[Senate Hearing 116-]
[From the U.S. Government Publishing Office]
TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2020
----------
WEDNESDAY, APRIL 3, 2019
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 12:58 p.m., in room SD-192, Dirksen
Senate Office Building, Hon. Susan Collins (chairman)
presiding.
Present: Senators Collins, Boozman, Capito, Hoeven, Reed,
Durbin, Coons, and Murphy.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
STATEMENT OF HON. BEN CARSON, SECRETARY
opening statement of senator susan m. collins
Senator Collins. The hearing will come to order. Today I am
pleased to welcome the Secretary of Housing and Urban
Development, Dr. Ben Carson, who will testify on the
President's fiscal year 2020 budget request. I am also very
pleased to be joined by my good friends and the ranking member,
Senator Jack Reed, the deputy leader on the Democratic side,
Senator Dick Durbin, and I am sure others will be joining us as
well.
Because of issues on the floor, we have moved up this
hearing to 1:00, and I want to thank the Secretary for
accommodating a last-minute change in the schedule. In light of
the time constraints that we have, I am going to greatly
shorten my opening statement. I am sure that will come as a
great disappointment to everybody here, but I would ask
unanimous consent that my statement be printed in the record in
full.
Thanks to the previous 2-year budget agreement, we were
able to provide $54 billion for the Department of Housing and
Urban Development in the fiscal year 2019 appropriations bill.
The Administration's fiscal year 2020 request for HUD does not
address this cap and highlights why we cannot return to
sequestration funding levels.
The request, excluding FHA and Ginnie Mae receipts, is
$44.1 billion, a reduction that is 18 percent below the fiscal
year 2019 enacted level. It includes provisions that were
rejected as part of our deliberations last year, and I predict
that many of the same program eliminations and other cost-
shifting gimmicks will once again be rejected. The request,
again, reflects a significant realignment of the Federal role
in housing and community development.
Just a few of the programs eliminated in the
Administration's budget include the Community Development Block
Grant, the HOME Program, VASH, the Family Unification vouchers,
Youth Homelessness grants, the Public Housing Capital Fund, and
the Choice Neighborhoods initiatives. Two of the programs that
the Administration has once again requested to eliminate--CDBG
and HOME--are specifically designed to leverage other funding
sources to further locally-driven priorities.
Community Development Block Grants provide very flexible
funding for critical water and sewer improvements, public
services for seniors, revitalization of distressed downtowns,
and countless other worthwhile projects that serve low- and
moderate-income communities. This essential resource for State
and local governments lies at the heart of HUD's community
development mission.
Low-income households face an affordable housing shortage
across this country, and in many locations that shortage is
reaching crisis levels. That is why I am concerned about some
of the changes included in this budget. Moderate-income
families are being hurt also by a shortage of affordable
housing. The very people who make our communities thrive--the
schoolteachers, the firefighters, the police officers, the
nurses--find that they can no longer afford to live in the
communities they serve. And yet the Administration's proposal
eliminates both the Housing Trust Fund and the HOME Program.
The budget request also proposes steep cuts to HUD's Rental
Assistance Program. It assumes the enactment of proposals to
shift the cost of rental assistance more and more to already-
struggling working families, proposals that were soundly
rejected last year. The Administration's request does not
include funding for new HUD VASH vouchers. These vouchers have
been critical in reducing veterans' homelessness by 49 percent
since 2010.
While I am deeply troubled by many of the Administration's
proposals, I also note that there are areas where HUD and this
committee share common goals. A priority that we share is the
elimination of the risk of lead paint exposure for children.
Reducing lead paint exposure has been a priority of mine and of
Senator Reed's since we joined this committee, and I fully know
that the Secretary shares this commitment as well. His
background makes him uniquely qualified to understand not only
the need to reduce lead paint exposure, but also the long-term
consequences of failing to act.
That is one reason why I was so pleased that Secretary
Carson recently came to Lewiston, Maine to see how HUD's Lead
Hazard Mitigation Grants along with programs like Choice
Neighborhoods and CDBG are changing lives, improving the health
of our children and transforming neighborhoods. And I want to
commend the Secretary for the Department's request of a record
high $290 million for the Office of Lead Hazard Control, an
increase of $11 million more than the fiscal year enacted
level. That is a welcome bright spot in this budget.
Mr. Secretary, I look forward to hearing from you, and I
now turn to Senator Reed for his opening remarks.
opening statement of senator jack reed
Senator Reed. Thank you very much, Chairman Collins. And I
will try to abridge my statement, so I would request the entire
statement be made part of the record.
Senator Collins. Without objection.
Senator Reed. We have had the pleasure of working together
many years, and through your leadership, in spite of difficult
and challenging budgetary climates, you have been able to
advance the Nation's transportation and housing infrastructure,
and I appreciate your leadership. And thank you for it, Madam
Chairman.
Let me welcome Secretary Carson. Mr. Secretary, thank you
for being here today.
Since the passage of the bipartisan Budget Control Act of
2018, we have provided nearly $15 billion for housing and
related infrastructure programs, including $2.6 billion in new
resources for affordable housing construction for the HOME
program, $6.6 billion for the popular bipartisan Community
Development Block Grant, or CDBG, Program, and more than $5.5
billion for capital reinvestment in our Nation's public housing
stock. These combined investments get us closer to the goal of
providing safe, decent affordable housing for our country's
most economically vulnerable.
And as I mentioned in our hearing last week with Secretary
Chao, we face yet another year where we are constrained by the
caps established in the Budget Control Act, which makes our job
of achieving these goals that much harder. We have to work
across the aisle to get commonsense relief from these arbitrary
one-size-fits-all spending limits.
Today you are here, Mr. Secretary, to discuss the fiscal
year 2020 budget request for the Department of Housing and
Urban Development. As with the prior two budget requests, the
Administration makes minimal investment to preserve our
Nation's affordable housing and ensure protections for more
than 5 million low-income households served through HUD's
Rental Assistance Program, and the additional 550,000
individuals experiencing homelessness.
The Administration's budget request for HUD is $44 billion,
an astounding $9.7 billion cut in discretionary funding from
fiscal year 2019. Much of this decrease is the result of a
flawed attempt to shift existing public housing units to the
private sector. The budget request incentivizes public housing
agencies to demolish this much-needed affordable housing
without a requirement to rebuild or replace. Any proposal that
exacerbates our affordable housing crisis is, I believe, a
nonstarter.
These unrealistically harsh funding levels are also
accomplished by eliminating the very same programs local
governments leverage to meet their unique housing and local
infrastructure needs, the CDBG and the HOME Program. This
budget also reflects a less than healthy FHA Fund and a
shrinking share of Ginnie Mae receipts and collections, both of
which are fundamental to the funding of HUD's core mission
programs. This is particularly concerning in light of the fact
that the Administration announced last week its intention to
pursue housing finance reform, which will require your Agency
to submit a plan to reform the critical role played by FHA and
Ginnie Mae and helping our neighbors, including veterans and
farmers, to responsibly own their homes.
While the Administration claims that sustainable home
ownership is the benchmark of success for comprehensive reform
to government housing programs, questionable FHA and Ginnie Mae
projections appear to suggest that even these hopeful words may
ring hollow, and I hope this is not the case. At a minimum,
housing finance reform must responsibly meet the needs of
working families, small lenders, consumers, and the civil
rights communities while also ensuring that FHA and Ginnie Mae
responsibly continue to support HUD's ability to meet its core
mission in both the rental and home ownership markets.
While I am pleased that the budget includes a modest amount
to sustain the funding for homeless assistance through the
Continuum of Care Program, it unfortunately decreases targeted
resources for Emergency Solution Grants and overlooks necessary
investments for youth and veterans experiencing homelessness as
well as victims of domestic violence. Instead it continues to
impose rent reforms and proposes to institute mandatory work
requirements for workable households. These rent reforms have
been proposed and rejected by the authorizing committees
multiple times. Further, work requirements are proven to be
costly and ineffective.
Overall, what we have in front of us today is a request
that I believe lacks the necessary compassion and true
understanding of the needs of the country. This budget cuts
corners to reduce the footprint of affordable housing. It
compromises the fiscal condition and safety of our existing
housing stock, and it places unreasonable financial burdens on
the already working poor.
Mr. Secretary, you are here today to help us understand
this request and how it might actually further HUD's missions
without reversing the strategic priorities we have been able to
make through our work on this subcommittee and through the
chairman's leadership. I look forward to hearing your
testimony, and I thank you, Chairman Collins.
Senator Collins. Thank you very much. Mr. Secretary, we are
delighted to have you here today and ask that you proceed with
your testimony.
summary statement of hon. dr. ben carson
Secretary Carson. Thank you. Chairwoman Collins, and
Ranking Member Reed, and members of the subcommittee, thank you
for the opportunity to appear before you today to discuss the
President's proposed 2020 budget.
This spending plan seeks $44.1 billion, which is an
increase of 7 percent over last year's request. It also seeks a
record amount of funding to reduce lead-based paint hazards and
other health and safety hazards. This budget will continue
providing support for the nearly 5 million families HUD serves
through its rental assistance programs. In short, this budget
will support HUD's combined efforts to provide safe, decent,
and affordable housing for the American people while being good
stewards of taxpayers' dollars. I would like to touch upon each
of these areas individually.
This Administration is requesting nearly $2.6 billion to
help local communities house and serve individuals and families
who are living in shelters and on the streets. This represents
an increase of nearly 3-and-a-half percent over last year's
level. In my time in Washington, I have learned that this is
one area in which we can all agree. Preventing and ending
homelessness remains a strategic goal of this Administration,
and working with our local partners, we are seeing a positive
and measurable impact.
HUD's fiscal year 2020 budget includes a request for $290
million for the Office of Lead Hazard Control and Healthy
Homes. This doubles the investment this Administration sought
last year and is $60 million higher than the funding enacted in
fiscal year 2018. As a doctor, it pained me that after treating
young children, sometimes you have to return them to a home
that was not healthy. Quite simply, you cannot be healthy if
your home is sick.
This undeniable link between health and housing is also
driving an active campaign at HUD to overhaul a 20-year-old
inspection process. HUD will now provide advanced notice of
just 14 days before an inspection because it became clear to us
that too many PHAs and landlords were using the weeks and, in
some cases, months before their inspection to make quick fixes
and game the system. These actions are part of a top-to-bottom
review of our inspections so we can be true to the promise of
providing housing that is decent, safe, and healthy to millions
of families that we serve.
Just last week we instructed HUD inspectors to begin
evaluating all public housing and privately-owned multifamily
properties under contract with HUD for the presence of a
working carbon monoxide detector. Additionally, in the coming
weeks, HUD will send notices to PHAs and multifamily owners
regarding the installation of carbon monoxide detectors. We
continue to pursue every possible way to ensure detectors are
present in units that need them.
Across our rental assistance programs, HUD has requested
sufficient funding to ensure that all currently-served
households continue to receive assistance. The Administration's
budget continues the support for 4.7 million HUD-assisted
households by increasing rental assistance to $38 billion. This
request will allow HUD to maintain rent subsidies for our
primary housing programs, including our tenant and project-
based Section 8 Program. The budget also proposes $644 million
for the Section 202 Program to support the rents of the
elderly. In addition, the request includes $157 million for the
Section 811 Program for persons with disabilities.
While we are here to talk about the Administration's
funding request, I would like to point out that not every
challenge can simply be solved by more financial resources. One
of my priorities as Secretary is to work with our Federal,
State, local, and tribal partners on identifying and
eliminating regulatory barriers that unnecessarily increase the
cost of America's housing supply. Despite low unemployment and
strong economic growth, we face stiff headwinds in our effort
to increase access to affordable housing. This crisis is not a
Federal problem. It is everybody's problem.
The Nation's public housing stock is experiencing a backlog
of billions of dollars in capital needs. Our budget, again,
proposes to merge the Public Housing Capital Fund and Operating
Fund to give greater flexibility to PHAs to pay for capital
improvements. Meanwhile, the budget expands HUD's rental
assistance demonstration. HUD is specifically requesting $100
million in dedicated funding for the RAD Program and that the
statutory cap on converting units be eliminated once and for
all. To date, RAD has placed more than 100,000 units of public
housing on a more sustainable funding platform. These are
affordable housing units that would have been lost forever
without RAD.
To support HUD's fair housing mission, the budget proposes
$62.3 million to allow us to continue fighting housing
discrimination and creates awareness of people's rights and
enhance economic opportunity. Advancing economic opportunity
for all is perhaps the fairest thing we can do. I am proud to
chair the White House Opportunity and Revitalization Council to
help breathe new life into long-forgotten corners of our
country. While we can be very proud of the economic growth we
are experiencing, there are still communities that have seen
little or no investment for generations.
It is our intent to support over 8,700 opportunity zones
across the Nation, economically-distressed places that
approximately 35 million Americans call home. We estimate these
opportunity zones will attract over $100 billion in private
investment to spur economic development and create jobs. This
kind of medicine is precisely what a doctor would prescribe to
heal communities where too many live in poverty.
To conclude, this budget advances our key priorities,
including empowering HUD-assisted families to achieve self-
sufficiency. For generations, the ideal of the Federal
government providing housing assistance meant only one thing:
helping to pay the rent so families could have a roof over
their head. However, we must also think about how we can help
families access financial programs, educational opportunities,
and higher-paying jobs. In short, we must think beyond
investing in bricks and mortar and think about investing in
people. This budget does just that, and I look forward to your
questions.
[The statement follows:]
Prepared Statement of Hon. Dr. Ben Carson
Chairwoman Collins, Ranking Member Reed, and members of the
Subcommittee, thank you for the opportunity to appear before you today
to discuss the President's proposed fiscal year 2020 Department of
Housing and Urban Development (HUD) Budget.
This spending plan seeks $44.1 billion, an increase of 7 percent
over last year's request.
The proposed fiscal year 2020 Budget also seeks a record amount of
funding to reduce lead-based paint hazards and other home health and
safety hazards.
And this Budget will continue providing support for the nearly five
million families HUD is currently serving through the Department's
rental assistance programs.
In short, this Budget will support HUD's combined efforts to
provide safe, decent, and affordable housing for the American people,
while being good stewards of taxpayer dollars.
I would like to touch upon each of these areas individually.
ending homelessness
This Administration is requesting nearly $2.6 billion to help local
communities house and serve individuals and families who are living in
their shelters and on their streets. This represents an increase of
nearly three and a half percent over the amount enacted for fiscal year
2018.
In my time in Washington, I have learned this is one area on which
we can all agree. Preventing and ending homelessness remains a
strategic goal of this Administration and, working with our local
partners, we are seeing a positive and measurable impact.
The data being reported to us from thousands of big cities and
small towns alike tell us our collective efforts are working. Since
2010, we have cut Veteran homelessness in this country by half. Family
homelessness is also on the decline, falling nearly 30 percent during
this same period.
This progress is happening because HUD's homeless assistance
programs, and the contributions from state and local governments, are
being targeted to proven programs and strategies. Our Budget request
further supports these local efforts.
promoting healthy homes
HUD's fiscal year 2020 Budget includes a request for $290 million
for the Department's Office of Lead Hazard Control and Healthy Homes.
This request doubles the investment this Administration sought last
year and is $60 million higher than the funding enacted in fiscal year
2018.
We stopped putting lead in paint back in 1978 yet more than 20
million older homes still contain lead-based paint hazards. Amazingly,
though lead poisoning is a preventable disease, we continue to see far
too many children exposed to lead.
As a doctor myself, it pained me that after treating a young child,
they returned to a home that was not healthy. Quite simply, you cannot
be healthy if your home is sick.
This undeniable link between health and housing is also driving an
active campaign at HUD to overhaul the inspection process that the
Department has been using for more than 20 years.
HUD is dramatically reducing the advance notice we provide to
public housing authorities and private owners of HUD-subsidized
apartment developments before our inspections. We will now provide
advance notice of just 14 calendar days before an inspection--a
dramatic reduction from the current notice, which can frequently extend
up to 4 months.
It became painfully clear to us that too many public housing
authorities and private landlords whom we contract with were using the
weeks, in many cases months, before their inspection to make quick
fixes, essentially gaming the system.
HUD also launched a series of listening sessions around the nation
to gather input about a planned pilot program to test innovative new
approaches to inspecting HUD-assisted properties.
These actions are part of a broader, top-to-bottom review of our
inspections so we can be true to the promise of providing housing
that's decent, safe and healthy to the millions of families we serve.
As a general rule, HUD doesn't inspect properties based upon local
codes. But just last week, we instructed HUD inspectors to begin
evaluating all public housing and privately-owned multifamily
properties under contract with HUD for the presence of a working carbon
monoxide detector. Additionally, in the coming weeks, HUD will send
notices to PHAs and multifamily owners to encourage them to install
carbon monoxide detectors.
We continue to pursue every possible way we can ensure detectors
are present in units that need them. This is literally a life and death
issue. Ultimately, we want to effectuate change in the most expedient
and efficient way possible and are using every lever at our disposal.
continuing rental assistance
Across our rental assistance programs, HUD has requested sufficient
funding to ensure that all currently served households can continue to
receive assistance, without any evictions.
The Administration's Budget continues support for 4.7 million HUD-
assisted households by increasing rental assistance to $38 billion.
This request will allow HUD to maintain rent subsidies through our
primary housing programs, including our tenant- and project-based
Section 8 programs.
The Budget also proposes $644 million for the Section 202 program
to support the rents of the elderly. In addition, the request includes
$157 million for the Section 811 program for persons with disabilities.
These requested amounts represent funding increases of 7 percent and 12
percent, respectively, over last year's proposed budget.
While we are here to talk about the Administration's funding
request, I would like to point out that not every challenge can simply
be solved with more financial resources. One of my priorities as
Secretary is to work with our Federal, state, local, and tribal
partners on identifying and eliminating regulatory barriers that
unnecessarily increase the cost of America's housing supply in general
and affordable housing supply in particular. These barriers increase
the cost to HUD of operating its rental assistance programs in many
markets.
pursuing rent reform
The Administration's fiscal year 2020 Budget incorporates proposed
reforms to HUD's current rent structure, including incorporating the
Administration's uniform work requirements. These reforms will:
--Require work for those who are able to work;
--Reduce the administrative burden for housing authorities and
residents alike; and
--Allow greater flexibility to create local solutions to local
challenges.
It is increasingly clear that the way we subsidize families in this
country is broken. In fact, the way we calculate a family's rent has
not changed since President Reagan was in office. We invite Congress to
engage in a dialogue with HUD to find common ground on the package of
reforms in the Making Affordable Housing Work Act that the Department
submitted last April.
supporting affordable housing
Despite low unemployment and strong economic growth, we face stiff
headwinds in our effort to increase access to affordable housing. The
President's Budget provides the tools we need to bring everybody to the
table to ease the affordability crisis in many parts of our country.
This crisis is not a Federal problem, it is everybody's problem.
The nation's public housing stock is experiencing a backlog of
billions of dollars in capital needs. This results in the loss of
thousands of units each year due to severe disrepair. The Budget again
proposes to merge the Public Housing Capital Fund and the Public
Housing Operating Fund and to give greater flexibilities to Public
Housing Authorities to pay for these capital improvements.
Meanwhile, the Budget expands HUD's Rental Assistance Demonstration
(RAD), allowing greater capital investment into deteriorating public
housing. HUD is specifically requesting $100 million in dedicated
funding for the RAD program and is requesting that the statutory cap on
converting units, currently set at 455,000, be eliminated once and for
all. RAD is proving itself to be an outstanding example of bringing the
public and the private sectors together to accomplish amazing results.
To date, RAD has placed more than one hundred thousand units of
public housing on a more sustainable funding platform. These are
affordable housing units we may have lost forever if not for RAD. And
these are affordable housing units that will remain affordable.
federal housing administration (fha)
Since its creation during the Great Depression, the FHA has been
instrumental in supporting homeownership in this country. The
President's Budget continues this support by requesting $400 billion in
single-family loan guarantee authority, as well as $150 million for FHA
administrative contract expenses, including critically needed funding
to improve FHA's aging technology systems.
FHA's most recent annual report finds that the agency's Mutual
Mortgage Insurance (MMI) Fund is sound. The MMI Fund has a total
economic value of nearly $35 billion and capital ratio above the
statutory minimum for a fourth consecutive year. FHA will remain
vigilant and continue to monitor economic trends in the housing market
to ensure taxpayers are protected.
We propose $30 billion in loan guarantee authority for FHA's
General and Special Risk Insurance programs, including programs that
insure financing for multifamily housing and healthcare facilities. And
we propose $550 billion in loan guarantee authority for Ginnie Mae to
continue supporting the secondary market for federally-insured loans.
fair housing and economic opportunity
To support HUD's fair housing mission, the Budget proposes $62.3
million that will allow us to continue fighting housing discrimination,
increase awareness of people's rights, and enhance economic
opportunity.
Advancing economic opportunity for all is perhaps the fairest thing
we can do. I'm proud to chair the White House Opportunity and
Revitalization Council to help breathe new life into long-forgotten
corners of our country. While we can be very proud of the economic
growth we're experiencing, there are still communities that have seen
little or no new investment in generations.
It is our intent to support over 8,700 Opportunity Zones across the
nation-- economically distressed places that approximately 35 million
Americans call home. We estimate these Opportunity Zones will attract
over $100 billion in private investment to spur economic development
and create jobs. This kind of medicine is precisely what a doctor would
prescribe to heal communities where too many now live in poverty.
Too often, new investments into distressed communities are here
today, gone tomorrow. Opportunity Zones ensure that development and
capital investment are available for the long-term.
eliminating/reducing ineffective programs
The Administration continues to propose eliminating the Community
Development Block Grant program, the HOME Investment Partnerships
Program, the Housing Trust Fund, the Choice Neighborhoods Initiative,
and the Self-Help Homeownership Opportunity Program. In today's budget
environment, these programs are best supported by state and local
governments.
conclusion
This Budget advances our key priorities, including empowering HUD-
assisted families to achieve self-sufficiency. For generations, the
idea of the Federal government providing housing assistance meant only
one thing--helping to pay the rent so families can have a roof over
their heads.
However, we must also think about how we can help families to
access financial programs, educational opportunities, and higher paying
jobs. In short, we must think beyond investing in bricks and mortar,
and think about investing in people. This Budget does just that.
Again, thank you for this opportunity to present to you the
President's fiscal year 2020 HUD Budget.
I look forward to your questions.
Senator Collins. Thank you, Mr. Secretary. Mr. Secretary, I
am going to start out with the investment that this
subcommittee made in fiscal year 2019 in creating a new Lead
Demonstration Program to fund intensive interventions in
communities with a very high incidence of lead paint. And from
your trip to Lewiston, Maine and from your medical background,
you know just how important that is.
In the State of Maine, 57 percent of the housing stock was
built prior to the year that lead-based paint was banned. It is
one of the highest levels in the country, so remediating
exposure to lead-based paint is a real challenge for a region
like New England. We need to get that funding out as soon as
possible. Could you give us some idea of when we can expect
those funds to be made available?
Secretary Carson. We expect those funds to be made
available by the summer.
Senator Collins. Thank you. That will be very welcome. The
sooner, the better. I want to turn to another issue that is of
great concern to me, and that is at-risk youth who are often
homeless or at risk of becoming homeless. What we know about
this population is that homeless youth are far more likely to
be unsheltered compared to the overall homeless population, so
they are particularly vulnerable.
While only about one-third of all people who are homeless
are actually unsheltered at night, 55 percent of unaccompanied
homeless youth under the age of 18 have no roof over their
heads each night. And of course that puts them at risk of being
trafficked, exposure to drugs, all sorts of bad outcomes. And
it is particularly difficult in rural areas where there are few
services, and that is why our subcommittee created the Youth
Homeless Demonstration Program in 2016 and we increased its
funding.
I am disappointed that the Administration seems to be going
in the opposite direction when it comes to homeless youth
programs. Could you elaborate on the budget request in this
area?
Secretary Carson. Well, first of all, thank you for the
tremendous interest you have shown in this. I remember when I
was there how you interacted with the young people, and it
really meant a lot to them. It means a lot to me, too. And, you
know, the amount of money that we have requested for
homelessness programs $2.6 billion includes youth homelessness
as well. You know, the attempt is really to kind of amalgamate
some of these homelessness programs and to really encourage the
ones that are having really stellar results and using an
evidence-based model for the funding. And so that will include
the youth programs as well.
Senator Collins. Well, I would encourage you to work with
us to make sure that we can preserve an independent revenue
stream that helps our homeless youth whose needs are often very
different from that of the adult homeless population. And as we
saw in Maine in Lewiston, the drop-in centers, the shelters
that exist there are truly changing the lives. Indeed, I would
argue are saving the lives of a lot of these young people.
Secretary Carson. Absolutely.
Senator Collins. And I hope we can work together on that.
Secretary Carson. I will make sure that my staff reaches
out to yours to ensure that there is no diminution for the
youth.
Senator Collins. Thank you. Senator Reed.
Senator Reed. Well, thank you, Madam Chairman. Over a year
ago, Mr. Secretary, Congress provided HUD with nearly $16
billion to help areas that were devastated by disasters between
2015 and 2017, to rebuild their communities to a more resilient
standard of sustainability with essentially mitigation funds.
Fifteen States and localities as well as Puerto Rico and U.S.
Virgin Islands are still waiting on HUD's guidance to develop
their action plans and begin drawing these funds. First, has
the Administration or OMB directed you or any member of your
leadership team at any time to delay or suspend action on the
mitigation funding?
Secretary Carson. No, none at all.
Senator Reed. Thank you. If not, then what is the cause of
this delay in publishing the mitigation notice in the Federal
Register, and when can we expect the publication?
Secretary Carson. Well, we had a government shutdown, but
also with this mitigation money, this is the largest amount of
money that has ever been committed to mitigation, and we want
to make sure we get it right. I do expect that to be done by
May 1st.
Senator Reed. By May 1st. Thank you very much. And as you
know, the intent of this funding was to give the grantees the
ability to rebuild not just what was there before, which would
be destroyed in the next hurricane.
Secretary Carson. Absolutely.
Senator Reed. Which now every 100-year hurricane comes
every 3 years, but to provide the resiliency and the
sustainability that we need.
Secretary Carson. Absolutely.
Senator Reed. And it also affects their strategy going
forward. They have been paralyzed because, and this is not only
for the States, but also for the territories and the
Commonwealth of the Philippines--of Puerto Rico. Are you
concerned that increasing these cost inefficiencies by moving
forward will create more problems, i.e., you have committed to
May 1st. I appreciate that. But have we already sort of caused
undue pain?
Secretary Carson. Well, I will tell you that the May 1st
commitment is 2 months ahead of what we had promised before, so
we are moving things along. I have actually impaneled a task
force at HUD to look at inefficiencies and ways that we can cut
down on timing. There are some areas where we get things done
in a day or two and other areas where it takes months, and I
find that to be unsatisfactory. And I think you are going to
see a big change in that.
Senator Reed. Thank you, Mr. Secretary. I want to also ask
about the disasters that have occurred in 2018 and 2019. We
have not received from the Administration a request yet for
disaster assistance, and these are the major disasters in
portions of North Carolina, South Carolina, Nebraska, Iowa, and
South Dakota. Does the Administration see a need for additional
emergency disaster assistance to those impacted States?
Secretary Carson. I think there probably is going to be a
need for it, and I know that the Senate and the House are
working on a supplement for that. We are hopeful to get that
total amount because it makes it much easier to designate.
Senator Reed. But would it not be appropriate for the White
House to request the money?
Secretary Carson. My understanding is that the money--the
negotiations are already going on.
Senator Reed. No, there are negotiations constantly going
around this body, but is the White House going to stand up and
say we need several billion dollars for Iowa and Nebraska, et
cetera, as is typically done in an emergency?
Secretary Carson. I do not know.
Senator Reed. Well, I would encourage you to encourage the
White House to stand up so we know clearly that these funds are
necessary. The last thing I think we would want to do is
conduct negotiations and discover the White House does not want
these monies spent or thinks they are inappropriate. So I think
that would be important to do, Mr. Secretary.
There is one other just general area. Last year we
discussed your efforts to operationalize the Office of Disaster
Management within your Department, and you sent up a report
last week. Thank you.
Secretary Carson. Yes.
Senator Reed. It appears that there are a number of
challenges that you face. Understandable. So could you just
give us what you believe is the biggest challenge and what
additional resources you might need?
Secretary Carson. Thank you. Obviously it is very important
because we have become much more involved, you know, pre-
disaster during the management and obviously in the post-
disaster period. We are reorganizing that office to make it
much more efficient. We have placed in charge Janet Golrick,
who is an excellent disaster relief individual, probably knows
more than anybody about that. And we are updating the IT
systems to give us more efficiency there, and we will continue
to give you updates on that.
Senator Reed. Thank you very much, Mr. Secretary. Thank
you, Madam Chairman.
Senator Collins. Thank you, Senator. Senator Boozman.
Senator Boozman. Thank you, Madam Chair, and thank you so
much for being here. We appreciate your hard work. First, I
would like to compliment your staff. They did a great job
during the shutdown. We had some problems and questions, and
they were very, very good about getting back and helping us any
way that they could. Also, you are going to be at the Arkansas
Fair Housing Commission Conference in Little Rock later this
month, and the people of Arkansas are really looking forward to
having you.
Secretary Carson. Terrific. Thank you.
Senator Boozman. We do appreciate your emphasis on
homelessness. As you noted, it has come up quite a bit today.
What I would like to talk to you a little bit about is the
effect on veterans, and how we can do a better job there,
particularly in States. We have our urban problems, and in
Arkansas we have got a mix. You know, we have got a rural area
that is certainly in need, sadly it continues to be a real
problem. And then the other thing in regard to homelessness and
veterans is how you have been able to work perhaps with some of
the nonprofits for public/private partnerships.
Secretary Carson. Yes. Well, I appreciate your interest in
the veterans. It is very important. And thank you for the
complement to our staff. I always say we have the ugliest
building but the best people.
[Laughter.]
Secretary Carson. And that is wonderful. Thank you. As far
as veterans are concerned, you know, 1 percent of our
population protects the other 99 percent, and I think we have a
special obligation to them. And, you know, veterans
homelessness, in particular, as you know, over the last year
point in time demonstrates that it has gone down 5.4 percent,
and over 49 percent, you know, over the last decade. So we are
making very good progress there.
But, you know, until we get it down to zero, it is not
going to be good enough, and it does require, you know, the
kind of wraparound services that recognize the kinds of things
that are going on in traumatized veterans' lives. This
particularly extends to the abuse of drugs, opioids, things of
that nature, and being willing to commit the resources that are
necessary in order to fully treat people because, you know, the
brain can become addicted in a week or two, but it generally
takes 12 to 18 months to recover. And if the programs are not
extensive enough, then we end up with recidivism and all kinds
of problems on a continued basis. So we do recognize that. And
we recognize the nexus between housing and health for the
veteran and for the population in general, and are tailoring
our programs so that they recognize that.
Senator Boozman. You know, I think that the point you
brought up then is really a great one in the sense of the very
easy ability, particularly for some individuals, to get
addicted very, very quickly, and then again, a year to 18
months, you know, to get them off.
Secretary Carson. Exactly.
Senator Boozman. The other thing that you mentioned in your
testimony that I think is really important is the opportunity
zones. And in Arkansas we have areas that simply have not
recovered as much of the country also has those areas. Can you
talk about HUD's role in that?
Secretary Carson. Sure. Well, I have been very gratified,
you know, as the chairman of the Opportunity and Revitalization
Council to see how much interest there is in opportunity zones
and how much money has already been committed. We are talking
unrealized capital gains being invested long term in
communities that traditionally have been neglected. And this is
going to make a tremendous difference because it is expected on
a conservative basis to draw in more than $100 billion.
These are dollars that can be used for a lot of the
traditional things that, you know, some of the programs that we
become very used to would do. And, you know, I do not expect
people to be willing to give up those programs quickly, but I
think you will see that, you know, the things that already
exist, like the RAD Program, can be enhanced in opportunity
zones, preferences points given, (LIHTC) low-income housing tax
credit expansion, the pilot program, so that we are dealing
with new constructions and major rehabilitations. And we are
also going to have technical assistance available within the
opportunity zones to help developing businesses to take
advantage of some of the things that are available already
through the government that they may not know about it.
Senator Boozman. Thank you, Madam Chair.
Senator Collins. Thank you, Senator. Senator Durbin.
Senator Durbin. Thanks a lot, Madam Chair. Dr. Carson, good
to see you.
Secretary Carson. You, too.
Senator Durbin. We have spoken several times about at least
two or three communities in Illinois: Chicago obviously, but
also East St. Louis and Cairo. East St. Louis, my hometown, has
a large population of low-income families who live in public
housing. They did a recent review of the public housing there,
and they found that they need more than $42 million for backlog
capital repairs.
This is not unique across the United States. I understand
the figure is some $26 billion is needed to repair and make
habitable and safe public housing. It grows by more than $3
billion a year. Yet when I look at your budget and I look for
the two funds that we could turn to in East St. Louis to repair
the public housing, the Public Housing Operating Fund, your
budget calls for reducing that by 38 percent, and then the
Public Housing Capital Fund, you call for its elimination. So
what am I supposed to tell the folks in East St. Louis based on
the President's budget when it comes to the housing they are
living in that is not safe?
Secretary Carson. Well, first of all, you know, thank you
for your attention to that. I know that is an issue you care
deeply about. The escalation of the capital costs is very
troublesome, and each year traditionally we have added more and
more money to these capital funds. And we have needed more and
more, and it is just a continued growing problem. So looking at
things that can reverse that trend, I think, is very important,
things like the RAD Program where now you have got the private
sector involved, but you have got sustainability that is not
coming out of government funding. Also, many of the places that
you just talked about are in opportunity zones. So there will
be, you know, an opportunity to merge those with some of the
other economic new developmental economics that are going on in
the area.
Senator Durbin. I am not familiar with anything in East St.
Louis that would do that.
Secretary Carson. That would be in opportunity zone?
Senator Durbin. No, it is an opportunity zone, but I do not
know of any efforts underway to use that opportunity zone to
deal with the very real housing problems that are currently
facing these resident.
Secretary Carson. Well, I will tell you I was--last Friday,
I was not in East St. Louis, but I was in St. Louis at the
foundry, the old foundry project that is going on there through
the opportunity zones. It is being completely revitalized, a
lot of investments not only from Missouri, but from throughout
the country.
Senator Durbin. Well, I hope that you can come over to our
side of the river and entice them to do the same. I would like
to ask you about another issue you would be familiar with from
your professional life work, and that relates to the University
of Illinois Hospital, which is near the Loop in downtown
Chicago. It is a well-regarded, highly regarded hospital.
They did a survey in the year 2017 of emergency room
admissions, and they found, Dr. Carson, that there were 48
individuals responsible for 780 emergency room admissions in
the year 2017. These 48 people had one thing in common: all
homeless. Now, they had other issues, physical and mental
issues, for sure. And this hospital finally realized it was
costing them thousands of dollars every time they walked
through the door and diverting medical resources.
Secretary Carson. Correct.
Senator Durbin. So the University of Illinois Hospital came
to me and said what we can we do to deal with housing for these
people. We are paying a heavy price already in our hospital
because of homelessness.
Secretary Carson. Yeah.
Senator Durbin. I do not think that is a unique challenge.
I think it is a challenge you will find in many cities across
the United States, in small towns, too. And I just have to say
it is a big challenge for presidents of either political party.
Do you feel there is a commitment by this President and your
Administration to actively try to deal with the homelessness
issue? I look at some of these budget cuts, and I do not see
it.
Secretary Carson. Well, in fact, you see that we have asked
for an increase for our homelessness programs. It is a very
high priority, and we recognize that a person----
Senator Durbin. I think you said 3-and-a-half percent
increase earlier. Is that what you are saying?
Secretary Carson [continuing]. We have asked for the
increase, yes. But we recognize that it costs more to keep a
person on the street than it does to house them. It is an
average of $33 to $44,000 a year to keep them on the street and
about $21,000 to house them. So we do know that, and that is
reflected in the programs that we are working on.
Senator Durbin. I hope we can do more. Thank you, sir.
Secretary Carson. Okay.
Senator Collins. Thank you, Senator. Senator Hoeven.
Senator Hoeven. Thank you, Madam Chairman. Secretary,
thanks for being here.
Secretary Carson. Absolutely.
Senator Hoeven. And thanks for your work. We really
appreciate it. In Minot, North Dakota, they had a devastating
flood in 2011, and about 4,000 homes were inundated. And so it
has been a big of recovery effort, and also now an effort to
build permanent flood protection to protect the community and
those homes and so forth. The State put together a plan for
permanent flood protection, about $1.2 billion. We broke it
into eight phases, and then between local, State, and Federal
funding we are trying to fund those eight phases. But we broke
it into those eight phases to try to get the work going knowing
we could not get the whole $1.2 billion.
The first four phases are underway, which covers about half
of the challenge, and the funding is coming from State, local
and Federal sources. We have been able to utilize some of the
Corps of Engineers program. Meeting the benefit cost ratio is
tough, but the remaining phases 5 through 8, are lower-income
areas. We are really having a problem finding programs that can
work. We cannot meet the benefit cost ratio and those kind of
things. So my question is, are there CDBG dollars or funds or
other programs that could maybe help us in some of these phases
5 through 8 where we really are dealing with low-income
neighborhoods?
Secretary Carson. Sure. Certainly CDBG, Section 108 loans,
would be appropriate. I must congratulate you and North
Carolina--North Dakota for what you were able to do with the
funds that you received already, particularly in terms of the
mitigation. That is very, very admirable.
Senator Hoeven. Well, the first four phases will cover
about 65 percent of the community and surrounding area, but the
real challenge, again, is, you know, these--like I said, phases
5 through 8. And I think--hopefully the low-income aspect will
be taken into consideration.
Secretary Carson. It would be.
Senator Hoeven. Okay. So do you have somebody at the Agency
that would be a good person to come out and talk with us? We
are going to have a number of the Federal agencies out there in
April, including the Corps and others. Would there be somebody
that could come out and join us in that effort----
Secretary Carson. We will have somebody contact your staff.
Senator Hoeven [continuing]. Okay, That would be fantastic.
I also want to commend you on a project in Grand Forks. It is
called LaGrave on First, and it is the kind of collaboration
that I think really is the future in terms of addressing not
only housing, but then some of the other challenges that go
with homelessness, drug addiction and other types of
challenges.
At LaGrave on First in Grand Forks, a 42-unit apartment
complex opened its doors in August of 2018. All 42 units pretty
much leased up right away, and it combined support of services
as well as housing to deal with physical and mental health,
substance abuse, education, job training needs, and more. So I
think it is a great example of how you are bringing these
services together. I would invite you to come out and see it.
I also chair the Indian Affairs Committee here in the
Senate, and we are trying to do a lot with homelessness on the
reservation and with veterans. As you know, our Native American
population has the highest per capita rate of service in the
military of any other group.
Secretary Carson. Right.
Senator Hoeven. There is a demonstration program called HUD
VASH, and it is really focused on Native American veteran's
housing and homelessness on the reservation. We have a
demonstration project on the Turtle Mountain Reservation, which
I think would also be good for you to see. We are trying to
take it from a demonstration project to permanent legislation.
As a matter of fact, I have legislation with Senator Johnny
Isakson, Senator Tester and Senator Udall, who is ranking
member on our committee.
Secretary Carson. Right.
Senator Hoeven. So, again, just any comments as far as
housing on the reservation and particularly Native American
veterans, and then also an invitation to come see some of the
projects which you have been a part of and have been very
successful.
Secretary Carson. Well, I know it is a very significant
issue on the Indian properties. I would be delighted to come up
there in July or August to see what is going on there.
[Laughter.]
Secretary Carson. I hope to schedule a visit with you there
if we could.
Senator Hoeven. Well, it is beautiful in the summer months,
and we would love to have you. But thank you for your work. We
appreciate it very much.
Secretary Carson. Thank you.
Senator Collins. Thank you, Senator. Senator Coons.
Senator Coons. Thank you, Chairman Collins, Ranking Member
Reed. And I just want to thank you, Chairwoman, for the
bipartisan and balanced way in which you and Ranking Member
Reed worked together last year to ensure that critical programs
in HUD were funded in the appropriations bill.
Secretary Carson, I must say we are going to repeat
probably identically our exchange from last year since, as you
know, as a former county executive, I spent years working in
affordable housing and relying heavily on CDBG, and HOME, and,
to a lesser extent, CHAP, to make those things possible for my
home city of Wilmington and my county of New Castle County. And
my recollection is last year you said that State and local
governments would make up the difference given that these
programs were proposed for complete elimination.
I have spent a fair amount of time asking questions of my
mayor, my city council, my county executive, county council,
General Assembly, and our governor, and they have neither the
intention nor the resources to fill the significant hole
created by your proposed elimination. I will follow on some of
the questions by Senator Durbin as well.
Across CDBG, HOME, CHAP, Public Housing Capital Fund, and
the Operating Fund, I see a cut of about $9 billion. I respect
and appreciate your saying that the committee--excuse me--that
the Department is committed to combatting homelessness. As
someone who has worked in and around housing and homelessness
issues for--off and on for 30 years, I do not see how you can
credibly say that you will almost eliminate the capital funding
from public housing programs and the resources of CDBG and HOME
from State and local governments and not have that contribute
to homelessness. Help me understand how in your view, your
vision, we will combat effectively homelessness while cutting
$9 billion of well-established, effective programs that have
demonstrated positive impact over decades?
Secretary Carson. Well, first of all, the amount of money
that we have requested for the Homelessness Continuum of Care
Program is actually greater than what was enacted last year.
Senator Coons. By how much?
Secretary Carson. I forgot the exact amount, but it is
greater.
Senator Coons. But it is in the millions of dollars,
correct, Mr. Secretary?
Secretary Carson. I think it is in the tens of millions of
dollars.
Senator Coons. Tens of millions of dollars.
Secretary Carson. Yes.
Senator Coons. Okay. And we are talking about a shortfall
in the housing area of about $9 billion.
Secretary Carson. Right.
Senator Coons. Okay.
Secretary Carson. True.
Senator Coons. Forgive the interruption, sir.
Secretary Carson. Okay. Now, I guess the question really
becomes should we continue to chase a growing problem, or
should we look for other ways to deal with it. We can continue
to chase it with more money every year, which has been the
tradition, but we must also recognize that we have a
responsibility to the people who are coming after us, so we can
find other ways, for instance, you know, working through the
opportunity funds to get money that is going to be invested
somewhere. Why not invest it into these areas where you really
have been neglected for a long time?
Senator Coons. Mr. Secretary, with all due respect, I would
welcome the opportunity to hear from you and from your Agency
how opportunity zones private-sector investment could either
supplement or replace. That, frankly, would be preferable to
me. I would prefer to see private-sector investment than public
dollars. They would be more likely to produce sustainable
outcomes. But the specific communities in Delaware where we
have applied these funds over years are areas that have
genuinely struggled to attract private sector investment.
So I have written to the Secretary of the Treasury. I would
be appreciative of your technical assistance to my office, my
governor, my county executive. If your argument is that somehow
opportunity zone-incentivized private investment is going to
replace public investment in housing, I would love to see how.
My concern is that the way the rules are rolling out for
opportunity zones and the way they are structured, they will
generate significant benefits for folks who were already
investing in capital infrastructure and may not provide
employment opportunities, housing opportunities, and
redevelopment opportunities in some of our most distressed
communities. There is a very compelling public/private
partnership redeveloping a longstanding public housing project
in Northeast Wilmington where we would love to have opportunity
zones be the answer, but I need persuading.
Secretary Carson. Okay.
Senator Coons. And I would welcome that opportunity, Mr.
Secretary.
Secretary Carson. We would be very happy to provide that
technical assistance.
Senator Coons. Because in my view, our best path forward is
to retain the best of CDBG and HOME, and complement it with
opportunity zone funding until there is a clear demonstration
that it can effectively supplant it, if that ends up being the
case.
Secretary Carson. And I would have no problem at all
working with you to do that. You know, the things that have
happened with CDBG, with HOME, with Choice Neighborhoods, these
are good things. These are things that we want to continue to
happen, but we want to do it under the right circumstances. And
also, you know, I could talk for a long time about some of the
problems with some of those programs because of the formulas
which are old and need to be updated so that we really are
targeting the right people.
Senator Coons. Well, in my own experience, they were
remarkably effective tools. I cannot speak for the whole
country. I can simply speak for the community I know and the
programs we invested in. And I would welcome and appreciate the
opportunity to work with you on a way to deploy new capital to
a longstanding problems.
Secretary Carson. Terrific.
Senator Coons. Thank you, Madam Chair.
Senator Collins. Thank you. Senator Capito.
Senator Capito. Thank you, Madam Chair, and thank you, Mr.
Secretary, for being here. I want to keep on the theme of
opportunity zones. Being from the State of West Virginia, we
have really been trying to figure out where our place is going
to be with opportunity zones, and obviously we have great need.
The program is designed, I believe, originally to help areas
such as ours.
One of the concerns I have, I know that you are now the
chair of the White House Opportunity and Revitalization
Council, and I assume you are going to be and have been looking
at opportunity zones. I guess my question is more how do you
see this rolling out in areas that have not previously been
invested in? And some of the concerns I have heard most
recently have been that opportunity zones are going to follow
real estate more than anything else. And so--when we say ``real
estate,'' does that--mean housing to you, and how do you figure
those investments are going to aid the areas it is intended to
aid?
Secretary Carson. A lot of the money that has already been
committed is, in fact, targeted for housing. You know, we do
not tell people what to do.
Senator Capito. Right.
Secretary Carson. But, you know, there have been places
also that I have visited, like a saw mill that had gone out of
business in an opportunity zone, because it was in that zone,
was repurchased, reinvested, hiring, bringing in a lot of
people, which then brought in builders to build houses for them
and other community development. And that is how I see it
rolling out.
And the key thing here is because it is a long-term
investment, it is very different than a lot of the investment
programs that have been done before where people would come in,
reap their benefit, and take off. They do not get a benefit
here until they have invested those unrealized capital gains
for at least 5 years, in which time they get a 10 percent
decrement in the capital gains that they owe in the original
investment.
Two additional years they get 5 percent more; 10 years, no
capital gains on the new gain from the original investment. So
it is a big advantage, but the biggest advantage, of course, is
that this money, which was going to be invested in something,
is brought into these areas. And West Virginia would seem to
be, you know, an ideal place for the opportunity funds. I
suspect there are some developing there already.
Senator Capito. Right. We are working hard to facilitate
that and look forward to talking to HUD further on that. We
have a unique situation. You are aware that we had the floods
in West Virginia in 2016.
Secretary Carson. Yes.
Senator Capito. And we were the recipient, and gratefully
so, of the CDBG disaster relief funds. But the concern I have
is with an entity that has come into the State that has been
very, very helpful to us. And it seems like they are kind of
getting caught up in a bureaucratic ping-pong match, to
characterize it. It is called the Appalachian Service Project.
It is a religious-based organization from Tennessee actually.
They were on the ground, and they have already rebuilt 74
houses aside from the CDBG disaster relief funding. This was
under other funding and simply under some of it was under just
grants and donations and things of that nature.
But they have been told that they are no longer eligible
for this funding. And we are--I am concerned because I have
seen the good work that they do, that they are going to pull up
stakes and leave, which is basically what they have said they
have to do. So I am just really asking you if you would be
willing to or somebody from your staff would be willing to meet
with them to understand because it is kind of going between
HUD, the State, them, back and we have a little bit of problems
with our flood relief dollars on the FEMA side. We just want to
make sure we, A, do not lose and we do not lose their good
service as well.
Secretary Carson. Sure.
Senator Capito. So I would ask you--I do not know if you
are familiar with the situation.
Secretary Carson. I am familiar with it, and they did good
work in the first phase. And then they became a sub-recipient
and wanted to continue with unit cost procedures, but they are
not eligible for unit cost procedures.
Senator Capito. Right.
Secretary Carson. They have to charge according to what it
costs to do the work, and they were not willing to make that
transition. I think that is why it fell apart. So if they are
willing to abide by the structures that exist, you know, we
very much would appreciate having them.
Senator Capito. So moving from being a sub-recipient to
what would be the category that they need to move to, main
contractor or----
Secretary Carson. I guess they were a main contractor and
then they moved to sub-recipient, and it changes.
Senator Capito [continuing]. Yeah, because they said it is
cost plus 5 percent administrative fee. It does not help cover
the costs, so their volunteers come in and helping, other costs
that they incur.
Secretary Carson. But if they are willing to be flexible,
we can certainly work with them on getting into the category
that works for them.
Senator Capito. Is the best place for them to and for me to
help them is directly with HUD or to go to the State through
HUD, or is it directly with HUD?
Secretary Carson. Well, if you work directly with HUD, we
can subsequently get you to the right place.
Senator Capito. All right. Thank you very much.
Secretary Carson. Thank you.
Senator Collins. Thank you, Senator. Senator Murphy.
Senator Murphy. Thank you, Madam Chairman. Good to see you
again, Mr. Secretary. I want to thank you for coming to
Connecticut last June to hear firsthand about the pernicious
issue in Connecticut of foundations that are crumbling to the
ground, affecting some potential 30,000 homes in Eastern and
Central Connecticut.
Secretary Carson. Right.
Senator Murphy. This is a problem that is affecting
property values throughout Connecticut, but, in particular, the
eastern and central and northern parts of our State. And I want
to also thank you for working with us to allow for CDBG funds
to be used by municipalities in order to help address this
problem. Admittedly, for many of these towns which do not
receive significant amounts of CDBG dollars, this is a drop in
the bucket. But as you challenged Connecticut to do, the State
has also put up $100 million, stood up a Captive Insurance
Company and pressured insurers to step up as well.
So given the one step forward that we made on allowing CDBG
funds to be used by the State of Connecticut to help address
this problem how do you explain the two steps back now?
You are proposing to eliminate those dollars. How do we
continue to work together if we do not have those CDBG dollars
as a HUD financing vehicle to try to address this crisis issue
in Connecticut? What do you suggest to someone who has seen
these homes and heard the stories of these homeowners that we
do together if we do not have CDBG dollars as your budget
proposes eliminating?
Secretary Carson. Well, you know, certainly my heart goes
out to those people who, in many cases, have invested their
life savings in their homes to have this happen. You know, I am
happy to see that some of the insurance companies have stepped
up to the plate after hiding in the beginning, and I am happy
to see that the State is there.
You know, I have talked to multiple people on the Federal
government level about what is happening there. It is not
something that we would traditionally do at HUD. I think you
probably understand that. But we have, you know, allowed $1
million to be repurposed for the testing and recently added
another $480,000. And we will be willing to work with you in
any way that we can because it is a significant problem. As far
as I am concerned, it is a disaster, but not everybody agrees
that that is the case.
Senator Murphy. I appreciate that, and as you know, Senator
Blumenthal and I have proposed some new funding sources, one of
which would run through HUD, in order to assist in a
remediation. One simple request that the town, the State, and
the individuals working at our Captive Insurance Agency asked
me to relay to you is they thought it would be very useful to
have one designated point person at HUD that they could work
with and be in contact with as we try to examine new, creative
ways that we can work with the Federal government. And I would
ask if you would work with us on designating someone who can
develop some expertise on this question.
Secretary Carson. Sure. No problem.
Senator Murphy. Second and lastly, I wanted to add my voice
to others who are very concerned about the pace of relief
dollars to Puerto Rico. It was very concerning to many of those
in Connecticut who have family and friends in Puerto Rico to
hear these reports that the President had at a February 22nd
meeting directed the slowdown of dollars to Puerto Rico. And I
heard your answer before on that question, and I appreciate it.
I wanted to ask you a more specific question about a $15
million fund that was made available to HUD for capacity
building and technical assistance, including assistance on
contracting and procurement. This is a complaint that we hear
from the Administration that Puerto Rico is not ready to take
these dollars, but we put $15 million your hands to try to help
Puerto Rico address any issues that we jointly identified that
would slow the receipt of the billions of dollars that we have
authorized. Do you have any update on how that $15 million was
and is being spent on capacity building and technical
assistance?
Secretary Carson. I could not tell you specifically. I have
been dealing with much larger sums of money. I have not dealt
with that particular one, but maybe we can have the point
person or someone talk to you about that.
Senator Murphy. I would appreciate a response back,
understanding it is a much smaller amount of money. But on one
hand we hear complaints from the President and people around
the President that Puerto Rico cannot take this money. We do
not think that is true, but then we also have this fund of
money that is still a large sum. I know in the scope of
disaster assistance, $15 million may sound like a small amount
of money, but that could put a lot of technical assistance on
the ground in Puerto Rico to help ease any concerns that the
Administration has. And so I would love to have an update on
that as well.
Secretary Carson. And, you know, the first $1.5 billion
has, in fact, been not only designated, but given to them.
Senator Murphy. Right.
Secretary Carson. And that the unmet needs, the second
tranche of $8.2, the agreement still needs to be signed, but
the plan has been accepted.
Senator Murphy. I appreciate it. Thank you for continuing
to focus on this, and we appreciate any efforts to expedite
that. This is an emergency. Thank you, Mr. Secretary.
Senator Collins. Mr. Secretary, due to the work that I have
done on the Aging Committee as the chair of that committee, I
have learned a great deal about how we can allow our seniors to
age in their own homes. And we included $10 million for new
Aging in Place Grants for HUD in the fiscal year 2019 bill. And
these grants are intended to enable low-income seniors who are
homeowners to make low-cost, high-impact home modifications,
such as grab bars, or handrails, or adjusting cabinet heights,
higher toilets, wider entryways, things that can allow them to
stay in their own homes.
And this demonstration project is based on smaller programs
across the country, including the Bath Housing Authority and
the Maine State Housing Authority. Allowing older homeowners to
remain in their own homes not only allows them to be where they
really want to be, but it avoids the cost of their moving into
assisted living facilities. And there is a real shortage of
those kinds of properties in rural areas. What we are concerned
about is that HUD appears to be moving in the direction that we
did not intend, and that is to use these grants for multifamily
rental properties rather than to help seniors upgrade their own
homes, low-income seniors.
So I know that HUD is developing the notice of funding
availability for these grants, and I would ask you to work
closely with our committee to ensure that the program is
accurately reflecting the intent of this committee.
Secretary Carson. Absolutely, and that is such an
incredibly important thing because the aging population is
rapidly increasing in proportion to the population at large.
And, you know, there is a tremendous opportunity for us to do
things for people aging in place. There is $7 trillion worth of
equity that seniors have. Eighty percent of seniors actually
are homeowners, so we have got all that equity. We have to come
up with an appropriate way that we can use that equity to
eliminate some of the anxiety in their lives and allow them to
benefit from what they have accumulated over their lifetime. We
are working on that.
Senator Collins. Thank you. We look forward to further
discussions with your staff on that issue. You and I also share
an interest in new kinds of construction materials that can
lower the cost of housing. Being able to reduce those costs is
really critical to expanding the supply of affordable housing.
There are emerging approaches that include new technology, such
as using 3D printing for construction. And another innovative
approach is the use of mass timber such as cross-laminated
timber and similar products. That offers a sustainable and
cost-effective building material.
The University of Maine has a wonderful project where they
are really leading the way in cross-laminated construction
materials. How is HUD using its programs and research capacity
to further the development and adoption of innovative
approaches like these to lower the cost of construction and,
thus, expand the availability of more affordable housing?
Secretary Carson. A very important question. It is the
reason that we have initiated an Office of Innovation at HUD
looking at these very things. In fact, this summer on the Mall
in Washington, D.C., we will have a demonstration including 3D
printing, including some of the newer technologies and
manufactured housing, tiny homes, accessory dwelling units, and
some of the materials. About 3 or 4 weeks ago, I was in Las
Vegas for the National Association of Homebuilders looking at
some of the new products that have come online, which will be
terrific for the mitigation products.
And when you look at the effects of mitigation, I want you
to think back to Hurricane Irma and what we were anticipating
as opposed to what happened. Because Florida had already from
the previous hurricane season engaged in mitigation, we ended
up with a lot less damage, and that is going to be on the real
purposes of looking at these new building techniques. If you
look at things like manufactured homes, manufactured homes
which are not trailers--not how people think about it--look
better than site-built homes and built on the appropriate
foundation actually withstand natural disasters better than
site-built homes.
Those are the kinds of things. That is one of the reasons
that we are moving so rapidly to get rid of a lot of the
regulatory barriers dealing with manufactured homes so that we
can use them, particularly in rural areas. Ten percent of the
single-family housing is manufactured homes in this country.
Senator Collins. Thank you. Senator Reed.
Senator Reed. Thank you very much, Madam Chairman. I want
to go back to what you indicated as a drastically-increasing
need for affordable housing for elderly Americans. It is a
cohort--I think we are part of it, Mr. Secretary that is
growing dramatically. And, in fact, only one-third of the
eligible seniors are receiving assistance right now throughout
the United States, and that is expected to double in the next
15 years.
So that is why it is--I find it interesting, over the last
3 years the committee through proper authorization, we have
appropriated $166 million to construct new affordable elderly
housing. You indicated to us that under the Section 202
Program, that all of that would be available by the end of
2018, but we are still awaiting the release of those funds. So
can you give us an idea of when you intend to make this money
available for housing construction?
Secretary Carson. We intend to make it available as soon as
possible, and I would think that that would be before this
fall.
Senator Reed. Well, you know, again, there seems to be this
emerging pattern of we authorize and appropriate funds over
several years, and they get hung up. The CDBG Sustainability
Funds, there the issue was it is a novel program, you need to
some analysis. This Section 202 Program has been around for a
long time, and I would think that you would get those funds out
the door immediately.
Secretary Carson. Well, this is a new iteration of that
program. Fifty million of it is going to be gotten out
immediately. The rest of it is being looked at in terms of
ways--innovative ways for people to age in place, and that is
why it is taking a little bit longer.
Senator Reed. Well, again, this pattern, I will say for
myself at least, it is disturbing of money being--the long,
long lead times to get money out that is appropriated by this
committee. The other area I want to concentrate as the time
slips away is the FHA. You have been directed to study FHA
reform, et cetera. One of the things that FHA does is it
contributes a lot of money to our operating budget through its
receipts, and it also has a great deal of flexibility because
through mortgage letters, it can vary the terms of its lending
arrangements. It can do a lot of things to protect the fund
from risk and also to provide more opportunities for
homeownership.
Secretary Carson. Yes.
Senator Reed. This budget assumes $2.3 billion less in FHA
single-family mortgage receipts for 2019, and that is a
significant fluctuation. And it raises the question of why are
we not using the flexibility, you as Secretary, to ensure that
there is at least a consistent flow of FHA funds to HUD for
your programs.
Secretary Carson. As far as I know, the flow from the FHA
funding does not come directly back to the Agency. It goes to
Treasury, and then we have to be allocated money from them. I
wish we could do it that way.
Senator Reed. Well, you traditionally are funded even
through Treasury by--in fact, this budget is showing funding
coming from the FHA for your--the President's proposal. So your
answer is that the Treasury has arbitrarily decided to take
money away from----
Secretary Carson. Well, it goes to the Treasury, and then
we have to go through other processes. The money never comes
directly to us.
Senator Reed. Well, but somewhere along the line this
budget suggests that someone is taking a significant decrease
in normally-allowed FHA expenditures going to HUD. That is the
math of this budget.
Secretary Carson. Well.
Senator Reed. If it is not you, then it is Treasury.
Secretary Carson. I would request that Congress--I have
said this for a long time. If we can take the profits that we
generate through FHA and we can use them directly and we will
be completely transparent--boy, we could do a lot.
Senator Reed. Well, let me--I will continue to pursue this
issue because, again, I think this--as you go forward with
plans, because you have been directed to sort of look at the
reformation of FHA.
Secretary Carson. Or of housing finance in general.
Senator Reed. And housing finance in general, but if FHA is
``reformed'' to the degree that you do not have access to any
of these receipts, then your programs--your whole range of
programs will suffer dramatically.
Secretary Carson. I agree.
Senator Reed. The only final point I would note was that
there was money, $25 million in 2017, to help PHAs, public
housing authorities, with their lead-based hazard--lead paint-
based hazards. You have only awarded $18 million and that is
just to 20 housing authorities, and you decided that the award
would be limited to a maximum of $1 million, and also that you
would not consider PHAs that have lead compliance issues. You
would help some PHAs, but not others. Are you after this
experience, are you contemplating any changes to this program
to allocate the additional resources?
Secretary Carson. Well, one of the major changes is we are
trying to get the information disseminated so that we have more
people applying for it. The reason that all the money was not
allocated is because we did not have enough people applying for
it.
Senator Reed. Well, again, we will continue to work and
this is an issue of lead paint both in private homes and
subsidized housing and public housing that the chairman and I
are very much concerned about.
Secretary Carson. Thank you.
Senator Reed. Thank you, Mr. Secretary.
Senator Collins. Mr. Secretary, thank you so much for being
with us today and for altering your schedule to accommodate the
earlier start time.
ADDITIONAL COMMITTEE QUESTIONS
The hearing record will remain open until Friday, April
12th, 2019, for additional questions. I know I have several,
and I am sure that the ranking member does as well, and we will
be submitting those for the record.
Questions Submitted by Senator Susan M. Collins
public housing annual contributions contract
Question. Last April, HUD issued a new Annual Contributions
Contract (ACC), which is the grant agreement for the public housing
operating and capital funds administered by housing authorities.
Shortly after it was issued, HUD pulled it back due to numerous
concerns from PHAs across the country, including those in Maine. In
December, HUD published additional revisions to the ACC for public
comment. The newly revised ACC appears to be very similar to what HUD
issued last year, with little consideration for the concerns from PHAs.
Concerns from PHA's include: an improper overreach of Federal
authority; noncompliance with the Administrative Procedures Act; HUD
control of non-Federal funds; and requiring PHAs to violate state
Freedom of Information and Freedom of Access Acts.
What problem is HUD currently experiencing with either the
operation of the public housing programs, or its relationship with
PHAs, that this revised ACC is intended to fix?
Answer. The revisions to the ACC published for public comment in
December 2018 set forth the terms and conditions associated with HUD's
longstanding award of Federal financial assistance for the public
housing program in the form of grants (current regulations 24 CFR
905.106). The Paperwork Reduction Act is the appropriate method for
revising the ACC because HUD is making a change to a required form
(namely the ACC) under its regular expiration/renewal cycle; HUD is not
making any changes to the substantive requirements of the Public
Housing Program. When HUD requirements are changed by rulemaking (which
is done through rulemaking and consistent with the APA), the ACC
incorporates by reference any such changes.
The concerns from PHAs enumerated in the preamble to this question
all represent existing requirements of PHAs in statute or regulation
that govern public housing funding. The December 2018 public comment
version of the ACC proposed elimination of provisions that, since 1995,
have been fully incorporated by regulation. The December 2018 proposed
ACC did not initiate new provisions that are not currently in effect
through statute or regulation.
Prior to the ACC changes proposed in 2018, HUD had last updated the
ACC in 1995; and prior to that, in 1969. Remarkably, some 400 of the
3,000 PHAs nationwide still have never executed the 1995 version of the
ACC and maintain that their participation in the public housing funding
program is based on the 1969 version, which was developed when the
public housing program was a loan program. This is an untenable
situation for HUD and for the PHAs, given more than two decades of
changes to applicable statutory and regulatory public housing funding
requirements, as described below.
The Public Housing program, which was initially a loan program, was
changed by Congress to a direct grant program in 1987, through which
HUD awards grants for the development and operation of public housing
(See sections 112 and 119 of the Housing and Community Development Act
of 1987 (the HCD Act)).
In 1988, HUD implemented OMB Circular A--102 ``Grant Awards and
Cooperative Agreements with State and Local Governments,'' by codifying
its provisions in 24 CFR part 85 (March 11, 1988, 53 FR 8025, 8650).
HUD made the public housing program subject to 24 CFR Part 85 in 53
fiscal year 7875:
HUD previously took the position that annual contributions for
public housing development and modernization were not subject to
Circular A-102 requirements because the Federal assistance to public
housing agencies (PHAs) was in the form of loans and loan guarantee
commitments made by HUD. The Department's current method of funding
public housing development and modernization by means of capital grants
(as opposed to loans, as in the past) has the effect of subjecting
public housing development and modernization funding to A-102
requirements. Public housing operating subsidies are administered as
grants and therefore are also appropriate for A-102 grant management
treatment. (emphasis added).In this statement, HUD clearly reflected
its determination that because of the changes made by the HCD Act,
public housing funding (capital and operating funding) were to be
administered as grants. Consequently, the ACC is an agreement related
to the receipt of public housing grant funding (i.e., a grant
agreement). Accordingly, as a result of the changes to the program made
by the HCD Act, HUD has, since 1988, consistently administered the
public housing program as a grant program.
In addition to codifying A-102 at 24 CFR Part 85, HUD codified the
provisions of other grant management-related OMB circulars, including
OMB Circular A--133, ``Audits of States, Local Governments and Non-
Profit Organizations,'' in 24 CFR parts 84 and 85 in 1997 (November 18,
1997, 62 FR 61617), and such other circulars related to grant
management. In the intervening years since codifying the guidance in
these circulars, HUD has cross-referenced applicable provisions of 24
CFR parts 84 and 85 throughout program regulations, including
applicable regulations for public housing development, modernization
and operating funding.
In 1995 HUD issued PIH Notice 95-44 which transmitted a revised
ACC, Form HUD-53012A and Form HUD-53012B (commonly known now as the
1995 version, which is the current version). The form was revised
against the backdrop of the public housing program being a grant
program, and HUD's determination that the ACC was a grant agreement.
HUD regulations and guidance frequently referenced the funding as grant
funding (e.g., 24 CFR Sec. Sec. 941.103 (ACC definition), 941.612,
968.103). The 1995 version was revised to be consistent with HUD's
program regulations and grant funding scheme. HUD noted that:
[t]he revised ACC eliminates the recitation of the specific
statutory, regulatory and executive order requirements to which a HA is
subject with respect to its public or Indian housing projects. Instead,
the HA is made subject to ``all applicable laws, executive orders and
regulations,'' whether or not these authorities are specifically
incorporated by reference in the ACC . . . With the execution of this
revised ACC, HUD intends to eliminate the obsolescence that has
developed over time in the existing ACC as a result of the enactment of
new legislation and the promulgation of new regulations that conflict
with specific requirements contained in the ACC.
But since 1995 there have been numerous additional changes to the
specific statutory, regulatory and executive order requirements to
which a HA is subject with respect to its public projects. For example,
in October 2013 HUD published the final rule for the Capital Fund
Program at 24 CFR Part 905. The final rule combined and streamlined the
former legacy public housing modernization grant programs, including
the Comprehensive Grant Program, the Comprehensive Improvement
Assistance Program and the Public Housing Development Program.
In 2004, the SF-424 ``Application For Federal Assistance'' was
identified as a new form added to the PHA-required submissions for the
receipt of public housing Operating Funds. (See Notice PIH 2003-22). At
that time, HUD identified the SF-424 as a new form that was required as
part of a government-wide grants management initiative and was
applicable to the public housing programs and PHAs requesting public
housing development and operating grant funding.
On December 19, 2014, OMB published a joint, Governmentwide interim
rule with all Federal award-making agencies, entitled Federal Awarding
Agency Regulatory Implementation of Office of Management and Budget's
Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (commonly called the'' Uniform
Guidance''). All Federal award-making agencies, including HUD,
implemented the Uniform Guidance. HUD amended its administrative
requirements for grants and cooperative agreements. HUD's final rule
(December 7, 2015, 80 FR 75931) conformed HUD's regulations to the
Uniform Guidance, and revised cross references within affected HUD
regulations, including the public housing programs covered by the 1995
ACC (e.g., the Public Housing Capital Fund Program and the Operating
Fund Program). In the preamble to the final rule HUD stated:
Grant recipients and those who monitor grants are strongly
encouraged to review the Uniform Guidance to obtain a better
understanding of the Uniform Guidance and its implications for their
Federal awards.
The proposed changes to the ACC update the agreement to conform to
government requirements at 2 CFR Part 200 that apply to grant funding,
and to address any misunderstandings and misinterpretations that have
developed over the 20+ year since the last revision to the document.
The ACC published in December 2018 was for public comment, and in
response to concerns raised by PHAs, HUD proposes to address and
concerns consistent with existing statutory and regulatory
requirements.
inspections of hud-assisted properties
Question. The physical quality of HUD-assisted units has long been
a concern of mine. I have pushed HUD to improve its oversight of the
physical conditions of units, including the collection of photos of
inspections to improve accuracy. As I have stated previously, neither
assisted families nor taxpayers are well served by subsidizing housing
in poor condition. At the direction of this Committee, GAO recently
completed a review of HUD's physical inspection process and inspector
oversight for HUD-assisted properties, identifying 14 recommendation to
improve quality and oversight. HUD concedes that the inspection scoring
model no longer aligns with housing quality, and that properties can
pass inspection even with poor unit conditions. In response, HUD has
announced a new policy of shortening the time between inspection
notification and the actual inspection to prevent owners from doing
only ``just in time'' repairs, and plans to undertake a 2-year
demonstration to evaluate and implement changes to the scoring model.
HUD has noted that the current model of five inspectable areas
(dwelling units, building systems, common areas, building exteriors,
and site) enables properties to pass inspections even if the dwelling
units fail inspection. HUD's new approach will consolidate these five
areas into only three--dwelling units, inside, and outside--and the
property will not pass the overall inspection if the dwelling units
inspectable area fails.
If HUD knows that the inspection scoring model based on these five
inspectable areas is flawed, why is HUD waiting 2-years to make the
change to three areas and a requirement that the dwelling units pass,
while families continue to live in sub-standard units?
Answer. There are two reasons HUD wants to make changes to the
scoring weights of our physical inspections over a two-year period.
First, the Department wants to ensure it has the correct solution.
We acknowledge concerns about the current weighting structure. While we
believe we have the solution, the Department is hesitant to make a
drastic change to the current system without a testing period. HUD
needs to ensure that changes to the model produces a more accurate
score and does not exacerbate existing or create new issues. The
current schedule is very aggressive but allows HUD the appropriate time
to ensure what we are proposing in the updated model works.
Second, making changes to the current state scoring model requires
a significant level of effort and commitment of resources that are
needed to develop the future state. The National Standards for the
Physical Inspection of Real Estate (NSPIRE) demonstration, which is
HUD's overarching effort at overhauling its inspections system,
includes other changes such as revising the inspection standards and
types of inspections that are intended to replace the current state.
The NSPIRE demonstration and the new inspection scoring model are more
closely aligned than the current system and these resources at the
Federal level would be better served creating a new system that works
rather than making fixes to the current system.
While HUD believes that a streamlined scoring model will provide
several benefits, changing the scoring model alone is not sufficient to
address the broad range of causal factors that can contribute to
improving the detection of substandard housing. This requires
enhancements to the underlying standards, protocols, processes, and
information technology. Given the inextricable linkage between the
standards and the scoring model, testing changes to one without the
other may lead to unintended negative consequences. The full extent of
those necessary changes will be evaluated as part of the NSPIRE
demonstration.
rent comparability studies in the northeast
Question. The recent government shutdown highlighted some HUD
process issues when it comes to renewing rental assistance. One such
case was the renewal of an 8-unit elderly housing project in Swans
Island, Maine. In places like Maine, properties like this are critical
to meeting the housing needs of low-income families and seniors.
Renewal of this property was complicated by HUD's inability to secure a
contract for a third-party rent comparability study, or other market
analysis, to provide the property with a rent subsidy increase, which
it had not received since 1996. I am pleased that, working with your
staff, we were able to ensure that this property will receive a full
renewal and subsidy increase. However, this renewal in Maine
highlighted that securing rent comparability studies or other market
analyses to justify subsidy increases is a particular problem for HUD
in the Northeast.
What steps is HUD taking to ensure that other properties are not
subject to similar delays and uncertainty?
Answer. To address delays and uncertainty in securing rent
comparability studies, HUD has recently taken steps to enter into a
contract with one vendor that will allow for the procurement of
multiple studies at once and delivery of a more expeditious product
rather than competing each property study separately, as was the
practice at the time of the Swan's Island, Maine property renewal.
fair housing action against facebook
Question. Last week, the Department charged Facebook with violating
the Fair Housing Act by enabling advertisers to exclude people based on
their religion, national original, and even for being a parent with
children. According to HUD, Facebook also used protected
characteristics of people to determine who could view ads regardless of
whether an advertiser wants to reach a broad or narrow audience.
Facebook's machine learning and other prediction techniques were used
to intentionally target and excludes users based on their protected
class. In today's digital world, I appreciate that the Secretary has
focused on new platforms that can be used to exclude protected classes.
Has the Department found other instances of new technologies that
could be restricting or limiting housing opportunities in violation of
the Fair Housing Act?
Answer. The Department is always exploring the application of the
Fair Housing Act and related authorities to new technologies. The
Department investigates and makes findings in thousands of cases per
year, many of which implicate new technologies, such as tenant
screening software, underwriting models, online advertising, automated
valuations, and social media. These types of technologies are of
interest to the Department because any unlawful bias in the
technologies may affect a large number of victims. As noted in the
hearing, the Department engaged Facebook beginning in 2016 about its
advertising practices and ultimately issued a charge of discrimination
against the company. The Department has also initiated dialogue with
other companies engaged in social media and advertising technology
about their advertising practices and is continuing to explore the
application of the Fair Housing Act to the online advertising space. As
more people turn to the web to find housing, loans, insurance, and
other housing-related services, online advertising plays a bigger role
in who has access to housing opportunities. The Department is committed
to protecting the rights of the American people online as well as in
the physical world.
3-year income recertification and family self-sufficiency
Question. One of the core aspects of the Administration's proposed
changes to rental assistance calculations is the triennial
recertification of income, which is intended to simplify administrative
requirements. On the other hand, the Family-Self Sufficiency program,
which is the Department's signature self-sufficiency program, deposits
funds into the FSS escrow accounts based on increases in household
income. A triennial recertification of household income would appear to
undercut the effectiveness of the FSS program.
Has HUD taken into account the intersection of changes to rent
calculations and self-sufficiency programs?
Answer. HUD currently has two self-sufficiency programs that
include a rent incentive: Family Self-Sufficiency programs (FSS) and
Jobs Plus. All other self-sufficiency initiatives function on the
standard rent calculation platform. HUD's proposed rent reform bill,
the Making Affordable Housing Work Act (MAHWA), would supplement these
programs by providing additional alternatives to standard income-based
rent that could be available to the broader universe of HUD tenants in
order to ameliorate any disincentive to increasing earnings.
Specifically, MAHWA has several provisions that build upon programmatic
experience regarding incentivizing self-sufficiency. These include the
following provisions:
1. Triennial recertifications--triennial recertifications would
provide a temporary incentive to families to increase earnings without
having an impact to total tenant payment until the next triennial
reexamination.
2. Minimum rent based at the minimum wage and part-time work
hours--this provision encourages individuals who may not have been
working to take steps to obtain employment in order to meet the higher
minimum rental amount.
3. Alternative rents--building upon the experiences of Moving to
Work (MTW) agencies and the FSS program, these rent structures are
developed to incentivize increased earnings over time, while also,
simplifying rent calculations, and permitting families to keep some of
the increased earnings.
4. Optional Work Requirements--again building upon the experience
of MTW agencies and the FSS program, PHAs and owners of project-based
assistance properties would be permitted to adopt work requirements as
a condition of admission and continued occupancy for work-able
families.
The FSS program, particularly the escrow savings in FSS, provides a
long-term incentive to increase income, with the ``reward'' or
incentive coming after several years of program participation.
Alternative rent structures that delay rent increases provide an
immediate incentive in the form of the ability to retain more of the
increases wages as they come in. There is ongoing research regarding
the differing benefits to the ``reward now'' or ``reward later'' models
and the added benefit of financial coaching in working towards long-
term self-sufficiency. These new rent calculations provide an excellent
opportunity to expand the benefits to more residents and test the
impact of various models.
opportunity zones
Question. The 2017 tax reform legislation included the creation of
Opportunity Zones, to be administered by the Treasury. These
Opportunity Zones will encourage investment in distressed communities
through tax incentives. You have been named the Chair of the White
House Opportunity and Revitalization Council, which will look at ways
to remove barriers to revitalization efforts and work on broader
efforts to combat poverty and geographic inequality. We recently had
the opportunity to visit an Opportunity Zone in Maine and I look
forward to working with you on the transformation of this neighborhood.
Given your leadership roles as chair of this council and as HUD
secretary, how can HUD and the Opportunity Zone program work together
to benefit additional communities that are in need of revitalization?
Answer. HUD has a very important presence within Opportunity Zones,
including: approximately 2.4 million persons living in HUD-assisted
housing (27 percent of the national total); 371,000 public housing
units (38 percent of the national); 2,400 Multifamily housing
properties with FHA mortgage insurance (21 percent of the national
total); and 617,000 FHA-insured Single Family properties (8 percent of
the national total) as of April 2019. HUD is uniquely positioned to
utilize its existing authorities to maximize the beneficial impact of
public and private investments in Opportunity Zones, as the agency's
various grant programs (whether discretionary or competitive in nature)
will be important for communities to help build the requisite housing,
infrastructure, and capacity at-large in order to attract private
capital in a way that most benefits existing residents. The same holds
true for additional communities that are in need of revitalization, and
yet have not been designated as Opportunity Zones. Although the
relevant Opportunity Zone Federal tax incentives do not apply to
investments made in other communities, we are working with State,
local, tribal, and territorial leaders (HUD grantees) to re-think their
economic development plans and engage residents in a way that has long
been neglected.
______
Questions Submitted by Senator Steve Daines
manufactured housing
Question. In its 2017 Omnibus bill, Congress included a directive
to HUD to review its add-on letter for garages and carports, the
proposed interpretive bulletin on frost-free foundations, and the on-
site completion of construction rule and ``develop a solution that
ensures the safety of consumers and minimizes costs and burdensome
requirements on manufacturers and consumers.''
The Manufactured Housing Consensus Committee (MHCC) is responsible
for recommending and facilitating revisions and interpretations of the
HUD Code and during a 2018 meeting took the following actions:
--Voted to rescind HUD's extension of ``alternative construction''
requirements for carports.
--Voted to withdraw HUD's proposed Interpretative Bulletin on Frost
Free Foundations.
--Unanimously supported changes to the HUD Code's requirements for
add-on structures (garages).
--Discussed changes to the on-site completion of construction rule.
Despite the MHCC recommendations, HUD has not taken action to
implement the recommended changes. What are your plans to move forward
with implementation?
Answer. HUD is working diligently to implement recommendations
received from the MHCC by revising the Manufactured Home Construction
and Safety Standards, which will include ``Add-On'' provisions to
address attached garages and carports, among other things.
The MHCC voted during its April-May 2019 meeting for HUD not to
finalize the proposed Interpretative Bulletin (IB) on Frost Free
Foundations and sent the subject to subcommittee for further review.
Accordingly, HUD is not working on finalizing the IB at this time.
Changes to the on-site completion of construction rule were
discussed during the April-May 2019 MHCC meeting. The MHCC referred all
recommendations regarding the On-Site Completion of Construction Rule
to MHCC subcommittees, which will revise them for final recommendations
to the full MHCC committee. HUD will continue to work with the relevant
MHCC subcommittees to implement findings from HUD's Report on the On-
site Completion of Construction for Manufactured Homes.
Question. When do you expect the first changes to me made with
regard to the comprehensive review of HUD's manufactured housing
regulations, which you announced last year?
Answer. HUD is working to release the first of three sets of
updates to the Manufactured Home Construction and Safety Standards by
March 2020.
Question. Can you discuss your plans to implement backlog of more
than 100 pending changes recommended by the MHCC?
Answer. HUD is working to release the first of three sets of
updates to the Manufactured Home Construction and Safety Standards by
March 2020. The Manufactured Home Construction and Safety Standards
have not been significantly updated since 2009. The third set of
standards will go far to address the backlog of pending changes. The
MHCC is currently addressing approximately 300 pending items, 200 of
which were just assigned to subcommittee at the April/May meeting. HUD
will begin a separate regulatory process for these pending items once
they are finalized by the MHCC and submitted to HUD.
______
Questions Submitted by Senator Jack Reed
competitive grants to public housing agencies to address lead-based
paint hazards in public housing
Question. Secretary Carson, as I mentioned during the hearing, this
Committee provided $25 million in fiscal year 2017 to help public
housing agencies (PHAs) address lead-based paint hazards in public
housing. I raised concern about HUD's failure to disseminate all of
this funding, by only awarding $18 million to 20 PHAs. In your
response, you stated that this was a result of not enough PHAs applying
for the funding. However, my staff received data from HUD on August 17,
2018 which stated 83 PHAs applied for this funding, of which, 48 PHAs
met the eligibility threshold and were considered for the awards.
Because the demand exceeded the amount of funding available, Senator
Collins and I included an additional $25 million in grants to PHAs for
this purpose in fiscal year 2019.
During the hearing I also noted two concerns with the fiscal year
2017 competition. Despite Congress providing this funding to help PHAs
come into compliance with the Lead Safe Housing and Lead Disclosure
Rules, HUD prohibited PHAs with any lead compliance issues from being
eligible for the funding. Additionally, HUD limited grant awards to a
maximum of $1 million, which does not take into account PHAs that might
have needs that far exceed this award amount.
Why is HUD defining PHAs that have existing lead-related compliance
issues as ineligible for the public housing lead funding and what long-
term effect does this have on their ability to meet the health and
safety needs of public housing residents?
Answer. The Notice of Funds Availability (NOFA) includes the
following provision: ``PHAs that have received written notification of
violations of the Lead Safe Housing Rule (LSHR) or Lead Disclosure Rule
(LDR) from the U.S. Environmental Protection Agency (EPA), HUD, or the
U.S. Department of Justice (DOJ), and have not yet resolved these
findings are not eligible for these funds. Further, these funds shall
not be used to perform any work required by a settlement agreement,
consent decree, voluntary agreement, or similar document, with EPA,
HUD, or DOJ for violations of the LSHR or LDR.''
The Department has multiple reasons for this provision. The first
reason is that PHAs that know about existing lead hazards have a 90 day
deadline to resolve the issue. Assuming that a PHA discovered a lead
hazard right before the application deadline for the grant, it could
not realistically expect to get funding from the grant fast enough to
comply with the 90-day deadline (even if it was assured of getting
grant funding). HUD needs adequate time to review the applications and
make the funding available. In addition, a PHA would have to go through
a procurement process after receiving an award before it could engage a
vendor to address the identified hazard. Further, the vendor would need
some period of time to begin work. It is unrealistic to think that all
of the necessary steps to use grant funds to address the hazard could
be completed to comply with the 90-day deadline. Realistically, a PHA
that has an already identified lead hazard must rely on existing
resources to mitigate the identified hazard. Additionally, PHAs that
have unresolved findings likely lack the necessary capacity to properly
carry out lead based paint grant activities properly and would be
identified as high-risk grant recipients.
Question. What data did HUD use to inform the maximum grant award
threshold and how was economies of scale taken into consideration?
Answer. Given that the grant program has very limited funding
relative to the potential need, the purpose of the maximum grant award
was to ensure that the grant funding would be spread across a
significant number of PHAs with properties that were clearly at risk.
This decision was made without particular regard for a concentration of
lead hazards in a single large property or in many properties managed
by the same housing authority. This decision had the effect of
preventing grant award bias away from smaller housing authorities or
housing authorities in more rural and less densely populated areas.
Again, with a grant program of limited funding, the Department did
not consider economies of scale in establishing a maximum grant award
amount, as the existence of lead hazards in any public housing unit
represents a significant health risk to the residents of that unit.
affordable housing development
Question. The leading causes of homelessness in the United States
are a lack of affordable housing, high rental price increases, and
stagnant wage growth for low-income Americans. As demand for affordable
housing vastly outpaces supply and drives rental prices higher, some
households making less than 50 percent of area median income (AMI) are
being forced to pay more than 50 percent of their incomes on rent. This
leaves few resources available for food, basic healthcare, and other
necessary expenses. Further exacerbating this crisis is wage stagnation
among low-income Americans. Even though the U.S. unemployment rate is
at its lowest level in two decades, wage growth has largely benefitted
top earners, while wages for low to median earners have remained the
same.
Secretary Carson, The affordable housing crisis is reaching epic
proportions in urban and rural communities alike, with the number of
low-income households facing worst case housing needs reaching 8.3
million in 2015.
Given the increasing demands for affordable housing, especially
among low-income households, what is HUD doing in this budget proposal
to expand our affordable housing stock?
Answer. HUD has prioritized working with our Federal, state, and
local partners to reduce the regulatory barriers that impede the
development of additional housing supply, particularly affordable
housing. A significant portion of the cost of building new multifamily
housing is related to regulations, so simply increasing funding for
HUD's programs will not solve this crisis.
HUD is also prioritizing the alignment of our programs with
Opportunity Zones, a tax incentive that encourages the deployment of
much-needed private capital into some of America's most distressed
Census tracts. In addition, HUD's Rental Assistance Demonstration will
allow the preservation and recapitalization of affordable units that
might otherwise be lost.
For potential homeowners, HUD has successfully preserved FHA as a
source of affordable mortgage credit and as a result FHA has served
over 3.6 million families during the past 3 years with:
--Over 2.5 million forward purchase loans;
--Almost 1 million refinances--resulting in reduced loan terms or
monthly payments;
--Over 150,000 HECM loans, enabling seniors to stay in their homes.
Further, over the past 3 years, FHA endorsed purchase loans for 2.1
million first-time buyers, or 82 percent of its total purchase loan
endorsements during this period. FHA has provided access to home-
ownership for people who otherwise may have faced difficulty obtaining
a conventional mortgage.
multifamily housing contract management practices
Question. During the government shutdown, HUD allowed over 1,500
multifamily housing contracts to expire, impacting nearly 60,000
tenants receiving assistance under the Section 8 Project-Based Rental
Assistance (PBRA), Section 202 Housing for the Elderly, and Section 811
Housing for Persons with Disabilities programs. In these cases,
landlords and public housing agencies (PHAs) were required to expend
reserve funds to meet ongoing obligations until HUD was able to resume
operations and contract renewal activities.
These events brought to light that HUD's internal contract renewal
procedures and financial management systems were insufficient and a
predominantly cumbersome manual process. As a result, HUD consistently
faces challenges predicting and managing the contract renewal process.
What business processes have you identified that HUD needs to
change in order to better predict and manage the renewal of expiring
contracts?
Answer. HUD has identified business processes that could be
improved with information technology advances. Completion of a contract
renewal is a multi-step business process involving a series of back-
and-forth exchanges over email and through standard mail between an
owner, HUD staff, and in many cases a Project-based Contract
Administrator (PBCA); however, HUD is exploring options for
utilizing a secure cloud-based document exchange platform for renewal
contracts and rent adjustment documents as well as tools to standardize
workflow tracking. By improving the process to share documents and
increase visibility into transaction status, we expect to be more
predictive in the renewal process and enhance both efficiency and
customer experience.
Question. If IT improvements are a component of that solution, what
system-specific changes need to be made and how is the Office of the
Chief Information Officer incorporating those changes into HUD's IT
modernization plan?
Answer. In 2018, HUD completed a review of the potential for
modernization of the Tenant Rental Assistance Certification System
(TRACS), the system central to contract renewals, tenant income
certifications, and payments for Multifamily's Section 8 PBRA, Section
202, and Section 811 programs. This review highlighted functional
systems enhancements needed to improve management of contract renewals.
In addition to re-platforming the aging system, TRACS modernization
would enhance Multifamily contracts management by eliminating certain
manual entries and improving interfaces with the integrated Real Estate
Management System (iREMS) for properties and the Line of Credit Control
System (LOCCS) payment system. HUD has recently begun the first steps
of TRACS modernization through its Enterprise Subsidies Management
initiative.
______
Questions Submitted by Senator Patrick J. Leahy
fair market rents
Question. Fair Market Rent--The fair market rents published by HUD
for fiscal year 2019 showed a decrease in rents for two bedroom
apartments in all but one county in Vermont. HUD's rents do not reflect
the rental market in Vermont, which has experienced a steady increase
in price over the last decade. The misalignment between HUD's Fair
Market Rents and Vermont's rental market results in voucher holders who
are unable to find quality homes in good neighborhoods. In fiscal year
18 and fiscal year 19, the Senate Appropriations Committee included
report language directing HUD to explore methods to improve its FMR
formula and identify barriers to states seeking to adjust their FMR's
based on private rental surveys.
What would be the impact of extending the authority of PHAs to set
payment standards from 110 percent of FMR to 120 percent of FMR?
Answer. If the payment standard basic range were extended to 120
percent, PHAs would be able to offer their tenants an additional 9.1
percent in voucher purchasing power. The following table provides
examples of the increased payment standard authority:
--------------------------------------------------------------------------------------------------------------------------------------------------------
FMR 110% PS 120% PS % Difference
--------------------------------------------------------------------------------------------------------------------------------------------------------
$500 $550 $600 9.1%
$750 $825 $900 9.1%
$1,000 $1,100 $1,200 9.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
By increasing the payment standard, the PHA is reducing the number
of families that the PHA can assist with its program funding. Any
increase in the maximum payment standard level is likely to increase
the per-unit costs in the voucher program, which will reduce the number
of participants the voucher program can serve unless the Department
receives a commensurate increase in TBRA funding.
Question. What regulatory or statutory changes need to take place
for this to occur?
Answer. The statute governing the payment standards is found at 42
USC 1437(f)(o)(1)(B): Establishment of payment standard. The text of
this paragraph is as follows: Except as provided under subparagraph
(D), the payment standard for each size of dwelling unit in a market
area shall not exceed 110 percent of the fair market rental established
under subsection (c) for the same size of dwelling unit in the same
market area and shall be not less than 90 percent of that fair market
rental, except that no public housing agency shall be required as a
result of a reduction in the fair market rental to reduce the payment
standard applied to a family continuing to reside in a unit for which
the family was receiving assistance under this section at the time the
fair market rental was reduced. The Secretary shall allow public
housing agencies to request exception payment standards within fair
market rental areas subject to criteria and procedures established by
the Secretary.
Similarly, HUD's regulations at 24 CFR 982.503(b) contains
companion language to the statute: Establishing payment standard
amounts. (1)(i) The PHA may establish the payment standard amount for a
unit size at any level between 90 percent and 110 percent of the
published FMR for that unit size. HUD approval is not required to
establish a payment standard amount in that range (``basic range'').
The PHA must revise the payment standard amount no later than 3 months
following the effective date of the published FMR if a change is
necessary to stay within the basic range.
Consequently, both the statute and the regulation would need to be
amended to allow PHAs with general authority to set payment standards
above 110 percent.
Question. What is HUD doing to identify barriers for small rural
PHAs to request an adjustment to the FMR's for their region?
Answer. PHAs operating in rural areas likely need to partner with
neighboring areas and conduct an area group survey. The non-
metropolitan counties of Bennington, Windham, and Windsor in Vermont
successfully completed a survey in 2016 that was used as the basis for
FMR calculations in fiscal year 2016, fiscal year 2017, and fiscal year
2018. Similarly, in fiscal year 2019, the non-metropolitan counties of
Coos and Curry in Oregon successfully completed a local survey of the
grouped area. HUD works with PHAs in smaller areas to ensure that they
have specific targets for number of survey responses needed to support
their reevaluation requests.
Question. PHAs are required by HUD to maintain rent reasonableness
databases based on the local rental market. In what ways could HUD
change its FMR adjustment process to include the utilization of this
data?
Answer. Rent reasonableness data are not statistically
representative of rental markets. These data are compiled based on
where voucher holders are seeking rental units or where voucher holders
have been successful in finding rental units. Consequently, these data
may not be compared to or considered a replacement for comprehensive
market data available from the American Community Survey (ACS). HUD has
set a standard that there must be at least 100 survey observations in a
dataset for HUD to use the information in the FMR calculation as a
replacement for ACS based point estimates of rent. If these databases
consistently tracked the same units from year to year, a measure of the
change in rents in an area may be obtainable. In order for this
information to be used in the calculation of FMRs, HUD would need to
develop a mechanism for PHAs to provide significant amounts of rental
data to the department each year and the PHAs would need to commit to
sending this information to the Department in a timely and consistent
manner each year.
______
Questions Submitted by Senator Christopher Coons
transitional housing
Question. What is the Administration's approach to transitional
housing as a means of assisting vulnerable populations who are homeless
or at risk of homelessness?
Answer.
HUD's Funding Process:
Each year, thousands of projects apply for funding under HUD's
Continuum of Care (CoC) program. In each community, applications are
coordinated by a local body known as the local CoC, which includes
members from the nonprofit, faith-based, business, and local government
sectors, people who have experienced homelessness, and other
knowledgeable stakeholders. The local CoC determines which projects
they will apply for and how they will prioritize those projects. That
local process generally focuses on the performance of those projects
and the need for those projects. HUD does not identify specific
indicators of need or performance that local CoCs should use, but at
the direction of congressional appropriations language, HUD is required
to encourage local CoCs to rank projects based on the degree to which
they improve the overall performance of the CoC at reducing
homelessness.
Once applications are submitted, HUD evaluates CoCs based on their
performance. Higher scoring CoCs may receive more funding relative to
the previous year, and lower scoring CoCs may receive less. The
specific projects that are funded are almost entirely based on the
overall performance of the CoC and where the CoC ranked the project.
There is no evaluation for which types of projects the CoC applies for
and HUD does not currently rate CoCs on their use of transitional
housing, either positively or negatively. The incentive or disincentive
for CoCs to apply for transitional housing projects is based on their
impact on the CoC's overall performance.
Beginning in fiscal year 2017, HUD allows CoCs to apply for
projects that combine transitional housing and rapid re-housing
assistance. In fiscal year 2018, HUD awarded approximately $116 million
for projects with transitional housing, compared to $104 million in the
prior year.
Evidence and Uses of Transitional Housing:
Despite the fact that transitional housing has been funded by
Federal programs for several years, there are few comprehensive studies
of its effectiveness, and evidence suggests that in most cases,
transitional housing projects cost more than other types of assistance
and have similar or worse outcomes. For example, an Urban Institute
report indicated: ``Evidence shows that transitional housing has high
barriers to entry: many programs screen for motivation, conduct drug
tests, and require demonstrated willingness to work with the program
through engagement in services (Burt 2010; Burt 2006). Even after
screening out higher-need families, the evidence on transitional
housing shows weak results.'' (Cunningham, M., Gillespie, S., Anderson,
J., Rapid Re-housing What the Research Says, 2015, Urban Institute).
There is some evidence, however, that transitional housing can be
an effective intervention in some contexts. For example, for people who
are seeking a transitional recovery housing program, evidence indicates
that the transitional housing can aid in the recovery process. HUD
published a brief on recovery housing that included a description of
effective practices for operating a recovery focused transitional
housing program. (https://files.hudexchange.info/resources/documents/
Recovery-Housing-Policy-Brief.pdf ).
In addition to serving people seeking recovery from substance use
disorders, transitional housing may be effective for other populations
such as survivors of domestic violence who may require and prefer the
security and onsite services provided in a transitional housing
program, or unaccompanied minors who may be unable to live
independently. The combined transitional housing and rapid re-housing
programs may be particularly effective for people fleeing domestic
violence and people who are unsheltered.
definition of chronic homelessness
Question. We hear from social service providers who struggle to
find housing options for families and individuals who are homeless but
do not meet the HUD definition of chronically homeless. HUD defines a
chronically homeless person as ``either (1) an unaccompanied homeless
individual with a disabling condition who has been continuously
homeless for a year or more, or (2) an unaccompanied individual with a
disabling condition who has had at least four episodes of homelessness
in the past 3 years.''
What efforts is HUD undertaking to address homelessness for those
who do not meet this high bar?
Answer. The majority of individuals and families experiencing
homelessness do not, and likely will never meet the definition of
chronically homeless, and serving these groups is a critical component
of HUD's homeless assistance programs. Permanent Supportive Housing
(PSH) delivered with a Housing First program model has been
tremendously successful at reducing homelessness and is the most
appropriate tool for people experiencing chronic homelessness. However,
there are not at present sufficient PSH resources to meet the needs of
even the chronically homeless population. In addition to PSH, HUD uses
a variety of approaches to address homelessness that have proven to be
effective for target populations such as emergency shelters, Rapid Re-
Housing, transitional housing, support services, and homelessness
prevention.
It is not clear whether providing individuals and families who are
not chronically homeless--in particular those who do not have a
disabling condition--intensive supportive services would be necessary
to keep those groups housed. For example, HUD's recently completed
Family Options Study found that homeless families had substantially
better outcomes when receiving traditional Housing Choice Vouchers than
those who were left in the usual care of the homeless system. HUD has
published guidance and provided technical assistance on the subject of
coordination between Housing Authorities and Continuums of Care (CoCs)
and has encouraged Housing Authorities to offer wait-list preferences
to individuals and families experiencing homelessness. Many individuals
and families resolve experiences of non-chronic homelessness after
short stays in the shelter system, with short-term assistance through
Rapid Re-Housing, or with housing-focused services designed to help
people find affordable housing or connect with family or friends who
can help them weather the crisis that caused their homelessness. To
that end, HUD has provided extensive technical assistance through the
Community Compass program aimed at improving CoC operations to more
efficiently and strategically use available resources to make
homelessness rare, brief, and non-recurring.
opportunity zones
Question. What evidence does the Department have of any investments
in affordable housing that make use of Opportunity Zones? What is
Secretary Carson doing as a part of the interagency effort to support
Opportunity Zones?
Answer.
--It is not possible for us at this time to provide definitive
evidence as to investments in affordable housing that make use
of the relevant Opportunity Zone Federal tax incentives due to
the need for Qualified Opportunity Funds to self-certify
through the IRS Form 8996. However, there have been many
unofficial public directories/lists of Qualified Opportunity
Funds aiming to raise capital with the intent of investing in
affordable housing.
--As part of the interagency effort to support Opportunity Zones,
Secretary Carson has:
--Visited multiple cities and rural areas to tour Opportunity Zones
--Created a HUD-internal Opportunity Zone taskforce comprised of
all HUD program offices, accomplishments of which thus far
include:
--Including preference points for qualified activities in
Opportunity Zones in applicable discretionary grants;
--Designating senior underwriters to be responsible for eligible
multifamily properties applying for FHA mortgage insurance in
Opportunity Zones (thus ensuring quicker and more efficient
review periods);
--Reducing application fees for multifamily properties applying
for certain FHA mortgage insurance in Opportunity Zones (from
30 basis points down to 20 basis points for market rate and
affordable housing, and 10 basis points for broadly affordable
housing);
--Publishing a Request for Information (RFI) soliciting public
comment on how HUD can utilize its existing authorities to
bolster investments in Opportunity Zones (amongst other
things);
--Creating an ``OpportunityZones.gov'' website (publication by
mid-June 2019);
--Leading a team of inter-agency representatives in the formation
of a Federal field staff manual (publication by mid-June 2019);
--Creating a ``community toolkit'' for local leaders (publication
due mid-to-late June 2019).
fair housing
Question. What has been the impact of the rollback of the Obama
Administration's strengthened and modernized fair housing regulations?
Answer. HUD has not rolled back the 2015 Affirmatively Furthering
Fair Housing rule (80 FR 42357). HUD withdrew a computer assessment
tool for local governments in May 2018 because it was unworkable. The
decision to withdraw the assessment tool was upheld by the U.S.
District Court for the District of Columbia in NFHA v. Carson in August
2018.
The Local Government Assessment Tool was a geographic data
interface that assisted local governments in formulating acceptable
Assessments of Fair Housing (AFH). It required users to answer
questions on data analysis and provide an assessment of fair housing
issues, priorities, and goals. All program participants are no longer
required to complete an Assessment of Fair Housing (AFH) and instead
must prepare an Analysis of Impediments (AI) to fair housing choice.
States and public housing agencies (PHAs) were not subject to the rule,
and HUD did not provide a computer assessment tool for them.
Grantees and PHAs must continue to comply with statutory
obligations to affirmatively further fair housing. Program participants
required to complete a consolidated plan must certify they will
affirmatively further fair housing, which currently means that they
will conduct an AI within the jurisdiction, take appropriate actions to
overcome the effects of any impediments identified through that
analysis, and maintain records reflecting the analysis and actions.
PHAs must also follow the regulations that existed prior to the AFFH
rule, which advise them to partner with their local governments as they
complete an AI.
In August 2018, HUD announced it would seek revisions to make the
AFFH rule more effective and practical. These revisions would: (1)
minimize regulatory burden while more effectively aiding program
participants to plan for fulfilling their obligation to affirmatively
further the purposes and policies of the Fair Housing Act; (2) create a
process that is focused primarily on accomplishing positive results,
rather than on performing analysis of community characteristics; (3)
provide for greater local control and innovation; (4) seek to encourage
actions that increase housing choice, including through greater housing
supply; and (5) more efficiently utilize HUD resources.
operating funds for public housing
Question. The Administration's budget proposes cutting the Public
Housing Operating Funds from $4.55 billion to $2.86 billion. How can
communities like Wilmington, Delaware sustain essential public housing
units with cuts like these?
Answer. HUD's proposed 2020 budget request for the Public Housing
Operating Fund of $2.86 billion provides funding at an estimated 54
percent proration. However, this request considers the existence of
approximately $4.5 billion of operating reserves held locally by PHAs
that can used to pay for operating costs. Furthermore, while most PHAs
have sufficient reserves to operate public housing projects at this
reduced funding level, HUD has also requested $340 million in set-aside
funds to provide targeted support to PHAs that may not have sufficient
operating reserves to cover project costs.
troubles properties
Question. How does HUD handle cases of troubled and failing
properties in public housing? Does the Department have enough staff and
resources to enforce public housing inspection standards?
Answer. HUD identifies troubled and failing properties through its
inspection process. The property score determines condition of the
property as well as exigent health and safety issues. Troubled and
failing properties are reported to the PIH Field Offices responsible
for each asset and the Field Offices in turn conduct extensive outreach
to assist the impacted PHAs in improving property conditions. The
troubled and failing property scores are incorporated into the PHAS
score, which encourages improvement and negatively impacts the capital
funding available to the PHAs that do not improve property conditions.
A failure to adequately address troubled or failing scores is a
possible trigger for notice of default and possible receivership for
those PHAs that do not adequately address troubled or failing property
conditions. The Department currently does not have sufficient human and
capital resources to ensure quality inspections and provide robust
assistance to PHAs. Additional Quality Assurance Inspectors and Field
Staff are needed to provide oversight and assistance to PHAs. Capital
resources are need as well. In the fiscal year 20 Budget Request, the
Department seeks $16 million to addresses the capital needs of public
housing developments at High Risk, Troubled and Receivership PHAs.
These funds specifically target the capital needs at troubled and
failing properties to preserve these assets for the long term.
______
Questions Submitted by Senator Chris Murphy
crumbling foundations
Question. At the hearing, you promised to designate a point person
at the department who could develop expertise on the issue of crumbling
foundations. This person would work with State of Connecticut, the
towns, and the captive insurance agency--all of which are involved in
addressing the crumbling foundations crisis--as they try to examine new
and creative ways they can work with the Federal government on this
issue. I thank you for that commitment.
Can you please provide me with the name, title, and relevant
contact information (i.e. phone number and email address) of the person
you have designated as the point person for crumbling foundations?
Answer. Please see the contact information below:
Alanna C. Kabel
Community Planning and Development Field Office Director
1Hartford Field Office
1 Corporate Center
Hartford, CT 06103
Alanna.C.Kabel@hud.gov
860-240-9770
technical assistance to puerto rico for disaster relief
Question. As you know, the Bipartisan Budget Act passed last
February included disaster relief appropriations. Of the money
appropriated under the bill, $11 billion was appropriated for your
department's CDBG-Disaster Relief program for areas affected by
Hurricane Maria.
As I discussed at the hearing, as part of that appropriation, $15
million was made available for ``capacity building and technical
assistance, including assistance on contracting and procurement
processes'' to help Puerto Rico effectively and promptly use the money
this Committee appropriated to address the challenges stemming from the
natural disasters.
T1 Can you speak to how the department has used the $15 million
appropriated in the Bipartisan Budget Act to further ``capacity
building and technical assistance'' for Puerto Rico?
Answer. To date, $6.1 million of the disaster Technical Assistance
(TA) set-aside has been awarded to organizations to help build capacity
and provide TA for both Puerto Rico and the U.S. Virgin Islands. The
remaining funds will be awarded this summer.
Beginning in March 2018, HUD assigned a team of TA providers to
Puerto Rico with a goal of providing intensive program launch support.
The team consists of five firms that provide both intensive on the
ground and remote capacity building and technical assistance. The team
conducted a needs assessment of the Puerto Rico Department of Housing
(PRDOH), the administering agency, and its capacity to manage and
implement the CDBG-DR program. Based on that assessment, a TA plan was
developed and included a focus on preparation of materials for the
statutorily-required CDBG-DR Financial Management and Grant Compliance
Certifications and PRDOH's CDBG-DR action plan submission to HUD. The
TA team also provided assistance on procurement design and review,
program design, community participation and transparency, and staff
capacity.
The TA team started Phase II of the TA plan in August 2018, and
completed the tasks identified in March 2019. The TA provided in Phase
II included items on the following topics: 1) the development and
review of program policies and procedures; 2) the development and
review of financial policies and procedures; 3) procurement policy
support and technical assistance; 4) the development of action plan
amendments; 5) how to manage and monitor subrecipients; 6) on-boarding
staff and building capacity to manage CDBG-DR; and 7) the translation
of existing HUD resources.
Phase III began in April 2019, and includes TA focused on the
following areas: 1) staff capacity development on CDBG-DR basics,
housing programs, economic development programs, continued subrecipient
management/monitoring, recordkeeping, and financial management; 2)
strengthening program policies and procedures to support program
implementation; 3) finalizing policies and procedures for its financial
management systems; and 4) program implementation assistance that will
address specific challenges identified by PRDOH.
Question. What type of technical assistance have you provided to
the island to help them stand up their programs and help them execute
their funding?
Answer. The Department has focused its technical assistance efforts
on building the capacity of the Puerto Rico Department of Housing
(PRDOH) staff, which are the staff administering the overall CDBG-DR
grant. The list below provides an example of the type of topics HUD
recently covered as part of the technical assistance.
----------------------------------------------------------------------------------------------------------------
Date Topics Covered
----------------------------------------------------------------------------------------------------------------
April 15, 2019.................................................. Training to PRDOH staff on How to Achieve CDBG-
DR National Objectives
March 15, 2019.................................................. HUD's Monitoring Process, Corrective Actions
and Sanctions; Overview of CPD Maps
Application; How to Document Low- and Moderate-
Income Area Benefit National Objective;
Determining CDBG-DR Service Areas
February 27, 2019............................................... Using CDBG-DR for Low Income Housing Tax
Credit Gap Financing; Action Plan Substantial
Amendment Process and Citizen Participation
Process
February 26, and March 1, 2019.................................. Disaster Recovery Grant Reporting Changes for
2017 [CDBG-DR grantees Webinar]
February 21, 2019............................................... Review of PRDOH organizational chart and
aligning with internal operational procedures
and workflows
February 4, 2019................................................ Subrecipient Training for Housing
Rehabilitation Program on cross-cutting
Federal requirements; subrecipient procurement
----------------------------------------------------------------------------------------------------------------
puerto rico disaster relief
Question. Has anyone from the White House or the Office of
Management and Budget asked you or other HUD officials to reduce, slow,
stop, or claw-back any of the hurricane relief funding Congress
approved for Puerto Rico? Has the President or Mick Mulvaney ever
spoken to you about hurricane relief funding for Puerto Rico?
Answer. This question seeks the substance of communications with
the White House and OMB, the disclosure of which would reveal
confidential, deliberative and internal Executive Branch information.
Question. Did former Deputy Secretary Pam Patenaude ever express to
you or other HUD officials her concerns regarding White House or OMB
efforts to reduce, slow, stop, or claw-back any of the hurricane relief
funding Congress approved for Puerto Rico?
Answer. This question seeks the substance of communications with
the White House and OMB, the disclosure of which would reveal
confidential, deliberative and internal Executive Branch information.
Question. Have you been contacted as part of the ongoing HUD
Inspector General's investigation into potential interference with
disaster relief funding approved for Puerto Rico? Will you commit that
you and your agency will cooperate with the IG's investigation?
Answer. The IG has contacted the Department with respect to a
review which is understood to involve CDBG-DR and Puerto Rico. The
Department cooperates with the IG in all of its investigations of the
Department.
section 811
Question. In 2010, Congress passed the Frank Melville Supportive
Housing Investment Act. I was the author of this bipartisan legislation
to reform and modernize the HUD Section 811 program.
The 811 Project-Based Rental Assistance program has been enormously
successful. It helps states develop integrated permanent supportive
housing targeted to non-elderly people with disabilities.
Prior to passage of the Melville Act, the 811 ``capital advance''
program was cumbersome and costly. Today, the success of the program is
hard to overstate.
--Today, the per unit cost of a Project-Based Rental Assistance
program unit averages only $30,000. Prior to the passage of the
bill, the per unit cost of the program exceeded $120,000 in
many parts of the country.
--In fiscal year 2010 & 2011, under the old program, $300 million in
funding produced less than 1,000 units across the entire
country. By contrast, 3 years of funding under the new 811 PRA
program (fiscal year 2012, 2013 and 2014) is projected to
produce as many as 7,500 units of integrated permanent
supportive housing at a fraction of the cost.
--Unfortunately, the President's fiscal year 2020 budget proposes to
reduce funding for Section 811 to $157 million, $27 million
less than the fiscal year 2019 level, a more than 30 percent
cut.
How can you justify this cut given the success of the 811 PRA
program and the tremendous need out there for permanent supportive
housing?
Answer. The fiscal year 2020 President's Budget request fully funds
the annual renewal and amendment for over 29,000 units across 2,450
housing properties that require additional budget authority in fiscal
year 2020. At the requested funding level, the Section 811 program
would support the same number of households currently assisted.
Additionally, the Budget includes a request to use offsetting
collections of excess residual receipts to fund new Capital Advances
and State Project Rental Assistance awards, thereby modestly increasing
the number of disabled, very low-income persons living in safe, decent,
and affordable housing.
funding availability notices (``nofas'') for section 811
Question. With the two-year budget agreement that governed fiscal
year 2018 and 2019, this Subcommittee was able to make important new
investments in a number of HUD programs including Section 811. This
includes as much as $385 million for new Section 811 ``Mainstream''
tenant-based vouchers in fiscal year 2018 and another $114 million for
fiscal year 2019. For 811 Project-Based Rental Assistance, the fiscal
year 2018 THUD bill allocated $82 .6 million for new units and another
$30 million for fiscal year 2019.
While HUD did award $98.5 million of the fiscal year 2018 funding
for 811 Mainstream in September, state and local agencies are still
waiting for a NOFA for the remaining $287 million--as well as the $114
million for the current fiscal year.
Likewise, HUD has yet to publish a NOFA for state housing agencies
for the $82.6 million for 811 PRA for fiscal year 2018. This is 6
months after fiscal year 2018 ended, and agencies are still waiting for
these NOFAs. This is troubling given the enormous demand for affordable
rental housing and permanent supportive housing experienced by non-
elderly people with disabilities.
What is the delay in getting these NOFAs published and these
desperately needed resources out the door?
Answer. In 2018, the Office of Multifamily Housing held multiple
listening sessions to seek input from stakeholders in order to inform
the design of the Notice of Funding Availability (NOFA) for the Section
811 Supportive Housing for Persons with Disabilities. These discussions
enhanced understanding of the current landscape for developing
supportive housing for persons with disabilities, including best
practices and innovative approaches to project financing, housing
quality, and partnerships with service providers. Also, HUD is drawing
from lessons learned through the ongoing assessment of the Section 811
PRA grant program. This informed approach to NOFA development is
essential to ensure a competitive process that targets funds to strong
project proposals in areas of great need. The Department anticipates
NOFAs for both fiscal year 18 and fiscal year 19 appropriations will be
published in late Summer 2019 and Spring 2020 for awards.
oversight of reverse mortgage servicers
Question. The government-insured Home Equity Conversion Mortgage
(HECM) is a reverse mortgage program that serves elderly borrowers
exclusively. Many of these borrowers rely on fixed incomes, lack family
or support systems, or have disabilities that make it challenging for
them to communicate or understand what their mortgage lender is telling
them. All of this means HECM-borrowers are especially vulnerable to
mistreatment by their mortgage servicer.
I am concerned that HUD may not have provided robust oversight of
the mortgage servicers that handle the day-to-day operations of HECM
loans or required safeguards that would protect this vulnerable
population of borrowers from mistreatment or unnecessary foreclosure.
What is HUD doing to protect reverse mortgage borrowers impacted
companies that may be pending Chapter 11 bankruptcy?
Answer. HUD has procedures in place to ensure that all HECM
borrowers will receive the funds owed to them under their HECM loan.
Following endorsement, every HECM borrower is sent a notice instructing
the borrower to contact HUD should they ever have difficulty obtaining
loan proceeds from their HECM servicer. When such a complaint is
received, HUD staff will contact the HECM servicer to determine the
reason for the delay of a HECM payment. Should a HECM servicer be
unable to make borrower payments, due to bankruptcy or any other
reason, HUD will provide required payments under the second mortgage to
the borrower to ensure that the borrower is unaffected by the
servicer's default.
Question. What will HUD do to ensure that servicers of HECM reverse
mortgages:
a. only seek due and payable status based on a property tax default
if the taxes are actually delinquent in accordance with local
law;
b. only initiate foreclosure when there are grounds to do so;
c. only cancel repayment plans or other loss mitigation when there
are grounds to do so;
d. comply with Federal law, including HUD regulations and RESPA;
e. have robust procedures that are followed to respond to borrower
concerns and complaints, including Notices of Error and
Requests for Information under RESPA; and
f. are providing equal access to borrowers with disabilities,
including those with visual impairments, hearing impairments,
and cognitive disabilities.
Answer.
--HUD approval is required before a HECM loan can be called due and
payable by a HECM servicer for a tax default. HUD uses the
local taxing authority's definition of ``delinquent'' in
rendering its decision for such an approval.
--HUD approval is required before a HECM loan can be called due and
payable by a HECM servicer for reasons other than the death of
the last surviving borrower, end of a non-borrowing spouse's
deferral period, or transfer of title. A HECM servicer cannot
initiate foreclosure prior to the loan being called due and
payable.
--HUD's policy contains specific conditions under which HECM
servicers may consider a repayment plan. Servicers must upload
supporting documentation into the Home Equity Reverse Mortgage
Information Technology (HERMIT) system to support their loan
servicing actions.
--HECM servicers must comply with all applicable laws and
regulations.
--HUD has a robust procedure for responding to concerns and
complaints from HECM borrowers. All HECM calls into HUD are
initially answered by the FHA Resource Center. The customer
service representatives gather information from the caller and
document the information into the Customer Relationship
Management (CRM) system to allow tracking of the call through
resolution. The customer service representatives answer any
questions regarding general information or clarification. Calls
requiring more specific information are escalated to HUD staff
for resolution. RESPA falls under the jurisdiction of the CFPB.
Therefore, HUD does not resolve complaints relative to RESPA
but, instead often refers borrowers with such complaints to the
CFPB.
--HECM servicers must comply with all applicable laws and
regulations. Any complaints received from borrowers stating
that they do not have access to their loan information due to a
disability are addressed directly by HUD staff who work
directly with FHA-approved mortgage servicers to ensure that
the borrower is provided the necessary information in a format
which they can utilize.
Question. Will HUD review HECM-servicers requests for due and
payable status or to terminate a foreclosure extension to verify that
there is actually a default warranting foreclosure?
Answer. HUD approval is required before a HECM loan can be called
due and payable by a HECM servicer for reasons other than the death of
the last surviving borrower, end of a deferral period or transfer of
title. A servicer cannot initiate foreclosure prior to the loan being
called due and payable.
Question. Will HUD require HECM-servicers to provide important
notices to borrowers and non-borrowing spouses, including those
involving loss mitigation, written in plain language and in an
accessible font and font-size?
Answer. HUD requires that servicers provide important notices with
specific information to borrowers and non-borrowing spouses under
existing policy. HUD's existing policy does not require specific fonts
or font-sizes. Any complaints received from borrowers stating that they
do not have access to their loan information due to a disability
limiting their ability to access information in their loan documents
are addressed directly by HUD staff who work directly with FHA-approved
mortgage servicers to ensure that the borrower is provided the
necessary information in a format which they can utilize.
Question. Will HUD require HECM-servicers to notify borrowers and
non-borrowing spouses of all loss mitigation options that are available
to them, including repayment plans, At-Risk Extensions, and the MOE,
both orally and in writing, prior to initiating foreclosure?
Answer. Loss Mitigation is not required for the HECM portfolio, so
HUD does not require HECM servicers to provide notice of loss
mitigation options to borrowers prior to the initiation of foreclosure.
However, HECM servicers must provide a Due and Payable Notice to all
borrowers whose HECM loans become due and payable. All Due and Payable
Notices sent to borrowers must reference available loss mitigation
options, if any, and inform the mortgagor of his/her ability to sell
his/her property or execute a Deed-in-Lieu of foreclosure. HECM
servicers must also refer borrowers to a HUD-approved Housing
Counseling Agency prior to initiating foreclosure. Servicers are
currently required under existing policy to be available to borrowers
by phone to answer questions regarding their HECM.
Question. Will HUD review and require HUD approval of HECM-
servicers' important notices to borrowers and non-borrowing spouses,
including those involving loss mitigation, to ensure that these notices
provide accurate and complete information, are written in plain
English, and are in an accessible font and font-size?
Answer. HUD requires that servicers provide important notices with
specific information to borrowers and non-borrowing spouses under
existing policy. These notices include monthly statements, annual
occupancy certification letters, Due and Payable Notices, and notice of
intent to foreclose. These documents are sent to the borrower and any
non-borrowing spouse throughout the life of the HECM. HUD's existing
policy does not require specific fonts or font sizes; however, if a
borrower needs assistance HUD staff will work directly with the HECM
servicer to ensure that the borrower is provided the necessary
information in a format which they can utilize.
freedom of information act
Question. Many tenants' and consumers' rights organizations in
Connecticut use FOIA requests to fulfill their missions. HUD is
required to respond to FOIAs in 20 business days, except for ``unusual
circumstances.'' During 2018, HUD reported it took HUD Headquarters an
average of 116 days to respond to ``simple'' FOIAs and an average of
199 days to reply to ``complex'' FOIAs.\1\ HUD took as many as 881 days
to respond to a FOIA, and it still has FOIAs pending from years ago,
going as far back as 2014.
---------------------------------------------------------------------------
\1\ See 2018 HUD Annual FOIA Report, available at https://
www.hud.gov/program_offices/administration/foia/foiarpts. Numbers
includes only FOIAs where information was granted.
---------------------------------------------------------------------------
HUD's decision to take down its FOIA web portal during the
government shutdown and to go without a vendor for its FOIA submission
and tracking system for approximately 2 months has only worsened the
delays.\2\
---------------------------------------------------------------------------
\2\ See https://www.propublica.org/article/hud-system-for-
processing-public-records-requests-died-during-the-shutdown
---------------------------------------------------------------------------
How many FOIAs did HUD lose (or need to have resubmitted or
assigned a new case number) during the government shutdown or the
outage of its FOIA submission and tracking system? What are the reasons
HUD lost these FOIAs (or needed to resubmit them or assign them new
case numbers)?
Answer. There were no lost FOIAs and because all the data in the
FOIA Management System (FMS2) was available when the system came back
online. All records and data stored in the FMS2 were available on the
first day the FMS2 contract was reinstated. Case numbers were not
reassigned because the new FOIA request did not get a FMS2 case number
until it was entered into FMS2, which was not possible until the FMS2
software was online. FOIAs received and processed while FMS2 was down
were entered into the FMS2 system when the system was back online and
assigned FMS2 case numbers. Once FMS2 was back online, FOIA requesters
were sent FMS2 case numbers for tracking purposes, if the case had not
already been closed. There was no need to resubmit FOIAs because when
the system was back up, all the FOIAs that were inputted through the
DOJ portal while the system was down were available in the system.
Question. What are the reasons HUD did not already have a new FOIA
vendor when its contract with Copper River Enterprise elapsed on
January 7, 2019? What are the reasons it took HUD nearly 2 months to
secure a new vendor? How did the system outage affect HUD's ability to
process and track FOIAs?
Answer. During the shutdown, the IT contract that funded the
application that supports the processing of FOIAs, FMS2, ended on
January 7, 2019. FOIAs were not considered an excepted activity in
HUD's contingency plan, therefore, all processing and correspondence
related to FOIAs ceased after December 22, 2018 due to the lapse of
appropriations. After consultation with our General Counsel,
Appropriations Law Staff, and Chief Financial Officer, it was
determined that since the contract was not in support of excepted
activity, it was not allowable for the agency to take any action to
preserve the contracted services or perform contract placement
activities for those services.
Upon reopening of the government on January 28, 2019, one of the
first priorities of the Office of Chief Information Officer, Office of
Chief Procurement Office and the Office of Administration was to
institute the contract that supported the processing of FOIAs. Upon
receipt of the required documentation and funding in February, the
Office of the Chief Procurement Officer expedited the contract award
and executed the new contract on February 25, 2019 well in advance of
its standard processing times (which is 60 days). It should be noted
that the lapsed award was a direct award with an Alaskan Native company
under the Small Business Administration (SBA) 8(a) program. Upon
requesting approval to issue a new contract award to the same company,
SBA disapproved which necessitated a new vendor be identified. Once a
new 8(a) vendor was identified, HUD sought and obtained SBA approval
and awarded the contract to the new 8(a) vendor.
While the FMS2 processing system was unavailable, staff were not
able to access the central database of all FOIA records of both closed
and pending cases. Staff had to rely on personal records to determine
the status of a request. New FOIA requests had to be tracked manually
with Excel sheets and Sharepoint and redactions were done through pdf
editing software instead of FMS2.
Question. What are the reasons HUD did not timely respond to FOIAs
in 2018?
Answer. HUD's use of technology--FMS2 and electronic discovery
(eDiscovery) tool has proven a be a significant factor in effectively
processing requests, as well as a significant challenge to efficiency.
While the use of FMS2 allows for the seamless integration of a
case's intake, its assignment out for collection of records, review and
redaction of those records, legal clearance, final approval, and
closure. The proliferation of this system's use, particularly amongst
employees not solely dedicated to FOIA, has better equipped the
Department to maintain a consistent approach to FOIA processing and to
ensure a robust and accurate administrative record for each request.
The Department's use of an eDiscovery platform for collection of
electronic records from employees' .gov email accounts allows
specialists to bypass custodial self-searches and to ensure that each
such collection is conducted both objectively and completely. However,
a surge in the number of requests for email-based records--thus, a
surge in the required use of the eDiscovery collection system--has
significantly challenged our ability to complete such collections
expeditiously. The turnaround time for collection of records through
eDiscovery is now in excess of 5 months.
Another challenge the Department consistently faces is that of
limited personnel. Many field offices around the country, and several
program offices within HUD Headquarters, rely on the efforts of a
single employee (for whom FOIA is one of many responsibilities) to
facilitate the collection of records responsive to incoming FOIA
requests. This, coupled with significant turnover across the agency,
has proved to be a noteworthy hurdle in both maintaining consistent
practices and closing FOIA requests efficiently.
Question. What is HUD doing to ensure that it timely responds to
FOIAs in accordance with the statute and to reduce the FOIA response
time identified in its 2018 Annual Report?
Answer. To significantly reduce the amount of time FOIA requests
are processed through the eDiscovery tool, two significant streamlining
improvements have been made to FOIA searches effective April 28, 2019.
First, the approval process for FOIA searches with the eDiscovery
tool has been streamlined. This reduced the number of steps in the work
flow process for electronic searches in half which will significantly
cut down the time a search request waits for approval before the search
is conducted.
Second, the search parameters for relevant documents is being
narrowed when the search is being initiated instead of the when the
search is completed. This reduces the amount of data that flows through
the FOIA process, reducing processing time and the time it takes for
FOIA specialist to review for relevant records.
These two improvements should significantly reduce the amount of
time it takes to search for relevant documents through the eDiscovery
tool.
Question. What changes has HUD's implemented to its FOIA tracking
and submission system to ensure that it timely responds to FOIAs?
Answer. To significantly reduce the amount of time FOIA requests
are processed through the eDiscovery tool, two significant streamlining
improvements have been made to FOIA searches effective April 28, 2019.
First, the approval process for FOIA searches with the eDiscovery
tool has been streamlined. This reduced the number of steps in the work
flow process for electronic searches in half which will significantly
cut down the time a search request waits for approval before the search
is conducted.
Second, the search parameters for relevant documents is being
narrowed when the search is being initiated instead of the when the
search is completed. This reduces the amount of data that flows through
the FOIA process, reducing processing time and the time it takes for
FOIA specialist to review for relevant records.
These two improvements should significantly reduce the amount of
time it takes to search for relevant documents through the eDiscovery
tool.
Question. Will HUD commit to responding to FOIAs in 20 business
days? What does HUD need to do to be able to respond to FOIAs within 20
business days?
Answer. The Department will continue to review FOIA processing and
analyze resources to meet the statutory requirements under FOIA.
Changes are already underway to reduce the eDiscovery processing time
of up to 5 months. To address the eDiscovery processing times, changes
are being implemented effective April 28, 2019, and further process
improvements are being studied.
There are several reasons for the increase in FOIA processing
times in the most recent fiscal year. First, there has been an
increased requests from members of the news media and government
oversight groups. Because these organizations do not pay FOIA
processing fees, they are more likely to file a greater number of
requests, and those requests are more likely to be complex, involve
voluminous records, or both. Second, a greater number of requests
required the utilization of eDiscovery for data collection, which as
explained above has been a cause for a delay in processing time. The
hope is that with the new procedures established in late-April, this
processing time will decrease. Third, a greater number of FOIA requests
proceeded to litigation. Due to Federal court production schedules and
filing deadlines, FOIA litigation must often be prioritized, drawing
additional resources (including staff) away from the processing of
traditional requests.
Another challenge the Department consistently faces is that of
limited personnel. Many field offices around the country, and several
program offices within HUD Headquarters, rely on the efforts of a
single employee (for whom FOIA is one of many responsibilities) to
facilitate the collection of records responsive to incoming FOIA
requests. This, coupled with significant turnover across the agency,
has proved to be a noteworthy hurdle in both maintaining consistent
practices and closing FOIA requests efficiently.
______
Questions Submitted by Senator Brian Schatz
facebook's violation of the fair housing act
Question. On March 28, 2019, HUD announced that it is charging
Facebook with violating the Fair Housing Act.
What actions is the FHEO taking to enforce, and better prepare
itself to enforce, the Fair Housing Act in the broader algorithm-driven
advertising space?
Answer. The Department is committed to ensuring enforcement of the
Fair Housing Act in all covered transactions. Millions of housing-
related advertisements are seen each day online, and many are highly
targeted to audiences. In addition to the specific enforcement actions
referenced above, the Department is actively considering the
application of the Fair Housing Act to a variety of transactions and
actors in this space. The Department is in regular coordination with
other interested agencies, such as the Department of Justice, the
Consumer Financial Protection Bureau, and the Office of the Comptroller
of the Currency. The Department has a dedicated Office of Systemic
Investigations that focuses on cases that are complex or have a large
number of potential victims, and the staff in this office are
increasing their expertise in the area of targeted advertisements, as
it is clear they play a role in the availability of housing
opportunities. The Department notes that while these technologies are
evolving, the law remains the same, and the Department intends to
enforce the Fair Housing Act as it has since 1968. The Department is
continuing to invest in staff recruitment, development, and training to
support this mission.
zoning reform and affordable housing
Question. You have said that zoning reform is key to addressing the
affordable housing crisis.
What are the major components of successful zoning reform? How can
HUD implement zoning reform and through what programs? Additionally,
how can HUD ensure zoning reform reaches communities with the most
exclusionary zoning regulations, communities not typically targeted by
HUD's programs?
Answer. Zoning is increasingly recognized as a major regulatory
barrier contributing to the affordable housing crisis. Strict zoning
codes can often restrict housing development and supply, leading to
increased housing costs at all income levels.
Key components of successful zoning reform include the following:
--Identifying and prohibiting exclusionary zoning practices that
create unequal access to a variety of housing options and
prevent families from fully participating in a community. A
streamlined rezoning process should adapt to a changing
community and the challenges that may emerge there such as
workforce housing needs, disadvantaged populations, aging baby
boomers, migration patterns, and young professionals.
--Integrating housing, transportation, and infrastructure planning in
a comprehensive fashion to improve livability. Effective zoning
begins with assessing the feasibility of creating well-planned,
livable communities of opportunity. It also considers community
resilience and sustainability by preserving existing natural
resources and planning for disasters, including not building in
flood zones.
--Encouraging regional cooperation by identifying and encouraging
state and local stakeholders to collaborate across silos to
find regional solutions to infrastructure challenges. Reforms
should interpret zoning regulations with sufficient flexibility
to accommodate the interests and preferences of rural and
small-town residents.
--Building evidence-based knowledge on zoning by learning what works
at the state and local government levels, and using the
knowledge to provide technical assistance to states and their
local government units. It also is essential to educating the
public about the importance of zoning and its impact on land
resources.
--Zoning strategies that can be used to increase housing supply
include:
--Offering incentives to developers, such as tax abatements, density
bonuses, and other programs to encourage the building (or
preservation), of housing units. Expanding ``by right'' zoning
will allow for more flexibility and creativity.
--Overlay zoning districts, affordable housing districts,
inclusionary zoning, allowing accessory dwelling units,
allowing manufactured housing and density bonus programs.
--Upzoning by allowing increased density may result in more housing
units, including smaller housing units that could be more
affordable. Increasing density strategically can create
amenity-rich environments by increasing ridership of public
transit and creating more walk-able, less car-dependent
neighborhoods. Zoning districts are sometimes created for
special purposes, such as preserving open space, improving
walkability, or expanding access to healthy foods.
HUD is reviving its America's Affordable Communities Initiative
(AACI), an effort to reduce regulatory barriers to affordable housing
and extending it to all levels of government. HUD recently directed
program offices to review their own program policies and procedures to
identify rules or regulations that could impede housing development and
preservation thereby reducing the availability of affordable housing.
AACI will allow HUD to work with state and local governments to assist
them with review of their comprehensive plans to identify zoning
regulations or land use policies that are exclusionary in nature and
recommendations for removing those impediments.
affordable housing crisis
Question. The United States is facing an affordable housing supply
crisis. This crisis is particular acute in Hawai'i, where nearly 65,000
homes must be built in the next 6 years just to meet demand.
We must consider new and innovative solutions to this problem. What
is HUD doing to explore international models, such as Singapore or
Vienna, that may be worth evaluating to see what aspects could be
incorporated here?
Answer. The International and Philanthropic Affairs Division (IPAD)
of HUD's Office of Policy Development and Research coordinates HUD's
international engagement with the objective of sourcing international
best practices and lessons to help make HUD's policies and programs
more effective. The IPAD office brings best practices back to HUD on a
myriad of issues including affordable housing, disaster recovery,
ending homelessness, and promoting economic opportunity. International
engagement by IPAD involves close coordination with the State
Department and includes the following:
--Organization for Economic Co-operation and Development (OECD): IPAD
works with the US-OECD Mission on housing and urban development
issues, providing input for OECD reports and participating in
the OECD Working Party on Urban Policy (WPURB) reviews of how
OECD countries engage in national urban policy, affordable
housing issues, and related topics. HUD's senior economist
attends the semiannual meetings of the WPURB.
--U.S. Department of State Mission to the United Nations: IPAD
provides support on housing and urban development issues for
the U.S. Mission to the UN's engagement with UN Habitat. HUD's
delegation to the 2019 World Urban Forum was led by Community
Planning and Development's Assistant Secretary, Neal Rackleff.
The delegation had a bilateral meeting with the Singapore
delegation to discuss this issue. The delegation invited
Secretary Carson to visit Singapore.
--United States Mission to the United Nations Economic Commission for
Europe (UNECE): UNECE includes 56-member States in Europe,
North America, and Asia, and aims to promote pan-European
economic integration. IPI coordinates membership and
information/research exchanges for the UNECE Housing and Land
Administration Committee, which focuses on housing
affordability, social housing and low-cost housing. The
Associate Deputy Assistant Secretary for the Office of Policy
Development attends the annual meeting in Geneva and attends
regular conference calls throughout the year that often center
on affordable housing issues.
--Japan Aging in Place Memorandum of Cooperation: This MOC signed in
June 2017 allows bilateral cooperation in Aging in Place
research and forums. An Aging in Place Forum in Los Angeles on
June 24--28 will focus on the affordable housing crisis and the
Los Angeles County Purposeful Aging Initiative (PALA). A joint
U.S.-Japan White Paper to be published later this year that
will include four case studies each from both HUD and MLIT (our
counterpart), focusing on Aging in Place but also including
housing affordability.
--IPAD supports professional exchanges through the International
Visitor Leadership Program (IVLP) of the State Department's
Bureau of Cultural and Education Affairs. HUD, on average,
receives about one to two delegations a month.
--IPAD supports the Dialogue for Change (D4C) initiative, whereby the
German Marshall Fund of the United States (GMF), HUD, and
several German government counterparts support a transatlantic
network of city official participants focused on successful
implementation of urban development projects including
affordable housing.
--IPAD supports the U.S.-Israel Joint Economic Development Group
(JEDG) in an annual dialogue to strengthen the bilateral
economic relationship and expand policy coordination and
cooperation. An MOC between HUD and the Israeli Ministry of
Finance enables collaborative research on affordable housing
and urban development policies and programs. In November 2019,
Israel and the US will conduct a city to city exchange focused
specifically on regulatory barriers/zoning that affects
affordable housing.
--IPAD sources and edits research to be included in the Foreign
Exchange section of HUD's policy journal Cityscape and other
publications by which international evidence might inform U.S.
housing and community development policy.
resilient housing and resilient neighborhoods
Question. You have suggested that HUD can support programs to
create more resilient housing and resilient neighborhoods.
What are specific changes HUD can pursue administratively and that
Congress can pursue to better support resilient neighborhoods?
Answer. The Department has not conducted an assessment of specific
administrative or legislative changes to support resilient
neighborhoods. More important than Federal funding is a focused effort
by state and local governments to reassess local building regulations
and land use policies. Work of this nature is encouraged within the
CDBG disaster recovery and mitigation funding and can also be an
eligible activity under the regular CDBG program. CDBG grantees may
always choose to pursue resilience investments with their annual
funding to the extent such investment are consistent with CDBG program
requirements. Consistent with the Administration's budget proposals in
the past several years, funding of these types of activities is best
pursued by states and local governments with their own resources.
disaster allocations
Question. In determining CDBG-DR allocations, how can HUD better
account for the unique challenges of disaster recovery in remote
locations?
Answer. When allocating formula disaster assistance funding, HUD
uses data that are collected by FEMA for both its Individual Assistance
and Public Assistance (categories C to G) programs, and SBA for its
disaster assistance loan program. Over the years of managing these
allocations, HUD has found that sometimes changes are needed to account
for the unique aspects of a disasters covered by a supplemental
appropriation, such as when in 2017 and 2018 there were severe
disasters in several remote locations. In some of these places, FEMA
has extra authorities, such as Permanent Housing Construction, that,
when calculating unmet needs for CDBG-DR, HUD takes into consideration
when normally the Department would not. Also, because remote areas can
have much greater recovery cost, HUD has revised the formula to reflect
higher costs to repair in those areas than in other less remote and
less costly recovery areas. Finally, to be more inclusive of remote
(or) rural areas, which are relatively low population, HUD has adapted
its thresholds to include as most impacted and distressed zip codes (in
addition to counties with a concentration of damage).
gao report on disaster
Question. Last week, GAO released a report supporting the full
authorization of the CDBG-DR program, additional grantee oversight, and
better staff training.
What steps is HUD taking to improve the efficiency and ensure
proper stewardship of CDBG-DR funds, including those based on GAO
recommendations? What communities would benefit from these changes, and
what would the impact on these communities look like?
Answer. The Department is focusing on efforts to make the CDBG-DR
grant process more efficient and provide clarity for communities
receiving funds. For example, consolidation and standardization of
Federal Register Notices could reduce the time that grantees must wait
to initiate their long-term recovery efforts. Additionally, the
Department will attempt to consolidate Federal Register Notices for
existing grantees who have multiple Notices governing their CDBG-DR
allocations. The Department is also developing an online tool to help
grantees identify the specific requirements that apply to their CDBG-DR
grant(s) across multiple Federal Register Notices.
The Department will also improve its stewardship by focusing on
pre-award grantee capacity and strengthening HUD's assessment tools.
CDBG-DR has hired 14 employees since January 2017 to support these
efforts with plans to have an additional 6 employees on board in June
2019.As the Department indicated in its comments to the GAO regarding
its recent report, the Department will expand its existing financial
management, capacity, and action plan assessments. The revisions
include clarifying the standards HUD uses to determine proficiency and
capacity and will provide additional training and/or guidance for HUD
staff performing the reviews.
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Questions Submitted by Senator Joe Manchin, III
community development block grant (cdbg) program
Question. As you know, the Community Development Block Grant (CDBG)
program is one of the longest running programs at the Department of
Housing and Urban Development (HUD). CDBG is a useful program because
it allows recipient communities to have the flexibility to determine
how best to use the money for their state's unique needs, whether it is
rehabilitating dilapidated housing stock, downtown revitalization, or
improving rural broadband connectivity. In West Virginia, we need it
all. In 2018, totaling all the funds grantee counties were awarded,
West Virginia received around $20 million in CDBG funds. As a former
Governor, I understand that nobody knows what a community needs better
than the people that live there. However, I was disappointed to see the
complete elimination of a program that does just that, for the third
year in a row.
I know this program has a lot of bipartisan support in the
Congress. Secretary Carson you've said this program is best supported
by state and local governments, how do you propose state and local
governments come up with the funds to support the CDBG program.
Answer. Many CDBG grantees have generated substantial program
income through implementation of their CDBG programs in prior years,
particularly in the areas of housing rehabilitation and economic
development. Moreover, local tax revenues plus public-private
partnerships are additional sources of funds for local and state
governments to address the types of activities eligible to be funded
through CDBG. HUD continues to effectively and efficiently administer
the requirements of the program while also remaining a good steward of
taxpayer dollars.
hud duplication of benefits (bop)
Question. On October 5, 2018, President Trump signed the FAA
Reauthorization Act into law. It included a number of policy reforms
affecting the way in which the Federal government responds to major
disasters. It included one specific provision to ensure that the people
who applied for Small Business Administration Disaster Loans
immediately after the storm would not be penalized for doing that by
ensuring that those loans would not be treated a ``Duplication of
Benefits'' that would render them ineligible for HUD disaster funding
later down the line. With all of the disaster related Community
Development Block Grant Funding currently on hold, the demand for loans
and other bridge financing is only going to increase in these disaster
affected communities.
When can we expect your guidance on how these new ``Duplication of
Benefits'' rules should be implemented? What interim advice should we
be giving our constituents while we wait for that guidance?
Answer. The Disaster Recovery Reform Act (DRRA), enacted on October
5, 2018, included one specific provision amending the ``duplication of
benefit'' provisions of the Stafford Act and establishes that a loan is
not a duplication of benefit. This amendment is effective for major
declared disasters between January 1, 2016 and December 31, 2021. HUD
has been coordinating the policy consideration with the Federal
Emergency Management Agency (FEMA) and the Small Business
Administration (SBA) and will shortly issue revised duplication of
benefit policy guidance for CDBG-DR grantees to implement this
legislative change.
home investment partnerships program (home)
Question. Stable housing has been shown to end persistent
homelessness, improve health conditions, and lower public costs by
reducing the use of other public services. We also know that stable
housing supports a stable workforce, enables children to achieve more
at school, and supports the strength of our communities. As you are
aware, the HOME Investment Partnerships Program (HOME) provides funds
for those who need it most. The funds benefit low-income families and
can be used for rehabilitation of owner-occupied housing, homebuyer
assistance, rental housing construction and rehabilitation, and the
provision of tenant-based rental assistance. In West Virginia,
Huntington Habitat for Humanity has dedicated 109 homes and they tell
us the construction of those homes would not be possible without the
support of government funding for affordable housing, like the HOME
funds. Their home buyers not only purchase their homes but they also
are a apart of the building process of their own home and homes for
others.
In fiscal year 2019, Congress funded this program at $1.25 billion.
However, for the third year in a row, we saw this program eliminated in
the President's budget.
In the HUD budget the HOME program is set to be eliminated. How do
you plan to supplement all the good development and investment that
organizations who use this funding are able to provide?
Answer. HUD believes states and local governments are uniquely
situated to engage public, private, and philanthropic partners and to
coordinate efforts to effectively address affordable housing needs
within their jurisdictions. To meet their affordable housing needs,
states and localities must reform local policies such as zoning and
permitting policies, commit state and local resources through state or
local housing trust funds, property tax exemptions, state-funded rental
assistance programs, or state investor tax credits. Further, the
Administration's Opportunity Zone initiative will attract significant
private investment to the distressed neighborhoods in which HOME
Program funds have frequently been invested. The Department will
continue to increase local affordable housing delivery capacity through
technical assistance resources, including a range of training,
toolkits, webinars, on-site help, and a variety of guides available on
the HUD Exchange website.
neighborhood reinvestment corporation (neighborworks america)
Question. The public nonprofit organization, NeighborWorks America,
supports a network of nearly 250 select local and regional nonprofit
community development organizations across the country. NeighborWorks
offers financial support, technical assistance, training and other
services to the nonprofits they work with. One of the NeighborWorks
chartered organizations in West Virginia that is doing great work is
the HomeOwnership Center located in Eklins.
It is important to have NeighborWorks charted organizations in West
Virginia to continue to provide their services to the community. How
does HUD plan to continue to fund the Neighborhood Reinvestment
Corporation?
Answer. HUD holds a Comprehensive Housing Counseling Notice of
Funding Availability (NOFA) competition to distribute Housing
Counseling Assistance funds appropriated by Congress. NeighborWorks
America has been a HUD-approved housing counseling national
intermediary for more than twenty years. In 2018, HUD awarded a total
of $47 million, appropriated by Congress, to support housing counseling
agencies like the Homeownership Center. NeighborWorks America received
an award of $3 million in the 2018 NOFA, which the agency sub-assigns
to approximately 117 affiliated HUD-participating housing counseling
agencies nationwide. In the coming months, Housing Counseling plans to
hold a NOFA competition to encourage all HUD-approved housing
counseling agencies, including NeighborWorks America and its
affiliates, to compete for funding.
hud's section 4 capacity building for community development and
affordable housing (section 4)
Question. Through funding of national intermediaries (such as;
Habitat for Humanity, Enterprise Community Partners), the Section 4
Capacity Building for Community Development and Affordable Housing
Program (Section 4) enhances the capacity and ability of Community
Development Corporations (CDCs) and Community Housing Development
Organizations (CHDOs) to carry out affordable housing and community
development activities that benefit low- and moderate-income families
and persons. The national partners distribute Section 4 funds to local
non-profits. Local non-profits in West Virginia, like Coalfield
Development Corporation, located in the southern part of the state
which has been hit hard by the downturn in coal production, has
received these awards and benefited greatly. Since 2013, Section 4 has
leveraged almost $7.5 billion in development costs alone.
It is important to see this investment in community development and
affordable housing, how does HUD plan to continue to encourage this
investment?
Answer. The awards for the $35 million Section 4 program were
recently announced, and the grant agreements were signed on April 23,
2019, effectively initiating the funds to the following awarded
entities--Habitat for Humanity International, the Local Initiative
Support Corporation, and Enterprise Community Partners. These entities
will provide Capacity Building and Technical Assistance to Community
Development organizations in primarily Urban areas throughout the
country. However, $5 million of the designated $35 million must be
earmarked for rural communities and activities. Additionally, the HUD
Office of Community Planning and Development published a $5 million
Notice of Funding Availability (NOFA) on April 8, 2019, soliciting
applications for the Rural Capacity Building (RCB) program. Once
applications are received, and awards are made, the selected
organizations will focus their Capacity Building effort solely in rural
communities throughout the country.
SUBCOMMITTEE RECESS
Senator Collins. I thank you for your cooperation, and I
also want to thank our subcommittee staff and your staff for
the work on this hearing.
Secretary Carson. Thank you.
Senator Collins. This hearing is now adjourned.
[Whereupon, at 2:12 p.m., Wednesday, April 3, the
subcommittee was recessed, to reconvene at a time subject to
the call of the Chair.]