[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.]