption in those cases is that we work with the
family through our Achievement Academy and hook them up with
non-earned income that would be appropriate to them--Social
Security, SSI, welfare, food stamps, whatever will be
appropriate to help that family, which we should be doing
anyway.
So, for a work-able family, if you remember the definition
of that, there is at least one individual in that family who is
under 55, who is not a full-time student under 23, and is not
disabled.
So that particular family, we will work with them and help
them find a job, but rather than trying to make it more
complicated perhaps than it should be, we figure that if we are
offering help and they are work-able, they should be paying a
minimum rent based on minimum wages.
And it has been remarkable to me how few complications or
problems we have had with this since we implemented it in 2013.
I will point out with respect to the FSS (Family Self-
Sufficiency) program, it is a wonderful program, but I think it
only goes halfway. It basically says, we are still going to
charge you an exorbitant, confiscatory rent based on your
income, but we are going to give some of it back to you.
So the family can look at it that way, then it makes sense,
it is better than not having FSS. And I do support it. But it
is only half way there. Better I think that we assume that a
resident who, in my 46 years in this business, some of the low-
income people I have worked with are some of the best financial
managers I have ever met.
Mr. Hultgren. That is right.
Mr. Gentry. Who can get a lot--a long way on a minimum
amount of money, we need to treat them with dignity and respect
and basically say we will help you. We expect you to do it and
we think you can carry it off. And so far at least in San
Diego, it is working very well.
Mr. Hultgren. It is great. We go on with my last minute and
a half here to, Mr. Russell, if I could. On page two of your
testimony you referenced that the current rent policy and I
quote, ``taxes two-parent households by charging more rent for
two incomes rather than encouraging a cohesive family unit it
by allowing two working adults to share the rent burden,'' end
quote.
Wonder if you could provide some more context based on your
experience of the connection between the current rent policies
and quasi-punishment of the maintenance of two-parent
households.
Mr. Russell. Well, in the non-HUD-assisted world, there is
an economic benefit to having a two-parent household, with dual
income or with a second parent, assisting with things that
would otherwise cost money to do.
So, and sharing the rent, splitting the rent, for example.
Under our policy, they can't share the rent. They can't split
the rent. There is no economic benefit to having a two-parent
household.
There is actually a penalty to do that because if the
second parent or second adult has income, we have to charge
them more rent accordingly. And it is so--it is kind of
insidious because we have single female heads of households who
have significant others that they want to have residing with
them and, but because of the rent policy, and the
discouragement of that, they literally have someone kind of
sneaking in and out at night and hoping to not going to be
discovered by the housing authority, and then if we find out it
becomes like a fraud issue.
And that is just--that is terrible climate that our policy
is creating for people who just want to have a two-parent
household. We should be encouraging that, not discouraging
that.
Mr. Hultgren. Well, my time has expired. Thank you. I yield
back, Chairman.
Chairman Duffy. The gentleman yields back. The Chair now
recognizes the gentleman from Florida, Mr. Posey for 5 minutes.
Mr. Posey. Thank you, Mr. Chairman, for holding this
hearing, and thank the witnesses for appearing and for your
testimony here today. I don't think there is a single Member of
Congress that likes the word homeless. And I--and I like to
think that every Member of Congress would like to do whatever
they could to effectively make sure we didn't have anybody that
was homeless.
I am especially chagrined today to hear that we actually
penalize married people or couples. I think the family model is
probably the best thing we can do to help people advance
forward and I always thought the goal of the public housing was
to help people along until they can get into private housing,
not to entrap them in public housing for their entire lives.
Mr. Russell, and then I will ask the other panelists. What
percentage of public housing residents annually, let us say,
graduate to private housing? You can swag it, I am not going to
hold any of you to this number, I am just really curious.
Mr. Russell. Yes, I would say, sir, in my agency, I would
say maybe about 5 percent.
Mr. Posey. OK. Mr. Fisher?
Mr. Fischer. Well, I just want to say, I--so I don't have
that figure off the top of my head, and it varies a lot from
one agency to another. So, for example in high-rent
neighborhoods, markets like New York City, it is a lower
number, because it is really hard for a working family to
afford housing on their own.
But the number that I do have is that the average length of
stay is about 3 years both in public housing and vouchers, that
is what is typical.
Mr. Posey. OK. Ms. Todman?
Ms. Todman. Yes, my--that was going to be the nature of my
response too, which is the average tenure, and I don't think
that there is any data on how many individuals leave public
housing or the voucher program and are going to the--into the
commercial market.
I will say my own experience, how that has happened is by
having families graduate into homeownership programs that have
been created by the housing authority, and also helping them
going into tax credit units. But that is not a hard number that
I can--
Mr. Posey. Thanks, Mr. Gentry?
Mr. Gentry. I can give you a specific number on a smaller
cohort of the broader program based in San Diego.
Mr. Posey. OK.
Mr. Gentry. The San Diego Housing Commission owns and
operates about 3,700 units of hard housing units. Only 189 of
those are public housing, the others are all affordable, mainly
based on our local models, some tax credits, some based on
Section 8 rents that are purely locally developed.
Five years ago, our turnover rate was 35 percent a year,
that means in a 3-year time period it would all turn over,
because as we came out of the great recession, because of the
overbuilding that occurred that you heard about a while ago,
whether in Las Vegas, or San Diego, or Florida, or where, there
was a place to move up and out to.
The turnover rate now has gone from 35 percent to 14
percent.
Mr. Posey. OK.
Mr. Gentry. Meaning it takes a 7-year time period. That has
less to do with our programs though than it has to with the
broader economic circumstances within San Diego. We have seen--
and this is going on in every high-cost area in the country,
and that probably--will be the subject of another hearing.
Mr. Posey. Right.
Mr. Gentry. But it--but the next tier to move up into has
gotten much more difficult. And I think, the way that would
translate to what we are talking about here is it makes it even
more difficult when we are punishing families from increasing
their own economic base for them to then access an ever-
increasingly expensive market.
Mr. Posey. OK. Thank you. Do you--do any of you know where
there are requirements for able-bodied people to seek
education, job training, or such requirements, or is that a
requirement anywhere?
Ms. Todman. So, again, the--there are a number of Moving to
Work agencies that have put into place some measure of time
limits, and also some work requirements, and there is still
lots of work being done in terms of the impact that that has
had at the local level.
We have been speaking to those agencies over the past
several weeks about what has the impact on the ground really
been, and their response to us is they take great lengths to
not harm the family with the term limits and work requirements.
What they do, is wrap case management around the household to
ensure that they can be successful, but they are really heavy
on the hardship exemptions.
Mr. Posey. Thank you. Mr. Russell, on page two of your
testimony, you reference that the current rent policy taxes
two-parent households by charging them more rent for two
incomes rather than encouraging a cohesive family unit by
allowing two working adults to share the rent burden. Could you
provide more context based on your experience of the connection
between the current policies and the quasi-punishment of the
maintenance of the two-parent households?
Mr. Russell. Yes. Well, as I mentioned that under the
current rent policy, I have no flexibility in how I treat the
second adult income in the--in the household. So, if a family--
if a single head of household wants to have their partner or
spouse move in and share in the economic burden of raising the
family and supporting their rent, I have to increase their rent
based on that income, I have no discretion to give them a
break, where they would be able to share rent in unsubsidized
housing.
Mr. Posey. And you think that this legislation will give
you the latitude you need to make a two-parent household more
practically applicable?
Mr. Russell. I do, and I think I may have noted in some of
my written testimony that under a couple of the options, there
probably could be a couple of tweaks to allow us to offer a
steep discount on that second wage earner's income and not
charge the full rent on that second income. But, yes, I believe
it does give us that option.
Mr. Posey. Thank you very much, thank you, Mr. Chairman.
Chairman Duffy. Gentleman's time has expired, the Chair now
recognizes the gentleman from Pennsylvania, Mr. Rothfus, for 5
minutes.
Mr. Rothfus. Thank you, Mr. Chairman. I would like to keep
going with Mr. Russell here. Talking about flexibility that you
may or may not have, do you have any flexibility that is
available in a non-Moving to Work situation?
Mr. Russell. Not much to speak of.
Mr. Rothfus. How does that lack of flexibility affect your
ability to help assist in a beneficiary's transition out of
public assistance?
Mr. Russell. Well, to be honest with you, it is
discouraging, because we are doing a lot in my agency to help
families provide services, complete their GED, get job
training, we are very focused on early childhood literacy, to
give our kids a bright opportunity.
And, again, whether it is two-parent households or families
who are trying to do better, and work harder, it is very
discouraging to see some of the decisions that they are making,
because of how our current rent policy penalizes them doing
better. And we--
Mr. Rothfus. But let me ask you a follow up to what Mr.
Posey was talking about, because we talked--touched on the two-
parent, two-income families, have you seen one or both parents
quit their jobs or scale down their hours?
Mr. Russell. Yes.
Mr. Rothfus. Wow. That is telling.
Ms. Todman, in your testimony, you discussed how Moving to
Work housing agencies are using their rent policy
flexibilities, can you describe how these agencies have used
these flexibilities?
Ms. Todman. Certainly, they have instituted--some of them
have instituted flat rents within income bands, similar to what
Mr. Gentry referred to where you are--as you are--you earned
income, it is not an automatic hit on the earned income, it
doesn't increase--it doesn't increase in the rent until you get
to the next income band, so a number of them have done that.
Others have actually eliminated deductions in their
calculation of rent, which is an adjusted rent, eliminated
deductions, and gone to just a simple 28 percent or a 27
percent of gross income across the board. So, there have been a
number of different models, but those two have been the most
prevalent.
Mr. Rothfus. Many of us see facilitating portability and
decreased dependency among the able-bodied as important goals
that should be part of our public assistance programs. Do you
view rent policy flexibility as an important component of the
toolkit that should be provided?
Ms. Todman. I think that rent reform is important for two
reasons, one is just the simplification of the process as--you
have heard Mr. Russell say, it is very, very complicated for
housing agencies to do this often and sometimes do it very
well.
But the other is tied to some of the disincentives that are
tied to adding a family member to the household, and also
getting a job or a better job. And so I think for two those two
reasons rent reform is something that we should pursue.
Mr. Rothfus. Thank you. Mr. Gentry, I think we--we talked a
little bit today about metrics of success, and some viewing
full occupancy is one measure, it is a measure because there
are people in need who we want to make sure are going to have a
place to live. But beyond that, there needs to be stage two and
in moving people up. What do you think a measure or a metric of
success can or should be?
Mr. Gentry. I think certainly for the work-able, helping
families to achieve economic independence, or at least greater
degrees of it is an absolute essential. And I think also for
the broader community, there is one group of people who are--do
not have a natural group of advocates here. And those are the
folks on our waiting list. In San Diego, we consistently have
over 60,000 families on the waiting list for 15,000-plus
vouchers with a turnover rate of 50 to 75 per month. You can do
the math.
There is a--there is a growing need without a growing--
Mr. Rothfus. They are--and there have been people on
waiting lists for years?
Mr. Gentry. The typical wait is anywhere from 7 to 10
years, sir. And San Diego also has a huge homeless issue, which
is there for a variety of reasons. So, I think that measures of
success are not always clear, but I think they certainly should
reflect values, and those values should be helping families
insofar as possible to become economically self-sufficient,
while providing a safety net for those like the elderly or
disabled who are not in that category, and providing options
too for our limited--from our limited resources, for those
families who need the help but are currently not getting it.
Mr. Rothfus. Thank you, and I yield back.
Chairman Duffy. The gentleman yields back. The Chair now
recognizes the Ranking Member, Mr. Cleaver for some purpose.
Mr. Cleaver. Thank you, Mr. Chairman, I ask unanimous
consent to enter a letter from the G7U housing organization led
by the National Low Income Housing Coalition into the record
for today's hearing.
Chairman Duffy. Without objection. And if I could ask the
Ranking Member just to ask the panel one last question before
we adjourn. And if I could just have everyone answer this, and
I want some clarity from the panel. In regard to elderly and
disabled, how will they be impacted by giving PHAs flexibility,
if at all? If you could just go in a line, Mr. Russell?
Mr. Russell. Well, we--FAHRO's goal is to hold them
harmless. And I think the bill discusses giving HUD some
discretion about setting a rent policy, that with the goal
being we are not charging any additional rent for the elderly
or disabled. And, hopefully, we can create a process that is a
little more dignified, and simplified for them. Right now we
have elderly people literally bringing in shoeboxes of medical
receipts, and that is not dignified. And so, the goal would be
to simplify it, but not at all increase their rent burden going
forward.
Chairman Duffy. OK. Mr. Fischer?
Mr. Fischer. Well, that is not what this bill does, it
allows HUD to impose unlimited rent increases on the elderly
and people with disability, disabilities--that is what the
language allows. They can set a percent of gross rent with no
cap, this is a HUD that has repeatedly proposed to raise rents
on the elderly and people with disabilities. They did it in
last year's budget. Just today, they released legislation that
would do that, would propose to do that again. So, I think they
would be harmed by the bill.
Chairman Duffy. But in--it is not mandatory, it is--
Mr. Fischer. It is not mandatory for HUD, but they said
they want to do it.
Chairman Duffy. And for the--for the PHAs it is not
mandatory either.
Mr. Fischer. No, it is mandatory for the PHAs, in this bill
it is mandatory for the PHAs.
Chairman Duffy. Ms. Todman?
Ms. Todman. As evidenced by those housing authorities that
have access to this level of flexibility, they have tended to
use rent reform to help to relieve administrative burdens from
our seniors and our disabled population.
On the flipside, where they have actually instituted work
requirements or time limits, they have exempted the elderly and
disabled from that through hardship exemptions.
Chairman Duffy. OK. Mr. Gentry?
Mr. Gentry. I would agree with Mr. Russell's comments
entirely, and that does reflect San Diego's practice and
policy.
Chairman Duffy. Very well. Listen, I want to thank our
witnesses for their testimony today. I appreciate your insight
to this committee as we look forward with this discussion
draft, to take your points of view and those of others and try
to get a proposal of this bipartisan, but also works.
Without objection, all members will have five legislative
days within which to submit additional written questions to the
Chair which will be forwarded into our witnesses, I ask the
witnesses--if we get some of those, respond in a timely manner.
Without objection, this hearing is now adjourned.
[Whereupon, at 3:30 p.m., the subcommittee was adjourned.]
A P P E N D I X
April 25, 2018
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