[Senate Hearing 115-]
[From the U.S. Government Publishing Office]



 
  TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2018

                              ----------                              


                        WEDNESDAY, JUNE 7, 2017

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:31 p.m. in Room SD-192, Dirksen 
Senate Office Building, Hon. Susan Collins (chairman) 
presiding.

    Present: Senators Collins, Boozman, Capito, Daines, Hoeven, 
Reed, Murray, Durbin, Coons, Schatz, and Leahy.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

STATEMENT OF HON. BEN CARSON, SECRETARY


             opening statement of senator susan m. collins


    Senator Collins. The subcommittee will come to order.
    Today I am pleased to welcome the Secretary of Housing and 
Urban Development, Dr. Ben Carson, who appears before this 
subcommittee for the first time. Dr. Carson brings a fresh 
perspective to the Department and I look forward to learning of 
his approach to addressing the housing needs of vulnerable 
individuals and families.
    I want to note that Dr. Carson has been visiting around the 
country with HUD employees and seeing the work that they do, 
and I really commend him for that. I know he will make it to 
Maine soon. But it is great that you are reaching out to the 
Department's employees and getting their input and ideas.
    I am also very pleased to be joined today by my friend and 
our Ranking Member, Senator Jack Reed, as we begin the 
subcommittee's work on the fiscal year 2018 appropriations 
bill.
    Mr. Secretary, it is unfortunate that due to the delay in 
your confirmation the Administration determined the size and 
scope of HUD's budget request largely before you arrived on the 
scene in the Secretary's office, which limited your input into 
the decisionmaking. The Administration has not given you much 
to work with and I suspect it will be a daunting task to defend 
these significant reductions that are being proposed.
    This year will be extremely challenging. Not only are the 
budget caps under the current law lower than last year, but 
also the President's request is proposing to set the caps even 
lower. For the Department of Housing and Urban Development, 
when offsetting receipts from FHA (Federal Housing 
Administration) and Ginnie Mae are excluded, the President's 
request is $40.7 billion. That is a reduction of $7.3 billion 
and 15 percent below the fiscal year 2017 enacted level.
    This level does not take into account additional spending 
that is necessary to cover inflationary increases for rental 
assistance. It also does not take into account the fact that 
rental assistance continues to consume nearly 85 percent of the 
Department's budget. The budget caps for 2018 require a budget 
that is the product of thoughtful consideration. Unfortunately, 
the request before us today does not reflect that kind of 
consideration of the adverse consequences for vulnerable 
families, low-income seniors, and distressed communities. I 
recognize that we have budget constraints, but hope we can do 
better than this.
    Of the $7.3 billion in cut, $3 billion results from the 
elimination of the Community Development Block Grant program. 
Since 1974, the CDBG program has provided grants to state and 
local governments to strengthen communities and expand economic 
opportunities, particularly for low and moderate income 
individuals. The flexibility of the CDBG program is the key 
hallmark and the funds are used for a range of activities that 
are determined at the state and local level. They range from 
municipal infrastructure projects which account for 
approximately 33 percent of all CDBG funds, housing 
rehabilitation and construction which comprise 25 percent of 
the funds, and job creation and retention projects. The United 
States Conference of Mayors describes the CDBF program as one 
of the most effective Federal programs for growing local 
economies and for providing a lifeline to families and 
communities with proven results.
    Additionally, every dollar from this program leverages an 
additional $3.84 in non CDBG funding. Put another way, if we 
were to enact the proposed elimination of CDBG, it would 
deprive states and local communities of $11.5 billion worth of 
critical investments in infrastructure, housing, job creation, 
and public services.
    The budget request also proposes to eliminate the HOME 
program. This program provides grants to acquire, rehabilitate 
and construct affordable housing and provide rental assistance 
for low and very low-income households. Research continues to 
show that access to affordable housing is a cost-effective 
strategy for reducing childhood poverty, providing housing 
stability, which is critical for educational and economic 
achievement, improves health outcomes for all ages. In addition 
to the benefits for families, the production of affordable 
housing also brings economic benefits. According to a 2015 
report by the National Association of Homebuilders, building 
100 rental apartments in a typical local area generates in the 
first year $11.7 million in addition a local income, $2.2 
million in local government revenue, and 161 local jobs.
    The budget request also proposes steep cuts to HUD's rental 
assistance programs. The proposed funding for Section 8 
vouchers is nearly $1 billion below current levels. The Public 
Housing Operating and Capital Funds are cut by a combined $1.8 
billion, or nearly 30 percent, and initial estimates indicate 
that the Project-based Section 8 housing program and the 
Elderly and Disabled programs are underfunded also by nearly $1 
billion.
    While we certainly need to pursue program reforms and find 
ways to reduce the share of HUD's budget that is consumed by 
rental assistance, merely shifting the cost onto low-income 
elderly and disabled households that comprise 57 percent of the 
participants in these programs simply cannot be the answer.
    The funding levels proposed will place vulnerable families 
at risk of losing their assistance and of becoming homeless. 
Wholesale divestment of funding capital needs will lead to the 
deterioration of the physical quality of assisted housing which 
benefits neither residents nor taxpayers.
    Finally, the funding level for public housing would 
undermine the success of the Rental Assistance Demonstration, 
known as the RAD program. Created in 2012, this program has 
already leveraged $4 billion in new private and public funds at 
a rate of $19 for every $1 of public housing funds while 
stimulating an estimated 75,000 jobs through construction 
activity. And the RAD program has achieved these goals without 
increasing HUD's budget. According to the Department's own 
figures, it would have taken public housing authorities 
participating in RAD 46 years to accumulate enough public 
housing capital funds to complete a similar level of 
construction.
    While I am deeply troubled by some of the budget proposals, 
I also want to acknowledge that there are so many areas where 
HUD and I share common interests. These include reducing the 
risk of lead paint exposure, which I know has been a priority 
of the Secretary, right-sizing the regulatory burdens on public 
housing agencies, including the use of RAD and Moving-to-Work 
programs, and improving the ability of HUD's programs to 
promote self-sufficiency and address generational poverty. We 
also share a common interest in strengthening public-private 
partnerships, as well as on continuing to build on past 
successes to reduce the number of homeless Americans.
    Mr. Secretary, I know this is a tough budget. I look 
forward to talking with you about it and working closely with 
you on these issues.
     [The statement follows:]
             Prepared Statement of Senator Susan M. Collins
    The subcommittee will come to order. Today I am pleased to welcome 
the Secretary of Housing and Urban Development (HUD), Dr. Ben Carson, 
who appears before the Subcommittee for the first time. Dr. Carson 
brings a fresh perspective to the Department, and I look forward to 
learning of his approach to addressing the housing needs of vulnerable 
individuals and families.
    I am also pleased to be joined today by my friend, and our Ranking 
Member, Senator Jack Reed, as we begin the subcommittee's work on the 
fiscal year 2018 appropriations bill.
    Mr. Secretary, it is unfortunate that due to the delay in your 
confirmation, the Administration determined the size of HUD's budget 
request before you arrived, which gave you limited input in the 
decisionmaking of the budget request. The Administration has not given 
you much to work with, and I suspect it has been a daunting task 
defending the significant reductions being proposed.
    This year will be particularly challenging. Not only are the budget 
caps under current law lower than last year, the President's request is 
proposing to go even lower. For the Department of Housing and Urban 
Development, when offsetting receipts from the F.H.A. and Ginnie Mae 
are excluded, the President's request is $40.7 billion, a reduction of 
$7.3 billion and 15 percent below the fiscal year 2017 enacted level.
    This also does not take into account additional spending necessary, 
such as inflationary increases for rental assistance. Funding HUD's 
programs in 2018 remains challenging, especially in an environment 
where rental assistance continues to consume nearly 85 percent of the 
Department's budget. The budget caps for 2018 will require a budget 
that is the product of thoughtful consideration. Unfortunately, the 
request before us today does not reflect that consideration.
    Of the proposed $7.3 billion cuts, $3 billion results from the 
elimination of the Community Development Block Grant program. Since 
1974, the C.D.B.G. program has provided grants to state and local 
governments to strengthen communities and expand economic 
opportunities, principally for low- and moderate income individuals. 
The flexible use of C.D.B.G. funds is a key hallmark of the program, 
and the funds are used for a range of activities from municipal 
infrastructure projects, which account for approximately 33 percent of 
all C.D.B.G. funds; housing rehabilitation and construction, which are 
approximately 25 percent of the funds; to job creation and retention 
projects. The United States Conference of Mayors describes C.D.B.G. as, 
``one of the most effective Federal programs for growing local 
economies and for providing a lifeline to families and communities with 
proven results.''
    Additionally, every dollar of C.D.B.G. leverages an additional 
$3.84 in non-C.D.B.G. funding. Put another way, if we were to enact the 
proposed elimination of C.D.B.G. it would deprive states and local 
communities of $11.5 billion worth of critical investments in 
infrastructure, housing, job creation, and public services.
    The budget request also proposes to eliminate the HOME program. 
This program provides grants to acquire, rehabilitate and construct 
affordable housing and provide rental assistance for low- and very low-
income households. Research continues to show that access to affordable 
housing is a cost-effective strategy for reducing childhood poverty, 
provides housing stability, which is critical for educational and 
economic achievement, and improves health outcomes across all ages. In 
addition to these benefits for families, the production of affordable 
housing also provides economic benefits in communities across the 
country. According to a 2015 report by the National Association of 
Homebuilders, building 100 rental apartments in a typical local area 
generates, in the first year, $11.7 million in additional local income, 
$2.2 million in local government revenue, and 161 local jobs.
    The budget request also proposes steep cuts to HUD's rental 
assistance programs. The proposed funding for Section 8 vouchers is 
nearly $1 billion below current levels, the Public Housing Operating 
and Capital Funds are cut by a combined $1.8 billion, or a nearly 30 
percent cut, and initial estimates indicate that the Project-based 
Section 8 and Housing the Elderly and Disabled programs are underfunded 
by nearly $1 billion.
    While we need to pursue program reforms and find ways to reduce the 
share of HUD's budget that is consumed by rental assistance, merely 
shifting the costs onto the low-income elderly and disabled households 
that comprise 57 percent of the participants in these programs cannot 
be the answer.
    The funding levels proposed in this budget will place vulnerable 
families at risk of losing their assistance and of becoming homeless. 
Wholesale divestment of funding capital needs will lead to the 
deteriorating physical quality of assisted housing. Neither residents 
nor taxpayers are well served when poor conditions are allowed to 
continue.
    Finally, these funding levels for public housing undermine the 
success of the Rental Assistance Demonstration, known as the RAD 
program. Created in 2012, this program has already leveraged $4 billion 
in new private and public funds at a rate of $19 for every $1 of public 
housing funds, while stimulating an estimated 75,000 jobs through 
construction activity. And the RAD program has achieved these goals 
without increasing HUD's budget. According to the Department, it would 
have taken P.H.A.s participating in RAD 46 years to accumulate enough 
public housing Capital Funds to complete a similar level of 
construction.
    While I am deeply troubled by some of the proposals in the request, 
I also believe there are still many areas where HUD and the 
Subcommittee share common interests. These include reducing the risk of 
lead paint exposure, right-sizing the regulatory burdens on Public 
Housing Agencies, including the use of RAD and Moving-to-Work programs, 
improving the ability of HUD's programs to promote self-sufficiency and 
address generational poverty, and strengthening public-private 
partnerships, as well as continuing to build on past successes to 
reduce homelessness.
    Mr. Secretary, I look forward to working closely with you on these 
issues.


    Senator Collins. I am now pleased to turn to Senator Reed 
for his opening statement.

                 OPENING STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you, Chairman Collins.
    As challenging as I know this year will be, I am thankful 
to have a partner to work through the funding decisions for 
fiscal year 2018. This is the fourth budget that we will be 
developing together as Chair and Ranking Member of the THUD 
Subcommittee. Our work has been effective because we share a 
vested interest in preventing homelessness, preserving 
affordable housing, and promoting economic development that 
benefits communities in Rhode Island, Maine, and across the 
nation. So thank you very much. Your leadership and friendship 
have been invaluable during this process.
    Also, I want to welcome Secretary Carson to his first 
hearing before the subcommittee.
    Mr. Secretary, we had an opportunity to meet during your 
confirmation process where I learned more about your interests 
in the intersection of healthcare and housing, and I agree that 
there are key synergies there. With access to stable, 
affordable housing that enables residents to better connect to 
services, we see improved health outcomes and reduced costs for 
mandatory healthcare programs.
    I also appreciate your commitment to addressing lead-based 
paint hazards in our nation's housing, as the Chairman has 
said. This problem is crippling the development of far too many 
children. Senator Collins and I have both worked on this issue 
for decades, and we look forward to working with you.
    We included a number of prevention initiatives in our 
fiscal year 2017 bill, and your diligence in seeing that those 
reforms are implemented will be essential moving forward.
    Today, we are here to discuss the Administration's fiscal 
year 2018 budget request for HUD. In his proposal, the 
President calls for a 15 percent cut to HUD's budget, $7.3 
billion below fiscal year 2017. In order to achieve these 
draconian funding levels, the budget proposes to totally 
eliminate HOME, CDBG, HUD-VASH, the Housing Trust Fund, Section 
4, and the Self-Help Homeownership Opportunity Program, all 
highly popular, successful programs that drive affordable 
housing production and economic development.
    These initiatives help families reduce their rent burdens 
and invest in their futures and the futures of their children. 
These drastic cuts will be devastating for communities across 
the nation. Within this very same budget, the Administration 
also proposes to cut non-defense discretionary programs by 
$56.5 billion and includes $1.6 billion for border wall 
construction.
    Despite the President's commitment to the American people 
that funding for the border wall would not come at the expense 
of critical Federal programs that make the American dream 
possible, his budget proposal does just that. And, by the way, 
the Administration's vision for the Federal budget does not end 
with the more than $56 billion in cuts it proposed for fiscal 
year 2018. Indeed, over the ten year budget horizon, the 
President is calling for a total of $1.5 trillion in cuts to 
non-defense discretionary programs. Moreover, across this 
budget, there is a disconnect between rhetoric and reality. 
While this budget claims to prioritize housing for low-income 
Americans, it would in fact cause them great harm.
    The HUD budget proposal fails to sustain housing assistance 
for low- and extremely low-income Americans by eliminating 
renewals through attrition. This budget also fails to provide 
resources for routine maintenance in our public housing stock 
by cutting the Public Housing Capital Fund to a record low. 
This would put tenants at risk of living in poor quality 
conditions--making them more vulnerable to unsafe 
circumstances, the same health hazards that you have so 
frequently expressed the desire to eradicate.
    Additionally, this budget proposes a number of rent reforms 
that would impose significant rent burdens on low-income 
assisted households. Over half of the 5 million HUD assisted 
households are elderly or disabled and live on fixed incomes. 
As a result of this Administration's budget, nearly 2.5 million 
elderly or disabled household's security and ability to live in 
affordable housing are being threatened. In sum, this budget is 
indefensible.
    I think it is more important, therefore, to engage where we 
can find common ground and where you have made commitments 
during your confirmation process that we expect you to uphold.
    Mr. Secretary, you have stated publicly that you are 
committed to improving the economic mobility and conditions of 
residents, protecting residents from health hazards including 
lead-based paint, and working on, not eliminating, programs 
that leverage critical private investment. I hope you will be 
true to this endeavor.
    Thank you again for coming before the subcommittee. I look 
forward to your testimony today.
    Thank you, Chairman Collins.
    Senator Collins. Thank you very much, Senator Reed.
    It is the custom of this subcommittee whenever we are 
graced by the presence of the Chairman or Vice Chairman of the 
full committee to recognize them for comments. And with that in 
mind, I am pleased to call on the Vice Chairman of the 
Committee, Senator Leahy, my neighbor in New England.

             OPENING STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. I was going to say I thank my friend, the 
Chair of this committee, Senator Collins. And I thank Senator 
Reed. We actually are all pretty much neighbors in New England.
    I am very concerned, as I have said before, about the 
President's budget for the Department of Housing and Urban 
Development. This budget, no matter how you look at it, is 
going to leave a lot of low-income elderly and disabled 
Americans out in the cold. And when you talk about either 
Vermont or Maine, out in the cold is more than an expression 
when it can be ten below zero or more outside in winter.
    It would deny shelter to victims of domestic and sexual 
violence. It would bring to a screeching halt programs that 
spur economic development, create jobs, and help ensure that 
safe, sustainable, and affordable housing is available in our 
communities.
    Frankly, Mr. Secretary, this budget is a travesty. I have 
been here with Republican and Democratic Administrations. I 
have never seen anything like this. It slices $7.3 billion from 
the work of your Department. It decimates Section 8 rental 
assistance grants that help keep very low-income families, as 
well as elderly and disabled Americans in decent housing. It 
eliminates the Community involvement in block grants, CDBG, and 
the HOME, the HOME programs. These help drive economic 
development in more than 1,200 American cities, including my 
own State of Vermont.
    Now eliminating these programs does not just eliminate a 
Federal investment; these projects have always leveraged other 
public and private sources to make them a reality. For every 
dollar we invest in CDBG projects, $3.65 is leveraged in other 
public and private resources. And while I recognize this does 
not fall under the jurisdiction of your department, the 
Administration's attack on housing programs is only amplified 
with the elimination of NeighborWorks. In 1 year alone, 
NeighborWorks provided affordable housing for more than 360,000 
families. It created and maintained more than 53,000 jobs. It 
leveraged its appropriation at a ratio of 91 to 1. That is not 
a typo--91 to 1.
    But under this budget, all these dollars just disappear. 
And you have to ask yourself where do our fellow Americans go 
who relied on this? The President's budget fails to include 
tenant-based rental assistance for victims of domestic 
violence, dating violence, sexual assault, or stalking.
    In 2013 my Republic colleague, Senator Crapo and I, worked 
together. We knew the Violence Against Women Act was outdated. 
We wanted to strengthen it. We wanted to expand it. We wanted 
to reauthorize it. We knew that too often victims of domestic 
violence, dating violence, sexual assault, or stalking remain 
in dangerous living situations simply because they have nowhere 
to go. I saw that enough when I was a prosecutor. That in 
itself is devastating, but all too frequently we have families 
who have to make a tragic decision: do they become homeless 
with their children or do they stay in a house where either 
they or their children may be subject to physical and sexual 
abuse.
    Your Department should be working hand in hand with the 
Justice Department, which administers the successful 
Transitional Housing Assistance Grant program. You should be 
working to find effective ways to support these survivors, and 
ensure they have access to safe and affordable housing. I mean, 
I do not know what you are going to tell these victims since 
you fail to support these programs in your request. Just tell 
them, ``Sorry, get beaten to death. Nothing we can do about 
it.''
    You know, poverty is not just a ``state of mind''. Housing 
is not a political issue--it should not be in the wealthiest 
nation on earth. It is actually a moral one. Hunger and housing 
moral issues in a nation as wealthy as ours.
    In Vermont, we know that housing people first is the key to 
helping them step out of poverty. And with the help of Federal 
investments like Homeless Assistance Grants, in states like 
Vermont have reduced chronic homelessness by 45 percent. But 
this is only possible with help from your department. 
Communities across the country know that instead your budget 
will close emergency shelters. You will put people back on the 
streets. I do not know how this helps your department meets its 
mission.
    Now is the time to invest in our nation's affordable 
housing infrastructure, not to decimate it. This budget is 
going to eliminate the investments and hands-on efforts that 
help families succeed. This is not a foundation for greatness. 
Frankly, this budget is a travesty.
    Senator Collins. Thank you.
    I am now very pleased to welcome Secretary Carson for his 
first appearance before our subcommittee. Please proceed with 
your statement, Mr. Secretary.

                 SUMMARY STATEMENT HON. DR. BEN CARSON

    Secretary Carson. Thank you very much. Thank you for 
inviting me to discuss the Department of Housing and Urban 
Development proposed budget for fiscal year 2018.
    The first Secretary of HUD, Robert C. Weaver, said, ``We 
must look for human solutions, not just policies and 
programs.'' I want our efforts to assist those in need, but 
also to support a path to self-sufficiency. At the same time, 
we keenly focus on efficiency throughout the agency with the 
mindset of doing more with less.
    The budget reflects the President's commitment to support 
HUD's critical functions, such as to provide rental assistance 
to low-income and vulnerable households, to promote decent, 
safe, and affordable housing for Americans, and to have access 
to home ownership, and to help work-eligible families achieve 
independence, freedom from regulations and bureaucracy, and the 
ability to govern themselves.
    The President's 2018 Budget also continues to provide 
rental assistance for 4.6 million households while recognizing 
a greater role for state and local governments and the private 
sector to address community and economic development.
    We also support borrowers through the FHA on their path to 
home ownership. This is very important for first time home 
buyers and those on limited incomes. But again, it is part of 
the path forward to wealth creation through investment, equity, 
and responsibility.
    For 2018, the budget proposes a set of policies in its core 
rental assistance programs to reduce cost. At the same time, we 
continue to assist current residents, encourage work, and 
promoting self-sufficiency. The budget also seeks to provide 
administrative flexibilities and to streamline the complex and 
administratively burdensome calculations of income and rent.
    I am particular interested in creating healthy homes. For 
example, I can tell you that any amount of lead in our children 
is too much, and I say that as a doctor. The budget promotes 
healthy and lead safe homes by providing $130 million for the 
mitigation of lead based paint and other hazards in low-income 
homes, especially in those where children reside. We also fund 
enforcement, education, and research activities to further 
support this goal, all of which contributes to lower healthcare 
costs and increased productivity.
    Turning to community development and homelessness, this is 
where our humanity must be evidence and our commitment 
steadfast. Our programs must reach out--so must our hearts. We 
must be compassionate, yet wise. HUD's Homeless Assistance 
Grants serve vulnerable individuals and families who are 
homeless or at risk of homelessness through a wide variety of 
service and housing interventions. These include: homelessness 
prevention; emergency shelter; rapid rehousing; transitional 
housing; and permanent supportive hosing. These programs are 
the vehicle used by HUD to promote evidence-based approaches 
leading to more effective uses of resources.
    The budget would provide $2.25 billion for Homeless 
Assistance Grants and supports the renewal of over 240,000 
beds. HUD will continue to work with our state, local, and non-
profit partners who are close to this issue to help continue 
find efficiencies and work to end homelessness. We are making 
progress in this area.
    The American housing market must remain stable, secure, and 
safe. FHA mortgage insurance programs, along with the mortgage-
backed security guarantee of Ginnie Mr. Elliott, will continue 
as a path for responsible homebuyers to have access to credit 
so they can build wealth through home ownership. The budget 
includes $400 billion in loan guarantee authority for FHA 
Mutual Mortgage Insurance programs and $500 billion in 
authority for Ginnie Mr. Elliott: secondary market guarantees. 
These programs will generate approximately $9.5 billion in 
receipts in 2018.
    In summary, President's Budget is fiscally responsible and 
meets the requirements of this Department. It reflects 
commitment to fiscal responsibility while supporting critical 
functions. It also administers programs to help the low-income 
and vulnerable households. It helps work-eligible families 
achieve self-sufficiency and supports a path for borrowers to 
have upward mobility.
    Thank you for your time here today. I look forward to 
answering your questions and more importantly, working with you 
to build programs to support these goals.
    [The statement follows:]
               Prepared Statement of Hon. Dr. Ben Carson
    Chairman Collins, Ranking Member Reed, members of the 
Subcommittee--thank you forinviting me to discuss the Department of 
Housing and Urban Development's (HUD's) Proposed Budget for fiscal year 
2018.
    The first Secretary of HUD, Robert Weaver, said that we must look 
for ``human solutions,'' not just policies and programs. I want our 
efforts to assist those in need and to support a path to self- 
sufficiency. At the same time, we are keenly focused on efficiency 
throughout the agency with the mindset of doing more with less.
    Of course, we continue our mission. The Budget reflects the 
President's commitment to support HUD's critical functions, such as 
providing rental assistance to low-income and vulnerable households; 
promoting decent, safe, and affordable housing for Americans; 
supporting access to homeownership; and helping work-able families 
achieve independence, freedom from regulations and bureaucracy, and the 
ability to govern themselves.
    The President's 2018 Budget requests $40.7 billion in gross 
discretionary funding for HUD, a $7.4 billion, or 15 percent decrease 
from the 2017 enacted level. The Budget request reflects the 
Administration's commitment to fiscal responsibility, careful and 
prudent spending, targeted funding to continue HUD's core support of 
our most vulnerable households, and cutting back on funding for 
programs that have not consistently demonstrated results or are 
ancillary to HUD's core mission.
    This Budget is aligned around three principles: First, serve the 
most vulnerable while expecting work from those able to work. Second, 
find the proper role for the Federal government in housing and 
community development. Finally, operate efficiently and effectively 
without displacing families.
    The President's 2018 Budget continues to provide rental assistance 
for over 4.5 million households, while recognizing a greater role for 
State and local governments and the private sector to address community 
and economic development needs.
    Through the Federal Housing Administration (FHA), we support 
borrowers on their path to homeownership. This support is very 
important for first-time home buyers and those on limited incomes. This 
is part of the path forward to wealth creation through investment, 
equity, and developing and maintaining sound household financial 
practices.
                             rental reform
    An examination of the Budget demonstrates our important efforts at 
rental reform. Approximately 80 percent of HUD's budget authority is 
dedicated to rental assistance. We need to get rental assistance right. 
For years, we have heard our renters question aspects of the program. 
The time has come for all of us to take a hard look at how rental 
assistance is provided. We must ask ourselves: Does it help or hurt? In 
what situations? Is it fair? Is it well targeted to the most 
vulnerable? How much should the Federal government contribute versus 
State and local governments? Could we make the subsidy programs less 
complex? Can we make rent policies that encourage rather than 
discourage work? With this Budget, we are proposing greater tenant 
contributions and greater flexibility while we begin a discussion with 
Congress on these larger policy questions.
    The Budget provides $35.2 billion for HUD's rental assistance 
programs and proposes reforms that reduce costs while continuing to 
assist low-income households. These reforms cover Tenant-Based Rental 
Assistance, Public Housing Operating Fund, Public Housing Capital Fund, 
Project Based Rental Assistance, Housing for the Elderly (Sec. 202), 
and Housing for Persons with Disabilities (Sec. 811).
    As we reduce costs, we continue to assist current residents, 
encourage work, and promote self- sufficiency. The Budget also seeks to 
provide administrative flexibilities, and to streamline the complex and 
administratively burdensome rent and income calculations. The Budget 
also asks tenants to contribute more for their housing. We look forward 
to working with the Congress on proposals to determine what is the fair 
and compassionate amount tenants should pay across its rental 
assistance programs.
    Over the past several decades, program funds have not been 
sufficient to provide long-term sustainability. The Administration's 
2018 Budget provides funding flexibilities and reduces the burden on 
PHAs administering the program. It encourages PHAs to seek private, 
state, and local partnerships to leverage opportunities for additional 
investment and to transition these properties to more sustainable 
funding platforms.
    I am again reminded of a comment by Secretary Robert Weaver. He 
said we must find local solutions to local problems. Public/Private 
Partnerships can be extremely effective in addressing the complexity 
and variations of local needs. That is our measurement of policies: do 
they work?
    So often there is too much bureaucracy, too many unhelpful hands, 
and too much unnecessary regulation, which drains our fiscal resources. 
The 2018 Budget includes general provisions that would provide 
administrative relief to PHAs, including waiver authority that would 
allow HUD and PHAs to reduce or eliminate annual requirements that are 
administratively burdensome. It also proposes flexibility in how PHAs 
can utilize their Capital and Operating Funds so that PHAs could use 
their funds, regardless of funding account, for any eligible public 
housing purpose, and target those funds to their highest priorities.
    HUD continues to support the Rental Assistance Demonstration (RAD) 
Program, which permits PHAs to transition public housing to a more 
sustainable funding and rational regulatory environment that permits 
debt and promotes other non-Federal leveraging. The RAD program relies 
on significant leverage of every dollar of HUD funding. It has 
leveraged more than $4 billion in capital investment in order to make 
critical repairs and improvements to this segment of the nation's 
affordable housing stock.
  protecting vulnerable populations, and promoting healthy, lead-safe 
                                 homes
    I am particularly interested in creating healthy homes. For 
example, as a doctor, I can tell you that lead exposure for children 
has serious effects and I know how important it is to prevent exposure 
and to act quickly once it has been identified. HUD issued a new rule 
to align its standards to the CDC's recommendation of response when a 
child has a blood-lead level of five micrograms per deciliter or more, 
in January 2017. This standard is beyond what most State and local 
health departments have implemented, and I am proud that HUD has now 
set a consistent Federal standard for requiring an environmental 
investigation for elevated blood lead levels in children living in its 
public and assisted housing.
    The Budget promotes healthy and lead-safe homes by providing $130 
million for the mitigation of lead-based paint and other hazards in 
low-income homes, especially those in which children reside. We also 
fund enforcement, education, and research activities to further support 
this goal, all of which contribute to lower healthcare costs and 
increased productivity.
    I also want to thank you for your continued support for this 
program to help us mitigate the risk and support healthy, lead-free 
housing for our most vulnerable. The additional grant funds provided in 
fiscal year 2017 for the Office of Lead Hazard Control and Healthy 
Homes will be put toward the elimination of lead-based paint hazards 
and protect the health in unassisted, low- income homes.
    Also, we look forward to implementing and evaluating the results of 
the $25 million provided for competitive grants to address lead-based 
hazards in public housing.
    I now turn to the Budget's funding for homeless citizens. This is 
where our humanity must be evident and our commitment steadfast. Our 
programs must reach out; so must our hearts. We must be compassionate, 
yet wise. HUD's homeless assistance grants serve vulnerable individuals 
and families who are homeless or at-risk of homelessness through a wide 
variety of service and housing interventions. These include 
homelessness prevention, emergency shelter, rapid re-housing, 
transitional housing, and permanent supportive housing.
    These programs are the vehicle used by HUD to promote evidence-
based approaches, leading to a more effective use of resources. The 
Budget would provide $2.25 billion for Homeless Assistance Grants, and 
supports the renewal of over 240,000 beds. HUD will continue to work 
closely with our State, local, and non-profit partners who are close to 
this issue to help continue to find efficiencies, and work to address 
homelessness. I am particularly anxious that we continue to make 
progress in eliminating chronic homelessness.
    Last year's changes to the formula for Housing Opportunities for 
Persons with AIDS (HOPWA) was a great step towards efficiency, shifting 
funding to areas with higher numbers of HIV/AIDS cases, rather than 
historical incidents. This is the kind of targeted efficiency that will 
help us do the most with limited Federal resources. We provide a 
phased-in approach to the new formula to provide communities time to 
adjust. The additional funding in 2017 also will help provide 
communities more time to adjust to the new formula. The 2018 Budget 
provides $330 million for HOPWA.
                             homeownership
    Stability in the American housing market is important. Federal 
Housing Administration mortgage insurance programs, along with the 
mortgage-backed security guarantee of Ginnie Mae, will continue as a 
path for responsible homebuyers to have access to credit so they can 
build wealth through homeownership. The Budget includes $400 billion in 
loan guarantee authority for the FHA Mutual Mortgage Insurance 
programs, and $500 billion in authority for Ginnie Mae secondary market 
guarantees. These programs will generate approximately $9.5 billion in 
receipts in 2018.
    The Mutual Mortgage Insurance program plays a critical role in 
supporting homeownership--serving over 3.3 million families over the 
past three fiscal years. There is over $1.1 trillion in outstanding 
loan guarantees, which are subject to economic risk and uncertainty. I 
take the responsibility for financial stewardship seriously. This is 
one of the reasons the Administration decided to halt the proposed 
reduction in insurance premiums earlier this year in order to assess 
the current conditions and risk management needs.
    I look forward to bringing on an FHA Commissioner to get their 
perspective on the state of the Fund. Additional actions may be 
warranted so that we can put households on a path to success and 
provide upward mobility for borrowers.
                          program eliminations
    The Administration's Budget reflects tough choices--eliminating or 
reducing funding for certain programs, and applying funds to other 
priorities. However, HUD's overarching mission remains the same: that 
all Americans have access to decent and safe housing. We will use 
lessons learned from eliminated programs and look to work with State 
and local governments and other partners to further economic 
development goals and support households on their path to 
sustainability.
    The Budget does not include new funding for the Community 
Development Block Grant (CDBG) or HOME programs in 2018. The CDBG 
program is not well-targeted to the poorest populations and has not 
demonstrated a measurable impact on communities. While the HOME program 
has played a part in affordable housing production, the Budget 
recognizes a greater role for State and local governments. The 
Department is committed to making the most of existing funding, 
consistent with the goals of these two programs.
    The Budget also does not include funding for the Housing Trust 
Fund, Choice Neighborhoods, the Self-Help Homeownership Opportunity 
Program, or Capacity Building (also known as Section 4). The Department 
looks forward to working with our State, local, and private partners to 
support them in playing a greater role in local community and economic 
development.
                   efficient and effective operations
    The Department has had public management challenges over the years 
that make it difficult to make the most of our resources and deliver on 
our mission in a transparent manner. The Budget recognizes that strong 
operations play a critical role in effective program delivery, with 
some initial steps to generate efficiencies in operations as we work 
towards the longer-term plan under the Administration's Executive 
Orders designed to streamline regulations and restructure agencies.
    There are several current managerial and operational issues that 
our Inspector General and the Government Accountability Office have 
identified, as well as opportunities for efficiencies found in our own 
internal reviews. We are aware that these important issues need to be 
addressed and we are undertaking steps to lay out a path to address 
them. Many of the findings cannot be corrected by simply putting them 
into operational, financial and technological categories, but instead 
each requires an integrated solution to ensure that we are implementing 
the fix that is most efficient and effective, and avoids recurrence of 
the same problem.
    I am building a leadership team with financial, operational and 
technological expertise that will work collaboratively to solve tough 
problems. I believe this integrated approach will put the Agency on a 
strong managerial and operational track. The 2018 request will support 
the agency's modernization and restructuring to align our core mission 
and policy priorities.
    Modernizing the Department's IT is critical to finding efficiencies 
that will allow us to more effectively deliver on our mission and we 
need to take steps towards replacing legacy systems with secure and 
reliable functionality. Achieving these efficiencies is about more than 
just the IT platform. We also need to transform service delivery and 
retool the HUD workforce to support these modernization efforts. To 
that end, the Budget includes the Working Capital Fund fee-for- service 
model that was fully enacted this year. The Budget also requests 
administrative flexibilities, so that we can target funding to the 
right blend of IT systems, human capital, and business processes to 
achieve our goals.
                                summary
    In summary, the President's Budget is fiscally responsible and 
reflects a commitment to supporting critical functions. It also 
administers programs to help low-income and vulnerable households. 
Further, this Budget incentivizes work-able families to achieve self-
sufficiency and supports a path for borrowers to upward mobility. I 
look forward to working with this Committee to build programs to 
support these goals.

                   COMMUNITY DEVOLOPMENT BLOCK GRANT

    Senator Collins. Thank you very much, Mr. Secretary.
    Recognizing HUD's essential role as a catalyst for 
community development, you have expressed an interest in 
actually changing the name of the department from the Housing 
and Urban Development to the Department of Housing and 
Community Development. And I personally like that change 
because I think it is more inclusive and better reflects the 
mission of HUD, which is to create strong, sustainable, 
inclusive communities and quality affordable homes for all.
    However, as I mentioned in my opening comments, the budget 
also proposes eliminating what is the most successful and 
important tool that the Department has to develop communities, 
and that is the Community Development Block Grant. I will tell 
you that I can talk to Democrats, Republicans, Independent 
mayors and councilmembers throughout the State of Maine, and to 
a person they really appreciate the flexibility of the 
Community Development Block Grant program. It is one of the few 
Federal programs that allows for the Federal funding to be 
tailored to whatever the local needs are and it helps to create 
jobs.
    What kind of message does it send when the President's 
Budget proposes eliminating all of the funding to carry out the 
community development mission of HUD?
    Secretary Carson. Well, thank you, Madam Chairperson for 
your continued interest in the welfare of the American people, 
particularly in the housing area. Very much appreciation.
    CDBG program, which was established in 1974, was 
established with a very lofty mission of providing states and 
localities with the flexibility to decide on their own what are 
the best ways to use Federal funding to deal with their 
community problems. HUD's primary mission is to provide safe, 
affordable housing, with a special emphasis on those who are 
most vulnerable in our society. Yet the CDBG program provides 
only 25 percent of its dollars for that purpose.
    And it is not that it has not done very wonderful things, 
but there has been mission creep to the point where we have 
those dollars being used for spray and neuter clinics and 
flowers along highways. Not that those are not wonderful 
things, but in an atmosphere of severe fiscal constraint, we 
have to be able to concentrate on what our primary goals are.
    Having said that, I will say that there is over $8 billion 
in the CDBG pipeline, including $3 billion for the fiscal year 
2017 allocations. So the programs obviously are going to be 
continued to utilize those, but we are going to utilize them in 
the most efficient and effective way and try to target the 
primary goals.
    And, you know, I do want to mention that there are a lot of 
programs that have been established over the years by people 
with wonderful hearts and wonderful intentions. And everything 
that we do builds on what they have done in the past, but we do 
find ourselves in a situation where we have to begin to think 
about those who are coming after us. And that means we have to 
establish fiscal responsibility even though it would be much 
easier to just continue along the same pathway.
    Senator Collins. Well, Mr. Secretary, I would point out 
that HUD has a dual mission and you are certainly right that 
the housing mission is a vital part, but the mission statement 
also, in addition to referring to quality affordable homes for 
all, it also refers to creating strong, sustainable, inclusive 
communities. So I would argue that the Community Development 
Block Grant program is an essential part of fulfilling that 
mission.
    My time has expired and since we have so many members here 
today, I do want everyone to know that we will do a second 
round, so if you could try to abide by the time limits on the 
first round, I would appreciate it.
    Senator Reed.
    Senator Reed. Thank you, Madam Chairman. Again, thank you, 
Mr. Secretary, for your testimony.
    I too want to associate myself with the remarks about the 
CDBG program. We have all seen how effective CDBG is. The 
program is effective because it not only empowers local 
communities, but it also involves, in many cases, private 
investment. CDBG's funds are often used as a way to accelerate 
private projects and are not just used for of public efforts.

                                  HOME

    There is another program like that too--the HOME program. 
In fact, most private-public partnerships involve some CDBG 
money and some HOME, money. That's the gap financing. So when 
those programs go away, what is the incentive for private 
investors to participate with a locality in a housing 
development?
    Secretary Carson. Well, keep in mind that some of the 
programs that we do not necessarily control--Treasury, for 
instance, controls LITC, Low Income Housing Tax Credits. Those 
are not going away. The mechanism to use those and to find ways 
to create win-win situations, those are not going away. What we 
are really kind of looking at is a new paradigm that has been 
forced upon us.
    Again, it would be much nicer if we just had an infinite 
pot of money, but we do not. So this has been forced upon us. 
The old paradigm is the Government rides in on a white horse 
with buckets of money and says, ``Build these facilities for 
these people,'' and then moves on to the next project. New 
paradigm, the Government comes in with money, but to seed 
projects and to help visualize projects and to create 
incentives for the private sector, the non-profits, all of 
those people to get involved. And one of the real advantages to 
that is the local people have a vested interest in the 
maintenance of that property because there is a revenue flow 
associated therewith. So having them involved on multiple 
levels I think actually is going to work very well.
    Rental reforms that we are going to be looking at have a 
long-term purpose. These are just the first steps in those 
kinds of things. What we are trying to do is create a solid 
foundation so that we can actually take care of more people. 
And efficiency is a big part of that.
    Senator Reed. I have either miscommunicated or missed my 
point. Most of these projects do not get built so that they can 
take advantage of Low Income Housing Tax Credits unless there 
is a HOME program the CDBG program, or some other incentive for 
funding from the private entity to come in. They usually do not 
invest in a project for a public spirited notion. Companies 
want to be able to make a return on their investment. Part of 
that is the Low Income Housing Tax Credit, but also part of it 
is HOME, CDBG, and other initiatives. And if you cut those out, 
you will be diminishing opportunities.
    Is particularly interesting that you suggest that due to 
our fiscal circumstances, certain people cannot be provided 
affordable housing while other people through of other 
proposals, such as tax proposals, are getting--if they pass--
extraordinary benefits. So, isn't there a midpoint where we can 
ask who befitted from past in programs that helped people live?
    Secretary Carson. Well, I will be very open to working with 
you on that, but I do want to mention the fact that you had the 
RAD program which is a very good vehicle for public-private 
partnerships and in general, we leverage those dollars at a 
rate of 19 to 1. So the more of that kind of thing we can do, 
obviously the far greater number of people we can take care of.

                    RENTAL ASSISTANCE DEMONSTRATION

    Senator Reed. The RAD program is interesting, but that is 
another incentive. As you get into public housing units that 
require more and more maintenance, which, because you have cut 
out most of the capital maintenance funds, will be less 
attractive to the RAD program, the time to get the RAD program 
in place will put people in difficult circumstances. But in 
addition to that, you have taken off--the cap on units in your 
proposal. Right now there is a cap, but there is no money in 
this budget for those the conversion of additional units.
    And, as you get into certain, particularly costly urban 
areas, market rates get very, very expensive, and it will not 
be attractive. So RAD is an interesting program. It can be used 
effectively in many places, but it is not a substitute for one 
of the basic things that is cut here which is giving public 
housing authorities the ability to fix up their facilities so 
people live in decent places, not in squalor.

                                  LEAD

    The other point I wanted to make is about lead-based paint. 
Your proposal is $15 million below what we have provided for 
this year. That funding level would result in 700 fewer units 
being addressed in terms of lead abated, exposing over 2,400 
individuals, including nearly 650 children, to lead-based paint 
hazards. Is that the message you are sending? Lead is 
important, but not for these 650 children who will be exposed?
    Secretary Carson. No. The message we are sending on that is 
that we proposed a $20 million increase over the fiscal year 
2015 and 2016 budgets. And that was what we actually proposed. 
You added in the Omnibus----
    Senator Reed. Yes, we did because we thought it was very 
important.
    Secretary Carson. Right. I am always happy to take money. 
That is not a problem, but----
    Senator Reed. Well, you have to ask for it first.
    Secretary Carson. And, in fact, you also provided $25 
million in competitive funds for lead based. We are leaving----
    Senator Reed. And you are cutting that back.
    Secretary Carson. We are going to use--no, we are not 
giving you that back. We are keeping that.
    Senator Reed. No, I am talking about in your proposal you 
are citing 2015 and 2016. In the 2017 Omnibus, it's $145 
million. You are asking for $15 million less, is that correct?
    Secretary Carson. Well, we had put in the request 
previously. We do not have the ability to change that, but I 
will leave that up to you.
    Senator Reed. Thank you.
    Senator Collins. Thank you, Senator Reed.
    Senator Capito.
    Senator Capito. Thank you, Madam Chair and Ranking Member, 
and thank you, Mr. Secretary, for being with us here today.
    Secretary Carson. Thank you.

          COMMUNITY DEVELOPMENT BLOCK GRANT DISASTER RECOVERY

    Senator Capito. Excuse me. You are going to find the CDBG, 
you are going to be--you are obviously brushed up on it and I 
am going to talk about it too from a small State, but I would 
like to talk about a specific area that was particularly help 
to our State. In about two weeks, on June 23rd a year ago, our 
State was devastated by floods that took 23 lives and just left 
millions and millions and millions of dollars of property 
damage.
    One of the ways the Federal Government helps us, and 
probably the most significant way, was the CDBG Disaster Relief 
Funds which helped people who have nowhere else to go. Many of 
them were homeowners who had no flood insurance, no other 
options, and we had $107 million that were appropriated or that 
we got from the Disaster Funds. My original question is we 
still have many unmet needs. And so I would like to elicit from 
you an affirmative that we can keep working with HUD to try to 
figure out what further damages we might have through the State 
and with your agency.
    Secretary Carson. Sure. Well, again, thank you for your 
attention to that detail. The CDBG Disaster Relief Fund is 
different than the basic CDBG program.
    Senator Capito. How is it treated in the budget? I should 
have that in front of me, but I do not.
    Secretary Carson. Well----
    Senator Capito. Is it zeroed out too?
    Secretary Carson. No. It is not talked about, but because 
it is a different program.
    Senator Capito. Okay.
    Secretary Carson. And obviously we have to maintain, 
regardless of any budgetary constraints, the ability to deal 
with disasters as they occur. Having said that, we have gotten 
some new numbers, West Virginia, from FEMA and from the SBA. We 
are studying those carefully looking at the extra money that 
has been designated----
    Senator Capito. Good.
    Secretary Carson [continuing]. With things that Congress 
has done recently.
    Senator Capito. Thank you. Thank you. I appreciate that.
    One of the things too with the flexibility in the past, and 
I realize this is well before your time, many of the last two 
governors have put a big emphasis on water and sewer 
infrastructure and CDBG funds were used for that as well. It 
seems as though the Department is making this a little bit more 
difficult. We have some specific examples. I would just like to 
work with you and the agency to try to iron these differences 
out.

                     FEDERAL HOUSING ADMINSTRATION

    Secretary Carson. Yes. I am aware of those problems and 
would definitely be happy to work with you on that.
    Senator Capito. Okay. Great. Great. Let me ask you about 
the FHA. What is the capital reserve percentage at the FHA 
right now? Do you know?
    Secretary Carson. Yes. It is 2.32 percent.
    Senator Capito. So it is below what it needs to be. It 
needs to be at 2.5. How do you see that?
    Secretary Carson. Well, no. It needs to be at 2.0.
    Senator Capito. 2.0. It is ahead.
    Secretary Carson. So it is actually a little bit above 
where it needs to be.
    Senator Capito. Okay. Yeah. I thought it was 2.5.
    Secretary Carson. Okay.
    Senator Capito. Is that a declining number or is it going 
up? Is it more solvent? I mean we have had to infuse some 
monies over the last several years into that to keep it going.
    Secretary Carson. Yeah. There was a time when not too long 
ago $1.7 billion had to be infused from the Treasury into it.
    Senator Capito. Right.
    Secretary Carson. But over the last 3 to 4 years, it has 
gone above the 2.0 level and is moving in an upward trajectory. 
It is stabilized.
    Senator Capito. Good.
    Secretary Carson. And, you know, that is one of the reasons 
that we, for instance, rolled back the MIP reduction because we 
do not want to go back to the other situation. And we are 
looking very much forward to having the installation of 
leadership, new leadership, at FHA.

                  PUBLIC HOUSING AGENCY FLEXIBILITIES

    Senator Capito. Yeah. We look forward to that as well.
    Just lastly, I would like to make a comment and I am not 
sure that it is covered in--I did not get to read into the 
detail that I would have liked to in your written statement, 
but a lot of our smaller housing authorities year after year 
after year are begging for some flexibility to be able to not 
have the--they do not have the staff. They do not have the 
ability to meet some of the demands that the larger housing 
authorities have in terms of maybe some accountabilities or 
ability to move funds. What kind of flexibility can you look at 
for these smaller authorities that just serve rural America and 
really our poorest citizens to be able to make their dollars go 
farther? A lot of these folks have worked in these programs for 
20 and 30 years, so they know the best way to move forward.
    Secretary Carson. Well, there is no question that it is 
difficult. One of the things that I discovered on my listening 
tour--and this was unanimous no matter where I went and where I 
talked to people--said that there are way too many regulations 
and too many hoops for us to jump through.
    Senator Capito. Right.
    Secretary Carson. It is almost not worth participating with 
your programs.
    Senator Capito. Right.
    Secretary Carson. So we do realize that is a problem. That 
is being address. But also looking at the ability for the PHAs 
to have some flexibility in the way that they use operating 
funds versus capital funds and being able to move those to the 
needed areas. That degree of flexibility will help them quite a 
bit.
    Senator Capito. Yeah. I would welcome that. Thank you very 
much. I look forward to working with you on the things that I 
mentioned.
    Secretary Carson. Thank you.
    Senator Collins. Thank you very much.
    Senator Schatz.
    Senator Schatz. Thank you, Madam Chairwoman. Thank you, Mr. 
Secretary, for being here.

                              HOUSING CUTS

    You said in response to a question that we are in new 
paradigm which is forced upon us. And I would like to first 
take issue with that. This is not forced upon us except that it 
is the priority of this Administration to cut taxes in the 
amount of anywhere from $1 to $5 trillion over the next 10 
years, depending on how it is calculated and who you ask. And 
so I guess my question is I want to quote something that you 
said which I found compelling in the interactions that we have 
had, I found to be reassuring in terms of where your heart is, 
but the money is not there. You said when you visited East 
Baltimore, ``I saw children with pica, with lead poisoning 
chronically, what that did to them intellectually, what that 
did to them medically. I saw so many children with asthma, 
which is induced in most of these cases by environment 
influences. Giving them hope starts with giving them a safe and 
productive environment.''
    HUD funding for public housing maintenance and capital 
repairs tackles these problems and makes other essential 
repairs to public housing, and yet this budget cuts it by 68 
percent from $1.9 billion to $628 million. And so this is not 
meant to be a got you question. It is meant for me to try to 
understand how you square your statements and where your heart 
really is with this draconian cruel funding proposal.
    Secretary Carson. Okay. Well, first of all, when I said the 
situation is forced upon us, what I am talking about is it is 
forced upon us by years of fiscal irresponsibility. And at some 
point we must reckon with that, and I think this is the point 
where we have to do it.
    You know, as far as where my heart is, there is no question 
that I care very deeply about what is happening, but that care 
goes to every aspect of those children that you are talking 
about, including their future. And, you know, we have to have a 
way of prioritizing what we are doing. Making sure that those 
children are in a safe, affordable, clean habitat takes 
priority over virtually anything else.
    Having said that, you will notice that in the budget where 
you saw a lot of cuts, you saw additions to that area that you 
are talking about. So that tells you where the heart really is.
    Senator Schatz. I am reaching for these additions. And as 
you know in the aggregate, it is----
    Secretary Carson. I am talking about for lead.
    Senator Schatz. Oh, for lead, I understand. There is a 
small increase for lead abatement. There is a massive, massive 
cut in the fund that, as you know, refurbishes the public 
housing stock to prevent a whole range of bad health outcomes. 
Lead is one of them, but you have asthma. You have mold. You 
have other infirmities that come from living in an unsafe 
place. And the way to deal with that is not to plus up a line 
item related only to lead, but to refurbish the public housing 
stack. And that is an expensive proposition.
    Secretary Carson. It is.

                        FISCAL YEAR 2018 BUDGET

    Senator Schatz. You know, Secretary, when I asked you the 
question during the confirmation hearing in the Banking 
Committee and I asked you are you going to advocate for the HUD 
budget. And you said, ``Not only do I want to advocate for the 
HUD budget, but I want to put together a world class plan on 
housing in this country. I do not know what the number is going 
to be. It might be more, it might be less, but it will be what 
is required to accomplish what we need to do.''
    Following up on what Chair Collins mentioned at the 
beginning, that the timing of your confirmation to your 
position is such that you have a little bit of space here to 
not own this budget totally if that is what you wish to do. And 
I want to know whether you think this is the world class budget 
and plan that you were talking about to me before your 
confirmation or if that is yet to come.
    Secretary Carson. This is a work in progress. You know, we 
make steps toward our goal. One of the things that is going to 
be necessary for us to accomplish a sustainable system of help 
for those in need is fiscal responsibility and we have to start 
that now. And I would be happy to work with you on making sure 
that we get there, but if we do not start at some point, you 
know, we all lose in the long run.
    Senator Schatz. Thank you, Mr. Secretary. Thank you, Chair.
    Senator Collins. Thank you.
    Senator Boozman.
    Senator Boozman. Thank you, Madam Chair and Ranking Member 
for holding this important hearing and thank you, Secretary 
Carson, for all that you do and your willingness to serve.

                   COMMUNITY DEVELOPMENT BLOCK GRANT

    In your written testimony you mentioned the Community 
Development Block Grant program not being targeted to the 
appropriate populations. The question is how did you reach the 
conclusion and why did you choose to zero out the program 
rather than work to better focus the program to the 
appropriation populations?
    Secretary Carson. What we chose to do is to ask ourselves 
what are the priorities and what can we accomplish with the 
funds that we have. It is kind of like a family who has a 
number of problems, but they do not have enough money to fix 
all of them and they have to prioritize which ones go first.
    So, as I mentioned in terms of how do we measure, one of 
the things that we measure is what is happening versus the 
goals that we have. The goals of getting people into a safe 
environment that is affordable is a very significant goal. Now, 
if we put that goal off, then there is no question that we can 
do some of the other things. I would like to be able to do them 
all, but in order to be able to do them all, we have to start 
laying the correct financial foundation and we have to start 
somewhere.
    Senator Boozman. Very good. Mr. Secretary, the Public 
Housing Agencies in Arkansas and across the country, especially 
small and medium size ones, provide vulnerable families and 
individuals with critical housing assistance every day. I 
understand the need to do more with less in these tight budget 
times, but I also understand the importance of helping the PHAs 
to manage their local programs in a way that meets local needs 
and promotes self-sufficiency, which is also very important. I 
think that is a theme that we hear from you which is so 
important, time and time again.

                             MOVING-TO-WORK

    The Moving-to-Work program has enabled some PHAs the 
flexibility to meet local needs and promote work while 
remaining cost neutral. In 2016, Congress added 100 PHAs to the 
existing pool of 39 MTW agencies. However, 139 is only around 3 
percent of the nearly 4,000 Public Housing Agencies and many 
are concerned they will miss out on the opportunity to 
participate in the program. Do you support a broader expansion 
of the Moving-to-Work program?
    Secretary Carson. I think the Moving-to-Work program is a 
good program because it provides a great deal of flexibility 
and it leads toward families becoming self-sufficient. And 
those are certainly goals that we very much support. So we are 
looking forward to working with the 100 additional PHAs and 
further expansion in the future.
    Senator Boozman. Good. Well, we look forward to helping you 
in that regard.
    Thank you, Madam Chair.
    Senator Collins. Thank you.
    Senator Coons.
    Senator Coons. Thank you, Chair Collins, and thank you for 
your opening statement and for your strong and clear-eyed 
leadership on the difficult issues that face us in this budget, 
to Ranking Member Reed, for your partnership and the balanced 
way in which you have conducted yourselves.

                 COMMUNITY DEVELOPMENT BLOCK GRANT/HOME

    Mr. Secretary, I cannot convey how deep my disappointment 
is with HUD's budget proposal this year. As someone who has 
spent 10 years in county government, first as a county council 
president, and then a county executive, I have personal hands-
on experience in the impact that CDBG and HOME funding can have 
to help severely disadvantaged vulnerable populations all over 
this country, senior citizens, those with disabilities, 
veterans seeking rehousing. I am really stunned at how broadly 
the deep cuts proposed in this budget would affect vulnerable 
populations in our country.
    I know firsthand how CDBG and HOME works and I have seen 
its impact. I was struck that you suggested, I think somewhat 
casually, that although well intentioned at its outsets, CDBG 
has been used for things like flowers alongside highways or 
spay and neuter clinics when HUD's own website, the 2016 annual 
performance report on CDBG, says that it created 18,000 jobs, 
supported 50,000 single family rehab projects, and served over 
200,000 seniors. Yet in your testimony you say the CDBG program 
has not demonstrated a measurable impact on communities.
    It seems to me I could spend the rest of the afternoon 
giving you concrete and specific examples of how CDBG and HOME 
has been used in my home county, in my state, and across this 
country and on HUD's own website it has been demonstrated to 
have an impact that advances HUD's core mission.
    What is the problem? Where is this tension between your 
testimony, that there is a lack of measurable impact, and my 
personal experience, and HUD's document experience that it has 
had a significant constructive and positive impact across this 
country?
    Secretary Carson. Well, Senator, thank you for your long 
history of service to our country. Very much appreciated.
    I do not think you heard me properly. I did not say that 
CDBG was a bad program and that it had not done anything good. 
That is not the issue at all here. The issue is we have a 
certain number of people who are housed right now and we do not 
want those people to be unhoused. Now, we could just say, 
``Let's fund CDBG at and Home because those are such great 
programs,'' and let those people fall where they may. We have 
chosen not to do that. We have chosen to look at what is 
essential and prioritize. Not saying that the other things are 
not good. I am not saying that at all.
    Senator Coons. Well, I was struck, Mr. Secretary, in your 
testimony that you did not choose to pick examples of CDBG and 
HOME helping people find housing, supporting the disabled, and 
helping veterans. You chose two almost insulting examples that 
suggest----
    Secretary Carson. Well, because two different things.
    Senator Coons. I think without any foundation that these 
are frivolous or wasteful programs. I understand you have to 
make priorities, but as my predecessor in this seat, former 
Senator Biden, many times said in my home state, show me your 
budget and I will show you your values. I think we are a 
country that values community development and affordable 
quality housing. And I think your agency in particular is 
charged with carrying out that mission.
    I will tell that lead remediation is exactly one of the 
things that we use CDBG money for in New Castle County and the 
City of Wilmington just used CDBG funding to abate 150 homes of 
lead hazard. So I am struck by your suggestion in passing that 
the budget, and I think I quote with reference to the HOME 
program, recognizes a greater role for state and local 
governments.
    As a former local government official, I think that is a 
very generous way of saying we are sticking you with the bill 
and we are abandoning a program that shows terrific leverage, 
local control, and has a demonstrated record of high impact. 
How do you have any expectation that state and local 
governments will actually make up the nearly $1 billion 
shortfall the elimination of this valued program would lead to?
    Secretary Carson. Again, I would harken back to the initial 
statement that I made, and that is there are certain priorities 
that it is essential that we accomplish. And if we do not, all 
the other things that we are talking about become almost 
irrelevant. So it is absolutely essential that we continue to 
provide the rental assistance that we are providing. It is 
absolutely essential that we deal with the homeless situation 
that is going on in this country. Would it be nice to take care 
of all this? Absolutely. I cannot tell you how much I would 
like to be able to do that.
    Senator Coons. Well, I am encouraged to hear you suggest 
that you have no fundamental objection to CDBG or HOME that 
this was a matter of prioritization. The Chair suggested at the 
outset that it was prioritization within a budget presented to 
you. It is my hope that we will work together in a bipartisan 
way to reverse what I think are unwise and unsubstantiated cuts 
and that we will do our role, as the Appropriations Committee, 
to set a better values priority for this Government overall.
    Thank you, Mr. Secretary.
    Senator Collins. Thank you.
    Senator Durbin.
    Senator Durbin. Thanks, Madam Chair.
    Mr. Secretary, glad to see you, and you know what I am 
going to talk to you about. I am going to talk to you about 
Cairo. It looks like Cairo, Egypt, but it is Cairo, Illinois.
    Secretary Carson. Yes.

                  AMERICAN COLLEGE HEALTH ASSOCIATION

    Senator Durbin. Alexander County. And you and I have 
chatted about this over the phone and in person. This is 
Exhibit A in mismanagement in Washington and locally. It is a 
disaster.
    Secretary Carson. It is.
    Senator Durbin. Public housing built in the 1940s neither 
of us would even consider staying a night, overnight, in this 
miserable, filthy, rat infested, bug infested, mold infested 
awful situation, none of us.
    Secretary Carson. Right.
    Senator Durbin. And yet our American citizens, people we 
represent, are living there. You made the right decisions to 
get rid of these old housing units, but there is an obvious 
question in Cairo, Illinois. What is next? And I need some 
assurances from you today on the record here in Washington, DC 
I can take home to Illinois. I need to make sure, number one, 
that you have a vision of what you want these families to have 
when it is all over.
    After all the mismanagement, and it is not on your watch--
it predated you. After all of the mismanagement in Washington 
and all the mismanagement locally, what can we promise these 
residents? Once we tear down those miserable old housing units, 
what can we promise them today?
    Secretary Carson. Well, I appreciate your steadfastness in 
this. We have had an opportunity to talk. And as I have said 
before, you know, we have examined virtually every option that 
there is. This, unfortunately, is a dying community. People do 
not have jobs there. There is really no support for public-
private partnerships. And you have a housing development that 
through years of neglect has deteriorated into an unlivable 
atmosphere.
    We have provided vouchers for all of those individuals to 
be able to move out. They can move to any place they want in 
the country and be supported. And we have provided people to 
come and help them, to counsel them on where they can go and 
how they can utilize the program.
    Senator Durbin. Can we walk through that a little bit?
    Secretary Carson. Yes.
    Senator Durbin. First off, we are going to do a survey for 
the 180 so people that are involved, find out what they want to 
do. Secondly, we are going to do a survey of available housing 
in the community. Many want to live in Cairo. That has been 
their home forever. And you and I might look at it and say, 
``Well, that is not a very promising community.'' This is still 
home for many of these folks and they want to be near their 
families there. So that survey needs to be done.
    And the inspection of the property that might qualify for 
Section 8 vouchers, I hope that inspection includes timely 
inspection for the obvious things, safety and the like, but 
also for lead so that we can put them in a place that is safe 
for them and their children when it is all said and done.
    But here is the thing that I have got to impress upon you. 
You say it is a dying community. If we are not careful, HUD can 
kill this community. And here is what I mean. If we had all of 
the people in those two units leave Cairo, Illinois, it would 
cut the school enrollment in half. That would be the end of 
their school system and it truly would be the end of this 
community. So I am starting with the premise if you want to 
stay and if we can find you a safe and clean place to stay, I 
feel an obligation to try to help you reach that goal. Is it 
reasonable for me to feel that way?
    Secretary Carson. It is reasonable for you to feel that way 
and that has been looked at and studied in some detail, even 
before I came on the scene. And we have continued to look at 
that and there do not appear to be adequate places. That is one 
of the reasons that we are in this particular situation. But, 
like I said, and as I have continued to say, if someone can 
find a solution that is better than the one that we have, I am 
all ears completely.
    Senator Durbin. Okay. I am going to hold you to that and 
the last thing I am going to say is this. The mismanagement 
that occurred locally has resulted in a report which I cannot 
question. They are facing bankruptcy, dissolution. Everything 
went wrong and people should be held accountable for it.
    Secretary Carson. Agreed.
    Senator Durbin. But not just in Illinois in Alexander 
County. People should be held accountable in Washington----
    Secretary Carson. I agree with you.
    Senator Durbin [continuing]. Who were overseeing this 
project. Are you willing to commit to an internal review so 
that if there was wrongdoing within the Department of Housing 
and Urban Development that can become public as well?
    Secretary Carson. It has already been started.
    Senator Durbin. By the Inspector General. I am talking 
about your own authority as Secretary.
    Secretary Carson. We are already doing that across the 
country. We are looking at the inspection process. We have 
already decertified 42 inspectors for falling below the 
standards. We are working with the others and we are hiring 
more. This is something that is totally unacceptable to me and 
we are going to get it taken care of.
    Senator Durbin. I hope you will include in the Cairo 
situation not just inspection, but those who had oversight of 
the local housing authority and decided that regular trips to 
Las Vegas were in order----
    Secretary Carson. Absolutely.
    Senator Durbin [continuing]. For these people who were head 
of the Housing Authority.
    Secretary Carson. I am lock step with you.
    Senator Durbin. Thank you, sir.
    Senator Collins. Thank you very much, Senator Durbin.
    It is now my pleasure to call upon the former chair of this 
subcommittee, Senator Murray.
    Senator Murray. Thank you very much, and thank you for your 
leadership on this and your fight for doing what is right along 
with Senator Reed. You have done an outstanding job, but I 
appreciate it.

                              HOMELESSNESS

    Secretary Carson, the fight against homelessness is one 
that many towns and cities and states across the country are 
really engaged in. It is a particular struggle for states like 
mine, Washington State that is experiencing huge spikes in rent 
or near zero vacancy rates. This is happening in communities 
across the state. The City of Seattle, and King County have 
been operating under states of emergency regarding homelessness 
since late 2015. And the work done by this committee has been 
instrumental, and I again want to thank our Chair, Senator 
Collins, and Ranking Member Reed, for their leadership in 
creating the Youth Homelessness Demonstration program.
    I am incredibly proud of King County's successful 
application which will bring them $5.4 million to the region to 
strengthen our response to this crisis, but there is really a 
lot more work that has to be done. Just last week there was a 
new report that showed that there are nearly 12,000 people 
experiencing homelessness in Seattle and King County alone, 
some of the sleeping in shelters, half sleeping on park 
benches, in their cars. It really is heartbreaking.
    Local communities in my state are stepping up to increase 
their housing levies and dedicating additional resources, but 
the Federal Government has to be a partner as well.
    Secretary Carson, I want to ask you. If we can show you 
that investments like HOME and CDBG work to reduce homelessness 
in my home state and states across the country would you commit 
to working with us to reverse these massive cuts in your 
proposed budget?
    Secretary Carson. One of our priorities is dealing with 
homelessness. And as you probably know, in the last few years 
homelessness has gone from 800,000 to just over 500,000, not in 
small part to some of the programs that have been envisioned 
and enacted at HUD. We will continue to work with you to make 
sure that we continue to drive that number down.
    Senator Murray. Okay. Well, we would like the ability to 
show you how those programs work, so I hope you can commit to 
working with us on that.
    Secondly, I want to ask you. I understand from some of your 
comments in the press that you might not understand the 
importance of the Housing First model. That really recognizes 
that the most successful way to move an individual out of 
homelessness is to get them into housing and to provide them 
any supportive services they might need to stay in a house. The 
Downtown Emergency Service Center in Seattle is a great model 
and it is a pioneer of Housing First when it began using this 
about 20 years ago.
    And it has shown us clearly that having a substance misuse 
disorder should not be a barrier to housing assistance. That 
way of thinking does not work. Do you support the goals of the 
Housing First model?
    Secretary Carson. I think getting people off the streets is 
absolutely essential. Somebody who is living under the bridge, 
you know, there is a strong chance during the course of the 
year that they are going to end up in the emergency room. They 
will end up being hospitalized for a week which costs more than 
it costs to put them in a shelter for a year. So I understand 
that. I understand those implications. Housing first is a good 
thing. Getting them off the street, no question about that.
    Senator Murray. Okay.
    Secretary Carson. However, it must be followed by housing 
second and housing third. You must decide, you must diagnose 
the reason and you must be willing to treat it.
    Senator Murray. Right.
    Secretary Carson. And if you really want to be 
compassionate.
    Senator Murray. Okay. Well, I would like to really 
encourage you to visit places like the Downtown Emergency 
Service Center in my State to learn about the importance of 
housing as a first and necessary step to helping people with 
that.

                           RENTAL ASSISTANCE

    Secretary Carson. I have no problem with that.
    Senator Murray. Great. Now, I know HUD works under some 
really challenging budgetary constraints, particularly with 
respect to fiscal year 2018, but I just have to say here that I 
find HUD's proposed budget to be especially troubling in asking 
for a 15 percent cut. With rents rising and increased need for 
affordable housing, I just do not see how it is possible for 
HUD to actually fulfill its essential role with so few 
resources. The Department requests a cut of nearly $3 billion 
to rental assistance programs alone.
    I just have to ask you, how can you propose such a 
substantial cut to rental assistance with so many families who 
cannot keep a roof over their head today?
    Secretary Carson. I would have probably asked that same 
question myself a few months ago, but now that I have been in 
government for 3 months, I have got to tell you there is a lot 
of waste and inefficiency. And we are going to achieve a lot by 
doing that, but we are also going to be looking at the new 
paradigm that I have talked about, getting public and private 
sector working together.
    This country is an amazing place with people with very big 
hearts. I have already talked to a number of people in the 
private sector who are very willing to help with some of the 
visions that we have. And they are not really getting anything 
back for it.

                 HOUSING AND URBAN DEVELOPMENT STAFFING

    Senator Murray. Okay. Well, a lot more to talk about that. 
I just want to raise one quick thing--the issue of leadership 
at our regional level, Region 10 based in Seattle. We have 
benefitted from really strong leadership in the past from Donna 
Batch and Bill Block and I have heard over and over again from 
stakeholders in my state that the reason has been attentive to 
their needs and that cooperative spirit really makes a 
difference.
    So I just want to tell you it is really essential that you 
move swiftly to nominate some regional administrators who share 
that passion and dedication and experience that it takes to do 
that. And I am happy to work with you on that process. We have 
got some great people in the state willing to do that, but I am 
concerned that this has been delayed.
    Secretary Carson. I share your concern in some of the 
delays and it has been somewhat difficult for me not having 
people in all the essential positions, but in a way it has 
forced me to learn a lot real quick.
    Senator Murray. Well, thank you very much.
    Senator Collins. Thank you.
    Senator Hoeven.
    Senator Hoeven. Thank you, Madam Chairman.
    Mr. Secretary, good to see you again.
    Secretary Carson. You too.
    Senator Hoeven. Thanks for being here. Thanks for what you 
are doing it.
    Secretary Carson. Thank you.
    Senator Hoeven. I really appreciate it. I think you bring, 
you know, just an amazing background to a challenging position.
    Secretary Carson. Thank you.
    Senator Hoeven. And I certainly wish you the best and look 
forward to working with you.

                   COMMUNITY DEVELOPMENT BLOCK GRANT

    I was a governor for 10 years before serving here in the 
Senate and we worked a lot with the CDBG, Community Development 
Block Grant program. And the reason that I particularly liked 
it is because it really gave states and localities the 
flexibility to put the dollars on target.
    So I understand that, you know, the Administration is 
trying to find savings where they can. I understand that you 
are going to work on waste, fraud, and abuse and try to get 
dollars on target. But talk to me a little bit if you would 
about CDBG because it is, I think a Republican concept to try 
to get resources to the local and state level and then really 
empower people to use those resources in the way they think is 
most productive rather than kind of having the Federal 
Government say, ``Here is some resources, but you have to use 
it this way.'' You see what I mean?
    Secretary Carson. Right.
    Senator Hoeven. So could you touch on that a little bit?
    Secretary Carson. Well, you know, the MTW program and other 
ways of finding flexibilities for people are important. And 
again, I want to emphasize the fact that I am not saying that 
all the programs under the CDBG umbrella are bad programs or 
under the HOME program or the SHOP program or the Section 4 
program. I am not saying that at all. What I am saying is in 
this atmosphere of fiscal responsibility and budgetary 
constraint, we absolutely have to prioritize.
    Senator Hoeven. Agree with that. I am pretty sure that 
working with the Chairman of our subcommittee and the Ranking 
Member, we are going to work to make sure there is CDBG money 
in the budget. And I would just, I guess, really want to 
emphasize or in the appropriation that it really is an 
opportunity to give dollars to those local communities and let 
them determine how best to use them. And then, of course, you 
working with the communities I think can accomplish a lot.
    I understand you are going to save where you can. I do want 
to tell you though that the flexibility of that program, I have 
found to be very effective.

                              HOMELESSNESS

    Along those lines, the City of Grand Forks, you were in 
Fargo, so not too far from where you were when you were in our 
state not long ago. The City of Grand Forks Local Housing 
Authority are working on a project to serve the chronically 
homeless population and it is called LaGrave on First. I have 
actually seen it--LaGrave on First. And it is an example of 
using a number of the housing programs to serve low-income, 
vulnerable populations. Now, they have hit a delay and they are 
concerned that this delay could jeopardize funding that they 
have put together from these multiple programs.
    So where I am going with this is this, I think, is a good 
program, effective program. They have put various funding 
sources together to leverage it. Because they have hit this 
delay, they are worried about losing funding and I would just 
ask that you would work with us to try to get through whatever 
log jams they have hit so that they do not lose the project.
    Secretary Carson. Absolutely. We will work with you on 
that. And we are very much focused on efficiency. So many of 
the programs that you and I have just talked about, you know, 
they have money in their pipelines, but we want to make sure 
that they are used in a very effective and efficient way.
    Senator Hoeven. Well, and I think that is where you can 
play a tremendous role is helping people get through some of 
these programs, some of the bureaucracy and red tape, and I 
think that can really help get dollars on target and make it 
more effective. So your leadership there will make a 
difference.
    Secretary Carson. Absolutely. Thank you.
    Senator Hoeven. Thank you.
    Senator Collins. Thank you very much.
    Senator Daines.
    Senator Daines. Thank you, Chairman Collins. Secretary 
Carson, thank you for testifying here today.
    Secretary Carson. Absolutely.
    Senator Daines. And thank you for discussing the 
President's fiscal year 18 budget request. No doubt your 
personal experience and upbringing has given you special 
insight truly into what it takes to escape poverty and I 
greatly appreciate you taking on this new role for our country. 
Thank you.
    I also understand you had to make some difficult decisions 
in prioritizing your budget and I thank you for wrestling with 
those issues as well. It is never easy when you look at trying 
to prioritize spending.

                     FEDERAL HOUSING ADMINISTRATION

    In the fiscal year 2017 THUD Appropriations Bill, I 
requested a study be done on FHA's conveyance process to ensure 
that taxpayer funds were not being wasted. Subsequently, HUD's 
Inspector General published an audit report last October that 
showed that $2.3 billion, with a B, was improperly paid by FHA 
to banks.
    Secretary Carson, where do you see opportunities to reduce 
fraud, waste, and abuse in instances like this at HUD?
    Secretary Carson. Well, there were actually 11 material 
weaknesses found by the IG in that analysis, all of which I 
think are serious and require a study, which we have already 
started. One of the things I learned during my many years in 
the corporate world is that you have to have an operator. You 
can sit around and you can talk about theory all day long, but 
unless you have an operator nothing is going to happen.
    So we have brought on a spectacular COO. We are also in the 
process of nominating a CFO which we hope you guys will put 
through very quickly, and a CIO is in the pipeline.
    Senator Daines. Secretary Carson, you are running this like 
a business, it sounds like.
    Secretary Carson. You are right.
    Senator Daines. That is a breath of fresh air.
    Secretary Carson. And, you know, bringing those entities 
together and taking a wholistic approach to these, particularly 
financial issues, I think will give us what we need very 
quickly.
    Senator Daines. Secretary Carson, then I assume you are 
going to be working to seriously cut down fraud, waste, and 
abuse at HUD, which will save the taxpayer dollars and provide 
more funding to Affordable Housing recipients.
    Secretary Carson. Absolutely.

                          MANUFACTURED HOUSING

    Senator Daines. Thank you. Mr. Secretary, my staff met with 
Travis Phillipe and his father. They own a company called Great 
Homes, Inc. in Missoula, Montana. And they raised a concern 
that HUD has a newly required manufactured and modular homes. 
They require them to be inspected onsite rather than at the 
production site prior to the homebuyers being able to take 
residency. Here is the challenge. In places like rural Montana, 
inspections can sometimes take weeks to occur because of the 
great distances where some of these homes are being installed.
    During your really brief tenure now as the Secretary of 
HUD, have you seen a legacy bias at the agency tilted against 
rural America from the prior Administration?
    Secretary Carson. Well, certainly the kind of problem that 
you just described is something that I think a lot of people, 
particularly city dwellers, would not even think about. And I 
think maybe some of those policies are designed by such 
individuals. And I actually appreciate hearing from you 
something like that because that is something we can look into.
    You know, one of the things that has happened, which I 
think is tremendous, Executive Order 13777. We need to start 
looking at all of these regulations that have been piled one on 
top of another without getting rid of what they were replacing. 
And it creates the kind of problem that you are talking about 
because it does not make any sense. What you just said, what 
they did, it does not make any sense.
    Senator Daines. Well, thank you for looking into that, that 
issue.

                 ROLE OF HOUSING AND URBAN DEVELOPMENT

    Lastly, you mentioned in your testimony that one principal 
of this budget request is to and I quote, ``Is to find the 
proper role for the Federal Government in Housing and Community 
Development. You also encouraged the participation of the 
private sector and market-based mechanisms to assist in 
affordable housing, possibly through these public-private 
partnerships. And as you know, the housing needs in Kalispell, 
Montana are far different from those in place like your 
hometown of Detroit, Michigan. Aside from just distributing 
funding, what specifically do you believe is the proper role 
for Federal Government when it comes to housing?
    Secretary Carson. I think it is the same role that the 
Federal Government has in every aspect, and that is to promote 
life, liberty, and the pursuit of happiness. That means 
facilitating in the case of housing, facilitating the ability 
of people to have, say, affordable homes, and facilitating the 
development of our people because that is what strengthens our 
nation.
    So everybody is either going to become part of the engine 
or part of the load. A smart government would do everything it 
can to make sure that they become part of the engine.
    Senator Daines. And speaking of the government, and this 
will be my last follow up, Madam Chair, is thinking about the 
role the Federal Government and State governments. What 
chances, if any, might you propose for allowing the states to 
more appropriately tailor housing programs for their specific 
needs?
    Secretary Carson. I think as long as there remains a 
dialogue, it is actually preferable to have the States and 
localities more involved with the decisionmaking because they 
are obviously much more familiar with the particularities of 
the area that they live.
    Senator Daines. Thank you, Secretary Carson.

                   OFFICE OF INSPECTOR GENERAL AUDITS

    Senator Collins. Thank you very much, Senator.
    Mr. Secretary, I want to follow up on the issue that 
Senator Daines raised about the Inspector General's annual 
audit. And fortunately, this is something that did not happen 
on your watch at all. I am impressed and pleased that you know 
that the IV identified 11 material weaknesses. Another part of 
this report that truly shocked me was that classification 
errors exceeded $500 billion.
    Now, this is not money that was lost, but it was not 
classified and accounted for in the proper way. And the 
previous Administration, quite frankly, failed to address a lot 
of these longstanding issues.
    So my hope, and I guess I am just seeking a commitment from 
you, is that you are putting together the team, that it sounds 
like you are.
    Secretary Carson. Yes.
    Senator Collins. That you are looking for a CFO, I 
understand, and a CIO as well, that will help ensure this does 
not happen because when you have that many problems that the IG 
shows up, and it translates into real money eventually.
    Secretary Carson. Right.
    Senator Collins. And that is money that we desperately need 
for these programs that your department administers.
    Secretary Carson. Absolutely. So it is a systemic problem.

                         FEDERAL PROGRAM SILOS

    Senator Collins. Another issue that I want to bring up with 
you is the result of the way that too many Federal programs are 
siloed in their approach. I have introduced along with Senator 
Martin Heinrich--actually, it is his bill that I am his key 
cosponsor, a two-generation economic Empowerment Act. And it is 
a new approach to poverty programs and it looks at the entire 
family and what all the needs are rather than just saying that 
the child needs pre-Head Start or the mother needs substance 
abuse help or the dad needs job training. It looks at all of 
the obstacles to self-sufficiency.
    And I am really excited about this bill, but I will tell 
you what we have found. There is a community action agency in 
the State of Maine that would like to start applying this 
approach now because they administer a lot of the anti-poverty 
programs. And what they have found is there are all these 
barriers to sharing information across departments and agencies 
such that someone who is coming in applying for low income 
heating assistance cannot be told that their children would 
qualify for Head Start.
    Secretary Carson. Right.
    Senator Collins. And that strikes me as absolutely absurd. 
Effective solutions to the problems of housing affordability 
and reducing poverty are going to require improved 
collaboration across Federal agencies. And I wondered if you 
had any initial thoughts on having a more collaborative 
approach where we break down these silos and working, for 
example, more closely with the Department of Health and Human 
Services.
    Secretary Carson. Sure. Well, I think it is absolutely 
essential. You go back and you look at the Interagency Counsel 
on Homelessness that was started years ago and look how 
effective that was. And that is one of the reasons that this 
Administration has decided early on to break down those silos.
    So we are all working together on lots of different 
problems right now. I think that is really the only way to do 
it, quite frankly.
    Senator Collins. I agree with you and I know that you are 
personally committed to that. I would note that regrettably the 
President's budget eliminates funding for the Interagency 
Counsel on Homelessness, which I think is a huge mistake 
because we need those agencies working together so that we can 
lift families out of poverty and into self-sufficiency.
    Secretary Carson. Well, I would assure Madam Chairperson 
that that interagency work is ongoing to an incredible extent 
right now.
    Senator Collins. I am really glad to hear that commitment.

            HOMELESSNESS/VETERANS AFFAIRS SUPPORTIVE HOUSING

    I want to talk about homelessness for a moment because that 
has been a major emphasis for both Senator Reed and myself. 
Senator Murray brought it up also and I was very pleased that 
she did. I am not happy that there is no additional funding for 
new VASH vouchers, which help our homeless veterans. And I want 
to say right off that President Obama's Administration did this 
every year also, so we always had to put back some of these 
vouchers. So this is not a new cut that has been proposed. But 
this program, partially because of its interagency approach, 
has been successful in reducing homelessness among our veterans 
by 47 percent since we started it in 2010.
    Now, should it go on forever? No. It should not, but let us 
finish the job. Let us get the job done.
    Secretary Carson. And I would agree with Madam Chairwoman 
on that. It is very important. But since the program started in 
2010, we have given out almost 90,000 VASH, HUD VASH vouchers, 
8,000 of which are still unused, and the new allocation for 
2017 gave us $40 million which adds another 5,000. That is 
13,000 unused.
    What would be very helpful is if we had the authority to 
move the vouchers around to where they can be used effectively 
and efficiently.
    Senator Collins. That is something we will take a look at 
because I have noticed that in some parts of the country it is 
a far greater problem than in other parts, so I am very 
sympathetic to flexibility. But just so you might know, my 
slogan on this is that in the land of the free, there must 
always be a home for the brave.
    Secretary Carson. Absolutely. I love that.
    Senator Collins. And it is something I feel strongly about.
    The other issue that I do want to bring up on homelessness 
has to do with youth homelessness. And I am particularly 
troubled by youth homelessness. That is when children get into 
real trouble and they become so vulnerable to being trafficked. 
And in many cases, we do not have a plan when youth exit foster 
care. Even if they have not finished high school, but they may 
have reached the age that a particular state has set and they 
are no longer eligible for foster care. So it is like where are 
they supposed to go?
    Secretary Carson. Right.

                           HOMELESSNESS/LGBT

    Senator Collins. And where are they going to live? And we 
know that for LGBT youth who make up nearly 40 percent of 
homeless youth that they are particularly vulnerable. And there 
have been several studies that have showed than nearly a third 
of LGBT homeless youth have survived human trafficking, a 
horrible experience. So the best way to prevent the trafficking 
of these vulnerable individuals is to give them safe places to 
stay and provide services.
    I am concerned that HUD, on March 10th, withdrew two 
previous LGBT related policy announcements. One would have 
required HUD funded shelters to put up a poster about residents 
non-discrimination rights and the others announced an 
evaluation phase of a long running initiative to prevent LGBT 
youth homelessness. I am hopeful that you will take another 
look at that issue and about reissuing these notices.
    Secretary Carson. The notice for the LGBT youth was 
withdrawn because the survey itself had some deficiencies and 
we need to rectify that because the information that we gain 
from that will be very important. We want to make decisions 
based on real evidence and facts and not the way that it has 
been done so often in the past.
    Senator Collins. Thank you. I have several other questions, 
but I am going to submit them for the record and turn to my 
colleague, Senator Reed.
    Senator Reed. Thank you, Madam Chairman.
    First of all, let me just echo the Chairman's comments 
about the HUD Veteran Affairs Supportive Housing (VASH) 
program, which has been very successful. Mr. Secretary, I know 
you are committed to helping as much as you can, and I 
understand that you have about 13,000 vouchers in the pipeline. 
Even with our great success over the last several years, we 
still have about 39,000 veterans who are homeless, and you are 
going to have a problem prioritizing them.
    I have also been informed that we included language in the 
most recent Omnibus that gave you the authority to reallocate 
these vouchers. We will all check, but if you have that 
authority, you can start using it immediately. This does raise 
a question about, this gap of roughly 20,000 veterans without 
homes and the vouchers that are available. What actions do you 
intend to take?
    Secretary Carson. Okay. Well, we are attempting to find out 
where the need is and addressing it as quickly as possible 
working hand in hand with the VA from the field level to the 
Secretary's office of both places, so this is a high priority 
for us.

                              HOMELESSNESS

    Senator Reed. Again, echoing one of the comments of the 
Chairman, is that the Interagency Council on Homelessness has 
been in existence since the Reagan Administration and we are 
all interested in, as you are, in eliminating the silos. The 
Council is one of the few places where there was at least a 
forum.
    Secretary Carson. Sure.
    Senator Reed. How are you going to deal with the 
elimination of this agency in addition to what looks like 
insufficient funding from our perspective for Homeless 
Assistance Grants. As I look at the numbers, there is a $133 
million reduction from the current appropriation for Homeless 
Assistance. So you are taking away money. You are taking away 
the interagency body that should be helping with spending it 
efficiently. How are you going to address homelessness?
    Secretary Carson. Well, you know, I have not found any 
problem at all in working with the other secretaries. I do not 
know how it has been before, but I can tell you right now it is 
extremely easy for each of the secretaries as well as their 
staffs to get together with problems that we have very quickly.
    Senator Reed. That is encouraging. How do you make up the 
$133 million? Will you borrow it from Treasury?
    Secretary Carson. Well, you know, as I said before, it is a 
combination of things. It is a combination of creating much 
greater efficiencies, beginning to run things more like a 
business. And it is also inviting in other partners, 
recognizing that the problems that face us right now as a 
nation will only become exacerbated if we do not, you know, 
deal with them in a sometimes what may appear to be a harsh 
manner, but we have to stop the bleeding if we are going to get 
healing.
    And I am looking actually very much forward to working with 
members on both sides of the aisle to find ways that we can 
take care of all of the issues that are facing us as quickly as 
possible.

                         HUD-CONGRESS RELATIONS

    Senator Reed. In that context, Mr. Secretary, I think you 
have recognized that there is a strong bipartisan bent to this 
subcommittee as a result of the Chairman leadership. Will you 
commit to us that you will treat requests from members and 
staff, regardless of party, fairly, efficiently, and 
effectively so that we do not run into a situation where we do 
not have the information to work with you?
    Secretary Carson. Not only would I make that commitment, I 
would be abhorred if anybody from our Department does that.
    Senator Reed. Okay. Well, if it does, then we will remind 
you.
    Secretary Carson. Absolutely.
    Senator Reed. Thank you very much, Mr. Secretary. Thank 
you, Madam Chairman.
    Senator Collins. Thank you, Senator Reed.

                   COMMUNITY DEVELOPMENT BLOCK GRANT

    Mr. Secretary, I am sure you noticed today that virtually 
every member of the committee, whether it was a Democrat or a 
Republican, mentioned to you their concern about the 
elimination of the Community Development Block Grant program. I 
have to say among municipal officials I think it is the most 
popular program because of its flexibility. And as Republicans, 
you and I stand for having more flexibility and fewer strings 
attached when we send Federal money so that communities can use 
it to tailor it to meet their local needs.
    I would note, since I do not want you to feel that we are 
being hard on you, that the previous Administration repeatedly 
tried to cut by a much, much smaller amount, but nevertheless, 
they tried to reduce the funding for the Community Development 
Block Grant by hundreds of millions of dollars. That is very 
different from wiping out the entire $3 billion, but it has 
been a target. And I would say to you each time in a bipartisan 
way this committee made sure that we got the funding back up.
    And it is going to be a big challenge this year, but I see 
this budget as just a first draft and you described it to 
Senator Coons as a work in progress, I believe. And we look 
forward to working closely with you to fill in some of these 
holes on such important programs.
    Secretary Carson. Thank you.
    Senator Collins. I do thank you for being here today and 
for your cooperation with the subcommittee.

                     ADDITIONAL COMMITEE QUESTIONS

    The hearing record will remain open for additional 
questions to be submitted to you until next Friday, June 16, 
2017.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
            Questions Submitted by Senator Susan M. Collins
                        public private partners
    Question. Public-private partnerships rely on the ability to 
leverage Federal funds, like CDBG, to make these partnerships work. In 
many cases, Federal funds act as the gap financing that makes a project 
possible or as the seed money that attracts private investment. How 
does the Administration anticipate that states and local communities 
will be able to leverage private investments and form successful 
public-private partnerships without critical programs such as CDBG and 
HOME?
    Answer. The Administration's Budget reflects tough choices, and 
proposes no new funding for CDBG and HOME, to apply these funds to 
other priorities. However, HUD's mission remains the same, and we will 
support successful elements of past programs and look to work with 
state and local governments and other partners to further economic 
development goals and support households on their path to 
sustainability.
    The Administration's fiscal year 2018 Budget proposals for CDBG and 
HOME is predicated on devolving responsibility for housing and 
community development activities to state, local, and private sector 
partners, the state and local level--enabling those entities at the 
local level that best understand the communities and their needs to 
drive the solutions that work for them. The Department is also 
committed to efficient and effective use of the uncommitted HOME and 
CDBG funds.
                                  cdbg
    Question. The Administration has claimed that CDBG is poorly 
targeted, ineffective, and does not show results. And instead of 
proposing program reforms, the Administration has simply moved to 
eliminate it entirely. Any program activities funded by CDBG must meet 
one of three national objectives: principally benefit low- and 
moderate-income persons, aid in preventing or eliminating slums, or 
address imminent health threats to residents. I must admit, I have a 
difficult time seeing how such requirements classify CDBG as ``not 
well-targeted'' to communities most in need of assistance. What is 
more, this flexibility allows local officials to direct resources where 
they are most needed. Between 2005 and 2016, this flexibility has: 
Created or retained nearly 400,000 jobs; benefited over 42 million low- 
and moderate-income persons through public improvements including 
senior centers; and benefited over 133 million low- and moderate-income 
persons through public services such as employment training, services 
for abused and neglected children; just to list a few examples. Given 
the flexibility of the program, it appears that the issue is not that 
CDBG is an ineffective program, but rather that the Administration has 
been ineffective at capturing the range of benefits CDBG provides local 
communities. How did the Administration determine that CDBG is 
ineffective?
    Answer. Approximately $5 billion in previously appropriated CDBG 
funding is currently unexpended by grantees and an additional $3 
billion is available to be obligated. The unexpended amount raises 
questions as to the ability of the program to deliver timely benefits 
to low income communities. The CDBG statute's three national objectives 
affect the use of funds within jurisdictions, but HUD's research has 
shown that the CDBG formula is increasingly ineffective in directing 
greater resources toward jurisdictions with greater needs. The 
Government Accountability Office found that information on the overall 
effectiveness of CDBG is limited, and cited their previous work that 
identified the difficulties of evaluating the impact of block grant 
programs that do not have uniform activities or outcomes, and the 
difficulty in attributing outcomes to the program, or to other factors. 
(GAO 12-575R, Effectiveness of Block Grants). The Department is also 
concerned about ``mission creep'' in the CDBG program as it has moved 
away from its original purpose of funding public facilities and housing 
activities.
                              section 108
    Question. The Section 108 Loan Guarantee program enables local 
communities to pledge a portion of their CDBG allocation as security 
for a guaranteed loan to pursue economic development projects. Such 
public investment is often needed to inspire private economic activity, 
providing the initial resources or simply the confidence that private 
firms and individuals may need to invest in distressed areas. Since the 
program's inception, HUD has issued over 1,850 commitments totaling 
more than $8.6 billion. While some of these commitments are for 
projects that will generate revenue, others are public infrastructure 
investments that do not generate revenue and depend on current and 
future CDBG funds for repayment. Has the Administration assessed the 
impact to the loan portfolio from eliminating the CDBG program, 
including the ability of communities to repay loans, and to what extent 
HUD, and the taxpayers, may have to borrow from the Treasury to satisfy 
loan guarantees?
    Answer. HUD has assessed the impact on the portfolio, and will 
continue to work closely with borrowers and monitor portfolio 
performance.
    The underwriting for Section 108 projects looks at sources of 
repayment, and by design, the anticipated costs exclude future CDBG 
block grant funding, consistent with budget scoring rules. Thus, the 
proposed elimination of CDBG funding should not have a budgetary impact 
on Section 108 repayments.
    Where a given community has planned to use future CDBG funds as 
repayment, HUD expects a range of approaches will be employed to 
address Section 108 debt service requirements. These approaches may 
include use of existing CDBG funds to prepay or defease loans, 
substitution with local revenue sources, establishment of debt service 
reserves, or refinancing of assets. Ultimately, investors that have 
funded Section 108 loans are assured of repayment via the Government's 
full faith and credit guarantee.
                                  lead
    Question. Mr. Secretary, I was glad to hear about your interest in 
addressing the problem of lead-based paint hazards for children who 
live in older homes, particularly given your medical background. The 
budget request clearly reflects your interest in this issue, since the 
lead grants program is about the only account which received an 
increase in funding when compared to fiscal year 2016. As you know, 
Senator Reed and I have also been working on this problem for nearly 
two decades, and while we have made some progress, much work remains to 
be done. The fiscal year 2017 Omnibus reflects our deep interest in 
this issue, and we provided an additional $35 million for lead grants 
for low-income private housing and $25 million for public housing 
units. Mr. Secretary, given your focus on health as it relates to 
housing, how will you use the additional funding we provided and what 
specific actions will you take to address this issue?
    Answer. HUD is already beginning to implement actions under the 
lead safety provisions of the Consolidated Appropriations Act, 2017 
(the Omnibus). The $60 million in additional fiscal year 2017 resources 
is being used by two HUD offices.
    The $35 million in increased funding for the Office of Lead Hazard 
Control and Healthy Homes (OLHCHH) resulted in the office's awarding 
additional lead hazard control grants to communities to control lead-
based paint hazards in low-income privately-owned homes than would 
otherwise have not been possible.
    The $25 million set-aside for public housing lead-based paint 
remediation grants under the Office of Public and Indian Housing (PIH) 
has resulted in PIH preparing a notice of funds availability to 
competitively award funds to public housing authorities. The Department 
does note that it also has a $25 billion backlog of capital needs in 
public housing beyond lead remediation, and that it cannot address the 
backlog if it limits itself to public funding. This underlies the 
importance of HUD's efforts to bring in private capital through the 
Rental Assistance Demonstration (RAD) program.
    HUD is preparing changes to its lead safety regulations, the Lead 
Safe Housing Rule and the Lead Disclosure Rule, to reflect the 
Appropriations Act's expanding the range of housing units covered by 
the Residential Lead-Based Paint Hazard Reduction Act of 1992 to 
include pre-1978 zero-bedroom housing units with children under age 6 
residing or expected to reside.
    To enable HUD to target lead safety efforts to areas with the 
greatest need, the Office of Policy Development and Research, 
partnering with the OLHCHH, has begun developing statistical models to 
identify geographic areas in the US with the highest risk of lead 
exposure. These models will inform HUD's program monitoring and 
technical assistance to communities, housing owners, and housing 
managers on the Lead Safe Housing Rule. Such models will also help HUD 
and Lead Hazard Control grantees identify target areas for enrolling 
housing units under those grants through improved application scoring.
                              lgbt survey
    Question. Mr. Secretary, in response to concerns I raised about the 
Department's March 10th withdrawal of two previous LGBT-related policy 
announcements, you clarified that the survey was withdrawn due to 
deficiencies with the survey itself and the need to correct those 
deficiencies. This is especially important so that decisions can be 
made based on real evidence and facts. What were the identified 
deficiencies and when will HUD reissue the corrected notices?
    Answer. This survey was withdrawn to allow HUD to thoroughly review 
the information included in the survey and its effectiveness, this 
includes ensuring proper metrics (scope, timeframes, etc.) to ensure 
that the survey generates evidence that can be used to improve policy. 
While HUD is working on this, we do not have a specific timeframe. 
However, it is a priority and the Department is happy to keep you 
updated. As it relates to broader equal access, HUD has policies in 
place that are focused on eliminating discrimination across all our 
programs. This is something HUD will continue to support and monitor.
                                  rad
    Question. The RAD program has demonstrated tremendous success at 
leveraging funds for capital improvements of the public housing stock 
while not increasing the cost to HUD's budget. The program works by 
converting the property to a Section 8 contract with housing assistance 
payments consistent with its current Public Housing Operating and 
Capital funding levels. Considering the steep, nearly 30 percent, cuts 
proposed for the public housing accounts, how does the Department 
envision RAD remaining successful? If the current participation cap is 
increased, how could HUD improve the efficiency of processing these RAD 
conversions?
    Answer. HUD fully supports the Rental Assistance Demonstration 
(RAD). It is a critical preservation program, which allows PHAs to 
leverage debt and other non-Federal funding to make needed capital 
repairs to public housing and transition the units to the Section 8 
platform. An early evaluation of the RAD program found that it 
leverages nearly $9 for every $1 of PHA funding. More recent analysis 
by program staff, after several larger projects closed, show that the 
leverage ratio is now $18 for every $1 of PHA funding.
    Even with reduced funding for the Capital and Operating Funds in 
fiscal year 2018, RAD can remain successful. Some existing awardees and 
PHAs receiving awards due to the recent 40,000-unit increase that 
anticipated using Capital Funds as a source in their recapitalization 
transactions may need to find alternative resources. In addition, 
lenders and investors may impose higher property reserve requirements 
given that the initial year funding for conversions is reliant on 
public housing funding levels. Upon conversion, rent levels are 
dependent on a property's public housing funding levels even though RAD 
does not receive appropriated funds. If the Capital and Operating Funds 
are consistently funded at the proposed fiscal year 2018 levels in the 
long term, it would reduce overall the number of public housing 
properties that could participate in and benefit from RAD. In the 
future, should the RAD cap be lifted, HUD looks forward to working with 
Congress and local governments on how to fund these future conversions.
    In the absence of a RAD participation cap, HUD will be able to 
streamline the processing requirements of RAD transactions, eliminating 
the need to monitor requirements that are tied to the stewarding of 
scarce resources. For example, the RAD Notice currently limits the 
number of times a PHA can pursue competitive 9 percent LIHTC resources 
so that, if they don't secure a tax credit award, they are not sitting 
on RAD authority that others would be able to use. HUD staff spend time 
monitoring whether the PHA has applied for their tax credits and 
pressing them for their backup financing plans. In the absence of a cap 
on authority, HUD would eliminate the need for this kind of up-front 
monitoring. This is just one example, and HUD has also done significant 
work to standardize and streamline the RAD process already. In the last 
few years, HUD has dramatically increased the volume of RAD conversions 
each fiscal year, operating with the same staff. At some point, as 
production continues to increase, HUD may need to review staffing 
capacity and/or realigning other staff resources. Finally, the 
streamlining efforts in the last year have significantly clarified 
roles and responsibilities, including decisionmaking, among offices. 
HUD can continue this effort to streamline processes by automating some 
steps, further clarifying the roles of various offices, and training 
and streamlining to accelerate substantive underwriting, fair housing, 
relocation, and environmental reviews.
                                 ______
                                 
            Question Submitted by Senator Richard C. Shelby
                          manufactured housing
    Question. Secretary Carson, after your nomination hearing in the 
Senate Banking Committee, I asked how manufactured housing can play a 
role in bringing individuals and families out of poverty. Currently, 
more than 22 million Americans reside in manufactured housing. 
Manufactured homes are particularly important in rural states such as 
Alabama, where manufactured homes are approximately 16.2 percent of 
occupied housing units. This is compared to 7.3 percent nationwide. 
Because of its prevalence, some have suggested that manufactured 
housing should be represented by the position of Assistant Deputy 
Secretary at HUD, much like multi-family housing.
    President Trump has required Federal agencies to look for ways to 
make their offices more efficient and effective. Will you ensure that 
manufactured housing is well represented and has an active role in any 
new HUD reorganization?
    Answer. With respect to any plans for reorganization, HUD will 
carefully consider all of its program and missions. Manufactured 
housing is a critical source of unsubsidized, affordable housing in 
America and a critical component of housing in rural America. The 
importance of Manufactured Housing will certainly be taken into account 
when considering any reorganization.
                                 ______
                                 
           Question Submitted by Senator Shelley Moore Capito
                          fha loans admin fee
    Question. Mister Secretary, the subcommittee understands that HUD 
and its technology systems are in need of an upgrade--particularly for 
purposes of quality control/assurance regarding the accuracy of the 
loans that the FHA ensures. The fiscal year 2017 budget package 
included $4 million for IT upgrades at FHA. I see that the President's 
fiscal year 2018 request for HUD includes a request for authority to 
levy an administrative cost to be charged against the Original 
Principal Balance of a lender's FHA handbook, in an effort to raise the 
$30 million needed for FHA to better assess those loans for quality 
assurance. It's important to note that this approach has been proposed 
in budgets submitted by the previous Administration, but has not been 
adopted by Congress in the past several years.
    While I appreciate that this request would be prospective, and 
would sunset, what are your thoughts on the service cost? How would HUD 
spend the money if the authority was granted and will you consult with 
other stakeholders about this request?
    Answer. The proposed fee would fund investments to improve FHA's 
interactions with lenders and enable more agile policy development 
through investments in IT and business process re-engineering. These 
fee-funded initiatives will modernize business processes and existing 
systems and build new capabilities to support an evolving industry, 
while employing a rigorous program planning and project management 
approach to ensure that interdependencies are identified earlier, risks 
are mitigated, and ultimately that projects are delivered on schedule 
and with maximum benefit to FHA and its stakeholders. There are two 
primary initiatives FHA would pursue with these fees:
    Modernization Roadmap: In 2015, FHA developed a ``Modernization 
Roadmap'' which details nearly 30 different projects that, once 
finished, would eliminate FHA's presence on the IBM and Unisys 
mainframes and modernize FHA business processes. These projects address 
processes and systems across key areas such as condos recertification, 
Case Management, and Servicing (e.g., claims processing), in addition 
to several ancillary projects to support modernization across FHA 
(e.g., address standardization). The benefits of this work would 
include increased agility and flexibility to quickly implement policy 
changes in our systems, reduced burden on business partners, 
significant savings in maintenance costs, and risk reduction or 
avoidance because we would no longer rely on antiquated technology.
    Automated Underwriting: Today, FHA and its partners use the 
Technology Open To Approved Lenders (TOTAL) scorecard to determine 
eligibility of borrowers applying for FHA-insured loans. While the rest 
of the industry uses a rules-based automated underwriting system (AUS), 
TOTAL bases its ``score'' on an algorithm that looks at historical 
data--which is a less flexible and ultimately riskier way of assessing 
creditworthiness. The benefits of this project to move to an AUS 
include improved credit policy flexibility, case tracking and workflow, 
enhancing visibility and service to our partners, more effective 
communication with lenders, more effective use of resources, ability to 
catch risk further upstream in the process, and ultimately improving 
the MMI fund health.
    These are just two examples of initiatives that would require 
significant investments, but there are certainly other worthy 
candidates for significant IT investment at the FHA. To formalize the 
focus for initial year funding, however, HUD would absolutely seek 
input from stakeholders--both informally through our routine channels 
and through the comment period as described in the budget language. 
Ultimately, the final selection of the appropriate initiatives will 
depend both on the timing of funding availability and on this critical 
input from our stakeholders.
    The fee would be assessed prospectively, on new loan guarantees, 
and in contrast to previous proposals, would sunset in 3 years.
                                 ______
                                 
              Question Submitted by Senator Lindsey Graham
                             housing costs
    Question. According to the Harvard Joint Center for Housing 
Studies, more than 11 million renter households are ``severely 
burdened'' by housing costs, spending in excess of 50 percent of their 
income on rent alone. High rent burdens are impacting communities 
across the country.
    What regulatory relief can you provide to decrease the number of 
Americans ``severely burdened'' by housing costs or excessive rent 
burdens?
    Answer. Affordable housing is a complex issue, and one where state 
and local governments and private sector partners in those communities 
must play a key role in identifying the appropriate solutions for their 
communities.
    The Joint Center for Housing Studies shows that one reason for the 
growth in the number of severely burdened renter households is that 
rents are growing at a faster pace than renter income. The reason rents 
are rising so quickly is that ``additions to the rental supply have not 
kept pace with swelling demand'' (page 27, Joint Center for Housing 
Studies 2017 State of the Nation's Housing report).
    The problem is most severe in markets where local land use choices 
and regulations both limit the supply of land and increase the cost of 
development. This constraint on supply leads to unsustainable market 
rents. Fifty-one percent of all renters in the United States have 
incomes less than 60 percent of AMI. A simple measure of the 
availability of affordable rents is to look at HUD's calculation of 
Fair Market Rent (FMR- the 40th percentile rent) relative to what is 
affordable at 60 percent of AMI (the LIHTC rent). When FMR is 
substantially higher than the LIHTC rent, this suggests a clear supply 
shortage in the market.
    In the Oakland, CA metropolitan area, for example, the FMR is 1.6 
times what a household at 60 percent of median family income can 
afford. New York, San Diego, Santa Ana, San Jose, Oxnard, Salinas, San 
Jose, Honolulu, and San Francisco metropolitan areas all have FMRs that 
are far above this simple measure of affordability. In contrast, 
Charlotte, Detroit, Columbus, Salt Lake City, Minneapolis, Houston, 
Dallas, Atlanta, Burlington, and Anchorage metropolitan areas have FMRs 
at or below what is affordable to a household at 60 percent of the 
median family income.
    In markets with a supply shortage, rents are not just a burden on 
the renters in those communities, they also have a cost to the Federal 
government. HUD's Housing Choice Voucher subsidy per unit is 46 percent 
higher in the first set of markets compared to the second set of 
markets. The Federal government would be able to serve thousands of 
more families with the resources proposed in this Budget if local and 
state governments in these high cost places did the hard work of 
removing barriers to the creation of rental housing and, absent a 
change in regulations, used local resources rather than Federal 
resources to pay for the additional per unit development costs that are 
a direct result of local policy choices. HUD looks forward to working 
with the Congress to discuss the local, state, and Federal combined 
strategy to addressing the needs of low income renters.
                                 ______
                                 
            Questions Submitted by Senator Senator Jack Reed
                       section 811 demonstration
    Question. The Frank Melville Supportive Housing Investment Act of 
2010 established a new means for creating supportive housing units and 
delivering project rental assistance for extremely-low income persons 
with disabilities. This Subcommittee has provided $238 million in order 
to evaluate this program, which offers the chance to create new units 
in a significantly more cost-effective manner. I know that the HUD 
Office of Policy Development and Research has almost finished 
evaluating the program's initial outcomes.
    Can you elaborate upon the potential savings from this 
demonstration? Could this type of rental assistance be used to create 
new housing for other vulnerable populations, such as the elderly?
    Answer. At this time, HUD does not have information about cost-
effectiveness to determine if this model should be used for other 
vulnerable populations, such as the elderly. However, HUD will review 
the results of the current study, and is committed to applying lessons 
learned to maximize the impact of HUD programs.
    HUD expects to have results about the effectiveness of this model 
of rental assistance, including potential savings, in 2019. HUD is 
implementing the evaluation of the Section 811 Project Rental 
Assistance (PRA) demonstration in phases. Phase I covered the first 18 
months of program implementation, between January 2015 and June 1016, 
and was focused on a process study.
    Phase II will continue to evaluate the implementation of the 
program, but will also include an impact and economic analysis to 
capture the cost-effectiveness of this model of supportive housing 
assistance and the impact of the program on residents. The second phase 
of the evaluation started in September 2016 and is expected to be 
completed in 2019 and is focused on six states that have more mature 
programs and have been more successful at attracting and leasing units 
under the program.
                  lead-based paint hazard initiatives
    Question. During your confirmation hearing, you stated that 
addressing lead-based paint hazards was one of your highest priorities. 
Our Subcommittee shares that goal. Senator Collins and I have been 
working for decades to protect children, especially those from low-
income families, from lead-based paint hazards. In the fiscal year 2017 
Omnibus, we provided $60 million in additional resources, expanded the 
housing units covered by lead-based paint regulations, increased the 
number of lead inspectors, and enhanced HUD's oversight of inspections.
    Can I have your commitment to quickly implement these reforms? I 
also want to continue to examine ways that these programs can be 
improved and to ensure that resources are being targeted to areas with 
the greatest need. Do you have any insights on how HUD's programs can 
be improved to more efficiently address lead-based paint hazards moving 
forward?
    Answer. Yes. HUD is already implementing actions under the lead 
safety provisions of the Consolidated Appropriations Act, 2017 (the 
Omnibus) and is working to implement them quickly and effectively. The 
$60 million in additional fiscal year 2017 resources, including $25 
million set-aside for public housing lead-based paint remediation 
grants under PIH, and $35 million in increased funding for OLHCHH, is 
useful for addressing the lead-based paint hazard problem. These two 
offices have already begun implementing the use of these funds, such as 
through the OLHCHH's award of additional lead hazard control grants to 
communities to control lead-based paint hazards in low-income 
privately-owned homes than would otherwise have been possible, and 
PIH's preparing a notice of funds availability for awarding funds to 
public housing authorities for its lead-based paint remediation grants.
    HUD is also committed to examining and finding ways to target 
resources to maximize impact, and is already implementing some 
improvements.
    One effort is through technical assistance and guidance to PHAs. 
HUD is developing guidance, and looks to work with PHAs in the coming 
year to ensure they are reporting and responding to children with 
Elevated blood lead levels (EBLLs). The HUD Office of Public and Indian 
Housing (PIH) expects to post its guidance in the next month, and will 
offer facts sheets and online training for its PHAs. The Office of Lead 
Hazard Control and Healthy Homes (OLHCHH) staff have already started 
training HUD field staff in reviewing lead reports.
    OLHCHH is preparing changes to its lead safety regulations, the 
Lead Safe Housing Rule and the Lead Disclosure Rule, to reflect the 
Appropriations Act's expanding the range of housing units covered by 
the Residential Lead-Based Paint Hazard Reduction Act of 1992 to 
include pre-1978 zero-bedroom housing units with children under age 6 
residing or expected to reside. OLHCHH is preparing to employ 
additional lead inspection staff.
    To enable HUD to target lead safety efforts to areas with the 
greatest need, the Office of Policy Development and Research, in 
partnership with the OLHCHH, has begun developing statistical models to 
identify the geographic areas in the US that represent the highest risk 
of lead exposure. These models will be used to inform HUD's monitoring 
compliance and technical assistance to communities and housing owners 
and managers on the Lead Safe Housing Rule. Such models will also help 
HUD identify target areas for enrolling housing units in Lead Hazard 
Control grants within the grantees' jurisdictions through improved 
application scoring.
           home rehabilitation and modification pilot program
    Question. The fiscal year 2015 NDAA authorized a pilot program that 
would provide grants to non-profit organizations to rehabilitate or 
modify the primary residences of eligible veterans, and this 
Subcommittee has provided nearly $10 million during the last two fiscal 
years for that program. However, HUD has not yet made this funding 
available. During your confirmation hearing, you stated that ``people 
who go out and risk life and limb for us are people that should never 
want for any basic thing.'' In this instance, veterans are waiting and 
wanting homes that are accessible, functional, and safe.
    Why has HUD taken so long to set up this program and provide these 
grants, and when can we expect for these funds to reach these veterans?
    Answer. The design of any new program takes considerable time and 
requires extensive review to ensure that the purposes are achieved in 
an effective and efficient manner, and in this case, the Administration 
is seeking public input to the program design. HUD is working to issue 
a notice to solicit public comments to refine or confirm the 
Department's initial program design, as appropriate. Once complete, HUD 
intends to move swiftly with the Notice of Funds Availability for both 
the fiscal year 2016 and fiscal year 2017 appropriations.
                    capital needs of public housing
    Question. Throughout your confirmation process and time as HUD 
Secretary, you have highlighted the nexus between your previous work in 
the medical field and housing. You have spoken about the negative 
impacts that environmental hazards had on the health of many of your 
young patients from Baltimore during your tenure at Johns Hopkins. Yet, 
this budget fails to meet even the modest needs that will ensure public 
housing residents can live in a safe and hazard-free environment.
    At the requested funding level, how do you propose public housing 
agencies (PHAs) meet the capital needs of our nation's public housing 
to ensure that residents are not exposed to unsafe and unsanitary 
housing?
    Your budget also strips PHAs of their ability to address lead-based 
paint hazards by cutting the $25 million Public Housing Capital set-
aside to remediate lead-based paint in public housing. How are PHAs 
supposed to effectively address lead-based paint hazards if they do not 
have the resources to inspect or remediate contaminated units?
    Answer. The Department has long required all PHAs to first address 
health and safety issues in advance of any major rehabilitation in its 
public housing developments. This includes lead paint remediation and 
other health-related items. In the early 1990s, HUD required that all 
PHAs test any units built before 1978 for lead paint and provided 
additional funding in the worst-case instances to remediate those 
problems. PHAs will shortly receive their fiscal year 2017 Public 
Housing Capital funding, which they can use to address existing health 
and safety needs, including lead safety needs. In addition, PHAs can 
apply for the additional competitive grant funds appropriated to 
address lead-based paint hazards. Given these past efforts, the 
Department cannot anticipate the demand for these newly appropriated 
funds, and believes that the competition for those funds will inform 
the need for additional funding.
            affordable housing preservation and rent reforms
    Question. This Subcommittee has consistently fought to preserve 
HUD's rental assistance programs. However, the budget proposes to cut 
these programs by $2.9 billion. Even assuming the most optimistic 
savings from rent reforms, this request will be insufficient to 
preserve the existing affordable housing stock.
    Do you recognize that affordable housing will be lost under this 
budget proposal, increasing the number of rent burdened families and 
creating a new pipeline of vulnerable families into homelessness? The 
budget also proposes a number of reforms that would place significant 
financial stress on already low- and extremely low-income families and 
individuals. Based on your analysis of the levels and sources of income 
of current HUD residents, who specifically would be impacted by your 
rent reforms? What were the underlying assumptions you used to 
determine the social and economic impact this proposal would have on 
residents, and what did that analysis reveal? Would you be willing to 
share this analysis with this Subcommittee and the public so that it 
can be analyzed in greater detail?
    Answer. Changes are needed to HUD's rental assistance programs to 
provide a sustainable means to help those in greatest need and create 
the right incentives for work-able families to improve their earnings 
and economic standing. As currently structured, funding requirements 
for rental assistance represent an overwhelming part of HUD's budget 
and continue to grow. Absent reform, this growth will continue, and 
housing the same number of families will take up more and more Federal 
resources without addressing the underlying issues.
    To begin the process of moving HUD's rental assistance portfolio to 
firm ground, the Administration needs partners in Congress, Public 
Housing Agencies, local governments, non-profits, and for-profit 
business to work together to craft permanent and lasting solutions. The 
affordable housing shortage in this country continues to present 
difficult choices to families. HUD programs must be part of the 
solution, but that solution must also empower partners in local 
governments to find solutions that work on the local level. It must 
leverage HUD dollars with the public and private sector to get the most 
bang for each buck.
    For the Budget, HUD assumed baseline funding at the 2017 full-year 
annualized continuing resolution level, and implementation of rent 
reforms and PHA use of existing flexibilities to meet budget targets 
starting October 1, 2017. The specific reforms in the budget and the 
estimated number of households impacted are presented in the tables 
below, provided to Congressional staff on HUD's Appropriations and 
Authorizing Committees.









                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein
                          veteran homelessness
    Question. California continues to experience rising veteran 
homelessness, particularly as a result of the lack of affordable 
housing in many high cost California cities such as Los Angeles and San 
Francisco.
    How is the Department working with the VA to ensure that the HUD-
VASH vouchers are able to be utilized in areas close to VA facilities 
where veterans may be receiving care and case management services?
    Answer. HUD and the Department of Veterans Affairs (VA) work 
closely on the HUD-VASH program to ensure coordination at all levels 
from the field to headquarters. This VA and HUD partnership has a 
formal structure to make certain that it is aligned on program, policy, 
and operational issues. HUD and the VA are in constant collaboration 
with each other, as well as with the local PHAs and Veterans Affair 
Medical Centers, to address the specific challenges faced by individual 
communities, such as addressing the shortage of housing opportunities 
close to VA facilities or more general utilization problems.
    Question. If veterans in a specific area have lower than average 
success in obtaining housing when compared to veterans participating in 
HUD-VASH nationally, what is HUD doing to assist those veterans in 
finding housing options?
    Answer. HUD and the VA work together to address the utilization 
challenges facing the HUD-VASH program in high cost markets such as Los 
Angeles and San Francisco. For example, PHAs may project-base any of 
their HUD-VASH awards at any time to ensure dedicated affordable rental 
housing will be available in proximity to the supportive services. To 
further support this approach, HUD has conducted four project-based 
voucher (PBV) set-aside competitions for HUD-VASH vouchers. HUD-VASH 
PBV vouchers were most recently awarded in November of 2016. These 
funding awards are concentrated in those areas with high need and a 
lack of affordable housing, with a large proportion of those HUD-VASH 
PBV vouchers going to areas in California.
    HUD also encourages PHAs to raise payment standards, and request 
exception payment standards above the normal range, to increase the 
buying power of the HUD-VASH voucher in very competitive, high cost 
markets with low success rates. PHAs may also provide as many 
extensions of the search term of a HUD-VASH voucher, as necessary, for 
veterans to find and lease a unit. HUD and the VA promote proven 
strategies such as peer support, housing navigators, and landlord 
outreach and engagement. Finally, HUD has in the past made set-aside 
administrative fee funding available to further assist PHAs engaged in 
activities related to increasing the success of HUD-VASH leasing.
                           youth homelessness
    Question. Child homelessness continues to skyrocket in the U.S., 
with 1 in 30 children experiencing homelessness with their families at 
some point. Homelessness takes many forms for children and families 
rundown motels, shelters, or staying with other people because they 
have nowhere else to go. These living situations are precarious and 
even dangerous, forcing multiple moves that harm children. Homeless 
families not in shelters are therefore extremely vulnerable, but often 
invisible to a community.
    How does the fiscal year 18 HUD budget attempt to identify these 
invisible homeless families and get them the HUD homeless assistance 
they need to find stability? How does HUD's fiscal year 2018 budget 
address rising child homelessness and the various social services and 
casework management approach needed to reduce it? How does HUD's 2018 
proposed budget address the lack of resources for homeless children, 
youth, and families living in suburban and rural areas who cannot 
access shelter or where there is a lack of options for shelter?
    Answer. HUD has been working strategically with its Federal, state, 
and local partners to identify how to more efficiently use existing 
resources. As HUD is engaged in this collaboration, it has clearly 
communicated to communities that they should also forge strategic 
partnerships with homeless assistance and mainstream benefits providers 
within their communities. These relationships broaden the communities' 
understanding of the scope of the homeless community and what housing 
and services they need to end their homeless experience. This kind of 
cooperation allows communities to use existing resources in a more 
efficient and strategic manner by shifting resources from lower 
performing projects and to focus on better prioritization of resources. 
The end result is that individuals and families experiencing 
homelessness receive more tailored housing and services.
    HUD will continue to educate communities on how to use the 
Continuum of Care (CoC) and Emergency Solutions Grants (ESG) Program 
funding to address the needs of people experiencing homelessness, 
including families, children, and youth. Many of those in these 
situations, including people living in shelters or unsafe conditions, 
are eligible for CoC Program funding. The ESG program funding was 
designed to address the concerns raised. ESG serves individuals and 
families who are below 30 percent the median area income, do not have 
sufficient resources to prevent them from moving to the streets or 
shelter, and can show how their housing is precarious through things 
like frequent moves, or doubling up because of hardship. Communities 
determine how to use these resources locally to strategically address 
all of the needs of individuals and families experiencing homelessness 
in their areas.
    HUD continues to emphasize the progress made on ending family 
homelessness--a decrease of 23 percent between 2010 and 2016 based on 
HUD's Point-in-Time count data--and encourages communities to continue 
to implement best practices, including rapid rehousing. All of HUD's 
housing options emphasize funding the services necessary to end 
homelessness for individuals and families who receive assistance. HUD 
has also been working closely with the U.S. Department of Health and 
Human Services (HHS), and other partners, to better utilize early 
childhood interventions. HUD is partnering with these Federal partners 
to increase awareness in communities and to encourage communities to 
adopt practices to identify and serve young children.
    HUD is also aware that homelessness in rural areas presents unique 
challenges. HUD has made allowances for some of these differences in 
its guidance and competitions. To better address the needs of rural 
communities, HUD has been providing technical assistance to provide 
communities with information on their specific needs. HUD is evaluating 
lessons learned from technical assistance activities, including lessons 
learned from the rural communities participating in the Youth 
Homelessness Demonstration Program, and is striving to better inform 
other rural communities.
                      extremely low income renters
    Question. It is my understanding that, if enacted, HUD fiscal year 
2018 Budget would result in California losing more than 35,000 
vouchers. California already has a severe housing crisis, and I fear 
that this budget would only make it worse. Currently, California has a 
shortage of 1,110,803 homes that are affordable and available to 
extremely low income (ELI) renters. For every 100 ELI renter 
households, there are only 21 affordable homes available to them. 
Seventy-seven percent of ELI renters spend more than half of their 
income on rent.
    How will you ensure that the policies and priorities in HUD's 2018 
proposed budget will be successful and not deepen the problem in a high 
cost state such as California?
    Answer. California's rents are among the highest in the US. There 
are a number of contributing factors to these high rents and HUD looks 
forward to working with the Congress to discuss the local, state, and 
Federal combined strategy to addressing the needs of low income renters 
in California. As you know, the Federal government has played a large 
role in addressing this problem through the Low Income Housing Tax 
Credit program and increasing per unit subsidies for assisted tenants. 
However, the affordable housing shortage persists, and HUD needs a new 
way of thinking about addressing this shortage.
    HUD looks forward to working with the Congress and local and state 
elected officials to map out a strategy that has substantial 
contributions from state and local governments in addition to the 
Federal contribution. State and local governments can do more to reduce 
parking requirements, allow higher density, allow smaller units, as 
well as funding the higher development costs associated with local 
building requirements such as LEED certification, storm water 
management, or higher wage rate requirements.
                         rental market studies
    Question. In California, many Public Housing Authorities have 
reported to me that they are having a hard time finding affordable 
units under HUD's allowed payment standard. This payment standard is 
calculated by HUD using the American Community Survey, which typically 
does not reflect the skyrocketing rental market.
    In very high cost regions, some of the housing authorities have 
pooled their resources in order to commission the study necessary to 
receive approval for a more accurate payment standard that will allow 
them to meet the demand in high cost areas. Are these rental market 
studies a reimbursable expense?
    Answer. The cost of rental market surveys that are conducted to 
determine the appropriate payment standard for a market area is a PHA 
expense related to the administration of the HCV program. The PHA may 
use its earned HCV administrative fees and administrative fee reserves 
to cover the cost.
    Question. Will HUD conduct additional outreach to Public Housing 
Authorities in high cost areas to ensure they are aware of their 
options in commissioning a rental market study?
    Answer. The Housing Opportunities Through Modernization Act of 2016 
(HOTMA) required HUD to establish procedures for public housing 
agencies and other interested parties to request a reevaluation of 
their FMRs. The Federal Register notice announcing the fiscal year 2017 
Fair Market Rents (81 FR 58952) specifies the procedures for 
reevaluation requests. Item 2 of the reevaluations procedures points 
out that requestors must provide the Department with data more current 
than the 2014 American Community Survey data upon which the fiscal year 
2017 FMRs are based. This item also directs readers to HUD's guidance 
on how to conduct local rent surveys. HUD will be providing similar 
guidance in the Federal Register notice announcing the availability of 
the fiscal year 2018 FMRs.
                                 ______
                                 
           Questions Submitted by Senator Christopher Murphy
                            hud section 811
    Question. The President's request for fiscal year 2018 is only 
$121.3 million, a $24.9 million cut below the fiscal year 2017 level. 
In addition to this 17 percent cut, the Administration is proposing a 
number of changes to current tenant protections that will result in 
higher rents for tenants in 811 properties--including adults with 
severe disabilities living below 100 percent of the Federal poverty 
level (many of whom live on fixed incomes). For example, HUD is asking 
for the authority increase tenant contributions toward rent from 30 
percent of adjusted income up to 35 percent gross income (i.e., income 
adjusted by exclusions but not deductions). HUD is also proposing to 
increase minimum tenant payments from up to $25 to $50 and eliminate 
utility reimbursement payments to tenants (sometimes referred to as 
``negative rents''). The Congressional Justification does reference the 
potential for ``hardship exemptions'' that would be later defined by 
the Secretary but without any details.
    Preliminary estimates from the Technical Assistance Collaborative 
are that collectively the higher tenant contributions, higher minimum 
rents and elimination of utility reimbursements would raise an 
additional $17 million for the program, leaving a $7 million gap. This 
$7 million shortfall translates into a loss of almost 2,000 PRAC units 
or 6 percent of currently occupied 811 units. In other words, even if 
Congress were to adopt all of these recommended policies--some of which 
require changes in the underlying 811 statute--2,000 PRAC subsidies 
would be at of not being renewed in fiscal year 2018.
    If the full $24.9 million cut to 811 were enacted with none of the 
proposed changes to tenant contributions and minimum rents, 8,000 811 
PRAC units would be at risk of non-renewal (i.e. 23 percent of the 
entire inventory of 811 units).
    How can your budget renew all PRAC given this $7 million shortfall, 
which exists even after factoring in the Budget Request's proposal for 
higher minimum rents and increased tenant contributions for tenants? 
How do you justify higher minimum rents and increased tenant 
contributions from non-elderly people with disabilities below 100 
percent of the Federal poverty level?
    Answer. We disagree that there is a shortfall in renewal funding 
once all funds available to the program are included in the calculation 
of need. In addition to the requested budget amount and associated rent 
reform implementation, the Department's Section 811 funding plan 
includes the use of currently anticipated carryover funds and fiscal 
year 2018 residual receipt collections, which, when taken together are 
more than adequate to cover a theoretical $7 million shortfall that 
results from looking only at 2018 requested funds. Therefore, the 
Budget fully funds all 811 PRAC renewals. Further, the Department 
proposes flexibility to allow transfers between the 202 and 811 
program, as an additional backstop to ensure all renewals can be fully 
funded. In crafting this budget request, the Department has been 
extremely careful to ensure that no existing units will be lost or 
tenants displaced.
    Requiring a minimum rent requirement of $50 for all households 
primarily impacts the non-elderly non-disabled households who are 
currently not working. This minimum rent is intended to encourage 
families to pursue some form of work, whether it be part time or full 
time, and it also creates more fairness with the families that are 
paying rent. The minimum rent requirement is proposed for all of the 
rental subsidy programs, for consistency across programs. The increased 
minimum rent to $50 will impact just 5 percent of the residents of 
Section 811 housing. This is because the great majority of disabled 
residents earn an income, and already pay higher amounts than the 
proposed minimum rent.
    Question. Mr. Secretary, you have claimed publicly that the 
President is requesting sufficient funding to renew all existing 
project-based rental assistance contracts (PRACs). However, the numbers 
for Section 811 do not appear to add up.
    If Congress were to adopt the President's budget for 811, do you 
have a contingency plan for dealing with a shortfall in PRAC renewal 
funding for a full 12 months? Is the proposal in the budget to transfer 
up to $35 million between 202 and 811 not an implicit concession that 
the Administration's budget short funds PRAC renewals across both 
programs?
    Answer. The Department is confident that there is no need for a 
shortfall contingency plan for Section 811. In addition to the budget 
request, HUD's funding plan includes currently anticipated carryover 
funds and residual receipt collections to support the program. These 
amounts, coupled with prompt implementation of rent reforms will ensure 
that all 811 PRAC renewals are fully funded. Further, the Department 
proposes flexibility to allow transfers between the 202 and 811 
program, as an additional backstop to ensure all renewals can be fully 
funded.
    The proposal for transfer authority is not a concession that the 
Budget does not provide adequate funding for PRAC across the two 
programs. The precise timing and distribution of rent reform savings 
between the two accounts is difficult to predetermine, as is the number 
of hardship exemptions that may be provided within each account. The 
transfer authority simply allows HUD to adequately support both 202 and 
811, as needed, during budget execution. In addition, residual receipts 
and recaptures used to supplement the budgets are unpredictable, so 
this authority allows the Department the needed flexibility to ensure 
funding is available for all contract renewals and amendments on a 
timely basis.
                                 ______
                                 
               Questions Submitted by Senator Joe Manchin
                   community development block grants
    Question. The Community Development Block Grant (CDBG) program is 
one of the longest running programs at the Department of Housing and 
Urban Development (HUD). It has historically been popular with 
Governors because it incorporates flexibility for them to determine how 
best to use the money for their state's unique needs.
    For example, my state of West Virginia suffered the worst flood in 
state history last June. It claimed 23 lives across the state and left 
many homeless. However, because of the unique structure of the CDBG 
program, funds have since been directed towards urgent flood relief to 
rebuild our communities. As we have arrived at the 1 year anniversary 
of the flood, there still remains much to be done. But, we wouldn't 
have gotten nearly this far without the critical funds provided by the 
CDBG program.
    You mention in your testimony that the CDBG program is not well-
targeted to the poorest communities and has not demonstrated a 
measurable impact on communities. However, I think the West Virginia 
families that lost their homes, their businesses, and their loved ones 
in the flood last year would beg to differ with that statement. I was 
disappointed to see that in his latest budget proposal, President Trump 
has eliminated this program completely.
    For a program that has enjoyed as much bipartisan support as the 
Community Development Block Grant program has, what was the rationale 
behind eliminating this critical program? Have you had any discussions 
with the Administration to find alternative ways to fill the void that 
eliminating this program leaves?
    Answer. The Department remains committed to working closely with 
West Virginia officials to address long-term recovery needs arising 
from the flooding that impacted the state in July 2016. To that end, 
millions of dollars in CDBG disaster recovery funding has been 
allocated to West Virginia and these funds will assist in long-term 
recovery efforts. The CDBG disaster recovery program is a supplemental 
program, funded as the result of a natural or manmade disaster, that 
has no relation to the funding of the regular CDBG program.
                  home investment partnerships program
    Question. Stable housing has been shown to end persistent 
homelessness, improve health conditions, and lower public costs by 
reducing the use of other public services. We also know that stable 
housing supports a stable workforce, enables children to achieve more 
at school, and supports the strength of our communities.
    The HOME Investment Partnerships Program provides funds for those 
who need it most--and in a state like West Virginia where many renters 
are considered extremely low income, meaning households with income 
less than the poverty guideline--these funds couldn't be more 
important. To put that in perspective, in my state, there are 27 
counties (out of 55 total) where more than half of all 4-person 
households make $24,250. That is for a family of four. Furthermore, 
this program has built or preserved 5,832 homes and supported 6,198 
jobs in West Virginia, highlighting its beneficial ripple effects in 
rural communities.
    I was encouraged when, during your confirmation hearing, you said 
that you would look for ways to expand affordable housing options. 
Instead, a program that successfully does that very thing is being 
eliminated in the President's budget.
    How does the elimination of this vital program contribute to your 
stated goal of expanding affordable housing options?
    Answer. Substantial regulatory burdens come along with Federal 
dollars as exemplified by the HOME program. Defunding of HOME will free 
state and local officials as well as other affordable housing producers 
to address affordable housing needs through approaches best suited to 
local resources.
    The Department will work with localities to develop public-private 
partnerships to continue developing affordable housing. Additionally, 
HUD encourages and supports localities to remove various barriers to 
the production of affordable housing. This approach will right size the 
Federal involvement for housing and encourage additional affordable 
housing to be built.
    Affordable housing is a complex issue, and one where state and 
local governments and private sector partners must all play a key role 
in identifying the appropriate solutions for their communities. Rents 
are growing at a faster pace than renter income, and this problem is 
most severe in markets where local land use choices and regulations 
both limit the supply of land and increase the cost of development, 
leading to unsustainable market rents. The Federal government has 
played a large role in addressing this problem through production 
programs like LIHTC, and increasing per unit subsidies for assisted 
tenants. However, this effort alone is not enough. HUD needs a new way 
of thinking about addressing the affordable housing shortage, and looks 
forward to working with the Congress to discuss the local, state, and 
Federal combined strategy to addressing the needs of low income 
renters.
                  section 4 capacity building program
    Question. In your testimony, you mentioned that the President hopes 
that this revamp of the budget will encourage more ``local solutions'' 
and more private involvement. However, that is already the case with so 
many programs, where funds must be matched. In rural areas like West 
Virginia, we are already struggling with matching requirements, which 
significantly delays projects until the matching funds can be secured. 
There just aren't enough financing options in rural areas something 
that I'm very concerned is not being recognized by this new budget.
    However, even programs that already must, by law, leverage private 
dollars, are eliminated under the President's budget. For example, the 
Section 4 program is the only program in HUD's budget that helps build 
the capacity of state and local organizations so that they can better 
serve their communities and it leverages significant private and public 
capital using minimal Federal dollars. While the law requires that 
every Section 4 dollar must be matched directly by $3 of private 
funding; this program has consistently over-performed, attracting $27 
in public and private investment.
    The Coalfield Development Corporation serves three counties in the 
hardest-hit region of West Virginia where they face issues of 
persistent poverty, high unemployment, an opioid epidemic, and a high 
incarceration rate. Leveraging a Section 4 grant of just $50,000, they 
were able to receive a 4 to 1 match to create 27 new and 24 
rehabilitated homes, create 35 new jobs, and support 15 new graduates 
in higher education. That is monumental in Southern West Virginia and 
is exactly the type of program we should support.
    For rural environments that face a lack of private investment and 
financing options, how do you envision elimination of programs that 
already used matching funds to affect those areas? Do you think that 
the elimination of this program would cause a greater imbalance than 
already exists between rural and urban communities?
    Answer. It may be more difficult for some communities to secure 
additional funds, but as demonstrated by your example, not impossible. 
Many communities have relied on Section 4 funding in part, because 
these communities have also not aggressively looked for additional 
private sector resources or prioritized the use of local resources.
    With respect to the Section 4 Capacity Building program, the non-
profits eligible for funds have significant capacity to raise funding 
from non-Federal sources. Further, HUD continues to support capacity 
building for both urban and rural communities through Technical 
Assistance. In recent years, HUD has adopted a more integrated and 
efficient approach to technical assistance and strengthening grantees 
in recent years, and looks forward to working with Congress and its 
stakeholders to ensure rural communities are well supported through 
those programs. The 2018 Budget includes $25 million for these efforts.
              self-help homeownership opportunity program
    Question. In your testimony, you stress the importance of being 
efficient with our government dollars and focusing on programs that 
``work''. Well, one program that meets both of these criteria is the 
Self-Help Homeownership Opportunity Program (SHOP). SHOP is one of the 
several HUD programs that require matched funds using minimal Federal 
dollars. Non-profit organizations must compete for the funds to 
revitalize neighborhoods, support lower-income homebuyers, and create 
new job opportunities across the country. Importantly, SHOP is one of 
only four Federal housing programs out of 40 studies that received a 
top rating in the Office of Management and Budget's (OMB) Program 
Assessment Rating Tool (PART) evaluation system.
    Far from being a government ``hand-out'', this program requires 
low-income beneficiaries to put in at least 100 hours of ``sweat 
equity'' into their homes, with most families averaging more than 350 
hours. Fostering this sense of ownership encourages these families to 
continue to care for their homes, and become long-term members of the 
community, which in turn, encourages good citizenship.
    This program has been eliminated in President Trump's budget. Do 
you believe that this program has been ineffective? Do you believe that 
there is a better way for us to encourage home ownership and good 
citizenship? What improvements, in your opinion, could be made to the 
program so that it can be viewed as more effective?
    Answer. Housing for low-income families is currently funded by 
multiple funding sources, including Federal, State, and local 
governments, as well as the private and nonprofit sectors. The result 
is a fragmented system with varying rules and regulations that create 
overlap and inefficiencies, as well as challenges to measuring 
collective performance. HUD needs a new way of thinking about 
addressing the affordable housing shortage, and looks forward to 
working with the Congress to discuss the local, state, and Federal 
combined strategy to addressing the needs of low income households. The 
Administration is in favor of ``sweat-equity'' as a model, and will 
look to partners in local communities, including philanthropic and 
other non-profit supporters as conduit to deliver these services.
                      national housing trust fund
    Question. The National Low-Income Housing Coalition has found that, 
in West Virginia, there are just 59 affordable and available homes per 
100 renter households for those considered as extremely low income. As 
a result, 63 percent of renter households in West Virginia pay more 
than half of their income on rent. These households include our 
seniors, veterans, people with disabilities, and working families with 
children.
    In this environment, I am concerned about the elimination of the 
National Housing Trust Fund (NHTF) from President Trump's budget. NHTF 
statue requires that at least 75 percent of the funds for rental 
housing benefit extremely low income households. Without resources like 
the NHTF, the private market would not be able to serve these families 
because the rent they can afford to pay is not enough to cover the cost 
of operating and maintaining the property, let alone to turn any 
profit--creating a dilemma for any private company. It is vital to the 
success of housing projects that private developers have Federal 
assistance, as it simply would not happen otherwise.
    Without the Housing Trust Fund allocations, West Virginia and the 
United States will be facing a housing crisis that will have far-
reaching effects. The loss of these programs is a blow that we just 
can't bear. If the Housing Trust Fund is eliminated, how can the 
Federal government incentivize private developers to build affordable 
rental housing units for people with the lowest incomes?
    Answer. HUD supports the justification in the Administration's 
Budget volume, Major Savings and Reforms of the proposal:
    ``The Housing Trust Fund, managed by the Department of Housing and 
Urban Development, provides grants to States to increase and preserve 
the supply of affordable housing primarily for extremely low-income 
families. The Capital Magnet Fund, managed by the Department of the 
Treasury's Community Development Financial Institutions (CDFI) Fund, 
provides grants to CDFIs and nonprofit housing organizations that are 
leveraged to finance affordable housing and related economic 
development activities. Originally established by the Housing and 
Economic Recovery Act of 2008 with dedicated funding from Fannie Mae 
and Freddie Mac assessments, a total of $627 million has been allocated 
to the funds since 2016. Housing for low-income families is currently 
funded by multiple funding sources, including Federal, State, and local 
governments, as well as the private and nonprofit sectors. The result 
is a fragmented system with varying rules and regulations that create 
overlap and inefficiencies, as well as challenges to measuring 
collective performance. The Budget would devolve some affordable 
housing activities to State and local governments who are better 
positioned to comprehensively address the array of unique market 
challenges, local policies, and impediments that lead to housing 
affordability problems.''
    collaboration with other federal agencies on rural housing and 
                         community development
    Question. Mr. Secretary, the Administration has proposed a major 
re-organization of the U.S. Department of Agriculture's (USDA) Rural 
Development portfolio, a move that would have considerable impact on 
rural housing and community development. Many of the Senators on this 
Subcommittee recently wrote to the President expressing our concern 
about this re-organization.
    Similarly, over at the Department of Commerce (DOC), many programs 
that support rural development and industry are being eliminated. At 
the rural levels, many communities utilize funds from HUD, DOC, USDA, 
Treasury, private philanthropy to implement projects and programs.
    With one or more of these sources of funding being lost (i.e., from 
DOC and USDA), how is this affecting HUD's ability to effectively 
implement their programs aimed at rural communities?
    Answer. HUD programs such as public housing, assisted multifamily 
programs, and Housing Choice Vouchers all serve rural areas. Of 1.3 
million extremely low-income renters in nonmetropolitan areas, i.e., 
those with incomes 30 percent or less of the area median income, HUD 
programs assist 300,000 households and USDA 150,000 households. HUD 
welcomes the opportunity to work with Congress to better align Federal 
housing efforts in rural areas.
    Further, HUD continues to support capacity building for both urban 
and rural communities through Technical Assistance. In recent years, 
HUD has adopted a more integrated and efficient approach to technical 
assistance and strengthening grantees in recent years. The 2018 Budget 
includes $25 million for these efforts.
    Question. Is HUD working to fill the gap where these other sources 
of funding are being eliminated?
    Answer. The Department is looking to target assistance to those 
that need it most, and avoiding displacement of existing families 
regardless of where they live. However, the Department is not looking 
to grow programs, or potentially overlap with other Federal efforts. Of 
note, the worst-case needs\1\ for affordable rental housing are 
substantial in rural areas, but not as severe as those in urbanized 
areas. Nationwide in 2015, 43 percent of very low-income renters had 
worst case needs, compared with only 31 percent in nonmetropolitan 
areas and 35 percent in rural suburbs of metro areas. Urbanized areas 
were worse off, with 44 percent in central cities and 49 percent in 
urban suburbs. Housing assistance benefits 25 percent of very low-
income renters nationwide, 32 percent in nonmetropolitan areas, 21 
percent in both rural and urban suburbs, and 26 percent in central 
cities.
---------------------------------------------------------------------------
    \1\ HUD defines worst case needs as renter households who have very 
low-incomes (not more than 50 percent of area median income), do not 
have housing assistance, and who have severe housing cost burdens 
exceeding 50 percent of income, or severely inadequate units, or both.
---------------------------------------------------------------------------
    Question. At the Secretarial level, do you work with Secretary 
Ross, Perdue, and others to assess the best ways for the 
Administration, as a whole, to effectively serve rural and underserved 
areas meet their housing and community development needs?
    Answer. The Department is committed to working together with other 
Federal, state, local and private partners to effectively serve the 
needs of the nation, and make the most of appropriated resources. HUD 
will also continue working with USDA on the Interagency Task Force on 
Agriculture and Rural Prosperity.
                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy
                        public housing vouchers
    Question. The President's budget proposes to slash Federal 
investments in affordable housing programs administered by HUD by $7.4 
billion, including $771 million less than enacted in 2017 and $2.3 
billion less than estimated to renew all housing vouchers in 2018. This 
level of proposed cuts is expected to result in a reduction of 
approximately 250,000 public housing vouchers for families throughout 
the nation. Public housing authorities already estimate that the 
spending levels included within the 2017 Omnibus, which included a $633 
million increase, will not be sufficient to fully fund all public 
housing vouchers as a result of increased demand and rising rents
    What efforts will the Department take to ensure that this proposed 
reduction in funding for rental assistance will not result in the 
eviction of nearly 250,000 families who are no longer able to afford 
their rent?
    Answer. The fiscal year 2018 Budget's objective for the Housing 
Choice Voucher (HCV) program is to reduce costs while continuing to 
assist current residents. HUD believes the Budget provides the 
necessary cost savings, offset authority, and administrative 
flexibilities for public housing agencies (PHAs) to meet their budget 
targets without having to terminate assistance to currently-assisted 
families.
    The Budget would provide HUD with the authority to waive or specify 
alternative requirements for statutory and regulatory provisions over 
areas including allowable rent levels, payment standards, and reporting 
requirements during this transition. This proposal will provide PHAs 
with a variety of options to help them manage their programs within 
their funding limits while preventing the displacement of current 
participants. This approach is designed to empower PHAs by giving them 
the flexibility to employ those relief measures that make the most 
sense in relation to their local needs and priorities. HUD is also 
proposing changes that will ensure that participating families are 
making modest contributions toward their share of the rent while 
reducing program costs. For example, families would pay a minimum rent 
of $50 and utility reimbursements (in instances when utility costs 
exceed tenant rent contributions) would be eliminated, except in cases 
where families would qualify for hardship exceptions.
    HUD will also continue to deploy a Shortfall Prevention Team to 
identify agencies that are at risk and work with those agencies to 
mitigate that risk, using existing tools such as the Housing Assistance 
Payments (HAP) renewal set-aside funding, PHA reserves, and cost 
savings measures that are available to the PHA. HUD will use existing 
offset and reallocation authority to reallocate excess PHA reserves to 
other PHAs to prevent funding shortfalls. As part of this Budget, HUD 
is asking Congress to remove the restrictions that have limited the 
Department's ability to apply the offset to the excess reserves held by 
the MTW agencies.
    It is true that some PHAs will need to stop or delay the reissuance 
of vouchers that turn over as families leave the program to achieve 
this objective (historically around 9 percent, or about 200,000 
families exit the program each year). However, not reissuing a voucher 
when it turns over is not the same thing as terminating a current 
voucher family's assistance, which the Budget's proposals are designed 
to avoid.
    Question. What plans does the Department have to increase 
investments in supportive services to ensure that families who are at 
risk of losing HUD-assisted housing as a result of this proposed 
reduction, will not become homeless?
    Answer. HUD is not increasing investments in supportive services 
targeted to current voucher families to prevent homelessness--the 
policies underlying the Budget request are designed to prevent the need 
for terminations due to funding shortfalls.
    In addition to the flexibilities and waiver authorities for the HCV 
program discussed above, the fiscal year 2018 Budget provides 
administrative relief and reduced administrative costs to PHAs 
operating the Public Housing Program. We are seeking broad waiver 
authority for the public housing program so that HUD can provide some 
immediate relief to PHAs from costly or burdensome regulations. HUD is 
also proposing full flexibility between operating and capital funds to 
allow PHAs to determine at the local level where funds are most needed 
for their public housing. Separately, we are implementing the FAST Act, 
which allows PHAs to recertify families on fixed income once every 3 
years--a significant administrative relief for both PHAs and families. 
Finally, HUD is establishing a Regulatory Reform Task force, as 
required by Executive Order 13771 to evaluate and reduce ineffective, 
costly, and burdensome regulations.
                         cdbg/home eliminations
    Question. You were asked several times during your testimony before 
the Subcommittee about CDBG grants, cited by my colleagues as an 
irreplaceable source for the production of affordable housing and 
community development activities. You responded that while you think 
the program does wonderful things, ``in an atmosphere of severe fiscal 
constraint, we have to be able to concentrate on what our primary goals 
are.'' Since 1983, Vermont has received more than $200 million in CDBG 
funds to invest in our rural infrastructure, successfully leveraging 
more than $4 billion in additional investment. The loss of such 
proposed economic activity in my small state would be a devastating 
loss for not only our affordable housing community, but our workforce 
that relies on the production and maintenance of this industry. The 
CDBG program's success is its flexibility as a source of capital that 
meets the unique needs of a community, including the construction of a 
new fire station, senior housing development, or community 
revitalization of low-income communities.
    What are the primary goals of the Department, if not to ensure 
decent affordable housing, to provide services to the most vulnerable 
in our communities, and to create jobs through the expansion and 
retention of businesses?
    Answer. The Department's goals remain unchanged, but approaches to 
achieving those goals must change for the Department's programs to 
remain sustainable. The Budget reflects the choice to discontinue 
funding for the CDBG program in favor of locally driven public-private 
programs with even stronger private leverage.
    Question. If we are working to establish fiscal responsibility, why 
would we eliminate Federal investment in CDBG--a program that leverages 
$3.50 in outside private and public investments for every Federal 
dollar invested?
    Answer. Current leverage metrics are flawed--reflecting only 
grantees that choose to report leverage, and include other Federal 
funds. As a result, one cannot isolate which CDBG-supported projects 
would have not occurred but for CDBG/Federal support. The Budget 
reflects the choice to discontinue funding for CDBG in favor of locally 
driven public-private programs with even stronger private leverage.
    Question. What other community development investments are you 
aware of that leverage private and nonprofit support at a better return 
on investment?
    Answer. It is common for community development projects to be 
funded by multiple funding sources--Federal, state, local, private and/
or nonprofit. To the specific question of leverage, an early evaluation 
of the RAD program found a 9-to-1 leverage ratio. More recent analysis 
by program staff, after several larger projects closed, show that the 
leverage ratio is 18-to-1.
    Question. With the proposed loss of CDBG, what investments is the 
Department prepared to make that enable communities to retain local 
decisionmaking power to invest in unique community development needs?
    Answer. Most infrastructure and other community development 
investments made by state and local governments are supported with 
local resources other than CDBG, such as local revenues, bond proceeds, 
and state resources. CDBG, as is the case with all Federal grant 
programs, comes with many overlapping requirements. Reducing these 
burdens on local governments ensures that local governments will retain 
decisionmaking power in the pursuit of local priorities.
                 eliminations/rental reform/opportunity
    Question. In his fiscal year 2018 budget proposal, the President 
has recommended cuts to programs like CDBG that support important 
programs provided by community-based organizations in our public 
housing and low-income communities. At the same time, you have talked 
about using public housing as a tool to provide ``opportunity'' and 
holistically serving resident in public housing.
    How do you envision providing opportunities while at the same time 
proposing cuts to programs that currently serve those purposes?
    Answer. The Administration intends to seek broader involvement of 
faith-based and other non-profits to not only close the funding gap but 
to establish a more flexible framework that is highly responsive to 
local needs. These non-governmental resources have been underutilized 
in the past and HUD is prepared to work closely with them to promote 
opportunity in the nation's low-income communities.
    HUD has two programs administered by the Office of Public and 
Indian Housing that provide opportunities to residents of HUD-assisted 
housing, and these programs will continue. The Family Self Sufficiency 
(FSS) program provides $75 million to over 700 grantees, and in fiscal 
year 2016 provided services to over 70,000 households. In FSS, the head 
of household signs a contract of participation that maps out steps he/
she will take to achieve self-sufficiency over the next 5 years. The 
FSS coordinator works with that family member to develop that 
individualized contract, and connects them to supportive services and 
employment opportunities that will help them become economically self-
sufficient--reducing dependency on welfare assistance and rental 
subsidies.
    The Jobs Plus program, modeled after a successful evidence-based 
pilot in the 1990's, has awarded $63 million in grants to 24 Public 
Housing Authorities over the past 3 years. Jobs Plus uses three 
strategies--intense job training and case management, rent incentives, 
and community support for work--at targeted public housing developments 
over 4 years. Grantees work with all able-bodied residents between the 
ages of 18 and 61 in the targeted development to increase earnings and 
advance employment outcomes. The Jobs Plus program requires that PHAs 
establish partnerships with American Job Centers and other community 
social service agencies to strengthen program implementation and 
streamline residents' access to services.
    Question. Can you share your vision of how HUD intends to provide 
services that increase opportunity and improve prospects for the youth 
who live in those communities better--for example academic support, job 
skills and career readiness training, among other services?
    Answer. Both FSS and Jobs Plus programs work with HUD-assisted 
residents on all challenges that may impede the residents' ability to 
become self-sufficient, and this includes linking residents to local 
educational opportunities, job placement and training courses, health 
screenings, etc. In addition, HUD works closely with Federal partners 
to make sure that needed services are coordinated and available to HUD-
assisted residents. Examples of this collaboration include:

  --Every summer HUD works with USDA to expand summer feeding programs 
        to HUD-assisted residents.
  --HUD has a strong partnership with the Department of Labor, and each 
        of the Jobs Plus grantees has a Memorandum of Understanding 
        with their local One-Stop Career Centers.
  --HUD is working with the Department of Education to increase the 
        number of HUD-assisted residents who apply for college and 
        complete the FAFSA form.
  --HUD continues to work with the Department of Veteran Affairs to 
        coordinate supportive services for homeless veterans.
                         cdbg/home eliminations
    Question. The President's fiscal year 2018 budget proposal 
eliminates the HOME program, the only Federal resource for the 
production of new affordable housing. The administration proposes the 
elimination of this program even as our country faces chronic shortages 
of safe, affordable housing in communities nationwide. This eliminates 
$950 million that states and communities would otherwise use to 
construct affordable housing and ensure long-term habitability in low- 
and moderate-income communities. The existing formula does not just 
dole out funding haphazardly it takes into account each jurisdiction's 
housing supply, poverty level, and financial situation, among other 
factors. Jurisdictions must match 25 cents for every dollar invested by 
the Federal government, which requires community investment. Our 
communities step up and contribute but they cannot do it alone. Federal 
investment is required for housing to remain affordable, safe, and 
accessible to all levels of income-earning Americans.
    Together, CDBG, HOME and NeighborWorks create an irreplaceable 
source of capital for communities throughout the nation. In my home 
state of Vermont, affordable housing projects often include up to 
fourteen different funding sources, always with these three investments 
at the core of leveraging private investment from the community. 
Without these funds, housing providers will not have matching resources 
to develop, maintain, or revitalize our much-needed affordable housing 
stock.
    How does your Department expect to improve upon or even maintain 
the current availability of affordable housing for low income Americans 
without Federal investments in CDBG, HOME and NeighborWorks?
    Answer. Given current budget constraints, the Administration placed 
priority on ensuring that currently assisted households continue 
receiving housing assistance through the Section 8 programs and HUD's 
homeless assistance programs.
    In addition, the Administration believes that local communities are 
better positioned than HUD to determine and comprehensively address 
their affordable housing needs. It is incumbent upon local elected 
officials to assess all factors that are leading to continued 
affordability problems, fund priorities with local revenues (e.g., 
local housing trust funds), and develop public private partnerships to 
invest in affordable housing.
    Affordable housing is a complex issue, and one where state and 
local governments and private sector partners must all play a key role 
in identifying the appropriate solutions for their communities. Rents 
are growing at a faster pace than renter incomes, and this problem is 
most severe in markets where local land use choices and regulations 
both limit the supply of land and increase the cost of development, 
leading to unsustainable market rents. The Federal government has 
played a large role in addressing this problem through production 
programs like LIHT, and increasing per unit subsidies for assisted 
tenants. However, this effort alone is not enough. HUD needs a new way 
of thinking about addressing the affordable housing shortage, and looks 
forward to working with the Congress to discuss the local, state, and 
Federal combined strategy for addressing the needs of low-income 
households.
                             neighborworks
    Question. As a uniquely designed congressionally chartered 
nonprofit organization, NeighborWorks has a strong record of success in 
upholding HUD's mission, and partnering effectively with HUD programs 
including CDBG and HOME to promote strong, sustainable, inclusive 
communities and quality, affordable homes for all. NeighborWorks 
represents one of the pillars of overall community development and 
affordable housing infrastructure for communities nationwide, and 
serves as an invaluable source of capital funding. NeighborWorks 
investments promote affordable homeownership, family financial 
stability, community sustainability, and workforce development, which 
spurs economic growth to effectively increase tax revenue at all 
levels.
    Importantly, the flexibility of NeighborWorks funding enables 
affiliates to effectively identify and address local development needs, 
as well as sponsor critical projects in low-moderate income communities 
that promote long-term economic development. When matched with other 
HUD capital funds including CDBG, HOME and funds leveraged by the 
Federal Low-Income Housing Tax Credit, NeighborWorks meets the unique 
needs of our communities by successfully building partnerships across 
development partners, resulting in cost-sharing and cost-saving 
practices. The success of these investments in lower-income communities 
further proves that if you remove one pillar, the whole structure 
crumbles.
    The President's budget proposes the elimination of funding for 
NeighborWorks, claiming the public nonprofit failed to document a 
strong return on Federal funds. However, in fiscal year 2016 
NeighborWorks affiliates provided affordable housing from more than 
350,000 families and created and maintained more than 50,000 jobs--all 
made possible by leveraging their appropriation at a level of 91 to 1.
    There are few programs that can demonstrate a stronger return on 
Federal investment as NeighborWorks. If the President believes this 
program has not had a strong enough return to justify investment, 91 to 
1 as reported in fiscal year 2016, then what is level of return is 
sufficient to merit funding?
    Answer. While the goal of NeighborWorks, or the Neighborhood 
Reinvestment Corporation (NRC), is laudable, the NRC is not a unique 
provider of housing and community services. Less than 2 percent of the 
network's investments come from NRC's Federal funds--the production of 
NRC network members come largely from other sources. Further, while the 
NRC has a demonstrated output measure, the Budget cites the lack of 
rigorous statistical evidence to link NRC's funding and technical 
support to improved outcomes. Accordingly, the Budget directs these 
funds to other Administration priorities.
                           housing trust fund
    Question. The National Housing Trust Fund (NHTF) has long been 
praised by housing providers as a critical tool in addressing the needs 
of the very lowest-income Americans. Despite multiple requests from 
members of Congress, including myself, it was not until 2014, that 
Federal Housing Finance Agency (FHFA) Director Mel Watt first 
authorized any payments, and its administration by HUD.
    This year, the NHTF is expected to collect and distribute $235 
million to states to increase housing opportunities to the lowest 
income Americans. However, rather than directing its resources towards 
housing affordability, President Trump's budget instead proposes 
eliminating the authority for NHTF and diverting those funds to the 
administrative costs, such as salaries, contract expenses, and 
technology improvements at the Federal Housing Administration.
    Does the Department consider repurposing the National Housing Trust 
Fund to pay FHA administrative costs, rather than its statutory intent, 
appropriate especially at a time when many states are seeing a 
reduction in Federal housing resources and increased demand for 
services for very low-income families experiencing homelessness?
    Answer. Thank you for the question. The Budget does not redirect 
the Federal Housing Finance Administration's assessments on Fannie and 
Freddie to Federal Housing Administration (FHA) administrative costs. 
Further, HUD does not oversee the FHFA, only the Housing Trust Fund 
amounts that are provided from such assessments. HUD is committed to 
effective and efficient administration of any Housing Trust Fund 
amounts.
    Question. Why discontinue this non-taxpayer funding stream that 
helps Americans struggling the most stay in their homes?
    Answer. To clarify, the Housing Trust Fund does not help struggling 
households remain in their homes but provides grants to States to 
increase and preserve the supply of affordable housing primarily for 
extremely low-income families. Housing for low-income families is 
currently funded by multiple funding sources, including Federal, State, 
and local governments, as well as the private and nonprofit sectors. 
The result is a fragmented system with varying rules and regulations 
that create overlap and inefficiencies, as well as challenges to 
measuring collective performance. The Budget would devolve some 
affordable housing activities to State and local governments who are 
better positioned to comprehensively address the array of unique market 
challenges, local policies, and impediments that lead to housing 
affordability problems. See page 107 of the ``Major Savings and 
Reforms'' Volume of the 2018 President's Budget: https://
www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/
msar.pdf.
    Affordable housing is a complex issue, and one where state and 
local governments and private sector partners must all play a key role 
in identifying the appropriate solutions for their communities. Rents 
are growing at a faster pace than renter income, and this problem is 
most severe in markets where local land use choices and regulations 
both limit the supply of land and increase the cost of development, 
leading to unsustainable market rents. The Federal government has 
played a large role in addressing this problem through production 
programs like LIHTC, and increasing per unit subsidies for assisted 
tenants. However, this effort alone is not enough. HUD needs a new way 
of thinking about addressing the affordable housing shortage, and looks 
forward to working with the Congress to discuss the local, state, and 
Federal combined strategy for addressing the needs of low-income 
renters.
    Question. Why divert it to the Federal Housing Administration?
    Answer. The Budget does not divert these funds to the Federal 
Housing Administration.
                       homeless assistance grants
    Question. During a meeting with the National Low Income Housing 
Coalition, you assured advocates in regards to the proposed reduction 
for homeless assistance programs to $2.25 billion from $2.383 billion, 
that, ``Nobody's going to be thrown out on the street.'' Following that 
statement, you defended your response by stating in a National Public 
Radio interview on June 5, 2017 that ``There's also a new model that 
we're really concentrating on'', citing public-private partnerships to 
leverage Federal investments in affordable housing.
    In states like Vermont, these public-private partnerships have 
successfully reduced the rate of chronic homelessness by 25 percent and 
27 percent in 2015 and 2016, respectively. However, this has only been 
achievable with the support from HUD Homelessness Assistance Grants and 
the Continuum of Care program, to support small communities to maintain 
local decisionmaking to invest in rapid-rehousing and permanent 
supportive housing.
    How will the Department ensure that communities do not see an 
increase in the number of individuals and families experiencing 
homelessness? What information is currently available about the ``new 
model'' that the Department is concentrating on to address 
homelessness? What efforts will the Department undertake to ensure that 
rural communities are part of the Department's plans to implement a new 
best practice to serve the homeless?
    Answer. Since the implementation of the HEARTH Act, HUD has been 
working with Federal, State, and local partners to understand best 
practices around the country. HUD continues to incentivize communities 
to implement best practices like coordinated entry and Housing First. 
These best practices allow communities to more efficiently allocate 
their resources while serving individuals and families experiencing 
homelessness in a more tailored and meaningful way. HUD will continue 
to support communities through technical assistance resources to 
effectively implement these practices locally.
    Additionally, HUD has a long history of creative public-private 
partnerships. Many of the projects today have a healthy blend of public 
and private supportive service options that often rely on local and 
state health and mental health services coupled with privately funded 
housing and employment specialists. Similarly, assistance with housing 
is often done in partnership with public housing authorities and other 
state and city resources along with non-profit housing developers and 
providers partnering to identify how to prioritize the housing and 
service resources to best meet the needs of individuals and families 
experiencing homelessness in their communities. These partnerships 
create critical leverage for maximizing the use of resources.
    HUD is aware that homelessness in rural areas presents unique 
challenges. HUD has made allowance for some of these differences in its 
guidance and competitions. To better address the needs of rural 
communities, HUD has been providing technical assistance to provide 
communities with their specific needs. HUD is evaluating lessons 
learned from technical assistance activities, including lessons learned 
from the rural communities participating in the Youth Homelessness 
Demonstration Program, and is striving to better inform other rural 
communities.
                  interagency council on homelessness
    Question. First authorized by the Reagan Administration, the United 
States Interagency Council on Homelessness (USICH) stands as the only 
Federal agency tasked with cross-Federal coordination to develop best 
practices and cost-effective strategies to prevent and end 
homelessness. Vulnerable communities, including Veterans, youth and 
individuals with mental health disorders have benefited greatly from 
these efforts. Since 2010, the nation has seen a 47 percent reduction 
in the number of Veterans experiencing homelessness, as well as a 27 
percent reduction in chronic homelessness, overall.
    I am confident that the USICH delivers on several key objectives of 
the Trump Administration, including reducing duplicative spending and 
regulatory burden. A recent report published by the Urban Institute 
noted that the proposed elimination of the USICH by the Trump 
Administration would increase ``duplication and suboptimal use of 
Federal resources'' among programs aimed to prevent and end 
homelessness.
    How does the proposed elimination of the USICH, an agency tasked 
with coordinating anti-homelessness efforts across 19 agencies and 
dozens of programs in order to promote cost-savings, best practices and 
avoid duplicative work, help to achieve the Administration's goals of 
``reducing duplication and redundancy''?
    Answer. HUD is committed to working across agencies and state, 
local, and private partners to leverage other programs to end 
homelessness. One of the United States Interagency Council on 
Homelessness' (USICH) biggest accomplishments was the promotion of 
interagency collaboration to combat homelessness. USICH helped pave the 
way for collaboration across agencies, and now such collaboration 
across agencies has become more common place and can continue without a 
distinct Council.
    Question. Without the cross-Federal coordination leadership 
provided by the USICH, how will the Department deliver on its mission 
to deliver high-quality technical assistance, and develop best 
practices and cost-effective strategies to prevent and end 
homelessness, especially with a 13 percent overall reduction in Federal 
funding?
    Answer. HUD is committed to coordinating with its public sector 
partners at the Federal, State, and Local level, and with the private 
sector. The Department has already taken a series of actions to improve 
the effectiveness and efficiency of the Homeless Assistance Grants, and 
will continue working towards making maximum progress towards the 
Department's mission with appropriated funding.
                 lead hazard control and healthy homes
    Question. Research confirms that housing policy has an important 
impact on public health, and that any public health agenda must include 
a housing component for it to be effective. Meanwhile, more than 
500,000 children under the age of five in the United States have 
elevated blood lead levels due to exposure to toxic chemicals in 
housing-related materials.
    During your confirmation hearing before the Senate Banking 
Committee, you testified that there is a strong connection between 
health and housing and furthermore, that ``Where one lives should not 
cause health problems.'' Despite acknowledging healthy homes as a 
priority, the fiscal year 2018 budget proposed by the Administration 
reduces funding for the Office of Lead Hazard Control and Healthy 
Homes' grants by $15 million.
    With reduced funding, how do you propose to build upon HUD's 
successful Lead Hazard Control programs and maintain its current 
efforts to address a variety of environmental health and safety 
concerns, including the welfare of children?
    Answer. The Department appreciates the funding provided in fiscal 
year 2017 for the Office of Lead Hazard Control and Healthy Homes 
(OLHCHH), with appropriations of $145 million, $35 million over the 
fiscal year 2016 funding level. These funds will be very useful for 
addressing the lead-based paint hazard problem.
    The Department supports increased funding for this program, as 
demonstrated by the President's fiscal year 2018 Budget which requests 
$130 million, or $20 million over fiscal year 2016 level--the same 
annual amount provided since fiscal year 2013. With the 2017 
appropriations and the 2018 request, the Department is committed to 
meeting its mission to provide lead-safe housing to low-income families 
renting or owning their private homes.
    Question. How will HUD invest in the research and development of 
best practices to target additional lead hazard control grants to the 
nation's highest-risk areas, including rural communities?
    Answer. To enable HUD to target lead safety efforts to areas with 
the greatest need, the Office of Policy Development and Research, 
partnering with the OLHCHH, has begun developing statistical models to 
identify geographic areas in the US with the highest risk of lead 
exposure. These models will inform HUD's program monitoring and 
technical assistance to communities, housing owners, and housing 
managers on the Lead Safe Housing Rule. Such models will also help HUD 
and Lead Hazard Control grantees identify target areas for enrolling 
housing units under those grants through improved application scoring.
                             rental reforms
    Question. The proposed administrative reforms to HUD's rental 
assistance programs in the President's budget include several changes 
that would disproportionately affect low income Americans. The proposal 
to increase tenants' rent contribution to 35 percent of gross income 
from 30 percent of adjusted income is particularly troubling, as the 
cost of housing is already out of reach for many HUD-assisted 
households. This change from adjusted to gross income removes expenses 
like healthcare and prescription drugs from the leger when calculating 
tenants' contributions. For many senior and disabled citizens, who 
represent more than 50 percent of HUD-assisted households and are 
generally on fixed incomes, this level of increase is insurmountable 
and will result in pricing many out of their homes.
    How many seniors and citizens with disabilities does the request 
estimate would not receive hardship exemptions and see their rents 
raise under the rent reform policies?
    Answer. Although the evidence is limited, HUD is assuming 
relatively few households whose rents would be increased from 30 
percent of adjusted to 35 percent of gross income will seek a hardship 
exemption. For the vast majority of families, this increase in rent is 
not large compared to the differential between their subsidized rent 
and the cost of renting in the private market. Households receiving 
housing assistance receive benefits averaging more than $600 in subsidy 
per month relative to private market rents. The proposed increases in 
tenant contributions, averaging less than $90 per month for households 
affected by the proposed change in the income calculation, still leaves 
most households with a monthly subsidy in excess of $500 relative to 
market rents.
    For the Housing Choice Voucher program and Public Housing, HUD's 
experience with hardship exemption policies as they relate to the 
minimum rent policies that are already in effect is that they are used 
sparingly. In a 2010 study of rents and rent flexibility, a survey of 
PHA staff found that less than 1 percent of assisted households receive 
a hardship exemption (https://www.huduser.gov/publications/pdf/
Rent%20Study_Final%20Report_05-26-10.pdf). More recent analysis of 
HUD's administrative data confirms this low percentage of households 
currently receiving a hardship exemption.
    Question. These ``reforms'' would not deduct medical and other 
healthcare expenses before considering rent as a percent of income.
    What should senior and disabled citizens do if they are on fixed 
income and cannot afford both their medications and their rent?
    Answer. To ensure that impact on vulnerable populations are 
minimized, HUD is proposing to provide for a hardship exemption for 
households that are unable to afford their rent level.
    Question. As the number of Americans relying on Federal housing 
subsidies continues to rise, and wages continue to outpace housing 
costs, how will the Department ensure that no HUD-assisted household 
sees a reduction or termination of Federal assistance as a result of 
the proposed rental reforms?
    Answer. The rental reforms proposed were designed around HUD's 2016 
experience with tenant incomes, recertification schedules, and Housing 
Choice Voucher turnover. The proposed fiscal year 2018 Budget assumes 
that the proposed reforms would begin to be implemented on October 1, 
2017. Although many households would be expected to contribute more 
towards their rent, HUD will work with PHAs and owners to manage their 
resources in a way that minimizes the risk of any currently assisted 
households losing their assistance due to these reforms.
    Question. Does the proposal result in fewer Americans overall 
receiving HUD assistance?
    Answer. For the Project Based Rental Assistance, 202/811, and 
Public Housing Programs, HUD's modeling of the Budget does not assume a 
reduction in households served. For the Housing Choice Voucher program, 
PHAs have a number of options available to them to achieve the budget 
goals proposed in the fiscal year 2018 Budget. Among those options is 
to reduce leasing of turnover vouchers, which if implemented, could 
result in fewer households assisted over time.
    Question. What is the total estimated budget savings from these 
residents' increased rents?
    Answer. The combination of the proposed increase in minimum rent 
and elimination of negative rent across all programs, along with the 
increase in tenant contributions in the PBRA and 202/811 programs from 
30 percent of adjusted income to 35 percent of gross income, is 
estimated to increase overall tenant contributions by approximately $1 
billion in fiscal year 2018.
    Question. What is the estimated savings from a 1 year rent freeze 
to owners?
    Answer. This proposal will save about $100 million for Project 
Based Rental Assistance, 202 and 811.
    Question. The Administration's proposal to establish ``a path for 
work-able families to move toward self-sufficiency'', suggests a work 
requirement for HUD-assisted families. Recent reports find that 
approximately only 6 percent of households receiving Federal housing 
subsidies include able-bodied adults not currently employed, or 
dependents with disabilities. The President's budget proposes the 
authority for statutory changes be granted to HUD, including for 
purposes of implementing work requirements for HUD-assisted households.
    What proposals will you submit regarding work requirements for HUD-
assisted households, and what evidence does the Department have to 
defend the proposal that work requirements will boost employment levels 
and increase ``self-sufficiency''?
    Answer. Requiring a minimum rent requirement of $50 for all 
households primarily impacts the non-elderly, non-disabled households 
who are currently not working. This minimum rent is intended to 
encourage families to pursue some form of work, whether it be part time 
or full time, and it also creates more fairness with the families that 
are paying rent. Over 60 percent of HUD-assisted households who are not 
elderly or disabled are working, and HUD's data further shows about 80 
percent of these households have had some earned income in the past 3 
years. However, 20 percent of those families have had no earned income 
reported for rent calculations in the last 3 years. Furthermore, of 
those currently working, many are working part time and most households 
have a single wage earner. Policies that encourage more hours worked, 
more months worked, and more wage earners in the household will put 
more families on a path toward self-sufficiency.
    HUD recognizes that some HUD-assisted households have barriers to 
employment. Low education, child care responsibilities, care of a 
disabled or elderly family member, and poor health are common barriers 
among the non-elderly, non-disabled. But HUD also recognizes that the 
current rent structure discourages work--higher income equals greater 
rent. This is a complex issue, with HUD's programs not being the only 
programs that need to be considered when developing a rent reform 
proposal. Approximately 70 percent of non-elderly, non-disabled 
assisted tenants receive SNAP benefits. There are Medicaid eligibility 
income limits as well that impact household decisionmaking.
    HUD is currently working on a rent reform proposal that is 
sensitive to this complexity and has a goal that the rent calculation 
serves as both an incentive to work and increase the number of workers 
in the household. HUD is developing this proposal by compiling lessons 
learned from the Moving To Work agency experience and HUD's current 
Rent Reform, Family Self-Sufficiency, and Jobs Plus research, among 
other sources.
    Question. Your Department is seeking flexibility for $35 million 
from both the Section 202 and 811 accounts for the elderly and 
disabled. I believe the requests for both accounts are insufficient to 
begin with.
    Why is HUD seeking this flexibility?
    Answer. Several funding source components within both the 202 and 
811 accounts are difficult to predetermine, such as recaptures. The 
transfer authority allows HUD the flexibility, based on real-time 
information, to ensure adequate, timely funding for all renewals, as 
needed in each account, during actual budget execution.
    Question. What prevents HUD from estimating accurately the actual 
needs for these accounts?
    Answer. It is difficult to accurately estimate the funding needs of 
the 202 and 811 accounts for several reasons. The properties are 
subject to budget based rent increases (as opposed to operating cost 
adjustment factor). Each property submits their rent increase request 
based on expected annual funding needs, which cannot be predicted by 
HUD. In addition, actual amounts can be higher or lower than 
projections due to changes to resident income and resident departures. 
In fiscal year 2018, the Department's funding plans for both 202 and 
811 rely on carryover funds, recaptures, and residual receipt 
collections in addition to the appropriated funding amount, all of 
which are more difficult to predict than standard baseline renewal 
needs. In addition, the precise timing and distribution of proposed 
rent reform savings between the two accounts is difficult to 
predetermine, as is the number of hardship exemptions that may be 
provided within each account. The requested transfer authority 
mitigates new challenges associated with pre-estimating ultimate needs 
within each account. That said, the Department is confident that the 
overall level for Sections 202 and 811 is sufficient to fully fund all 
Project Rental Assistance Contracts (PRAC) renewals and amendments.
              affirmatively furthering fair housing (affh)
    Question. I continue to have concerns regarding your feelings 
toward the Affirmatively Furthering Fair Housing (AFFH) Rule, which you 
called a 'failed socialist experiment' in an op-ed in the Washington 
Times. This rule asks cities and towns receiving Federal dollars to 
look at their housing patterns to identify racial bias and to take 
action to rectify any bias they find. You called it social engineering. 
During your confirmation hearing, you pledged to enforce our fair 
housing laws. I believe this includes upholding the AFFH. Will you 
support, and enforce the AFFH rule?
    Answer. Yes. HUD is committed to complying with the Fair Housing 
Act and all implementing regulations, including the Affirmatively 
Furthering Fair Housing Rule. The AFFH obligation is a shared 
obligation between HUD and its grantees required by the Fair Housing 
Act. The AFFH Rule promotes compliance with this obligation for HUD's 
grantees. The Rule provides localities with assistance in their fair 
housing planning, and the planning process requires that local 
decision-makers involve their communities in assessing fair housing 
issues to jointly develop local strategies for overcoming them. The 
Fair Housing Act of 1968 requires the Secretary of HUD and agencies 
administering programs and activities relating to housing and urban 
development to administer these programs and activities in a manner 
that affirmatively furthers fair housing. HUD will continue to 
implement and enforce the fair housing rule, while ensuring that these 
obligations are not overly burdensome on PHAs and HUD grantees.
    Question. Do you believe AFFH has been an effective tool to promote 
fair housing choice, and foster inclusive communities that are free 
from discrimination?
    Answer. The AFFH rule still remains in the early stages of 
implementation. When HUD-funded communities begin reporting on their 
efforts through their annual progress reports to CPD and PIH, HUD will 
share more concrete results.
    Question. What efforts and investments is the Department prepared 
to make to ensure that all Americans, regardless of identify, are 
protected from discrimination within their place of residence, if the 
AFFH Rule is not upheld?
    Answer. For 49 years, the Fair Housing Act has required HUD and its 
grantees to affirmatively further fair housing. Regardless of AFFH, the 
obligation for HUD and it grantees to affirmatively further fair 
housing under the Act does not change, and HUD's enforcement authority 
of the obligation to affirmatively further fair housing remains. 
Moreover, the Fair Housing Act require HUD to protect the public from 
housing discrimination based on race, national origin, color, religion, 
sex, disability and familial status.

                          SUBCOMMITTEE RECESS

    Senator Collins. This hearing is now adjourned.
    [Whereupon, at 4:10 p.m., Wednesday, June 7, the 
subcommittee was recessed, to reconvene subject to the call of 
the chair.]