[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
THE RENT IS STILL DUE: AMERICA'S
RENTERS, COVID-19, AND AN
UNPRECEDENTED EVICTION CRISIS
=======================================================================
VIRTUAL HEARING
BEFORE THE
SUBCOMMITTEE ON HOUSING,
COMMUNITY DEVELOPMENT,
AND INSURANCE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JUNE 10, 2020
__________
Printed for the use of the Committee on Financial Services
Serial No. 116-94
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
42-894 PDF WASHINGTON : 2021
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 ANN WAGNER, Missouri
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 STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut SCOTT TIPTON, Colorado
BILL FOSTER, Illinois ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio FRENCH HILL, Arkansas
DENNY HECK, Washington TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
RASHIDA TLAIB, Michigan DAVID KUSTOFF, Tennessee
KATIE PORTER, California TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts BRYAN STEIL, Wisconsin
BEN McADAMS, Utah LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota
Charla Ouertatani, Staff Director
Subcommittee on Housing, Community
Development, and Insurance
WM. LACY CLAY, Missouri, Chairman
NYDIA M. VELAZQUEZ, New York STEVE STIVERS, Ohio, Ranking
EMANUEL CLEAVER, Missouri Member
BRAD SHERMAN, California BILL POSEY, Florida
JOYCE BEATTY, Ohio BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
VICENTE GONZALEZ, Texas SCOTT TIPTON, Colorado
CAROLYN B. MALONEY, New York LEE M. ZELDIN, New York
DENNY HECK, Washington DAVID KUSTOFF, Tennessee
JUAN VARGAS, California JOHN ROSE, Tennessee
AL LAWSON, Florida BRYAN STEIL, Wisconsin
RASHIDA TLAIB, Michigan LANCE GOODEN, Texas, Vice Ranking
CINDY AXNE, Iowa Member
MICHAEL SAN NICOLAS, Guam
C O N T E N T S
----------
Page
Hearing held on:
June 10, 2020................................................ 1
Appendix:
June 10, 2020................................................ 37
WITNESSES
Wednesday, June 10, 2020
Hill, Cashauna, Executive Director, Louisiana Fair Housing Action
Center (LaFHAC)................................................ 4
Kingsella, Mike, Executive Director, Up for Growth Action........ 6
Oliva, Ann, Visiting Senior Fellow, Center on Budget and Policy
Priorities..................................................... 8
Schuetz, Jenny, Fellow, Brookings Institution.................... 10
APPENDIX
Prepared statements:
Hill, Cashauna............................................... 38
Kingsella, Mike.............................................. 45
Oliva, Ann................................................... 59
Schuetz, Jenny............................................... 71
Additional Material Submitted for the Record
Clay, Hon. Wm. Lacy:
Written statement of the Credit Union National Association... 77
Written statement of the National Association of REALTORS.... 79
Written statement of the Private Equity Stakeholder Project.. 81
Real Estate Coalition Letter................................. 124
Written statement of the Real Estate Roundtable.............. 128
Heck, Hon. Denny:
Letter from various undersigned organizations................ 137
Stivers, Hon. Steve:
Written statement of the International Council of Shopping
Centers.................................................... 154
Written statement of the National Multifamily Housing Council
and the National Apartment Association..................... 156
THE RENT IS STILL DUE: AMERICA'S
RENTERS, COVID-19, AND AN
UNPRECEDENTED EVICTION CRISIS
----------
Wednesday, June 10, 2020
U.S. House of Representatives,
Subcommittee on Housing,
Community Development,
and Insurance,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 12:01 p.m.,
via Webex, Hon. William Lacy Clay, Jr., [chairman of the
subcommittee] presiding.
Members present: Representatives Clay, Velazquez, Cleaver,
Beatty, Green, Heck, Vargas, Larson, Tlaib, Axne, San Nicolas;
Stivers, Posey, Huizenga, Tipton, Zelden, Kustoff, Rose, and
Steil.
Ex officio present: Representative Waters.
Chairman Clay. The Subcommittee on Housing, Community
Development, and Insurance will come to order. Without
objection, the Chair is authorized to declare a recess of the
subcommittee at any time.
Also, without objection, members of the full Financial
Services Committee who are not members of this subcommittee are
authorized to participate in today's hearing.
Members are reminded to keep their video function on at all
times, even when they are not being recognized by the Chair.
Members are also reminded that they are responsible for muting
and unmuting themselves, and to mute themselves after they are
finished speaking.
Consistent with regulations accompanying H. Res 965, staff
will fully mute Members and witnesses as appropriate when not
recognized to avoid inadvertent background noise, like I am
hearing now.
Members are also reminded that all House rules relating to
order and decorum apply to this remote hearing.
Today's hearing is entitled, ``The Rent is Still Due:
America's Renters, COVID-19, and an Unprecedented Eviction
Crisis.'' I now recognize myself for 5 minutes for an opening
statement.
I want to welcome all of you to our first virtual hearing
of this subcommittee, which deals with enduring this very
challenging and difficult time for renters, homeowners,
landlords, and for our housing market as a whole.
At today's hearing, we will focus our attention on how the
COVID-19 pandemic is impacting our rental market. The harmful
effects of this pandemic on physical and mental health,
financial stability, and overall way of being can be even more
devastating when you are unable to pay your rent. When everyone
is being told to stay inside to avoid getting sick, now is one
of the worst times for families to lose their homes to
eviction.
Families who experience evictions are likely to experience
greater poverty and a host of other negative outcomes that make
it harder for their family to get back on their feet,
especially during a time when our country faces a growing
economic crisis. In the worst cases, these families may fall
into homelessness.
But let's be clear, many low-income families were already
struggling to pay their housing costs pre-pandemic. As Ms.
Oliva points out in her testimony, even before the pandemic, 23
million people and 10.7 million low-income households paid more
than half of their income in rent, and rents across the country
had become increasingly unaffordable.
Many of these people work in jobs that do not allow them
the flexibility to save and stash reserves away for a rainy day
because, as many can attest, it always seems to be raining down
on them, and COVID-19 has become an unrelenting storm.
We also know that the economic effects of the COVID-19
pandemic are being disproportionately felt by people of color.
In the month of April, Latinx unemployment was over 18 percent,
and Black unemployment was over 16 percent, while the Census
Bureau reports that Latinx and Black households are struggling
to pay rent at higher rates than white households.
Congress acted quickly in March to pass the Coronavirus
Aid, Relief, and Economic Security (CARES) Act, which included
language from a bill that I introduced, which provided mortgage
forbearance, including for multi-family and single-family
rental property owners, but there is much more that needs to be
done.
The Urban Institute estimates that as this pandemic goes
on, up to 17.6 million renter households could need rental
assistance, at a cost of $96 billion for 6 months, to be able
to remain in their homes.
To further respond to the crisis, the House passed the
Health and Economic Recovery Omnibus Emergency Solutions
(HEROES) Act, which includes $100 billion for emergency rental
assistance, increased protection against evictions, and other
housing resources to support HUD and USDA programs.
The House has acted and now the Senate must get to work. I
call on my Senate colleagues to pass this bill to bring much-
needed relief to families across the country, including
struggling renters. Thank you, and I look forward to hearing
the testimony of our witnesses today.
I now recognize the ranking member of the subcommittee, Mr.
Stivers, for 4 minutes for an opening statement.
Mr. Stivers. Thank you, Chairman Clay. I appreciate you
holding this hearing. I apologize for the video, but I am in
the rural part of my district on a cell phone today. But I am
still able to be in on the hearing, and I appreciate that.
Obviously, today's hearing will evaluate the impact of
COVID-19 on America's housing security, which is an extremely
important topic and it is important to focus on it. Time and
time again, our subcommittee has highlighted the link between
housing security and outcomes of health, education, and career
prospects.
So at a time of such economic volatility, it is right to
focus on this topic. And as I mentioned during a recent virtual
roundtable, Congress has taken extraordinary steps to deal with
the unprecedented public health crisis and its impact on our
economy.
The $2 trillion spending in the CARES Act, combined with
trillions from the Federal Reserve, would have been unthinkable
sums at the start of 2020, but there has been bipartisan
consensus on those items because of the severity of the
problem.
The CARES Act and its implementation have not been perfect,
but with respect to housing security, it is clear that the
law's forbearance provisions, combined with extended
unemployment insurance programs, have helped sustain
individuals through the last few very difficult months.
Now, all 50 States have begun to reopen their economies,
and the Bureau of Labor Statistics reported that in May, the
economy added 2.5 million jobs, but unemployment remains
unacceptably high. So, we find ourselves in a rapidly evolving
situation, and Congress and the Administration must evolve our
response to meet those demands.
I am keeping an open mind about what that response should
look like, but it is clear we should focus on the formula that
worked in the CARES Act. Namely, we need to: first, focus on
real problems that are demonstrated by the best and most
appropriate data; second, it should not be previous policy
goals by Republicans or Democrats that pre-date the pandemic,
but should be a response; third, it should truly help the
housing and rental markets, not harm them through unintended
consequences; and fourth, it should be bipartisan.
I know that the Democrat's memo points to an alarming
statistic from apartmentlist.com on payments of rents from
renters, but the National Multifamily Housing Council data
suggests significantly higher payment rates.
And so, I think we need to keep all that in mind and try to
sort out the facts. New forbearance requests have slowed. That
is good news, and I am grateful to hear from our witnesses
today, and I look forward to working together on underlying
problems.
Finally, I have enjoyed the discussions with Chairman Clay
on the need to address racial disparities in home ownership. I
think that is something we should be looking at, which is in
the jurisdiction of our subcommittee.
But there have been items that are outside the jurisdiction
of our committee, mostly in the Judiciary Committee, that we
can't turn a blind eye to, including the injustice that
occurred in Minneapolis. George Floyd should still be alive
today, and so should countless other African Americans, and I
think we need to work together, regardless of the fact that
this is mostly in the jurisdiction of the Judiciary Committee,
to root out injustice wherever we find it.
Thank you. I look forward to working with Republicans and
Democrats on these important issues, and I look forward to
hearing from our witnesses today.
Thanks for holding this hearing, Mr. Chairman.
Chairman Clay. Thank you, Mr. Stivers. And thank you for
your encouraging words. I look forward to working with you also
to tackle these issues as they come before this subcommittee,
and before Congress.
At this time, I recognize the Chair of the full Financial
Services Committee, the gentlewoman from California, Chairwoman
Waters, for 1 minute,
Chairwoman Waters. Good afternoon, and thank you, Chairman
Clay. We were already dealing with the rental crisis long
before the pandemic, and this pandemic has only made matters
worse, with Black and Latinx renters bearing the brunt of the
pain. According to the Turner Center, Black and Latinx renters
are overrepresented among the rental population expected to be
financially impacted by COVID-19, making up 28 percent, and 18
percent, respectively, even though they only comprise 18
percent, and 12 percent, respectively, of the U.S. population.
While the CARES Act included an eviction moratorium that
covers some renters, it provided no rental assistance for
people struggling to pay their rent during the pandemic. So, I
am pleased that the HEROES Act includes a proposal by Mr. Heck
and myself to provide $100 billion for emergency rental
assistance.
And I am looking forward to hearing from our witnesses
today about the dire need for rent relief and the importance of
keeping everyone stably housed during and after this crisis.
Thank you so very much.
And I yield back.
Chairman Clay. Thank you, Madam Chairwoman, for your
steadfast leadership on the issue in this area on housing and
how we make people secure in their housing, and I appreciate
the working relationship that we have.
Today, we welcome the testimony of Cashauna Hill, executive
director, Louisiana Fair Housing Action Center; Mike Kingsella,
executive director, Up for Growth; Ann Oliva, visiting senior
fellow, Center on Budget and Policy Priorities; and Jenny
Schuetz, fellow, the Brookings Institution.
Witnesses are reminded that your oral testimony will be
limited to 5 minutes. A chime will go off at the end of your
time, and I ask that you respect the Members' and other
witnesses' time by wrapping up your testimony.
And without objection, your written statements will be made
a part of the record.
And now, Ms. Hill, you are recognized for 5 minutes to give
an oral presentation of your testimony.
STATEMENT OF CASHAUNA HILL, EXECUTIVE DIRECTOR, LOUISIANA FAIR
HOUSING ACTION CENTER (LaFHAC)
Ms. Hill. Thank you, and good afternoon to you all.
My name is Cashauna Hill and I serve as executive director
of the Louisiana Fair Housing Action Center (LaFHAC). I want to
thank Committee Chair Waters and Subcommittee Chair Clay for
the opportunity to address the subcommittee today. I would also
like to thank Committee Ranking Member McHenry, Subcommittee
Ranking Member Stivers, and all of the members of the
subcommittee for welcoming all of the witnesses here.
The Louisiana Fair Housing Action Center was established in
1995 to eradicate housing discrimination and segregation. We
are based in New Orleans and serve all of Louisiana as the only
full-service fair housing advocacy group in the State. Our work
includes work across four programmatic areas: education and
outreach services; foreclosure prevention counseling; free
legal representation to people who have experienced housing
discrimination; and policy advocacy at the State and local
levels.
Fifty-two years after the passage of the Federal Fair
Housing Act, we know that housing discrimination in the United
States remains a divisive force that perpetuates poverty and
segregation and limits access to opportunity. The work of the
Louisiana Fair Housing Action Center is dedicated to
eradicating this scourge and to addressing the legacy of
discriminatory housing policies that continues to feed unjust
outcomes across the country.
In Louisiana, we, unfortunately, have a lot of experience
recovering from disasters. Whether from Hurricanes Katrina and
Rita that devastated South Louisiana in 2005, the subsequent
levee breaches, or the great flood of 2016 in the Baton Rouge
area, we know that in all of their destruction and tragedy,
disasters are often an opportunity to imagine a different
future.
It is imperative that we take the chance now to deploy the
resources needed to right past wrongs that made so many members
of our community vulnerable to COVID-19 in the first place.
I want to illustrate the challenges that we currently face
through the story of Danielle Seymour. Ms. Seymour was working
three jobs when the pandemic hit in March. Her jobs at a local
basketball arena, waiting tables on Bourbon Street, and helping
to run a Tulane University cafeteria all disappeared within the
same week as New Orleanians sheltered in place to slow the
coronavirus.
At the time, Ms. Seymour was staying in an extended stay
hotel as she waited for an inspection on a rental home. Despite
a local eviction moratorium, the proprietor hired a security
guard to cut off door locks and barge into rooms with a gun
drawn. It was likely only the swift work of local legal aid
attorneys that kept the situation from deteriorating further.
I wish Ms. Seymour's story was an outlier, but nearly half
of all renters in Louisiana were paying more than they could
afford on rent and utilities before COVID-19. As is true across
the country, the effects of COVID-19 have fallen
disproportionately on Louisiana's low-income and Black
households. In New Orleans, many of the Census Tracts with the
highest COVID-19 per capita rates correlate with Black-majority
neighborhoods that have seen also the highest eviction rates.
Without additional Federal assistance, we expect the
reopening of eviction courts throughout the State to only
deepen this disparity. Short of rent and mortgage cancellation,
Louisiana renters and landlords desperately need a massive
rental assistance program like the $100 billion set-aside for
rental assistance in the HEROES Act.
Another crucial element of the HEROES Act is the extension
of the CARES Act eviction moratorium to cover all renters. The
CARES Act moratorium was an important step in the right
direction, but has proven incredibly difficult to implement at
the local level, and it leaves far too many renters out.
Because the last four digits of the landlord's Social Security
number are often required to look up a mortgage, most renters
in Louisiana won't have any way to determine whether they are
covered under the CARES Act, and it has already proven very
difficult to plan for enforcement of the Act and to educate the
public about it.
If courts decide to do the right thing and not require
tenants to provide information that those tenants will likely
not have access to, we are left with the courts themselves
doing research on each property where an eviction is filed to
ensure that the property is not federally-subsidized or subject
to a federally-backed mortgage.
In Louisiana, however, most jurisdictions handle evictions
in Justice of the Peace Courts, which are woefully unprepared
to handle this level of engagement. Justices of the Peace are
often non-lawyers. They have few, if any, staff, and in some
communities, it is common for court to be held in the Justice
of the Peace's garage, living room, or kitchen.
I return now to a point I opened with, that if we do not
address racial and other disparities early in our disaster
recovery efforts, we are destined to amplify them. Black home
ownership in New Orleans, previously on the rise, has declined
since Katrina. Segregation in the City has increased since the
storm, and African Americans have been displaced from
communities on high ground that are less susceptible to
flooding, to communities that are farther away from jobs and
social support systems.
As we continue a long-overdue national conversation about
racism in America, I offer that we sit at the similar decision
point in history as we did just before the Fair Housing Act was
passed in 1968. Fair housing advocates across the country
understand that providing a just path forward is necessary. I
thank you for the opportunity to testify--
[The prepared statement of Ms. Hill can be found on page 38
of the appendix.]
Chairman Clay. Thank you for your testimony.
I now recognize Mr. Kingsella for 5 minutes.
STATEMENT OF MIKE KINGSELLA, EXECUTIVE DIRECTOR, UP FOR GROWTH
ACTION
Mr. Kingsella. Chairman Clay, Ranking Member Stivers, and
esteemed members of the subcommittee, thank you for inviting me
to provide testimony at this important hearing.
By way of background, Up for Growth Action is a national
legislative advocacy campaign focused on eliminating structural
barriers to housing.
The COVID-19 crisis has rapidly exposed the fragility of
critical systems in infrastructure in our country, and the
housing ecosystem is no exception. Failure to address the
looming rent crisis will have dire consequences for millions of
Americans, and for the housing ecosystem that underpins our
economy, which was already under strain from a severe shortage
of homes.
We believe emergency rental assistance is the most
important and urgent action Congress can take. It is essential
to ensuring housing stability for the millions of Americans
impacted by COVID-19 and essential for the housing providers
who rely on these payments. We commend the committee for its
work thus far, in particular, in ensuring that emergency rental
assistance is included in the House-passed HEROES Act.
I hope my testimony will provide perspective as to why
these measures and others are needed now more than ever. To
fully understand the rent-associated challenges on the
immediate horizon, we need to understand the severity of the
existing housing crisis. The numbers are grim. The country is
at least 7.3 million homes short of where we need to be, with
deficits in every region, and the need spans all demographics
and geographies.
Nearly half of American renter households are cost-
burdened, spending 30 percent or more of their income on rent.
Extremely-low-income renters fare worse, with 71 percent of
those folks making below 30 percent of AMI paying more than
half of their gross income on rent.
IAfrican-American and Hispanic renter households are much
more likely to be cost-burdened than their white neighbors.
Decades of flawed housing policy led to more land being used
for less housing, and the people in those homes having to
travel longer distances to find gainful employment. Spatial
mismatch in housing is a $1.6 trillion drag on the economy,
causing the Federal Government to forego hundreds of billions
of dollars in tax revenue.
And COVID-19 has further destabilized an already-struggling
housing market. Fifty million people are living in renter
households where at least one person works in an industry most
likely to be affected by COVID-19-related layoffs, and many of
these households were already cost-burdened and cannot absorb
any sudden loss of income.
It is vital that these families continue to stay in their
homes. Rent is the cornerstone of the housing ecosystem,
buttressing property investors both large and small. The
housing sector contributes upwards of 18 percent of U.S. GDP.
Seventeen million jobs are tied to the rental housing industry.
Stable and durable rent payments sustain the financial system,
and if this system is interrupted, it will virtually eliminate
the capital necessary for more housing to be built. State and
local coffers are nearing their breaking point and cannot
sustain a drop in tax revenue resulting from a drop in rent
payments.
Emergency rental assistance is vital for millions of
Americans struggling to pay rent. While expanded unemployment
insurance benefits, one-time stimulus payments, and limited
rent moratoria were necessary first steps, they are, by design,
not equipped to address the longer-term problem.
And that is why Up for Growth Action supports the Emergency
Rental Assistance and Rental Market Stabilization Act
introduced by Chairwoman Waters and Representative Heck. And we
were pleased that this legislation and it's $100 billion
appropriation was included in the HEROES Act. The bill broadly
meets the principles set forth by a broad coalition of
advocates, industry, and consumer groups, and the focus of
today's hearing is on the immediate rent crisis. I urge the
subcommittee to use this opportunity to advance solutions
needed to solve the underlying housing crisis, driven in large
part by a severe shortage of homes.
I outline several proposals in my written testimony,
including Chairwoman Waters' Housing is Infrastructure Act, and
Representative Heck's bipartisan, Yes in My Backyard Act, both
of which have been reported favorably by this committee.
COVID-19 exposes weaknesses across every system, and I hope
policymakers will act now so that we can create a more just and
equitable housing ecosystem.
Thank you for hosting this important hearing and for your
work on housing affordability. I look forward to answering your
questions.
[The prepared statement of Mr. Kingsella can be found on
page 45 of the appendix.]
Chairman Clay. Thank you, Mr. Kingsella.
Ms. Oliva, you are now recognized for 5 minutes.
STATEMENT OF ANN OLIVA, VISITING SENIOR FELLOW, CENTER ON
BUDGET AND POLICY PRIORITIES
Ms. Oliva. Chairwoman Waters, Chairman Clay, Ranking Member
Stivers, and members of the subcommittee, my name is Ann Oliva.
I am a visiting senior fellow at the Center on Budget and
Policy Priorities. Thank you for the opportunity to testify
today on this important topic.
I want to begin by acknowledging the events of recent weeks
and the systemic racism that led to the deaths of George Floyd,
Breonna Taylor, Ahmaud Arbery, and many other Black Americans,
because it relates to the topic that we are discussing today.
As a nation, we must pursue racial justice inequity, and
housing justice must be part of the discussion because systemic
racism also results in homelessness, housing instability, and
the disproportionate impact of COVID-19 on communities of
color.
The data is clear. Black people are dying of COVID-19 at
2.4 times the rate of white people. Unemployment in May was
still very high overall, but fell among white workers and kept
rising among Black and Latinx workers. Black people account for
40 percent of those experiencing homelessness, but only 13
percent of the overall population, and Latinx people account
for 22 percent of those experiencing homelessness, but only 18
percent of the population.
If our response to the current health and economic crisis
follows the same policy script of the past, we will do too
little to stop a spike in evictions and homelessness, and
Black, Latinx, and American Indian/Alaska Native communities
will suffer the most.
First, let's talk about the public health impact. COVID-19
shows that housing is a form of healthcare. People in doubled-
up or congregate situations, people released from jail without
a place to go, and people living on the street cannot socially
distance or follow other public health guidance. Many of them
are older or have disabilities or underlying health conditions
that make them more susceptible to getting sick.
From a public health perspective, emergency rental
assistance will be key in helping people in particularly
vulnerable situations get into safe housing.
Now, let's talk about the economic impact. Even before the
pandemic, too many households were paying too much of their
income in rent, making it harder for them to bounce back after
a job loss or a cut in income, and experts expect that the
economic downturn will haunt us for some time. The
Congressional Budget Office (CBO) estimates that unemployment
will be 8.6 percent at the end of 2021, which is far more than
double the pre-crisis level, and history shows us that the
labor market can remain weak far longer for Black workers than
white workers, so, many Black households will struggle longer
with low or no earnings.
If additional rental assistance isn't made available,
communities across the country will struggle to address the
impact of COVID-19. The heroic efforts to safely shelter
thousands of vulnerable people at risk of COVID-19 will be
squandered if people wind up back on the street because they
can't get rental assistance to transition to more permanent
solutions.
Large numbers of unsheltered people who want to come inside
will continue to be criminalized and underserved. If growing
numbers of households can't pay rent, we might see a wave of
evictions once the moratoriums on evictions end. And some
households will pay rent, but stop paying other bills like
utilities, which will put them at high risk of losing their
housing in the future.
These indicators of what might come highlight an important
point. COVID-19 has created a perfect storm of problems that
will weaken communities and widen disparities with long-lasting
effects unless flexible rental assistance is available.
The HEROES Act includes short-, medium-, and longer-term
rental assistance options that communities need to form a
comprehensive COVID-19 response to a variety of demands, and
that benefit both households and landlords who own rental
stock.
In 2009, I led the design and implementation of the
Homelessness Prevention and Rapid Re-Housing Program (HPRP)
that served over 1.3 million people during the Great Recession,
and is the closest model we have to what we need now.
Given what we have learned since HPRP's implementation, a
new emergency rental assistance program should incorporate
several key elements. Communities must use a racial justice and
equity approach in their programs to end homelessness for as
many people as possible. Communities should focus on
homelessness prevention and remove barriers that prevent
historically marginalized populations and other people from
accessing these funds. They should work with nontraditional
partners that can reach into highly affected neighborhoods and
areas, and recipients should work closely with landlords in
implementing their programs.
HPRP showed us that funding for emergency purposes can have
both immediate benefits in addressing the crisis and long-term
benefits by leveraging funding and innovation to achieve
systemic change.
Thank you, again, for the opportunity to testify. I am
happy to answer any questions.
[The prepared statement of Ms. Oliva can be found on page
59 of the appendix.]
Chairman Clay. Thank you so much for your testimony, Ms.
Oliva.
And Ms. Schuetz is now recognized for 5 minutes.
STATEMENT OF JENNY SCHUETZ, FELLOW, BROOKINGS INSTITUTION
Ms. Schuetz. Good afternoon, Chairwoman Waters, Chairman
Clay, Ranking Member Stivers, and members of the subcommittee.
Thank you for the opportunity to testify today. It is an honor
to be here virtually before you. I am grateful for your
continued leadership and attention to the critical issue of
housing insecurity.
My comments today will focus on the broader context of the
current rental housing crisis, and policy tools available to
Congress. It is vital to understand that housing insecurity was
a widespread problem among low-income renters well before the
COVID-19 pandemic. Even before the current crisis, more than 10
million households spent over half of their income on rent.
When families devote too much of their budget to housing,
they may not be able to pay for food, healthcare, or other
necessities. Any loss of income will leave them unable to pay
rent, increasing the risk of displacement. Low-income Black and
Latinx workers have been hit particularly hard by the current
recession. Households earning less than $40,000 per year have
experienced higher rates of job loss. Black and Latinx workers
are more likely to hold essential workforce jobs that cannot be
carried out remotely.
Further, the precarious situation of low-income renters
today reflects past policy choices by Federal, State, and local
governments. Federal rental assistance is not an entitlement,
unlike food stamps or Medicaid. Roughly one in four eligible
renters receives any Federal housing subsidy.
Overly strict State and local regulations, such as zoning
bans on apartments, contribute to the high cost and limited
availability of rental housing. Compared to its role in
overseeing mortgage markets, the Federal Government plays a
relatively small role in regulating rental housing.
State Governments set most of the parameters for landlord/
tenant laws, leading to wide variations across States in renter
protections. The currentpatch work of temporary eviction
moratoriums is a predictable outcome of rental market
regulations adopted at the State and local level.
Additionally, it is important to underscore that temporary
eviction moratoriums are not a long-term solution to housing
insecurity. Allowing renters to suspend rent payments for a few
months can relieve financial pressure in the short-term,
however, families who cannot afford one month of rent now will
face even greater difficulty paying several months of overdue
rent when the moratorium ends.
Halting rent payments can have harmful ripple effects
throughout local economies. Landlords rely on rent checks to
pay their mortgages, insurance, utilities, and property taxes
to local governments. Rent checks pay the wages of other
workers, such as maintenance and housekeeping staff.
Interrupting cash flows will inflict the most harm on small-
scale, non-professional property owners. Many of these
landlords operate on thin margins, so the delay or loss of rent
payments may force them to sell their properties.
Congress can address renters' housing stability in the
short run through three channels. First and most importantly,
renters with lost income due to the pandemic need direct
financial assistance. The most recent jobs reports suggests
that the economic recovery may be uneven. Workers in heavily
affected industries or geographic areas may require ongoing
support even as the overall labor market improves.
Second, local governments will have to process an unusually
high volume of evictions once temporary moratoria end.
Additional resources would allow them to manage these cases
more equitably.
Third, targeted grants or low-interest loans to property
owners would help preserve the physical condition and financial
viability of existing affordable housing.
These three channels can help renters and property owners
survive the immediate crisis. Reducing long-term housing
insecurity among low-income renters will require either
increased funding or restructuring existing housing subsidy
programs.
The Federal Government should also work with State and
local governments to reform land use regulations that make it
difficult and expensive to build rental housing.
Thank you for the opportunity to testify virtually today,
and for your continued leadership on this important issue. I
look forward to answering your questions.
[The prepared statement of Ms. Schuetz can be found on page
71 of the appendix.]
Chairman Clay. Thank you so much, Ms. Schuetz, and all of
the witnesses for your testimony. I now recognize myself for
questions.
I will start with Ms. Hill. Many renters who have lost
income due to the COVID-19 crisis have turned to credit cards
to pay for their rent. Even among renters who have made their
rent payments on time, there has been a concerning trend of
being increasingly reliant on credit cards to do so.
Zego, a digital rent payment platform, reported a 30-
percent increase in tenants using credit cards to pay rent in
April compared to the month prior. While paying rent with a
credit card may help renters avoid eviction in the short-term,
it could lead to them facing high interest rates and deeper
debt that could impact their credit in the long-term.
Research has shown that people of color are more likely to
struggle with credit invisibility and lower credit scores. What
other adverse financial effects might tenants face if they
resort to paying for their rent with credit cards, and can you
speak to the additional interest and associated costs renters
might incur while doing so?
Ms. Hill. Yes. Thank you for that question. In Louisiana,
we deal with a very large population of our community that is
significantly underbanked. Oftentimes, folks may not have
access to traditional lines of credit or to a bank account, and
all of these issues are further exacerbating the impact of
COVID-19 on their ability to pay rent.
We are working in communities with many people who have
lost jobs and income because they stayed home--as we were all
directed to do--in order to protect themselves and everyone
else. So, we do have some concerns about this scenario that you
have raised. When that option is available for people, we know
that oftentimes for people who are very-low-income or for our
African-American and Latinx community members, they are
subjected to some of these predatory interest rates when it
comes to credit cards or credit in order to pay rent.
The concern that we have is really that these effects would
snowball, that they would use these alternative methods to pay
rent and then that high-interest vehicle just becomes a vehicle
to incur more debt. At that point, people are then more likely
to lose their homes. We actually, through our foreclosure
prevention work, work with homeowners who are having difficulty
paying their mortgages.
And I would say that the number-one threat that we see
amongst those folks who come to us for those foreclosure
prevention counseling services is some sort of high-interest
debt that they took on in order to help them, in the short-
term, make those mortgage payments, and then what we know is
that those payments lead to the debt spiraling out of control.
So, there is a very real risk of people being forced into
homelessness because they are having to find alternative
methods to cover their rent costs.
Chairman Clay. It just sounds like a spiraling effect of
getting deeper and deeper into debt. Thank you for that.
Let me go to Ms. Oliva. My hometown of St. Louis, Missouri,
and across America was already experiencing a rental
affordability crisis before the pandemic, with a national
shortage of 7 million apartments that are affordable and
available to extremely-low-income renters. Some of the hardest-
hit renter households were low-income and likely had little
savings, even before the pandemic, since rental costs ate up
most of their paychecks. Low-income households are also more
likely to work in industries where job losses related to the
pandemic have been particularly severe.
Considering this crisis, what will the long-term impact be
for renters, Ms. Oliva?
Ms. Oliva. Thank you so much, sir, for that question. In my
written testimony, you will see that we provide quite a bit of
data around housing instability and homelessness and what we
really are concerned about is a large inflow of people into the
homeless services system that is already overburdened and can't
serve all the people who already need housing and services
through that system.
We know that most people who are experiencing homelessness
are at that extremely-low-income level, at zero to 30 percent
of the area median income.
So you can see that, through my testimony, we are
suggesting that we are quite deliberate, and you all were
actually also quite deliberate in the design of the Emergency
Rental Assistance Program for good reason, because we wanted to
make sure that people in the worst situations or who are most
likely to become homeless are prioritized for assistance, and
that we are stopping evictions for all the people for whom we
can stop evictions.
Because even if those families don't become homeless, you
can see through Matthew Desmond and other peoples' research
that eviction leads to long-term housing instability and, like
you said, a sort of spiraling effect over the long-term.
So if we do nothing now, we will see increased homelessness
and increased housing instability that we will have to deal
with down the road.
Chairman Clay. Thank you so much for that response. My time
has expired, and I now recognize the distinguished ranking
member of the subcommittee, Mr. Stivers, for 5 minutes.
Mr. Stivers. Thank you, Mr. Chairman. Again, I appreciate
you holding this hearing.
My first question is for Dr. Schuetz. Can you explain what
the current data is saying about how renters have been impacted
by COVID-19?
Ms. Schuetz. Yes, thank you. We have partial data on how
renters are responding to this. The most widely-cited survey is
by the National Multifamily Housing Council. They have been
reporting information that is provided from relatively large
apartment owners through the software companies that process
their rent.
For the set of apartments that fall into their sample, 80
percent of households were able to make at least a partial rent
payment as of the beginning of June. So, we have seen pretty
consistently, 70 to 80 percent of households making some
payment. There are a couple of things to keep in mind with
that. The smaller properties that are run by nonprofessional
owners are not represented in that because they don't use these
software companies to report.
The other thing that we have noticed is that more people
are making payments over the course of the month. Often, people
can't pay at the beginning of the month, and they are paying
maybe a month or two late. In particular, we saw this in the
first month because people were waiting to get their stimulus
checks and the expanded unemployment insurance, but most
renters are still making payments.
Mr. Stivers. Thank you, Dr. Schuetz.
Given our admitted blind spots on that policy, how
effective do you believe HUD would be in administering a
national rental assistance program?
Ms. Schuetz. I think the question is whether rental
assistance is going to be provided through existing mechanisms.
In the short run, it is easier to put more funding into an
existing program that already has an administrative
infrastructure, continuing to send out checks to people who get
it. The harder thing is likely to be to start up something new,
to the extent that we have to reach out to landlords who
haven't worked with HUD, or provide it through some sort of
different mechanism. Getting a new program up and running in a
crisis situation is harder, so using existing mechanisms is
easiest. And economists always say if we can give people cash,
we prefer to, because cash is fungible, so replacing income
lost by direct payments to households is likely to be the most
effective.
Mr. Stivers. Thank you. That leads into my next question,
Dr. Schuetz. First, is there anything in the CARES Act which
allowed renters to help make their payments and what was most
effective?
And second, are there any troubling signs out there that
might cause the rental crisis to become more serious in any of
the data you have seen?
Ms. Schuetz. We have only kind of indirect evidence on how
households are able to continue making payments, but this trend
of people picking up their payments as the stimulus checks and
unemployment insurance rolled out suggested those have actually
been very effective ways of helping people stay current.
So, households receiving financial assistance has really
helped stabilize them to a greater extent than we expected. I
would say the worry is when that money runs out, since the
stimulus was a one-time check. The expanded unemployment
insurance has a timeline. There is a concern that when those
run out, households are likely to be in trouble if they have
not gone back to work. Of course, the uncertainty is that when
the larger labor market recovers, how many of those people will
be able to go back to work, will be able to resume their full
number of hours?
Obviously, the point of this is to provide enough
assistance to bridge people until the larger economy recovers.
We simply don't know when that is going to happen.
Mr. Stivers. Thank you.
One last question, because you talked about land use
policy. Are there things that you would recommend on land use
policy that Congress could do that would make apartments more
affordable, because those things are driving up rents?
Ms. Schuetz. This is a longer-term issue, but yes. The
Federal Government should be thinking about how it can
incentivize local governments to allow more housing,
particularly close to jobs and transportation centers and, in
particular, local land use is heavily prejudiced against
apartments, multi-family buildings, through the majority of
rental housing. Encouraging local governments to make it easier
to build rental housing will bring down the cost and make it
possible for more people to find places to live.
That is not necessarily a quick fix, but as Mr. Kingsella
said, if we want to have a more functioning housing market in
the long run, at some point we have to deal with these supply
constraints.
Mr. Stivers. Thank you. I think it is important to say that
we are all committed, on both sides of the aisle, to racial
justice and equality. I know we have a lot of work to do in
housing and housing policy. I look forward to working with
Chairman Clay going forward, and both Democrats and Republicans
on those issues.
I yield back, Mr. Chairman.
Chairman Clay. Thank you. The gentleman from Ohio yields
back.
I now recognize the Chair of the full Financial Services
Committee, Chairwoman Waters, for 5 minutes.
Chairwoman Waters. Thank you very much, Mr. Clay. I would
like to direct a question to Jennifer Schuetz. I am really
pleased that you testified today extensively about smaller
landlords. I have been worried about these landlords who are
basically mom and pop, and you testified that they own nearly
half of all rental units, 22.7 million units and then you
contrasted that, and you estimated that fewer than 1 million
business entity landlords own a little over half of the rental
units in the United States.
So these smaller landlords, you say, are more likely to
have renters who are unable to pay the rent due to the
pandemic. I am worried that even with the HEROES Act, if we are
successful, and I think we can be, in getting the $100 billion
that we have been working on, I don't know how long it is going
to take to get the system up by which we could get that rental
assistance to the landlords to benefit those renters.
What do you think will happen if it takes 3 months to get
the systems going, particularly in some of the States that may
have more difficulty identifying which entity of government
will be responsible for doing the implementation of the
landlord of the assistance that we are directing toward the
landlords?
And what will these small mom and pops do if they have to
wait another 3 or 4 months before they can get their rental
payments?
Ms. Schuetz. Thank you for that question.
Small mom-and-pop landlords are unquestionably going to be
the most impacted. Many of them own small properties, a single-
family house, or a two- to four-family house, and so having
even one tenant in, say, a two-family house who can't pay rent
means that half of the income for that property is gone. That
obviously makes it very difficult to pay all of the other
payments down the line.
We know that a lot of the small mom-and-pop landlords do
have mortgages. Some of them may be federally-backed mortgages
in which case they have up to a year to forbear on the mortgage
payment, but many of the owners of the small rental properties
do not have federally-backed mortgages and so the mortgage
payment is still due.
In addition to that, property taxes are often a fairly
substantial expense as well, as local governments are facing
very difficult budget constraints at the moment. So any
fallback in property taxes would hurt local governments'
ability to pay for essential public services.
We don't know entirely what is likely to happen, but we
suspect that many of the smaller landlords may be forced to
sell their property if they don't have income coming in. Three
months to forego your mortgage payments is enough to get you in
trouble and so there may actually be a number of these smaller
properties that wind up going on the market. That is
potentially a threat to the existing affordable housing stock.
Many of these are relatively low-rent properties.
If they get bought either by homeowners who take them out
of the rental stock or by investors who choose to raise the
rent, this could be a permanent loss for long-term affordable
housing.
Chairwoman Waters. Do you think that perhaps even with 3 to
4 months waiting to rent to get back rental payments that there
would be a lot of evictions where the small landlords could get
desperate and say, ``I can't go along with this any longer. I
know you people are saying that you are going to get the
assistance to us, but I just can't wait any longer. It hasn't
happened.''
Do you think there will be a whole rash of evictions?
Ms. Schuetz. My understanding is that local governments are
expecting to have a lot of eviction filings when the moratorium
ends. Many of those are delayed at the moment, in part because
court systems are shut down and they are simply not processing
cases that have been filed, but it is quite possible that a
number of landlords have started eviction proceedings.
The other threat is if the landlord has to sell the
building because they can't make the payments, then the new
owner of the building may also move forward. So, it is
definitely a possibility.
Chairwoman Waters. I am really worried about the small
landlords, and we are working very hard to try and ensure that
we have the kind of implementation of the $100 billion so that
the landlords and the renters don't have to wait too long,
because I am worried that if they all have to wait too long,
not only will we have landlords who will evict them or, as you
said, have to sell their properties, but we think that it will
cause a lot of action on the street, with a lot of unhappy
people out there who are not able to keep their rental units
and are being evicted.
Ms. Schuetz. Yes. There is certainly a potential.
Chairwoman Waters. Thank you.
And I yield back the balance of my time.
Chairman Clay. The chairwoman yields back.
I now recognize the gentleman from Florida, Mr. Posey, for
5 minutes.
Mr. Posey. Thank you very much, Mr. Chairman, and Mr.
Ranking Member. I appreciate both of you bringing out the
challenges our renters face in the midst of this pandemic that
we are enduring now.
As we move forward, I think we should consider the best way
to address this hardship and to do it consistent with
principles and approaches that we have been providing
assistance in other areas successfully.
The Paycheck Protection Program is a good model that if
used [inaudible] Existing program to provide temporary relief
in a timely way to respond to the crisis.
We should refrain from the temptation to enact broad
expansions of existing problems or even new programs to respond
to the crisis. General program extensions and new programs
should be subject to regular order, I believe, and not
emergency legislation. I believe that this kind of economic
crisis calls for us to be compassionate about the ability of
families to meet their rent.
And with those principles in mind, I believe we might work
together to provide timely rental assistance through the
Section 8 program, a limited and temporary program expansion
that is means-tested on the basis of an individual or a
family's ability to pay within the window of the COVID-19
crisis.
This allows a direct grant to the disadvantaged renter to
pay his rent in place within the home he currently occupies.
Such assistance should be limited, obviously, to the time
period of the crisis and be subject to an expedited application
and approval process.
My question to the panelists is, do you think the idea I
just described would address the challenges that renters face
in the current pandemic?
Ms. Oliva. I am happy to start, and my fellow panelists can
come in behind me. I would say, as I mentioned in my testimony,
we think that it is really important to have a comprehensive
approach here to address short-, medium-, and longer-term
needs. Depending on the specific circumstances of various
households and families, we know that some folks, as was
mentioned earlier, will be continuing to pay the rent by using
credit cards or by not paying utilities.
We have folks who are in domestic violence situations.
There are a lot of different situations that we need to
contemplate, so I would suggest that we look at this as a
package that includes a substantial emergency rental assistance
component in addition to additional vouchers for folks who need
longer-term assistance and can't stabilize with only short- or
medium-term assistance.
Mr. Kingsella. I would also add that in terms of the
individuals who require rental assistance, we make a connection
with the pandemic and pandemic containment efforts, and
economic impacts, we are looking at a number of individuals who
are called the missing middle of affordability, the 80 percent
AMI to 120 percent AMI range. And I believe that we have seen
that individuals in that bucket have been impacted directly by
COVID and have been either put on furlough or have been
terminated as a result of layoffs.
One of the elements that the emergency rental assistance
structure provides States is the ability to scale that resource
up to individuals who aren't typically covered under the
current Section 8 Program.
Congressman Posey, I would point you to a May 4, 2020,
letter signed by 43 industry organizations, consumer groups,
and housing advocates that lays out the principles of a
successful rental assistance program in response to COVID.
And I would venture to say that the Emergency Rental
Assistance Act is a vehicle that is moving, that is included in
the HEROES Act, that leverages existing programs, but to the
extent that expansion of Section 8 or HOME or other programs
get to the same outcome, I think you would find that a number
of stakeholders would support that approach.
I think the essence of the advocacy is to ensure that this
money gets out to folks.
Thank you.
Mr. Posey. Mr. Chairman, I yield back.
I am out of time.
Chairman Clay. The gentleman from Florida yields back.
I now recognize the gentleman from Missouri, Mr. Cleaver,
for 5 minutes.
Mr. Cleaver. Thank you, Mr. Chairman. I want to thank you,
Ranking Member Stivers, and the Chair of the Full Committee,
Chairwoman Waters, for allowing this hearing to take place,
because it is taking place in the backdrop of social justice
and civil rights becoming a part of what happens on the front
burner of the American system.
We are seeing Americans evolve, with all races and all
creeds demanding an end to systemic institutionalized racism. I
addressed the protesters here, about 5,000. I walked out, Mr.
Chairman, to address them and almost went into tears because
having been in my first civil rights march at the age of 15,
down in Texas, this was the first time I had seen a crowd like
this. About 55, maybe 60 percent of the participants were
white. The rest were Black and Brown.
In the old civil rights movement, you would have, for
example, the president of Notre Dame, a priest, walking with
Martin Luther King, or Ralph Abernathy, or Joe Lowery, or C.K.
Steele, or Fred Shuttlesworth, but it was for protection. These
people were there saying they want change and, frankly, I think
that our committee, your chairmanship in this committee, deals
with change perhaps more than any other committee, including
the Judiciary Committee, because housing is right at the core
of change and is also one of the principal causes of the pain.
One of the things that I would like our panel to address
is, we have $100 million in the HEROES Act, and I am wondering
if you believe that there are--I don't know if you read the
bill or know much about it, but if there are better ways of
dealing with that $100 billion in terms of rental assistance
than what we might have recorded in the HEROES Act?
Any or all of you?
Ms. Hill. From our perspective, and as someone who has
served in communities that are multiracial and with some pretty
high poverty levels across the State of Louisiana, it is clear
to us that this rental assistance is going to be critical in
order for people to be able to recover and fully participate in
the thrust of their communities after this pandemic ends. We
know that people are struggling to pay their rent and that they
need this cash assistance in order to be able to do so.
Coming from a place, Louisiana, that also has very few
tenant protections, we see this as an opportunity to actually
tie that assistance to some tenant protections because it is
likely proposed that the rental assistance is really landlord
assistance, right? It goes to landlords to help them cover the
cost of the rents that they are missing. And so, if they are
going to make a massive investment in supporting landlords,
then I would like to see participating landlords ask to sign
lease addendums with provisions that provide some protections
to tenants, protections that are missing in Louisiana's
landlord/tenant laws, things like a 14-day right to cure any
lease breaches, anti-retaliation protections, other than the
State of Louisiana, where it is still perfectly lawful for
landlords to retaliate against their tenants and to kick
tenants out who request things like repairs. And so, having
some protections tied to the money would be especially helpful
for Louisianians.
Mr. Cleaver. I am glad to hear you say that, because I
intend to speak with Chairwoman Waters and Chairman Clay about
some other changes along the lines of what you are saying,
because we have a senior citizen facility in Kansas City where
HUD guaranteed the loan to the Missouri Housing Development
Corporation (MHDC), and the owners live out-of-State. The
temperature is now hovering every day here in the mid-90s, with
no air conditioning; the air conditioning went out. There are
all kinds of problems. We need to do something along the lines
of what you were saying, but maybe they ought to be a part of
HUD regulations. HUD is guaranteeing bad ownership of a senior
housing project.
And my time is up. I had a lot to say. Thank you, sir.
Thank you, Mr. Chairman.
Chairman Clay. I'm sorry. Thank you, Mr. Cleaver.
And let me remind Members to keep their cameras on so that
we can see you on the main screen and be able to recognize you.
At this time, I would like to--okay. Is Mr. Huizenga there?
You are recognized for 5 minutes.
Mr. Huizenga. Thank you. I appreciate that, Mr. Chairman.
Hopefully, I think you can see me as well.
I really just wanted to make a statement more than
anything, and then yield back. I do appreciate the
accommodation. This is something that is critical to so many
communities in rural areas, suburban areas, and urban areas.
And we do need to make sure there is adequate housing stock.
Having been involved in the business of construction for 3
generations now, we also know the effects that oftentimes,
local ordinances and requirements, and things like that, what
kind of costs might be added to the construction side of
things. And obviously, that impacts affordability.
So I hope in this conversation we are loking not just at a
government program to help with dollars getting sent to either
the renter or the provider of the housing and those kinds of
things, but we also have that discussion about, how do we make
sure that affordable housing is truly affordable on the
construction side and on the availability side as well.
With that, I am going to yield back. I appreciate the
opportunity to be on today.
Chairman Clay. I thank the gentleman for yielding back and
for your brevity.
I now recognize the gentlewoman from Ohio, Mrs. Beatty, for
5 minutes.
Mrs. Beatty. Thank you so much to our chairman and to our
ranking member and to all of those who are participating in our
new format of testifying. I have certainly enjoyed hearing your
testimony.
And as we talk about housing, it is very clear that we are
on a cliff. Evictions are on a cliff. And when you look at who
is on the ledge of that cliff, we are looking at individuals
who look like me. We are looking at those individuals who might
be homeless. When we think about where we are in the midst of
this nation, whether it is COVID-19, as our chairman talked
about in his opening statements, and when we look at the death
rates in proportion to what African Americans in particular
represent in this nation, and certainly those disparities are
also here in my district. So when I think about who is at risk,
the least of us are at risk. When I think about minority
populations, I think about those who are at risk because we are
at an inflection point in this country with regard to diversity
and inclusion with racial biases and racism.
I just introduced a resolution which says that racism is a
national crisis. And housing was one of the first things, Mr.
Chairman, that I listed in it.
Let me make a quick statement, and then I have two
questions I would like to address to the panel. The questions
will be centered around, how are these long-existing gaps
affected by COVID-19, and how does Congress ensure that they do
not widen the gap even further, and how do we close them as it
relates to housing?
And before you start to answer that, let me just remind you
of something that my staff shared with me in an article that
was written in 1966 in The Nation Magazine, where Martin Luther
King, Jr., said, ``Slums with hundreds of thousands of living
units are not eradicated as easily as lunch counters or buses
are integrated or jobs, and jobs are harder to create than
voting.''
When you think of chattel, slavery was abolished, but a
program to transform slaves into citizens was omitted. So, he
is talking about economic justice. He is talking about it as we
look at wealth creation or the lack of it and mainly talking
about housing.
So, where do we go from here? I will start with you, Ms.
Hill.
Ms. Hill. Thank you so much for the question, and it
resonates very deeply with me. I think what is most important
is that we have to seize this opportunity to go somewhere,
right? We know that this conversation is not new. We know that
it has happened, it has been happening, and it is continuing to
happen now. So, we have to seize the opportunity.
We knew from the current commission report, around the same
time that you are mentioning, Representative Beatty, that we
needed, as a country, to do something, and those changes were
not made. It is time now to act upon those promises and really
to honor the legacy of Dr. King and all of those who worked
with him for this kind of justice to which you are referring.
In Louisiana, as across the country, Black and Brown
households were already disproportionately impacted by the
affordable housing crisis prior to COVID-19. We know now that
Black women are disproportionately impacted by eviction rates
across the country as well as in New Orleans. And Matthew
Desmond's research has helped to highlight that problem. In New
Orleans, the same Black-majority neighborhoods with eviction
rates that are much higher than the national average are now
the same areas that have been hit hardest by COVID-19 in our
City.
There has to be a comprehensive package that seeks to
redress these ongoing disparities. The cash rental assistance
is incredibly important. And rental assistance that is tied to
protections for tenants is also important, and increased
support for homelessness prevention programs, especially
eviction defense. We know that having a right to counsel in
eviction court would cut evictions in New Orleans, for example,
by half.
There really is a variety of options available. And we are
so thankful for your leadership, this subcommittee's leadership
on these issues and in moving this conversation forward.
Mrs. Beatty. Thank you. And I have a few seconds left, for
anyone who wants to answer, as we know, the CARES Act eviction
moratorium and prohibition on late fees for nonpayment will
expire next month, on July the 25th. With the record high
unemployment numbers, which we learned are going to be even
higher, where do we go from here, when renters are looking at
an eviction, on that eviction cliff on July 31st? What do we do
to protect those renters when the CARES Act expires and the
rent becomes due?
Would anybody else like to comment on that?
Ms. Oliva. Yes, I would be happy to comment quickly on
that. That is why it is so important for us to get emergency
rental assistance to be able to do homelessness and eviction
prevention for those renters that are on that cliff that you
are describing. But it is also why we need to take new
approaches to this emergency rental assistance program, and we
have to use a racial justice and equity approach. We need to
ensure that we are targeting highly-impacted neighborhoods and
communities. So, there are lots of things that folks can do.
Thank you so much for that question because it is incredibly
important.
Mrs. Beatty. Thank you. My time is up, and I yield back,
Mr. Chairman.
Chairman Clay. The gentlewoman yields back.
At this time, I recognize the gentleman from Colorado, Mr.
Tipton.
Mr. Tipton. Thank you, Mr. Chairman. And I also thank the
ranking member for his support.
I would like to associate myself with the comments that Mr.
Huizenga made. We do need to be looking at some of the
regulatory hurdles that we are impeding by increasing the costs
of affordable housing, and also the full recognition that a lot
of this is impacted at the local level, in terms of where they
will allow the affordable housing to be built.
I would like to start with Dr. Schuetz, and thank you for
being before our panel again today. I wanted to follow up,
during our last panel, you had noted that there are debt
obligations, maintenance obligations continued during this
crisis. Is it still your view that property owners are required
to be able to carry forward with those obligations during the
crisis?
Ms. Schuetz. Thank you for that question. Yes. Property
owners still have to maintain their properties. The temporary
forbearance on mortgages applies to maybe half of rental
property owners. So, that will help landlords who have a
mortgage that is federally-backed; they will have some extra
time to pay that off. And that allows them to pass along
savings to their tenants. But the mortgage is not the only
thing they owe. In particular, we worry about them not being
able to pay their property taxes to local governments. We are
seeing a shortfall in a number of their revenue sources in some
things like sales and hospitality taxes. One of the other
concerns is just basically paying utilities. Water and sewer
have to keep running, and utilities for the property overall.
There are things that landlords have to pay whether the
rent is coming in or not. And if they are not getting enough
cash in order to do that, some of them may need to put their
buildings up for sale. So, that is definitely a concern.
Mr. Tipton. In addition to that, obviously, being noted by
other questioners, if air conditioning and heating goes out, it
is pretty much the obligation of the landlord to fix that. So,
it is important that they receive as much rent as possible.
Ms. Schuetz. Yes. And, again, thinking about the scale of
buildings that are most vulnerable, if there is a 200-unit
building and a few tenants can't pay rent, the landlord is
still getting income from most of the building. We are
particularly worried about smaller buildings, the one- to four-
unit properties that are in fact half of the rental units in
the United States. Those are really dependent on all of the
tenants having continuing cash flow and being able to pay rent.
We do know that landlords are often making negotiations
with tenants. If tenants have, for instance, lost some hours,
and they can make a partial payment but not a full payment,
most landlords would rather have someone in the unit who is
able to pay some cash rather than having to flip the unit. If
you evict and then the unit sits empty, that doesn't help. So,
landlords are trying to work with tenants where they can,
providing both--replacing the income to renters through either
unemployment insurance or some other method that allows them to
keep making payments. For some landlords, it may also be
helpful to some have small grants perhaps administered through
the local government to help them maintain the property and
viability.
Mr. Tipton. Ms. Schuetz, during your testimony, you noted
that temporary eviction moratoria can be helpful in the short
term, but these moratoria could increase a household's long-
term financial insecurity. Could you speak to that a little bit
more?
Ms. Schuetz. Sure. We worry that if households are not
paying rent, but that the balance of their rent is accruing, at
some point that has to be paid off or renegotiated with the
landlord. Most renters are in very thin financial margins. So
if they are out of work for a month or 2 months, even when they
get their job back, they can start getting current on their
payments, but there is a past-due balance. That is similar to
the issue of putting your rent on a credit card; it postpones
it until the future, but at some point, those bills come due.
And most people don't have the assets to pay that off.
Mr. Tipton. I appreciate the answer to that. And I also
appreciate the rent in terms of smaller landlords that are out
and the impacts it is having on them. I think we all join in
wanting to make sure that people have a roof over their head,
and also recognizing that people have made investments that
need to be able to be serviced as well.
I would like to jump, with the little time that I have
left, to during the last appropriations cycle, we appropriated
$290 million to the Homeless Emergency Solutions Grants (ESG)
Program. Under the CARES Act, that increased by about $4
billion in spending. Under the HEROES Act, it is proposed to
spend an additional $111.5 billion on the ESG program.
Does ESG currently have the capacity and the efficacy to be
able to absorb the 299 percent increase, particularly given the
time?
Ms. Schuetz. I am not familiar enough with the
administration of the program to know how the increase in
funding would work. I cannot speak to that.
Ms. Oliva. I would be happy to take that, given that that
was my office when I was at the Department of Housing and Urban
Development. Can I do that, Mr. Clay?
Chairman Clay. Yes. Yes, you may. Please provide us with
that information.
Ms. Oliva. I think we are always right, as members of the
government, to pay attention to capacity. And you are right;
the $290 million is the normal ESG allocation in any given
year.
But we need to make sure that ESG recipients have the
guidance and support that they need to effectively design and
effectively implement these types of programs. So, I would
first encourage HUD to get the ESG COVID funding that was under
the CARES Act guidance out the door as quickly as possible.
I would also say that we can provide technical assistance
resources through these funds that can support communities to
really focus on the strategies that work and ensure that they
have the capacity they need to administer these funds. We need
to make sure that HUD is appropriately staffed to monitor these
programs.
I know that when I ran HPRP, which took a 200--it was $160
million at the time to $1.5 billion. We hired term employees to
do monitoring, and that was incredibly important.
I think the most important thing that I want to say on this
particular issue is that ESG grantees have always risen to the
challenge. And I hope that that is not--while we need to pay
attention to it, I would not want that to be a barrier to
providing really important emergency rental assistance to
communities.
Chairman Clay. The gentleman from Colorado yields back.
I now recognize the gentleman from Texas, Mr. Green, for 5
minutes.
And please unmute, Mr. Green.
Mr. Green. Thank you for the reminder, Mr. Chairman. And
thank you for the hearing as well. I also thank the ranking
member of the subcommittee, and the Chair of the Full
Committee. And I thank all persons who had any hand in
perfecting this important hearing.
Mr. Chairman, as you and I know, the Fair Housing Act of
1968 passed Congress within weeks of the assassination--in
fact, within days of the assassination of Dr. Martin Luther
King. It did not end invidious discrimination in housing.
Just as having laws that indicate what the speed limit is,
does not prevent people from speeding. You have to have
enforcement. And enforcement still is much needed, even today,
because invidious discrimination still exists.
Ms. Hill, I think you have made some salient points on
this, as well as others, about the invidious discrimination in
housing.
We know that, during this time of the pandemic, the
President has done some things that were unkind. He has made
statements about the, ``China virus.'' And this has caused
persons who are of Asian ancestry to be discriminated against.
I did a speech on the Floor of the House where I talked
about this level of discrimination, persons trying to seek
lodging being discriminated against. But we also know that over
60 percent of the people experiencing homelessness in America
today are Black and Latinx and that over 4 million fair housing
violations are estimated to occur each year against members of
protected classes.
So, during this time of pandemic, it is exceedingly
important that we have enforcement, enforcement in terms of
intake, education, and investigation as it relates to the
complaints that are going to be called to our attention with
reference to invidious discrimination in housing. It does
happen, and we need to make sure that we protect people.
I am honored to say that the Chair of the Full Committee,
the Honorable Maxine Waters, is an original cosponsor of the
Fair Housing Further Enforcement Emergency Act. These are funds
that are being allocated to deal with the invidious
discrimination that emanates as a result of the coronavirus.
I would ask you, Ms. Hill, do you believe that it is
necessary for us to have this emergency enforcement power and
the ability to investigate and take action against those who
still deal in hate, some of it emanating from the highest
office in the land as a result of comments that are being made
by the President of the United States of America? Your
thoughts, Ms. Hill, please?
Ms. Hill. Thank you so much for that question,
Representative Green.
And, absolutely, yes, these programs and the resources that
you mentioned are incredibly important, and perhaps now more so
than ever. Unfortunately, and it may be counterintuitive, but
we know from experience that complaints often go up during
emergencies. When families have lost income and are at risk of
losing their homes, they are really at their most vulnerable.
And that is even more true now when homelessness might mean
increased exposure to the potentially deadly coronavirus.
Unfortunately, there are housing providers that we know will
take advantage of this precarious situation that many tenants
are in.
We saw rampant discrimination against Black New Orleanians
and families with children after Hurricane Katrina, and we
needed to really engage in some large-scale litigation to right
some of those wrongs.
We are very concerned about increasing sexual harassment
cases during the pandemic. There are reports of some landlords
looking to capitalize on the lack of ability of some of their
tenants to pay rent. And so, we are hearing reports of
landlords seeking to exchange sexual favors for rent with some
of their vulnerable tenants who are having difficulty making
those payments. We are hearing reports from domestic violence
survivors in Louisiana who are being victimized further by
landlords not following the law.
For instance, we are working with a woman who had survived
domestic violence, and went to her landlord and asked to be
moved to a different unit per the Louisiana State Violence
Against Women Act, and was told, in direct contradiction to
that law, that she would have to pay out the remaining months
of her lease before she could be granted the permission to
move.
So, we know that an increase in fair housing funds will be
essential to ensure that we can continue to investigate these
cases and ensure that families are protected under the Fair
Housing Act.
Mr. Green. Thank you, Mr. Chairman. I yield back the time I
do not have.
Chairman Clay. Thank you so much, Mr. Green.
And, at this time, I will recognize the gentleman from
Tennessee, Mr. Rose.
Mr. Rose. Thank you, Chairman Clay, and Ranking Member
Stivers.
And to our panelists testifying today, we appreciate you
being available to talk about this important issue.
We are currently navigating uncertain times and folks are
having to make difficult decisions regarding their finances.
With job losses stemming from the economic downturn related to
COVID-19, there are concerns that renters have had trouble
meeting their monthly rent payments.
This is building on Mr. Tipton's question about the
negative effects of the failure of tenants to make their rent
payments. Can you talk about the overall ripple effects and
negative externalities to communities, especially rural
communities, such as supplying local jobs and paying local
property taxes? Dr. Schuetz?
Ms. Schuetz. Thank you for that. We are concerned about
where rent payments go further down the line and when those are
not available. So, for many landlords, they will still have to
pay a mortgage, and if they don't, there are consequences to
that. Property taxes are obviously one of the high items on the
list that landlords have to pay. Local governments are having a
really difficult time at the moment. They have lost money from
sales taxes, and hospitality taxes. Incomes have dropped. They
are facing a squeeze on the budget side at the same time that
they are being asked to provide extra services to constituents.
So, failure to pay property taxes--the inability to pay
property taxes will hurt.
There are also jobs related to this. Larger properties tend
to employ more onsite staff: building superintendents;
maintenance staff; housekeeping staff. Those are typically not
high-wage jobs, but people rely on them for their income. Most
of those smaller landlords don't have in-house staff, but they
hire outside contractors, particularly for maintenance, the
plumbers and electricians. These are all downstream payments
that could be threatened if a few months dry up.
I have not seen information on how rural communities are
doing relative to urban areas with repayment. But we do know
that some of the rural areas, particularly those with food
processing plants, are seeing higher rates of infection, and
that is likely to put stress on their public health systems as
well as their local public amounts.
Mr. Rose. Thank you. I know I have said it before, but we
have a responsibility in Congress to ensure that dollars spent
by the Federal Government are spent wisely, efficiently, and
for the intended purposes. And falling from that, I am hesitant
to say that $100 billion in new spending that would more than
double HUD's annual budget achieves that. It is our role to
ensure that are were being prudent. And it does no good to the
American people to make a bloated false promise of assistance
that never actually comes. We need smarter, more innovative,
localized solutions than the ones we are largely discussing
today.
Dr. Schuetz, you stated in your testimony that excessively
strict State and local regulations have made it extremely
difficult for localities around the country to build apartment
buildings, contributing to the high costs and limited
availability of rental housing.
Where do you find these local regulations are the strictest
and prohibit the growth of affordable housing the most?
Ms. Schuetz. The short answer is everywhere. Almost every
local government in the country has zoning that preferences
single-family detached houses relative to multi-family
buildings. Multi-family buildings provide most of the purpose-
built rental housing. And so effectively, every local
government in the country is biased against building rental
housing. And we find this consistently across the country. This
is true for suburbs. This is true for rural communities.
We find that higher level of overall regulations in many of
the coastal metropolitan areas. But the suburbs in Dallas and
Detroit are every bit as restrictive of apartment buildings as
San Francisco. So really, this is a national problem, that we
have made it hard to build. Local communities have different
kinds of barriers, but almost every community has some sort of
barrier, particularly, to rental housing, low-income housing.
Rural areas, in particular, their restrictions on manufactured
housing, which is generally one of the lowest cost ways to
create housing in smaller communities.
Mr. Rose. Isn't it true, though, if we provide more than
double the funds for HUD, most of these funds are going to go
to renters in the high-cost cities? Is that a fair statement?
Ms. Schuetz. The per-household subsidy is much higher in
high-cost cities because of the way the formula works. HUD's
rental assistance is going mostly to people in large populated
places where there are larger populations and also where the
cost of housing is higher.
Mr. Rose. Thank you, Chairman Clay. I yield back.
Chairman Clay. The gentleman from Tennessee yields back.
I now recognize the gentleman from Washington State, Mr.
Heck, for 5 minutes.
Mr. Heck. Thank you, Mr. Chairman, Mr. Ranking Member, and
Madam Chairwoman. Thank you so very, very much for holding the
hearing on this important topic.
As many of you have heard me describe before, I tend to
have a perspective of framework about the issue of shelter,
especially in the context of the COVID crisis, that is a three-
legged stool. I am going to outline that and then ask a couple
of panelists to respond: to affirm; to disabuse; or to amplify.
The first leg of the stool is support for homeowners. Home
ownership is still far and away a hugely held aspiration of the
American public. But just as importantly, it is the number-one
net worth building tool of the average American, and a critical
component of their retirement security. We recognized this when
we provided mortgage forbearance for those whose mortgages are
ultimately held by one of the Government-Sponsored Enterprises,
and well we should.
The second leg of the stool is support for renters. We
talked a lot about that. The panelists--you have terrific data
about the crying need for this. You have all heard me say my
mantra is: pillow; blanket; roof. If someone doesn't have a
pillow to lay their head on, a blanket to keep them warm, and a
roof over their head, any other issue in their life is not
going to be dealt with, whether it is unemployment or mental
health or substance abuse; you don't successfully deal with
those things while you are sleeping under a bridge. That is why
I am so passionate about the $100 billion that was in our
legislation and then included in the HEROES Act. And it is not
just me.
Mr. Chairman, with your permission, I ask unanimous consent
to submit a letter for the record that has 640 signatures to
it. And might I add, this is not a petition. Those signatures
represent 640 different organizations nationally who have come
together and united in a very diverse coalition in support of
our $100 billion rental relief.
Chairman Clay. Without objection, the letter will be
submitted into the record of the hearing.
Mr. Heck. Finally, of course, is the issue of the missing
millions of homes that Mr. Huizenga so eloquently alluded to--
7.3 to 7.5 million. Let us remember this, that when you have a
supply restriction, you have increased occupancy, which leads
to increased rents, which leads to increased cost burdens,
which of course we are experiencing at historic levels, which
increases homelessness. We simply have to build more housing
units, especially affordable housing units in this country. And
it is not just for the benefit of the individuals who need it;
it is for the benefit of this entire country. Because I want to
remind you that every recession in modern history, save the
last one, has been led out of by housing construction activity.
And we are not doing it. And we are not doing it at a rate that
continues to accumulate our housing unit deficit on an annual
basis. We need more housing units, especially affordable
housing units.
I guess I would like to start with Ms. Oliva, with whom I
haven't had the opportunity to interact before, and ask you,
those are my three legs: support for homeowners; support for
renters; and support for increased housing unit construction.
Can you affirm it or disabuse me or amplify any component of it
that you think bears highlighting?
Ms. Oliva. Sure. Thank you so much for that question. I
actually spend a lot of time in your State, working in King
County, so I know quite a bit about some of the work that is
being done throughout the State.
I would say that my expertise is not in home ownership. It
is really around rental housing for people who are extremely-
low-income and low-income and experiencing homelessness.
And so, I wouldn't disabuse you of any of the three legs of
your stool, but what I would say, and that I talk a little bit
about in my testimony, is that we really need to target the
most in-need families and households first to ensure we are not
creating a worse situation, especially within the homeless
shelter system.
And specifically to COVID-19, we are seeing so vividly that
housing is healthcare. And to the extent that we are
prioritizing folks without housing and folks potentially going
to lose their housing, I think that is an incredibly important
component of the emergency rental assistance, and for full
housing sort of complements the short-, medium-, and long-term
options that are included in the HEROES Act.
Mr. Heck. A quick follow-up question, if I may. One of the
earlier speakers alluded to $100 billion as ``bloated.''
Frankly, I find that sad. I think a perfectly legitimate
question to be raised is, can we effectively and efficiently
get that amount of money out because it is large? But is it
bloated compared to the need?
Ms. Oliva. I don't think so. I believe that we need to
fully respond to this crisis so that we don't have lasting
long-term impacts in the way that we are starting to see now.
Mr. Heck. Thank you. I yield back, Mr. Chairman.
Chairman Clay. The gentleman from Washington yields back.
I now recognize the gentleman from Wisconsin, Mr. Steil,
for 5 minutes.
Mr. Steil. Thank you very much, Chairman Clay, Ranking
Member Stivers, and Chairwoman Waters for pulling together
today's hearing, which I think is on a really important topic.
The events of the past few weeks, I think really refocused our
attention on some of the structural barriers to opportunity.
Today's hearing, in particular, is about how COVID-19 is
impacting people's housing, in particular those of low- and
moderate-income, as well as underrepresented minority groups.
I want to dive in on this. I would like to ask a question
of you, Ms. Schuetz, regarding the proposed extension of the
temporary moratorium on evictions. You talked about this a
little bit, and I have read your testimony that was put
forward. But I would like you just to dive in a little further.
You have noted, I think very well, the impact of the potential
extension as set forth by the HEROES Act that passed the House,
what that would be in real terms on mom-and-pop landlords. But
could you also comment on what role that may play at city and
State municipal level resources and how that would play out in
State and local budgets if the proposal that has ultimately
passed the House in the HEROES Act was fully implemented?
Ms. Schuetz. Sure. Yes, it is definitely a concern for
local governments which are really where the evictions are
likely to be processed. And communities across the country have
a variety of different ways of dealing with evictions. New York
City has an entire housing court which does nothing but handle
landlord/tenant issues and evictions. But for many other
places, particularly smaller communities, this runs through the
general court system. Many of the court systems have been
closed down or operated--
Mr. Steil. If I can, let me just refocus the question maybe
a little bit more tailored here. In your commentary,
particularly on some of the mom-and-mop landlords where they
may be uniquely financially impacted, would they have
challenges in paying their property taxes which would
ultimately impact State and municipal governments?
Ms. Schuetz. Many of them will have difficulty with that.
Property taxes are a very substantial component for smaller
properties, and those are going to be due depending on the
local budget cycle. But if they don't have income coming in,
they might not be able to pay that, which then directly impacts
the local budget.
Mr. Steil. Thank you. And let me shift gears slightly. One
of the things we saw Congress do really out of the gate was
kind of come in with a sledgehammer, and flood the market with
liquidity. There are reasons to do that at the beginning of the
crisis.
As we look now, I think there is a real opportunity to
shift from the sledgehammer to the scalpel to make sure we are
getting relief to those who need it most while preventing
relief from being just blanketed across all individuals in the
United States.
In particular, as you reviewed the potential expansion of
the moratorium put forth in the HEROES Act, can you comment on
the impact that would have? It appears that it would obviously
be a benefit to low- and moderate-income individuals who truly
are impacted by the coronavirus through no fault of their own.
But would it also be available to higher-income individuals or
those who have not had the same negative impact in their
financial situation due to the coronavirus?
Ms. Schuetz. I don't know exactly how this would play out
with different incomes. In part, what we have seen is that the
ability to continue paying rent has been dependent on the
extended unemployment insurance and the stimulus checks which
are going to run out.
One of the difficulties of sort of targeting with a scalpel
at the moment is the uncertainty about how quickly the labor
market will recover across different geographies in different
industries. So, I don't think we know yet which workers are
going to be going back to work, the companies that are still
going to be hiring, and the kind of hours that are replaced.
I fully agree that it is ideal to tailor the stimulus. We
are guessing a little bit, because we are still in the dark
about where the recovery is going to come back soonest. So, it
may not be possible to tailor it as much as we would like.
Mr. Steil. I appreciate your commentary today. And I
appreciate everyone's work on this important topic.
And, with that, I yield back, Mr. Chairman. Thank you.
Chairman Clay. Thank you so much. And the gentleman yields
back.
I now recognize Mr. Vargas of California for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman.
It is great to see you, great to see my colleagues, and
great to have these wonderful panelists. Again, thank you very
much for holding this hearing.
First of all, as you know, here in San Diego we have been
hit hard because of COVID-19. So much of our industry relies on
tourism, and tourism, of course, has been one of the industries
that has been hit very, very hard. So, again, we have a lot of
people who have been relying on these stimulus checks and
unemployment insurance, and that is going to run out, as we
said earlier. So I think that there is going to be a coming
crisis here in San Diego. And as was stated earlier, I think it
depends on how quickly the economy will recover. I think the
economy will not recover as quickly as some people think,
especially in the tourist industry, because of the fear of
COVID-19.
I do have to say one thing, though, and it sticks in my
craw every time. I keep hearing about these high-cost areas and
how some people from some States say, why do we spend so much
on a high-cost area? So I would like to remind everyone that
California gives more money to the Federal Government than any
other State, and that doesn't come back to us; we are a donor
State, not a receiving State. Some of these people from the
receiving States love to throw rocks. But I look at how much
money they receive compared to California, and I say, ``Take a
look at the facts next time before you start throwing rocks,
please.''
I do want to talk a little bit about corporate landlords
versus mom-and-pop landlords and just go for that for a second
because the reality is that corporate landlords, I think, are
better capitalized to be able to withstand some of these
problems, I think, that are coming, that are already here and
going to be coming as a tsunami, versus mom and pop. What can
mom-and-pop landlords do when a lot of their tenants are not
going to be able pay the rent? Would someone like to comment on
that, please?
Mr. Kingsella. Yes, sure. I am happy to start. Congressman
Vargas, I think you bring up a very excellent point with regard
to our landlords because, as Ms. Schuetz said in her testimony,
smaller landlords, smaller property owners disproportionately
provide housing to those on the front lines who are most at
risk of being impacted by COVID. You also have the least
wherewithal that withstands shocks, such as many landlords are
experiencing.
We spoke to a small landlord in Washington State, the first
in the county, who takes naturally occurring affordable housing
and preserves it as affordable. And she reported that
delinquency of rent as of April 9th was 4 percent across her
portfolio, 12 percent as of May 9th across her portfolio, and
32 percent as of June 9th across her portfolio.
So anecdotal data points are suggesting that the smaller
landlords not only have the least wherewithal to withstand this
challenge but are also disproportionately experiencing the
brunt of the crisis of nonpayment of rent.
I would also just add that, from a municipal perspective, I
know that there have been a number of questions about the
ability for the $100 billion of emergency rental assistance to
move through the ESG system. I think it is actually quite
exciting to see the number of cities, including San Diego, that
have established local rental assistance programs to respond to
the need. The challenge is, as many of us know, that the
resource isn't there to serve the need. We spoke to the City of
Tacoma, Washington, and they reported that they received over
700 applications the day that they opened up their rental
assistance program. And it has become a lottery system. The
communities, municipalities, even States, don't have adequate
resources to provide funding for those folks impacted by COVID-
19.
And I just say that to say that, yes, we fully agree with
your point with regard to smaller landlords bearing the brunt
and want to amplify the fact that there are limited, scarce
resources available to insure and protect those landlords from
potential financial challenges here in the coming months.
Mr. Vargas. Again, I would like to--if someone else wants
to comment on that. Because the truth of the matter is--I know
in my own district, we have a number of people who have worked
very, very hard to create a few units, and that is what they
rely on for their retirement. And they are not well-prepared to
weather this storm if it continues to go on. As I said, a lot
of people have been able to pay their rent because of
unemployment insurance, because of the stimulus checks, but
they are going to run out.
If we don't have the assistance, then what are these small
landlords going to do? And they rely on this money for
retirement. How can we help them? Would anyone else on the
panel like to comment on that?
Ms. Schuetz. Sure. I will just say quickly that I think it
is worth considering some funds that landlords can apply for to
help supplement their expenses and cover the cost of this. And
particularly for mom-and-pop landlords, we want the hurdle for
applying to be relatively low. Complicated programs are a
deterrent even to requesting health. The big corporate
landlords have attorneys and have accountants, so they can fill
out applications for things. But for mom-and-pops, if we want
to get funding to them, we need to make this pretty accessible.
Ms. Oliva. I would totally agree with that, and I would
also just add that we need to make sure communities who receive
these funds are doing outreach specifically to these small
landlords so that they can make sure that anybody who is one of
their tenants who is behind in rent is accessing this resource
to get them whole.
Chairman Clay. The gentleman from California's time has
expired.
I now recognize the gentleman from Florida, Mr. Lawson.
Mr. Lawson. This question is to Ms. Oliva. Concerns have
been raised that the Emergency Rental Assistance and Rental
Market Stabilization Act that was included in the HEROES Act
would not provide rental assistance to the higher-income people
who lost their job due to the COVID-19 pandemic. It says their
former income would be too high to qualify for the program.
Could you please explain how these people would be qualified
under the program?
Ms. Oliva. I would be happy to. Thank you for that
question, because I think it is an important one. The program
as passed in the HEROES Act actually contemplates exactly that
scenario in a couple of different ways. It does target a
certain amount of the funding to people who are extremely-low-
income and very-low-income. And then, it actually allows
communities the flexibility to go up to about 120 percent of
area median income with 30 percent of the funds, if I remember
correctly. But it also makes a change and makes a very specific
change to how eligibility is determined at the point of
application per assistance. And that means that really it is
taking into account only the income that is happening right now
for a household to make them eligible for assistance. So
households who have lost income that might have been higher
income in the past and have lost income as a result of the
economic impact of COVID-19 would--as long as they meet one of
those income requirements 30 percent, 50 percent, or up to 80
to 120 percent, then they would be eligible for these
resources.
So, it is actually specifically contemplated and addressed
in the HEROES Act.
Mr. Lawson. Okay. I am trying to wrap my head around that.
I am trying to understand it a little bit better. But the
individuals that I am talking to really feel like when they
read the program, they were left out. And so I am trying--I
have to give them some assurance based on what you are telling
me. And maybe I need to read some more, that according to what
you are saying is that it is going to be up.
And maybe the chairwoman might want to comment on that
because that is a big concern that I have in an area--in two
areas, in Tallahassee and in Jacksonville--they are not
systematically left out of the HEROES plan. Am I correct?
Ms. Oliva. If they are at income levels between zero up to,
in some cases, 120 percent of area median income, they can be
served through the Emergency Rental Assistance Program in the
HEROES Act, but with the caveat that there are specific types
of targeting that are also worked into the Act to ensure that
people with the highest need are prioritized.
Mr. Lawson. So you are saying a hundred and some percent--
let's say $150,000 for a family or for an individual?
Ms. Oliva. Area median income is for the household.
Mr. Lawson. Okay. So, in most cases, many don't fall into
that category.
Ms. Oliva. If they lost income due to the effects of COVID-
19, they very well could fall into that category. Because the
way that eligibility is determined based on the way that the
law is written, it is based on their income at the time that
they are applying for assistance. It looks like maybe Mr.
Kingsella also has some thoughts on this.
Mr. Lawson. Okay.
Mr. Kingsella. Absolutely. Thank you, Congressman Lawson,
and Ann, thank you. That is absolutely right. That was a major
point of discussion with a number of stakeholders on the
conversations around this policy. And we were very pleased to
give confirmation from the authors that the testing is as of
the time of application, not some trailing period of months. So
if you are a household that, let's say, 150 percent of area
median income, you lose 50 percent of your income, you are now
cost-burdened, you have the opportunity to apply for and
receive an emergency rental assistance voucher.
Mr. Lawson. Okay. I am hoping I can get this in. I have a
lot of student housing here. And many of the owners of these
complexes are saying that they are pretty much left out because
with the loans and stuff that they have, that they are not
allowed to seek other resources in order to provide for the
management of their loans because it is the type of loan they
signed up for. And that becomes a problem because you have a
lot of complexes here that house students, and these students
are not in these complexes. So, they are suffering from paying
their mortgages.
Have you done anything in that regard, that anyone can
comment on?
Ms. Oliva. I would just note that the Emergency Rental
Assistance Programs and the other programs that are included in
the HEROES Act are really about supporting the individual
household. I could be wrong, but I don't think that the
underlying financial sort of setup for the building as a whole
would make any of those people or households ineligible for
funding as long as they meet the requirements.
Chairman Clay. The gentleman from Florida's time has
expired.
I now recognize the gentlewoman from Michigan, Ms. Tlaib,
for 5 minutes.
Ms. Tlaib. Thank you, Mr. Chairman. It is always so good to
see you. And thank you so much for this hearing on an
incredibly important issue. As someone who represents a very
much front-line community in the third ward district, I have
seen my folks really enduring this pandemic.
Talking about what is in the HEROES Act, I do want to
uplift something that I think is really critically important.
The moratorium for--in the State of Michigan, we have a
separate moratorium that is actually over on Friday. And one of
the things I have been really stressing about, just for the
panel to know is, I know the moratoriums are just Band-Aids,
and that after they are done, all of it, from the student loans
to the mortgages to the water payments, all of those things
that were moratoriums are now going to be due.
My issue is, we are always specifically saying, okay, we
are going to do something about utility shutoffs, like water
shutoffs in my district. We are going to specifically do
something about renters' help. Why aren't we looking at the
fact that most of our neighbors across the country are not as
blessed as many of my colleagues and I. They are very much
living paycheck-to-paycheck. Why aren't we talking about
recurring payments? Meaning, I have the Automatic BOOST to
Communities Act where we say: Look, we are going to have
precharged debit cards given out to people during this pandemic
because again, many of them were in survivor mode before the
pandemic.
And now we are asking them: Hey, hold off, you don't have
to pay rent now. But, yes, in a few months, all of the rent
will be due at the same time.
So I want to hear from you, especially Dr. Jenny Schuetz,
you had mentioned about the stimulus. And I want to hear from
you as you work with advocates on the ground, does a recurring
payment, do stimulus payments help address the issue around
rent?
Ms. Schuetz. Thanks for that question. A number of my
colleagues at Brookings have actually written a year ago--it is
very prescient now--an argument that we should have automatic
stabilizers that are tied to things like the national
unemployment rate. So that, rather than Congress having to
decide on these on a case-by-case basis, that assistance
directly to households, or potentially to local governments,
that those are tied to these national markers of economic
assistance. And you could do that. You could even do something
that is tied to sort of local rates. The local unemployment
rate, when that goes above some level, that payments to
households directly kick in until the unemployment rate goes
lower. So, there are some very strong arguments to doing that.
Then, the number of payments that have to be made would be
determined by how quickly the economy recovers.
Ms. Tlaib. Do you have any insight, Ms. Oliva or Ms. Hill
or Mr. Kingsella, when you talk to advocates, are they pushing
this idea around, recurring payments as addressing some of
these social needs that existed prior to the pandemic, but
obviously has been heightened due to it?
Ms. Hill. I would say, absolutely. Working in communities
throughout the State of Louisiana, one of the things that is
very clear to me is that Louisiana is going to continue to feel
the effects of the COVID-19 pandemic for years to come.
We know that, in the New Orleans area, in particular, our
economy really heavily depends on tourism and hospitality jobs.
And so, the concern that we have and that our clients have is
that while stimulus and the unemployment insurance has been
helpful, we know that folks are now being asked to return to
work in what is traditionally the slowest time for those
industries. And so, they are now going back to work, and our
moratorium here ends on June 15th. So we are concerned that
people are going to have to catch up on the rent that they
missed during the moratorium.
Ms. Tlaib. Ms. Hill, do you think recurring payments is
something that needs to be really leading this conversation
about how we address some of these issues?
Ms. Hill. Absolutely, because the nature of our lives means
that we don't just incur one-time costs. Rent, bills, those
things occur on an ongoing basis. The stimulus and the
unemployment money has been very helpful. But in order to help
people to continue to recover from this, ongoing payments are
certainly incredibly important.
Ms. Tlaib. Any other panelists who would like to chime in?
Mr. Kingsella. I think the Emergency Rental Assistance Act
clearly provides--one of the bright spots of it is, it provides
both the catching up on rent arrearages as well as future
rental payment needs.
Ms. Tlaib. Thank you so much. Thank you to the chairman. I
just want you all to know, it is not only rent; it is
utilities, it is water. That is why you have to give people
human dignity, and give them the resources that they need and
let them choose what is the priority for their families so they
can be able to live with the quality of life and humanely.
Thank you so much, Mr. Chairman.
Chairman Clay. Thank you, Ms. Tlaib.
And the gentlewoman from Michigan yields back.
I now recognize the gentlewoman from Iowa, Mrs. Axne, for 5
minutes.
Mrs. Axne. Thank you, Mr. Chairman. It is great to see your
face, and I would like to thank the witnesses for being here.
I'm glad we could make this happen.
I want to get right to it. In the most recent survey from
the Census Bureau, more than 30 percent of Americans had very
little confidence that they would be able to pay their next
month's rent. Those, of course, are folks with overwhelmingly
lower incomes and, in fact, in my State of Iowa, every one of
these renters makes less than $50,000.
We worked on the CARES Act and we did create the eviction
moratorium to protect those renters in federally-backed
properties, and I know that most States have put in broader
prohibitions on evictions to keep people in their homes over
the last couple of months, but as Representative Tlaib just
mentioned, and in States like Iowa, people still owe their
rent, and some of these moratoriums have expired. Mine here in
Iowa expired 2 weeks ago.
Ms. Oliva. I know that 70 percent of homeowners with
mortgages backed by Fannie Mae or Freddie Mac have been
provided financial assistance by giving forbearance and
allowing them to delay payments until the end of their
mortgage. I know we have covered this a bit so far today, but
just to confirm, have we done anything similarly broad to help
renters stay in their homes during this crisis?
Ms. Oliva. No. We don't have a specific package for renters
in this crisis in the same way yet, which is why we are so
excited about what is included in the HEROES Act, because it
provides short-term, medium-term, and long-term options that
can really be used together at the local level to address needs
for people who are experiencing homelessness all the way
through eviction prevention.
So, that is why we are so excited about this law.
Mrs. Axne. Very good. Thank you and, of course, I want to
thank Mr. Heck and Chairwoman Waters for their leadership in
introducing the bill to provide the hundred billion dollars of
emergency rental assistance. I am very proud to cosponsor that.
But given that homeowners typically have higher incomes and
more ability to absorb hits during downturns like this, do you
worry that leaving renters, who are most likely to have lost
income during this crisis, much more so than probably
homeowners--do you worry that leaving them out of assistance
could worsen the income and wealth inequity during this crisis?
Ms. Oliva?
Ms. Oliva. Oh, my apologies. I'm sorry. I wasn't sure that
was for me.
Yes, of course, we are, because we know that people at zero
to 30 percent of area median income are the people who
experience homelessness the most. We know that folks who are
extremely-low-income and very-low-income will have trouble
paying their rent. And that we have this potential cliff
coming, as you have mentioned and others have mentioned, where
there are arrears that have to be paid, and a one-time stimulus
check is not enough to pay those arrears.
So, emergency rental assistance and some long-term options
for folks who need that is really important so that we are not
increasing the gap that already exists, and it is also why we
need to take a racial justice and equity approach as we design
these programs at the State and local levels so that we are
paying attention to how race and ethnicity plays into those
gaps. And you can see some of the details on that in my written
testimony.
Mrs. Axne. Thank you, and thank you for bringing that up,
because I was going to say I would be remiss if I didn't
mention the impact that the current policy would have on the
racial wealth gap that we are currently seeing, and we
certainly need to address that structural inequity.
Last thing, the history of redlining and discrimination in
this country has led directly to 74 percent of white households
being homeowners, compared to only 44 percent of Black
households. Ms. Hill, or anyone else, do you think targeting
assistance only to homeowners is likely to further exacerbate
that gap?
Ms. Hill. Absolutely. And we know from our experience here
in Louisiana with disaster recovery work, that that is what has
happened. When we target resources to homeowners, who tend to
be overwhelmingly white, and we leave out renters, who are
disproportionately people of color, then really what we are
doing is just working to perpetuate segregation and inequity.
Mrs. Axne. Thank you for that. We have a long way to go,
and I am so grateful that we are having this conversation as we
look to addressing these systemic issues across this country. I
appreciate all of your support and work on this to everybody
who is here today, so thank you so much.
And I yield back.
Chairman Clay. The gentlewoman from Iowa yields back, and
it's so good to see you too, Cindy.
That is the end of the list of Members to ask questions. I
want to recognize the ranking member for 1 minute for closing
remarks.
Mr. Stivers. Thank you, Chairman Clay, for holding this
hearing. It has been very informative, and even as we are
seeing our economies open up in most States, it is clear that
there are millions of Americans going through very difficult
times.
Our witnesses have provided some very helpful insights that
should inform our thinking moving forward and, as I said
earlier, I have an open mind and I look forward to working
together with both Republicans and Democrats to find solutions
as we move forward.
We may have some disagreements on some specific form or
substance of the policy response, but I stand ready to partner
with the chairman and with Democrats and Republicans to try to
make sure we can keep people in their homes and give people
stable housing as we move forward.
Thank you, and I yield back. Thanks for doing this hearing,
Mr. Chairman.
Chairman Clay. Thank you so much, Mr. Stivers. And I look
forward to working with you and all of the members of the
subcommittee in a bipartisan fashion to address some of the
most basic needs that our constituents' and the citizens of
this country face, and one of them is housing, and a roof over
their head. So, we will move expeditiously in that manner.
I would like to thank our witnesses for your testimony
today, too. I found your insights to be invaluable and we will
certainly use them as guidance as we move forward and consider
legislation.
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.
This hearing is now adjourned. Thank you.
Mr. Stivers. Mr. Chairman, have a great day.
Chairman Clay. You, too. Take care, Steve.
[Whereupon, at 2:06 p.m., the hearing was adjourned.]
A P P E N D I X
June 10, 2020
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