[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]






 
                     HOUSING IN AMERICA: ASSESSING                     
                      THE INFRASTRUCTURE NEEDS OF                      
                        AMERICA'S HOUSING STOCK

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 30, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-19
                           
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     
 
 
 
 
                               ______
 
                U.S. GOVERNMENT PUBLISHING OFFICE 
 37-450 PDF               WASHINGTON : 2019
                           
                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    April 30, 2019...............................................     1
Appendix:
    April 30, 2019...............................................    63

                               WITNESSES
                        Tuesday, April 30, 2019

Carter, Daryl J., Founder, Chairman, and CEO, Avanath Management, 
  LLC, testifying on behalf of the National Multifamily Housing 
  Council and the National Apartment Association.................    10
Lawson, Steven, President, The Lawson Companies, testifying on 
  behalf of the National Association of Home Builders............     8
Todman, Adrianne, CEO, National Association of Housing and 
  Redevelopment Officials........................................     6
Yentel, Diane, President and CEO, National Low Income Housing 
  Coalition......................................................     5

                                APPENDIX

Prepared statements:
    Carter, Daryl J.,............................................    64
    Lawson, Steven,..............................................   114
    Todman, Adrianne.............................................   129
    Yentel, Diane................................................   137

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of the Center on Budget and Policy 
      Priorities.................................................   151
    Written statement of the Council for Affordable and Rural 
      Housing....................................................   153
    Written statement of the Council of Large Public Housing 
      Authorities................................................   160
    Written statement of the Credit Union National Association...   164
    Written statement of Enterprise Community Partners...........   167
Budd, Hon. Ted:
    U.S. Chamber of Commerce, Center for Capital Markets 
      Competitiveness report entitled, ``The Role of Insurance 
      Investments in the U.S. Economy,'' dated Winter 2019.......   170
Gonzalez, Hon. Anthony:
    Agreement between the U.S. Department of Housing and Urban 
      Development, the New York City Housing Authority, and New 
      York City, dated January 31, 2019..........................   212
McHenry, Hon. Patrick:
    Written statement of Howard Husock, Vice President for 
      Research and Publications, Manhattan Institute.............   264
Ocasio-Cortez, Hon. Alexandria:
    Article from The New York Times entitled, ``Mold, Lead, Leaks 
      and Broken Locks. Tenants Vent Fury at Housing 
      Authority.'', dated September 26, 2018.....................   267
    Article from The New York Times entitled, ``Tests Showed 
      Children Were Exposed to Lead. The Official Response: 
      Challenge the Tests,'' dated November 18, 2018.............   269
    Article from The New York Times entitled, ``No Heat for 10 
      Years, and the City Is Their Landlord,'' dated December 19, 
      2018.......................................................   276
Wagner, Hon. Ann:
    Chart of St. Louis City & County Opportunity Zone 
      Recommendations............................................281 01

                HOUSING IN AMERICA: ASSESSING
                  THE INFRASTRUCTURE NEEDS OF
                    AMERICA'S HOUSING STOCK

    Tuesday, April 30, 2019
      U.S. House of Representatives,
          Committee on Financial Services,
            Washington, D.C.
The committee met, pursuant to notice, at 10:10 a.m., in room 
  2128, Rayburn House Office Building, Hon. Maxine Waters 
  [chairwoman of the committee] presiding........................
Members present: Representatives Waters, Velazquez, Sherman, 
  Clay, Scott, Green, Cleaver, Himes, Foster, Beatty, Vargas, 
  Gottheimer, Gonzalez of Texas, Lawson of Florida, San Nicolas, 
  Tlaib, Porter, Axne, Casten, Pressley, McAdams, Ocasio-Cortez, 
  Lynch, Gabbard, Adams, Garcia of Illinois, Garcia of Texas, 
  Phillips; McHenry, Wagner, Posey, Luetkemeyer, Huizenga, Duffy, 
  Stivers, Barr, Tipton, Williams, Hill, Loudermilk, Mooney, 
  Davidson, Budd, Kustoff, Gonzalez of Ohio, Rose, Steil, Gooden, 
  and Riggleman..................................................
Chairwoman Waters. The Financial Services Committee will come to 
  order. Without objection, the Chair is authorized to declare a 
  recess of the committee at any time............................
Today's hearing is entitled, ``Housing in America: Assessing the 
  Infrastructure Needs of America's Housing Stock.'' I now 
  recognize myself for 4 minutes for an opening statement........
Today, this committee convenes for a hearing on addressing the 
  infrastructure needs of America's housing stock. Congress must 
  recognize that our nation's infrastructure extends beyond 
  making investments in our roads, bridges, ports, and airports. 
  It also includes our nation's affordable housing...............
We are in the midst of a housing affordability crisis. According 
  to the National Low Income Housing Coalition, there is a 
  shortage of more than 7.2 million rental housing units that are 
  affordable and available to the lowest-income families. In 
  fact, no State in America has an adequate supply of affordable 
  housing for the lowest-income renters..........................
For example, California has a deficit of over a million 
  affordable and available units. Wisconsin has a deficit of 
  nearly 140,000 units. Mississippi has a deficit of nearly 
  50,000 units. New York has a deficit of over 600,000 units.....
Rising rents and gentrification are part of this problem. For 
  example, in my district, the City of Inglewood, California, is 
  experiencing economic development which, while it offers many 
  benefits for the community, has also resulted in higher rents 
  and has led to displacement of residents. Affordable housing 
  must be a part of any solution or long-time and often lower-
  income residents will lose their homes.........................
Our public housing system, which houses 2.6 million Americans, is 
  also in dire need of investment to repair kitchens, elevators, 
  baths, doors, windows, and roofs. There is a public housing 
  capital need backlog of $70 billion, and around 10,000 units 
  are lost each year as a result of disinvestment................
Neglecting our housing infrastructure hurts our economy. Studies 
  have found that the lack of affordable housing hurts economic 
  productivity and wages. For all of these reasons, I have put 
  forth a discussion draft that would make the investments we 
  need in our housing infrastructure and critical jobs across the 
  country........................................................
The bill contains $1 billion to fully fund the backlog of capital 
  needs for Sections 515 and 514, that is rural housing stock; $5 
  billion to support mitigation efforts that can protect 
  communities from future disasters and reduce post-disaster 
  Federal spending; $5 billion for the Housing Trust Fund to 
  support the creation of hundreds of thousands of new units of 
  housing that would be affordable to the lowest-income 
  households; $100 million to help low-income elderly households 
  in rural areas age in place; $1 billion for the Native American 
  Housing Block Grant Program to address substandard housing 
  conditions on tribal lands; $10 billion for a CDBG set-aside to 
  incentivize States and cities to eliminate impact fees and 
  responsibly streamline the process for development of 
  affordable housing; and $70 billion to fully address the public 
  housing capital backlog........................................
We also need to consider ways to incentivize developers to reduce 
  the energy costs of affordable housing and to create housing 
  that accommodates generations of families living under one 
  roof...........................................................
This committee has already passed the Ending Homelessness Act to 
  house the more than 500,000 persons experiencing homelessness, 
  and is now turning its attention to addressing another aspect 
  of the affordable housing crisis: the lack of housing 
  infrastructure.................................................
I now recognize the ranking member of the committee, Mr. McHenry, 
  for 4 minutes for an opening statement.........................
Mr. McHenry. Thank you, Chairwoman Waters. I thank you for 
  holding this hearing on the very important subject of housing..
First, I am encouraged, Madam Chairwoman, that you agree with 
  committee Republicans that barriers to advancing and promoting 
  affordable housing at the local level are important topics 
  worthy of debate and consideration. That is included in this 
  bill...........................................................
In particular, we need to find solutions to assist and partner 
  with local communities who struggle to address affordable 
  housing, especially the supply and demand dynamics in local 
  neighborhoods..................................................
A report which was the discussion by this committee in the last 
  Congress found that up to 30 percent of the cost of developing 
  and constructing affordable housing is attributed to outdated 
  and sometimes unnecessary local regulations. On the other hand, 
  Madam Chairwoman, this hearing is more than a discussion on how 
  to incentivize local innovation to attract development of 
  affordable housing for lower-income families...................
This legislation you drafted as a subject of today's hearing 
  raises serious concerns about the funding for publicly assisted 
  rural and Native American tribal affordable housing projects. 
  There is no question that today's federally supported 
  affordable housing stock has serious capital improvement needs.
The last HUD study estimated $21 billion, and today we will hear 
  that number could be as high as $70 billion. These are big 
  costs representing big needs. But I would suggest that if we 
  are to discuss a proposal to infuse $70 billion into public and 
  assisted housing programs, then we need to really hear what 
  should be happening for a 21st Century modern model for 
  government-funded and assisted housing.........................
We shouldn't just be funding old models, we should be looking at 
  the newest innovative models and the current models that 
  actually work and get the most bank for the buck. Funding 
  aside, public and rural assisted housing is struggling and it 
  is not just because of a lack of funding.......................
Innovation, in particular using private financed markets to 
  design and influence programs that advance able-bodied working 
  families to get back into the workforce are effective models in 
  the community. We have work-capable adults who are on the 
  sidelines. We need to give them the means, the mechanism, and 
  the opportunity to get back into the workforce and to find 
  themselves in their own stable situation. We need a more 
  holistic approach..............................................
That is what is working in communities and getting people back 
  into a sustainable housing situation. We know some of the 
  toolset can work, Move to Work, the Rental Assistance 
  Demonstration Program, and really the most recent idea, thanks 
  mainly to Congressmen Duffy and Cleaver, is the Housing Choice 
  Voucher Mobility Demonstration Act of 2018.....................
I would also bring attention to work conducted by Harvard 
  University economist Raj Chetty, who developed the opportunity 
  atlas using data from the U.S. Census Bureau and the Internal 
  Revenue Service. And here is what Dr. Chetty found: If a person 
  moves out of a neighborhood with worse prospects to a 
  neighborhood with better outlooks, that move increases lifetime 
  earnings for low-income children by an average of $200,000.....
So I am interested in the opportunity atlas because it indicated 
  that my neighboring community, Charlotte, North Carolina, which 
  is really important for my region, ranked dead last out of 50 
  cities. I think that is problematic. So, I hope that we can 
  work together to use the models that do work, and that we can 
  focus on innovation............................................
I am happy to have a discussion that is not about throwing money 
  at Depression-era programs that don't fit a modern setting in a 
  modern situation and a modern economy. And to make sure that we 
  have the right Federal investment for the best outcomes........
And so with that, I look forward to the panel and the questions 
  today..........................................................
Chairwoman Waters. The Chair now recognizes the gentleman from 
  Missouri, Mr. Clay, the Chair of our Subcommittee on Housing, 
  Community Development, and Insurance for one minute............
Mr. Clay. I want to thank the chairwoman and the ranking member 
  for convening this important hearing on housing infrastructure. 
  As the Chair of the Subcommittee on Housing, I am honored to 
  mark the 51st anniversary of the congressional passage of the 
  Fair Housing Act during the month of April, which is National 
  Fair Housing Month.............................................
President Johnson signed the Fair Housing Act on April 11, 1968, 
  one week after the assassination of Dr. King. The Fair Housing 
  Act was a monumental step forward for the Civil Rights Movement 
  and pivotal to establishing equal opportunity in housing for 
  all Americans..................................................
A 2018 report from the Council of Large Public Housing 
  Authorities estimated that completing the $25 billion backlog 
  of public housing repairs would infuse $80 billion into local 
  economies. And according to the National Low Income Housing 
  Coalition, in my Missouri congressional district, there are 
  only 3 affordable homes for every 10 low-income renter 
  households.....................................................
So we are coming up short and must address this problem with the 
  necessary investment at the Federal, State, and local level. 
  Madam Chairwoman, I see my time has expired, so I yield back...
Chairwoman Waters. Thank you.....................................
The Chair now recognizes the gentleman from Wisconsin, Mr. Duffy, 
  the ranking member of the subcommittee, for one minute.........
Mr. Duffy. Thank you, Madam Chairwoman. I appreciate you holding 
  this hearing today and I look forward to parts of your draft 
  that work with rural housing developments, Sections 514 and 
  515. Chairman Clay held a hearing on these issues last month 
  and I think this is a point of potential bipartisanship and I 
  look forward to working with you and Mr. Clay and other 
  Democrats......................................................
But I also will have to say, do we just open up a checkbook and 
  start spending money, to Mr. McHenry's point, or do we have a 
  new vision for what programs will work for the 21st Century, 
  and how do we effectively spend taxpayers' money on really 
  important programs for virtually all of our communities?.......
As Mr. McHenry pointed out, we have to look at the cost of 
  regulation, of local, State, and Federal regulation on the 
  construction of housing. And I think we have to work as a 
  committee and as a Congress to identify those costs and try to 
  reduce those costs as opposed to some of the proposals that 
  have come from the left that would actually dramatically 
  increase those costs. And I think that is a point of 
  bipartisanship as well.........................................
And just one last note, I would say that if we are going to be 
  effective in fixing the housing crisis we have in America, we 
  have to make it bipartisan, and that means working on 
  legislation I think from the starting point to get it to the 
  Senate and get the President to sign it. And I look forward to 
  working with the Majority......................................
I yield back.....................................................
Chairwoman Waters. Today, we welcome a distinguished panel of 
  witnesses to discuss issues around the U.S. housing stock: Ms. 
  Diane Yentel, president and CEO of the National Low Income 
  Housing Coalition; Ms. Adrianne Todman, CEO of the National 
  Association of Housing and Redevelopment Officials; Mr. Steven 
  Lawson, president of the Lawson Companies, testifying on behalf 
  of the National Association of Home Builders; and Mr. Daryl 
  Carter, founder, chairman, and CEO of Avanath Capital, 
  testifying on behalf of the National Multifamily Housing 
  Council and the National Apartment Association.................
Witnesses are reminded that your oral testimony will be limited 
  to 5 minutes. When there is one minute left, a yellow light 
  will indicate that you should wrap up your testimony...........
And without objection, all of your written statements will be 
  made a part of the record......................................
Ms. Yentel, you are now recognized for 5 minutes to present your 
  oral testimony.................................................
                STATEMENT OF DIANE YENTEL, PRESIDENT AND CEO, 
                  NATIONAL LOW INCOME HOUSING COALITION
Ms. Yentel. Thank you. Chairwoman Waters, Ranking Member McHenry, 
  and members of the committee, thank you for the opportunity to 
  testify today..................................................
On behalf of the National Low Income Housing Coalition (NLIHC), I 
  commend Chairwoman Waters for your leadership on the Housing is 
  Infrastructure Act of 2019. The investments proposed are badly 
  needed and long overdue........................................
Our country's affordable housing crisis has reached historic 
  heights, most harming the lowest-income people who are in less 
  than the poverty line or 30 percent of area meeting incomes. 
  Nationally, we have a shortage of over 7 million homes 
  affordable and available to these lowest-income people.........
In other words, there are fewer than 4 homes affordable and 
  available to every 10 of the lowest-income seniors, people with 
  disabilities, or families with kids. No congressional district 
  has an adequate supply of available rental homes affordable to 
  its lowest-income residents. As a result, nearly 8 million of 
  the lowest-income renter households pay more than half of their 
  incomes towards housing and over half a million people in our 
  country have no homes at all...................................
The private market cannot on its own meet the housing needs of 
  the poorest renters. Without government intervention, decent 
  and affordable homes cannot be reliably built, operated, and 
  maintained at a price that the lowest-income households can 
  afford. Federal subsidies are necessary but funding for such 
  subsidies has been declining for decades. In addition to the 
  tremendous need to produce homes affordable to the lowest-
  income people, we must preserve our country's existing 
  affordable housing infrastructure..............................
Public housing, home to over 2\1/2\ million low-income people, 
  plays a critical role in addressing America's affordable 
  housing needs. Congress has underfunded public housing for 
  decades. Between 2000 and 2016, funding for public housing 
  repairs was cut in half........................................
With limited funding, public housing agencies are unable to make 
  needed repairs to preserve these homes and these investments. 
  Our country loses 10,000 to 15,000 public housing apartments 
  annually to obsolescence or decay, and other units fall into 
  deep disrepair. The funding needed to address capital repairs 
  in public housing is estimated to exceed $50 billion today.....
An infrastructure spending package is an opportunity for Congress 
  to respond. Like roads and bridges, affordable housing is a 
  long-term asset that helps communities and families thrive. 
  Investments in affordable homes increase economic mobility, 
  strengthens communities, creates jobs, and lifts local 
  economies......................................................
NLIHC strongly supports Chairwoman Waters' Housing is 
  Infrastructure Act and its proposed investment of $5 billion to 
  expand the National Housing Trust Fund, which would address the 
  underlying cause of our affordable housing crisis, the severe 
  shortage of homes affordable for the lowest-income people......
The Housing Trust Fund's first allocation of $170 million has 
  allowed States to build or preserve 160 projects with over 
  1,900 Housing Trust Fund-assisted homes, housing our country's 
  most vulnerable people: those previously experiencing 
  homelessness; youth exiting foster care; survivors of domestic 
  violence; people with disabilities; seniors; veterans; and 
  others.........................................................
Funding for this successful and necessary program should be 
  expanded to no less than the $5 billion proposed by Chairwoman 
  Waters. We strongly support the chairwoman's proposal to invest 
  $70 billion for the public housing Capital Fund. This 
  investment could quickly be used to repair America's 
  deteriorating public housing infrastructure by fixing leaky 
  roofs, replacing outdated heating systems, and remediating mold 
  to improve the health and living conditions for millions while 
  creating local jobs and protecting a key piece of America's 
  affordable rental housing stock................................
And we strongly support the proposed $2 billion to address 
  critical housing needs in rural and tribal areas that have some 
  of the country's most severe housing needs.....................
As infrastructure bills move forward in Congress, NLIHC will 
  monitor and oppose proposals attempting to increase income 
  levels targeted by existing subsidized housing programs or to 
  create new programs to subsidize middle-income market-rate 
  housing........................................................
Using scarce Federal dollars on market-rate housing is misguided 
  and wasteful. In most areas of the country, the private market 
  meets these needs. Where it doesn't, the Federal Government's 
  role should be to incentivize or require local communities to 
  decrease regulatory and zoning barriers to private sector 
  development....................................................
Chairwoman Waters' CDBG set-aside proposal is a good step towards 
  creating effective incentives. Thank you for the opportunity to 
  testify before you today. I look forward to any questions you 
  may have.......................................................
[The prepared statement of Ms. Yentel can be found on page 137 of 
  the appendix.].................................................
Chairwoman Waters. Thank you, Ms. Yentel.........................
Ms. Todman, you are now recognized for 5 minutes to present your 
  oral testimony.................................................
                STATEMENT OF ADRIANNE TODMAN, CEO, NATIONAL 
                  ASSOCIATION OF HOUSING AND REDEVELOPMENT 
                  OFFICIALS
Ms. Todman. Good morning, Chairwoman Waters and Ranking Member 
  McHenry. Thank you for inviting me to talk to you today about 
  public housing and the importance of Housing as Infrastructure.
Last year, the National Association of Housing and Redevelopment 
  Officials (NAHRO) celebrated its 85th anniversary as a 
  membership organization. Our members represent over 70 percent 
  of the agencies that actually administer public housing, HOME 
  and CDBG across the country. America's public housing is an 
  integral component of our nation's infrastructure; it is home 
  to almost one million families including more than 360,000 
  families with children and more than 315 senior households.....
We owe it to those families, children, and veterans, and also our 
  homeless individuals who need access to those units, and people 
  who are struggling with housing affordability, to preserve 
  those units....................................................
One might ask, how did we get here as it relates to the condition 
  of public housing? Over the years, and as the public housing 
  program rules changed, the rents of the families who lived in 
  public housing could no longer sustain the operating costs of 
  the units. Congress then authorized the provision of operating 
  assistance which also could not keep up with existing costs. 
  Unfortunately, funding needed to address the capital needs of 
  this important housing portfolio has never truly been realized 
  and we are now bearing witness to the consequences of those 
  decisions......................................................
The Capital Fund is provided annually to public housing agencies 
  for the development, financing, and modernization of public 
  housing developments. Housing authorities use this money to 
  repair and improve their public housing sites, address deferred 
  maintenance needs, and replace obsolete utility systems........
While we are extremely grateful for the increased appropriations 
  that were made in 2018 and 2019, the current appropriations 
  levels are just not keeping up with costs. Extrapolating from 
  HUD's 2010 capital needs assessment, we join our sister 
  association, the Public Housing Authorities Directors 
  Association (PHADA), in estimating the capital needs backlog to 
  be upwards of $70 billion, and this is even after considering 
  contributions made by the Rental Assistance Demonstration 
  Program (RAD) and the Housing Choice Program...................
We applaud the inclusion of $70 billion in Chairwoman Waters' 
  housing infrastructure bill for the public housing program. 
  Public housing is not just infrastructure, it is also an 
  economic engine. Every dollar that's spent on public housing 
  produces an additional $2.12 in indirect economic activity.....
We also recommend to the committee that it consider investments 
  into the HOME program, which has created more than a million 
  units of affordable housing and provided direct rental 
  assistance to more than 356,000 families across the country. We 
  encourage you to consider including $5 billion into the HOME 
  Program........................................................
In order to prepare for the natural disasters that impact our 
  housing infrastructure, we need to have both a firm plan to 
  ensure resilience as well as a path back for when our housing 
  is damaged or destroyed. We are pleased to see that the 
  proposed legislation acknowledges the role that natural 
  disasters play in interrupting housing affordability in 
  communities across the country.................................
Investing in affordable housing, particularly the public housing 
  portfolio, truly is an investment in people and it is a cost-
  saving mechanism that prevents additional expenditures 
  downstream. In fact, a 2016 study found that living in 
  subsidized housing as a teen was positively associated with 
  adult earnings. The research also found that subsidized housing 
  was associated with reduced likelihood of incarceration........
Another 2015 study found that older adults who were able to 
  access housing after experiencing homelessness had lower rates 
  of emergency hospital visits and reduced overnight 
  hospitalization................................................
And investing in people is what this conversation is really 
  about. Without this investment, there is a generation of 
  children who will not have stable housing, who may not have 
  opportunities and become, as Raj Chetty has also said, the 
  ``lost Einsteins'' in our country, folks who would have had an 
  opportunity but for destabilization............................
It is that part of our work that inspires housing professionals 
  across the country to get out of bed every single day and go to 
  work even in the face of impossible decisions, and choices they 
  have to make to keep public housing stable. And it is that 
  reason that this committee and this Congress should be 
  compelled to look at not just public housing as part of 
  infrastructure, but also the entire affordable housing 
  continuum across the country. I look forward to your questions.
[The prepared statement of Ms. Todman can be found on page 129 of 
  the appendix.].................................................
Chairwoman Waters. Thank you, Ms. Todman.........................
Mr. Lawson, you are now recognized for 5 minutes to present your 
  testimony......................................................
                STATEMENT OF STEVEN LAWSON, PRESIDENT, THE LAWSON 
                  COMPANIES, TESTIFYING ON BEHALF OF THE NATIONAL 
                  ASSOCIATION OF HOME BUILDERS (NAHB)
Mr. Lawson. Chairwoman Waters, Ranking Member McHenry, and 
  members of the committee, thank you for the opportunity today 
  to testify on this very important subject......................
My name is Steve Lawson and I am chairman of the Lawson 
  Companies. I am proud to say, I am a third generation 
  homebuilder and apartment developer from Virginia. Owning and 
  renting a suitable home is increasingly out of financial reach 
  for many Americans. NAHB strongly believes that increasing the 
  inventory of new single family and multifamily housing is key 
  to improving housing affordability.............................
Factors such as regulations, availability of lots, lack of 
  skilled labor, cost of building materials, and financing 
  account for the increased building costs and insufficient 
  supply. One aspect that directly limits the ability to develop 
  affordable housing is the financing of it......................
Construction financing is commonly misunderstood and propagates a 
  pervasive misconception that builders prefer to develop luxury 
  homes and rentals. However, as I cannot stress enough, the 
  builders would gladly serve families at all income levels if 
  they could simply make the numbers work........................
Developers must be able to demonstrate that projected revenues 
  will be sufficient to cover the loans. Builders will be unable 
  to secure financing to develop a project if the projected rents 
  or sales prices are too low to cover the expenses..............
As a small business owner operating in a heavily regulated 
  industry, I understand how difficult and often costly it is to 
  comply with the myriad of government regulations. It is 
  particularly noteworthy in an industry where margins are thin 
  and consumer sensitivity to price fluctuation is so acute......
Although regulatory reform will help with housing affordability, 
  it is important to note that NAHB does not believe that all 
  regulation is bad. There is a role for sensible regulation to 
  protect health, safety, and fair housing rights. However, when 
  it accounts for 24 percent of the cost for a single family 
  home, or 32 percent of the cost of a multifamily project, 
  affordability needs to be part of the larger discussion when 
  discussing or updating regulations.............................
Impact fees are an example of imposed costs that have a direct 
  negative effect on housing affordability. Impact fees are 
  imposed often upfront at the time of a building permit as a 
  price of admission for developments to be approved by local 
  governments....................................................
These fees are typically dedicated to specific public use like 
  sewer, water facilities, parks, roads, or schools. Impact fees 
  affect affordable and market rate development alike............
The premise of impact fees is that development, especially 
  residential development, does not pay for its fair share of the 
  bargain imposed on the local government. However, NAHB's 
  research shows this premise to be false. The impacts of 
  building 100 rental apartments include $11.7 million in local 
  income, $2.2 million in taxes for local governments, and 161 
  local jobs.....................................................
Results show that new homes generate enough revenue for local 
  governments to not only cover their current expenses but to 
  service and pay off all the debt incurred to invest in these 
  public structures in one year..................................
NAHB applauds Chairwoman Waters for starting this important 
  discussion on the role that additional costs such as impact 
  fees play in housing affordability. NAHB supports funding for 
  important housing programs such as the Rural Housing Programs 
  and the Housing Trust Fund. We applaud the innovative ideas to 
  incentivize lowering of impact fees and streamlining of the 
  development process in your legislation, the Housing is 
  Infrastructure Act of 2019.....................................
We look forward to working with you to address the unmet demand 
  for low-income rental housing. While regulatory reform will 
  help us lower developing costs, it is financially infeasible to 
  construct new affordable rental units without a Federal 
  subsidy, and that bears repeating: It is financially infeasible 
  to construct new affordable rental units without a subsidy.....
Thank you again, Chairwoman Waters, for the opportunity to 
  testify. We appreciate you convening this very important 
  hearing to explore strategies for removing barriers to 
  affordable housing development. NAHB stands ready to work with 
  you to achieve thoughtful and effective policies to expand the 
  availability of affordable housing.............................
[The prepared statement of Mr. Lawson can be found on page 114 of 
  the appendix.].................................................
Chairwoman Waters. Thank you, Mr. Lawson.........................
Mr. Carter, you are now recognized for 5 minutes to present your 
  oral testimony.................................................
                STATEMENT OF DARYL J. CARTER, FOUNDER, CHAIRMAN, 
                  AND CEO, AVANATH MANAGEMENT, LLC, TESTIFYING ON 
                  BEHALF OF THE NATIONAL MULTIFAMILY HOUSING 
                  COUNCIL AND THE NATIONAL APARTMENT ASSOCIATION
Mr. Carter. Good morning. Chairwoman Waters, Ranking Member 
  McHenry, and members of the committee, thank you for this 
  opportunity to speak on behalf of the National Multifamily 
  Housing Council (NMHC) and the National Apartment Association 
  (NAA) on the apartment industry's infrastructure needs.........
I am the chairman and CEO of Avanath Capital, an apartment firm 
  with $1.7 billion in assets under management. Avanath is 
  somewhat unique in that we focus exclusively on affordable and 
  workforce housing in low-income communities where renters have 
  high cost barriers.............................................
More than half of our properties are located in communities of 
  color. We applaud Chairwoman Waters for recognizing that 
  housing must be a key component of any infrastructure 
  initiative Congress and the Administration undertake...........
Before I begin my testimony, I think it is important to 
  understand the context within which the apartment industry is 
  operating. As you know, the U.S. has a serious shortage of 
  housing affordable to low- and middle-income households. That 
  is in part because demand for rental housing is at historic 
  levels.........................................................
Since the mid-2000s, the number of rental households has 
  increased by more than seven million, the greatest renter wave 
  in history. To meet that demand, we need to build 4.6 million 
  new apartments by 2030. That translates into 328,000 new 
  apartments every year, a mark that we have only hit twice since 
  1989...........................................................
Our greatest need is in the low- and middle-income levels, which 
  is all but impossible to develop without deep subsidies. 
  America loses an estimated 100,000 units a year to 
  obsolescence, conversions, or demolition. And the majority of 
  those lost units are from the lower-income housing stock, the 
  very units we need the most, while development costs continue 
  to escalate....................................................
We need to look for new ways to better preserve existing units 
  and to cut development costs for new construction. That is why 
  housing must be considered a vital element of this nation's 
  infrastructure. Infrastructure and housing are connected in 
  important ways. As communities struggle with inadequate 
  transportation, water, sewage, and other public systems, they 
  are increasingly looking for ways to pass infrastructure 
  improvement costs to developers by making project approvals 
  contingent on infrastructure investments.......................
This, of course, translates into higher rents for a household. My 
  written testimony includes a number of examples of how housing 
  and infrastructure interact for NMHC and NAA members. But let 
  me share one example from my firm, we acquire older apartment 
  assets with older infrastructure, we make investments to 
  mitigate life, safety, and sanitation matters..................
In one project, for example, we provided all new piping and 
  fixtures to make water and sewer flow more efficient. 
  Nevertheless, we continue to have sewer backups because the 
  municipal trunk lines feeding the property are too small. In 
  many cases, these systems are 50 to 100 years old..............
Investment in public infrastructure will also facilitate more 
  affordable housing preservation. But that alone is not 
  sufficient to address our affordable housing shortage. While 
  apartment completions have increased in recent years, it is 
  virtually impossible to develop and renovate units at the rent 
  levels that low- and middle-income households can afford.......
The cost to develop apartments has escalated dramatically in 
  recent years. Land, material, and labor costs have increased 
  significantly. But regulatory barriers have also raised the 
  cost of housing; research shows that 32 percent of multifamily 
  development costs are attributable to local, State, and Federal 
  initiatives....................................................
Developers must contend with things like outdated zoning laws, 
  unnecessary land use restrictions, and arbitrary permitting and 
  parking requirements. On top of that, many localities impose 
  impact and inspection fees, inclusionary zoning mandates, and 
  rent control rules.............................................
Easing these regulatory and other policy obstacles is critical as 
  policymakers explore solutions that close housing affordability 
  and look for ways to make serious investments in our nation's 
  infrastructure. Madam Chairwoman, we commend you for holding 
  this hearing and for your work on the Housing is Infrastructure 
  Act of 2019. Housing and infrastructure are both critical 
  nationwide needs...............................................
Policymakers at every level of government have a role to play in 
  removing obstacles to housing production, easing costs, and 
  creating supporting environment providing apartment homes......
The apartment industry is committed to providing high-quality and 
  attainable housing for all Americans. Thank you very much......
[The prepared statement of Mr. Carter can be found on page 64 of 
  the appendix.].................................................
Chairwoman Waters. Thank you very much. I now recognize myself 
  for 5 minutes for questions....................................
I am going to address this to Mr. Lawson.........................
Mr. Lawson, 60 percent of U.S. cities have more than 25,000 
  residents in the imposed impact fees, which are fees on housing 
  developments to fund other infrastructure projects.............
Dwindling Federal resources for infrastructure improvements have 
  pushed State and local governments to turn to impact fees to 
  raise revenue for this purpose. This shift is raising costs on 
  home builders as well as new renters and home buyers, 
  ultimately making houses less affordable.......................
In California alone, impact fees average $23,455 for a single 
  family home and $19,558 for a multifamily unit, which is almost 
  3 times the national average. My bill aims to address these 
  challenges by providing funds for cities to incentivize or 
  eliminate impact fees and responsibly streamline the process 
  for the development of affordable housing. What are your views 
  on impact fees?................................................
Mr. Lawson. Thank you for the question, Chairwoman Waters. My 
  view, as you stated very well, is that impact fees are high, 
  getting higher, and not often used toward the things for which 
  they are intended to be used...................................
We also operate at--each one of our developments operates at what 
  we call the margin of feasibility. So, every dollar in 
  additional fees that we pay reduces the number of households we 
  can serve. Very simply stated, higher impact fees directly 
  affect the number of units that we can build, that affects the 
  feasibility of those units especially at the lower-income 
  levels.........................................................
Any effort that this committee can make or that Congress can make 
  to lower those fees, those impact tap fees and other fees, 
  would be very much appreciated in the industry. We also want to 
  make sure that the incentive is done in a way such that the 
  fees that are reduced for affordable units are not transferred 
  to other units in the marketplace, therefore making the 
  affordability problem worse for other renters and other buyers.
Chairwoman Waters. Thank you very much. I would like to ask you 
  another question about the departments of city governments, for 
  example, who have the responsibility for reviewing the plans 
  that are put before them for the development of housing, and 
  how there seems to be a lot of flexibility in determining what 
  other kinds of requests can be made of developers that cost 
  them more money, for example, the moving of a pole, this, or 
  that, what are those experiences like?.........................
Mr. Lawson. It is a very frustrating experience for us on the 
  ground, because often those requirements are not very 
  specifically spelled out and that is a process, in many cases 
  it is a process and negotiation with the local municipality....
And they very rightly have their goals and the things they would 
  like to do for their community. However, one new community 
  cannot bear the cost of 5 decades or more of neglect in public 
  facilities.....................................................
Chairwoman Waters. Thank you very much. The Chair now recognizes 
  the distinguished ranking member for 5 minutes for questions...
Mr. McHenry. Thank you, Chairwoman Waters. And thank you all for 
  your testimony. This is a very important issue to my 
  constituents and all of our constituents represented on this 
  committee and even those that are not on the committee.........
Mr. Carter, I want to go directly to your decision-making. How 
  many States are you invested in?...............................
Mr. Carter. We operate in 12 States..............................
Mr. McHenry. Twelve States, okay.................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. But you have to make decisions on which States to 
  operate in?....................................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. I would guess that is in part the economy, am I 
  correct? How do you make that decision on which States to 
  invest in?.....................................................
Mr. Carter. Well, we invest primarily in States where there is 
  job growth, where there is lots of demand for housing, and also 
  where there are people moving into that area...................
Mr. McHenry. Okay. Now, the question of the local appetite to 
  either enable you to fix up these properties and make them 
  ready for folks to have safe housing, walk me through that 
  decision on a local zoning effort, regulatory effort and how 
  that goes into your decision-making............................
Mr. Carter. Well, we operate in about 50 different municipalities 
  across the country, primarily on the two coasts................
And very often when we go into properties, particularly where we 
  are acquiring and preserving an affordable property working 
  with that local government, we often will buy a tax credit 
  property that may have Project-based Section 8 over it where we 
  may have 6 different regulatory agreements on that particular 
  property that we have to navigate with 6 different public 
  housing agencies...............................................
So very often, in our business, I spend a lot of time, a 
  considerable amount of my time dealing with local agencies.....
Mr. McHenry. Okay. But that question of your experience with 
  these agencies, that will determine whether or not on the 
  margin you will invest in a project, is that correct?..........
Mr. Carter. Yes..................................................
Mr. McHenry. So if you lighten that barrier for you to more 
  affordably put your money at work, would you do more projects?.
Mr. Carter. Yes, we would. And more importantly, I think the key 
  part of it is that when people look at a company like ours 
  where we have $1.7 billion of assets under management, we 
  partner with institutional investors...........................
And those institutional investors, most of them are public 
  pension funds. So when I look at investing in what we do, I 
  think of my sister who is a teacher in the State of Michigan, 
  and when we take on a specific property, we are looking at the 
  risk of how long it takes to do and the riskiness of it........
So you have many public pension funds where the workers are 
  dealing with the affordability crisis themselves, but then in 
  making the projects that we invest in more riskier when you 
  have many of these local mandates, it creates risks for them on 
  the other side.................................................
Mr. McHenry. If you would do like a quick back of the envelope 
  calculation for me, so you buy a small apartment complex, 
  right? Give me a number of units...............................
Mr. Carter. Probably our average size is 150 apartments..........
Mr. McHenry. Okay, 150 units. Roughly speaking, what type of 
  investment do you make per unit to get that up to your 
  standards?.....................................................
Mr. Carter. A range of $7,000 to $20,000 a unit..................
Mr. McHenry. $7,000 to $20,000...................................
Mr. Carter. Yes..................................................
Mr. McHenry. $20,000 a unit is a serious investment..............
Mr. Carter. Yes, it is...........................................
Mr. McHenry. Okay................................................
Mr. Carter. Of private capital...................................
Mr. McHenry. Private capital.....................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. So what if you took that number and made it about 
  $50,000? Would that speak to the deficiency of the unit or 
  would that speak more to the inefficiency of the dollars?......
If I told you we are going to spend $50,000 on the housing unit 
  in a similar apartment complex, would you tell me I was making 
  a bad investment or do you think that would be a wise 
  investment?....................................................
Mr. Carter. Well, it depends on what the situation was. If it is 
  a really old and dilapidated situation, it may need that.......
Mr. McHenry. The bill that we have here today will spend between 
  $50,000 and $55,000 per public housing unit in America today. 
  That would tell you that is about 25 percent of the median home 
  value sold last year. That is an extraordinary amount of money 
  and that is why I want to talk about the efficiency of these 
  dollars in this hearing. Thank you. I yield back...............
Chairwoman Waters. Thank you very much. The gentlewoman from New 
  York, Ms. Velazquez, is recognized for 5 minutes...............
Ms. Velazquez. Thank you, Chairwoman Waters, and Ranking Member 
  McHenry, for holding this important hearing. I just would like 
  to say that I understand what you are both saying, Mr. McHenry 
  and Mr. Duffy, that we need to help create more affordable 
  housing, we need to work with our partners at the local level..
But the fact of the matter is that in my City, New York City, 
  Mayor de Blasio and the city council have made numerous 
  concessions and renegotiated labor contacts and zoning 
  requirements, but that doesn't take away the reality that my 
  town still faces the largest backlog in the country, more than 
  $36 billion, almost three quarters of the entire nation's 
  needs..........................................................
So while you are right, we need to work with our State and local 
  partners, that does not mean that we do not have the 
  responsibility here. In fact, the state of public housing in 
  our nation is a direct result of the Federal disinvestment that 
  has taken place in our nation for years........................
We need to put more money into the Public Housing Capital Fund, 
  the Section 8 program, and affordable housing programs. So I 
  look forward to working with both of them to make sure that we 
  invest wisely..................................................
Ms. Yentel, when we discussed providing more, better funding for 
  public housing, one of the main arguments we consistently hear 
  from the other side of the aisle is that bureaucratic delays 
  and mismanagement by public housing authorities (PHAs) make 
  investment in public housing an unwise use of taxpayers' money.
However, the last time Congress included an infusion of funding 
  for the Public Housing Capital Fund in 2009 as part of the 
  American Recovery and Reinvestment Act (ARRA), a GAO analysis 
  later confirmed that housing authorities used the funding in a 
  timely and efficient manner....................................
Can you explain the GAO's finding and why you believe including 
  money for the Capital Fund as part of any infrastructure 
  package will be a wise and efficient use of the taxpayers' 
  resources?.....................................................
Ms. Yentel. Yes. Thank you for the question. So as you say very 
  well, the public housing capital needs backlog has reached well 
  over $50 billion, and that is a direct result of decades of 
  Federal disinvestment in capital repair dollars by Congress....
Between 2010 and 2016 alone, Congress cut funding for public 
  housing capital repairs in half and that was on top of prior 
  decades of disinvestment as well. So today, the public housing 
  capital needs are severe and investment in repairing public 
  housing is badly needed........................................
PHAs can spend money when they have it available to them and they 
  spend it efficiently and effectively. As you said, the last 
  time we had an infusion of funding for public housing capital 
  repairs was under ARRA, and the GAO studied how PHAs were able 
  to use those funds and found that the vast majority of them 
  used them within the time limits that were set.................
NICHA in particular does well with spending its capital 
  expenditures: the last four capital expenditures that it 
  received, it spent well in advance of deadlines required by 
  HUD............................................................
Ms. Velazquez. Thank you. Ms. Yentel, a recent study produced by 
  the Council of Large Public Housing Authorities showed that for 
  6 PHAs around the country, $4.5 billion in direct capital 
  spending between FY 2013 and FY 2017 generated an estimated 
  $7.6 billion in economic activity and supported 7,600 full-time 
  jobs...........................................................
Moreover, the $4 billion in capital funding provided by the ARRA 
  generated over $12.5 billion in economic activity. Can you 
  explain how investing in public housing creates jobs and acts 
  as an economic generator by leveraging public and private 
  sector resources?..............................................
Ms. Yentel. Yes. There are multiple studies that share statistics 
  as you just did that show that if we were to spend $25 billion 
  in repairing public housing, it would generate close to $80 
  billion in new money in local economies........................
And I think it is important too to note that funding for public 
  housing repairs has an added benefit of providing not just 
  jobs, but jobs for residents of public housing and other low-
  income residents in the community through the Section 8 program 
  that requires that when communities receive funds from HUD, 
  they give preference for those jobs to public housing 
  residents......................................................
Ms. Velazquez. I yield back......................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Missouri, Ms. Wagner, is recognized for 5 
  minutes........................................................
Mrs. Wagner. Thank you, Madam Chairwoman.........................
Mr. Carter, you started your investment firm in 2007 to take a 
  kind of different approach to Section 8 and affordable housing. 
  How does your firm lift up residents of distressed communities 
  and go beyond just developing a brick-and-mortar building?.....
Mr. Carter. Thank you very much for that question, Mrs. Wagner. 
  We view that our investment strategy is holistic. We are not 
  investing just in brick and mortar. For instance, about half of 
  our residents are Section 8, and of our Section 8 residents, 
  about 95 percent work, and many of those are two-income 
  families. They just happen to live in a very expensive place 
  like Southern California.......................................
And so, what happens in many of our communities, particularly 
  those that have kids, is when the school bus pulls up, you have 
  the properties--all of these kids and what we do in a number of 
  our communities where we have lots of kids, is we do 
  afterschool programs that really provide a place for the kids 
  to go that is safe afterwards..................................
And we can afford to make this investment and things like that if 
  in fact--and we find that it lowers our operating cost and many 
  other things. So, we take a holistic approach to it............
Mrs. Wagner. It is a great model. The Tax Cuts and JOBS Act that 
  we passed in the last Congress in 2017, created the Opportunity 
  Zone Program. This tax benefit is designed to drive economic 
  development and create jobs by encouraging long-term 
  investments in economically distressed communities.............
The St. Louis region where I am from has 40 designated 
  opportunity zones, including some in Missouri's 2nd District. I 
  would like to submit this map, Madam Chairwoman, for the 
  record.........................................................
Chairwoman Waters. Without objection, it is so ordered...........
Mrs. Wagner. Earlier this year, you launched a fund to invest in 
  one of the nation's more than 8,700 designated opportunity 
  zones. How will the tax benefit help your firm continue its 
  mission?.......................................................
Mr. Carter. Well, we are very excited about opportunity zones, 
  because it really made projects that maybe were not financially 
  feasible before that benefit, feasible. We believe it adds 
  about 4 percent of return which allows us--we had invested 4 
  percent more in return.........................................
Mrs. Wagner. Right...............................................
Mr. Carter. We own about 15 communities today that are in 
  opportunity zones. And so, one of our strategies is to take a 
  number of those communities where they are already affordable 
  and add more density, add more apartments there................
We have communities--we have a community in Oakland which is 
  really close to downtown Oakland, an opportunity zone that 
  stays at 100 percent occupancy and we have a waiting list of 
  200 people. So, it would be great to add more units to a 
  property like that.............................................
Mrs. Wagner. That is fantastic. So, you have seen really positive 
  result as a result of--........................................
Mr. Carter. Absolutely...........................................
Mrs. Wagner. Standing up these opportunity zones based solely on 
  the fact that we already passed and have signed into law the 
  Tax Cut and JOBS Act. Is that correct?.........................
Mr. Carter. Absolutely...........................................
Mrs. Wagner. Are there other multifamily firms planning to 
  participate in the new opportunity zone program?...............
Mr. Carter. Many are, yes........................................
Mrs. Wagner. Many are............................................
Mr. Carter. And I do think this will help add more housing in 
  places that we really need it..................................
Mrs. Wagner. Right. And we talked I know kind of at length about 
  the local barriers, and I just want to clarify with you, it 
  sounds to me like the barriers in terms of overregulation and 
  burdensome barriers are not at the Federal level. They are at 
  the municipal level and the city level. Is that correct?.......
Mr. Carter. Yes, ma'am. Most of them are at the local level......
Mrs. Wagner. Thank you very much.................................
In my limited time, I want to thank you, Ms. Yentel, and the 
  National Low Income Housing Coalition, for your support of the 
  disaster relief legislation that Representative Green and I 
  have joined hands on. We want to ensure that people who need 
  money the most can get access to funding while safeguarding 
  against fraud with the proper controls.........................
Can you talk briefly about how codifying the CDBG-DR program 
  would help grantees gain access to funding more efficiently?...
Ms. Yentel. Yes. And thank you, Congresswoman Wagner, for your 
  leadership in that area. It is very important. The CDBG 
  Disaster Recovery grant program is the largest source of funds 
  that local communities receive for their housing recovery needs 
  after disasters, but without codifying CDBG Disaster Recovery 
  legislation, Congress, HUD and communities rewrite rules after 
  every disaster which delays the funds from being put to use....
And the legislation that you have put forward would ensure that 
  those funds are directed towards those with the greatest needs 
  and for the housing needs......................................
Mrs. Wagner. Thank you, Ms. Yentel. Anything else you should 
  submit for the record, I appreciate it. I am over my time, but 
  I am so grateful for Mr. Green and for the chairwoman joining 
  us in this endeavor............................................
Chairwoman Waters. The gentleman from California, Mr. Sherman, is 
  recognized for 5 minutes.......................................
Mr. Sherman. One way to look at it is the rents are too damn 
  high. The other way to look at it is the wages are too damn 
  low............................................................
We, in this room, celebrate with the Fed that we have what they 
  consider to be a very low unemployment rate. But until we see 
  an acute labor shortage that leads to rapidly increasing wages, 
  we are not going to solve not only the housing problem but a 
  host of other economic problems as well........................
Transit and density related, Congress tends to fund a lot of 
  transit and not ask a lot of questions about density and 
  zoning. We need perhaps to involve ourselves. This is a 
  national problem and the most important decisions are made in 
  zoning and we do not play a role at all. My State government is 
  beginning to play a role.......................................
Density without transit is gridlock, but transit without density 
  is underutilization and operating losses for the transit 
  system. We need density near subway stations. We need subway 
  stations near density..........................................
One issue is just how much housing does each person need. We have 
  a lot more square-footage in this country per person than 
  Europe or Japan, yet we are the one with the housing crisis. It 
  is certainly patriotic to demand that every American have a 
  much bigger home than any European or a resident of Japan. But 
  I see square-footage requirements per unit per person as 
  leading to keeping working class units out of a community, 
  another kind of exclusive zoning...............................
Does anyone have an opinion on how many square-feet need to be in 
  a unit for a family of four? I am not seeing anybody jump in. 
  So, I am going to ask you, Mr. Lawson..........................
Mr. Lawson. I think we can go to the occupancy--the standard 
  occupancy requirements and a three-bedroom unit in that case 
  would fit the bill and--.......................................
Mr. Sherman. So, we should keep the standards and the system the 
  way it is......................................................
Mr. Lawson. I believe the market should dictate that and 
  actually, we build--...........................................
Mr. Sherman. The market is dictating that I have homeless people 
  in every park in my district...................................
Mr. Lawson. Yes..................................................
Mr. Sherman. So, I am not sure we want to leave things the way 
  they are.......................................................
Mr. Lawson. And I am speaking--to clarify, I am speaking to 
  affordable tax credit units, not for sale. That is a different 
  dynamic........................................................
Mr. Sherman. Ms. Todman?.........................................
Ms. Todman. Yes. Thank you, Congressman. I think that you raise a 
  larger point which is how do we look at the built environment 
  in a very innovative way so we can maximize the availability 
  and access to affordable units.................................
And I would go so far as to say if you look at using technology 
  as a means of decreasing costs and increasing affordability--..
Mr. Sherman. The Japanese have been very innovative in the use of 
  technology so that people can live well in a smaller space, and 
  I would rather be living in a small Japanese unit than living 
  in the park in Rosita or Konoba Park or Granada Hills or 
  Sherman Oaks...................................................
Mr. Lawson, you mentioned the importance--and we had to blindside 
  you with this question, so, I am going to ask you to give me an 
  answer for the record--the importance of these impact fees. See 
  what lower impact fees, that takes money away from the city 
  where you are building. I want you to explore with your 
  organization, lobbying our State governments so that the sales 
  tax on everything that goes into a unit goes to the city where 
  the unit is being built, not where the builder's headquarters 
  is located, not where the warehouse store is located, but where 
  it is being built..............................................
Because, if you want to lower impacts fee from cities, you are 
  going to have to backfill some at least some of that, now, that 
  is not going to solve the whole problem. We are probably 
  talking hundreds of dollars of units and you are talking 
  thousands, but your testimony indicates that by every few 
  hundred dollars we reduce the cost to building a unit, we can 
  get a few more families affordable.............................
I do have a question for you, one last question, how do these 
  impact fees affect affordable and market-rate units? Are they 
  different for a luxury building than for an affordable 
  building?......................................................
Mr. Lawson. I will take that last question. First, the impact 
  fees are typically assessed on a per unit or per bedroom or per 
  bathroom basis based on the load on the public facilities. And 
  I can say in one jurisdiction where I built both low-income 
  housing tax credit units and luxury townhome units, for the tax 
  credit units, I was paying about $11,000 per unit just for the 
  right to break ground..........................................
Chairwoman Waters. The gentleman from Florida, Mr. Posey, is now 
  recognized for 5 minutes.......................................
Mr. Posey. Thank you very much, Madam Chairwoman, and Ranking 
  Member McHenry, for holding this important hearing. Making 
  housing affordable is an objective I share with members of this 
  committee. However, housing is truly not infrastructure like we 
  consider roads and bridges, I don't believe....................
Housing has historically been provided by the private market and 
  differs from roads and bridges where public provision has been 
  relied upon because markets can't always provide the relief 
  these facilities provide in an efficient way. Therefore, I 
  think it is important to think about housing as a private good 
  that we take a public interest in that we make provisions for 
  the market to make sure people have access to housing as a 
  fundamental need...............................................
In the context of housing market supply, supply conditions are 
  really important. If housing is restricted by unnecessary use 
  regulations and other non-value-added regulations, that raises 
  the price of public housing obviously, then, the price of all 
  housing rises and not only for new housing but for existing 
  housing........................................................
When we drive up demand without addressing the cost of building 
  housing, we may be actually making housing less affordable 
  because we drive up the price across the board. That is why it 
  was pointed out at our first affordable housing committee 
  hearing the role of local land use regulations in restricting 
  supply in driving up prices....................................
I introduced, and with this committee's help passed, an amendment 
  in the committee to provide incentives for local communities to 
  ease restrictions on land use to help increase the supply. I 
  think that a carrot is probably better than a stick. And one of 
  the fundamental challenges that we face today obviously is 
  creating affordable multifamily housing or apartments. Changing 
  demographics seem to drive that need...........................
While none of us would support development of any housing that is 
  free of reasonable, prudent, and healthful building codes, we 
  must ask ourselves if we can make housing affordable in a 
  regulatory environment that pushes up cost to this extent. 
  Costs stem from what many consider as excessive standards. For 
  example, a survey respondent to the study conducted by the 
  National Multifamily Housing Council and the National 
  Association of Home Builders estimates that recent changes to 
  the international and energy conservation code have the 
  potential to drive up costs by much more than the savings in 
  the utility bills. And I hope we can all agree that does not 
  help those living in affordable housing at all.................
And, Madam Chairwoman, I would ask unanimous consent to enter 
  this survey into the record. As we move forward on affordable 
  and fair housing, I hope members of the committee will join me 
  in keeping a laser focus on opportunities to offer supply side 
  solutions that make housing truly affordable...................
My first question is for Mr. Carter. America's housing markets 
  are changing just as our population is changing more broadly. 
  For example, rentership has remained at historic highs since 
  the financial crisis. Our millennials, the largest generation 
  since the baby boomers, are entering the workforce and choosing 
  a lifestyle and the flexibility it affords over home ownership.
How can we update and improve housing policy to reflect the needs 
  of Americans now and in the future?............................
Mr. Carter. Well, I will give you--thank you very much for that 
  question. One very quick example that I think could move the 
  needle as low hanging fruit, when I go to many of our 
  communities, I go at night and just look at the parking. And we 
  have a lot of empty spaces and simply put, with ride sharing 
  and other things and Uber, we don't have as many cars at our 
  communities and I think many of our parking requirements are 
  outdated.......................................................
And if I could take the land on some of my communities and add 
  more apartments, it would be a great thing, but that is just 
  one innovation which has changed with the change in driving....
Mr. Posey. Well, that was one of the suggestions offered at a 
  hearing that the Chair called on homelessness, requiring two 
  parking places for a homeless person. I mean, if they don't a 
  home, the odds are they don't own two cars. It is just common 
  sense..........................................................
According to Harvard's Joint Center for Housing Studies, in 2015, 
  more than one-in-four renter households, approximately 11.1 
  million, paid more than half of their income in rental housing. 
  Please share with the committee your specific examples of the 
  ways in which the Federal Government can update our policies to 
  provide a better--.............................................
Chairwoman Waters. The gentleman from Missouri, Mr. Clay, the 
  Chair of our Subcommittee on Housing, Community Development, 
  and Insurance, is recognized for 5 minutes.....................
Mr. Clay. Thank you, Madam Chairwoman............................
Ms. Yentel and Ms. Todman, a question for you, I know you can't 
  see me. These two are in front of me...........................
Ms. Yentel. We can see you, Congressman..........................
Mr. Clay. All right. But the last comprehensive infrastructure 
  spending package was the American Recovery and Reinvestment Act 
  of 2009 which acknowledged the importance of affordable housing 
  as part of our national infrastructure and provided $4 billion 
  to address public housing capital needs........................
I understand those firms generated an additional $12.5 billion in 
  economic activity. With such a successful precedent, the recent 
  history in mind, would you agree that investing in public 
  housing should be a vital component of any future 
  infrastructure spending package?...............................
Ms. Todman. I could not agree more, Congressman, and that is the 
  basis of my testimony today. I would also add to that that 
  housing authorities across the country--all 3,000 of them--not 
  only spent that money quickly but spent it well................
And of the $4 billion, $3 billion was given out via formula, and 
  the other $1 billion was given out to support green retrofits 
  and other energy efficiency projects for very low-income 
  housing products, and they did a great job. The industry stood 
  up, and that is why I feel very confident, having run a housing 
  authority in the past myself, that this industry is prepared 
  and ready for an infusion of dollars to really deal with the 
  backlog of capital needs that they have........................
Mr. Clay. Thank you..............................................
Ms. Yentel?......................................................
Ms. Yentel. I agree and I would just add on that certainly 
  affordable housing investments belong in an infrastructure 
  spending package just like roads and bridges. Our country's 
  affordable housing infrastructure is a long-term asset that 
  assists with families and communities in thriving. It creates 
  jobs. It lifts local economies.................................
So, certainly, investments in an infrastructure package should 
  include our affordable housing infrastructure..................
Mr. Clay. As a follow-up question, how do you think the RAD 
  program works for public housing authorities? Have you seen any 
  successes?.....................................................
Ms. Todman. I will say that over the past decades, because of the 
  Federal disinvestment, housing authorities had to rely on all 
  the tools in the toolkit and RAD became a recent tool. And I 
  think we have reached over 110,000 units that have converted 
  into the RAD program. RAD is simply just converting the asset 
  from one program inside of HUD to another program inside of 
  HUD. It creates, not just some regulatory relief but also 
  creates stability by leveraging private funds to do the capital 
  improvements that are needed...................................
There have been a number of very successful RAD experiences 
  across the country. I will lift up the El Paso housing 
  authority and the Austin housing authority--...................
Mr. Clay. Yes....................................................
Ms. Todman. --which have done extraordinary jobs in terms of 
  using RAD to improve the units that they own...................
Mr. Clay. Great..................................................
Ms. Yentel. I would just add to that that RAD is an important 
  innovation and there are PHAs that are using it for its purpose 
  and to their advantage in order to leverage private dollars to 
  invest in the capital need repairs of public housing...........
But we should also note that: one, for many public housing units, 
  RAD will not be feasible, because the finances just don't work 
  given the level of repairs that are necessary; and two, often 
  when we talk about private investments going into public 
  housing repairs through the RAD program, they are not often 
  actually private. There are other public resources like HOME 
  dollars or CDBG dollars or low-income housing tax credit 
  equity.........................................................
And while it is good and important to be able to use those funds 
  to repair public housing, those dollars could be used for their 
  intended purposes of building new homes affordable for low- and 
  very low-income people. So, where we to instead invest in the 
  capital repair dollars for public housing on its own, it would 
  free up those resources to do what they were intended to do, 
  which is build, to be additive, to be creating additional 
  affordable housing units.......................................
Mr. Clay. Okay. Thank you........................................
Mr. Carter or Mr. Lawson, any thoughts on RAD?...................
Mr. Carter. Well, one thought is that RAD is administered through 
  public housing authorities, and as a company, we deal with 
  about 45 of them and they are all different and they all have 
  various capabilities. And so, that is one of the challenges 
  with the fact that many of HUD's programs are administered 
  through public housing authorities and there are 4,000 of them 
  and they have varying levels of ability to execute.............
Mr. Clay. Thank you. I yield back................................
Chairwoman Waters. The gentleman from Missouri, Mr. Luetkemeyer, 
  is recognized for 5 minutes....................................
Mr. Luetkemeyer. Thank you, Madam Chairwoman.....................
Good morning, ladies and gentlemen. A recent study by the 
  National Multifamily Housing Council and the National 
  Association of Home Builders, which Mr. Lawson and Mr. Carter 
  represent this morning, found that an average of 32 percent of 
  multifamily development costs are attributable to complying 
  with State, local, and Federal regulations.....................
That is very concerning to me, and this morning, I want to talk a 
  little bit about some of the bank regulations that could be 
  causing the ability of individuals to have access to funds and 
  restricting their ability to those funds, what they may have...
Mr. Lawson, you represent the National Association of Home 
  Builders. And back in December, we had--I was Chair of the 
  Financial Institutions Subcommittee and we had a hearing, and a 
  representative from your association appeared and testified, 
  and I asked the question with regards to the increased cost and 
  what kind of effect it would have on people with regards to 
  access to credit...............................................
And he said--and we since have found it on your website--that 
  apparently for every $1,000 increase in the cost of a home 
  loan, 100,000 people no longer have access to credit and 
  therefore have no ability to own a home, the American Dream. 
  And so, I am very concerned because with the new FASB rule, the 
  regulation called CECL that is causing home mortgage folks to 
  assess the risk of their home mortgage portfolio and change the 
  way they reserve is going to have a dramatic effect on homes 
  being able to be built or purchased which is going to have--and 
  especially on low- and moderate-income folks, is going to have 
  a dramatic effect on those folks...............................
I have talked to the new Director of FHFA and he is trying to get 
  us some numbers. So, my question to you this morning is, have 
  you looked at CECL and the effect it may have on the totality 
  of the home mortgage business across the country?..............
Mr. Lawson. I cannot say I can speak personally about the 
  specifics of CECL, but I will say that obviously the mortgage 
  business, the mortgage origination business has changed very 
  dramatically over the last several years.......................
In fact, many companies that have been stalwarts in that business 
  simply decided to get out of the business. That decreases 
  competition and will therefore raise costs which cost to the 
  consumer meaning less affordability, and less home building....
Mr. Luetkemeyer. Mr. Carter, you represent the Multifamily 
  Housing Council. Have you looked at CECL and what effect it may 
  have on multifamily housing availability?......................
Mr. Carter. No, I have not. We have spent a little bit more time 
  looking for instance, at CRA--.................................
Mr. Luetkemeyer. Yes.............................................
Mr. Carter. --which certainly has an impact on our business 
  because we have a number of investors that are banks that 
  invest through CRA via the fact that it fits within their 
  affordability requirements.....................................
And so, we would like to see more modernization of that, because 
  some of the rules of CRA are outdated. The other thing is that 
  we operate sort of proprietary equity funds that we have to 
  register now with the SEC as a result of the Dodd-Frank Act, 
  which probably adds another 10 percent to our cost when we 
  launch a new fund..............................................
Mr. Luetkemeyer. Have you done a number or a study to show how 
  much increased costs restrict the ability of people to finance 
  or go out and build multifamily housing? Have you done any 
  studies on that, see where the cost line is so that at a 
  certain point, people no longer can afford to build a 
  multifamily housing?...........................................
Mr. Lawson?......................................................
Mr. Lawson. I can't say that we draw a line in the sand, but that 
  is what we do every day, is we are drawing lines based on the 
  moving variables that the variables go up and down every day. 
  Interest rates or one of those costs and all of these other 
  things, rents we can charge, so, any movement there reduces, 
  any upward movement reduces affordability......................
Mr. Luetkemeyer. Okay............................................
Mr. Carter, you helped segue into my next question with regards 
  to CRA. To me, it is concerning. The original intent is 
  worthwhile and it did a good job for a number of years. Now, it 
  is sort of becoming antiquated. It is kind of outdated with the 
  ways things are working today. Can you give me some ideas, 
  because you have already started down that path of things you 
  would like see different with the modernization of CRA?........
Mr. Carter. Well, many of the CRA regulations for banks are based 
  on kind of the old branch banking system and assessment 
  districts. And when you look for instance at Internet banking 
  where it comes from anywhere, everywhere, we think one of the 
  things which would be helpful would be to modernize and to 
  focus on the activity of what gets invested as opposed to 
  where..........................................................
Mr. Luetkemeyer. Interesting. Thank you very much................
I yield back.....................................................
Chairwoman Waters. Thank you.....................................
The gentleman from Georgia, Mr. Scott, is recognized for 5 
  minutes........................................................
Mr. Scott. Thank you very much, Madam Chairwoman.................
This is a very timely and very interesting hearing, but let me 
  start with this. I want to ask each of you how can we even 
  begin to intelligently address these housing infrastructure 
  needs particularly as it affects middle- and lower-income 
  people when the Trump Administration is proposing to zero out 
  the budget of the one major instrument that we have to address 
  this, which is the community development block grants program..
Now, if we don't put that on the table and if we don't put 
  pressure on this Administration to cut it out, it is insane. 
  All of us realize that this is at the core a financial problem. 
  It is a money problem. And when you have Dr. Ben Carson, I 
  respect him, but every time he comes before the committee, I 
  ask him, why and how...........................................
Now, I would like for each of you to give us your indication, 
  particularly Ms. Todman and Mr. Lawson. This is a financial 
  issue. This requires money, and here, you have the Trump 
  Administration wanting to cut out and zero out $8.2 billion at 
  this great need when one of the fastest growing groups that 
  need it are our veterans. How cruel can you be?................
So, tell us. How can we intelligently deal with this? Does it 
  upset you all the way it should?...............................
Ms. Todman. Well, yes, thank you, Congressman. I think that 
  everybody here at the table will agree that the White House's 
  proposal was less than ideal when it came to infusing funds 
  into the affordable housing programs...........................
Our members rely on CDBG, HOME, and the Capital Fund and, we have 
  been disappointed year after year to see that those programs 
  have been zero-funded. But we have been thrilled that this 
  Congress has done the right thing and come back and seen what 
  the needs are at the local level and the national level. We are 
  hoping that will happen again during the 2020 budget cycle. We 
  were very excited about what happened in 2018 and 2019, also...
I think that this issue requires a sense of leadership. It 
  requires leadership at every level, that is why we are excited 
  to be here and see the chairwoman exhibiting leadership and 
  having this conversation. And so, while these proposals zero 
  out important programs for localities, we look to this Congress 
  to do the right thing..........................................
Mr. Scott. All right.............................................
Mr. Lawson?......................................................
Mr. Lawson. Yes. Great question. NAHB, of course, opposes the 
  zeroing out of the CDBG as well as the HOME. Those are 
  important resources. They are not all the resources. We need 
  more resources obviously.......................................
While it is not under the jurisdiction of this committee, the Low 
  Income Housing Tax Credit is probably the most fundamental 
  resource for creating affordable housing. We certainly oppose 
  that. It is a financial issue and we should do everything in 
  our power as an industry to preserve the funding...............
I think this issue is gaining a lot more traction and a lot more 
  attention nationwide. I know it is locally in the areas where I 
  work, so that is a positive sign...............................
Mr. Scott. Very good.............................................
Mr. Carter and Ms. Yentel?.......................................
Ms. Yentel. Yes. If I could, thank you. We share your concern and 
  your outrage over the proposed cuts that go much deeper and 
  broader than eliminating CDBG. The Administration would 
  eliminate the National Housing Trust Fund, would eliminate 
  public housing capital repair dollars at a time when there is 
  such a substantial need........................................
Like Ms. Todman, we are pleased that Congress has not only 
  rejected those proposals but actually increased spending by 10 
  percent for the first time in many, many years. This is an 
  important first step, but we have a long way to go to make up 
  for decades of disinvestment in these programs.................
And we are still under the very tight spending caps required 
  under the Budget Control Act, which is why it is so important 
  to look for opportunities outside the appropriations process to 
  invest in affordable housing like through an infrastructure 
  spending package, through GSE reform, and through other 
  methods........................................................
Mr. Scott. Mr. Carter?...........................................
Mr. Carter. The quick answer is we will invest private money if 
  we can get more private money if we can get more obstacles 
  reduced........................................................
Mr. Scott. Thank you, Madam Chairwoman...........................
Chairwoman Waters. The gentleman from Michigan, Mr. Huizenga, is 
  recognized for 5 minutes.......................................
Mr. Huizenga. I appreciate that, Madam Chairwoman, and I would 
  like to welcome the witnesses..................................
My family has had a long history in home building and 
  construction. My family was one of the founding families of our 
  local home builders association. I still own our third 
  generation sand and gravel operation. A cousin owns our ready 
  mix concrete company, all small businesses.....................
But we have had the opportunity to provide hundreds of dwellings. 
  And we have looked at multifamily housing as well. And one of 
  the concerns that we have had is working with local 
  municipalities to try to keep those costs down. We have a real 
  issue in West Michigan with workforce affordability and trying 
  to make sure that we can provide quality opportunities for 
  people to live in or rent......................................
We battle this notion all the time. And back when I was selling 
  real estate full time, we had to battle one of our local cities 
  who had a great idea which was to do set asides for affordable 
  housing. The one lone housing development though in the city 
  had a minimum lot size requirement of 100 by 150, 15,000 square 
  feet. And houses, they wanted then to have affordable housing 
  put on those. And it just wasn't functional....................
They also were making a proposal to retroactively go back into 
  rental units and put in hard sprinkling, not even smoke 
  detectors, sprinkling systems. And they had no concept about 
  what this would actually cost or what it would do for rents 
  because it all looked great on paper. But there is a detachment 
  from reality...................................................
And Mr. Lawson and Mr. Carter, I am curious, I don't want to just 
  curse the darkness, I do want to light a candle on this, and I 
  am curious if you can provide maybe some of those candles. What 
  have some of those local businesses or, I'm sorry, local 
  governmental agencies done to help affordability rather than 
  hinder affordability?..........................................
Mr. Carter. The one thing I would point out is that one of the 
  issues that we have talked a lot about is the cost those things 
  add. But I think what we sometimes miss is the additional risk 
  that the process makes for the project.........................
The fact that particularly in California, which is my current 
  home State; I grew up in your home State--.....................
Mr. Huizenga. I won't make you point to your hand where you are 
  from...........................................................
Mr. Carter. Okay. I was over here................................
Mr. Huizenga. Okay. I am over here so--..........................
Mr. Carter. But the problem in many municipalities across the 
  country particularly in--and California is one of them where we 
  are based, is that it may take 3 to 10 years before you know 
  the final zoning approval of what you are getting and whether 
  you are going to have 200 units or 300 units, and you may in 
  that time period spend $3 million to $10 million of risk 
  without knowing the economics of the projects..................
Mr. Huizenga. Just so we can figure out the math, does that make 
  it cheaper if you can put 300 units in versus 200?.............
Mr. Carter. Yes, 300.............................................
Mr. Huizenga. Okay. Let us just make sure, because we sometimes 
  lose sight of that in Washington. And I think that goes back to 
  what my friend from California, Mr. Sherman, was talking about. 
  The phrase he used was, ``The rent is too damn high.'' Well, 
  sometimes the costs are too damn high, right?..................
And how do you make sure that it is not just materials. It is the 
  process. It is the development cost. It is that time value of 
  money for anyone in the private sector that is going to do 
  this, and we cannot just simply point this over the government 
  at all times...................................................
Mr. Lawson, I want to give you an opportunity to answer as well, 
  to light the candle............................................
Mr. Lawson. Yes, sir. I appreciate that. You clearly feel our 
  pain, so thank you for that. I think one of the discussions we 
  had earlier about creating incentives for local municipalities 
  to streamline the process or to make their zoning less 
  exclusionary...................................................
One of the things in the industry that or one of the things many 
  municipalities have taken up is inclusionary zoning and 
  mandatory inclusionary zoning. I oppose that. I think it should 
  be voluntary. There should be an economic quid pro quo between 
  that, so that it doesn't simply become a tax on the market rate 
  units in a community...........................................
And that would be density bonuses, fee waivers; all sorts of 
  incentives can be created......................................
Mr. Huizenga. And this notion of mixed use is something that 
  seems to be lost as well. And having the ability to have 
  different incomes all in the same area, maybe not with the same 
  lot size like my city back in the district was trying to do....
But if you change and vary the lot size, you could actually make 
  it more affordable to have those families have that 
  opportunity....................................................
So with that, I yield back.......................................
Mr. Lawson. Absolutely...........................................
Chairwoman Waters. The gentleman from Missouri, Mr. Cleaver, the 
  Chair of our Subcommittee on National Security, International 
  Development, and Monetary Policy, is recognized for 5 minutes..
Mr. Cleaver. Thank you, Madam Chairwoman.........................
I was in my home State of Texas this past weekend. So, I got up 
  yesterday morning, drove 26 miles from the Renaissance downtown 
  Dallas to the place where I was born, Waxahachie, a little 
  community of about 12,000......................................
I drove from my maternal grandmother's home, gone, to my grandma 
  Gardner's home, gone. I went to my paternal grandfather's home, 
  gone, Aunt Edna's house, gone, little town, all you see is just 
  vacant land....................................................
And I couldn't help but wonder the same thing I wondered about 
  Capitol Hill. I moved here 14 years ago to Capitol Hill. And it 
  was a rather homogenous neighborhood and now you have to hunt 
  down Black people. If you walk from my apartment right across 
  the street from the Supreme Court to the Eastern Market-- I was 
  trying to count Black people as I walked a couple of weeks ago, 
  and I saw two, on a nice sunny day.............................
And I think about the new stadium, human beings used to live down 
  there, I wonder where all those people, wonder where all those 
  people are in little Waxahachie, I wonder where all those 
  people are who used to live on Capitol Hill, all gone. I was in 
  San Francisco this past August, staying with some friends, my 
  wife and I. And we were driving around and our host said the 
  Black/Brown population in San Francisco has dropped now to 
  about 2 percent because they can't afford to live there........
So, I asked Barbara Lee, ``Are they moving over to Oakland?'' She 
  said, ``Well, they were, but the price of homes now in Oakland 
  are rising to the level they were in San Francisco, so they 
  have left Oakland.'' And I asked, ``Well, did they go to 
  Richmond?'' She said, ``We don't know where they are going.''..
Have you guys wondered where they are going? You are in the 
  housing business, can you tell me where they are going? 
  Anybody?.......................................................
Ms. Todman. Congressman, I think that that is the value of this 
  conversation today. If you look at the public housing portfolio 
  across the country, it is important to make sure that it is 
  preserved for years to come, otherwise the people who live 
  there--brown, black or otherwise--will also be gone because 
  those units have not been preserved............................
But it also speaks to the importance of balancing market forces 
  with the intervention of government to make smart choices for 
  the community. And when we do that, we can see that there are 
  certain tactics that are put in play to preserve, not just the 
  small businesses that were there during the difficult times and 
  who should thrive during the robust times, but also for 
  families who live in unsubsidized affordable housing, what we 
  call Naturally Occurring Affordable Housing to be able to stay 
  in communities as well.........................................
I am a strong believer in what market forces can do, but I also 
  believe it takes leadership inside of the public policy space 
  to make sure that what you are describing doesn't continue to 
  be an issue throughout the country.............................
Mr. Cleaver. Yes. It is a major issue. Let me get this out to 
  make sure I get it said. And that is it is not just the urban 
  areas. I don't think people realize because it is a little more 
  convenient to believe it is an urban problem, but it is worse 
  in the rural areas.............................................
I have been working on a housing project in a little town called 
  Marshall, Missouri, now for 3 years. It is very difficult, the 
  builder said they can't build the housing, this is the Midwest, 
  for under $125,000. So, we are virtually at a standstill.......
But the new problem that just cropped up that you may or may be 
  aware of is the tariffs. The tariffs that were imposed on 
  countries like China are hurting in housing because the price 
  of everything is rising. They closed down a nail factory in my 
  State. So, anything from nails to granite countertops, the 
  price is rising. And we had a dramatic drop in new housing 
  starts last March. Affordable housing just stopped because the 
  cost is rising so high.........................................
Anyway, take it from there, Mr. Lawson...........................
Mr. Lawson. That is the eternal challenge for us as practitioners 
  in every aspect of affordable housing, home building, anything, 
  we are constantly, constantly assessing our costs and fighting 
  against that, trying to find new resources, hence I think the 
  discussion today. If we could find a reasonable way to lower--.
Mr. Cleaver. It is a national emergency..........................
Chairwoman Waters. The gentleman from Wisconsin, Mr. Duffy, is 
  recognized for 5 minutes.......................................
Mr. Duffy. Thank you, Madam Chairwoman...........................
I think what is unique about this hearing is that we agree we 
  have a problem, a problem exists with affordable housing in 
  America. And now the question becomes, how do we find the right 
  solutions to address that problem, and I don't know that I 
  would agree that a blank check approach is the only approach we 
  could have to making sure housing works for our families and 
  our communities................................................
And I would agree with Mr. Cleaver that there are different 
  problems in different parts of the country and in our cities 
  and in rural America, I think we have different and unique 
  problems that face those kinds of communities and all should be 
  addressed......................................................
But I want to go to maybe Mr. Carter. You said you do some work 
  in Southern California?........................................
Mr. Carter. Yes, sir.............................................
Mr. Duffy. Could you lay out for us some of the challenges that 
  you face with zoning and regulation as you try to do projects 
  in Southern California?........................................
Mr. Carter. Well, I think the first one is density, how big will 
  it be because that obviously drives the economics of the 
  project, is density. And I think the second is--...............
Mr. Duffy. When you say density, when you are trying to get 
  approvals, is that a problem, the density of your project?.....
Mr. Carter. Yes, whether it is 200 units or 150 units, obviously, 
  the more density, we could make it cheaper per unit. And then 
  the push back is well, you are going to add more people and 
  there is more mitigation that you have to do with roads and 
  things like that. So, it is a back and forth process...........
Mr. Duffy. But finding that sweet spot of getting the right 
  density to get the right price for the most people is an 
  important consideration........................................
Mr. Carter. Yes, sir.............................................
Mr. Duffy. And maybe just stick on that point before you give me 
  the layout of some other things for us, obviously, we have a 
  crisis in Southern California, and specifically in Los Angeles, 
  that the Chair has talked about. There is a homelessness 
  problem in L.A. that we have to address and I have heard her on 
  that point. And she is a great advocate for the homeless.......
But if we could make housing more affordable, that could 
  potentially reduce the number of people who can't afford homes 
  and are on the streets. And so, do those leaders in L.A. 
  partner with you and clear the way and cut the red tape to 
  allow you to do more of your projects to drive down the cost of 
  housing and serve more people?.................................
Mr. Carter. Many try and a lot of what we are able to succeed at 
  in many places like Los Angeles and around the country are 
  preservation of older properties that have, potentially are 
  falling out of the housing supply because they need renovation. 
  And so, we generally--.........................................
Mr. Duffy. Is this the dense supply or is this like single 
  family?........................................................
Mr. Carter. No. This would be an existing apartment community 
  that might have some challenges and is rundown that we acquire 
  and renovate. And I think the gentleman who--the point about 
  displacement, one of the things that we try to do in our 
  investments is to retain 75 to 80 percent of the existing 
  residents when we do an acquisition and a rehab, because we 
  have found--the other thing that we found that the model of 
  mixed income communities really work...........................
And that is one of the things we have to figure out how to do 
  where we are not segregating low-income people all in one 
  place..........................................................
Mr. Duffy. So maybe beyond the land cost and maybe the labor cost 
  is that no more expensive to build in L.A. compared to other 
  parts of the country that you work in because of rules and 
  regulations or they are pretty good on rules and regulations 
  that is only in L.A.?..........................................
Mr. Carter. No. I would say the cost. We have two properties that 
  we are working at right now. It is similar spec. One is 
  $500,000 a unit to build. We are looking at it in the State of 
  Michigan and it is $250,000....................................
Mr. Duffy. So, half the price....................................
Mr. Carter. Yes..................................................
Mr. Duffy. And I guess that is my point. And if those costs come 
  to bear on the zoning and regulatory side in the local 
  communities, and those same local communities are having 
  problems with homelessness and affordable housing, don't we 
  start to say, Hey, Congress, you guys might have to spend more 
  money. But shouldn't we also be putting pressure on local 
  communities to say streamline this stuff so we can help you fix 
  your problem...................................................
Mr. Carter. Absolutely...........................................
Mr. Duffy. Right?................................................
Ms. Yentel. Congressman Duffy, can I respond to that as well?....
Mr. Duffy. Sure..................................................
Ms. Yentel. So, absolutely, I agree that we have to look at 
  zoning and land use regulations that are driving up the cost of 
  any type of housing or even prohibiting any kind of multifamily 
  housing from being built which is raising costs for everyone. 
  That is a central piece of the puzzle to solving the housing 
  crisis.........................................................
Even were we to do so when we do so, I think we already heard our 
  colleagues from the home builders, we have heard economists and 
  others agree that those homeless households that you referenced 
  in L.A. will not find housing that is affordable to them. So, 
  while we have to do what we can to eliminate restrictive 
  zoning, lower costs for everybody, that affordability will not 
  trickle down to the lowest-income households. For them, 
  government subsidy, government intervention is essential.......
Mr. Duffy. But making sure we can have affordable houses, 
  affordable housing for more people--...........................
Ms. Yentel. It is all part of the spectrum, absolutely...........
Mr. Duffy. Make sure we have less people who are on the streets. 
  And so, I agree with you. But my point is this has to be a 
  holistic approach..............................................
And I was going to get to Ms. Todman because in her testimony she 
  cited a study that actually references back to the cost of 
  regulation in these projects. And, again, I am about, what are 
  the dollars, what are the regulations, how do we look at this 
  in the 21st Century with new data, new information and a new 
  vision?........................................................
I yield back.....................................................
Chairwoman Waters. The gentleman from Florida, Mr. Lawson, is 
  recognized for 5 minutes.......................................
Mr. Lawson of Florida. Thank you, Madam Chairwoman, and I thank 
  all of the witnesses. Welcome to the committee. I have never 
  heard my name called so much in committee. I have been tempted 
  to ask a lot of questions when they called on Mr. Lawson. Thank 
  you............................................................
My question is in terms of public housing and I might be a little 
  off, and maybe Mr. Lawson, or anyone can help me, with the new 
  millennium group that live in housing area or place, is it 
  possible in this legislation that we have to create a portion 
  of the rent going into what I would consider as housing IRAs so 
  that you can move individuals from public housing into 
  homeownership? And maybe I might be a little bit off on that, 
  but Mr. Lawson, Mr. Carter, anyone can come in. I want to know 
  whether that is possible.......................................
Mr. Lawson. I don't have specific information on that but I know 
  that those programs do exist where a portion of the rent is set 
  aside for down payment assistance and other things. Perhaps Ms. 
  Todman and Ms. Yentel could speak to that......................
Ms. Todman. What Mr. Lawson is referring to, one particular tool 
  that housing authorities use is the Family Self-Sufficiency 
  (FSS) Program which allows households to increase their income 
  as they get a job or a better job, and the net new rent that 
  would occur because of their increased income is placed into an 
  escrow account by the housing authority, or in some cases these 
  days private affordable housing providers......................
And as that escrow grows, FSS participants will be able to use it 
  as a down payment towards a home or other family goals. So, 
  that tool does exist and it is a very powerful tool. It is not 
  spoken of a lot, but Family Self-Sufficiency is probably one of 
  the best resources to helping families move up and out of 
  public housing and the voucher program, that exist today.......
Mr. Lawson of Florida. Would anyone else like to answer? Mr. 
  Carter?........................................................
Mr. Carter. One of the things that we do with some of our banking 
  partners is we do financial literacy programs in many apartment 
  communities. And one of the things that we have learned and 
  particularly in affordable housing communities is that if we 
  noticed for instance people are paying with a cashier's check 
  or cash, that means they are doing check-cashing...............
And if you could just get them into the banking system, the 
  standard banking system, you have given them a 5 to 10 percent 
  raise, because they are not paying those check-cashing fees. 
  And so, the other thing that I wish, my wish for renters is 
  more rental stability such that people who have paid their rent 
  get that reflected into their credit score so they can 
  eventually buy a house.........................................
Right now, from what I see, that rental credit history doesn't 
  seem to move the needle as much in the credit scoring as other 
  things so--....................................................
Mr. Lawson of Florida. Ms. Yentel?...............................
Ms. Yentel. Yes. Thank you.......................................
So, the Family Self-Sufficiency Program is very important and it 
  does exactly what you are suggesting. And I think looking for 
  ways to assist low-income residents who are able to reach 
  homeownership, we should. But we should also recognize that the 
  vast majority of residents in the public housing program that 
  you mentioned specifically, the vast majority of them are 
  seniors, they are people with disabilities, or they are people 
  in the labor force who are working very low wage jobs and the 
  kind of jobs where it is difficult to cobble together enough 
  hours in a week or in a month to make ends meet................
This will be an issue for the foreseeable future. So, as was 
  raised earlier, it is not just a housing issue; it is a wage 
  issue. The Department of Labor projects jobs to have the 
  greatest growth and 7 out of 10 of the jobs that are projected 
  to have the greatest growth over the next 10 years pay less 
  than what it costs to rent a one-bedroom apartment.............
So, the problem is not just that people aren't working hard 
  enough, it is that jobs don't pay enough to cover the cost of 
  rising rents...................................................
Mr. Lawson of Florida. Okay. I am about out of time..............
But I want to thank these groups like Millennium and so forth 
  that take these housing projects and they don't reinvest into--
  Ms. Todman, can you tell me, should that be a part of this 
  legislation to make them more accountable?.....................
Ms. Todman. And which groups are you referring to, sir?..........
Mr. Lawson of Florida. Different groups that have the housing, 
  Federal housing programs where they get dilapidated............
Ms. Todman. Right................................................
Mr. Lawson of Florida. And I guess I yield back..................
Chairwoman Waters. Thank you.....................................
The gentleman from Ohio, Mr. Stivers, is recognized for 5 
  minutes........................................................
Mr. Stivers. Thank you, Madam Chairwoman. I appreciate your 
  holding this hearing on a very important topic. And one of the 
  provisions in the draft legislation that I want to address that 
  I think is a follow-up on what Mr. Duffy talked about is, and I 
  think it merits consideration, I think it is a great idea is 
  that in the builder supervision that would reward community 
  development block grant recipients with additional funding if 
  they demonstrate they are eliminating or reducing impact fees..
And while I do think impact fees can be used for positive things 
  like making sure sewer lines and other infrastructure are in 
  place for growing communities, I suspect that in some 
  instances, city planners and city policymakers have used such 
  fees to make the economics of development too high.............
My first question for Mr. Carter and Mr. Lawson is, have you ever 
  seen a circumstance where impact fees made building affordable 
  housing too high?..............................................
Mr. Lawson, first................................................
Mr. Lawson. Yes. Absolutely. And in my earlier example, I was 
  noting a municipality in which I built both affordable housing 
  under the low income housing tax credit and market rate luxury 
  townhomes. The tax credit affordable apartments, that TAP and 
  impact fees were $11,000 per unit..............................
Mr. Stivers. Wow.................................................
Mr. Lawson. For the $325,000 town homes, the fee was $13,000 a 
  unit...........................................................
Mr. Stivers. So, a lot more for the affordable housing and really 
  changes the economics..........................................
Mr. Lawson. A lot more. Precisely................................
Mr. Stivers. Do you have a similar view, Mr. Carter?.............
Mr. Carter. Well, I would just maybe touch on a philosophy that 
  exists broadly both locally and even to programs at HUD. They 
  are disincentives and they are designed to catch the bad actors 
  if you will, in the sense of if you look at things like for 
  instance Section 8 housing which we have about half of our 
  inventory--....................................................
Mr. Stivers. I want to get to that in a second. Yes, keep moving.
Mr. Carter. But clearly, one of the things is that there needs to 
  be more incentives versus penalties. That is the--.............
Mr. Stivers. Thank you. That is great. The next thing I want to 
  cover is lawsuit abuse with regard to the Americans with 
  Disabilities Act and the Fair Housing Act, and while I support 
  the goals of both of those pieces of legislation, in many cases 
  there are folks, and I have seen examples in my district, who 
  have a sue and settle mentality that aren't interested in 
  fixing any of the violations. They are only interested in 
  pulling money out of the system................................
Mr. Lawson and Mr. Carter, I will start with Mr. Carter this 
  time, have you seen any examples of this frivolous legal 
  activity that actually increases the cost of affordable 
  housing?.......................................................
Mr. Carter. Not for us...........................................
Mr. Stivers. Not for you.........................................
Mr. Lawson, have you seen any of that?...........................
Mr. Lawson. We have experienced personally in our market and NAHB 
  for a long time has advocated for a safe harbor accessibility 
  provision where we have numerous different regulations that 
  come into play, and we are not always sure and our professional 
  consultants, our architects can't always say you are 100 
  percent fine if you do A, B, and C, that is a challenge........
Mr. Stivers. One of the things that I have pushed for is a right 
  to cure which would ensure violations get fixed and doesn't 
  make it about just money to these organizations. Since you have 
  seen some of this, Mr. Lawson, do you think a right to cure 
  would make affordable housing more affordable while still 
  living up to the ideals of the ADA and the Fair Housing Act?...
Mr. Lawson. Yes, I would agree...................................
Mr. Stivers. Thank you. One more question I have for Mr. Carter, 
  and you started to talk about it is, can you talk about what 
  could be done to make building managers more likely to 
  participate in HUD's Section 8 program?........................
Mr. Carter. It is to create consistent standards across public 
  housing authorities, that they have to do inspections within a 
  certain period of time and the like, but developing a set of 
  standards that are consistent because HUD deals with, again, 
  over I think it is 3,000 or 4,000 different public housing 
  authorities, consistency there. And, again, we deal with 45, 
  and one and 45 are very, very different........................
Mr. Stivers. So, Mr. Carter, what you are saying is owners of 
  apartments and building managers want consistency and certainty 
  across jurisdictions so that they can understand what they are 
  dealing with and that would make Section 8 housing more 
  attractive as an alternative or a way to get involved in 
  affordable housing.............................................
Mr. Carter. Yes, sir.............................................
Mr. Stivers. Thank you...........................................
Thank you, Madam Chairwoman, for holding this hearing. I yield 
  back the balance of my time....................................
Chairwoman Waters. You are so welcome............................
The gentleman from Guam, Mr. San Nicolas, is recognized for 5 
  minutes........................................................
Mr. San Nicolas. Thank you, Madam Chairwoman.....................
I have been listening very intently and I am finding a lot of 
  interesting connotations in the conversation. It sounds like in 
  the interest of trying to move forward this legislation to 
  provide funding for affordable housing, there is a resistance 
  or a hesitation to do so if we don't pursue deregulation 
  perhaps first..................................................
And I think that deregulating makes sense to a certain extent. 
  But I don't think we should be abdicating our responsibilities 
  to address the affordable housing crisis in this country. We 
  shouldn't be abdicating that responsibility to localities which 
  we do not have any jurisdiction over. I think that maybe 
  perhaps in our role, we can influence our respective districts 
  to address whatever is holding back the development 
  opportunities in the regulatory framework. But I think that we 
  need to stay focused on what our duties are here now with 
  respect to this particular piece of legislation................
And in the context of that, I wanted to talk about how--or 
  looking at, I think, two different arenas here, really, and we 
  are comparing them in ways that I don't think are very 
  accurate, at least not an accurate reflection of what we are 
  dealing with in those two particular areas.....................
Mr. Carter, your interest in the whole affordable housing arena 
  is focused on private capital and utilizing private capital to 
  address the public housing issues in this country..............
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. And in the earlier conversation, it was talked 
  about how your target range is about $7,000 to $20,000 as a 
  cost basis when it comes to rehabbing existing structures for 
  affordable housing purposes?...................................
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. And it was also mentioned in that conversation 
  that the $55,000 per unit cost that is going to be addressed in 
  this particular legislation is--well, it was intonated that it 
  was higher than what your costs are, but the whole purpose of 
  your operation is to pursue those kind of projects that have 
  the least amount of cost and the highest rate of return. Is 
  that correct?..................................................
Mr. Carter. I would say that those that have the appropriate risk 
  adjusted return, yes, sir......................................
Mr. San Nicolas. Okay............................................
Now, Ms. Todman, you represent the agencies?.....................
Ms. Todman. That is correct......................................
Mr. San Nicolas. And this $55,000 per unit public housing cost is 
  to address the agency concern..................................
Ms. Yentel, you spoke about how the agency rehabilitation issues 
  have been underfunded for decades..............................
Ms. Yentel. Yes..................................................
Mr. San Nicolas. And it has been cut off by as much as 50 percent 
  over the last almost 20 years..................................
Ms. Yentel. That is right........................................
Mr. San Nicolas. Now, I think that we can get the private sector 
  and the public sector to agree that when you defer maintenance 
  for that long, the cost to rehab those units increases 
  exponentially over time, is that correct?......................
Ms. Yentel. Yes, that is correct.................................
Mr. San Nicolas. And we have a consensus across the board on 
  that...........................................................
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. Okay. So the under-investment overall these 
  decades is I would argue a large cost component of why we are 
  talking about $55,000 per unit today as opposed to $7,000 or 
  $20,000 per unit for a private firm is able to go out and 
  almost pick and choose what projects to undertake. Is that 
  correct?.......................................................
Ms. Todman. Yes..................................................
Ms. Yentel. That is correct, sir.................................
Mr. San Nicolas. Do we have consensus on that across the board?..
Mr. Lawson. I would simply say that we may be comparing apples 
  and oranges in that case, because I think the level of capital 
  needs and the level of the deferral of maintenance in some of 
  the public housing portfolio would be much greater than that, 
  which Mr. Carter, than a property that Mr. Carter might be 
  buying.........................................................
Mr. San Nicolas. I am glad we are able to get that on the record 
  because I don't want us to--I think we are all on the same page 
  here. I think that we definitely need to support and deregulate 
  to allow for the private investment to continue to help meet 
  those demands, so we don't have to invest public money in the 
  areas where the private investment isn't going to flow toward..
I think that we will have to figure out how to find that happy 
  ying and yang here. I do want to talk about something that was 
  mentioned by my colleague, Mr. Sherman, about how rents are too 
  damn high and wages are too damn low...........................
And I think that, of course, that formula factors into the 
  equation when it comes down to affordable housing. Ms. Yentel, 
  you mentioned a single person with a disability relying on an 
  annual income of just over $10,000 from supplemental security 
  income as an example of inadequate income to meet housing 
  needs, is that correct?........................................
Ms. Yentel. Well, it's an example of an extremely low-income 
  household and they are the households who have the most severe 
  shortages for homes affordable and available to them, yes......
Mr. San Nicolas. Right. And so, I wanted to just kind of 
  reference that when I make this point here and that is that, 
  well, I know that your purposes are to advocate for housing in 
  particular, I think that because we just have so much crossover 
  here in the need for housing and the need for incomes that can 
  afford that housing, I would ask that your organizations begin 
  exploring the availability of their testimony to actually speak 
  towards income issues in this community........................
And one of them in particular, and I will end with this, is that 
  Guam is a territory does not get SSI. We don't even have that 
  $10,000. And I just wanted to close by asking across the board, 
  your organizations are national organizations, does that 
  include territorial data?......................................
Ms. Todman. Yes..................................................
Ms. Yentel. Where the data is available, yes.....................
Mr. San Nicolas. Great...........................................
Thank you very much, Madam Chairwoman. I yield back..............
Chairwoman Waters. Thank you.....................................
The gentleman from Colorado, Mr. Tipton, is recognized for 5 
  minutes........................................................
Mr. Tipton. Thank you, Madam Chairwoman. And I appreciate you 
  holding the hearing here today. I would like to be able to 
  describe a little bit of what we have in my district. We have 
  some resort communities that have developed building for a 
  specific clientele.............................................
But here is part of the challenge. The plans were not put in 
  place for the lower-income folks who are going to be the 
  workers who are going to be in those communities. We also have 
  a second challenge; they come from rural Colorado..............
We have the statistical information to be able to support that we 
  have a lower per capita income. However, some of the 
  regulations that are applied at the State level and even at the 
  local level as well are increasing some of those housing cost 
  that are making those homes less affordable....................
And I want to be very clear, a lot of the regulations happen to 
  be very good, to be able to have a fire alarm within your home, 
  carbon monoxide detectors, good ideas to be able to have those 
  but, Mr. Carter, you had mentioned earlier in your testimony 
  that you are dealing with six public housing agencies..........
You just mentioned 45 different regulators just a little bit ago 
  that you are having to be able to deal with. When we are 
  looking at the cost of an actual home or for a place for people 
  to be able to rent, how much is added on to the cost of those 
  units from the cost of regulations that the people have to be 
  able to pay?...................................................
Mr. Carter. We think 30 percent or more..........................
Mr. Tipton. And arguably some of those regulations are obviously 
  good to be able for the safety and soundness of the community..
Mr. Carter. Yes, sir.............................................
Mr. Tipton. Is there a better way when you were just describing 
  just when Mr. Stivers was questioning you that having to deal 
  with a variety of different folks in terms of the regulations, 
  does that increase your cost as well, with effectively one or 
  two or maybe even three stop shopping, would that be a better 
  way to be able to do business?.................................
Mr. Carter. Well, what I mentioned is we operate in affordable 
  housing communities with over 45 different public housing 
  agencies, so I have a team. I have a staff of 10 people who 
  just deal with our compliance issues...........................
Mr. Tipton. Ten people...........................................
Mr. Carter. Yes..................................................
Mr. Tipton. And so that does drive up the cost for people with 
  lower incomes to be able to get that type of housing...........
Mr. Carter. Yes, sir.............................................
Mr. Tipton. It seems to me, we are dealing with this from the 
  Federal end. If you were to make just an educated guess in 
  terms of some of the regulatory cost, is the heavier burden 
  from the Federal side or from the State and local sides?.......
Mr. Carter. State and local......................................
Mr. Tipton. State and local side.................................
Mr. Carter. Yes..................................................
Mr. Tipton. So, what is happening at the State and local level in 
  terms of creating affordable housing for people in those resort 
  communities, in areas with lower incomes is actually creating a 
  hardship on people?............................................
Mr. Carter. Yes, sir.............................................
Mr. Tipton. Great. So, do you have some ideas on how to best 
  address that?..................................................
Mr. Carter. Well, certainly, the area that you mentioned 
  specifically, in your district, I mean, we own a property in 
  Naples, Florida, which is a perfect example of a very high-end 
  community with a lot of resorts and then a lot of workforce 
  that has to support that.......................................
And I do think the low income housing tax credit is still the 
  best way to produce housing units for that segment in those 
  communities....................................................
Mr. Tipton. Great................................................
Mr. Lawson, do you have any comments on that?....................
Mr. Lawson. Yes. Obviously, there are a lot of things that affect 
  the cost but risk is very much one of those, and the State and 
  local regulatory processes are a big piece of that. It can 
  sometimes take us, as Mr. Carter said, years to get something 
  done...........................................................
Your investment is at risk that entire time. And to create more 
  certainty, to streamline that process sounds like a great idea. 
  I think we have discussed here, and other people have discussed 
  the idea of creating an incentive in order to streamline that 
  process. The incentive, the Federal incentive could perhaps 
  affect the State and local behavior............................
Mr. Tipton. Great. I appreciate your comments on this because it 
  is a multi-level issue that we have to be able to deal with 
  impacting people at home. And we do need to be cautious and 
  aware as well..................................................
There is no free literally in the world, be it a Federal 
  incentive there are going to be costs associated with that that 
  ultimately those same people that we are talking about who are 
  having a hard time maybe being able to make that mortgage or 
  that rent payment are going through taxes to be able to have to 
  assume some of that cost.......................................
Simplification, good streamlining which is what we do in the 
  private sector is something that I think is something that we 
  ought to be aspiring to. And again, Madam Chairwoman, I 
  appreciate you holding the hearing today.......................
Chairwoman Waters. Thank you.....................................
Mr. Tipton. I yield back.........................................
Chairwoman Waters. The gentlewoman from Michigan, Ms. Tlaib is 
  recognized for 5 minutes.......................................
Ms. Tlaib. Thank you, Madam Chairwoman...........................
The average price for homes in Detroit is $30,000, an affordable 
  rate for home buyers in my district. Despite this, since the 
  early 2000s, we saw more of a drop in Black homeownership than 
  any other State in the country.................................
Traditional banks are carrying out the very practices outlawed by 
  the Fair Housing Act, a 50-year-old law that banned racial 
  discrimination lending and refusing to offer mortgages for low-
  income borrowers for less than $50,000.........................
Currently, the City has over 43,000 vacant homes. So Detroit, 
  unlike similar cities, has both an increase in demand and its 
  supply of housing stock. Ms. Yentel, can you talk about the 
  challenges buyers typically face when attempting to get smaller 
  mortgage loans?................................................
Ms. Yentel. Thank you for the question. And you are right to be 
  concerned. We share your concern about minority homeownership. 
  And in fact, today, as you mentioned, the numbers in Detroit 
  and beyond nationally, Black homeownership levels are lower 
  today than they were before the Fair Housing Act was enacted...
So clearly we have a long way to go and more to do to ensure that 
  access to credit becomes possible for historically underserved 
  communities. It is a place where Fannie Mae and Freddie Mac 
  play an important role and it is one of the reasons why we have 
  to ensure as we address comprehensive housing finance reform 
  that that access to credit for historically underserved 
  communities remains available..................................
Ms. Tlaib. Now, I am so glad you mentioned Fannie Mae and Freddie 
  Mac in that and their duty to serve efforts to preserve 
  affordable housing. How can we get them to facilitate financing 
  of smaller mortgages? What can we do as public servants and 
  Congress Members to push for that initiative?..................
Ms. Yentel. Well, I think duty to serve is an important 
  initiative and it is something that Fannie and Freddie--it is 
  relatively new. It is something that Fannie and Freddie are 
  starting and doing well........................................
It is requiring more thought and more initiative, more innovation 
  in serving historically underserved communities, including 
  renters in rural communities, including manufactured housing 
  residents......................................................
So, I think, one, ensuring that we retain duty to serve and 
  continue to allow for this innovation to happen and measure 
  what is working and what isn't, and then work to take to scale 
  the lessons that we learn from that............................
Ms. Tlaib. Thank you.............................................
Ms. Todman, what can be done under the Community Reinvestment Act 
  to ensure that banks are being properly examined by the Office 
  of the Comptroller of the Currency to receive the CRA credit?..
Ms. Todman. I think that oversight is important. And I believe we 
  should trust, but verify. And so, if there are situations--....
Ms. Tlaib. We do.................................................
Ms. Todman. --where our financial institutions have made 
  commitments, we need to make sure, at the local level, that 
  those commitments are kept to those areas that, but for 
  investment from financial institutions, certain community 
  amenities and housing improvement would not occur..............
And I look at programs like New Market Tax Credits as a program 
  available to financial institutions to infuse equity and 
  improve what is happening inside the community.................
Ms. Tlaib. Because residents in Detroit in the 13th Congressional 
  District are locked out of the traditional mortgage market, 
  they are often forced to borrow from nonbanking lending 
  institutions, even high rates of land contracts are just out of 
  control........................................................
Our other largest source of mortgage loans right now, which are 
  obviously outside of the purview of the Community Reinvestment 
  Act regulations, and this is something that I am increasingly 
  becoming more passionate about these kind of loopholes and the 
  need to update the CRA.........................................
Ms. Yentel, can you talk a bit about the risks that consumers are 
  faced with right now when borrowing from nonbanking 
  institutions?..................................................
Ms. Yentel. So, I have to be honest and say that is outside of my 
  area of expertise..............................................
Mr. Carter. But I would--first of all, I grew up in your 
  district, so I know it very well...............................
Ms. Tlaib. Then we are brother and sister now....................
Mr. Carter. Yes. I went to Cass Tech High School. But we actually 
  are involved in Detroit now in developing new apartments there. 
  And one of the things that we believe that part of--it is a 
  great objective to buy a home but quality rentals are needed 
  there as well..................................................
And we find that there is a lack of quality rentals and we are in 
  the process of developing a new property on the north end of 
  Detroit. And we think it is a great market--...................
Ms. Tlaib. Mr. Carter, what do you mean by quality rentals? 
  Because I have articles, they say rising rents, falling wages, 
  Detroit's poor face housing crisis. For some, the price is 
  just--.........................................................
Mr. Carter. We will have affordable apartments where we are 
  building.......................................................
Ms. Tlaib. But the definition of ``affordable,'' I'm sorry 
  gentlemen, maybe we can talk offline, but the definition of 
  affordable is the issue. And we need to really have a serious 
  conversation about that........................................
Chairwoman Waters. The gentleman from Kentucky, Mr. Barr, is 
  recognized for 5 minutes.......................................
Mr. Barr. Thank you, Madam Chairwoman, for holding this important 
  hearing........................................................
Mr. Carter, included with your testimony were some articles that 
  tell your story and the creative solutions that you have 
  offered and developed to improve the lives of tenants and 
  communities, and we are very impressed with your story and your 
  commitment to serving these communities........................
I wanted to ask about how we might attract more private capital 
  in the development of apartments in multi-family housing as 
  opposed to just always resorting to more taxpayer expenditures.
There are a lot of things that we can do, I think, to change the 
  way we do business in this country to attract private capital. 
  And one government program that actually, I think, does a 
  pretty good job of this is the RAD program.....................
Ms. Todman, I think you have may have testified about this 
  earlier. And I will get to that in a minute. But before we get 
  to that, could you expand a little bit on your testimony about 
  the changes to the--the retooling of the Community Reinvestment 
  Act that could really help in this regard?.....................
Mr. Carter. Well, I would say the first one would be that the old 
  assessment districts aren't necessarily aligned to where the 
  need is. And so, there are certain banks that say, well, I 
  can't invest there because my assessment district is here......
And the reality of it is it would be great if it is affordable 
  housing that serves an underserved market wherever it is, that 
  the banks get credit for.......................................
Mr. Barr. Let me ask also about your testimony about opportunity 
  zones. There are a lot of investors who are very interested in 
  this, but I think there is still some uncertainty with the 
  Treasury rollout...............................................
As you look at this--the tax bill opportunity zones--tell me how 
  opportunity zones are going to attract private capital? And are 
  the rules that you are seeing so far, are they positioned to 
  attract that private capital?..................................
Mr. Carter. I would say, yes. I think there was a big uncertainty 
  that came out of it last week. One of the issues though is the 
  challenge in developing new things and the timeframes are very, 
  very--the opportunity zone legislation requires that we get 
  things processed quickly where there is certainty as to what 
  fees and things are there, which doesn't exist today. And that 
  is where we have to get the--..................................
Mr. Barr. So maybe a message to the local governments is look at 
  those opportunity zones. Look at your local regulations and 
  match those up.................................................
Mr. Carter. Yes, sir.............................................
Mr. Barr. Now, that could really help super charge the 
  opportunity zones..............................................
Mr. Carter. Yes, sir.............................................
Mr. Barr. In my district, we have an outstanding community 
  leader, PG Peebles, who is the CEO of the Lexington Urban 
  League. And a city council member, also James Brown who is--
  they both come to me and talk to me about the need for more 
  affordable housing and yet at the same time the problem of 
  gentrification.................................................
Can you talk a little bit about how we can do some of these 
  things, to invite more private capital, to revitalize 
  opportunity zones in other neighborhoods without the problem of 
  displacement?..................................................
Mr. Carter. Well, I think that is the key. We have to be 
  inclusive. We have to keep people who are there. And we have 
  to--to me, we have to add additional levels of income to a 
  community to make it viable....................................
I believe that a diversity of incomes will make a stronger 
  community. We own mixed income properties. I can tell you where 
  we range from 50 percent, 40 percent of AMI to market-rate 
  units. And those are some of our most successful communities...
Mr. Barr. Great..................................................
And Ms. Todman, back to you on RAD. The Lexington Housing 
  Authority is moving towards jurisdiction. They are doing some 
  great things, Austin Sims leads that agency. I don't know if 
  you know Austin................................................
Ms. Todman. Yes..................................................
Mr. Barr. But they are taking advantage of RAD...................
Ms. Todman. Yes..................................................
Mr. Barr. And RAD is a great opportunity to take all the 
  dilapidated public housing stock, invite private investment 
  which is great for those tenants, and convert those into 
  Project-Based Section 8........................................
To me, this sounds like a great way to both rehab our existing 
  public housing stock while at the same time save some taxpayer 
  dollars and invite more private capital in.....................
Ms. Todman. Sure. So Mr. Sims is a colleague of mine and he is 
  able to marry two programs, RAD and Moving to Work, to improve 
  his units. But that is sometimes unique to agencies like in 
  Lexington that have all of those tools in the tool kit. For a 
  fair amount of our members, RAD, as powerful a tool as it is 
  and as successful as it can be, it is not always a tool for all 
  agencies. And so, I think an infusion of capital funds will 
  help those agencies and for those who can use RAD and 
  capitalize on it, it is a tool for the future..................
Mr. Barr. Thank you. I yield back................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Massachusetts, Ms. Pressley, is recognized 
  for 5 minutes..................................................
Ms. Pressley. First, I want to say thank you, Chairwoman Waters, 
  for renewing this committee's sense of urgency around this 
  issue and framing the conversation to reflect the real gravity 
  of it..........................................................
In 2013, a National Infrastructure Protection Plan was released, 
  outlining 16 critical infrastructure sectors. Of the 16, not 
  one was housing or shelter. Just to be clear for the purposes 
  of the record, would the 4 of you indicate by a show of hands, 
  do you believe it is vital that we recognize our nation's 
  housing supply as critical infrastructure if we are serious 
  about addressing our current housing crisis?...................
[Show of hands.].................................................
Ms. Pressley. Let the record reflect--enthusiastic showing,thank 
  you. In cities across the country, including those in my 
  district, the Massachusetts Seventh, the housing supply lacks 
  both in quantity and quality...................................
In Cambridge, one housing property alone vacated 57 housing units 
  as a result of hazardous mold. Now, we know that multi-family 
  units and apartments house a large proportion of low-income 
  families, and while some are in good shape, many of these 
  buildings have deteriorated and do require significant 
  renovations....................................................
Unfortunately, these situations are plagued by split incentives 
  where owners see repairs more as sunken cost than as 
  investments in their properties................................
Mr. Carter, would you say that because of split incentive, many 
  building owners choose not to make these needed repairs and 
  many residents contend with poor and subpar housing conditions?
Mr. Carter. I would say that as an industry, I believe that, and 
  I know as a company, we focus on making those investments 
  because the most important thing to us is the safety and 
  wellness of our residents. So, we do make those investments and 
  we cure those situations.......................................
Ms. Pressley. Would anyone else like to comment before I move on?
Mr. Lawson?......................................................
Mr. Lawson. I would just say that within the industry--within any 
  industry there are good participants and there are bad 
  participants. And we all know that there is a small percentage, 
  I think, of landlords who do not keep up their building........
As an industry, we welcome our local codes officials putting 
  pressure. We think they should be even more aggressive.........
Ms. Pressley. Thank you. Reclaiming my time......................
Okay. Very good. When I served on the city council, I chaired the 
  Public Health Committee and we spoke often about the weathering 
  effect that we learned about through the Massachusetts 
  community health center where they surveyed low-income 
  residents in public housing about how bad did they think their 
  children's asthma rates were...................................
And they put it in like the 3 to 5 range but when they were 
  tested, they were actually at life-threatening risk, 8 to 10. 
  And so, we know that housing is a fundamental and critical 
  determinant of public health...................................
And repeated studies have shown this link between housing 
  stability and health outcomes. The current state of much of our 
  housing supply poses a literal hazard to families and 
  particularly children..........................................
One 2-year study by the Boston Housing Authority at the Mary 
  Ellen McCormick neighborhood found a 47 percent reduction rate 
  in asthma symptoms, asthma attacks, ER visits, and school 
  absences, when tenants moved out of older apartments into newly 
  renovated units................................................
This reality is no clearer than the story of a constituent of 
  mine, Angelo, who first came to the Boston Medical Center Grow 
  Clinic at 8-months-old but was the size of a 4-month old.......
He and his mom were living in an overcrowded apartment, sleeping 
  in the living room with a leaking ceiling, and infestations of 
  mice and cockroaches among other things. He developed allergies 
  and was so weak he could not raise his head up.................
Since then, as a result of moving into quality public housing, he 
  has now started to thrive, to gain weight, and to hit the 
  necessary developmental milestones to enroll in day care.......
Ms. Yentel, do you agree that housing is a critical determinant 
  of health?.....................................................
Ms. Yentel. Absolutely. And if I could add, I would say I think 
  you raised such an important point not only for the individual 
  costs to children and to families, but to the Federal 
  Government through inaction....................................
So, we are talking a lot about what are the benefits of a major 
  investment and infusion of funds to repair public housing and 
  build more? Inaction is expensive. We are paying for housing 
  instability and homelessness one way or another................
And as you raise, we are paying for it through increased health 
  costs. When people are affordably housed, their visits to 
  primary care physicians increase by 22 percent. Their visits to 
  the emergency room decrease by 18 percent. Medicaid costs fall 
  by 12 percent..................................................
There was a study in your backyard from Children's Health Watch 
  where a group of pediatricians in Boston found that over the 
  next 10 years, we will spend $111 billion in avoidable health 
  care costs because of housing instability and housing 
  insecurity.....................................................
Ms. Pressley. Yes. So one more time, just for the record, in your 
  opinion do you believe the current level of funding poses a 
  risk to the public health of our children and families?........
Ms. Yentel. I do. Yes............................................
Ms. Pressley. Thank you. And I yield back........................
Chairwoman Waters. Thank you.....................................
The gentleman from Texas, Mr. Williams is recognized for 5 
  minutes........................................................
Mr. Williams. Thank you, Madam Chairwoman. The chairwoman's draft 
  legislation cost for $92.1 billion for housing infrastructure. 
  This is double the entire budget of the Department of Housing 
  and Urban Development..........................................
I think the private sector which I am part of will have an 
  important role in solving an affordable housing issue, and I am 
  not convinced throwing this much money at a problem as the 
  government sometimes does will solve the underlying issues that 
  led us here in the first place.................................
So, Mr. Lawson, my first question to you is, what do you view as 
  the most effective way for the public and private sectors to 
  work together to help solve the affordable housing problem that 
  we have here in this country?..................................
Mr. Lawson. Again, while it's not under the jurisdiction of this 
  committee, I think the low income housing tax credit program 
  has been the most successful affordable housing program that 
  the country has ever created...................................
That works in conjunction, however, with a lot of funding, a lot 
  of programs that aren't under the jurisdiction of this 
  committee. I think the reason that the tax credit program works 
  so well is it marries the private sector discipline with the 
  public sector resource of the tax credits......................
And everyone has a responsibility. A responsibility of the 
  resident on one hand is to pay the rent and pay it on time. The 
  responsibility of the owner is to rent to income-qualified 
  people. If that doesn't happen then there are very serious 
  penalties at play..............................................
Mr. Williams. Thank you..........................................
Mr. Carter?......................................................
Mr. Carter. Yes, sir.............................................
Mr. Williams. Your LLC manages over 8,000 units in 12 States, as 
  we have heard today. This is a very impressive accomplishment. 
  You were able to find a free market solution to help solve the 
  affordable housing crisis......................................
And I think this is the beauty of capitalism. So before I 
  continue to my question, Mr. Carter, are you a capitalist or 
  are you a socialist?...........................................
Mr. Carter. Capitalist...........................................
Mr. Williams. Thank you very much. I appreciate that. Now, the 
  economy is strong. I think we would all agree with that. There 
  are more jobs than people looking and the economy grew at an 
  impressive rate, we found out, at 3.2 percent in the first 
  quarter of 2019, which surpassed almost every economist's 
  projection.....................................................
Mr. Carter, on page six of your testimony you talked about the 
  intersection of jobs, affordable housing, and infrastructure. 
  So can you please elaborate on what role jobs play in this 
  discussion?....................................................
Mr. Carter. Well, certainly, as we create jobs, for instance, 
  Amazon, people look at that and they see Jeff Bezos, but the 
  reality of it is that it creates lots of jobs for people who 
  make $40,000 to $50,000 a year in warehouses...................
And those are the people that we house. So that is, as we even 
  create technology jobs and things like that, there is a very, 
  very close relationship, jobs and the need for people to live 
  close by. In one of the areas that university towns, we own in 
  Boulder and also Poughkeepsie, New York, huge demand for people 
  that work at the universities..................................
Mr. Williams. Mr. Lawson, you mentioned in your testimony that 
  the shortage of housing units in low- and moderate-income 
  families reflects the market reality, not a lack of interest in 
  serving the population.........................................
We have heard testimony today that local policies have a 
  significant effect on construction prices of affordable housing 
  units. So my question would be from a Federal level, how can we 
  better get the numbers to reflect the market reality if we are 
  hindered by over-regulation at the local level?................
Mr. Lawson. I think we can create incentives for local 
  municipalities to streamline their regulations and to adopt 
  less restrictive land use policies. A lot of zoning ordinances 
  in suburban areas which is a lot of our--a lot of areas in 
  which I work, are by definition exclusionary. They are 
  excluding the least expensive home and apartment types.........
Mr. Williams. Okay. My last question to you, Mr. Carter, is to 
  piggyback off my previous question to Mr. Lawson. Your company 
  has found a way to make the numbers work and is operating in 12 
  different States, as we have said..............................
Studies have shown that local regulations can account for over 30 
  percent of the cost of development in renovation of the 
  apartment complex. And so, what are some of the unique 
  regulatory challenges that you are facing in development in 
  Southern California versus the one right outside my district in 
  Austin, Texas?.................................................
Mr. Carter. I would say that the environmental regulations are a 
  lot tougher in California than Texas. That is one. I would say 
  that the ability to get density is greater, is easier in Texas 
  than California................................................
Mr. Williams. And we have no personal income tax either in Texas.
Mr. Carter. Yes, sir.............................................
Mr. Williams. I yield back the rest of my time...................
Chairwoman Waters. Thank you very much...........................
The gentleman from Utah, Mr. McAdams, is recognized for 5 
  minutes........................................................
Mr. McAdams. Thank you, Madam Chairwoman, and thank you, all, for 
  being here today. As a former mayor myself, I worked on housing 
  issues on a daily basis. And we certainly struggled with many 
  of the same concerns that you all have raised in your 
  testimonies, that is how to incentivize affordable housing 
  development, and how to plan for development projects in a way 
  that made sense for communities, our schools, and our existing 
  infrastructure and how to do it financially....................
And planning for our existing infrastructure, integrating housing 
  with our infrastructure, that is the point I want to focus on 
  in my questions. So, Mr. Carter, in your written testimony, you 
  note that infrastructure and housing are linked in significant 
  ways...........................................................
You go on to note that contemporaneous consideration of housing 
  demands and infrastructure needs maximizes community benefit 
  and promotes efficiencies in transportation, land use, and 
  public works...................................................
In short, what I believe you are referring to is the need for 
  smart growth and thoughtful city planning, planning that links 
  jobs with housing and with infrastructure investments and not 
  to look at these as separate activities endeavors of their own 
  right but collectively how we are connecting people to the 
  opportunities that they desire to access.......................
Housing is linked to jobs, is linked to a transportation 
  infrastructure. So, Mr. Carter, can you elaborate on one point 
  that you are making in your testimony, how important it is to 
  link affordable housing development with infrastructure 
  investments and what benefits this can bring to those cities 
  and to those residents?........................................
Mr. Carter. Well, I think that the--thank you very much for that 
  question. That in the creation of jobs, I believe that in most 
  industries there is a diversity of different workers at 
  different salary levels which really reflect the need for 
  housing at a variety of different levels.......................
So, we have seen it with technology. People assume that every 
  tech worker is a millionaire, but the fact is there are a lot 
  who work in doing things at where they make--support staff, so 
  you need housing for those people as well......................
Mr. McAdams. And, Mr. Lawson, as a developer yourself, how does 
  access to transportation influence where you seek to put a 
  project? And how often are the cities you interact with trying 
  to link jobs and housing with their infrastructure investments?
Mr. Lawson. I think that is a great question, because I think we 
  can do a much better job of aligning our transportation and our 
  housing. And that has been a struggle, I can say in my 
  hometown. That has been a big struggle. It has been a political 
  struggle to the extent that we can, again, create positive 
  incentives for municipalities to align those to, I think the 
  outcome would be better........................................
Mr. McAdams. So this hearing today is about housing as 
  infrastructure. And I think that is right that housing is a 
  critical piece of infrastructure but I also think it is 
  important to note that a bus line or a transit line or a road 
  is part of our housing infrastructure..........................
That housing in a silo, people don't just live in the place of 
  their residence. They have to get to work. And so, connecting--
  looking at housing not in a silo but as it relates to their 
  transportation choices, I think is important...................
So, I guess, I am curious if anyone on the panel has any 
  recommendations that we could pursue legislatively to 
  incentivize smarter housing growth strategies that ensure 
  affordable housing development has access to our transportation 
  resources, such as rail or bus.................................
Mr. Lawson. I think again, what we have talked about and I think 
  one of the other Congress Members here said that we give away a 
  lot of money for transportation to localities but we don't 
  require anything in return, perhaps this is an opportunity.....
Mr. McAdams. Okay. I think that gets at some of my concerns which 
  is as I have seen affordable housing projects come forward, 
  trying to make this pencil even with--tech and other incentives 
  is difficult...................................................
And so oftentimes, we find affordable housing on the land that is 
  less desirable, which means then once the housing is built the 
  residents have to have a car, have to have gas, have to walk 
  long distances to work and other unintended consequence of the 
  location and yet land next to our transit is more expensive but 
  maybe better capable of sustaining these developments and a 
  better quality of life for those residents and the development.
Ms. Todman. I would say I had the great joy of being in St. 
  George, Utah, for Utah's NAHRO chapter meeting and I was 
  impressed by the level of growth there, particularly from a 
  jobs perspective, but I have lots of questions about the low-
  income individuals who are in those jobs and how they were able 
  to move around.................................................
Every city has their consolidated plan that they are to submit to 
  HUD to receive funds. I do believe that there is an intersect 
  between housing and transportation. Maybe that is someplace we 
  can look to to have localities coordinate......................
Mr. McAdams. Thank you. I am interested in that. And I yield 
  back...........................................................
Chairwoman Waters. Thank you.....................................
The gentleman from Georgia, Mr. Loudermilk, is recognized for 5 
  minutes........................................................
Mr. Loudermilk. Thank you, Madam Chairwoman. I appreciate the 
  panel and your testimony here today. Housing is something that 
  we are dealing with even in my district back in Georgia........
I met with one of our manufacturers recently and asked them what 
  is their number one issue? I anticipated trade or the economy, 
  which was growing, that their answer would be the labor 
  workforce......................................................
Then, they told me their number one concern is the lack of 
  starter single-family homes, because what they have seen is 
  there are numbers of people who could qualify for a mortgage 
  today, who couldn't 2 years ago, because of how strong the 
  economy is and how they are building the workforce.............
But there are no starter single-family homes for them to purchase 
  in our area, which is just surprising to me. But even with 
  that, with more people qualifying for homes, there are still a 
  lot of Americans for whom homeownership is out of reach for 
  various reasons................................................
I have worked with several of these nonprofits. One, Homes for 
  Vets, actually will build homes for disabled veterans and they 
  give them a zero interest mortgage going forward. They custom 
  build these homes. I have had the honor doing several ribbon 
  cuttings, but also in my home State of Georgia, one of the 
  largest nonprofits is Habitat for Humanity that actually will 
  build homes for those for whom homeownership is just out of 
  reach..........................................................
And as we are looking at some things we can do, there is one 
  thing that we could do this pretty simple to build it. It 
  actually passed unanimously out of this committee last Congress 
  and passed out of the House, unfortunately, it didn't go 
  anywhere in the Senate, that would provide some regulatory 
  relief for these nonprofits....................................
The TRID rule is making it more difficult for the nonprofits 
  because you have a 2,000-page regulation that organizations 
  like these have to comply with, which in many cases requires a 
  full-time compliance person and these are nonprofits and some 
  of them have just said it is not worth doing...................
It is too onerous for us to comply with such heavy-handed 
  regulations that were actually designed for large bank mortgage 
  companies. And so, the BUILD Act is what we introduced that 
  would basically allow these nonprofits to go back to the pre-
  TRID reporting forms...........................................
Just those that make the zero percent mortgage loans, to allow 
  them to give them a little flexibility to go out and do more of 
  what they do, building these affordable homes or zero interest 
  mortgages for these low-income families........................
So, my question is really around that as, Ms. Yentel, can you 
  discuss the important role that these nonprofits play in the 
  nation's affordable housing arena?.............................
Ms. Yentel. I have to look more closely at the BUILD Act to get 
  back to you specifically on that. Nonprofits are an important 
  part of our country's affordable housing solution, whether they 
  are helping to provide low downpayment, no downpayment homes 
  for those who can afford them or whether they are developing 
  and operating rental housing for the lowest-income people......
Mr. Loudermilk. Yes. And that is really my question, what 
  important role do they play?...................................
Ms. Yentel. Yes..................................................
Mr. Loudermilk. And as I have seen, it is a very important role. 
  It is another piece of the larger puzzle.......................
Ms. Todman, should we be careful not to overregulate these 
  companies that, or these nonprofits that are there to provide a 
  service, especially with regulations that are geared toward the 
  huge, big, mega mortgage loan companies........................
Ms. Todman. I would speak to regulation in general and say that 
  when regulations exceed the tipping point of addressing health 
  and safety and have folks become paper shufflers in terms of 
  what their duties are, there is a monetized impact to that. I 
  do think we have to look very carefully at how regulations 
  impact housing affordability and whether you are able to have 
  new growth and preservation inside an overregulated 
  environment....................................................
Mr. Loudermilk. Thank you. I appreciate that.....................
Mr. Lawson, how do private sector home builders partner with 
  these nonprofits?..............................................
Mr. Lawson. We partner with a number of nonprofits, mostly on the 
  multi-family side within the context of the low income housing 
  tax credit program that our State creates incentives for. But I 
  think we do--what we should do is align incentives.............
We should not look at--we should look at the goal first and not 
  look at the taxability, yea or nay, of a particular 
  practitioner in the market. We should say what is the best 
  housing goal and let us create incentives for it...............
Mr. Loudermilk. Thank you. I appreciate that. And hopefully, we 
  can move this bill forward again in this Congress. I yield 
  back...........................................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Texas, Ms. Garcia, is recognized for 5 
  minutes........................................................
Ms. Garcia of Texas. Thank you, Madam Chairwoman, and first, I 
  know that you all have already talked about this, but I just 
  wanted to get it clearly on the record, because having grown up 
  poor in South Texas in a four-room only kitchen, no bathroom, 
  no living room house, I have seen what the need for housing was 
  then. And I have been a social worker and have visited many 
  homes like mine where there are 10 people and 10 children a 
  room, so you can imagine the crowded situation, I have visited 
  and they have same or similar conditions.......................
When I block walk some of my own neighborhoods now that still 
  exists now. So, housing shortage is not a new problem. It has 
  been around for a long time. And as much as we can say that 
  private industry will take care of it and that the markets will 
  take care of it, well, guess what? They really haven't. I think 
  it has helped but it really hasn't.............................
So, I just want to ask each one of you, just yes or no, do you 
  all agree that without some government involvement, the market 
  fails to develop any new low-income housing?...................
Ms. Yentel. Yes..................................................
Ms. Todman. Agreed...............................................
Mr. Lawson. I absolutely agree...................................
Mr. Carter. Agreed...............................................
Ms. Garcia of Texas. Agreed. Now, I was also a lawyer in the 
  housing section and my favorite T-shirt actually said, 
  ``Housing for poor people, not profits.'' And Mr. Carter, you 
  probably would disagree with that and, Mr. Lawson, you probably 
  would too because you are here to make a profit................
But you still utilize some of the incentives that we have, right?
Mr. Carter. Yes, we do...........................................
Ms. Garcia of Texas. Right. So which one do you think works best? 
  And if you could just be brief because I still have one more 
  question?......................................................
Mr. Carter. I would say Section 8--Project Based Section 8 and 
  the low-income housing tax credit..............................
Mr. Lawson. I would say the tax credit because as I said before 
  it marries a public subsidy with the private sector discipline. 
  I think that public private venture is what creates the 
  sustainability long-term.......................................
Ms. Garcia of Texas. Okay........................................
And, Ms. Yentel, you talked about how there are different 
  strategies and different levels of poverty, and the one that we 
  really need different strategies for each, what can we really 
  do like a lot that I see in my district and it is still like 
  the house that I grew up in that is four rooms with--it may not 
  be 10 children for the one family. I was from a very large 
  family, but in fact it may be 10 children and 4 adults and it 
  is 2 or 3 different families living in them. And what can we do 
  to really reach the very poorest of the poor of America?.......
Ms. Yentel. Yes. Thank you for the question. The only segment of 
  the population for which there is an absolute shortage of homes 
  that are affordable and available to them are those extremely 
  low-income households..........................................
The National Housing Trust Fund Program is our country's newest 
  and most deeply targeted housing program. It was created and 
  designed precisely to meet this need. And at its current 
  funding level, 100 percent of the dollars go to build or 
  preserve apartments that are affordable to extremely low-income 
  households. The first year's allocation of $174 million has 
  resulted in about 1,900 units that have been developed that are 
  housing some of the country's most vulnerable people...........
A lot of the people that you are talking about are people who 
  would otherwise be living in severely overcrowded situations or 
  would be sleeping in shelters. The only challenge with that 
  program is that it is woefully underfunded compared to the 
  overwhelming need. So, an infrastructure spending package is an 
  ideal opportunity to increase investments in this important 
  program........................................................
Ms. Garcia of Texas. Right. I feel like the mayor back here who--
  housing is just the first start, but you also have to include 
  the transportation and maybe wraparound services so that they 
  can be able to maintain the home and address all their needs...
So have you seen any strategies that really work by combining the 
  housing assistance with the wraparound services needed so that 
  someone can really get the lift up?............................
Ms. Yentel. Sure. Housing First is a good example of that and it 
  is the model that we use today to help end homelessness in 
  communities across the country. And while some people 
  experiencing homelessness or some extremely low-income renters 
  may have challenges in their lives that go beyond housing 
  affordability, until people are affordably housed, they can't 
  effectively address those other issues.........................
So the idea is first get people housed in homes that are decent, 
  safe, affordable, accessible, and then the wraparound services 
  can help them address the other issues in their lives, to 
  maintain those homes, to address accessibility issues, mental 
  health issues and beyond. But the home and living in a safe, 
  stable, affordable environment is essential to success in those 
  other areas....................................................
Ms. Garcia of Texas. Thank you. Thank you, Madam Chairwoman. I 
  yield back my time.............................................
Chairwoman Waters. Thank you. The gentleman from Ohio, Mr. 
  Davidson, is recognized for 5 minutes..........................
Mr. Davidson. Thank you, Madam Chairwoman. And I thank our 
  witnesses today for your expertise in the matters before us....
You know, affordable housing is important in every district. It 
  is certainly important in Ohio's 8th District. We have pockets 
  of great wealth, but we also have, right nearby, pockets where 
  people are struggling to find affordable housing...............
Our rural communities are, even though the net cost is fairly low 
  by national standards, struggling to find affordable housing. 
  And I just want to understand how, when we look at the ability 
  to afford housing, normally you would think income growth is 
  key. And when you look at the economy that we have been under 
  for the past couple of years and certainly the economy the 
  numbers look great, 3.2 percent GDP growth in the first 
  quarter, 3 percent personal disposable income..................
So that is the cash that you have to pay your bills with in the 
  household, that has gone up by 3 percent. And it is not always 
  where the GDP is going up and wages are going up. We have seen 
  the GDP go up and wages remain stagnant, so thankfully, both 
  trends are positive............................................
And I am finding it odd that as I look at our spending on Federal 
  housing subsidies, we are spending more money on poverty 
  assistance. We have a safety net and America values the safety 
  net, but you would think that as the economy heats up, as 
  people are more fully employed, more fully employed than they 
  have ever been in many of our communities and certainly by 
  demographics, record low levels of unemployment, yet we spend 
  more money on Federal housing subsidies, we are spending more 
  money with 3.8 percent unemployment than we were spending at 10 
  percent unemployment right after the Great Recession...........
Ms. Yentel, I will start with you, why would that be?............
Ms. Yentel. The economy is working well for some of the mostly 
  higher-income households. while lower-income earners, for them, 
  the economy hasn't gotten much better, because they don't have 
  stocks in the stock market--...................................
Mr. Davidson. No, wages are up. The wages are up for everybody...
Ms. Yentel. For the lowest-income people, wages have 
  predominantly been stagnant and are just now getting--.........
Mr. Davidson. That is true for the century. It is not true for 
  the past couple of years.......................................
Ms. Yentel. It is true and if we look at the jobs--..............
Mr. Davidson. It is not a debate. The time is mine. Ms. Todman?..
Ms. Todman. Yes. I would say that you have a lot of middle-class 
  families impacted by the Great Recession who are still catching 
  up in terms of their housing needs. They are only just 
  beginning to see the impact of the economic improvements that 
  you suggest....................................................
Another issue is just supply. We, as a country, are running into 
  a supply issue. It relates to the actual number of housing 
  being produced, which is why it is important to keep one 
  important supply, the public housing stock, and it is also 
  important for us to invest in other affordable housing units, 
  and it is important for us to encourage market-rate housing. 
  Supply is key to the cost of housing...........................
Mr. Davidson. Thank you for that. And the reality is, while wages 
  are going up, in the low-income portion, without some of the 
  programs that we talked about, there are challenges in meeting 
  the needs, because the market doesn't produce all of the 
  affordable housing without some of the incentives we have......
And as I go to Mr. Lawson and Mr. Carter, maybe you can highlight 
  each briefly some of the hurdles that you run into, maybe I'll 
  begin with Mr. Carter. We have all these programs. We spend 
  nearly $900 billion a year on poverty assistance, over 92 
  programs, some of them are duplicative. They all come with all 
  kinds of rules and barriers. What are a couple that you find 
  that would help you meet the needs better if you could get some 
  reform?........................................................
Mr. Carter. Thank you for the question. One is just the cost of 
  developing. And I just want to point out to your last question, 
  we were involved in a project in downtown San Francisco in 
  2001. It was $200,000 a unit to build at Mission Bay. Today, it 
  would cost $650,000 a unit to build............................
Mr. Davidson. Wow. Thank you. Mr. Lawson.........................
Mr. Lawson. Supply and demand, and the increase in construction 
  costs and the the scarcity of supply has driven housing costs 
  higher than the increases in incomes...........................
Mr. Davidson. Thank you. And as you look at the way some of the 
  programs work, here is a piece. Right. So even one of my 
  Democratic colleagues was speaking about one of his two 
  programs that he had been involved with as a former mayor and 
  one worked really efficiently, they would spend all the money. 
  The other one didn't, there was money trapped there because 
  there were a lot of rules......................................
As we look at that, the proposals will spend $92 billion more 
  with no reforms. I know most people won't spend an extra 200 
  bucks without expecting a better bang for the buck. And it is 
  just shameful that we are not talking more seriously about 
  reform.........................................................
My time has expired, and I yield back. Thank you.................
Chairwoman Waters. The gentlewoman from New York, Ms. Ocasio-
  Cortez, is recognized for 5 minutes............................
Ms. Ocasio-Cortez. Thank you, Madam Chairwoman. Ms. Todman, would 
  you agree that if you try to make repairs to your home after 20 
  years of neglect, it would be much more expensive to repair at 
  the end of that 20 years than if you just invested in routine 
  maintenance?...................................................
Ms. Todman. Agreed. And my testimony speaks to that. There is a 
  chart that shows some of the longitudinal impact of non-
  investment in the past several decades.........................
Ms. Ocasio-Cortez. And, Ms. Yentel, would you say that public 
  housing is part of our national infrastructure?................
Ms. Yentel. Yes, absolutely......................................
Ms. Ocasio-Cortez. Well, for more than 2 decades, the Federal 
  Government neglected to make the New York City Housing 
  Authority's (NYCHA's)developments--they failed to invest in 
  them for more than 400,000 New Yorkers. And so now we have 
  about 2 decades of complete neglect, and that bill for 2 
  decades of neglect is a lot bigger than if we had just invested 
  in that routine maintenance. Would you agree with that, Ms. 
  Yentel, Ms. Todman?............................................
Ms. Yentel. Agreed. I agree......................................
Ms. Todman. Yes, agreed..........................................
Ms. Ocasio-Cortez. So people just throw out the term $32 billion. 
  That is what is owed to New York City's Housing Authority 
  alone, $32 billion. But what does that $32 billion in neglect 
  look like?.....................................................
Well, we took up some stories from our district and it seems this 
  is what that $32 billion in neglect looks like. In one 
  apartment in the Bronx, sewage flows into an apartment when it 
  rains and water leaks through the roof. Children like Mikayla 
  Bonaparte have blood lead levels hitting 8 times the amount 
  that prompts Health Deaprtment action; 800 children under the 
  age of 6 living in NYCHA housing tested positive for high 
  levels of lead between 2012 and 2016 during the Federal 
  disinvestment period...........................................
While already in decay, Hurricane Sandy devastated many housing 
  developments whose boilers were located in the basement and 
  they already struggled, and continue to struggle with that 
  replacement. During the winter, residents have to open their 
  gas ovens to heat their apartments because the disinvestment 
  has prevented and tied the Housing Authority from being able 
  replace these heating systems..................................
People are going without hot water and heat during the 
  wintertime. In some cases, residents estimate heat in their 
  apartments began to falter over 10 years ago and they have to 
  make do with space heaters in the middle of the winter, and 
  other residents have to put up with the stench of pervasive 
  mold that triggers their asthma. Madam Chairwoman, I seek 
  unanimous consent to submit to the record multiple articles 
  from the New York Times highlighting each and every one of 
  these cases....................................................
Chairwoman Waters. Without objection, it is so ordered...........
Ms. Ocasio-Cortez. Thank you so much.............................
Ms. Yentel, do you believe that all of these horrific cases were 
  necessary? Or were they unnecessary in terms of the 
  government's disinvestment?....................................
Ms. Yentel. Well, certainly, those kind of health consequences 
  are unnecessary and shameful and a direct result of 
  disinvestment over decades into the repairs necessary to upkeep 
  those homes....................................................
Ms. Ocasio-Cortez. So it was completely unnecessary for these 
  kids to get lead in their blood. It was completely unnecessary 
  for these families to live through winter without heat. It was 
  completely unnecessary for these families and children to 
  breathe in mold. And we did it anyway, because we decided that 
  their lives and that their housing was not worthy of Federal 
  investment. Would you say that is correct?.....................
Ms. Yentel. I would. I would say that the funding that is 
  required to keep those homes at a decent, safe level have been 
  underfunded for decades, funding for public housing repairs to 
  repair all of those units that you are talking about were cut 
  in half over the years 2000 to 2016 and continue to be terribly 
  underfunded compared to the need...............................
Ms. Ocasio-Cortez. So this is what we did--......................
Ms. Yentel. It is fixable. It is all fixable.....................
Ms. Ocasio-Cortez. And as we thank you. And as we said, that this 
  and as people made excuses that these investments were 
  unaffordable and that there was no money, we exploded our 
  military budget. We expanded fossil fuel subsidies to oil and 
  gas companies, and we continue to provide tax cuts to 
  corporations and the exceedingly wealthy that didn't need them. 
  Yet at the same time, folks have the audacity to say that there 
  is no money for public housing and that it is that we can't 
  afford for children to have clean blood and clean water........
This is morally wrong and it is also fiscally unnecessary. I have 
  one last question. As we transition to the necessity of green 
  and clean energy, are there health benefits that are possible 
  here? Can we create jobs for folks in housing in that are 
  living in Housing Authority as we make that transition?........
Ms. Todman. Certainly. The Section 3 program is one that as we 
  look at the Capital Fund as the preservation tool, many housing 
  authorities will use Section 3 as a way to employ residents but 
  also there is--................................................
Chairwoman Waters. Time has expired..............................
Ms. Ocasio-Cortez. Thank you. Thank you very much................
Chairwoman Waters. The gentleman from North Carolina, Mr. Budd, 
  is recognized for 5 minutes....................................
Mr. Budd. Thank you, Madam Chairwoman, for yielding and, again, 
  for hosting this hearing. I want to start by highlighting the 
  role that the insurance industry plays as an investor and 
  supporter of American infrastructure projects. The U.S. Chamber 
  of Commerce Center for Capital Markets Competitiveness has an 
  excellent report summarizing this..............................
And, Madam Chairwoman, I ask unanimous to submit this into the 
  record.........................................................
Chairwoman Waters. Without objection, it is so ordered...........
Mr. Budd. Thank you. And to highlight some of the findings from 
  the Chamber's report, of the roughly $6 trillion in investment 
  assets held by insurers, about a trillion are held in municipal 
  securities that are issued to fund our roads, our schools, and 
  our hospitals, which, of course, is great infrastructure for 
  housing........................................................
Insurers also directly invest in infrastructure projects, having 
  provided $26 billion or 6 percent of all private infrastructure 
  investments in 2016 alone. Insurers also initiated 11 percent 
  of all commercial real estate loans in 2017 valued around $54 
  billion. These figures show that the insurance industry plays 
  an important and key role as an investor in American 
  infrastructure.................................................
So, Mr. Carter, I would like to ask you a question. I want to 
  talk about regulatory burden with you just for a moment. 
  According to the research from Hoyt Advisory Services 
  commissioned by the National Apartment Association and the 
  National Multifamily Housing Council, America needs to build 
  more than 4.6 million new apartment homes at a variety of price 
  points by the year 2030. So how can the Federal Government 
  partner with the private sector to better house our nation as 
  well as help this nation's infrastructure needs?...............
Mr. Carter. Well, I thank you very much for your question. I 
  think the first thing is to make it easier for private 
  investors to invest. You mentioned insurance companies, and 
  about 10 percent of our investors are insurance companies. And 
  the other important thing that people forget about the 
  insurance industry is it plays a huge role in insuring what we 
  do.............................................................
And so in terms of our properties and so over the last few years, 
  we have had challenges with hurricanes and windstorms, which 
  has also increased our operating expenses and that has impacted 
  affordability, but I would say making it easier for them to 
  invest in some of our apartment communities by eliminating some 
  of the regulatory challenges and some of the uncertainty.......
Mr. Budd. So eliminating regulatory challenges, any permitting 
  challenges that are slowing down projects, make it harder to 
  invest?........................................................
Mr. Carter. Yes. Again--and those roadblocks, they impact the 
  certainty of the viability of the project, when it will come 
  on. Again, in many places around the country, it is 3 to 10 
  years before you get final approval to get a project done......
Mr. Budd. Understood. Another question. Mr. Carter, a recent 
  study by the National Multifamily Housing Council and the 
  National Association of Home Builders found that on average, 32 
  percent of multi-family development costs are attributable to 
  the costs associated with complying with local, State, and 
  Federal regulation like we just talked about. Can you please 
  provide us with some examples of programs, practices, and 
  regulations at the Federal level that add to the cost of 
  housing? This really follows on the last one since you 
  mentioned regulation being an obstacle, if you can give us some 
  examples.......................................................
Mr. Carter. Well, one is parking. I think today, and I mentioned 
  earlier as society has evolved, I think the parking 
  requirements are based on where it used to be one car per 
  bedroom and people are driving less and there is other car-
  sharing and things like that. And certainly more density, that 
  is the big thing. You know, being able to build more units.....
Mr. Budd. Mr. Lawson, with the same question, do you have some 
  more obstacles that you would like to talk about?..............
Mr. Lawson. Yes. Well, one example several years ago, we bought a 
  parcel of property, and we were going to build 96. Well, we 
  ended up only being able to build 96 apartment units on it, 
  affordable apartment units, because we found out there are 
  wetlands on this parcel that was miles from water or any other 
  tributaries or anything else. The regulations have changed the 
  indicative species for wetlands to include very common species 
  rendered this wet area wetlands, which then required mitigation 
  ended up costing about $150,000 and reducing what we could with 
  the property at the end of the day.............................
Mr. Budd. Understood. Environmental, parking lots, and I am sure 
  the list could go on. I appreciate your time, and, Madam 
  Chairwoman, I yield back.......................................
Chairwoman Waters. Thank you very much. The gentleman from 
  Illinois, Mr. Garcia, is recognized for 5 minutes..............
Mr. Garcia of Illinois. Thank you, Madam Chairwoman. And I would 
  like to thank all the panelists for their testimony and their 
  replies to questions asked. I would like to shine the spotlight 
  on the Chicago Metro region for a quick snapshot that I think 
  is informative nationally. I would like to ask a question 
  regarding the National Housing Trust Fund after sharing some 
  data with you about affordable housing in the Chicagoland area.
Ms. Yentel, according to your organization's analysis, there are 
  about 92,000-plus affordable and available rental homes in the 
  Chicago area, but about 326,000 extremely low-income renter 
  households. That is right, one of three households in Chicago, 
  less than one in three have access to affordable housing.......
DePaul University's Institute for Housing Studies found that in 
  Chicago's Logan Square community, for example, there was a 12 
  percent drop in the share of available affordable housing 
  between 2012 and 2014 and between 2015 and 2017. This enormous 
  lack of affordable housing is driving some troubling trends....
For example, some of the outcomes that this reality has produced 
  according to the Chicago Community Trust is that Chicago lost 
  about 100,000 African-American residents in the past 10 years. 
  Logan Square alone has lost over 20,000 Latino residents and 
  nearly 10,000 African-American residents in the past 15 years 
  alone. How can increased investment in the National Housing 
  Trust Fund help low-income communities stay in their homes?....
Ms. Yentel. Well, the National Housing Trust Fund program was 
  designed exactly to meet the need that you are describing very 
  well. And the need that you are describing exists in your 
  district. It exists in every congressional district whether 
  they are rural, suburban, or urban. The primary cause of the 
  affordable housing crisis we have today is the shortage of 
  homes affordable and available to the lowest-income people.....
The National Housing Trust Fund program at its current funding 
  level, all of the funding, all of the dollars go to States in 
  order for them to get the funds out to developers to build and 
  preserve apartments for the lowest-income people. So in your 
  State, there is a project that has been funded through the 
  first year's allocation of the Housing Trust Fund that is 
  serving homeless veterans. In other communities across the 
  country, Housing Trust Fund homes are housing people 
  experiencing homelessness, previously experiencing 
  homelessness, survivors of domestic violence, people who were 
  previously chronically homeless, and others of some of the most 
  vulnerable people in our country...............................
Mr. Garcia of Illinois. Thank you. Transit-oriented development: 
  The Chicago City Council 5 years ago passed an ordinance 
  encouraging transit-oriented development. I believe in 
  improving transportation and mobility for neighborhoods. That 
  is a major reason why just last week, I was in Logan Square to 
  support a proposed 100-unit affordable housing development next 
  to a transit station, the Chicago Transit Authority............
However, we know that development when done incorrectly in 
  Chicago can lead to gentrification, displacement, and racially 
  inequitable outcomes. Since Chicago's council passed its 
  transit-oriented development, several developments have gone 
  up, but only one is currently available. How do we prioritize 
  and provide resources for equitable transit-oriented 
  development projects that will maintain diverse communities in 
  the full sense of the word like Logan Square?..................
Ms. Yentel. Right. It is a great question. Thank you. And so 
  transit-oriented development is a really important part of the 
  solution, ensuring that we have density in homes that have 
  access to transportation, good jobs, and with that often comes 
  increased investments in the community and gentrification. And 
  what we have to ensure is that there is not displacement as a 
  result of that gentrification..................................
Affordable housing is the key to that. Affordable homes that are 
  built and preserved in communities that are gentrifying become 
  the anchor that allows for long-time residents, low-income 
  residents, people of color, to remain and continue to afford 
  their homes as costs go up around them. So it is essential to 
  ensuring any kind of transit-oriented development project that 
  there are affordable homes, affordable to the lowest-income 
  people to allow those residents to remain......................
Mr. Garcia of Illinois. Thank you. Madam Chairwoman, I yield back 
  the rest of my 3 seconds.......................................
Chairwoman Waters. Thank you very much. The gentleman from 
  Tennessee, Mr. Kustoff, is recognized for 5 minutes............
Mr. Kustoff. Thank you, Madam Chairwoman. And I want to thank the 
  witnesses for appearing today. I looked at the clock, and it 
  has been almost 3 hours, and we appreciate all of your 
  testimony today. Mr. Carter, if I could with you first, in your 
  written testimony, you discussed the importance of the 
  community development block grants and how that can address the 
  shortage of affordable housing.................................
We had a hearing 2 or 3 weeks ago and we discussed in the hearing 
  about withholding the CDBG funding to local communities to 
  better incentivize and streamline the permitting process and 
  other policies that create barriers to development projects. I 
  know you likely support increased funding for these CDBG 
  projects, but do you believe that withholding these community 
  development block grant funds from communities would better 
  incentivize affordable housing in lane use policies?...........
Mr. Carter. Yes, I think that there should be incentives to 
  create a path of efficiency to make sure that we can get things 
  done...........................................................
Mr. Kustoff. Thank you very much. Ms. Yentel, as it relates to 
  the Community Development Block Grant Act of 1974, of course, 
  it used census data in the funding formula. It has created, I 
  think, anomalies within the dividing programs funding between 
  the most needy and least needy communities across the United 
  States. What I am talking about is formula B, which you may or 
  may not be familiar with; it allocates funding based on a share 
  of growth lag..................................................
It is pre-1940 housing and it is weighted at 50 times the 
  appropriation. Some of the older suburbs benefit greatly from 
  that pre-1940 data even though they may have relatively low 
  needs to their community. Are you familiar with the formula 
  process? And if so, do you have an opinion about whether the 
  formula itself needs to be updated?............................
Ms. Yentel. I am not familiar enough with that provision to speak 
  specifically to that, but I would say generally that the CDBG 
  formula would benefit from updating in order to assure that 
  resources go to the communities that most need those resources.
Mr. Kustoff. Thank you, Ms. Yentel. Ms. Todman, are you familiar 
  with the formula process? And if so, do you have an opinion 
  about the way it is allocated?.................................
Ms. Todman. I am not familiar with it. I would say though as it 
  relates to older suburbs, we should be very careful, because 
  there are a lot of lower-income neighbors who are moving out of 
  the urban core and into suburbs and ex-urbs because that is 
  where affordability exists. So I think we need to be careful as 
  we consider moving the antenna to look at the historic movement 
  of people in and out of the suburbs and the urban core.........
Mr. Kustoff. Thank you, Ms. Todman. Mr. Lawson, are you familiar 
  with the formula and about the pre-1940s way that it is 
  calculated?....................................................
Mr. Lawson. Unfortunately, no....................................
Mr. Kustoff. Okay. And you wouldn't have an opinion then?........
Mr. Lawson. No, sir..............................................
Mr. Kustoff. Mr. Carter, are you familiar with it?...............
Mr. Carter. No, sir..............................................
Mr. Kustoff. Okay. As it relates to my community, I represent 
  part of Memphis, Tennessee. There has been some questioning 
  about the linkage between access to public transportation and 
  to affordable housing. In my community, there have been some 
  news reports lately about how some of the commutes on public 
  transportation can take hours for the individuals to get from 
  where they live to where they work. Ms. Yentel, do you have an 
  opinion about what approaches this committee should consider or 
  could consider that would better align efficiencies for housing 
  needs and public transportation?...............................
Ms. Yentel. Well, I would say transit-oriented development is a 
  good way to achieve both, and the reason why people live so far 
  from where they work is because they are not able to find homes 
  that are affordable to them that are closer, and so it points 
  back to the shortage of homes for the lowest-income people and 
  the importance of investing in constructing and preserving more 
  homes that are affordable to them closer to where they work in 
  all communities................................................
Mr. Kustoff. Thank you. Ms. Todman, in my remaining time, do you 
  have any ideas about better aligning those needs?..............
Ms. Todman. I do think--having practiced at the local level as a 
  houser, I do think that there is a robust conversation that 
  should always be had between the planning department, housing 
  agencies, and also the transportation department, and to the 
  extent the Federal Government can infuse that conversation with 
  resources, I think we all will benefit from that...............
Mr. Kustoff. Thank you...........................................
Chairwoman Waters. The gentleman from Texas, Mr. Green, the Chair 
  of our Subcommittee on Oversight and Investigations, is 
  recognized for 5 minutes.......................................
Mr. Green. Thank you, Madam Chairwoman. And I thank the witnesses 
  for appearing as well. I am of the opinion, Madam Chairwoman, 
  that the infrastructure starts with housing, because all roads 
  lead to some home, some community where people dwell. Housing 
  is the necessity for people that creates the opportunity for 
  contractors and engineers to build infrastructure. So let us 
  not de-value the infrastructure of a home......................
And just for edification purposes, Mr. Carter, we have a bill, 
  H.R. 123, that does exactly what you called to our attention. 
  It is a pilot program, FHA, to allow rent, light bills, gas 
  bills, water bills, and phone bills to be scored, so that 
  people who probably could afford a home but for poor credit or 
  thin credit, will be able to do so. I was very pleased that you 
  brought this up. Would you just give an additional comment on 
  how this can be beneficial, please?............................
Mr. Carter. Well, I would like to start by saying that I do think 
  in this country we have a bias of homeowners versus renters, 
  and I don't believe that renters are often the given the credit 
  both in terms of their community standing as well as how credit 
  bureaus recognize their consistent payment of rent and utility 
  bills, and to me that is one philosophical thing that I think 
  that this country and certainly our organization believes that 
  renters have, they are an important part of this nation........
Mr. Green. Thank you. Quickly, let me ask this of all of you. 
  Assuming that there is waste, fraud, and abuse, and there is, 
  as a matter of fact, we have it in the military, but we always 
  increase the budget. We don't decide that because there is 
  waste, fraud, and abuse that we are not going to enhance the 
  military budget. But can this problem that we are confronting, 
  can it be solved without money? Do we have to have money to 
  solve the problem? Is that a necessary ingredient?.............
Mr. Carter. Yes..................................................
Ms. Yentel. We need funding, yes.................................
Mr. Green. Let the record reflect that all agree. Moving on, here 
  is what we are confronting. Some of my colleagues believe that 
  the poor can do more with less, but that the wealthy need more 
  to do more. It has been my experience that the poor can benefit 
  from more, too. And that sometimes it is just the luck of the 
  draw. You just weren't born in the right place, the right ZIP 
  code as we are now prognosticating. You weren't born in the 
  right family. You just didn't get the luck of the draw.........
And but for the grace of God, a President who had a tough time, 
  had to pull himself up by a $1 million dollar bootstrap, some 
  of us just don't get those kinds of bootstraps and have to 
  contend with receiving at the demise of our parents a legacy of 
  poverty, it is just the truth. So when I hear my colleagues 
  talk about how they want to include more people in the social 
  safety net, they want to make sure that more people can be 
  moved into various programs to help the homeless, but at the 
  same time won't increase the funding...........................
So what you are saying is more people, less money, because you 
  don't increase this funding, so you are expecting the people 
  who are getting the benefits to do more with less. I find that 
  quite intriguing and I am trying to be delicate with my 
  verbiage. Sometimes, my diction can be less than superb. My 
  final point is this: I think this $5 billion for the Housing 
  Trust Fund is absolutely needed, and I thank you, Madam 
  Chairwoman, for placing it in there. I yield back..............
Chairwoman Waters. Thank you. The gentleman from Ohio, Mr. 
  Gonzalez, is recognized for 5 minutes..........................
Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, for holding 
  this important hearing today...................................
I want to start by entering into the record this agreement dated 
  the 31st day of January 2019 between HUD and the New York City 
  Housing Authority and New York City............................
Chairwoman Waters. Without objection, it is so ordered...........
Mr. Gonzalez of Ohio. Thank you..................................
And this is a follow-up to my colleague from New York earlier, 
  who cited some of those New York Times articles................
I just want to read this. The complaint set forth the findings of 
  the United States investigation alleging among other things 
  that NYCHA had routinely failed to comply with lead-based paint 
  safety regulations, had failed to provide decent, safe, and 
  sanitary housing including with respect to the provision of 
  heat and elevators and the control and treatment of mold and 
  pests, and had repeatedly misled HUD through false statements 
  and deceptive practices........................................
In the next section, NYCHA made admissions regarding, among other 
  things, deficiencies in physical conditions with respect to 
  lead, mold, heating, elevators, and pests. Untrue statements to 
  HUD regarding the condition of NYCHA properties and NYCHA HUD 
  then declared that NYCHA is in substantial default. Ms. Yentel, 
  were you aware of this specific agreement?.....................
Ms. Yentel. Yes..................................................
Mr. Gonzalez of Ohio. You were, okay. Would you agree then based 
  on this that--I think it was suggested earlier that the Federal 
  Government is solely responsible for this specific challenge...
Do you agree that NYCHA bears some responsibility given that they 
  in fact admitted to it themselves?.............................
Ms. Yentel. Well, much of what you read there is them admitting 
  to deficiencies in conditions of units, broken elevators, 
  broken boilers, lack of heating, which is the result of decades 
  of lack of funding for NYCHA to support and redevelop those 
  properties.....................................................
Mr. Gonzalez of Ohio. So, again, whereas based on NYCHA's 
  misconduct as detailed in the complaint, the Secretary of HUD 
  declared that NYCHA is in substantial default, but moving on...
So switching gears, I want speak about a different type of 
  regulation. Mr. Carter, Mr. Lawson, you spoke quite well about 
  the importance and I think we actually agree on this, that 
  local and State regulations can have on the development of 
  properties, can hold you back, it can bring down supply 
  artificially...................................................
So I want to speak about a different type of regulation, and 
  those are the increases in regulation that have been proposed 
  by the Green New Deal, which I believe would mandate net zero 
  emissions for all buildings in the country. Mr. Lawson and Mr. 
  Carter, you both cited today 32 percent of costs to development 
  are due to regulations in multi-family units. Mr. Lawson, in 
  your testimony you said that when you do not build more 
  affordable housing, it is for two reasons: one, regulatory 
  cost; and two, lack of Federal subsidy. Speaking specifically 
  about the regulatory cost, what do you think being forced to 
  build at net zero emissions on all projects would do to those 
  costs? Mr. Lawson?.............................................
Mr. Lawson. I think it is unequivocal that the cost would go up 
  because that technology is not in standard use today...........
Mr. Gonzalez of Ohio. Significantly. Mr. Carter, do you feel the 
  same way?......................................................
Mr. Carter. In general, yes. Although I think it is important to 
  understand that when we acquire a property, we try to make it 
  more energy-efficient and we invest LED lighting and things 
  like that. And one of the reasons is that it lowers our 
  residents' monthly cost........................................
Mr. Gonzalez of Ohio. Right. And we all agree that we need to 
  improve in that regard, I think everybody in this room, but 
  this is something over and above that would add tremendous 
  cost. And see in my opinion, the reason why the Green New Deal 
  is such a bad idea and I really think it is it would be 
  devastating in my community. I live in Northeast Ohio, Ohio's 
  16th District, and I'm proud to represent Northeast Ohio, is 
  and you guys just discussed it, that the development cost would 
  move to such an astronomical level that we wouldn't be able to 
  build. We wouldn't be able to build affordable housing. And so 
  the way that would hit my community not just in affordable 
  housing but look at energy costs, we would have families making 
  real trade-offs between heating their homes and putting food on 
  the table. That is the cost of these regulations. We need to 
  talk about how do we remove barriers to development, which we 
  all know is important and everybody agrees on, not how can we 
  add an additional layer that is unrealistic that would price 
  low-income families completely out of the housing market. And 
  with that, I yield back........................................
Chairwoman Waters. Thank you. The gentlewoman from North 
  Carolina, Ms. Adams, is recognized for 5 minutes...............
Ms. Adams. Thank you, Madam Chairwoman. And thank you for holding 
  this important hearing. And to our witnesses, thank you for 
  your testimony today. Let me first direct this question to Mr. 
  Lawson and Mr. Carter. In my district, in the city of 
  Charlotte, North Carolina, the community development 
  organizations, many of them in the private sector, are working 
  together to tackle our local housing crisis and indeed it is a 
  crisis for us in Charlotte. Private investment in affordable 
  housing infrastructure is crucial, but do you agree that it is 
  difficult for private developers to create affordable housing 
  for the lowest-income households without the benefit of Federal 
  housing subsidies?.............................................
Mr. Lawson. Yes, I agree.........................................
Mr. Carter. I agree as well......................................
Ms. Adams. All right. Both of you, okay. Can you speak to the 
  importance of some of the key Federal housing programs that 
  help home builders create and reserve affordable housing?......
Mr. Lawson. Yes. The programs that help us create affordable 
  housing are absolutely key. As I said in my testimony, 
  affordable housing cannot be constructed without some form of 
  subsidy........................................................
Ms. Adams. Right.................................................
Mr. Lawson. That base subsidy is the low-income housing tax 
  credit. HOME funds are often used in conjunction with that 
  Project-based Section 8 and housing choice vouchers are also a 
  component in many of our communities...........................
Ms. Adams. Do you agree?.........................................
Mr. Carter. I agree..............................................
Ms. Adams. Okay. Let me ask all of you if you believe that 
  housing is a human right, just a yes or no.....................
Mr. Carter. Yes..................................................
Ms. Adams. Did everybody say yes?................................
Mr. Lawson. Yes..................................................
Ms. Adams. All right. We have unanimous agreement. Mr. Lawson, 
  Ms. Todman, the Trump Administration has proposed to zero out 
  critical HUD and USDA housing programs such as the community 
  development block grant program. From the development 
  perspective, why are these funds important to maintaining the 
  current affordable housing stock and increasing the supply of 
  affordable housing?............................................
Ms. Todman. I would say for two reasons. One, HOME dollars, 
  sometimes CDBG, are used as important gap financing tools to 
  pay for the cost of building a unit. I always say a unit costs 
  exactly what a unit will cost whether it is for somebody who is 
  middle-income versus somebody who is low-income. So it takes 
  money on the front end or the back end, by way of project-based 
  vouchers, to actually write down that cost for low-income 
  families.......................................................
So it is important from that regard, but it is also important in 
  preserving the housing that we have. And CDBG is used for that. 
  HOME is used for preservation tactics with private owners so 
  all of those programs are key for both preserving and building 
  new housing....................................................
Ms. Adams. Would you like to add something, Mr. Carter?..........
Mr. Lawson. Yes..................................................
Ms. Adams. Mr. Lawson, excuse me.................................
Mr. Lawson. I would simply agree that the HOME funds in 
  particular in a lot of cases are the gap funding, the piece of 
  funding that gets the property over the hump...................
Ms. Adams. Okay. Thank you. Ms. Todman, you represent a coalition 
  that includes several public housing agencies, can you describe 
  the severe shortage of public housing and Federal rental 
  assistance that your members see in the communities that they 
  serve?.........................................................
Ms. Todman. Certainly. Many of the communities I serve including, 
  I might add, some of the smaller and rural agencies, are seeing 
  increased demand on the resources that they have. There is 
  evidence that for every four people who can actually qualify 
  for affordable housing, there is only one family who actually 
  receives it. And our members see that across the country no 
  matter what their geographic area may be.......................
And that is not just in public housing, it is particularly in the 
  voucher program, which is larger than the public housing 
  program, and I will say probably a little bit more popular 
  because families have the opportunity to navigate communities. 
  The voucher program is entirely capped as well. There have not 
  been any net new vouchers in some time. While we are grateful 
  for the mobility demonstration, the need grows in lower- and 
  middle-income families. Our housing agencies are trying to meet 
  that need, but it is becoming harder every day.................
Ms. Adams. Great. Thank you very much, Madam Chairwoman. I yield 
  back...........................................................
Chairwoman Waters. Thank you very much. The gentleman from 
  Wisconsin, Mr. Steil, is recognized for 5 minutes..............
Mr. Steil. Thank you, Madam Chairwoman. And thank you for calling 
  today's hearing to discuss what is a really critical issue. I 
  want to focus in a little bit here as to how we lower the 
  actual underlying cost of housing. I think as we look across 
  the United States, we see a great diversity in the cost of 
  housing. You look at San Francisco, the average rent is roughly 
  $3,300; $3,200 in Los Angeles; approaching $3,000 in New York; 
  contrast that with Chicago, where the average rent is a little 
  bit below $1,700; or in the City of Racine in Southeast 
  Wisconsin, around $1,400 a month. That is a pretty significant 
  variation in housing. Mr. Carter, could you comment how cities 
  like Chicago are keeping housing costs low compared to say San 
  Francisco, Los Angeles, and New York?..........................
Mr. Carter. That is a very, very good question. I would say if 
  you look at specifically New York, and we operate in New York 
  and also in California, they are where you have the highest 
  land costs, the highest entitlement costs, and you have some 
  unique factors in California. You are dealing with seismic 
  issues and things like that. And actually in Chicago, it tends 
  to be flat and it is a little bit easier to build there........
The other thing I think that when you are looking at construction 
  costs, one of the things that has gained more acceptance in a 
  few other places are modular type factory-built components, 
  which seems to happen a little bit more in the Midwest than the 
  two coasts.....................................................
Mr. Steil. Is there a reason why you are seeing more modular 
  homes in the Midwest versus on the coast? Is that a local 
  regulation or is that--........................................
Mr. Carter. I think it is a combination of two things. One, it is 
  local regulation. Two, there are more people who produce those 
  components that are in the Midwest, so transportation is a big 
  part of having to ship them....................................
Mr. Steil. You commented earlier that there are higher 
  entitlement costs in certain areas that are impacting the cost 
  of housing. Can you comment on what you mean by that?..........
Mr. Carter. Well, the fact that when you look to build on a piece 
  of land, to build an apartment in California, it is maybe 
  $150,000 just for the land and maybe $50,000 of that would be 
  entitlement costs. And the price in the Midwest might be 
  $25,000 to $50,000.............................................
Mr. Steil. So going back now to kind of Southeast Wisconsin, less 
  of an urban area, what policies are you looking at that would 
  ultimately lower the cost of housing to make it more affordable 
  for people in those regions?...................................
Mr. Carter. I believe the one thing is to make sure that the 
  number one is greater density, because if we can get to greater 
  density, it reduces the cost per unit construction for 
  development....................................................
Mr. Steil. Thank you. And looking in particular at those average 
  rents, where roughly $3,200 is the average rent, somewhere in 
  the neighborhood in San Francisco, but you are providing rents 
  in the neighborhood of a thousand or average rents in Los 
  Angeles approaching $2,000, you are well below that in the 
  neighborhood of $1,100. What are you doing in particular that 
  is allowing you to keep those rent costs as low as you are?....
Mr. Carter. We are generally buying things that are existing 
  properties that we buy that we buy very, very well and we try 
  to do what we call smart renovations. We use synthetics as 
  countertops not marble. We resurface cabinets, we don't replace 
  them, but we try to do smart renovations to keep our costs at a 
  point where we could rent at those levels......................
Mr. Steil. So it is market-based decisions, you are analyzing, 
  you determine how you were able to keep your cost under 
  control........................................................
Mr. Carter. Yes. And many times we buy things in communities that 
  have been underserved by institutional capital that we make the 
  investment and we are able to buy perhaps a little cheaper than 
  in more desirable locations....................................
Mr. Steil. And as you are looking at some of those renovations, 
  how impactful are local codes that you need to meet in the 
  reconstruction of those buildings, does it impact on the 
  ultimate price on rent post-renovation?........................
Mr. Carter. It varies by locality................................
Mr. Steil. Okay. If you looked in particular at some of the 
  building regulations that you would see in the Green New Deal 
  and the impact that that would have on your ability to 
  provide--......................................................
Mr. Carter. I have not specifically looked at that...............
Mr. Steil. Thank you. I appreciate your time. I yield back my 
  time. Thank you................................................
Chairwoman Waters. Thank you very much. I would like to take a 
  moment to recognize a former Member of Congress who has been 
  with us today, Congresswoman Laura Richardson is in the 
  audience. Thank you for the time you have spent in our 
  committee today................................................
I would like to thank our witnesses for their testimony today....
The Chair notes that some Members may have additional questions 
  for this panel, which they may wish to submit in writing. 
  Without objection, the hearing record will remain open for 5 
  legislative days for Members to submit written questions to 
  these witnesses and to place their responses in the record. 
  Also, without objection, Members will have 5 legislative days 
  to submit extraneous materials to the Chair for inclusion in 
  the record.....................................................
And with that, this hearing is adjourned. Thank you..............
[Whereupon, at 1:29 p.m., the hearing was adjourned.]............

                            A P P E N D I X



                             April 30, 2019
                             
                             
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