[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
PERSISTENT POVERTY IN AMERICA:
ADDRESSING CHRONIC DISINVESTMENT
IN COLONIAS, THE SOUTHERN BLACK
BELT, AND THE U.S. TERRITORIES
=======================================================================
HYBRID HEARING
BEFORE THE
SUBCOMMITTEE ON HOUSING,
COMMUNITY DEVELOPMENT,
AND INSURANCE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
NOVEMBER 15, 2022
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-102
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
49-482 PDF WASHINGTON : 2022
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas
BILL FOSTER, Illinois FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
CINDY AXNE, Iowa TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts JOHN ROSE, Tennessee
RITCHIE TORRES, New York BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts LANCE GOODEN, Texas
ALMA ADAMS, North Carolina WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts
Charla Ouertatani, Staff Director
Subcommittee on Housing, Community
Development, and Insurance
EMANUEL CLEAVER, Missouri, Chairman
NYDIA M. VELAZQUEZ, New York FRENCH HILL, Arkansas, Ranking
BRAD SHERMAN, California Member
JOYCE BEATTY, Ohio BILL POSEY, Florida
AL GREEN, Texas BILL HUIZENGA, Michigan
VICENTE GONZALEZ, Texas LEE M. ZELDIN, New York
CAROLYN B. MALONEY, New York TREY HOLLINGSWORTH, Indiana
JUAN VARGAS, California JOHN ROSE, Tennessee
AL LAWSON, Florida BRYAN STEIL, Wisconsin, Vice
CINDY AXNE, Iowa, Vice Chair Ranking Member
RITCHIE TORRES, New York LANCE GOODEN, Texas
VAN TAYLOR, Texas
C O N T E N T S
----------
Page
Hearing held on:
November 15, 2022............................................ 1
Appendix:
November 15, 2022............................................ 27
WITNESSES
Tuesday, November 15, 2022
Arriaga-Salinas, Amber, Assistant Executive Director, Proyecto
Azteca......................................................... 7
Bonilla, Yarimar, Director, Center for Puerto Rican Studies,
Hunter College................................................. 4
Burt, Kiyadh, Vice President of Policy & Advocacy and Interim
Director, Hope Policy Institute................................ 6
George, Lance, Director of Research and Information, Housing
Assistance Council (HAC)....................................... 8
Potterpin, Chris, President, Council for Affordable and Rural
Housing (CARH)................................................. 10
APPENDIX
Prepared statements:
Arriaga-Salinas, Amber....................................... 28
Bonilla, Yarimar............................................. 37
Burt, Kiyadh................................................. 46
George, Lance................................................ 58
Potterpin, Chris............................................. 69
Additional Material Submitted for the Record
Cleaver, Hon. Emanuel:
Written statement of cdcb come dream.come build.............. 77
Hill, Hon. French:
GAO report, ``Targeting Federal Funds, Information on Funding
to Areas with Persistent or High Poverty,'' dated July 2020 81
GAO report, ``Areas with High Poverty, Changing How the 10-
20-30 Funding Formula is Applied Could Increase Impact in
Persistent-Poverty Counties,'' dated May 2021.............. 151
PERSISTENT POVERTY IN
AMERICA: ADDRESSING
CHRONIC DISINVESTMENT IN
COLONIAS, THE SOUTHERN
BLACK BELT, AND THE
U.S. TERRITORIES
----------
Tuesday, November 15, 2022
U.S. House of Representatives,
Subcommittee on Housing,
Community Development,
and Insurance,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:06 a.m., in
room 2128, Rayburn House Office Building, Hon. Emanuel Cleaver
[chairman of the subcommittee] presiding.
Members present: Representatives Cleaver, Velazquez,
Beatty, Vargas, Torres; Hill, Posey, Huizenga, Rose, and
Taylor.
Ex officio present: Representative Waters.
Chairman Cleaver. The Subcommittee on Housing and Community
Development will come to order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. Also, without
objection, members of the full Financial Services Committee who
are not members of this subcommittee are authorized to
participate in today's hearing.
Today's hearing is entitled, ``Persistent Poverty in
America: Addressing Chronic Disinvestment in Colonias, the
Southern Black Belt, and the U.S. Territories.''
I now recognize myself for 4 minutes for an opening
statement.
Persistent poverty is a major problem in this country. And
in counties around the country, they have a rate of poverty
that has exceeded 20 percent for 30 years or more in a row of
the country's 377 persistent-poverty counties. The vast
majority are in rural and non-metro areas.
The millions of Americans grappling with persistent poverty
are diverse. They are located in Appalachian communities in
States like Tennessee and Kentucky; in Native American
communities in States like South Dakota; in Latino communities
in States like Texas; in African-American communities in States
like South Carolina and Alabama; and in the U.S. Territories.
These Americans--Americans--are represented in Congress by
Democrats and Republicans, and by Democratic and Republican
members of this committee. Addressing persistent poverty is in
the interest of all Americans, regardless of geography, race,
or political preference. And addressing persistent poverty is a
significant challenge, despite flows in the economy. In good
economic times and in bad, persistent-poverty areas of the
country are struggling, resistant to time and effort.
Democrats continue to advocate for rural America and the
Territories. Under the leadership of Chairwoman Waters, the
Financial Services Committee passed the Build Back Better Act,
which would have made a historic level of investments in rural
and persistent-poverty areas. The housing title of the bill
would have specifically provided over $100 billion in fair and
affordable housing investments throughout the United States.
This would have included $2.1 billion for housing and
homeownership preservation to increase the supply of housing
and provide rental assistance in rural communities through the
USDA, as well as $500 million for infrastructure improvements
and manufactured housing communities, and $700 million for
housing and community development investment in colonias,
including those located outside of the 150-mile area from the
United States-Mexican border, through the Community Development
Block Grant (CDBG) program. Territories would have received a
significant portion of these investments through required
minimum allocations.
I hope that this hearing will dive deeper into the
financial solutions and the Federal solutions on this table and
the full range of tools at our disposal.
The Chair now recognizes the ranking member of the
subcommittee, Mr. Hill, for 4 minutes.
Mr. Hill. I want to thank the chairman. And I appreciate
today's topic of the hearing, persistent poverty in America.
This topic is certainly an important one, and it is a
troubling one. According to the Census Bureau, the national
poverty rate was 12.8 percent in 2021, with about 37 million
people in our nation in poverty, up more than 3 million from
the prior year.
It might be hard for some to fathom that in a country so
blessed with abundance, there are still so many places where
poverty not only exists but where it has taken root and shows
no sign of relenting. These places are remnants of a more
forgotten time in America, before the economic boom that for
many dominated the latter half of the 20th Century and carries
on today.
And despite the specificity of the title of today's
hearing, these deeply-impoverished areas can, sadly, be found
in all corners of our great nation: from the southeast counties
of the Blue Grass State of Kentucky to the Native American
Reservations of central South Dakota, western Alaska on the
Bering seacoast, and in my home State of Arkansas.
These places might not all look alike, but they do share at
least one major characteristic: They are, for many purposes,
all rural in nature, and for many, extremely so. So in a lot of
ways what we are really talking about here today is the impact
of poverty in rural America. And more of the pointed question
we need to be asking is why does poverty seem to hit those
living in the country with such a tremendous impact over those
in impoverished urban areas, like the south Bronx or Detroit? I
am not sure we will ever be able to answer that important
question here today, but let me make a couple of observations.
First, the high levels of poverty we see in these rural
areas of our nation, despite 60 years of focused Federal
efforts to eradicate them, continue. The Department of
Agriculture's Rural Housing Service was created in 1949 to
build or improve housing and essential community facilities in
rural areas. That was followed in 1965 by HUD's efforts under
urban renewal, and by Sergeant Shriver and the Commerce
Department's Economic Development Administration (EDA), all to
try to help economically-distressed areas and cities.
In fact, if you go back to the launch of the Federal
Government's 1960's war on poverty, President Johnson boldly
proclaimed: ``We have declared an unconditional war on poverty;
our objective is total victory; I believe that 30 years from
now, Americans will look back on these 1960s as the time of a
great American breakthrough towards victory of prosperity over
poverty.'' Well, $22 trillion later, I am reminded of President
Reagan's quip from 1988: ``President Johnson declared war on
poverty, and poverty won.''
These were lofty goals by President Johnson, but after 60
years and hundreds of billions--as I say, $22 trillion in
inflation adjusted spending, Big Government approaches to
battling poverty have not worked for many rural households.
It seems to me it is a great time to rethink this strategy
as we try to tackle it. We can no longer define success by
annual increases in funding levels for programs that fail to
elevate families out of poverty. Instead, we should focus on
what is likely to be the most effective way to combat it:
greater development and deployment of economic opportunity,
including broadband; better available education in these rural
areas; private lending and investment; and job creation.
I have seen that success in Arkansas, Mr. Chairman. One of
the poorest counties in the First District of Arkansas, in the
Mississippi Delta is now the world's largest producer of steel.
And hundreds of people are employed, and that economic
prosperity and that corridor from Memphis to the Missouri
border is growing because of those kinds of investments.
I thank my chairman for this hearing. I look forward to the
discussion, and I yield back to him.
Chairman Cleaver. The gentleman yields back.
The Chair now recognizes the Chair of the full Committee on
Financial Services, the Honorable Maxine Waters of California.
Chairwoman Waters. Thank you very much, Mr. Cleaver, for
this hearing.
Over 1.7 million people in the U.S. live in rural counties
experiencing persistent poverty. These rural communities face
chronic disinvestment and population loss as housing, lending,
and community development needs have gone ignored. We cannot
continue to turn a blind eye, especially as inflation, driven
in large part by rising housing costs nationwide, has
exacerbated rural job loss, further entrenching persistent
poverty in many communities.
One year ago this month, the House passed the Build Back
Better Act, which included historic investments for housing in
rural America, but not one single Republican Member supported
it. I hope we can build bipartisan support for efforts to
invest in affordable housing, especially in rural areas, and to
effectively reduce inflation. And I hope, as we go down this
path for the future, that we can get some support from the
Republicans.
Thank you. I yield back.
Chairman Cleaver. The chairwoman yields back.
We will now turn to our witnesses: Yarimar Bonilla, the
director of the Center for Puerto Rican Studies at Hunter
College; Kiyadh Burt, the vice president of policy and advocacy
and interim director at the Hope Policy Institute; Amber
Arriaga-Salinas, the assistant executive director of Proyecto
Azteca; Lance George, the director of research and information
at the Housing Assistance Council; and Chris Potterpin, the
president of the Council for Affordable and Rural Housing.
Our witnesses are reminded that their oral testimony will
be limited to 5 minutes. You should be able to see a timer that
will indicate how much time you have left. I would ask that you
be mindful of the timer so that we can be respectful of the
other witnesses' and the committee members' time.
And without objection, your written statements will be made
a part of the record.
Ms. Bonilla, you are now recognized for 5 minutes to give
an oral presentation of your testimony.
STATEMENT OF YARIMAR BONILLA, DIRECTOR, CENTER FOR PUERTO RICAN
STUDIES AT HUNTER COLLEGE
Ms. Bonilla. Thank you.
Good morning. My name is Yarimar Bonilla, and I am the
director of the Center for Puerto Rican Studies at Hunter
College, the largest research institute and archive devoted to
the Puerto Rican experience. I am grateful for the invitation
to testify today on the question of persistent poverty and
chronic disinvestment in the U.S. Territories. Alhough, given
the time limit and the data challenges, I will focus narrowly
on Puerto Rico.
When I gathered with my team to present this testimony, the
first question we asked ourselves was, is persistent poverty
really the right term for thinking about Puerto Rico's
challenges?
The U.S. Government has set 20 percent for 30 years as the
trigger of an alarm, but the fact is that Puerto Rico's poverty
rate has been twice that for over half a century. At 40.5
percent, Puerto Rico has the second-highest poverty rate in the
U.S., second only to American Samoa, and the absolute lowest
median income of any U.S. jurisdiction.
A full quarter of the Puerto Rican population subsists on
just $10,000 a year. Some assume that these depressed incomes
are tied to a lower cost of living, but the contrary is true.
Rent, mortgage, and utility burdens are all higher in Puerto
Rico than the national average.
The U.S. Territories as a whole share these concerning
metrics, leading us to ask whether this is really a question of
persistent poverty, or rather, of the systemic poverty of
empire.
Sadly, those most impacted by poverty and inequality are
Puerto Rico's children. A whopping 55 percent of Puerto Rican
children are living in poverty, 60 percent in rural areas. It
has been shown that the best way to attend [inaudible] is to
ensure access to public infrastructure and services like
education that facilitate upward mobility. However, in Puerto
Rico, acute poverty rates have been met by a systemic
disinvestment in public infrastructure due to austerity
measures, leading to the closing of schools, the defunding of
the university system, and the privatization of essential
infrastructure, such as roads, tolls, and energy distribution.
Since the privatization of the grid in 2021, outages have
become commonplace, even as utility costs rise. This has
impacted education, healthcare, communications, sales, and even
the preparation of this testimony. Just yesterday, one of our
researchers was among the hundreds of thousands without
electricity due to yet another mass power outage.
The toughest part of all of this is that those who fail to
provide us with the most basic of services, services which
arguably should be guaranteed human rights, seem to operate
with complete impunity. Although many wring their hands and
accept this as the unfortunate fate of life in the colonies, we
remind the Members of Congress that the U.S. Constitution
grants them the singular power to change the lives of millions
of citizens and nationals who reside in the Territories.
The U.S. Supreme Court has established that Congress has
the power and authority to treat the Territories differently
than the States. This has historically been interpreted as a
congressional right to treat the Territories worse, by leaving
them out of critical Federal programs while failing to address
their systemically-depressed incomes. However, Congress could
just as easily treat the Territories better, by attending to
the demographic particularities and historic legacies of
systemic dispossession.
If the U.S. Government recognizes that a persistent poverty
rate of over 20 percent for 3 decades warrants Federal action,
we request that the committee ponder what is necessary to
attend to communities that have had twice that rate for
multiple generations.
To begin, Congress must exercise its oversight role to
critically examine the impact of the Fiscal Board it created.
What has been the tangible impact and long-term consequences of
the focus on austerity and privatization? Further, since the
board conceded that a large portion of Puerto Rico's debt was
unconstitutional, why is it forcing Puerto Ricans to pay it and
refusing to have it audited? In addition, HUD and FEMA must be
held accountable and work in better partnership with local
watchdogs.
Discrimination and excessive scrutiny of Puerto Rican
agencies and applicants in the aftermath of Hurricane Maria had
been widely documented and [inaudible] yet we already hear the
same issues are unfolding in the wake of Hurricane Fiona.
Lastly, Congress must address the exclusion of Puerto Rico
and other U.S. Territories from Federal programs like SSI and
other Federal benefits geared at precisely the most-
disadvantaged sectors of the population. Otherwise, it should
speak clearly on what moral grounds residents of the
Territories are excluded from these entitlements. Again,
Congress can treat Territories differently. It should use that
power.
Thank you for your time.
[The prepared statement of Ms. Bonilla can be found on page
37 of the appendix.]
Chairman Cleaver. Thank you.
Mr. Burt, you are now recognized for 5 minutes.
STATEMENT OF KIYADH BURT, VICE PRESIDENT OF POLICY AND ADVOCACY
AND INTERIM DIRECTOR, HOPE POLICY INSTITUTE
Mr. Burt. Thank you.
Good morning, and thank you to the committee for having me
here today.
My name is Kiyadh Burt, and I am the vice president of
policy and advocacy and the interim director of the Hope Policy
Institute (HOPE).
Since 1994, HOPE has worked to increase financial inclusion
among the most-vulnerable populations in the Deep South: the
Deep South States of Alabama, Arkansas, Louisiana, Mississippi,
and Tennessee, a region that is home to one-third of this
nation's persistent-poverty counties, most of which are rural.
HOPE is also one of the largest Black and women-owned
financial institutions in this country, and on behalf of the
organization, I am here today to discuss the strategies to
increase affordable homeownership and housing in this region,
with the emphasis on increasing opportunities for communities
of color.
The first strategy in increasing homeownership and
affordable housing concerns down payment assistance. In the
Deep South, there is nearly a 27 percent difference between
Black and White homeownership. Largely due to financial
exclusion and exploitative practices, many Black and Brown
communities simply lack adequate capital to purchase a home.
Down payment assistance is a critical strategy in resolving
that gap. Down payment assistance has the ability to transition
households from a history of renting to a future of
homeownership.
HOPE is familiar with the positive impact of down payment
assistance, particularly through our experience with the
NeighborhoodLIFT Program, a partnership between Wells Fargo and
the NeighborWorks America organization, to increase the number
of first-time home buyers, particularly among communities of
color. In our experience, when we see an increase in down
payment assistance programs, we see a clear correlation in the
increase of homeowners of color.
The second strategy is that we must ensure that banks and
credit unions offer mortgage products that meet the needs of
communities that often find themselves in rural, persistent-
poverty counties, and also that a secondary market supports
those efforts. HOPE has an in-house mortgage product that meets
the challenges of communities that often lack access to down
payments. This product is manually underwritten. It discounts
student loan deferred debt, and it also has a loan to value
ratio of 100 percent, effectively eliminating the down payment
disparities and challenges.
Now, what is interesting about our product is that the
Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie
Mac, do not support the flexibility of this product. Their
inability to purchase these loans really speaks to the lack of
capacity to provide increased homeownership for these
communities, and also limits our ability to expand our capacity
to lend to these communities by the failure of them to purchase
this loan product.
And lastly, for strategy, we must hold State Housing
Finance Agencies (HFAs) accountable for meeting pandemic
recovery needs of local people. An examination of the Emergency
Rental Assistance Program shows that State Governments in the
Deep South did not meet the needs of local people in the
distribution of rental assistance at levels achieved across the
country. Such findings call for increased accountability among
States, particularly States with questionable track records in
serving the most-vulnerable populations.
In conclusion, communities in America's Black Belt have
long endured persistent poverty and its associated ills.
However, these communities and the institutions that serve them
have demonstrated the expertise to mitigate the effects of race
in place, most often with significantly fewer resources than
other parts of the country. The Community Development Financial
Institutions Fund (CDFI Fund) has a track record of reaching
and working with communities in partnership model solutions
that work. With adequate resources supported in these
institutions, and increased commitment by others to do the
same, it is possible to ensure prosperity and mobility in the
most economically-distressed communities in this country.
[The prepared statement of Mr. Burt can be found on page 46
of the appendix.]
Chairman Cleaver. Thank you very much.
We will now hear from Mrs. Arriaga-Salinas. You have 5
minutes to present your oral testimony.
STATEMENT OF AMBER ARRIAGA-SALINAS, ASSISTANT EXECUTIVE
DIRECTOR, PROYECTO AZTECA
Mrs. Arriaga-Salinas. Good morning, Chairman Cleaver, and
members of the subcommittee, and thank you for this
opportunity.
I am Amber Arriaga-Salinas, assistant executive director at
Proyecto Azteca. We are a nonprofit construction company based
in San Juan, Texas, and our mission is to provide affordable
housing for low-income families who cannot obtain a traditional
mortgage. Our goal is to empower them to become responsible
homeowners and move away from poverty to prosperity.
Colonias are substandard, isolated developments where
residents lack basic services like potable drinking water,
sewage treatment, electricity, paved roads, adequate drainage,
street lights, sidewalks, and decent housing. Cheap former
agriculture land was sold to low-income families, and
developers were not required to improve infrastructure. Health,
safety, economic, and housing challenges plagued thousands of
colonia residents by the end of the 1970s.
There are approximately 200,000 people living in Hidalgo
County colonias. They are industrious, hardworking, and family-
oriented people, but it is not uncommon for residents to work
multiple jobs to make ends meet. There is a low rate of
conventional homelessness, but we do see a great deal of
overcrowding.
In 1996, the State legislature began to implement model
subdivision rules, where many improvements were made, but
colonias still lack safe, decent, and affordable housing.
There is a great deal of persistent poverty despite decades
of economic growth. In 1977, research showed that 40 percent of
families were living in poverty, but today, we believe that it
has not changed.
The McAllen and Edinburg metropolitan areas are some of the
poorest in the country. There is very limited public
transportation, and owning a vehicle is a necessity for colonia
residents in order to maintain a job, go to school, shop for
groceries, and visit the doctor.
Drainage improvements cannot keep up with the rapid growth.
As buildings, parking lots, and highways grow, there is less
space to divert water. And because colonias are isolated, the
issues are magnified. There are many health challenges
associated with flooding, such as diseases and increased mental
distress.
Although the infrastructure is poor in colonias, we did see
a great deal of improvements in great part due to the Colonia
Ombudsman Program that the State unfortunately vetoed in 2016.
Housing is the most important component that determines a
family's quality of life, and communities cannot thrive when so
many live in unstable conditions. We ask that a program like
the State Colonia Ombudsman Program be revived in order to
track improvements. And colonias would have a greater
opportunity to address affordability, equity, and
sustainability problems if the term, ``colonia,'' were included
in the Federal Housing Finance Agency's (FHFA's) Duty to Serve
(DTS) definition.
Build Back Better and the American Rescue Plan moneys
provided great relief for the families that we serve. However,
Federal dollars are designated to address homelessness and
rental assistance, and the definitions do not address the needs
of housing in colonias. Rental units are limited for families
in colonias. Rental vouchers outside city limits are not
available. Rentals in colonias actually consist of travel
trailers parked on lawns. Funds should be set aside in order to
specifically address the unique need for affordable housing and
community development in colonias.
[The prepared statement of Mrs. Arriaga-Salinas can be
found on page 28 of the appendix.]
Chairman Cleaver. Thank you very much.
Mr. George, you are now recognized for 5 minutes to give an
oral presentation of your testimony.
STATEMENT OF LANCE GEORGE, DIRECTOR OF RESEARCH AND
INFORMATION, HOUSING ASSISTANCE COUNCIL (HAC)
Mr. George. Thank you.
Chairwoman Waters, Chairman Cleaver, Ranking Member Hill,
and members of the subcommittee, greetings, and thank you for
this opportunity to testify on the issue of persistent poverty
in America.
My name is Lance George, and I am the director of research
and information at the Housing Assistance Council. The Housing
Assistance Council, often referred to by our acronym HAC, is a
national nonprofit corporation that supports affordable housing
efforts in rural areas of the United States and the
Territories. Inherent to HAC is our longstanding attention to
persistently-poor rural areas and people. HAC's efforts in
these communities have been at the core of our work since our
founding over 50 years ago.
In addition to HAC's direct services, we continually assess
and study the issue of persistent poverty to help inform
strategies and solutions for these important communities. We
know the members of this subcommittee are knowledgeable on the
issue of persistent poverty, but we wish to highlight five
quick trends that we believe are key to improving social,
economic, and housing conditions in these communities.
No. 1, areas of persistent poverty are not random, and are
geographically-clustered. While seemingly invisible to much of
the nation, persistent-poverty counties make up one-tenth of
all counties and 15 percent of our nation's land mass.
No. 2, persistent-poverty areas are fluid. According to
HAC's recent estimates, 70 counties moved off of the
persistent-poverty list, while 13 countries newly reached this
threshold. But approximately 78 percent of current persistent-
poverty counties have been in that state consistently since
1980. Although, I would note there has been a dramatic
reduction in these counties over the last 40 or 50 years.
No. 3, poverty is not new to the Territories. Because of
the focus of this hearing, HAC would also like to highlight
that, for the first time, we calculated persistent-poverty
status for Puerto Rico. All 78 of Puerto Rico's municipios were
classified as having persistent poverty in 2020.
No. 4, race and ethnicity are closely aligned with the
persistence of poverty. Sixty percent of people living in
persistent-poverty counties are people of color, and 42 percent
of persistent-poverty counties have majority populations of
color.
And finally, trend No. 5, the visible impact of economic
distress is evidenced in the housing conditions in these
communities. The incidents of housing units lacking adequate
plumbing is twice the national rate, and over 380,000
households in persistent-poverty counties live in crowded
conditions. Additionally, more than half of persistent-poverty
renters experience affordability challenges. Mortgage and
housing finance are similarly unbalanced. Low levels of loan
applications and loan originations and high rates of loan
denials and high-cost lending are prevalent in many persistent-
poverty counties.
Persistently-poor communities face regional and local
challenges, yet importantly, have unique assets, strengths, and
opportunities to combat geographic inequality. HAC recommends
proactively considering geographic factors in Federal
policymaking.
In our experience, and given the persistent-poverty
landscape outlined before, there are two critical factors
necessary to build equity in persistently-poor rural places.
The first is just local organizational capacity. The second is
access to capital. Additionally, tailoring the Federal
resources and improving the reliability and availability of
rural data would also improve equity for persistent-poverty
communities. An example of this importance of data are HAC's
development of the colonias investment areas. This research
created a usable and programmatic definition of, ``colonia,''
so that mortgage and housing finance resources can be more
efficiently directed to colonia communities.
In closing, I would ask for indulgence from the
subcommittee to add a personal note. I grew up and lived the
first 18 years of my life in Lewis County, Kentucky, a
persistently-poor county in Appalachia, that has experienced
very high poverty rates since the 1960s and before. I wish to
be clear, I did not live in poverty as a child, but I have
family, friends, and acquaintances who were poor, and continue
to live in poverty in the place that I love. And while the
residents of Lewis County, like those from every persistent-
poverty community, suffer from distressed economies,
underresourced assistance, and disinvestment, but they also
have a rich cultural history, perseverance, and a deep sense of
pride in their community, and I share that pride.
Through this paradox of perseverance and pain, HAC
appreciates the subcommittee's attention and motivation to
provide meaningful change to the condition of persistent
poverty in rural America. And the Housing Assistance Council,
in collaboration with our community partners, stands ready to
assist Congress in this goal.
Thank you again for this opportunity to testify.
[The prepared statement of Mr. George can be found on page
58 of the appendix.]
Chairman Cleaver. Thank you, Mr. George.
Mr. Potterpin, you are now recognized for 5 minutes to give
an oral presentation of your testimony.
STATEMENT OF CHRIS POTTERPIN, PRESIDENT, COUNCIL FOR AFFORDABLE
AND RURAL HOUSING (CARH)
Mr. Potterpin. Thank you.
On behalf of the Council for Affordable and Rural Housing,
or CARH, I would like to thank you for the opportunity to
provide this testimony in support of the efforts to address
chronic disinvestment in the colonias, the southern Black Belt,
and the U.S. Territories.
CARH focuses on housing investments and providing
affordable housing, and that is going to be the focus of my
testimony.
CARH is an industry trade association with headquarters in
Alexandria, Virginia, representing the interests of for-profit
and non-profit builders, developers, management companies, and
owners, as well as financial entities and suppliers of goods
and services to the affordable rental housing industry in rural
America. My company, PK Companies, based in Michigan, develops,
manages, and owns approximately 5,000 units of affordable rural
housing units in about 8 States. We are a second-generation
company that is committed to efficient, effective, and
affordable rural housing.
The members of this committee and the other witnesses have
done a great job of describing the problem that the southern
Black Belt, the colonias, and the U.S. Territories are facing,
and I believe that these problems are expressed throughout all
rural areas in this country. And there continues to be an
overwhelming need for both affordable and decent housing.
The lack of safe and decent housing in rural America is one
of the greatest contributors to the challenge of poverty. The
lack of affordable housing reflects the lack of investment in
these localities more broadly. In fact, rural renters are more
than twice as likely to live in substandard housing compared to
people who own their own homes.
In these areas, we are losing our affordable units. Loss of
federally-assisted multifamily housing means losing a finite
resource, and that trend is contributing to challenges in rural
areas. Most areas never had enough decent, safe, or affordable
housing, and increasingly, those that did, are losing this
resource.
The adverse effects of housing instability, as I said, have
been covered well in this hearing already, but I want to
highlight that the number-one impact is on the education and
health of the country's greatest asset--the children--and it
has been well-documented.
Neither the private nor the public sector can produce
affordable rural housing independently of one another. There
needs to be a partnership. We actually have a very good Federal
program built to address this already. Federal programs have
been very effective, when properly funded and supported with
technology and government staff. But too often, these programs
focusing on rural areas have been shorted as compared to their
urban counterparts, and the agencies have been limited on staff
levels and training resources.
Specifically to housing in rural areas, we are talking
about the USDA Rural Development Program, specifically the
Sections 514 and 515 loan programs and Section 521 rental
assistance. They were reasonably well-funded from their
inception up until the mid-1990s, and produced a large number
of housing units in rural areas. Since the mid-1990s, these
programs have not seen proper funding. The majority of the
existing projects that were built are now 30-plus-years old,
with no way of preservation or rehabilitation outside of the
housing tax credit, which predominately goes to urban areas or
suburban areas.
We are already losing our affordable housing projects. We
are down to less than 14,000 projects and properties. Over the
next decade, as many as three-quarters of all Section 515
mortgages will mature, and with it, the end of rental
assistance for the folks in those properties, and that will
affect approximately 250,000 families and elderly persons,
leaving them without the ability to house themselves.
In 300 counties, Section 515 properties are the majority of
project-based subsidized units, and 90 percent of all Section
515 properties are in counties with persistent poverty. We do
have some tools available to help this problem. Rural
development rental housing programs and the housing credit
program are the best tools we have to develop more housing
units from the housing that we have. Section 521 is rental
assistance for [inaudible] programs and currently subsidizes 63
percent of the 515 units that are created. We need to increase
this number to 100 percent.
Almost all of the residents who live in 515 housing that is
not subsidized are overburdened, and that is a key tool to
preserving the housing and using outside private resources to
rehabilitate and preserve this housing for the next 30 years,
and stop it from becoming market-rate housing and losing it out
of the program.
Rural development needs more specific direction on how to
use that rental assistance and using it for preservation of
existing projects. We also need to modernize the housing credit
to be more focused towards rural and allowed to use for more
rural projects. We need to allow LLCs and S corps to
participate more fully in the housing credit and support
relief.
I know that I am over now, but we do need to support the
Rural Housing Office with technology upgrades. Some of their
programs are still from the 1990s, and they need more staff
there. They have been chronically-understaffed.
On behalf of CARH, I would like to thank this committee for
the opportunity to discuss rural housing issues with you today.
And with a few relatively minor changes, we can apply the tools
needed to continue successful partnerships in affordable rural
housing. Thank you.
[The prepared statement of Mr. Potterpin can be found on
page 69 of the appendix.]
Chairman Cleaver. Thank you for your testimony.
I now recognize myself for 5 minutes for questions.
I want to begin with Mr. Burt. Based on your testimony, you
have a lot of experience in dealing with this issue. What would
you like to see that could help spur sustainable homeownership
opportunities for people in rural communities facing persistent
poverty?
Mr. Burt. I think we want to see more down payment
assistance. Earlier in my testimony, I mentioned the
Neighborhood LIFT Program. Through this program, we have been
able to provide down payment assistance grants of up to $10,000
for 359 Mississippians. Approximately one-quarter of the
mortgages originated were located in rural communities, 90
percent went to Black households, and 63 percent went to women
head of household. This program is solid proof that down
payment assistance is an opportunity to bridge the gap from
renting to homeownership.
We actually estimate that we can close the homeownership
gap in the Deep South through funding the mortgages for 500,000
people of color. Now, achieving such a goal would require the
funding and maintenance of a flexible down payment assistance
program. And to date, we have seen no other set of proposals
with a greater potential to close this gap than the Downpayment
Toward Equity Act. This Act appropriately targets down payment
assistance to first-generation homebuyers, people most in need
of an equity boost to get into a home. We also remain excited
about that opportunity and look forward to more possibilities
of increasing down payment assistance, particularly for rural
communities, people of color, and communities that find
themselves in persistent poverty.
Chairman Cleaver. I agree with you. And I am wondering, Mr.
Potterpin--I may have misunderstood you, but you were saying in
your testimony that a great deal of the money went into the
urban areas and a not so significant amount went into the rural
areas. Did I interpret that correctly? Federal funds?
Mr. Potterpin. In regards to the Low-Income Housing Tax
Credit Program, yes. There are certain set-asides that provide
housing in rural areas, but not compared to the population that
lives in rural areas or reflecting the need or the challenges
that the rural housing is facing.
Chairman Cleaver. Yes. I represent, believe it or not, a
large rural area of Missouri, and the problem is not--from my
perspective; I am interested in yours--based on Washington
making decisions about where the money is spent. The problem is
based on the fact that we give the States Federal funds to do
exactly what you said needed to be done. And my interpretation
is that the problem comes with the State. And if the money goes
into entitlement cities, CDBG, they go into entitlement cities,
and probably in most States, there may be four or five
entitlement cities, with the exception of Texas, California,
and New York. But then these smaller communities have to go and
fight it out--200 or 300 smaller cities have to go and fight it
out in their State capitals, and even then they get a puny
piece of the money.
Mr. Potterpin. That is right.
Chairman Cleaver. So if we are going to correct the
problem, it needs to be with what is going on with the Federal
allocation to the States because that is where the problem is
most clearly seen. And I have been arguing this for a long time
now, that we need to take a whole different view of this.
Even if you have to get the Community Development Block
Grant, the States will have to--since they are not entitled,
they have to go out and fight a little community 5 miles down
the road to get a new water tower. It is a horrible situation
that needs to be corrected. This might not be exactly what this
hearing is about, but this creates one of the biggest obstacles
to providing at least--it still wouldn't be sufficient housing
dollars or dollars to fight poverty, but it is a serious,
serious problem.
Thank you very much. My time is up.
I now recognize the distinguished ranking member, Mr. Hill.
Mr. Hill. Thank you, Chairman Cleaver. And first, let me
thank you for your chairmanship of this subcommittee during
this Congress, and for our work together and for your
outstanding voice for the challenges in this subcommittee,
particularly in housing and community development, with your
background both in Congress and as a mayor. And while the bills
that were noticed and attached to this hearing aren't partisan
and had much bipartisan engagement, I would say, I hope in the
coming Congress that we will be able to work effectively
together in a bipartisan way.
Mr. Chairman, I ask unanimous consent to enter two
documents into the record, both from the U.S. Government
Accountability Office. The first is entitled, ``Targeting
Federal Funds, Information on Funding to Areas with Persistent
or High Poverty,'' by GAO's Director of Financial Markets and
Community Investment, Bill Shear, and others. It was issued in
July 2020. And the second is also by Director Shear and his GAO
colleagues. It is called, ``Areas with High Poverty, Changing
how the 10-20-30 Funding Formula is Applied Could Increase
Impact in Persistent-Poverty Counties,'' that was issued in May
of 2021.
Chairman Cleaver. Without objection, it is so ordered.
Mr. Hill. Both of these reports are focused on economic
development in areas with persistent or high poverty, and
discuss how to improve ways various programs can target Federal
funds, and overall transparency. And I would note that in the
reports, GAO has found that HUD, USDA, and the Department of
Commerce's Economic Development Administration (EDA) have not--
and I am quoting from the report--incorporated leading
practices for effective interagency collaboration in select
economic development programs.
Mr. George, what is your view of that? Could we do a better
job of interagency coordination to laser-beam all of these
programs into these counties?
Mr. George. Thank you, Ranking Member Hill. I agree that
there could be more coordination and more effort generally. I
do think the agencies try really hard and are making sound
investments in these communities. There are some instances that
were noted in the testimony where there is a lack of adequate
staffing and resources in some of these agencies to direct
those funds, but by all means, we think collaboration is a good
effort across-the-board among the agencies.
Mr. Hill. Right. Thank you.
Mr. Burt, first, please tell Bill Bynum hello for me. We
were on the CDFI advisory board together in the early 2000s,
and I enjoyed my association with him in overseeing the CDFI
program at the Treasury. And thank you for being a good
investor and partner in Arkansas with Hope Federal Credit Union
and your nonprofit work.
What is your view of that coordination, on down payment
assistance? In Arkansas, in talking to the Arkansas Development
Finance Authority, we have really, because of our--we use the
bond program to replenish that--we effectively have more down
payment assistance available than people applying for it, as a
general statement. I don't want to say any given year, but we
have a robust State program there.
But how do you feel about the coordination of these Federal
programs in persistent-poverty counties, and who stands out?
Does the Delta Regional Authority help broker some of that, in
your experience, in the Mississippi Delta?
Mr. Burt. Absolutely, we do support the interagency
collaboration in deploying funds to communities that are deep
in poverty. One of the things that we like to highlight is
making sure that Federal funds get to the communities that do
the best work in serving these communities, as evidenced by the
Emergency Rental Assistance Program, and in some cases, the
Homeowner Assistance Program is that, at times, our States may
have the inability, or unwillingness to effectively serve these
communities.
From our experience, we saw communities and households
express challenges in accessing the Rental Assistance Program,
whether due to an online application or having to have an email
address or simply lacking access from State agencies that were
managing the funds to actually access that critical relief.
But in addition to that, what we also like to amplify is
that, where there are opportunities, send these funds directly
to CDFIs with the strongest track record. We have a good
example of the ways in which CDFIs have the ability to
encourage public and philanthropic dollars to make a difference
in homeownership in real communities.
This question reminds me of a story of Eastmoor,
Mississippi, a small subdivision in Moorhead, which is a small
town of about 2,000 people in the Delta. Around 1970, an
Eastmoor subdivision was built right outside of the small town
of Moorhead, hastily constructed. And in subsequent years, the
sewage actually seeped into several yards and caused about 20-
something homes to be either burned or destroyed.
In 2015, HOPE put a branch there in Moorhead, and we
reached out to several partners and got a grant from Goldman
Sachs, got money from the HOME Fund, got money from the
Department of Agriculture, and with a few of the philanthropic
moneys, we were able to provide rehabilitated housing for that
community. That was 44 houses rehabilitated. That was 44
households that became homeowners.
So when we talk about the ways in which agencies could
collaborate or think about the ways in which we could bring
about greater resources to these communities, you have to
include CDFIs with a strong track record and you have to
include getting the money directly to them.
Mr. Hill. Thank you, Mr. Burt. My time is over, but thank
you. I thought your answers were very, very helpful. And I
yield back, Chairman Cleaver. Thank you for the hearing.
Chairman Cleaver. Thank you.
I now yield to the Chair of the full Financial Services
Committee, Chairwoman Waters.
Chairwoman Waters. Thank you very much.
Since Mr. Hill started talking about whether or not there
is cooperation between the agencies, and Mr. Burt, you
mentioned how it became difficult to get rental assistance out
into the community, let me ask you, do you believe that poor
communities that do not have access to computers, do not have
access to the technology that is oftentimes needed in order to
make application for some of what we are sending to the cities
or the counties or the States, and what do you think we can do
about that, if you believe that is true?
Mr. Burt. I do think it is a challenge. That has come from
my experience being on the ground with communities trying to
access the rental assistance programs. One of the things we
want to do is partner with organizations and also raise
advocacy efforts to get those technologies to these
communities, and even more importantly, making sure that these
programs are just simply accessible to the communities where
they are.
Simply put, when we construct policies and construct these
Federal programs that we put under the jurisdiction of the
States, we want to make sure the States are doing what they
need to do to make sure the most-vulnerable communities have
access to these critical funds in a post-COVID reality.
Chairwoman Waters. Thank you very much.
Mr. George, how would housing and community development
investments, like the more than $150 billion my committee
secured in the Build Back Better Act, help alleviate persistent
poverty in rural America? And what more can we do to ensure
that existing Federal housing resources really reach poor rural
communities?
Mr. George. Thank you, Chairwoman Waters. I would like to
follow up on Mr. Burt's comments, candidly, and say that our
number-one strategy that we posed was organizational capacity.
At the Housing Assistance Council, we work with local,
community-based organizations, nonprofit organizations,
municipalities, Tribal entities, and some for-profit
developers. And candidly, they know what is best for their
community. We just try to enhance their services and their
ability to provide those services. But they are trusted actors
in these communities, and I applaud the subcommittee for
including many of these entities in this discussion. These are
valuable partners that we work with every day and they really
know their communities.
So, I think our goal is to enhance those funds to enhance
the capacity of those local community-based organizations. For
example, the Housing Assistance Council uses vital resources
from HUD's Rural Capacity Building grant, and we have made
valuable investments in many of these organizations, which is--
Chairwoman Waters. Of the $150 billion that we worked so
hard for, to get out to assist the housing needs of this
country, everything from Section 8 vouchers, to money to deal
with the renovation and repair of public housing, and on and on
and on, how much would that have helped the poverty in some of
the communities with which you deal?
Mr. George. It obviously would have been an immense help.
It is almost incalculable. But obviously, these communities
need all the assistance and all the directed targeted
assistance that they can handle.
Chairwoman Waters. We are going to continue to fight for
housing, despite the fact we did not get the support that was
needed from the opposite side of the aisle.
But on this issue of whether or not the resources we worked
so hard for, if we get them signed by the President, they go
out to the communities. We still have poor communities who are
not able to access these resources for lack of computers and
technology. And I had to call in Legal Aid in Los Angeles and
set up meetings and get people into board rooms, et cetera, to
try and help people who needed it so desperately.
What are we going to do? Do we have enough nonprofits that
can basically utilize these resources and get them out to the
persistent-poverty communities, or do we need to set up some
brick-and-mortar offices and locations with big signs on them
so people can come and get some help for the utilization of the
resources? What do you think? How are we going to do it?
My time is running out. I know you have some answers.
Mr. Burt. I was about to say, I will take it. Again, I
think the point to be made is that we want to make sure that
State leadership is doing all that they can to reach the
communities that are most in need. When you talk about the
challenges around broadband and technology, money has already
been deployed to get these communities the technology that they
need. So, some of this is on nonprofits, but the brunt of the
responsibility lies on the administrating authority over the
fund.
And I would say that we can continue to put pressure on our
States to do right by the communities that need it, with
research, advocacy, and data. And I think that may be one of
the best ways forward.
Chairwoman Waters. Thank you. And thank you, Mr. Chairman.
Chairman Cleaver. Thank you.
The gentleman from Tennessee, Mr. Rose, is now recognized
for 5 minutes.
Mr. Rose. Thank you, Chairman Cleaver and Ranking Member
Hill, for holding this hearing.
According to the Majority's memorandum for this hearing,
the focus of the hearing is intended to explore persistent
poverty in regions that are predominantly rural, so I believe
that it would have been a good idea for us to have the Rural
Housing Service Administrator testify.
I will note that this committee has not had a Biden
Administration official testify since July 20th. Thankfully,
that is changing tomorrow, when we will have the bank
regulators coming before the committee, but this cannot
continue. One of our core responsibilities as Members of
Congress is oversight, and we cannot conduct adequate oversight
when the Majority is shielding the Administration from
scrutiny.
As my time is limited, I will dive right into my questions.
In my district in Middle Tennessee, 12.9 percent of total
occupied housing units are manufactured homes. Manufactured
housing is an affordable homeownership option available
nationwide for minorities, the underserved, and low-income
borrowers.
USDA Section 502 offers Federal backing for loans issued by
approved private-sector lenders to low- and moderate-income
families for purchased, construction, or rehabilitation of
modest homes. Eligible borrowers can obtain financing for up to
100 percent of the appraised value of the home. New
manufactured homes are currently eligible for financing through
the Section 502 program, but existing homes are not.
Mr. Potterpin, do we need to make sure that the USDA
Section 502 program better supports manufactured housing so
that more low- and moderate-income rural Americans can access
financing to purchase manufactured homes?
Mr. Potterpin. Absolutely. I think that we need to make
sure that all of USDA's programs--502, 514, 515--have better
funding and more access to folks to provide more housing units
and to preserve more housing units.
Mr. Rose. Thank you. I believe that we need broad-based
solutions to increase our housing supply to meet demand. This
includes both single and multifamily options.
Regarding multifamily, research from the National
Association of Home Builders and the National Multifamily
Housing Council notes that regulations imposed by all levels of
government account for an average of 40.6 percent of
multifamily development costs.
Mr. Potterpin, do you believe that when multifamily
development costs rise, it translates to higher rents and
reduced rental housing affordability?
Mr. Potterpin. Yes, it does. And I would also add that
rural areas are impacted even more because their rents are
typically lower, but when the costs rise, as they do
everywhere, and we have less options for contractors or
competitive bidding, they are feeling the impact even greater.
And the rents go up a greater percentage. That is why it is
important to improve rental assistance and the amount of
assisted units and have more access for these funds.
Mr. Rose. And just to reiterate, Mr. Potterpin, do you
believe that multifamily development could help improve the
supply of affordable housing in rural areas?
Mr. Potterpin. No question at all. Yes. It is desperately
needed in almost every rural area. And with minimal investment
into these programs, we can leverage private dollars on an
average of $7 to $11 for every dollar invested to create more
units.
Mr. Rose. The Community Development Block Grant (CDBG)
program was created to help urban areas modernize and respond
to the blight and decay that plagued cities in the 1970s. The
authorizing statute states that the primary objective of the
law was to establish the development of viable urban
communities. Since then, cities now have far greater access to
economic development and services than their much smaller rural
neighbors.
Mr. Potterpin, does it make sense to update the mission and
purpose of the CDBG program so that it also focuses on the
unique challenges of rural Americans living in the 21st
Century?
Mr. Potterpin. CARH would welcome this being addressed. The
challenges of rural are different and sometimes greater than
those facing their urban counterparts, and I think we need to
update this to give easier access to these funds, as was noted
elsewhere in this hearing. Rural municipalities often have less
resources to pursue funds and compete for funds than their
urban counterparts, so they are at a disadvantage, and they
need more assistance in doing so on a level playing field.
Mr. Rose. Thank you. And, Mr. Chairman, I see my time has
expired, so I yield back.
Chairman Cleaver. The gentleman yields back.
The gentlewoman from New York, Ms. Velazquez, who is also
the Chair of the House Committee on Small Business, is now
recognized for 5 minutes.
Ms. Velazquez. Thank you, Mr. Chairman, and Mr. Ranking
Member, for this important hearing.
Professor Bonilla, I agree with you in terms of how poverty
in Puerto Rico is directly linked to the colonia situation in
Puerto Rico, and that Congress has a responsibility for
resolving this issue.
Following Hurricane Maria in 2017, under President Trump's
leadership, HUD imposed unique restrictions and stalled almost
$20 billion in Federal disaster funding to Puerto Rico.
President Biden has since removed this restriction. But can you
explain how President Trump's decision to set up roadblocks and
make it difficult for Puerto Rico to access disaster funding in
2017 has compounded its current recovery efforts?
Mr. Bonilla. Yes. Thank you, Congresswoman. The Trump
Administration engaged in practices of overscrutiny of
applicants of color and put excessive barriers on applications
for aid on behalf of both individuals and the Puerto Rican
Government. Some of these measures were placed in the name of
preventing corruption, but it is important to mention that the
only people who have been accused of corruption in the wake of
Maria have been FEMA agents and contractors.
The delay of Federal aid and of Federal assistance programs
to which Puerto Ricans are fully entitled as residents of the
U.S. Territories has caused incalculable damage to a society
that was already, as I mentioned, experiencing 40-percent acute
poverty, and that had already been facing measures of
austerity, that had dismantled the education system, public
infrastructure, and other public services that were then unable
to respond and be available to citizens in the time of
immediate emergency.
At the Center for Puerto Rican Studies, we call for greater
scrutiny of these FEMA practices and the practices of other
government agencies that should be assisting Puerto Ricans in
their time of need.
Ms. Velazquez. Thank you. Professor, one of the issues
facing Puerto Rico after the most recent hurricane is the lack
of specific data on how low-income Black and rural communities
remain at a disadvantage on the island.
What should Congress do to immediately address this
information gap so it can enhance long-term investment in these
communities?
Ms. Bonilla. The first issue is that we need clarity on why
certain government agencies just suddenly stopped providing
data for the Territories. One example is the American Housing
Survey, which just stopped being done in Puerto Rico after
Hurricane Maria, at a time when this information was the most
necessary for documenting the challenges of local residents.
A second example is the Household Pulse Survey, another
important survey, which not one Territory has participated in.
We also need greater data related to FEMA claims. It is
difficult to know where and who was denied and who did not have
access to aid; 60 percent of applicants were denied, and there
is really no transparency as to how those decisions were made.
I should also add that Federal agencies should be working
with local groups to make sure that the existing mechanisms are
adequate for the Territories. A primary example is the U.S.
Census, which in 2020 suddenly added a race question in Puerto
Rico with inadequate categories and inadequate education
campaigns. So, we really stress the need for that, yes.
Ms. Velazquez. Yes. Although FEMA updated its policy last
year to allow homeowners to self-certify their ownership,
reports from the ground indicate that FEMA is wrongfully
denying assistance to eligible survivors of Hurricanes Fiona
and Ian.
Wouldn't you agree that it is not enough for FEMA to simply
change its policy, but it also needs to act with recovery
partners on the ground to ensure Puerto Rico homeowners get the
assistance to which they are entitled?
Ms. Bonilla. Absolutely. We have seen that simply
[inaudible] is not enough. The community organizations on the
ground are reporting that we are seeing the exact same issues
of lack of Spanish translation at FEMA sites, of lack of
interpretation for deaf communities, and of overscrutiny and of
a demand for documentation that is not actually necessary to
apply for aid.
As one of my colleagues in Puerto Rico says, FEMA must
learn how to learn; that is, they cannot be impervious to
changes made at the top, that are announced, and need to
somehow trickle down so that we actually see them applied and
in action. And we feel strongly that it is only by working in
partnership with community watchdogs that we can actually
ascertain if these changes are being implemented.
Ms. Velazquez. Thank you.
Mr. Chairman, I yield back.
Chairman Cleaver. The gentlewoman yields back.
The Chair now recognizes the gentleman from Wisconsin, Mr.
Steil, for 5 minutes.
Mr. Steil. Thank you very much.
I want to thank the chairman and the ranking member for
holding today's hearing. Entrenched multigenerational poverty
is an incredibly serious challenge in many parts of our
country. It is true of the areas listed in the hearing title,
but it is also true in rural and urban communities in
Wisconsin, in my home State.
As many of you may know, or some of you may know, I am the
ranking member on the Select Committee on Economic Disparity
and Fairness in Growth, what I call the economy, and we have
really dug into the impact of the persistent poverty that is
plaguing far too many American families.
Interestingly, in one of the areas we went to, a colonia in
Texas on the U.S.-Mexico border, we saw kind of the direct
impacts that the failure to secure the U.S.-Mexico border has
had on a lot of the local communities in Texas, where they are
expending resources at the local and State levels for what
should be a national solution to that challenge that actually
would be far better off serving many of the people who are
suffering from the topic we are discussing today.
Let me shift gears slightly to you, Mr. Potterpin. Your
company specializes in developing projects using Low-Income
Housing Tax Credits, Historic Preservation Tax Credits, and New
Market and Opportunity Zone Programs.
Could you offer a few recommendations and improvements to
those programs that make it easier for developers to add
affordable units in more challenged communities?
Mr. Potterpin. Absolutely. Thank you. A lot of the changes
that I would recommend were actually proposed and still exist
in the Affordable Housing Credit Improvement Act. That Act
would have expanded the 9-percent Housing Tax Credit by 50
percent, and also would have increased rural basis boost. We
were offered a rural basis boost of up to 30 percent, offering
more credits to those, and that is essential to allowing real
deals to compete federally on bond deals, 4 percent credit
deals where many of the rural deals with lower rents don't
pencil for those types of credits. That development deals don't
make sense with a 30 percent boost, many deals now would and
would offer preservation.
Additionally, one other thing that is being discussed right
now that would be very helpful is reducing the bond test from
50 percent to 25 percent, essentially doubling the capacity of
4 percent credits in each State. Many States which are now
using all of their allocation, all of these would offer a lot
more units and, again, leverage a lot of private dollars to
provide those.
Mr. Steil. Thank you very much, Mr. Potterpin. Let me shift
gears somewhat significantly. We talked a lot about government
intervention in our more-urban areas or denser-population
areas. I know your business also does a lot of work in rural
America.
Shifting away from just government support, what are the
chief problems you encounter when your firm is investing in
rural communities, and what can be done to encourage more
investment in more-rural or less-densely populated areas?
Mr. Potterpin. I think a lot of what we are facing,
especially in the affordable housing world, where we have to
work with the communities very closely, sometimes we need--we
are offering lower-rent communities, so we need tax abatement
or other assistance or at least cooperation from those
communities. And those communities often don't have the staff
or the resources that urban communities do to facilitate the
development and make a more open--
Mr. Steil. Let me push you there just a little bit, if I
can. What areas outside of government intervention might be
helpful, particularly in rural areas, understanding the impact
that tax structuring can have?
Mr. Potterpin. Sure. In many areas, most communities are
often dependent on one big supplier or job supplier, so those
areas are dependent on that and it is hard to underwrite or
solicit investment. So if we can find ways to broaden the
supply base of jobs and the infrastructure, especially
infrastructure where it is hard to--oftentimes we are coming
from--if we are looking to develop in rural communities, the
water infrastructure, the broadband infrastructure, the other
infrastructure that is necessary to provide amenities and
provide housing for those residents, it does not exist. Other
ways to do that would be to improve that infrastructure there,
or we can work directly with job suppliers.
Mr. Steil. Thank you very much, Mr. Potterpin. I appreciate
you and all of our witnesses here.
Mr. Chairman, thank you for holding today's hearing. I will
yield back.
Chairman Cleaver. The gentleman yields back.
The gentlewoman from Ohio, Mrs. Beatty, who is also the
Chair of our Subcommittee on Diversity and Inclusion, is now
recognized for 5 minutes.
Mrs. Beatty. First of all, let me say thank you, Mr.
Chairman, and thank you to the witnesses present and on the
screen. Thank you for allowing us to have the opportunity to
take a look at persistent poverty in America in those areas as
cited in the hearing.
Let me also say thank you--I am sorry our Chair of the Full
Committee is not here, but certainly we did hear from the Biden
Administration, and most of us will know that no one has been a
bigger advocate for housing than Chairwoman Maxine Waters, and
you, Mr. Chairman.
And I was very pleased when our HUD Director came before
the Financial Services Committee--Biden's Administration, just
for the record--and talked about the $3.8 billion in CDBG, and
also specifically said that their area of interest in housing
included working in those underserved areas in cities, small
towns, and rural areas. So, I think we know where the Biden
Administration stands on that.
My first question will go to you, Mr. Burt. And I want to
make the connection to when we talk about housing, especially
in the southern States, that we tie it to the racial wealth
gap. And certainly, we know that it is important to increase
homeownership for Black Americans. When we think about places
like Mississippi and Tennessee and Arkansas, I noticed that
most of you talked about those southern States and talked about
the percentage of poverty for the nation coming from those
southern States in rural areas.
The renowned Bryan Stevenson said, ``The opposite of
poverty is not wealth, but it is justice.'' So when I look at
homeownership, I look at the disparities, I look at whether
those are in Black communities, and in urban or rural areas.
Certainly, a lot of our Members represent rural areas and also
are members of the Congressional Black Caucus.
Can you explain why median home values in Black communities
are significantly lower than outside of the Black Belt and the
effect that has had on the racial wealth gap?
Mr. Burt. Yes, I can. Effectively, in the Deep South, this
is the region that holds the Black Belt, these counties that
are majority persons of color. It is not unusual to see that
they have higher rates of homeownership in the region, given
that a lot of the housing stock is actually passed down
generation to generation.
The issue is that because of historical challenges of,
again, financial lending exclusion, redlining, and the lack of
access to affordable mortgages, the quality of housing hasn't
kept up with the pace of homeownership.
Said more simply, in Black communities that are in
persistent poverty, and in rural counties, people may have a
house, but they don't have the capital, or the access to
capital to get renovations, or they don't have the access to
get capital to pull equity and increase the equity out of the
same housing stock.
In short, what we see with homeownership is we actually see
that it is really a function of the lack of affordable
mortgages. And even beyond that, when we talk about persistent-
poverty counties, we realize that of the 158 counties that have
an unbanked and underbanked rate of 1\1/2\ times the national
average, 75 percent of those counties are persistent-poverty
counties.
Again, persistent-poverty counties in our region are
majority persons of color, and they are more likely to be
rural. What we see is an intersection of the compounding impact
of the lack of investment into these communities. So, it is
affecting not only their ability to get a home mortgage, become
a homeowner, but also--
Mrs. Beatty. I am going to have to stop you, because my
clock is running out, but that was very helpful.
Mr. George, kind of to segue from that, what do you think
are some of the things we can do to boost homeownership in the
southern Black Belt regions?
And I say that because we know the small number of Minority
Depository Institutions (MDIs) that we have, and Community
Development Financial Institutions (CDFIs). What are some of
the things you think we can do?
Mr. George. Thank you, Congresswoman. Obviously, to
reiterate the comment, access to capital is a major strategy,
and notably, what we would call good capital, improved
resources to USDA's Rural Development Service, so borrowers can
get good quality loans and not access to subprime loans or
chattel loans in many cases.
Mrs. Beatty. My time has run out, but you can respond more
in writing, if you like. Thank you.
Mr. George. Okay. Thank you.
Mrs. Beatty. I yield back, Mr. Chairman.
Chairman Cleaver. Thank you. The gentlewoman yields back.
The Chair now recognizes the gentleman from San Diego, Mr.
Vargas, for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman, and I thank
the ranking member and all of the witnesses today.
HUD defines colonias as communities located within a 150-
mile region along the U.S.-Mexico border that, ``lack adequate
water, sewer, or decent housing, or a combination of all
three.''
Mrs. Arriaga-Salinas, you noted that colonias suffer from
persistent poverty, limited access to healthcare and public
transportation, and flooding due to lack of adequate
infrastructure. What can Congress do to prioritize the voices
of individuals who live in your community as well as colonias?
In my home State of California, my district is the entire
California-Mexico border, and all of it is within 150 miles of
the border. What can we do?
Mrs. Arriaga-Salinas. I think that there are quite a few
things that can be done. Coming from a nonprofit, I think
giving opportunities to nonprofits and local voices is very
important.
For colonias, I think the challenges are very unique. There
are moneys that were mentioned today that would assist with
rental assistance or to make other developments. However, in
colonias, we cannot use vouchers for that because people are
renting a dilapidated mobile home or a shed. That is their
rental unit. There is no way for them to be able to access
vouchers when that is their option.
There aren't enough funds for people to rehabilitate their
homes. And one of the challenges that we see is that as these
colonias are annexed into cities, they are not seeing the
benefits. They are not seeing the infrastructure improvements,
but their taxes are going up. And I think that when a colonia
is no longer under that designation, but they are annexed into
the city, the term, ``rural,'' goes away.
We are not allowed to use rural development moneys, 502s
and things like that, because there is population growth, but
the housing and the infrastructure has not changed, and I think
that is something that absolutely needs to be addressed.
When the term, ``colonia,'' dissipates the amount of funds
that we are able to use, that makes it much more challenging.
So, I think that recognizing the unique problems in colonias
would make a great deal of change.
Mr. Vargas. First of all, thank you for that answer. But
let me challenge you a little bit on the definition of,
``colonia,'' because, again, the definition helps in my
district, but frankly, the Central Valley of California has
what I would consider colonias, but it is beyond the 150-mile
area of the border.
Do you think that some of those areas should be designated
as colonias? Why or why not?
Mrs. Arriaga-Salinas. I absolutely do. I recognize that
communities that haven't been able to improve their
infrastructure need the change, because if there is severe
weather that affects them, and the infrastructure is not in
place to address that, then the potential damage is just
magnified. And I feel that would be very beneficial.
Mr. Vargas. Often, severe weather in central California is
the lack of water. So it is not the flooding because there is
too much water; it is the lack of water. It goes the other way.
Mr. George said that the $150 billion that we put in the
Build Back Better Act that our Chair fought so hard for would
help immensely, almost incalculably.
Mr. Potterpin, you also said that the leverage ratio would
be 1 to 7 in some instances. Could you tell us then what you
think, Mr. Potterpin, that money could have gone for or how
helpful it would have been for this persistent poverty?
Mr. Potterpin. I concur with Mr. George. Almost
incalculable, the amounts that were talked about when looking
at those budgets for Build Back Better. Specifically, in the
Rural Development, what was slated for the rural development
budget at that point for the 515 and 521 programs was almost 20
years of normal funding in 1 year, and it would have--these
properties are falling behind through deferred maintenance
every year. There is not enough money to even maintain what is
there, and this would have put them back on the right track for
preserving its entire portfolio.
Mr. Vargas. I am running out of time. Thank you very much.
I hope we do that. I think the problem was the name. We should
call it the Republican plan and just pass it.
Thank you again, Mr. Chairman. I appreciate it.
Chairman Cleaver. Thank you.
The gentleman from New York, Mr. Torres, is now recognized
for 5 minutes.
Mr. Torres. Thank you, Mr. Chairman.
I have several questions and comments directed toward Ms.
Bonilla. One of the root causes of persistent poverty in Puerto
Rico is the Insular Cases, which, to me, represents a
continuation of Jim Crow. Denouncing the Insular Cases as a
vestige of Jim Crow is not hyperbole, it is a statement of
historical facts. The Supreme Court that gave us Plessy v.
Ferguson and the doctrine of separate but equal is the same
court that gave us the Insular Cases, which imposes second-
class status on the U.S. citizens of U.S. Territories.
There are more than 3 million American citizens of Puerto
Rico deprived of equal protection simply because those citizens
happen to live in an unincorporated Territory, which is a
second-class status fabricated by the United States Supreme
Court.
The term, ``unincorporated Territory,'' appears nowhere in
the actual text of the Constitution, yet the self-proclaimed
textualists and originalists on the Supreme Court seem to be in
no rush to overturn the Insular Cases. How telling.
As you know, Ms. Bonilla, the Insular Cases enable the
Federal Government to discriminate against the American
citizens of Puerto Rico. The American citizens of Puerto Rico
are excluded from SSI, excluded from SNAP, excluded from their
fair share of Medicaid funding, and excluded from far too many
programs to enumerate.
Do you think there is a single State in the United States
that could absorb the fiscal shock of losing all of its SSI
funding, all of its SNAP funding, and most of its Medicaid
funding? Can you think of a single State that could absorb
those fiscal shocks?
Ms. Bonilla. Obviously not.
Mr. Torres. Is it reasonable to expect Puerto Rico to
suffer fiscal conditions and constraints that not even the
wealthiest States like New York or California could survive?
Ms. Bonilla. Absolutely not.
Mr. Torres. And the Federal Government denies Puerto Rico
access to Federal programs that are crucial to the fiscal
solvency of just about every State.
Is it fair to say that the United States, by denying the
island access to that which is essential, has essentially set
up Puerto Rico to fail?
Ms. Bonilla. It has set it up to fail, but it has set it up
to succeed as a colony, which is what the United States wishes
to hold it as since it is what it continues to replicate in
Puerto Rico and in the other U.S. Territories.
Mr. Torres. Do you believe, as I do, that overturning the
Insular Cases is necessary for the recovery of the island?
Ms. Bonilla. Honestly, this might surprise you, but I don't
think it is necessary because it is, in fact, just an excuse. I
think it would help to remove the excuses that the U.S.
Government uses to keep treating Puerto Rico differently, but
the fact is that the U.S. Government, the U.S. Congress, could
begin to treat Puerto Rico differently today. It doesn't have
to remove the Insular Cases in order to do that.
Do I think it is a racist law that brings shame to the U.S.
Government? Yes. But I don't think it is more than just an
excuse for the conditions that are currently in place.
Mr. Torres. As you might know, the Jones Act is a third
wheel in American politics. Congress is fiercely protective of
the Jones Act, which discriminates against Puerto Rico. What
are your thoughts on the disparate impact of the Jones Act on
the island?
Ms. Bonilla. Without a doubt, the Jones Act brings nothing
but increased costs to a place that is experiencing persistent,
acute, and systemic poverty across every single one of its
counties and municipios.
The problem with the Jones Act is that it is not a partisan
issue. It does not impact one party or another, and it has not
been taken up by one party or another. But the fact is that the
only folks who benefit from the Jones Act are the shipping
industry in the United States. So, it does need to be brought
under greater scrutiny and questioned and repealed.
Mr. Torres. Not every State and Territory is subject to the
Jones Act. Both Puerto Rico and Hawaii have the highest
electricity costs in the United States, and both Puerto Rico
and Hawaii are subject to the Jones Act. Do you think that is a
coincidence?
Ms. Bonilla. No. Obviously, there are folks who are
benefiting from the extreme costs that are spent in
transporting goods to these places. However, I think it is
important to recognize that some folks benefit, but this does
not benefit the U.S. economy as a whole, since it actually
makes it more expensive for many U.S. businesses to operate in
Puerto Rico because of these excessive shipping costs.
Mr. Torres. My time has expired. Thank you.
Chairman Cleaver. Mr. Torres yields back.
We have no further witnesses.
Let me thank the witnesses for your testimony, and your
participation today.
The Chair notes that some Members may have additional
questions for these witnesses, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
This hearing is now adjourned.
[Whereupon, at 11:32 a.m., the hearing was adjourned.]
A P P E N D I X
November 15, 2022
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