[Senate Hearing 117-]
[From the U.S. Government Publishing Office]


 
  TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2022

                              ----------                              


                        THURSDAY, JUNE 10, 2021

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met, at 9:33 a.m. in room SD-192, Dirksen 
Senate Office Building, Hon. Brian Schatz (chairman) presiding.
    Present: Senators Schatz, Murray, Manchin, Van Hollen, 
Collins, Boozman, Hoeven, and Braun.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

STATEMENT OF HON. MARCIA FUDGE, SECRETARY


               opening statement of senator brian schatz


    Senator Schatz. This hearing will come to order.
    Secretary Fudge, it is a true pleasure to have you before 
the subcommittee to testify on the President's Budget Request 
for fiscal year 2022. I know this will be one of many 
opportunities for us to work together on HUD's needs, and the 
investments necessary to support HUD's mission. To that end, I 
hope we will be able to quickly come to a budget agreement to 
mark up this July.
    I am honored to continue the legacy that my friend Senator 
Collins has established for the subcommittee as a voice of 
unwavering support for the prevention of homelessness, the 
preservation of affordable housing, and the advancement of 
economic development for disadvantaged communities. Each of 
these pillars of housing policy is also reflected in the 
President's budget request for $68.7 billion.
    This is an honest and clean request that avoids previous 
gimmicks to eliminate popular programs like CDBG and HOME as a 
budgetary offset because, frankly, these are hugely popular 
programs that create real change in communities that have 
experienced the toughest of times.
    While the total request is an increase of $9 billion, $3.7 
billion of that is needed to preserve the existing affordable 
housing portfolio. This is the highest 1 year increase to 
renewal needs ever. Market-rate rents continue to rise and the 
impact of COVID on jobs continue to wreak havoc on tenant 
income. This is an important reminder of why we need the 
American Jobs Plan. We need to get people back to work, and 
housing needs to be part of those priorities.
    Where we live impacts every aspect of our lives. Decades of 
discriminatory housing policies have segregated neighborhoods, 
creating economic inequality for minority communities, these 
very--those very communities bear the burden of substandard 
housing and environmental pollution, and the American Jobs 
Plan, and this budget proposal acknowledge these injustices and 
put forward solutions to drive the change we need.
    While the Eviction Moratorium and Emergency Rental 
Assistance have helped to stem the potential for a tidal wave 
of evictions during the pandemic, we are not out of the woods. 
The reality of limited affordable housing stock, skyrocketing 
rents, and low wages, are causing people to be pushed into 
homelessness at alarming rates. Tent cities are proliferating 
across the country in high-cost urban areas, and we clearly 
need a united approach to reverse this trend.
    We need to incentivize new affordable housing units through 
a combination of tax policy, flexible financing, and the HOME 
program. We also need to streamline the Housing Trust Fund to 
reduce development costs, to make housing production more 
efficient. I support your proposal and using incentives to 
eliminate exclusionary zoning. These types of carrots make 
communities aware of how their own policies create unnecessary 
local barriers to production.
    To support these goals, HUD needs to address its own 
internal capacity. Over the last decade HUD's staffing levels 
have fallen by 20 percent. The budget requests and increase of 
$182 million for additional staffing, the previous 
administration shared this goal and requested $121 million 
increase despite $10 billion in cuts to HUD programs; so I 
think we can all agree, regardless of the administration, there 
was a clear need and bipartisan support for additional 
staffing.
    Secretary Fudge, I look forward to an ongoing dialogue on 
this matter to improve the oversight and management of HUD 
programs.
    And, Senator Collins, I turn to you for your opening 
statement.


                 statement of senator susan m. collins


    Thank you very much, Mr. Chairman. I am very pleased to 
join Chairman Schatz in welcoming Secretary Fudge to her very 
first hearing before this subcommittee to discuss the 
Department of Housing and Urban Development's fiscal year 2022 
Budget Request.
    As part of the fiscal year 2021 Omnibus, we provided $60.4 
billion for HUD, and that includes $695 million in emergency 
spending. These funds provide rental assistance for seniors and 
low-income families. They help provide safe and secure housing 
for formerly homeless veterans and youth, they support critical 
investments in communities through the Community Development 
Block Grant and home programs, and they fund efforts to reduce 
lead paint hazards for children and pregnant women, and enable 
low-income seniors to remain in their own homes.
    This funding was also supplemented by $12.4 billion 
provided through the CARES Act last year in response to the 
COVID epidemic. As we begin our work on the budget for the next 
fiscal year, it is important to know that unlike previous 
years, there is not yet a budget agreement in place. Top line 
funding levels remain to be determined. The administration's 
request for HUD, excluding FHA and Ginnie Mae recedes, is $68.7 
billion, a substantial increase of $9 billion above current 
levels.
    But those numbers tell only part of the story. This 
increased funding request is on top of not just the 12.4 
billion provided in the CARES Act and the 10 billion provided 
in the American Rescue Plan in March, but also the $170 billion 
for HUD proposed in the administration's American Jobs Plan.
    The supplemental funding from the CARES Act and the ARP 
combined with the proposed AJ, American Jobs Plan, and Fiscal 
2022 budget increases would--totaled nearly $180 billion in 
additional funding for HUD, that amounts to three times HUD's 
fiscal year 2021 funding level.
    Accounting for the baseline appropriations, the 
administration is proposing to provide HUD with the equivalent 
of 5 years of funding in a two-year period. I am concerned that 
HUD, and many of its grantees, lack the capacity to manage and 
oversee such an influx of funding, regardless of how well-
intentioned those proposals may be.
    As the chairman has mentioned, this is not a situation the 
secretary has created, HUD has been understaffed for some time 
now, but the problem is exacerbated by this huge influx of 
proposed funding. More than a year after the CARES Act provided 
$9 billion for the flexible CDBG and Homeless Assistance Grants 
programs, HUD has actually spent less than $1 billion, or less 
than 11 percent of those two programs.
    That other Federal funding was also provided in many cases 
to the exact same grantees, only underscores the challenges 
that these organizations and HUD would face managing even 
larger mounts.
    Now, let me be clear. The lack of affordable housing is a 
crisis in many parts of the country with no state having an 
adequate supply. And that includes the State of Maine. The very 
people who make our communities thrive, firefighters, police 
officers, teachers, nurses, often find that they can no longer 
afford to live in the communities they serve.
    The solutions to such challenges take careful thought and 
coordination. Providing HUD the equivalent of 5 years of 
funding over 2 year period is not, however, the answer. Where 
funding increases are appropriate, they should be in areas that 
will yield results quickly. When such results are not possible, 
the Department should invest time, instead, in finding ways to 
expedite the administration and allocation of grants, and 
improve its programs by streamlining regulations and working to 
reauthorize the many expired programs.
    Most of the HUD's programs are operating with long expired 
authorizations. Again, not the secretary's fault, but something 
she has inherited. These expirations do not prevent this 
committee from funding programs, however, without 
reauthorizations the programs are often not as effective as 
they could be. According to the CBO, the CDBG Home and Lead 
Paint Hazard Reduction Authorizations expired way back in 1994, 
public housing, Section 8 vouchers, housing for the elderly in 
2003, and Homeless Assistance Grants authorization expired in 
2011.
    The Department is missing the opportunity for 
transformational change to better serve our communities, 
seniors, youth, the homeless, veterans, and individuals with 
disabilities. With a budget request as sizable as this one, it 
is particularly disappointing to see no dedicated funding for 
the HUD-VASH program. That is inexplicable given the success of 
this program. VASH has been critical to reducing veteran's 
homelessness by 50 percent since 2010, while homeless veterans 
could be eligible under the administration's newly-proposed 
incremental vouchers program, this proposal fails to take into 
account the VASH program's partnership with the VA, which 
provides veterans with case management and supportive services.
    That partnership between HUD and the VA has been critical 
to the success of the VASH program. And I just don't understand 
why the administration would want to eliminate that partnership 
and undermine the effectiveness of VASH.
    While there were a number of concerns with the budget 
requests, I do want to acknowledge a number of areas of shared 
interests. First, is the CDBG program; like the chairman, it is 
refreshing that this year, the program has not been eliminated 
knowing that we would restore the funding, but forcing us to 
search for the funds. It is a critical program that provides 
flexible funding for water and sewer improvements, public 
services for seniors, revitalization of distressed downtowns, 
and countless other worthwhile projects that serve low- and 
moderate-income communities.
    I think it is probably the program I hear the most 
favorable comments about among all the HUD programs, both from 
my colleagues and from folks back home. For every dollar 
invested in CDBG, it leverages another six--another $3.64 in 
funds from state, local and private sources. This is an 
essential resource that lies at the heart of HUD's community 
development mission. And it has really benefited communities 
across Maine.
    In addition to CDBG, I am pleased to see the request 
continues robust investments in reducing the health hazards of 
exposure to lead paint, particularly for young children, the 
request also includes funding for aging-in-place home 
modification grants, and the Youth Homeless Demonstration 
Program that I have worked to establish in previous years.
    Finally, I am pleased to see that the request this year 
includes sufficient funding for renewing existing rental 
assistance.
    Madam Secretary, once again, I welcome you to today's 
hearing, and look forward to your testimony.
    Senator Schatz. Thank you, Senator Collins.
    Secretary Fudge, please proceed with your testimony.


                 summary statement of hon. marcia fudge


    Secretary Fudge. Thank you so very much, Mr. Chairman. And 
Madam Ranking Member, it is a pleasure to be here with you 
today.
    Chairman Schatz, and Ranking Member Collins, and 
distinguished members of the subcommittee, thank you for this 
opportunity to discuss the President's 2022 Budget for the 
Department of Housing and Urban Development.
    President Biden has often shared the words of wisdom which 
he learned from his father. Those words are, ``Don't tell me 
what you value. Show me your budget, and I will tell you what 
you value.''
    Well, the Biden-Harris administration has issued a budget 
that sends a strong message about what we value. It tells the 
American people this administration views housing as a 
foundational platform to help address the most urgent 
challenges facing our Nation, to provide security and stability 
for those who live on the outskirts of hope, to advance 
opportunity and equity on behalf of marginalized communities 
and to meet the existential threats posed by natural disasters 
and climate change.
    The President's budget requests $68.7 billion for HUD in 
fiscal year 2022. This amount represents an increase of $9 
billion or 15 percent from HUD's enacted funding for fiscal 
year 2021. The American people need every dollar contained in 
this budget. We all know the United States confronts a crisis 
in affordable housing, even before the onset of COVID-19 nearly 
11 million households spent more than 50 percent of their 
incomes on rent. The pandemic has only made that situation 
worse, especially for communities of color, and for people of 
modest means.
    The President's budget addresses the affordable housing 
crisis head on, and dramatically strengthens our social safety 
net for the most vulnerable among us. It contains $3.5 billion 
to provide housing and supportive services to Americans 
experiencing homelessness, including young people and survivors 
of domestic violence. It contains $30.4 billion request for 
HUD's housing choice voucher program; if enacted this funding 
would provide, potentially, life-saving assistance for an 
additional 200,000 households.
    The President's budget takes strong steps to expand our 
supply of affordable housing. This includes $1.9 billion for 
the Home Investment Partnership Program, which helps create 
affordable rental homes for low-income Americans. On top of 
this investment, the President's budget requests funding to 
build 2,000 new homes for seniors, and for people with 
disabilities.
    In addition, the President's budget takes bold action to 
help preserve the affordable housing we already have. Nearly 
half of our public housing is more than 50 years old, and many 
properties face major capital needs. This is not just a safety 
issue for the residents of public housing, it is an issue of 
both racial justice and climate justice.
    People of color represent roughly 70 percent of Americans 
who live in public housing, and public housing is often located 
in underserved communities that are especially vulnerable to 
the effects of climate change. That is why the President's 
budget invests $3.2 billion toward public housing capital funds 
to dramatically improve the quality of life for residents.
    Furthermore, it contains $300 million to help increase 
energy efficiency, reduce carbon pollution and boost resilience 
in public housing. The President's budget further advances 
equity by making significant investments in traditionally 
marginalized communities all across the country. It requests 
$3.8 billion in community development block grants, including 
$295 million in targeted funding for historically underserved 
areas in cities, small towns, and rural counties.
    It requests $723 million in Indian Housing Block Grants to 
help create affordable housing, improve water conservation and 
build climate-resilient infrastructure on tribal lands. Taken 
together, the investments in this budget underscore the 
President's belief that every American has the basic right to 
live each day with security and with dignity. Throughout the 
COVID-19 crisis, we have all been reminded of the fundamental 
role our homes play in how we live, how we learn, and how we 
work.
    Our homes shape everything, from our health and safety to 
our hopes, and sense of self. HUD looks forward to working with 
each of you to help make housing for all a reality in America, 
and to serve as a responsible steward for the funding entrusted 
to our Department.
    With that, I am happy to answer any questions you may have.
    [The statement follows:]
               Prepared Statement of Hon. Marcia L. Fudge
    Chairman Schatz, Ranking Member Collins, and distinguished Members 
of the Subcommittee. Thank you for the opportunity to testify today in 
support of President Biden's 2022 Budget for the Department of Housing 
and Urban Development (HUD). The support of this Subcommittee is 
critical to ensuring that every American has a roof over their head and 
can live in communities that are strong and resilient.
    HUD's mission is critical to achieving the President's vision to 
ensure that we build back better from the COVID-19 pandemic public 
health and economic challenges and address longstanding systemic 
challenges, including racial injustice, rising inequality, and the 
climate crisis. This Budget makes historic investments that will help 
our Nation build back better and lay the foundation for shared growth 
and prosperity for decades to come. Our request greatly expands 
assistance to low-income families currently served by HUD programs, 
increases assistance to targeted vulnerable populations--including 
persons experiencing homelessness and Native Americans--and revitalizes 
neighborhoods with distressed HUD-assisted housing and concentrated 
poverty. HUD's work is critical to the Administration's efforts to 
improve the quality of life of the American people.
                           covid-19 pandemic
    The past year of COVID-19 has been one of enormous challenges and 
difficulties. In the face of adversity and hardship, HUD staff in every 
region of the country continued to carry out the vital work of meeting 
the diverse needs of America's communities. HUD staff worked tirelessly 
to assist grantees and recipients of HUD assistance in their responses 
to the pandemic. While our nation is starting to turn the corner on 
COVID-19, we still have important work to do. In the months ahead, HUD 
will continue to play a critical role in the Administration's 
coordinated Federal response to the pandemic--a response focused on 
protecting the health and well-being of the American people.
    At HUD, we know firsthand the severe impact of COVID-19 on our 
nation's housing crisis. We have helped housing owners, housing 
authorities, and communities provide additional rental assistance and 
support new efforts to eradicate homelessness. In coordination with the 
Departments of Veterans Affairs and Agriculture, we also extended the 
Federal Housing Administration's foreclosure and eviction moratorium 
and forbearance enrollment window until June 30th, and provided up to 
an additional 6 months of forbearance for certain borrowers, to support 
the immediate and ongoing needs of distressed homeowners. We are 
strengthening partnerships between recipients of HUD assistance and 
public health agencies and healthcare providers. This means 
strengthening our efforts to ensure equitable access to treatment and 
care, including testing and vaccines, for HUD assisted households.
    Many of the people living in federally-assisted housing have risk 
factors that make them particularly vulnerable to COVID. These factors 
include disability, race, and low incomes, along with racial and ethnic 
disparities in access to response, care, and treatment.
    We are making sure that Federal, state, and local efforts reach 
those most at-risk of COVID and we are linking those efforts to people 
living in housing that HUD supports. The American Rescue Plan is 
critical to our success in these efforts. Some of you may know that my 
last vote as a Member of Congress was for the American Rescue Plan. I 
was proud to vote for this historic legislation to get help to the 
American people during this moment of great challenge.
    To meet this moment, we need to invest in our communities and our 
people. I believe that a budget is more than just a list of numbers; it 
reflects values and priorities. The 2022 President's Budget 
demonstrates the Administration's commitment to helping low-income 
families, seniors, and communities through the commitment of their 
Federal government. For too long, housing needs have not been 
recognized as a national priority, resulting in a severe shortage of 
affordable housing and too many Americans unable to find a safe place 
to call home. This Budget begins to reverse that trend, investing in 
our housing infrastructure to meet urgent demand. I am proud to support 
President Biden's 2022 Budget and I look forward to working with you to 
meet urgent housing needs in all our communities.
                     president biden's 2022 budget
    The 2022 President's Budget requests $68.7 billion for HUD, 
approximately $9.0 billion more than the enacted level for 2021. In 
addition to this discretionary request, the Budget also includes the 
American Jobs Plan and the American Families Plan. The Budget outlines 
an ambitious agenda to address challenges our Nation faces, ranging 
from climate change to housing discrimination to ending homelessness. 
This funding further builds on the substantial resources provided in 
the American Rescue Plan (ARP). The priorities in the Budget include:

  --$30.4 billion for the Housing Choice Voucher Program, which 
        accommodates 200,000 new vouchers, prioritizing those fleeing 
        from domestic violence and households experiencing 
        homelessness;

  --$3.5 billion to provide housing and services to individuals and 
        families experiencing homelessness, including a focus on 
        survivors of domestic violence and youth experiencing 
        homelessness;

  --$400 million to remove dangerous health hazards from homes, 
        including lead, carbon monoxide, and radon;

  --$800 million in targeted climate resilience and energy efficiency 
        improvements in public, tribal, and other assisted housing;

  --$85 million for Fair Housing programs, and increased HUD staff 
        capacity to redress discriminatory housing practices; and

  --$2 billion for Management and Administration expenses, or about 3 
        percent of the proposed Budget, investing in critical staffing 
        and information technology needs to strengthen HUD's capacity 
        to deliver on its mission.

    In summary, HUD's proposed Budget allocates budget authority across 
programs and for staffing and other management and administrative 
expenses. Most of the budget authority funds programs to help 
vulnerable, low-income households--many elderly or disabled--pay their 
rent. The Office of Public and Indian Housing (PIH), the Office of 
Housing, and the Office of Community Planning and Development (CPD) 
administer these programs.
    This request dovetails with funds provided by the CARES Act of 2020 
and the American Rescue Plan Act of 2021, which appropriated $12.4 
billion and $10.8 billion, respectively, across multiple HUD programs 
for urgently needed housing and services due to the COVID-19 pandemic. 
The 2022 President's Budget extends this comprehensive approach to 
address these challenges and invigorates the Nation's response through 
targeted funding increases and policy interventions, strengthening the 
Federal housing safety net, advancing equity, increasing access to 
affordable housing, addressing the climate crisis, and building HUD's 
capacity overall.
    At HUD, we understand that our homes represent more than four walls 
and a roof. A good home can serve as a platform to spark economic 
opportunity and create healthier, more sustainable, and more inclusive 
communities. To further HUD's mission through this Budget, I have 
outlined five priorities:

  --Strengthen and Broaden the Federal Housing Safety Net for People in 
        Need

  --Advance Housing Equity as a Means to Improving Housing Choices and 
        Greater Economic Opportunity

  --Increase the Production of and Access to Affordable Housing

  --Promote Climate Resilience, Environmental Justice, and Energy 
        Efficiency Across the Housing Sector

  --Strengthen HUD's Internal Capacity to Deliver on Mission
  strengthen and broaden the federal housing safety net for people in 
                                  need
    One of HUD's core functions is to provide a safety net for 
households when they need it, and help people access a safe and stable 
place to live. This function has become increasingly important as 
growth in rents continues to outpace incomes. From 2001 to 2018, rent 
costs increased nearly 14 percent while renter incomes grew just 1.4 
percent.\1\ The Budget provides the opportunity to expand the number of 
people that can rely on HUD's programs, and once people have stable 
housing, they can better focus on their families, jobs, health, and 
other aspects of life. Key features of the Budget include:
---------------------------------------------------------------------------
    \1\ America's Rental Housing 2020 Report, Joint Center for Housing 
Studies, Harvard University (https://www.jchs.harvard.edu/sites/
default/files/reports/files/Harvard_JCHS_Americas_
Rental_Housing_2020.pdf).

  --The Budget provides necessary renewal and operating funding for 
        multiple HUD programs, including two of HUD's largest programs 
        providing this safety net--Tenant- Based Rental Assistance 
        (TBRA) and Project-Based Rental Assistance (PBRA)--as well as 
        for Housing for the Elderly (Section 202), Housing for Persons 
        with Disabilities (Section 811), and the operating subsidy 
---------------------------------------------------------------------------
        formula in the Public Housing Fund.

  --The TBRA request will allow HUD to issue vouchers to 200,000 more 
        households that currently qualify for rental assistance. These 
        new vouchers, the largest 1 year increase since the program was 
        authorized, will increase affordable housing, and provide 
        greater access to areas of opportunity for very low-income 
        families and individuals that are experiencing or at risk of 
        homelessness. This includes individuals and families fleeing, 
        or attempting to flee domestic violence, dating violence, 
        sexual assault, or stalking. The Administration looks forward 
        to working with the Congress to build on this investment and 
        achieve its long-term goal of providing housing vouchers to all 
        eligible households, while increasing the program's impact on 
        equity and poverty alleviation.

  --An increase of 14 percent for public housing capital funds (under 
        the Public Housing Fund), for a total of $3.2 billion, which 
        will be critical to improving the quality of public housing.

  --An increase of $500 million for HUD's Homeless Assistance Grants, 
        to provide housing and services for vulnerable individuals and 
        families who are homeless or at risk of homelessness. This 
        increase will provide capacity and support to communities as 
        they work to coordinate an effective homeless response system 
        in a housing first approach and equitable way. HUD will build 
        on the many lessons learned from its effort to keep people 
        experiencing homelessness safe in response to the threat of the 
        COVID-19, while encouraging partnering between other Federal 
        and local programs.
  advance housing equity as a means to improving housing choices and 
                      greater economic opportunity
    Every family should be able to have a safe place to call home. 
However, discriminatory practices have led to longstanding inequities 
in access to housing. The Budget makes investments in key areas to 
bring an end to discrimination in housing and eliminate patterns of 
racial and ethnic segregation and economic disparities in communities, 
while proactively advancing equity for historically underserved 
communities. Key initiatives include:

  --Fair Housing Programs: $85 million, a $12.5 million or 17.2 percent 
        increase over 2021, for targeted and coordinated enforcement, 
        education, and outreach.

  --Community Development Block Grant (CDBG) Program: $3.8 billion, a 
        $295 million increase specifically to incentivize communities 
        to direct funds to historically underserved communities and 
        neighborhoods.

  --Indian Housing Block Grant (IHBG) Program: $723 million, a $76 
        million or 11.7 percent increase over 2021, for grants to 
        finance affordable housing construction and related community 
        development. As funding for IHBG has remained level for many 
        years, Indian Tribes have had to rely on other programs to fund 
        the production and preservation of affordable housing, 
        reserving IHBG for operations and maintenance of existing 
        housing. This increase will help Tribes change this balance.

  --Mobility Services initiative under TBRA (new): $491 million to fund 
        cost-effective housing mobility strategies to assist families 
        with children to move from areas of extreme poverty to areas of 
        higher opportunity. The funding will also address impediments 
        to public housing agency collaboration, with a goal of 
        reversing the effects of residential segregation adversely 
        impacting people of color.

  --Eviction Prevention Demonstration program: The 2022 Budget will 
        continue to fund HUD's Office of Policy Development and 
        Research's execution of the $20 million competitive grant 
        program that provides free legal assistance to eligible low-
        income tenants at risk of or subject to eviction.
      increase the production of and access to affordable housing
    Increasing the availability of affordable housing is essential to 
the resilience of households and communities. The Budget proposes 
several key tools to further this goal.
    The HOME Investment Partnerships (HOME) Program has long served as 
an anchor of the Nation's affordable housing finance system. The 2022 
President's Budget will make a significant impact, providing $1.9 
billion--$500 million and 37 percent more than the 2021 enacted level. 
The Budget includes a $100 million set-aside for a new initiative, the 
FirstHOME Down Payment Assistance initiative, which provides funding to 
States and insular areas to better support sustainable homeownership.
    The Housing for the Elderly (Section 202) Program proposes $100 
million for new Capital Advances to increase the supply of affordable 
housing for seniors by approximately 1,100 units. The Housing for 
Persons with Disabilities (Section 811) Program proposes $80 million, 
which will support 900 new units to expand the supply of affordable 
housing for very low- and extremely low-income persons with 
disabilities to live independently in the community with connections to 
critical supportive services. Combined, these programs provide a total 
of $180 million to support a total of 2,000 new units for vulnerable 
populations.
    Ginnie Mae Securitization of Risk-Sharing Loans: The Budget 
proposes Ginnie Mae authority to securitize affordable multifamily 
loans made by Housing Finance Agencies (HFAs) and insured under the 
Federal Housing Administration's (FHA) 542(c) Risk-Sharing program. As 
an interim measure that will sunset 3 years after implementation, HUD 
is resuming its partnership with Treasury's Federal Financing Bank 
(FFB) to provide ``Ginnie-like'' financing for HFA Risk- Sharing loans. 
The proposed Ginnie Mae securitization authority would provide a 
permanent source of low-cost capital for these affordable housing loans 
once FFB financing expires.
    Finally, the Budget proposes $30 million for two other 
homeownership resources through FHA to:

  --Expand the Good Neighbor Next Door (GNND) Program, which offers a 
        substantial discount to law enforcement officers, teachers, 
        firefighters, and emergency medical technicians to encourage 
        them to purchase and reside in homes in distressed communities; 
        and

  --Create a Home Equity Accelerator Loan (HEAL) Pilot that would test 
        new loan products designed to lower barriers to homeownership 
        for first-generation and/or low-wealth first-time homebuyers.
     promote climate resilience, environmental justice, and energy 
                  efficiency across the housing sector
    In response to the President's Executive Order 14008 (``Tackling 
the Climate Crisis at Home and Abroad''), HUD's Budget includes $800 
million to reduce carbon pollution, increase resilience to the impact 
of climate change, and address environmental justice. Communities 
served by HUD programs, which often have a significant share of low- 
and moderate-income households and people of color, are often more 
vulnerable to climate change due to their locations, aging 
infrastructure, and historic disinvestment. As part of the 
Administration's whole-of-government approach to the climate crisis, 
the Department is committed to expanding energy-efficient and climate-
resilient housing options in public and assisted housing. The following 
investments proposed in the Budget are crucial to assist communities 
throughout the country to mitigate and prepare for the worst effects of 
climate change:

  --Public Housing Fund: $300 million to increase energy efficiency, 
        reduce water consumption, and promote climate resilience in 
        public housing.

  --Native American Programs: $100 million to eligible Indian Tribes 
        and Tribally Designated Housing Entities (TDHEs) to increase 
        energy efficiency, improve water conservation, and further 
        climate resilience. Preliminary estimates indicate this funding 
        would allow HUD to retrofit approximately 16,600 housing units.

  --Choice Neighborhoods: $50 million to further support energy-
        efficient housing construction and environmentally sensitive 
        and resilient design of community improvement projects.

  --Green and Resilient Retrofit Program (new): $250 million to 
        rehabilitate Multifamily- assisted properties to be more 
        energy-efficient, healthier, and more resilient to extreme 
        weather events. This increased investment will improve the 
        stock of affordable housing available to many low- and 
        extremely low-income families, often from marginalized 
        communities.

  --Rental Assistance Demonstration Program: $100 million under the 
        TBRA and PBRA programs for public housing authorities (PHAs) to 
        transition public housing units to the Section 8 platform. This 
        program preserves and improves public housing properties and 
        will enable public housing authorities to holistically address 
        critical property needs, environmental hazards, energy 
        inefficiencies, and increase housing choice for residents.

    In addition, the Budget requests $85 million for the Healthy Homes 
component in the Office of Lead Hazard Control and Healthy Homes, an 
increase of $25 million or 41.7 percent over 2021 enacted. These funds 
will help grantees identify and mitigate multiple health hazards in 
low- income households.
    Finally, the Budget requests $145 million for Policy Development 
and Research of which $5 million is for research on housing, climate 
adaptation, and resilience conducted in coordination with the new 
Advanced Research Projects Agency for Climate (ARPA-C) at the 
Department of Energy. The ARPA model of high-risk, accelerated research 
is uniquely designed for research and development that, if successful, 
will result in transformational technology advancements.
    Together, these investments will decrease the financial burden on 
tenants, help to address inequities, reduce carbon emissions, and 
increase the climate resilience of HUD's housing stock while improving 
indoor air quality and creating healthier and safer homes for families.
        strengthen hud's internal capacity to deliver on mission
    HUD's Enterprise Risk Management program has identified staffing as 
one of the top risks to the Department. In fact, in the 2021 Risk 
Profile, all program offices identified risk related to the quality of 
their business functions resulting from a lack of expert staff in 
procurement, information technology, and human resources areas.
    From 2012 to 2019, the number of full-time equivalent (FTE) 
employees at HUD declined 20 percent, from 8,576 to 6,837. Although a 
focus on the hiring process and the salaries and expenses (S&E) budget 
have enabled HUD to regain some of the ground lost, attrition has 
resulted in imbalanced program offices and the loss of expert staff to 
effectively administer some programs. For example, HUD's review of 
enterprise risks found that due to the decline, HUD lost staff in 
critical disaster mitigation posts, the institutional memory within its 
environmental programming, and specialized skills necessary to 
administer contracts critical to the functioning of the agency. In 
addition, inadequate staffing due to numerous retirements threatens 
HUD's vital cybersecurity capabilities. Overall, these enterprise 
issues and risks weaken HUD's ability to deliver strong, sustainable, 
inclusive communities and quality affordable housing.
    The 2022 Budget requests $1.7 billion for S&E, $189 million more 
than the 2021 enacted level, which, in combination with expected 
carryover of 2021 funding, will support 8,186 FTEs.\2\ The 2022 Budget 
will support the gains made in 2020 and projected for 2021 and provide 
for continued increases in staffing, which will enable the Department 
to serve households and communities better and more efficiently across 
the country.
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    \2\ Including Ginnie Mae; excluding Office of Inspector General.
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    The Budget also proposes $323 million for the IT Fund, to continue 
the modernization of HUD's IT systems and cybersecurity. These 
investments in IT and staffing will help ensure that HUD has the 
resources and capacity to rise to meet the critical work ahead.
    HUD's mission is to create strong, sustainable, inclusive 
communities and quality affordable homes for all. HUD is actively 
strengthening the housing market to bolster the economy and protect 
consumers. We are helping meet the need for quality affordable rental 
homes through our programs. We work to improve our citizens' quality of 
life through housing as a platform. And we are building inclusive and 
sustainable communities free from discrimination, while transforming 
the way HUD does business. The Budget delivers on these promises, and I 
am pleased to share this request with the Subcommittee.
    Under the President's leadership, America is getting back on track. 
We are turning the corner on the pandemic. Our economy is growing and 
creating jobs. Students are getting back into classrooms. For the fifth 
month in a row, unemployment claims have dropped precipitously as we 
have gotten Americans vaccinated. For all the progress we have already 
made, we cannot simply return to the way things were before the 
pandemic and economic downturn. We must seize this moment to reimagine 
and rebuild a new American economy that invests in the promise and 
potential of every American and makes it easier for families to break 
into and stay in the middle class. We must build back better.
    Chairman Schatz, Ranking Member Collins, and distinguished Members 
of the Subcommittee, I look forward to working with you. Thank you for 
the opportunity to appear before you today to discuss my priorities for 
the Department and how the President's 2022 Budget will serve our most 
vulnerable citizens, increase the resilience of our communities, and 
Build Back Better.

    Senator Schatz. Thank you very much, Secretary Fudge. Let 
me start with this, there are--according to the last Point-in-
Time count, there are 37,000 veterans experiencing 
homelessness, but we have got 24,000 (HUD-Veterans Affairs 
Supportive Housing) HUD-VASH vouchers that remain unleased. 
What strategies are you and Secretary McDonough looking at to 
solve this problem, given that we have resources and we can't 
match them with the people that need them the most?
    Secretary Fudge. First, Mr. Chairman, let me thank you all 
for making sure that those resources are available. I know that 
some budgets in the past have not made the kind of requests 
that you all have stepped in and done what was right for 
veterans and the American people in general.
    Part of the problem we are finding with VASH and we are, on 
a regular basis, talking, our staffs, as well as I have talked 
with Secretary McDonough. We have two major problems in this 
program. One being that we get referrals from case managers, VA 
does not have enough case managers. So some they get bogged 
down in that process, but the biggest issue is housing. It is 
just not available in the numbers that we needed.
    And so affordable housing is not available really to the 
degree that veterans need these resources. And so we have to 
find ways to either change things, like how much we allow 
vouchers to really be effective, we need to look at our price 
points, because we know in communities like yours, Mr. 
Chairman, that it is almost impossible to find the kind of 
housing that will take vouchers, from anyone, not just 
veterans, but especially from people in need.
    And so we have a lot of work to do and we know it, but we 
also know that that is why the President has requested the 
kinds of dollars that he has to expand housing, affordable 
housing.
    Senator Schatz. Thank you very much. And let us be in touch 
about this because, yes, it is a resource question, but it is 
also an execution problem between local governments and two 
Federal executive agencies.
    Secretary Fudge. I agree.
    Senator Schatz. I want to talk to you just a little bit 
about empowering local communities to tackle discriminatory 
zoning. And I know you have been a leader on this, a thought 
leader on this, and just wondering what mechanisms HUD is in 
possession of and what we could do to help to try to solve the 
problem.
    Look, we have got to appropriate money to affordable 
housing, but the truth is, lots of local governments are 
actually creating housing shortages and then lamenting housing 
shortages. And so I am wondering what you think you can do as 
the secretary to try to precipitate change at the local level?
    Secretary Fudge. Well, one thing that the American Jobs 
Plan does, Mr. Chairman, is it allocates resources to start to 
have the discussions with local governments about how their 
zoning is creating an impediment to affordable and low-income 
housing. Because I think sometimes they don't realize that if 
in their zoning they require that a lot size has to be a 
certain particular size, or they decide that you have to have 
so many parking spaces, or there has to be so much space for a 
driveway, when they start to think about the cost, I think they 
sometimes don't understand the impediment, partially.
    I think the other thing is that these resources are going 
to allow them to do the kind of research and discussion in 
their own communities to determine what is best for them. And I 
think you will find that, and I know, myself having been a 
former mayor, when you start to talk to your residents, and you 
start to talk to other people in your community, they come back 
with a different view, because a lot of these laws have been in 
place for so long, nobody has even thought about them. And so 
we need to take the discrimination out of it, but we also need 
to just say: It is a new day and we have to think about these 
things differently.
    Senator Schatz. Final question, what are your next steps to 
ensure that tribes are eligible for homeless assistance grants?
    Secretary Fudge. Well, I think we have already actually 
started doing that. Let me see. Here we go. Well, let me just 
say that, I know that we, right now, have already started to 
make tribes available for the program. So we are right now 
planning to allow tribes and tribal organizations to apply for 
Continuum of Care. We have been having ongoing conversations 
with them. I have had calls with tribal leaders on more than 
one occasion. Their input is not where we need it to be, and so 
we are in the process and expect to announce it later this 
summer that the eligibility will be there because the 
requirements will be changed to allow it.
    Senator Schatz. Thank you very much.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Secretary Fudge, I want to follow up on the chairman's 
first question about the VASH program, which I mentioned in my 
opening statement. You mentioned that there is some lack of 
caseworkers, and also a lack of affordable housing, but we have 
found that there are other challenges in connecting eligible 
veterans through the program, through the current referral 
system, and the 2020 Point-in-Time count found that there are 
still more than 37,000 homeless veterans. And we like to say: 
That in the land of the free, there should always be a home for 
the brave. And I feel very strongly about this program, and I 
have seen the difference it has made in the lives of veterans 
who were homeless in the State of Maine.
    So in response to the difficulties that HUD was 
experiencing in connecting veterans with vouchers, in last 
year's appropriation bill, we directed HUD to use its waiver 
authority to streamline the intake process, including by 
enabling public housing authorities to issue vouchers to 
eligible veterans in advance of a referral from the FAA. What 
has HUD done, or are you aware of what HUD has done to 
implement the directives from last year's Appropriations Act?
    Secretary Fudge. I would say to you, Senator, that VA 
actually is taking the lead on some of these programs. And so 
what they are doing now is talking about some of the things--
same things we are, quite frankly, is their capacity, because 
VA has the same kinds of issues we do as it relates to 
staffing, and to skills gaps, quite frankly. And, you know, we 
have already been, advised that we have a major skills gap as 
does VA.
    And so some of it clearly is a result of what is happening 
within the agencies, but I would suggest to you, Senator, that 
even though there is a problem within our house, that being VA 
and HUD, the need is still there and the need is still great. 
We are trying to figure it out. Secretary McDonough and I, and 
our staffs are working to try to move it as quickly as 
possible. But I think what has happened over the last number of 
years, eight or 10 years probably, is that we have never really 
looked at how the system should work best, and we have never 
really applied the best practices that we should have. And that 
is just an honest assessment of what I see. But we are working 
on it.
    Senator Collins. I want to bring to your attention a HUD 
success story. And it is in Lewiston, Maine. The Choice 
Neighborhoods Initiative, which is intended to help cities 
leverage public and private funds, to revitalize neighborhoods 
that are severely distressed, and have housing problems, and 
vacant property, a lack of employment opportunity. The City of 
Lewiston, Maine, was recently awarded a $30 million grant to 
revitalize what we referred to as the ``Tree Street 
Neighborhood''.
    And it would replace 185--or result in building 185 new 
units of affordable housing, rehabilitating nearly 1,500 units 
that are lead-contaminated, and it will result in $100 million 
private investment in the city.
    Lewiston was the smallest city to receive an implementation 
grant. And that really underscores the hard work that all of 
the partners, and stakeholders who came together, put into the 
plan. First, I want to invite you to come, at some point, to 
Lewiston, and see the wonderful work that is being done. And 
also, I want to point out a broader point, and that is that HUD 
needs to be more focused on smaller cities and communities. It 
cannot just focus on large urban areas. And oftentimes these 
smaller communities are at a real disadvantage because they 
don't have full-time grant writers. They don't have the staff.
    And that is why technical assistance, presentations from 
HUD, and HUD working with these smaller communities is so 
important. And HUD has done that with Lewiston. And I just want 
to thank you for that effort. Invite you to see the exciting 
project, but also encourage further efforts to help smaller 
communities take advantage of the programs at HUD.
    Secretary Fudge. Thank you. If I may, Mr. Chairman? I had 
the opportunity to speak with the Mayor of Lewiston and 
congratulate him on the hard work and the award, and I 
understand very clearly what you are saying. I was the mayor of 
a small city. I understand when you are not a city that gets 
your own direct CDBG money, or when you don't--when you have to 
find ways to write grants. I am one of those people who 
understands very clearly.
    And so congratulations to you and to the team, it was an 
outstanding proposal, I had an opportunity to read it. So thank 
you for acknowledging that. Thank you.
    Senator Collins. Thank you, Mr. Chairman.
    Senator Schatz. Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman.
    Secretary Fudge, thanks for being here today. And I 
appreciate you being, and the job you are doing. And I want to 
talk to you about the issue of children and youth homelessness.
    In HUD's 2020 Annual Homelessness Report 185 people in 
families with children, and only 120--112 unaccompanied youth 
in West Virginia were identified as homeless. However, children 
and youth experience, homelessness are hidden in our schools, 
communities, and often moving place to place, and staying in 
places like motels.
    My problem is this, we have identified through the 
McKinney-Vento definition, 10,000 in West Virginia. There is 
such a difference. And I guess it is because of the definitions 
and what we are using as definitions versus what HUD and 
McKinney-Vento. Is there any way that we can pair that up? 
Because it is harming us, we are really not addressing with the 
amount of urgency that we should be.
    Secretary Fudge. Well, the one great thing about the 
President's budget, there is an allocation, or a request for an 
allocation of $82 million to deal with homeless youth.
    Senator Manchin. Sure.
    Secretary Fudge. That includes high school, those aging out 
of foster care.
    Senator Manchin. And I am sorry to interrupt you, but 
where--what numbers are they going to use? Are they going to 
use the HUD's definition, or McKinney-Vento's definition?
    Secretary Fudge. Well, we are going to actually try to 
combine the two, because I know that there is a difference 
there.
    Senator Manchin. Fine. It needs to be done. Okay. You know 
you have a problem there?
    Secretary Fudge. Yes.
    Senator Manchin. Let me jump around, because we have--if 
you can get that done, that will be a miracle for all of us, 
because if not, let me just say this too; whenever you are 
dispersing funds, if you all could consider, I have been trying 
to write this in every piece of legislation, 20 percent of the 
population of the United States of America is determined or 
defined as rural. And if you want to know the geopolitical 
problems that we have, it is rural versus urban and it gets 
bigger, and the chasm gets bigger and bigger. And if you are 
ever going to unite our country back together, it is basically 
treating everyone equally.
    When the money is disbursed, if you can make sure that 20 
percent of the money goes directly to rural areas, so only 
rural states or rural communities can compete for that 20 
percent. We lose out every time when a big urban area jumps in, 
New York, or Chicago, or Florida, or Hawaii, Honolulu, we lose 
out. We cannot compete because the scales of economy, economy 
of scales basically work better, giving more people help, 
because there is more people, but the 20 percent set aside is 
all I am asking for.
    If you could take that back to your team and talk about 
that, because we are trying to write legislation, anything that 
comes through 66 million people live in rural, out of 330. That 
is all I am asking for. Let those 66 have the same shot, 
proportionately, as the rest, because--I will give you a 
perfect example: Healthcare, $172 billion now out the door on 
all the healthcare CARES--COVID packages, only 6 percent went 
to rural. Rural hospitals were closing. How in the world do you 
close a hospital during a pandemic? Okay. That is enough of 
that. But I do need your help on that. You can help us 
immensely.
    Let us go to the CDBG, Community Development Block Grant. 
It is one of the longest-running programs of the Department of 
Housing and Urban Development, it is s useful program because 
it allows recipient communities to have flexibility to 
determine how best to use the money for their state's unique 
needs. And it is used for so many good things. Here is the 
problem. The program has a lot of bipartisan support in 
Congress. Okay?
    Secretary Fudge. Mm-hmm.
    Senator Manchin. But despite that support, the previous 
administration sought to dismantle the program, to dismantle 
it. So I want to know what your intentions are and your plans 
to not only, not dismantle it, but to bolster it.
    Secretary Fudge. Actually, we have made a request for 
increased funding for CDBG. It is the most flexible program.
    Senator Manchin. You know that, too, don't you, from being 
a mayor?
    Secretary Fudge. That is right.
    Senator Manchin. I appreciate you so much. I really do. I 
just want to make sure you know this is a partnership and we 
need it, and if we don't do it and do it right, God help us 
all, because there is so much--the cost of housing now, what 
are we going to do on that? How do you address that? This 
inflated costs that we are going through right now, and how do 
we get people in, out of the cost.
    Secretary Fudge. I think that also goes back to some of the 
questions that we have been asked about affordable housing, 
when we were talking about veterans. The biggest problem we 
have with veteran housing is rural areas because they don't 
have the--they don't have the capacity within the communities; 
they don't have the housing to even--to put veterans in. So it 
is a major, major problem.
    So what we are talking about doing now is creating through 
low-income housing tax credits, through neighborhood 
improvement home tax credits, to make sure that we can make it 
more affordable. If we do those two things, which come out of 
Treasury, and then if we put in our home dollars, our housing 
trust dollars, we can bring down the cost of that house.
    Senator Manchin. One thing I would ask you all to consider 
is ownership. The greatest thing we have is the people that, 
basically, we provide housing for, and subsidize the rent and 
everything else, they are a tenant, not an owner. They don't 
take care of things the way they would, if they were an owner, 
they don't look at any building, any values whatsoever, and 
they are afraid they are going to lose their benefits because 
now they have assets.
    It is absolutely a conundrum that we cannot get out of 
abject poverty in Appalachia or poverty-stricken areas. And 
unless you let them buy in to have ownership, we are never 
going to cure this.
    Secretary Fudge. I think you will be pleased that there is 
$100 million in this budget to assist with homeownership.
    Senator Manchin. I hope $20 million of that is basically 
going to be in rural America.
    Secretary Fudge. I got it.
    Senator Manchin. Okay. Thank you.
    Senator Schatz. Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman. Remember I like 
Hawaii.
    Senator Schatz. I do remember.
    Senator Boozman. It is good to have you, Madam Secretary, 
as an old house member, we appreciate you, and hope you are 
having a good experience over on the Senate side.
    Secretary Fudge. It is good to see you, Senator.
    Senator Boozman. Again, thank you for being here, and 
taking time to speak with us. I am sure you know, last 
Congress, we came together in a bipartisan manner and passed 
the Consolidated Appropriations Act of 2021, which created a 
$25 billion emergency rental assistance program designed to 
repay a renter's back-rent debts.
    Following that Congress passed the American Rescue Plan, 
which created a second round of emergency, or rental assistance 
of $21 billion. So now we have a total of roughly $46 billion 
in rental assistance. The Bipartisan Consolidated 
Appropriations Act established parameters for how the first 
round of emergency rental assistance funding can be used. And 
it was clear, it was meant to repay renters back-rent debts.
    However, what concerns me is that these parameters were 
changed in the American Rescue Plan and the safeguards in the 
American Rescue Plan are different than those in the 
Appropriations Act. So you have got a difference in the two 
bills. It also concerns me that I have heard from constituents 
and colleagues that Treasury has not been able to provide 
details about how and where the money is being spent, and that 
some states are having difficulty setting up the program. While 
I recognize that you don't work for the Treasury Department, 
your agency has authority over the Section 8 Housing Choice 
Voucher Program, and I am sure you agree with us how important 
it is to meet rental assistance needs.
    In that light, can you commit to working with Congress to 
make sure we address any potential mismanagement of the 
Emergency Rental Assistance Program, or any other potential 
areas of mismanagement around affordable housing? And then 
again, square the two bills, in the sense that we have got 
different direction coming out of each one of them?
    Secretary Fudge. Oh, absolutely. I certainly commit to do 
that. But let me just reassure you that the appropriation act 
that was passed is the determining factor in how we go forward.
    Senator Boozman. Very good. Well, being on the 
Appropriations Committee, we like to hear that. We have heard 
from a constituency in the mortgage industry that updates to 
the information technology systems and processes of HUD that 
support the FHA program have lagged behind comparable 
information technology systems and processes used by other 
mortgage market participants.
    We work hard in government to provide those things, but it 
is not uncommon for us to lag behind. In recent years Congress 
has appropriated dedicated funding for upgrades to FHA 
technology. Can you share your views on the progress that HUD 
has made to date, and how you can continue these efforts moving 
forward, to get our technology up to snuff?
    Secretary Fudge. Thank you for asking that question, 
Senator. We have been looking at where we have significant 
skill gaps, and that is one of the places where we do. As we 
talk with the Head of GAO, he cited it for me. The first thing 
he said was: You have a significant skills gap, but you also 
are at risk of cyberattacks because of the lack of investment 
in your systems.
    And so that is one of the things that we are talking about 
in our budget, is being able to not only just build the 
capacity with people, but to build the systems. And so we know 
that we have a problem, and we are working on it.
    Senator Boozman. Very good. Thank you. An ongoing area of 
focus with FHA relates to broad consumer access to affordable, 
sustainable housing. As I am sure you would agree, it is very 
important that consumers all across America have access to 
affordable, sustainable housing, particularly in rural America, 
whether we are talking about eligibility requirements for 
providers, of down payment assistance, or treatment of 
potential borrowers with student loan debt. In your view, 
Secretary Fudge, are there areas in which policy shifts and 
greater regulatory clarity for lenders, would promote improved 
access to credit, which is also very important?
    Secretary Fudge. It is one of the major issues and major 
impediments to home ownership, and it has been going on for far 
too long. So we are actually sitting down trying to determine 
what it is in the way that we assess credit worthiness that can 
be changed. We know that things like student loans, which you 
just mentioned, are weighted heavier than other types of 
credit. And who has those kinds of debts? Poorer people, 
moderate-income people, people of color. So we know that there 
are some things that we must do and we are working on it. And I 
think you will be pleased to see what we come up with in a very 
short period of time.
    Senator Boozman. Good. Thank you for your testimony.
    Secretary Fudge. Thank you.
    Senator Boozman. And thank you, Mr. Chairman.
    Senator Schatz. Secretary, between 2012 and 2019 HUD had a 
20 percent decline in full-time employees. We talked a little 
bit about this before the hearing started. Can you speak to 
what that has done to the agency? And what you are doing about 
it? And what we can do about it?
    Secretary Fudge. Thank you so much, Mr. Chairman. And I 
just want to say that when you look at HUD and its totality, 
part of the problems that we have, whether it be VA, or whether 
it be getting funds out from--that have been so graciously 
given to us by Congress, capacity is a problem with us, just as 
it is with our end-users.
    Part of the problem that we had with the funds that came 
out of CARES, and others, is that when Treasury sent the 
resources, there was nobody to provide technical assistance, 
there was no one to assist people to tell them how they should 
use it. And so what happens is when you have especially small 
communities, and rural communities, they are afraid to use 
funds if they don't know what they are supposed to be doing. 
And so they hold it, and they use other money, so when you came 
down with the COVID money, they used it instead of the CARES 
money, because that was more clear to them.
    And so when you lose 20 percent of your staff, it keeps you 
from accomplishing your mission. You cannot do the work we do 
if you are shorthanded. So what I found at my entrance into the 
agency, as an agency that have great employees, but they were 
overworked and we were understaffed. And so until we can start 
to build back up our staff, and build back up our capacity, we 
are at risk of not doing some things that we should do to make 
sure that our mission is completed.
    Senator Schatz. But what do we do to build back up the 
staff? I am sure that previous HUD secretaries were not--well, 
maybe some were, but from that time period, you would assume 
that most secretaries are not desirous of reducing their 
capacity by 20 percent. So it is not just a matter of wanting 
to increase your capacity. We have got to have a strategy for 
it. So what should you be doing? And what should we be doing to 
reverse the trend?
    Secretary Fudge. Well, there are two things that we must 
do. In this budget we requested a significant increase in 
salaries and expenses. We know that we need it. Secondly, we 
have to start to hire people and hire them faster. We are 
looking at, today, more than 500 people in our agency who are 
eligible to retire, more than 500. This has been happening year 
after year, so the attrition has created as big a problem as 
not hiring people and not hiring them quickly enough.
    But the other thing we need to do is make sure we hire 
people with the right skill sets to do the work that needs to 
be done. It is unfortunate that over the last--over that 10-
year period or so that no one thought it important to make sure 
that we were able to do our work with the limited staff we 
have. Now, we have--because of your kindness, we were able to 
come up a little bit, but we are woefully short of where we 
need to be. And so that is why this budget requests those 
resources.
    Senator Schatz. Is the slow hiring time, is that a function 
of capacity, you know, throughput capacity, or are there 
idiosyncratic processes or rules that need to be changed? Or is 
there a statutory barrier? What is going on there?
    Secretary Fudge. Well, we have changed them. When I came 
into the agency, they said it would take 180 days to onboard an 
employee, 180 days. And so we have been able to cut that in 
half at least. And the other thing we would do, let us just 
say, for instance, in every single department, we have an 
advisor of some sort, they would post every advisor separately. 
When we know the advisor position is the same, no matter where 
it is, so I am saying: let's post them all at the same time.
    There are many things we can do, but sometimes we do get 
bogged down in what we have always done. So we need to change 
the mindset and put some urgency behind what we are doing, 
because I do not believe that if we do not show some urgency 
that we are going to be able to accomplish our tasks.
    Senator Schatz. Yes, and just one observation before I turn 
it over to Senator Collins. I think what Senator Manchin said 
is right, which is that HUD has become a sort of politically 
polarized agency with the notable exception of many members, on 
a bipartisan basis on this committee, it is something that has 
been fought over in terms of urban versus rural, and to the 
degree and extent that we can make sure that everybody 
understands that everybody benefits from funding, and resources 
towards housing, whether you live in a small town, or not a 
town at all, or a big city, you know, then you can, not just 
provide resources, but provide a direction, a collective 
direction for all employees and for the country to say: We are 
all committed to housing, that is one of the few things we are 
going to decide not to disagree about. And I think that that is 
a really important aspect of improving morale, improving 
capacity, and getting that continued bipartisan consensus for 
funding.
    Secretary Fudge. But if I may Mr. Chairman.
    Senator Schatz. Sure.
    Secretary Fudge. This budget is requesting the largest 
single increases in rural capacity, in rural housing, in tribal 
housing, native Hawaiian housing, senior housing, and housing 
for the disabled. It is a significant portion of the increases 
in those buildings--this budget goes to those particular 
things.
    Senator Schatz. Thank you very much.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Madam Secretary, you have said many times set HUD is 
understaffed. And I agree with you on that. And that obviously 
is a barrier to effectively implementing programs, but I do 
want to point out too, that under the CARES Act, the Office Of 
Community Planning and Development was given substantial new 
funding, $10 million, I believe it was. And to date, as of June 
3rd, only 13.1 percent has been spent.
    So some of the problem appears to be at HUD, if we are 
giving you that kind of extra money to hire staff, to implement 
the CARES Act, which was passed more than a year ago, and you 
have only spent a little over 13 percent of the money for 
salaries; there is some problem at HUD.
    Secretary Fudge. I don't disagree with you Senator. There 
is a problem at HUD. I absolutely agree with you 100 percent. 
What we found--or let me say, what I found when I arrived is 
that there didn't seem to be the kind of systems in place to 
make sure that these funds were spent properly and timely. I 
agree with you, we are addressing it now. And I think that you 
will find that as we go through the next few months, through 
the assistance that we are going to provide as well as in-
house, you are going to see a difference in those resources. 
But I don't disagree.
    Senator Collins. Let me bring to your attention, another 
issue, the budget that is related, and it may already be on 
your radar screen. The budget request includes $125 million for 
service coordinators in the Section 202 Program, and as you 
know, the service coordinators help link residents of eligible 
housing with supportive services provided by community 
agencies; the Department funds these coordinators through a 
combination of direct grants and budget-based rents.
    So I am pleased that our subcommittees worked to increase 
funding for these counselors, but I am concerned that there are 
still two open GAO recommendations to HUD related to service 
coordinators. And one of them relates to the fact that HUD does 
not know how many service coordinators it has. And knowing how 
many service coordinators HUD has seems to me to be pretty 
fundamental information that the Department should have.
    So what is the Department doing to address these open GAO 
recommendations? It is really hard for us to decide how much 
money to give for how many people, if you cannot tell us how 
many people you have.
    Secretary Fudge. I certainly appreciate that concern. I did 
have a meeting last week with the director of GAO. We went 
through the top 13 concerns, the biggest ones. This was one, we 
are already putting in place a plan to make sure that we 
address them within a very short window of time. But he--I 
think we came away from the meeting, knowing that, we do have 
the information. It is just a matter of over the last period of 
time, no one seemed to want to get the information together and 
give it to--we have the information, and we can get the 
information to you.
    Senator Collins. Let me now turn to one final issue that I 
want to touch on. I may have some additional questions for the 
record, and that is cybersecurity. We know that cybersecurity 
is an increasingly critical issue. We have seen the SolarWinds 
attack, which affected nine separate departments, the Colonial 
Pipeline cyberattack.
    But it is not just big companies, or the Federal government 
that are targets. I know from my work on the Aging Committee, 
that every day Americans, and particularly seniors, are victims 
of cyberattacks. According to the FBI, one of the fastest-
growing cybercrimes is real estate wire fraud. In 2019 more 
than $220 million that we know of was stolen from Americans as 
a result of those kinds of housing-related cyberattacks.
    Madam Secretary, the budget request, nearly $86 million for 
the Office of Housing Counseling. What is HUD going to do to 
help combat real estate wire fraud by using a portion of that 
money for that purpose?
    Secretary Fudge. Well, let me just report that over the 
last few weeks, we actually did have someone working remotely 
open a virus on their system. And so before we knew it, because 
we could not get the systems in place fast enough, 750 people 
had already been infected with the virus, but part of the 
problem was, is because we outsource so much of this because we 
don't have the skills in-house to do it, it took them three 
days to get back to us.
    And so we have to do two things. One is we have to make 
sure that those people who have the contracts or who are 
responsible are people that we bring in and say to them, this 
is not acceptable, and this is our expectation. But also to 
have the skill in house so that they can catch it as well. When 
you decide that you are going to outsource everything that is 
important, things like your security, and no one in house can 
catch it. Then there is a problem. It is just the way the 
system has been designed, but we need to change it. And we are 
working on doing that.
    Senator Collins. I agreed that you need to improve your 
internal cybersecurity, but I hope that you will also look at 
ways to educate consumers about the danger of real estate wire 
fraud. Thank you.
    Secretary Fudge. To work safe, and we absolutely will.
    Senator Schatz. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman.
    Secretary Fudge, the OMB, let's see, in January of 2021, 
announced a proposed change to the metropolitan statistical 
area, MSAs, to increase it, the population threshold from 
50,000 to 100,000, to the MSA standard. And, that is a concern 
to 140 communities across the country in 45 states, including 
three communities in my state, Grand Forks, Bismarck, and 
Minot. So we don't want to see that MSA standard increase from 
50 to 100,000. And that affects--the MSAs affect not only the 
labor market conditions, the information that we get there, but 
also government programs and funding formulas, including for 
CDBG, Community Development Block Grants, a very important 
program, as well as the home investment partnership program, 
and others.
    So programs that you administer. Myself, along with a 
bipartisan group of senators have written OMB expressing our 
current concerns and that--advocating that it not be increased 
from 50- to 100,000. What is your opinion on that? And 
hopefully you will agree with our position. And if so, would 
you be willing to weigh in with OMB on it?
    Secretary Fudge. Well, I would suggest to you that I think 
that we need to constantly take into consideration smaller 
communities. I was the mayor of a small community, so that's--
it's good to say.
    Senator Hoeven. That is good. So would you be willing to 
weigh in and help with OMB?
    Secretary Fudge. Oh, absolutely. I am happy to talk to OMB 
to find out how we can come to something, a resolution that is 
something that everybody can live with.
    Senator Hoeven. Thank you. So we have 32 public housing 
authorities in our state, but as you say, we are a rural state. 
What kind of assistance does HUD provide for public housing 
authorities located in rural areas to help with not only 
building, but also technical assistance, and training, that 
kind of thing?
    Secretary Fudge. We provide the same assistance we do in 
big cities. The problem that we have in smaller communities is 
that they often don't have the capacity to do some of the work. 
So we are going--we are stepping up our technical assistance to 
smaller public housing authorities, and to smaller communities 
where we have grants out there because we know it is a problem 
just with capacity.
    Senator Hoeven. Very good. The Minot Housing Authority got 
a funding under the Community Development Block Grant Natural 
Disaster Resiliency Program. And they have been using that to 
develop housing after a very severe flood they had in 2011. 
Senator Kaine and I recently, we were able to pass legislation, 
extending that to give them another year. Because they have got 
to expend those monies within a certain period of time or they 
lose--or they lose them. And so it was not just mine, but there 
were 13 of those awards that needed that additional 
flexibility.
    Are you aware of that? And, you know, are they coming along 
all right? Do you know, is that something that we are going to 
have to do again? It is important that these communities have 
that flexibility, so they are not forced to use the funds on 
something that really would not be the right priority. And it 
is just a matter of giving them additional time.
    Secretary Fudge. Let me check into it. I am not aware off 
the top of my head. But I certainly will check and get back 
with you.
    Senator Hoeven. And then, one other question for you; in 
Fargo, we have the Herschel Lashkowitz Tower, and it was built 
50 years ago, it is 200 residential units, it is under the 
auspices of the Fargo Public Housing Authority, and they want 
to demolish it, as I say it is 50 years old, and build a new 
110-unit, multi-use facility. Are there HUD programs or 
assistance available for public housing authorities that are 
seeking to redevelop aging facilities such as this Lashkowitz 
Tower?
    Secretary Fudge. There are. And we are certainly happy to 
talk with your local public housing folks and give them the--
what we can do to assist them.
    Senator Hoeven. Good. Thank you. One final thing I will 
mention in regard to Minot, too, is that we have got about, it 
is about a $1.2 billion flood protection project going there. 
We have broken it into eight phases. The first four are pretty 
much underway. That covers about 65 percent of the community. 
There is about 50,000 people in the community, but this 
actually covers much of the county, so it would cover, I don't 
know, more than that, you know, 65,000 to 75,000 people 
probably, but for phases five through eight we don't have 
funding in place yet, and those are the lower-income areas, so 
we cannot make benefit cost to get any help from the Corps.
    So we were using state and local funds, but we have tried 
to connect with other agencies, such as yours to see if there 
is anything we could do to help, you know, with collaborative 
funding effort for that flood protection. And so, I don't know 
if you have programs like that, but if you do it would sure be 
good to partner.
    Secretary Fudge. You just have to reach out to us, because 
I mean one of the things that is great about what we do as an 
administration is we work across agencies quite well, actually.
    Senator Hoeven. Yes.
    Secretary Fudge. So even if we don't have resources, 
someone else may have. Maybe the USDA has, maybe somebody else 
does. So we will take a look and see if there is some way I 
can.
    Senator Hoeven. Yes. I am thinking under some of your low 
income housing programs might be need to get some, and of 
course--
    Secretary Fudge. Plus, you know, I think people forget 
about the resources USDA has as well.
    Senator Hoeven. Right on.
    Secretary Fudge. We will work together.
    Senator Hoeven. Yes. Thank you.
    Senator Schatz. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member 
Collins.
    Madame Secretary, it is great to see you. A lot to cover in 
your budget, but I was pleased to see your proposals. I was 
especially pleased to see the proposed increase in tenant-based 
vouchers by $4.6 billion, which would add 200,000 vouchers, 
which would be a significant jump, as you know. Also was very 
interested in the new mobility-related social services program 
to assist families in finding houses in higher-opportunity 
neighborhoods, two pieces of your budget.
    So, Senator Young and I have introduced bipartisan 
legislation. Last Congress, we just reintroduce it again 
yesterday in honor of your appearing here today, which would 
create 500,000 housing mobility vouchers. So coupling those two 
ideas in your budget, it would provide 500,000 additional 
mobility vouchers over the next 5 years. So this allows more 
families to move to areas of opportunity.
    I raised this issue with you in the last hearing. I am 
hoping you had a chance to look at it. I would like to get the 
Biden administration, and you, Madam Secretary, to support this 
legislation. It seems to fit perfectly with your proposals.
    Secretary Fudge. We have discussed it. We are discussing it 
still. They are happy to have more conversations about it to 
get better understanding, but we are discussing it.
    Senator Van Hollen. Okay.
    Secretary Fudge. So don't think I forgot.
    Senator Van Hollen. I appreciate that. No I just--hopefully 
we have now introduced it, and we support any--we will take a 
look at any suggestions you have got, but I would like to move 
forward on this.
    Secretary Fudge. Okay.
    Senator Van Hollen. Because we are considering this in the 
context of some of the legislation, in terms of the American 
Families Plan.
    Secretary Fudge. Well, the good thing is they are not 
opposed to what you are doing.
    Senator Van Hollen. I would be surprised if you were 
opposed, Madam Secretary, so hopefully we will get a yes, a big 
yes.
    Secretary Fudge. All right. Thank you.
    Senator Van Hollen. So your budget also proposes a new 
piece and add on to the CDBG program, $295 million to: 
``Advance the administration's priority in redressing the 
history of the Federal government systemically declining to 
invest in communities of color and low income neighborhoods.'' 
And it goes on. Baltimore City, is an example of a city that 
had redlining. It was one of the worst in terms of 
discriminatory zoning practices. Can you tell us how you are 
going to make the determinations with respect to the use of 
these funds?
    Secretary Fudge. One of the things we know is that FHA is 
such a significant player in the market, and we do have some 
input on what happens with FHA clearly. And so we are going to 
be looking at how we best do this in a fair way. And I think 
you will be pleased with what we come up with. We are still 
having those discussions, but I think that, FHA, Ginnie, and 
everybody else that we are working with knows that there are 
some things that we need to do. There are some things we need 
to shift. And not just as we look at how we talk about 
redlining, but just even in terms of appraisals of properties.
    When we look at how we do transportation, when we--there 
are so many things that are involved in this, but we are 
working together with Transportation, with VA, and with some 
others, but primarily FHA is the major player in this.
    Senator Van Hollen. All right, Madam Secretary. Yes. If you 
could get back to us, because this is a very, I think positive 
proposal, this relates to CDBG grants. So I would be interested 
in how FHA is playing a role there. We would just like some 
clarity on how you are planning to use these CDBG funds. 
Separately, and regarding FHA, a lot of us, and I think on a 
bipartisan basis are interested in helping first-time home 
buyers, as well.
    And FHA, they are their financing of homes are really 
important to first-time home owners. In fact, you know, 83 
percent, I think of first-time homeowners received FHA loans. 
You have proposed something called the HEAL Pilot Project, 
which is a new FHA initiative for this year, that would help 
lower barriers to home ownership. So are you going to be 
proposing to help first-time homeowners with those down 
payments? Are you talking about lower interest rates? Can you 
talk about what combination of help you are thinking about?
    Secretary Fudge. We are talking about all of the above.
    Senator Van Hollen. Okay.
    Secretary Fudge. What we really want to do is be sure that 
when people--we have found that if you come into a 
homeownership and you already have a stake in it, which most 
low-income people don't, because they don't have the kind of 
down payment that is necessary. We want to be sure that we can 
assist them in making sure that they don't need a loan more 
than 90 percent. So that is going to be a number of things.
    Senator Van Hollen. Okay.
    Secretary Fudge. And, and it is going to be home down 
payment assistance, it is going to be fee structure, it is 
going to be tax rates, it is going to be a lot of things, but 
we just want to be sure that we can make those people who can 
pay their rent now, most of whom can afford to pay a mortgage, 
but just a system to get over the hump.
    Senator Van Hollen. Right.
    Secretary Fudge. And like with the CDBG, you know, that is 
so flexible with communities, we are hopeful that some of those 
resources will be used to also assist people in getting a home.
    Senator Van Hollen. Well, as you well know, a big part of 
the racial wealth gap can be traced to differentials in home 
ownership, so I do think this is a really important area. And I 
look forward to working with you. Thank you. Thank you, Madam 
Secretary.
    Secretary Fudge. Thank you.
    Senator Schatz. Senator Braun.
    Senator Braun. Thank you, Mr. Chair.
    Good to be talking to you again. Traveling around Indiana. 
I hear three things, pre-COVID, during-COVID with the need for 
a rural broadband, workforce development and training, and then 
affordable housing. According to the GAO, 150 housing programs 
across 20 agencies are out there, HUD's budget has grown from 
$44.2 million in 2019, $49 billion in 2020, $59.7 billion in 
2021, and now a 13 percent increase requested, up to $68.7 
billion.
    I still hear the same thing as I did, you know, two, 3 
years ago, that we still have the issue. Are we applying 
metrics to what we are spending all this money on? Are we doing 
a better job of, you know, lowering the amount of need for 
affordable housing? We put a lot of resources to it. And then 
also is there one of these 150 programs that maybe should be 
eliminated because it is not working well? I cannot believe 
that we have that many chasing the same issue and that it would 
not be confusing to some extent, and that every one of them 
would be effective and that we may want to reorient resources, 
and at least measure things better. What do you think about 
that?
    Secretary Fudge. Well, I have not done assessment of all of 
the programs, but if they have that many, I am certain we 
probably should look at them. I mean, I don't certainly have a 
problem with that. I do believe that you can always do things 
better. I think you can always do things more efficiently. So I 
don't certainly have any concern about looking at them. And as 
it relates to the increases in budget, I would suggest two 
things to you. One is that from 2010 to 2019, we have lost so 
much in terms of funding and staff, that this is just an effort 
to try to make up, to do the work that we know that we need to 
do.
    When you lose 20-plus percent of your staff over an eight-
year period, it is most difficult to do the work. And so what 
we are doing, we are trying to make up for what we lost. I am 
not going to try to sugarcoat that in any way; we are 
significantly understaffed and overworked. But yes, I do think 
we need to take a look. That is what government does.
    Senator Braun. Were you understaffed pre-COVID as well?
    Secretary Fudge. Oh, absolutely.
    Senator Braun. Okay.
    Secretary Fudge. Oh, absolutely.
    Senator Braun. And with those kinds of budget increases, 
which average 10 to 15 percent a year over the last 4 years, 
that would mean that there was either a lot of catching up to 
do, or that it might need to be spent more efficiently because, 
obviously, our economy, when it is booming grows 3 percent a 
year, and that is about four to five times, the rate of 
increase that you can afford to pay for any government program.
    Secretary Fudge. Let me say, Senator, that I don't--I don't 
see where over the last 4 years in particular, our budgets went 
up significantly, they were pretty much flat. And then as, as 
it relates to why the cost is so great, just even in your own 
community, the same house you could buy, or the same place you 
could rent 4 years ago, you cannot rent anymore for what we are 
willing to give a voucher for.
    Senator Braun. It was a GAO that got the figures 44 49, 59, 
and now 68. So it may appear flat maybe due to the need being 
that great. I have got another question here. In President 
Biden's budget, it includes $5 billion for a new competitive 
grant program for jurisdictions that eliminate exclusionary 
zoning. How does the administration define exclusionary zoning? 
And do you believe every community should have the same zoning 
standards?
    Secretary Fudge. Let me start from the end, no. I do not 
believe every community should have the same zoning standards. 
As well, let me just, I think, maybe just disagree a bit. It 
does not give grants to eliminate it. It gives grants to 
discuss it, to talk about how we can eliminate it. It talks 
about what communities are doing to make affordable and low-
income housing more difficult. So what we want to talk to them 
about is things that they may not even be aware of in their 
zoning codes that are creating unnecessary barriers and/or 
increasing the cost of building new housing.
    So it is not a demand. It is not a dictate in any way. It 
is a discussion. And I agree that communities should have the 
flexibility themselves. But what we want to do is engage those 
communities with the people who want to build housing, with the 
people who live in those communities, and not just say: Do you 
know what? We have got the zoning, it is fine with us. Let's 
take a look at it.
    Senator Braun. Thank you.
    Senator Schatz. Senator Murray.
    Senator Murray. Thank you, Mr. Chairman.
    Secretary Fudge, thank you for joining us today and for all 
of your work on this budget. You know, I have spoken to people 
in communities across my home state of Washington who have 
raised really serious concerns about the impact this pandemic 
has had on housing security, and the pressure that it has added 
to the existing affordable housing crisis that my state was 
facing long before COVID.
    So I was really pleased to see President Biden's budget lay 
out a plan to meet this moment, and to push out strong 
investments in creating and preserving affordable housing. One 
of my top priorities, as a member of this subcommittee, is to 
make sure the Federal government is providing the resources, 
knowledge, and support necessary to end the homelessness crisis 
that individuals and families are experiencing across 
Washington State. And I know this is a struggle for many other 
states as well, and it is not just an issue for the most 
populated areas. It is a challenge in our small cities, in our 
suburbs, in our rural communities.
    And it is just heartbreaking to see this as, especially 
when so many children are involved. I believe it is essential, 
the Federal government does all it can to provide the resources 
and coordination with state and local authorities. So I was 
pleased to see the strong funding included in the budget for 
homeless assistance grants and a major infusion of additional 
housing choice vouchers.
    Can you just talk with me a little bit about how the fiscal 
year 2022 request will address homelessness, and the importance 
of robust funding for those accounts?
    Secretary Fudge. I mean, I think that it is important for 
people to realize that unsheltered homeless is now larger than 
those who are sheltered. That is how significant the problem 
has changed and how it has grown. Part of the reasons that the 
President and this budget are requesting additional resources 
is because what we are finding, let's just take your state, for 
instance, we have the resources to provide the vouchers. We 
don't have the places to put them because of the high cost of 
rentals and the low vacancies in communities like yours.
    So what we need to do is expand the numbers of units that 
are available for homeless and/or low-income, or moderate-
income people. And that is why there is a huge focus on how we 
treat homeless, especially because we know that we don't have 
the congregate facilities and we don't want them anymore 
because of COVID.
    But what COVID did was just basically shine a bright light 
on the problem that we already had. And so the best we can do 
right now is try to find ways to--and many communities are 
doing it--I have talked to mayors and governors all the 
country, and they are all using different things here. In 
Washington, D.C., the mayor is talking about using those 
resources to build new housing for the homeless, and for low-
income. In places like Los Angeles they are buying motels and 
hotels that house the homeless. The resources are flexible, we 
just need for people to have the kind of assistance to make 
decisions as to what to do. And that is what these resources 
will let us do.
    Senator Murray. Good. And I was really pleased to see the 
strong funding for home and CDBG programs that were included in 
the budget, because as you know, this subcommittee has rejected 
attempts in recent years to get those programs. And I am really 
hopeful that we can use this request to push for further 
increases in those flexible funds. And maybe you can talk a 
little bit about how the increased levels of investment, in 
addition to the ones that are proposed in the American Jobs 
Plan, will help boost that supply of affordable housing.
    Secretary Fudge. Well, the great thing about the Jobs Plan 
budget is that there is a request for $213 billion to assist. 
This is over and above the homeless money. This is just 
creating new low-income and moderate-income housing units, 
because we know that no matter what we do with the resources we 
have today, we cannot solve the problem, we just want to have 
places to put people, we don't have places where people can 
live decently, and public housing, because it is already at its 
limit, is not the answer either.
    So what we are trying to do is even take some of these 
vouchers, these emergency vouchers, and turn them into project-
based vouchers, or tenant-based vouchers so that we can use 
them in other ways to get those who are experiencing 
homelessness into housing very quickly.
    Senator Murray. Thank you. And to close, I just want to 
underscore my strong support for major investments for 
affordable housing, like the ones that are included in the 
American Jobs Plan to be included in any infrastructure package 
we do. Like I mentioned earlier, in my state, we were 
experiencing an affordable housing crisis before this pandemic, 
and getting back to where we were is not going to be good 
enough. This is going to take a lot of work to build us back 
fair and stronger. And I think it is time we make bold 
investments in housing infrastructure, to make sure that 
everyone has a safe, secure place to live. Just, this is not 
the time to hold back on this. We have got a lot of work to do. 
So I appreciate your work on this, Madam Secretary.
    And Mr. Chairman, thank you.
    Senator Schatz. Thank you, Senator Murray. Thank you, 
Senator Collins. Secretary Fudge, thanks for coming today to 
discuss HUD's fiscal year 2022 Budget Request.

                     ADDITIONAL COMMITTEE QUESTIONS

    The hearing record will remain open until Friday, June 
18th, to allow members to submit additional questions for the 
record. This hearing is now adjourned.
              Questions Submitted by Senator Brian Schatz
    Question. Local housing markets can be highly volatile, and in the 
last year, many communities experienced increases of over 15 percent in 
rents in a single year. This committee has continued to encourage HUD 
to make progress to reduce the time lag in rent data used to establish 
fair market rents (FMRs) for Section 8 housing assistance payments.
    How can HUD make sure fair market rents and operations are 
responsive in these fast-changing markets? How does HUD plan to support 
public housing authorities as they work through local challenges?
    Answer. HUD has three main strategies to address rapidly increasing 
rents, with the ultimate aim of enabling HCV families to better locate 
and rent suitable units. The first strategy is to encourage PHAs to 
take advantage of the range of existing regulatory flexibilities to 
better align their payment standards to market rents, including 
utilization of exception and success rate payment standards.

    Second, HUD assists PHAs in working through local challenges in 
several ways:

  --HUD has made technical assistance available to support PHAs in 
        achieving high utilization in high-cost markets.

  --For the new Emergency Housing Voucher (EHV) program, HUD has 
        established an alternative requirement permitting PHAs to 
        establish separate higher payment standards for EHVs. Through 
        the alternative requirement, PHAs may establish a payment 
        standard for the EHV program up to 120 percent of the 
        applicable FMR/SAFMR. More than 600 PHAs across 55 states and 
        Territories received an EHV allocation. Many of these PHAs 
        serve high-cost urban and rural markets.

    Finally, HUD has three grant-funded studies underway looking at 
methodologies to improve FMR estimates in markets with rapidly rising 
rents. The researchers are examining use of private sector data 
sources, web-scraping of rental advertisements, and machine-learning 
and Artificial Intelligence (AI)-based forecasting as alternatives to 
the current approach to calculating FMRs. One tension HUD will face in 
implementing many of the techniques identified by the research 
underway, should they prove to be more accurate, will be loss of the 
transparency Congress and the public have come to expect in being able 
to review the data and calculations behind every FMR.
    HUD has received criticism in the past that PHAs generally do not 
have the resources necessary to conduct rent studies to re-evaluate 
HUD's FMR calculations. These studies do use PHA resources, and many 
PHAs' resources are already stretched thin. Congress could provide 
dedicated funding to PHAs to cover a portion of the local FMR surveys 
costs. There could be something like PD&R's Research Partnerships 
program where HUD splits the survey cost with a PHA. If the Committee 
would like to do more to support PHAs in conducting rent studies, HUD 
is happy to engage.
    Question. The President's budget includes a $295 million set-aside 
in CDBG for historically underserved communities. HUD proposes 
developing a formula geographically targeting distressed communities 
and allowing eligible grantees to participate and receive additional 
allocations for revitalizing activities.
    When will you be able to share the revised formula for the CDBG 
distressed communities' set-aside, and will the allocations be 
substantial enough to really revitalize these communities?
    Answer. The additional CDBG funds ($295 million) will be allocated 
to grantees that opt-in and commit to use the incentive funds for more 
geographically targeted, potentially transformational activities in a 
specific neighborhood/Census place. HUD is discussing opt-in and 
formula approaches internally and is available to discuss the approach. 
Because allocation amounts to each participating grantee will depend on 
which and how many grantees opt in, no formula runs are feasible in 
advance of the opt-in period.
    The areas to be targeted may include neighborhoods with at least 20 
percent poverty, areas of persistent poverty, low- and moderate-income 
areas of minority concentration, brownfields, certain designated slums 
and blighted areas, Neighborhood Revitalization Strategy Areas, income-
qualified areas most impacted by a major disaster, and Opportunity 
Zones. These areas are small geographical areas where investments can 
make a significant difference. Even if a majority of CDBG grantees opt 
in and the per-project award is relatively low, grantees would still be 
able to undertake planning and pre-development activities, and could 
seed small business lending, which could help attract partners and 
leverage. Grantees can also supplement the awards with formula CDBG 
funds.
    Eligible activities include CDBG activities related to construction 
and reconstruction of public facilities and improvements, special 
economic development to small businesses or local entrepreneurs, 
acquisition and disposition of real property, and rehabilitation of 
housing and other structures. The CDBG incentive funds could also be 
used for planning activities to align codes, more modern zoning, 
master/comprehensive/area-wide plans, and expediting permitting to 
direct and support reinvestment of public and private funds into one or 
more historically underfunded areas.
    The benefit of this incentive will exceed the reach of the 
funding--by providing multiple examples of targeted investment in a 
smaller range of activity types, it will enable HUD to evaluate and 
understand what investments drive revitalization. Participating 
grantees can use these results to influence investment decisions for 
their CDBG and local funds. HUD will share successful models 
nationally, with the expectation of advancing local community 
development practice across the entire CDBG portfolio.
    Question. The cost of energy and water utilities continues to 
consume as much as 17 percent of HUD's total program budget.
    In addition to funding green energy and climate resilience 
investments across HUD programs, what else can HUD plan to do to 
institutionalize efficient and resilient practices in rehab and new 
construction projects?
    Answer. HUD is working in partnership with DOE, EPA, and key non- 
governmental institutions to strengthen policies, procedures, and, 
perhaps most importantly, threshold standards. Such standards would 
consistently incentivize and, where appropriate, require HUD funding 
recipients/affordable housing providers to follow aggressive cost- 
reasonable approaches to increase the efficiency and resilience of 
affordable housing, both when developing new and modernizing existing 
affordable housing across all of HUD's affordable housing programs.
    HUD has made significant strides towards institutionalizing 
efficient and resilient practices for affordable properties throughout 
its portfolio, including those that are preserved programs such as the 
Rental Assistance Demonstration (RAD) and properties assisted by HUD 
such as public housing and Section 202 Project Rental Assistance 
Contracts. HUD requires every project to meet the following 
requirements related to energy efficiency and climate resilience.
                           climate resilience
    All RAD conversions undertake an environmental review to assess the 
site and proposed activities for hazards to the residents and the 
property, including flooding. Public housing agencies (PHAs) and owners 
are required to mitigate any environmental risks that arise from the 
environmental review, ensuring that the property is a safe place for 
residents. As examples of required mitigation, when sites have been 
found to be at significant risk (e.g., within floodways), the HUD has 
required PHAs to transfer the assistance to a new, safer location or to 
remove dwelling units from the portion of a site that is at risk and 
replace them elsewhere (or remove those units through Section 18).
                      energy and water efficiency
    All PHAs must use Energy Star(r), WaterSense(r) or Federal Energy 
Management Program (FEMP)-designated products and appliances in any 
work associated with a RAD transaction. In addition, any PHAs 
anticipating a significant level of construction must complete a green 
analysis as part of their capital needs planning, including a detailed 
analysis of energy- saving alternatives and other green building 
components, and the payback and cost/saving analyses for the various 
options. The Capital Needs Assessment (CNA) used for RAD transactions 
is built on green principles. In the CNA narrative, the assessor 
provides an energy audit, which identifies the most efficient 
replacement for systems and building components and explains the 
benefits and cost savings of those updates to the housing authorities. 
The PHA is required to utilize the most energy- and water-efficient 
options that are financially feasible and that are found to be cost-
effective by the CNA.
    For RAD conversions involving new construction, projects must meet 
or exceed the 2009 International Energy Conservation Code (IECC) for 
single family or low-rise multifamily properties (three stories or 
less) or the ASHRAE 90.1-2007 standard for mid- or high-rise 
multifamily projects, or any successor codes that are adopted by HUD 
under the requirements of the Energy Independence and Security Act of 
2007. They are encouraged to meet or exceed the requirements for Energy 
Star for New Homes or Energy Star for Multifamily High-Rise buildings. 
Further, in new construction and applicable retrofit projects, HUD 
strongly encourages the use of industry-recognized, green building 
certifications, such as the US Green Building
    Council's LEED Rating System, Enterprise Green Communities 
Criteria, the National Green Building Standard, Green Globes, 
GreenPoint Rating, EarthCraft, Earth Advantage, Passive House, or 
Living Buildings.
    The Public Housing Energy Performance Contracting program is an 
innovative financing technique that provides PHAs with the financial 
flexibility to install cost-effective, utility-related improvements 
with little or no upfront expenditure. It uses cost savings from 
reduced energy consumption to repay the cost of installing energy 
conservation measures. The costs of the energy improvements are borne 
by the performance contractor and paid back out of the energy savings.
    For public housing modernization or development, PHAs are to 
conduct energy audits every five years, and (1) use integrated utility 
management and capital planning to promote energy conservation and 
efficiency measures; (2) improve energy and water-use efficiency by 
installing fixtures and fittings that conform to the American Society 
of Mechanical Engineers/American National Standards Institute standards 
A112.19.2-1998 and A112.18.1-2000, or any revision thereto, applicable 
at the time of installation, and by increasing energy efficiency and 
water conservation; (3) install and use Energy Star appliances whenever 
energy systems, devices, and appliances are replaced, unless it is not 
cost-effective to do so, in accordance with Section 152 of the Energy 
Policy Act of 2005, 42 U.S.C. 15841; and (4) use utility and energy 
management system automation and metering activities, including 
changing master meter systems to individually metered systems if 
installed as part of a modernization activity to upgrade utility 
systems; for example, electric, water, or gas systems of the PHA; and 
(5) procure solid waste management services in a manner that promotes 
energy and resource recovery. (24 CFR part 905)
    In addition to HUD's requirements, 37 states and territories 
require or incentivize green certification programs in the award of 
Low-Income Housing Tax Credits, which are commonly used in RAD 
conversions.
    HUD is mindful of the utility costs it incurs through various 
programs.HUD's FY 2022 budget request includes funding to expand 
benchmarking of properties in HUD's portfolios, using EPA Energy Star 
Portfolio Manager, to obtain 1-100 scores. This data will help HUD 
better understand how efficient/inefficient HUD-assisted properties are 
relative to their peers, identify whether or where to target actions to 
reduce utility consumption, and position us to develop programs to 
incentivize and reward high performers while bringing others to a more 
efficient standard.
    With respect to energy efficiency, the Department intends to 
increase the requirements associated with approving the development of, 
or the substantial recapitalization of, affordable housing, where HUD 
provides significant funding and particularly where the Department 
iscommitted to subsidizing the property in the future (e.g., public 
housing, voucher-based assisted housing).
    The President's FY 2022 Budget Request begins to institutionalize 
these principles, with $150 million in funding for a Rapid Return 
Utility Conservation Program, offering competitive grants for public 
housing investments that have a quick financial return through energy 
efficiencies. The Department is confident that extensive opportunities 
remain for PHAs to implement utility conservation measures that will 
pay for themselves in just a few years.
    The Department is currently working with Department of Energy staff 
at the Energy Efficiency and Renewable Energy (EERE) office on 
researching what standard or standards it should reference in approving 
transactions to develop or recapitalize affordable housing. It could 
potentially reference an existing protocol (e.g., LEED Platinum or 
Enterprise Green Communities) or possibly establish its own 
standard(s). It would then incorporate the standard(s) into NOFOs, as 
well as in requirements for approving recapitalization transactions, 
public housing modernization and development and public housing mixed 
finance approvals.
    While great progress is being made through interagency efforts and 
at the Department of Energy to develop climate resilience building 
standards, the establishment of generally recognized construction and 
operating standards is not as mature as it is with respect to energy 
efficiency. While the Department intends to move forward to establish 
climate resilience standards, it will need time to research the 
development of standards prior to institutionalizing them. When it has 
confidence in climate resilience standards, it will implement those 
standards in the same way that it intends to implement energy 
efficiency/utility conservation standards.
    Furthermore, Community Planning and Development grantees for 
Community Development Block Grants, HOME, Emergency Solutions Grants, 
and Housing Opportunities for Persons With AIDS submit a Consolidated 
Plan every 3-5 years. One of the elements of this plan is a requirement 
to consult stakeholders about and address in the Plan the climate 
resilience needs of low-/moderate-income and vulnerable populations. 
The grantee's Plan must provide an analysis of the jurisdiction's 
vulnerability to natural hazard risks, particularly the vulnerability 
of housing occupied by low- and moderate-income households to increased 
natural hazards associated with climate change. PHAs must submit a 
Certification of Consistency with the Consolidated Plan with their 
Annual Plans (indicating how public housing and section 8 assistance 
will be used in a consistent manner under the Consolidated Plan).
    Question. How will HUD support its partners--especially the smaller 
and lower capacity PHAs, tribal housing entities, and nonprofits--to 
take advantage of these opportunities?
    Answer. HUD's proposal includes technical assistance provided to 
communities through multiple initiatives.
    The Green and Resilient Retrofit program proposed in the FY 2022 
President's Budget request includes significant technical assistance to 
work directly with all participants, especially smaller owner entities, 
to work through the property energy and resilience assessment and 
retrofit process.
    With respect to Tribes and tribally designated housing entities 
(TDHEs), HUD is requesting $100 million in additional funding for 
targeted green and resilient investments in Native American housing. 
This funding would be used to rehabilitate and retrofit existing 
affordable housing stock owned, operated, or assisted by Tribes and 
TDHEs. This funding will modernize existing housing, reduce harmful 
emissions and consumption of energy, and reduce utility costs in Tribal 
housing.
    To ensure that Tribes and TDHEs can successfully implement this new 
funding, HUD will make training and technical assistance funds 
available. Any Tribe, regardless of size or capacity can reach out to 
their HUD local office to request targeted technical assistance 
specifically to provide an internal assessment on capacity and 
financial capability and their ability to compete for competitive 
grants. In addition, HUD will provide national and regional training 
sessions for all interested applicants and grantees.
    Currently, HUD provides a Community Resilience Toolkit specifically 
targeting smaller grantees, nonprofit stakeholders, and neighborhood 
residents and offering specific actions they can take. The toolkit is 
designed to help recipients of Community Planning and Development (CPD) 
funds identify opportunities to use their CPD dollars to mitigate the 
impacts of natural related hazards. Additionally, the toolkit has a 
financing section with other funding opportunities for resilience 
projects. HUD plans robust additional technical assistance related to 
resilience. https://www.hudexchange.info/resource/5981/community-
resilience-toolkit/
    With respect to PHAs, HUD intends to provide extensive 
opportunities for technical assistance provided through multiple 
mechanisms including virtual training, webinars, guidebooks, notices 
and individual PHA access to technical assistance providers where 
appropriate.
    Question. According to HUD's latest Worst Case Housing Needs 
report, additions to the total supply of rental housing between 2015 
and 2017 was less than 1 percent. Without accelerated affordable 
housing supply, lower income renters will continue to be squeezed from 
the market. The Low Income Housing Tax Credit is the largest source of 
federal assistance for the development of affordable housing, and is 
frequently paired with HUD and other Federal funds. However, multiple 
GAO reports have noted the data that is collected and shared between 
HUD and the Department of Treasury could be significantly improved.
    What have you found to be the most efficient financing method to 
get the most affordable housing production out of the limited funding 
available?
    Answer. As the lead up to the question notes, nearly all 
development that occurs today to create affordable housing involves 
complex mixed finance that uses funding from multiple sources in order 
to generate enough subsidy to make the project viable. The largest of 
those subsidy sources for capital finances is the Low-Income Housing 
Tax Credit (LIHTC), but other sources include HOME, Housing Trust Fund, 
Choice Neighborhoods, Section 202, Section 811, and Public Housing 
Capital Fund. Many projects also have FHA mortgage financing to cover 
the debt portion of a project. Supporting the cost to operate the 
housing when tenants have very low and extremely low-incomes generally 
requires Tenant-Based Rental Assistance, Project-Based Rental 
Assistance, 202/811 PRAC, or Public Housing Operating funds. This is 
all to say that the current approach to affordable housing is seldom 
efficient, no matter the program, because of the need to do mixed 
financing. But this also means that it is hard to say what financing 
method is the most efficient. Projects are done on a case-by-case basis 
based on the availability of these resources locally and are subject to 
local decisions.
    Different federal programs supporting affordable rental housing 
have differing goals and targeted populations, making relative 
``funding efficiency'' determinations difficult. Producing housing 
affordable to extremely low-income households (e.g., public housing) 
necessarily takes more subsidy than producing housing that is 
affordable to more lower-income households (e.g., LIHTC). The most 
``cost-efficient'' form of subsidy can also depend on market 
conditions. For example, in markets with high rents and low vacancy, 
project-based new construction will often be more cost-effective, while 
in markets with lower rents, tenant-based assistance is often 
preferable.
    Question. How would addressing LIHTC data gaps improve this 
Committee's understanding of costs, efficiencies and effectiveness 
across Federal housing programs? Do HUD and Treasury have a plan for 
addressing GAO's recommendations and closing identified data gaps?
    Answer. Receiving Low Income Housing Tax Credit (LIHTC) data from 
the Internal Revenue Service (IRS) would provide HUD more complete 
information and more detail on LIHTC development costs, but 1) the 
level of detail the IRS maintains is not sufficient to adequately 
compare the costs of LIHTC to other forms of government rental housing 
support, and 2) the IRS is not legally allowed to share with HUD any of 
the information that they receive. Importantly, Congressional action is 
required to provide an exemption that would allow HUD and Treasury to 
close the identified data gaps.
    Through HUD's LIHTC data collection from state and local housing 
finance agencies, HUD receives the amount of LIHTCs allocated to each 
property. The allocation amount provides an indication of construction 
costs, although it is not sufficient to conduct a cost comparison 
study. In addition, since HUD has no way to enforce the statutory 
requirement that the state housing finance agencies that administer 
LIHTC submit this information to HUD, HUD's data are incomplete in two 
ways. First, not all LIHTC properties are reported to HUD in the year 
after they are placed into service and, second, allocation amounts are 
not always reported for the properties that are included in their 
submissions to HUD. Without the complete list of LIHTC properties as 
reported to the IRS, HUD cannot determine how complete its data is.
    The IRS receives, on Form 8609, the amount of eligible basis (total 
development costs excluding land) and qualified basis (development 
costs for the portion of the property that is dedicated for low-income 
tenants) for each property. While this would provide more detailed and 
more complete information than HUD currently receives, it is also not 
sufficient to compare the costs of LIHTC to other federal housing 
programs. Providing HUD access to this information would, however, 
decrease the reporting burden on the housing finance agencies (HFAs) 
that submit similar information to both the IRS on Form 8609 and to HUD 
in its LIHTC data collection. It would also provide HUD a more complete 
list of LIHTC properties, which would improve knowledge of and research 
on LIHTC.
    The GAO recommendations from their 2015 report include the 
following: ``Congress should consider designating HUD as a joint 
administrator of the program. HUD's role should include oversight 
responsibilities (such as regular monitoring of HFAs) to help address 
deficiencies GAO identified. Treasury agreed HUD could be responsible 
for analyzing the effectiveness of LIHTC, with IRS continuing to 
enforce tax law. HUD and IRS did not comment on the matter for 
congressional consideration. HUD supported consideration of a structure 
for enhanced interagency coordination. The association representing 
HFAs disagreed with the matter. GAO maintains that joint administration 
would strengthen program oversight.'' HUD has no further comment beyond 
those included in the 2015 report.
    Further, GAO issued follow-up reports in 2016 and 2017. Neither of 
these reports had specific recommendations for HUD to implement. Since 
the recommendations are directed to the IRS and Congress, HUD has no 
additional comments at this time.
    Question. On May 24, President Biden announced FEMA would provide 
$1 billion for communities through FEMA's Building Resilient 
Infrastructure and Communities program in 2021 to support pre-disaster 
hazard mitigation projects. A portion of these funds will be targeted 
to disadvantaged communities--an area where HUD also has substantial 
experience through the CDBG-DR program.
    How is HUD working with FEMA on its pre-disaster Building Resilient 
Infrastructure and Communities (BRIC) program, and what does HUD see as 
its role in mitigation versus FEMA's?
    Answer. As with Community Development Block Grant--Disaster 
Recovery (CDBG-DR) funds, HUD's CDBG-MIT grants are designed to achieve 
whole community protection and risk reduction. CDBG-DR and CDBG-MIT 
allow grantees to address risks across a broad range of activities to 
achieve more resilient housing and infrastructure and to spur economic 
revitalization. In addition to a ``whole community'' approach to 
mitigation, HUD also requires grantees to prioritize assistance to low- 
and moderate-income persons and areas, requiring that not less than 
half of all CDBG-MIT funds be used for that purpose. HUD also requires 
CDBG-MIT grantees to assess how CDBG-MIT activities may impact not only 
vulnerable populations, but also protected classes, racially and 
ethnically concentrated areas and concentrated areas of poverty as part 
of its ``whole community'' recovery and mitigation mission.
    HUD often reaches out to FEMA to collaborate on the development and 
implementation of its mitigation activities. For example, HUD staff 
from the Disaster Recovery and Special Issues Division reached out to 
FEMA and volunteered to participate in the review and evaluation of 
FEMA BRIC applications. HUD also reached out to FEMA staff to request 
their participation in the review of HUD's Community Development Block 
Grant--Mitigation (CDBG-MIT) Action Plans, which detail how CDBG-MIT 
grantees will expend those funds and requested their participation in 
our CDBG-MIT Webinar Series to introduce HUD grantees to FEMA's BRIC 
and Hazard Mitigation Grant Program (HMGP), where we discussed the 
possibilities of leveraging those sources with HUD's Community 
Development Block Grant Disaster Recovery (CDBG-DR) and CDBG-MIT funds. 
Additionally, HUD and FEMA have also conducted a webinar on our joint 
guidance that was released by both agencies titled, ``Implementation 
Guidance for Use of CDBG-DR Funds as Non-Federal Cost Share for FEMA PA 
Program.'' Although this guidance does not explicitly address the BRIC 
or HMGP, it highlights the potential for extensive, common-sense 
coordination in both Mitigation and Public Assistance.
    HUD remains open to any engagement proposed by FEMA staff on 
coordination for its BRIC program and would welcome the opportunity to 
provide technical assistance and lessons learned based on HUD's 
experience working with our grantees to prioritize funds for low- and 
moderate-income persons and vulnerable populations.
    Question. We have made record level investments into homeless 
assistance in the FY 2021 appropriations bill, the CARES Act, and the 
American Rescue Plan that allow communities to rethink congregate 
shelters and develop new permanent supportive housing.
    What best practices are you sharing to help get money to grantees 
in order to reverse the growing trend in unsheltered homelessness?
    Answer. HUD is committed to helping communities utilize existing 
resources, as well as new resources awarded through the CARES Act and 
the American Rescue Plan (ARP), to reduce homelessness, including 
unsheltered homelessness.
    Over the past year and a half, HUD has intensified efforts to 
release technical assistance materials highlighting strategies that 
help communities award money to new organizations, which helps with 
spending resources in an equitable manner, and to help them utilize 
these resources effectively. This includes publishing technical 
assistance materials related to expanding procurement strategies, 
recruiting landlords, removing barriers to obtaining housing, 
identifying, and securing mainstream supportive services to help people 
obtain and maintain housing, and other re-housing strategies.
    Additionally, HUD has hosted Office Hours each Friday throughout 
the pandemic along with the Department of Veterans Affairs (VA), 
Centers for Disease Control (CDC), and Healthcare for the Homeless. 
During these sessions, along with its purpose of helping communities 
respond to the pandemic and keep people safe from COVID-19, HUD 
highlights resources that are available to communities to help them 
develop re-housing strategies and invites communities to participate 
and share their promising practices. Furthermore, HUD and its partners, 
including the community presenters, answer questions participants have 
on any topics.
    HUD has also mobilized technical assistance providers to 
approximately 50 communities to provide intensive technical assistance 
to support these communities in adopting an accelerated rehousing 
strategy. The focus of this effort is to ensure the communities have 
the best available tools to quickly line up rehousing plans, strategize 
with their partners as well as those affected by homelessness, and 
build stronger, more equitable systems.
    Funding through ARP provided $5 billion for emergency housing 
vouchers that will provide long-term housing subsidies, with housing 
navigation or ongoing wrap-around services, for people exiting 
homelessness. ARP also provided $5 billion for homeless assistance and 
supportive services which, through the HOME program will, among other 
things, add much- needed units to the affordable housing inventory. 
Implementation of these ARP funded programs will be accompanied with 
substantial technical assistance for communities.
    Finally, in the coming weeks HUD, in collaboration with U.S. 
Interagency Council on Homelessness (USICH) and other federal partner 
agencies, will release an initiative that will launch a national effort 
to utilize the new resources provided through the CARES Act and the ARP 
to address homelessness. This initiative will support communities 
through tools, technical assistance, direct regular communication, data 
support, and peer-to-peer learning.

                                 ______
                                 

                Questions Submitted by Senator Jack Reed
    Question. Secretary Fudge, President Biden has requested $30.4 
billion for the Housing Choice Voucher Program and $3.5 billion to 
provide housing and services to individuals and families experiencing 
homelessness. I am leading the Senate letter urging the Subcommittee to 
meet the President's FY22 funding requests for these programs.
    If Congress fully funds the President's requests, can you please 
share with us how these funds will help communities throughout the 
country, especially in Rhode Island?
    Answer. The HCV program is an essential component of the Federal 
housing safety net for people in need. The availability of Housing 
Choice Vouchers represents an opportunity for low- and extremely low-
income families to improve their housing options and pursue greater 
economic opportunities. The HCV program increases access to affordable 
housing, and the option to project-base vouchers aides in the 
preservation of deeply affordable units. The Administration supports a 
strategy that recognizes the HCV program as an essential resource to 
prevent homelessness, promote racial equity, and provide critical funds 
to ensure families pay approximately 30 percent of their income for 
rent.

    The HCV program partners with local PHAs and landlords to provide 
housing to our nation's neediest families. Of the families currently 
receiving HCV assistance:

  --78 percent are extremely low-income, earning below 30 percent of 
        the area median income;

  --75 percent of program participants identify as part of a minority 
        population, 53 percent of those being Black, non-Hispanics;

  --29 percent of households served have an elderly head of household;

  --25 percent have a non-elderly disabled head of household; and

  --36 percent of families served have a female head of household with 
        children.

    Without rental assistance, families in Rhode Island and across the 
country would likely face a great risk of transitory homelessness, or 
be forced to forgo other life necessities, such as food, clothing, and 
medicine.
    The requested funding for FY 2022 renewal levels would maintain 
current services for approximately 2.3 million participating 
households. In Rhode Island, the FY 2022 renewal levels would ensure 
the approximately 10,100 HCV families currently assisted with the HCV 
program will continue to be housed in safe and affordable housing.
    Question. If anything, COVID-19 has proven emphatically the 
importance of housing. Indeed, for many families, their homes have been 
the single most available and effective form of personal protective 
equipment.
    Can you please discuss how affordable and available housing is 
actually an investment that saves taxpayers funds and pays dividends 
throughout our communities?
    Answer. The growing shortage of affordable and available housing 
for huge fractions of the nation's population is part of a vicious 
cycle. The U.S. has long sought to house its people by adding a thin 
safety net to a private market structure, but long-term declines in 
real earning power of disadvantaged households have increasingly 
pressured that policy approach.
    HUD's Worst Case Housing Needs reports to Congress and similar 
reports from independent organizations document that the market is 
incapable of producing and maintaining decent housing that is 
affordable to households with extremely low incomes less than 30 
percent of the median income in their area. When safe, affordable 
housing is not available, financial constraints force families into 
unsafe, semi-affordable alternatives. The importance of safe housing is 
revealed in evaluations that show that a dollar invested in remediation 
of lead paint hazards pays off 17- to 221-fold \1\ and a dollar 
invested in healthy homes pest management and allergen reductions pays 
off 5- to 16-fold.\2\ Research has also shown a clear cost 
effectiveness of investment in supportive housing for people 
experiencing homelessness. A chronically homeless person costs the 
taxpayer an average of $35,578 per year. Costs on average are reduced 
by 49.5% when they are placed in supportive housing. Supportive housing 
costs on average $12,800, making the net savings roughly $4,800 per 
year.\3\ Finally, affordable housing is essential for housing 
stability, and numerous studies have documented how stable housing 
supports stable families, thriving children, and productive adults in 
vibrant communities.\4\ In these ways, public investment in affordable 
and available housing has the long-term effect of reducing future needs 
for such investment, converting the vicious cycle into a virtuous 
cycle.
---------------------------------------------------------------------------
    \1\ Gould E., Childhood Lead Poisoning: Conservative Estimates of 
the Social and Economic Benefits of Lead Hazard Control. Env. Health 
Perspectives. 117(7):1162-7 (2009).
    \2\ Nurmagambetov TA et al. Economic Value of Home-Based, Multi-
Trigger, Multicomponent Interventions with an Environmental Focus for 
Reducing Asthma Morbidity: A Community Guide Systematic Review. 
American Journal of Preventive Medicine. 41(2S1): S33- S47. 2011.
    \3\ See https://endhomelessness.org/wp-content/uploads/2017/06/
Cost-Savings-from-PSH.pdf
    \4\ Sandra J. Newman & C. Scott Holupka (2014): Housing 
Affordability and Child Well-Being, Housing Policy Debate, DOI: 
10.1080/10511482.2014.899261
---------------------------------------------------------------------------
    Question. In your written testimony, you note that ``HUD is 
resuming its partnership with Treasury's Federal Financing Bank (FFB) 
to provide ``Ginnie-like'' financing for HFA Risk- Sharing loans.'' 
First, when will you resume this partnership?
    Answer. The HUD Risk sharing program and partnership with Treasury 
FFB was signed on August 3, 2021, officially restarting the program 
with state housing finance agencies and removing the original dollar 
cap, enabling expanded opportunity of using this risk sharing program 
to finance more affordable housing supply in more states.HUD is 
temporarily resuming the FFB Initiative with a renewed emphasis on 
enacting legislation to provide a permanent source of lower-cost 
capital through Ginnie Mae securitization. This second phase of the FFB 
initiative will sunset three years after implementation, to give HUD 
adequate time to pursue legislation and transition 542(c) participants 
from FFB financing to Ginnie Mae securitization.
    Question. Second, please explain how this partnership is helpful, 
especially in Rhode Island?
    Answer. Through a network of state and local Housing Finance 
Agencies (HFAs) nationwide, the program provides low-cost financing 
options for the creation and maintenance of multifamily affordable 
housing. In the past, the program was responsible for the creation of 
over 20,000 units of affordable housing nationwide. Rhode Island HMFC 
is an active participant in the FFB Risk Sharing program, financing 15 
loans with over $150 million in loan originations. With FFB commitments 
as recent as FY 2020, we expect Rhode Island to continue their active 
participation.
    Question. Can you please discuss the ongoing importance of the Fair 
Housing Act, and why promoting fair housing is actually good for the 
economy?
    Answer. The Fair Housing Act (the Act) ensures that all home 
seekers have equal access to housing and housing-related products free 
from discriminatory barriers. Where one lives determines access to 
amenities, resources, and opportunities and consequently can create 
disparities in important life outcomes such as health, employment, and 
generational wealth acquisition. The Act guarantees all persons have 
the right to move to areas of their choice to gain access to 
neighborhoods rich in amenities and opportunities. Further, it is 
equally important that we strive to make every neighborhood rich in 
resources and amenities. Enforcement of the Fair Housing Act can 
achieve both objectives, and by doing so has the potential to spur 
economic growth not just within households, but in neighborhoods, 
cities, and regions.
    It is important to note that the Fair Housing Act also has tools 
that allow for greater access to equal credit and homeownership 
opportunities, which contribute to economic growth and generational 
wealth creation and preservation. Among other things, making 
neighborhoods more desirable depends on owners' ability to have equal 
access to credit for buying or refinancing a home. The Department 
utilizes its enforcement authorities and leverages its legacy program 
partners in the Fair Housing Assistance Program (FHAP) and Fair Housing 
Initiatives Program (FHIP) to eliminate discriminatory treatment in 
housing transactions and take proactive steps to educate the industry 
and the public about the importance of fair housing to reduce barriers 
to housing access and choice.
    Discrimination in the housing market reinforces the patterns of 
residential segregation that have been shaped by decades of racially 
biased housing policies. Further, housing discrimination and 
residential segregation impede the ability of African American and 
Hispanic homebuyers to build equity. Homes in primarily African 
American neighborhoods are typically de-valued and priced significantly 
lower than similar homes in predominantly white neighborhoods. Those 
neighborhoods lack key resources such as access to credit and quality 
schools. Racial biases and discriminatory lending practices such as 
redlining, steering, bias in appraisal methods, and racially motivated 
perceptions of neighborhoods are contributors to a lower housing demand 
and prices in African American neighborhoods. The devaluation of 
African American-owned homes negatively impacts the overall economy. 
The promotion of fair housing and the enforcement of the Fair Housing 
Act and other civil rights laws helps to prevent and remedy 
discrimination, foster economic development, and expand wealth in 
minority communities.

                                 ______
                                 

            Questions Submitted to Senator Chris Van Hollen
    Question.The President's FY2022 Budget Request includes $491 
million in funding for a new Mobility Related Social Services program 
to ``assist families in finding housing in higher- opportunity 
neighborhoods with access to jobs, services, schools, and other 
resources.''
    Could you please provide additional information on how many 
households this level of funding would expect to help? What is the 
expected cost per voucher for mobility services given this level of 
funding? Are there additional details on this program that you can 
share?
    Answer. The FY 2022 budget's proposal of $491 million for Housing 
Mobility Services would provide nearly 20 percent of HCV families with 
children with services to help them access a lower poverty community. 
In view of the strong evidence both that low-income families with 
children benefit from living in low-poverty, high-opportunity 
communities, and that mobility programs work, it should be a priority 
to extend such services to more families.
    Using a cost estimate of $3,000 per family offered mobility-related 
services, HUD estimates that about 163,000 families will receive 
services on a voluntary basis. PHAs may provide services to families 
with an existing voucher, regular turnover voucher, or to families that 
receive newly available vouchers in the 2022 appropriations act.
    These new funds will help PHAs implement cost-effective housing 
mobility strategies to expand housing options for families with 
children to move by providing services that will help them move, if 
they want, from areas of high poverty to lower poverty, high 
opportunity communities of their choice. Services provided to 
participating families may include:

  --pre-and post-move coaching

  --housing search assistance

  --family financial assistance such as security deposits

  --landlord incentive payments

  --financial coaching

    These services will also address impediments to PHA collaboration, 
particularly regulatory and administrative barriers, to facilitate 
regional PHA coordination on portability and other issues.
    If funded, HUD will issue a competitive Notice of Funding 
Opportunity and encourage PHAs to apply. HUD will prioritize funding 
awards based on the concentration of HCV families with children in 
extreme poverty neighborhoods. Prior to awarding any new funding 
available for mobility services, HUD also will incorporate available 
lessons learned from the early stages of the HCV Mobility 
Demonstration, the second phase results of the Creating Moves to 
Opportunity (CMTO) study, and existing research evidence and best 
practices on housing mobility programs.
    Under the HCV Mobility Demonstration, our technical assistance 
provider is creating a suite of program guides, materials, and 
trainings (using the best available evidence and best practices) for 
use by participating PHAs. HUD will make this entire suite of guides, 
materials, and trainings available for all PHAs that are awarded new 
funding. We anticipate encouraging PHAs to use the evidence-based 
program model we are using for the demonstration to implement their own 
local programs using the new funding.
    This program, anticipated to be implemented at over 100 PHAs, will 
help improve outcomes for HCV families with children, and help further 
goals of reversing the effects of residential segregation and its 
adverse impacts on people of color, and addressing issues of racial and 
health equity.
    Question. At the May 20th Senate Banking Hearing (``21st Century 
Communities: Expanding Opportunity Through Infrastructure 
Investments''), I discussed with you my bill with Senator Young, the 
Family Stability and Opportunity Vouchers Act (S. 1991), which would 
make 500,000 housing mobility vouchers available over the next five 
years so that more families with young children can move to stable, 
affordable housing in areas of opportunity, with the supportive wrap-
around services they need to succeed, and asked if you could confirm 
whether or not the Biden Administration supported the proposal.
    With the benefit of having had some additional time to review, is 
the Family Stability and Opportunity Vouchers Act a proposal that the 
Biden Administration can support? Or if not, could you please provide 
an explanation of any concerns?
    Answer. The Administration shares the goals and outcomes that S. 
1991, the Family Stability and Opportunity Vouchers Act, seeks to 
achieve. As you know, HUD proposed $491 million for mobility-related 
services in its FY 2022 budget proposal. The set of services envisioned 
in this budget proposal are substantially similar to the set of 
services proposed in the Family Stability and Opportunity Vouchers Act. 
Additionally, HUD proposed an additional 200,000 new housing choice 
vouchers in its FY 2022 budget proposal. While the services and new 
vouchers are not directly tied together in the FY 2022 budget proposal 
as they are in the Family Stability and Opportunity Vouchers Act, HUD 
envisions that some of the mobility-related services funding would be 
used in conjunction with the new vouchers. While there aredifferences 
in the approaches between S. 1991 and HUD's FY 2022 budget proposal, 
there are also many similarities. Our staff would be happy to discuss 
both proposals with you.
    Question. The President's FY2022 Budget Request calls for $225 
million for a new Green and Resilient Retrofit Program that is modeled 
after the American Recovery and Reinvestment Act of 2009 (ARRA) Green 
Retrofit Program, which successfully rehabilitated nearly 20,000 units 
in over 200 properties, including Brooklyn Homes in Baltimore. While 
ARRA's Green Retrofit program focused exclusively on energy efficiency, 
grants and loans for this program can also be used to address climate 
resilience, for example, by making the HVAC systems in a supported 
property able to continue working during a flood.
    Besides this program improvement, are there other lessons learned 
from the 2009 program that you hope to implement in this program?
    Answer. The 2009 ARRA Green Retrofit Program was widely considered 
successful and effective. HUD learned from that experience that demand 
far exceeded the amount made available. Further, we learned that more 
technical support was needed for some grantees and/or prospective 
applicants. To that end, other than the addition of property resilience 
measures as eligible activities to encourage retrofits that will 
protect life and property against extreme weather events, HUD is also 
requesting funds to support grantee assistance to complete necessary 
due diligence and underwriting efforts.
    Other potential changes based on lessons learned include changes 
focused on ensuring that certain industry standard energy saving 
upgrades take place when green and alternative energy sources are being 
funded through the program. For example, this would entail ensuring any 
property installing solar panels under the Green and Resilient Retrofit 
Program is also replacing light bulbs throughout the property with 
energy efficient LED ones. HUD may consider other potential program 
changes that encourage property owners to apply innovative solutions 
for greening and increasing resilience of multifamily properties 
nationwide.
    Question. The budget says that the program is meant to support 
improvement projects for approximately 15,000 affordable housing units 
at approximately 150 assisted properties nationwide, serving families 
most vulnerable to the effects of climate change. What criteria will 
HUD use to ensure that these grants and loans go to the most vulnerable 
and economically distressed communities?
    Answer. Properties that would be eligible for Green and Resilient 
Retrofit grants or loans are those assisted through Project-Based 
Section 8, Section 202, and Section 811. These programs already ensure 
that the assistance will be provided to properties serving vulnerable 
populations. Historically, the application process was managed on a 
first come, first served basis for those that met prescribed criteria, 
without preference beyond participation in these assistance programs. 
The program will rely upon property owners and the technical support 
HUD will provide to identify the energy retrofit and resilience needs 
at each property and to ensure that owners of all sizes and abilities 
are able to participate. In crafting program requirements, HUD will 
consider how any criteria for participation will impact the applicant 
pool to ensure that properties in distressed communities can fully 
participate.
    Question. The President's FY2022 Budget Request includes $30 
million for a temporary expansion (up to three years) of the Good 
Neighbor Next Door (GNND) program and a new HEAL pilot. The HEAL pilot, 
a new FHA initiative for 2022, will offer new loan products to lower 
barriers to homeownership for potential first-time, first-generation 
homebuyers. These programs will assist FHA in equitably strengthening 
communities by providing affordable housing to people that serve those 
neighborhoods and expanding access to credit.
    Can you tell us a little bit more about what you envision for this 
program? Will it be subsidizing down payments? Lowering interest rates? 
A combination? And how will you determine who a first-generation 
homebuyer is?
    Answer. In proposals for the 2022 budget, the Administration seeks 
to expand the Good Neighbor Next Door program, which is designed to 
help strengthen communities that have experienced significant 
underinvestment and high rates of poverty while also providing 
opportunities for first responders, educators, and those engaged in 
national service to purchase homes in those same communities.
    HUD also proposes a pilot program tentatively titled ``The HEAL'' 
pilot for 2022, which would address barriers to homeownership for 
potential first-time homebuyers. HUD is in the process of defining what 
a first-time, first-generation homebuyer is as well as fleshing out the 
underwriting process.
    Question. The President's FY2022 Budget Request includes $295 
million in targeted CDBG funds to ``advance the Administration's 
priority of redressing the history of the Federal Government 
systematically declining to invest in communities of color and low-
income neighborhoods and preventing residents of those communities from 
access to high quality housing, jobs, public transit, and other 
resources.''
    How will this $295 million be ``targeted'' towards communities with 
a history of federal disinvestment and redlining, like Baltimore? What 
factors will you be looking to in your formula?
    Answer. The additional $295 million in CDBG funds will be allocated 
to grantees that opt-in and commit to use the incentive funds for more 
geographically targeted, potentially transformational activities in a 
specific neighborhood/Census place. HUD is discussing opt-in and 
formula approaches internally and is available to discuss the approach. 
Because allocation amounts to each participating grantee will depend on 
which and how many grantees opt-in, no formula runs are feasible in 
advance of the opt-in period.
    The areas to be targeted may include neighborhoods with at least 20 
percent poverty, areas of persistent poverty, low- and moderate-income 
areas of minority concentration, brownfields, certain designated slums 
and blighted areas, Neighborhood Revitalization Strategy Areas, income-
qualified areas most impacted by a major disaster, and Opportunity 
Zones. These are small geographical areas where investments can make a 
significant difference. Even if a majority of CDBG grantees opt-in and 
the per-project award is relatively low, grantees would still be able 
to undertake planning and pre-development activities, and could seed 
small business lending, which could help attract partners and 
additional financial leverage. Grantees can also supplement the awards 
with formula CDBG funds.
    Eligible activities include CDBG activities related to construction 
and reconstruction of public facilities and improvements, special 
economic development to small businesses or local entrepreneurs, 
acquisition and disposition of real property, and rehabilitation of 
housing and other structures. The CDBG incentive funds could also be 
used for planning activities to align codes, more modern zoning, 
master/comprehensive/area-wide plans, and expediting permitting to 
direct and support reinvestment of public and private funds into one or 
more historically underfunded areas.
    The benefit of this incentive will exceed the reach of the funding: 
by providing multiple examples of targeted investment in a smaller 
range of activity types, it will enable HUD to evaluate and understand 
what investments drive revitalization. Participating grantees can use 
these results to influence investment decisions for their CDBG and 
local funds. HUD will share successful models nationally, with the 
expectation of advancing local community development practice across 
the entire CDBG portfolio.
    Question. Some 144,000 Maryland households are estimated to be 
currently behind on rent, according to the National Equity Atlas. Of 
those households, an estimated 82% are people of color. The President's 
FY2022 Budget Request calls for $20 million for an eviction-prevention 
program that would extend ``legal services'' to between 10,000 to 
40,000 renters. Last Congress, Senators Hassan, Kaine, and I introduced 
the Prevent Evictions Act, which would create a landlord-tenant 
mediation grant program to bring landlords and tenants to the table to 
find informal, mutually agreed upon solutions that keep tenants in 
their homes and avoid time- consuming and costly litigation. Legal 
representation in eviction proceedings is very important, but so is 
trying to find solutions before a tenant is forced to go to court.
    Will some of the funding in your eviction-prevention program go 
towards mediation services, so tenants and landlords can find solutions 
before it gets to the legal stage?
    Answer. HUD anticipates that the FY 2022 grant, if enacted, would 
build on the Eviction Protection Grant Program funded by the 
Consolidated Appropriations Act, 2021, Division L, Title II--HUD 
Appropriations Act, 2021 (Pub. L. No. 116-260, approved December 27, 
2020). HUD anticipates making awards for the FY 2021 program in 
November 2021. The FY 2021 grant includes alternative dispute 
resolution as an eligible activity. Alternative dispute resolution 
would include mediation activities undertaken to avoid litigation. Both 
tenants who are at risk of eviction and those who are subject to 
eviction are eligible for these services.
    Though HUD does not require grantees provide mediation services, 
applicants are rated on the soundness, quality, and effectiveness of 
their proposed work plan. For example, grant applicants are required to 
identify their program strategy from pre-eviction through post-eviction 
and explain how their proposed mix of services is expected to meet the 
needs of their target service area. Selected grantees will also be 
required to report services provided and outcomes associated with those 
services.

                                 ______
                                 

            Questions Submitted by Senator Patrick J. Leahy
    Question. We know that only 1 in 4 families who are eligible for 
Section 8 vouchers receive them because of funding constraints, so 
additional funding for rental assistance certainly would benefit 
families across this country. However, in Vermont, and I suspect this 
is the case in many other places, having a voucher in hand does not 
mean that a family is housed. The scarcity and cost of available 
apartments poses a major barrier to housing voucher holders.
    How will HUD use the additional funding requested to better align 
its housing production, housing subsidy and housing services programs 
to house vulnerable Vermonters?
    Answer. HUD recognizes that the scarcity and cost of available 
rental units can be a major challenge to the overall success of the 
housing voucher program. The HCV program has an existing component that 
PHAs can use to address the lack of rental housing in the community--
project-based voucher assistance. A PHA may use up to 20 percent of its 
vouchers for project-basing, which can be used to support new 
construction and rehabilitation as well as to place existing units 
under long-term contracts to preserve them as an affordable housing 
resource in the community. The additional resources HUD is requesting 
for the HCV program may be used by some PHAs to help increase the 
supply of affordable housing units in their jurisdictions.
    HUD also seeks to increase the production of affordable housing in 
communities through its proposed funding for the HOME program. The 
$1.85 billion invested in HOME would allow communities to increase the 
production of, and access to, affordable housing. HUD estimates that 
the requested funding for HOME would produce 35,000 units of affordable 
housing, both homeownership and rental units.
    A vital stakeholder and partner in the HCV program is the 
participating owner. HUD established the HCV Landlord Task Force in 
2018 to hold convening sessions with rental owners throughout the 
country to explore barriers to participation and develop strategies and 
tools to alleviate those barriers. We are in the process of 
implementing numerous recommendations of the task force, including 
providing resources specifically for landlords participating or 
interested in participating in the HCV program and developing a 
guidebook for PHAs on best practices to recruit and retain landlords.
    Finally, HUD recognizes the need to provide PHAs with the resources 
necessary to increase voucher success rates through housing search 
assistance and robust landlord recruitment and retention efforts. The 
FY 2022 budget request provides $2.8 billion in administrative fees for 
the HCV program, which would fully fund administrative fees in the HCV 
program for the first time in many years. While prior years have funded 
the administrative fees at roughly 80 percent, HUD believes that the 
full funding the administrative fees is critical to support additional 
leasing and improve voucher success rates in Vermont and across the 
country.
    Question. During this period of sharply increased housing costs, 
how will HUD ensure that the fair market rent standards for Housing 
Choice Vouchers are accurate, especially in small rental markets where 
the data used to determine the FMR tend to lag what is happening on the 
ground?
    Answer. HUD has three main strategies to address rapidly increasing 
rents, with the ultimate aim of enabling HCV families to better locate 
and rent suitable units. The first strategy is to encourage PHAs to 
take advantage of the range of existing regulatory flexibilities to 
better align their payment standards to market rents, including 
utilization of exception and success rate payment standards.

    Second, HUD assists PHAs working through local challenges in 
several ways:

  --HUD has made technical assistance available to support PHAs in 
        achieving high utilization in high-cost markets.

  --For the new Emergency Housing Voucher (EHV) program, HUD has 
        established an alternative requirement permitting PHAs to 
        establish separate higher payment standards for EHVs. Through 
        the alternative requirement, PHAs may establish a payment 
        standard for the EHV program up to 120% of the applicable FMR/
        SAFMR. More than 600 PHAs across 55 states and Territories 
        received an EHV allocation. Many of these PHAs serve high-cost 
        urban and rural markets.

    Finally, HUD has three grant-funded studies underway looking at 
methodologies to improve FMR estimates in markets with rapidly rising 
rents. The researchers are examining use of private sector data 
sources, web-scraping of rental advertisements, and machine-learning 
and Artificial Intelligence (AI)-based forecasting as alternatives to 
the current approach to calculating FMRs. One tension HUD will face in 
implementing many of the techniques identified by the research 
underway, should they prove to be more accurate, will be loss of the 
transparency Congress and the public have come to expect in being able 
to review the data and calculations behind every FMR.
    HUD has received criticism in the past that PHAs generally do not 
have the resources necessary to conduct rent studies to re-evaluate 
HUD's FMR calculations. These studies do use PHA resources, and many 
PHAs' resources are already stretched thin. Congress could provide 
dedicated funding to PHAs to cover a portion of the local FMR surveys 
costs. There could be something like PD&R's Research Partnerships 
program where HUD splits the survey cost with a PHA. If the Committee 
would like to do more to support PHAs in conducting rent studies, HUD 
is happy to engage.
    Question. In rural states like Vermont, homeownership is a vital 
source of affordable housing. However, the dream of homeownership is 
now out of reach for too many Vermont families because of the surge in 
home prices. In Vermont, the median sales price of a home has increased 
25 percent in the last year, and that increase shows no sign of 
slowing. Vermont prides itself on its high level of homeownership and 
has had past success in creating pathways to affordable homeownership 
through shared-equity and down payment assistance programs.How can HUD 
ensure that people in Vermont, and across the country, can continue to 
achieve the American dream of becoming homeowners even if they are not 
wealthy, despite the dramatic housing market pressures the country is 
experiencing?
    Answer. HUD programs have consistently been designed to help low- 
to moderate-income and first-time homebuyers become homeowners. Through 
the Mutual
    Mortgage Insurance Fund (MMIF), FHA programs offer minimal down 
payment and flexible credit requirements. FHA continuously monitors its 
portfolio and market trends, adjusting its requirements as needed to 
ensure that the borrowers FHA was designed to serve continue to have 
access to affordable credit while simultaneously ensuring the MMIF 
remains stable.
    A new FHA initiative for 2022, the Home Equity Accelerator Loan 
(HEAL), will offer new loan products to lower barriers to homeownership 
for potential first-time, low-wealth, and/or first-generation 
homebuyers.
    At HUD, in addition to the extensive FHA Single Family Program, we 
have other opportunities for renters-including families in HUD rental-
assisted housing-to move to home purchase, through resources in our 
public housing and voucher programs.
    The Housing Choice Voucher (HCV) homeownership program, authorized 
under Section 8(y) of the 1937 Act, allows HCV program participants to 
use their voucher as monthly assistance toward meeting homeownership 
expenses.\5\ To participate in the HCV homeownership program, the HCV 
family must meet specific income and employment requirements, be a 
first- time homeowner as defined in the regulation, attend and 
satisfactorily complete the pre- assistance homeownership and housing 
counseling program required by the PHA, and meet any additional 
eligibility requirements set by the PHA. There is a maximum term of 
homeownership assistance of 10 years, or 15 years if the initial 
mortgage has a term of 20 years or more.
---------------------------------------------------------------------------
    \5\ While the HCV homeownership regulations contemplate a down 
payment grant option (where the PHA offers a single down payment 
assistance grant to the family instead of a monthly homeownership 
subsidy), funding has not been appropriated for this purpose and this 
regulatory provision has never been implemented.
---------------------------------------------------------------------------
    There are similar homeownership opportunities in the public housing 
program. Section 32 of the 1937 Act offers PHAs a flexible way to sell 
public housing units to low-income families, with preference given to 
current residents of the unit(s) being sold. The program helps low-
income families purchase homes through an arrangement that benefits 
both the buyer and the public housing agency that sells the unit: it 
gives the buyer access to an affordable homeownership opportunity and 
to the many tangible and intangible advantages it brings, while 
permitting PHAs to sell individual units and developments that may, due 
to their location or configuration, be more suitable for homeownership 
than for rental housing. In addition, PHAs have the flexibility to use 
public housing Capital Funds for home purchase assistance for first- 
time, income-eligible homebuyers in the form of secondary financing 
(down payment, closing costs assistance, and second mortgages).
    While these tools to facilitate homeownership for income-qualified 
families exist within our public housing and voucher programs, most 
PHAs are unable to make extensive use of these flexibilities. This is 
simply because the shortage of affordable rental units is equally or 
even more acute than are opportunities for homeownership, and it is 
only in very limited circumstances that PHAs find it appropriate to 
divert their limited voucher and public housing resources from rental 
to homebuyer assistance. Fuller support from the Congress for HUD's 
core programs would significantly expand our ability to foster first-
time homebuyer programs for citizens of modest means nationwide.
    HUD is also engaged with helping communities add to the supply of 
housing by suggesting regulatory reforms and encouraging the adoption 
of new housing production technologies to reduce the cost of new 
housing and speed up the supply response.
    Question. Vermont has used its state and local relief money from 
the CARES Act and the American Rescue Plan to support housing 
construction to ensure that Vermonters who are struggling to find 
affordable housing, including over 2,700 Vermonters currently being 
sheltered in hotels to prevent homelessness. Vermont has a strong 
history of building mixed income housing in areas of opportunity. 
However, recent Treasury guidance on spending state and local relief 
money does not offer clear guidance for whether this funding can be 
used to construct affordable housing in areas of opportunity, leading 
to confusion among Vermont affordable housing groups. The guidance 
states that ``Treasury will presume that certain types of services are 
eligible uses when provided in a Qualified Census Tract (QCT), to 
families living in QCTs, or when these services are provided by Tribal 
governments. Recipients may also provide these services to other 
populations, households, or geographic areas disproportionately 
impacted by the pandemic. In identifying these disproportionately-
impacted communities, recipients should be able to support their 
determination for how the pandemic disproportionately impacted the 
populations, households, or geographic areas to be served.'' I 
understand that HUD was involved in the creation of guidance with the 
Treasury Department as the guidance relates to housing issues.
    By not explicitly allowing affordable housing construction outside 
of low- income areas (QCTs), does the Treasury guidance undermine long-
standing housing best practices of ensuring that affordable housing is 
located in a range of locations, offering economic opportunity for 
residents?
    Answer. HUD understands the concern. HUD is trying to find ways to 
promote the development of affordable housing in opportunity areas and 
would welcome further discussion with Treasury if there are 
opportunities to provide supplemental guidance. It is important 
however, for federal resources to be directed to disadvantaged 
communities to help address the disproportionate housing needs in these 
communities. One way to do that is targeting assistance to Qualifying 
Census Tracts (QCTs). Targeting assistance to areas predominantly 
inhabited by low-income households can also speed the delivery of funds 
to eligible populations while reducing the burdens of proving 
individual eligibility through income documentation.
    The COVID relief money for housing programs was required by 
Congress to be targeted to people and places disproportionately 
affected by the pandemic. Because disproportionate shares of lower 
income people lost jobs during the pandemic, HUD advised Treasury that 
targeting relief money to low-income areas was highly likely to 
coincide with the disproportionately affected populations. Vermont can 
target these funds to opportunity areas if they can also show that many 
people adversely affected by the pandemic live there, or that the 
housing is being built for pandemic-affected people to move to. This is 
a higher bar than the ``safe-harbor'' of targeting funds to low-income 
areas in Treasury's guidance but is in keeping with Congress' intent 
when appropriating the funds.
    Question. How will HUD use its requested resources to support 
building housing that offers not only shelter, but also opportunity, to 
American families?
    Answer. HUD's resources directed toward producing affordable 
housing in the 2022 budget include direct investment in new home 
construction in the Section 202 and 811 Capital Advance programs and in 
the HOME program. Households burdened with high housing costs for 
themselves, and supported family members often sacrifice spending on 
other critical expenses such as food, healthcare, and transportation, 
potentially impacting their health outcomes and access to job and 
educational opportunities. Providing deeply affordable housing promotes 
economic stability by giving residents and their families the 
opportunity to use household resources for other purposes such as 
education, childcare, nutrition, healthcare, transportation, and 
savings.
    The Budget invests $100 million in new affordable housing for very 
low-income older adults (Section 202) and $80 million for very low- and 
extremely low-income persons with disabilities (Section 811). Section 
202 properties provide residents connections to services through the 
service coordinator program, using a person-centered approach to 
helping residents access the resources they need to live longer, 
healthier lives in independent housing settings.
    Section 811 properties provide residents accessible housing and 
supportive services often required to live independently in the 
community with connections to critical supportive services, as an 
alternative to costly institutional care. Because Section 202 and 
Section 811 are place- based investments, they provide opportunities 
for the Department to engage with communities where they are located 
and foster connections between initiatives and programs at the local 
level.
    HUD's FY 2022 budget also requests $1.85 billion for the HOME 
Program. Through HOME, HUD provides funding to State and local 
governments to develop affordable rental and homeownership housing. 
Because these funds can be used anywhere within a jurisdiction, States 
and local governments can use HOME funding to construct affordable 
housing in areas with higher incomes and greater opportunity.

                                 ______
                                 

              Questions Submitted by Senator John Boozman
    Question. As you know, the American dream of homeownership remains 
a pillar of our economy. While home prices in urban and suburban 
communities have increased, affordable, lower-cost properties still 
exist, particularly in America's rural communities. However, there 
still remain challenges to financing these rural properties.
    In your view, what are some existing regulatory barriers that you 
see to both large and small dollar rural home financing, and what does 
the agency plan on doing to address those barriers?
    Answer. Affordable homeownership opportunities do remain available 
in markets around the country, and this is especially true for 
America's rural areas. However, barriers to accessing affordable 
financing and down payment assistance persist. HUD has several tools 
that can be used to address homeownership barriers that even low-cost 
communities face and has plans underway. The Federal Housing 
Administration's (FHA) mortgage insurance program is looking at ways to 
make small dollar mortgages more accessible, and at improving the Title 
I insurance program for manufactured housing financing. In addition, 
the FY 2022 Budget has requested a set-aside in the HOME Investment 
Partnership program for a new home buyer assistance grant program to 
direct funds specifically to jurisdictions in support of making the 
dream of homeownership more accessible in America's rural and urban 
communities.
    Question. Given the current housing market and rising home prices, 
some buyers who rely on government-insured loans like FHA are being 
disadvantaged, especially in many of our rural communities. Some of 
this is from extra requirements on appraisals or inspections, or 
arbitrary regulatory rules that prohibit FHA loans on homes held under 
90 days.
    Is HUD looking at ways to make these programs work better for low-
down payment/first time buyers?
    Answer. Yes, HUD and the FHA team are continuously reviewing 
opportunities for streamlining and efficiency of our programs. We are 
acutely aware of the issues you raise, and how the current real estate 
market, with its low supply, is creating competitive pressures that 
make use of government insured programs like FHA more difficult for 
consumers to access. FHA has reviewed its strategic roadmap and has 
been addressing a number of items that pose barriers to potential 
homebuyers, especially for low and moderate-income first-time home 
buyers.
    A recent example is the policy changes that FHA has made to its 
student loan debt calculation. This change aligns FHA underwriting for 
borrowers with student debt with other government agencies and opens up 
access to credit for many who would have previously been denied an FHA 
mortgage due to the way that debt was calculated into the underwriting 
decision. HUD is also taking on issues related to appraisal industry 
and misevaluation of properties driven by bias. An interagency task 
force has been formed, led by HUD Secretary Fudge and is attacking this 
head on with a set of recommendations and report expected in January.
    The FHA team has taken many steps, particularly in light of the 
COVID-19 pandemic, to be proactive and ensure that inspection 
requirements and appraisal requirements meet the needs of communities--
especially those that are harder to reach, like rural--and has put in 
place numerous waivers and flexibilities for lenders and servicers 
during this time.
    Question. The current rise in home prices can present a challenge 
to prospective buyers facing difficulties qualifying for a mortgage or 
saving for a down payment, particularly in rural communities. FHA-
backed products in limited markets such as own-option mortgages, leases 
with a purchase option, and others have shown promise in increasing 
affordable homeownership. However, I'm concerned that unnecessary 
regulatory burdens may limit the ability of these types of products to 
expand into rural households and communities. Housing agencies have a 
responsibility to ensure that regulatory requirements are not 
unnecessarily limiting or delaying the ability of products aimed at 
increasing affordable, sustainable homeownership to broaden into new 
markets.
    Can you commit to looking into what actions your agency can take to 
ensure that overly burdensome regulatory requirements are not limiting 
the ability of these types of products to expand into new markets, 
especially into rural households and communities?
    Answer. FHA continuously monitors market trends and will look at 
ways it can work in harmony with alternative financing arrangements 
that show effective means toward attaining affordable homeownership. 
HUD's Office of Policy Development and Research (PD&R) maintains 
current information on housing needs, market conditions, and existing 
programs and conducts research on priority housing and community 
development issues. PD&R provides reliable and objective data and 
analysis to help inform FHA decisions. See examples of PD&R's recent 
reports here:

1. National Comprehensive Market Analysis (As of January 1, 2021): 
        https://www.huduser.gov/portal/publications/pdf/National-CHMA-
        21.pdf

2. US Housing Market Conditions, Comprehensive Housing Market Analyses: 
        https://www.huduser.gov/portal/ushmc/chma_archive.html

3. National Housing Market Summary: https://www.huduser.gov/portal/
        ushmc/quarterly_commentary.html

                                 ______
                                 

          Questions Submitted by Senator Shelley Moore Capito
    Question. As you know, the Biden Administration extended the 
forbearance period through September 30, 2021, and the foreclosure 
moratorium through June 30th. An estimated 6.5 million home-loan 
borrowers have missed at least one payment since March 2020. Since the 
forbearance moratorium was implemented, West Virginia has seen a 
dramatic increase in serious delinquent loans--those falling in the 120 
day and greater category. While a well-intended temporary solution, I 
am very concerned at the unintended consequence this action and its 
subsequent extension will have on homeowners in my state.
    Many housing stakeholders in my State believe that while they will 
be able to provide loan modifications to some, there will be many who 
never recover. What actions and resources has HUD taken and devoted to 
addressing this serious issue?
    Answer. HUD has taken significant steps and has devoted many 
resources to acting to ensure all protections are in place that will 
help people keep their homes and avoid foreclosure. HUD has worked in 
coordination with the White House, and all government agencies who back 
mortgage loans to address delinquent borrowers swiftly through 
forbearance and new foreclosure avoidance programs which have been 
announced. Our priority is helping as many families as we can get on a 
road to recovery and move to stability and affordability in their 
housing.
    On June 25, 2021, Federal Housing Administration (FHA) announced 
more measures to help homeowners with FHA-insured mortgages who are 
struggling financially due to the COVID-19 pandemic. These measures 
will provide additional, immediate relief while also expanding outreach 
and home retention options for struggling homeowners who are 
disproportionately people of color. These measures include the 
extension of the forbearance period until September 30, 2021, but HUD 
has included additional foreclosure alternatives to avoid the 
unintended consequences mentioned.
                   covid-19 advance loan modification
    FHA introduced a new home retention option, the COVID-19 Advance 
Loan Modification (COVID-19 ALM). The COVID-19 ALM will offer 
significant payment relief to eligible homeowners.
    The COVID-19 ALM will be offered to borrowers who are 90 or more 
days delinquent or at the end of their COVID-19 Forbearance. This new 
home retention option is for those homeowners whom a 30-year rate and 
term mortgage modification will bring the mortgage current and will 
reduce the Principal and Interest portion of their monthly mortgage 
principal and interest payment by at least 25 percent.
    Another key step for delinquent borrowers is the simplification of 
the FHA loss mitigation waterfall and introduction of the COVID 
Recovery loan modification that FHA announced on July 23, 2021.
    The new FHA COVID-19 Recovery waterfall streamlines and revises 
FHA's previous options for struggling homeowners, reduces required 
documentation, and allows mortgage servicers to provide greater payment 
reduction for eligible homeowners with FHA-insured
    Single Family Title II forward mortgages. The simple two-step 
waterfall options intended for properties that are occupied as the 
homeowner's primary residence are:

1. COVID-19 Recovery Standalone Partial Claim: for homeowners who can 
        resume making their current mortgage payments, the COVID-19 
        Recovery Standalone Partial Claim allows mortgage payment 
        arrearages to be placed in a zero-interest subordinate lien 
        against the property that is repaid when the mortgage 
        terminates, usually when the homeowner refinances or sells the 
        home.

2. COVID-19 Recovery Modification: for homeowners who cannot satisfy 
        the COVID-19 Recovery Standalone Partial Claim requirements, 
        the COVID-19 Recovery Modification extends the term of the 
        mortgage to 360 months at a fixed rate and targets reducing the 
        borrower's monthly principal and interest portion of their 
        monthly mortgage payment. The COVID-19 Recovery Modification 
        must include a Partial Claim if the homeowner has Partial Claim 
        funds available.

    FHA has also taken steps to ensure protections for seniors who are 
part of the reverse mortgage program.
          home equity conversion mortgage covid-19 extensions
    To assist seniors with Home Equity Conversion (reverse) Mortgages 
(HECMs) who have been negatively affected by COVID-19, FHA extended the 
ability for these homeowners to request an extension before the 
servicer may request the loan be called due and payable. For extension 
requests received between July 1, 2021, and September 30, 2021, 
servicers must grant homeowners an extension of up to six months.
    For HECM homeowners with loans that have already been called due 
and payable, servicers must approve homeowner requests for an extension 
for any deadline related to foreclosure and claim submission of up to 
six months when the request is received between July 1, 2021, and 
September 30, 2021.
    For all HECMs that received an extension between July 1, 2020, and 
September 30, 2020, FHA is providing one additional three-month 
extension period if needed, when the homeowner requests this extension 
from their mortgage servicer.
    Question. Another matter we continue to receive outreach on is the 
inability to quickly distribute federal dollars to renters and tenants 
who are desperate to receive them. While I understand that Treasury is 
responsible for overseeing the distribution of these funds, I am 
concerns that with the amounts allocated through the CARES Act and the 
American Rescue Plan on top of the Administration's significant 
increase in the amount requested for HUD, I am concerned that we are 
completely overwhelming our States and localities with money that they 
simply do not have the capacity in place to get out the door. Can you 
comment on this?
    Answer. We agree that many CDBG and HOME grantees are addressing 
historic levels of need with historic levels of funding. Some are 
struggling currently, but most seem to be steadily prioritizing, 
scaling up, and successfully implementing. HUD's experience with 
disaster recovery and Neighborhood Stabilization Program (NSP) funding 
is that this apparent pause as grantees design programs and execute 
contracts and inform citizens will give way to rapid action in most 
communities. These funding sources provide substantial administrative 
resources for grantees to hire or contract the additional expertise 
necessary to implement the activities for which the funds are 
appropriated. In addition, HUD is implementing a robust technical 
assistance effort to support the CARES and ARP funds and coordinating 
closely with the Department of Treasury to support and improve 
community capacity, with special attention to sharing best practices.
    Question. Earlier this year, the Office of Management and Budget 
released a proposed rule that would double the definition of a 
metropolitan statistical area from a population of 50,000 in an urban 
core to 100,000. This change would lead to over 140 communities to lose 
out on billions of dollars in grants, including Community Development 
Block Grants through HUD that have been invaluable to my home state of 
West Virginia. I joined 24 of my Senate colleagues in sending a 
bipartisan letter to OMB opposing this change.
    According to recent news reports, OMB is planning to move forward 
on this regulation despite receiving over 800 comments from affected 
communities that are opposed to this change. As a largely rural state 
with few urban centers, this change would force West Virginia 
communities that have long relied on HUD and other agency grants to 
potentially seek alternative funding, which is unrealistic in a poor 
state such as West Virginia.
    Should OMB finalize this rule, how will you commit to ensuring that 
HUD continues to serve communities that do not meet these overly 
stringent definitions of ``urban?''
    Answer. On July 13, 2021, OMB announced that the technical advisory 
committee of interagency experts, the Metropolitan and Micropolitan 
Statistical Area Standards Review Committee, after the public comment 
period, submitted a revised recommendation to leave the current 
Metropolitan Statistical Areas (MSA) core population threshold in 
place. Consistent with the Standards Review Committee's revised 
recommendation, OMB's 2020 Standards will maintain the MSA threshold of 
50,000. Recognizing the committee's concern that MSA thresholds have 
not kept pace with population growth, OMB will work with the Standards 
Review Committee to conduct research and stakeholder outreach to inform 
the 2030 standards update.
    HUD remains committed to serving all communities, and its State 
CDBG program serves smaller urban and rural communities. The State CDBG 
program represents 30% of the annual CDBG appropriation and is one of 
the largest grant programs directed to rural jurisdictions to meet 
their community development and affordable housing needs. In the State 
CDBG program, states pass almost all funding through in subgrants to 
about 2,500 less urban or rural jurisdictions a year. Although the full 
range of CDBG eligible activities is available, the majority of the 
funding is used for public facilities and improvements, such as water/
sewer systems.
    Question. How will HUD continue to invest in struggling communities 
such as those in West Virginia that are often left fighting for a tiny 
piece of the pie in terms of federal grants?
    Answer. One way HUD will continue to serve smaller urban and rural 
communities, such as those in West Virginia, is through the CDBG 
program. The CDBG program provides grants directly to larger cities and 
urban counties through the entitlement program and serves non-
entitlement communities through the State CBDG program. The State CDBG 
program represents 30% of the annual CDBG appropriation, or about $1 
billion per year, and is one of the largest grant programs directed to 
rural jurisdictions to meet their community development and affordable 
housing needs, primarily for the benefit of low- and moderate- income 
families. In the State CDBG program, the states pass almost all funding 
through in subgrants to non-entitlement communities. States may use a 
portion of the funding to provide technical assistance and help 
localities apply for and use the funding. Although the full range of 
CDBG eligible activities is available, most of the funding is used for 
public facilities and improvements, such as water/sewer systems.
    Similarly, the Rural Capacity Building Program (RCB) enhances the 
capacity and ability of local governments, Indian tribes, rural housing 
development organizations (RHDOs), rural Community Development 
Corporations (CDCs), rural Community Housing Development Organizations 
(CHDOs) to carry out community development and affordable housing 
activities that benefit low- and moderate-income families and persons 
in rural areas. The RCB program provides much needed funds that assist 
small, rural communities such as those in West Virginia and beyond. For 
example, RCB funds assist the International Sonoran Desert Alliance 
(ISDA) located in rural Arizona, which is a 501(c)3 organization that 
designs and implements environmental, cultural, real estate and 
business development projects intended to preserve and enrich the 
environment, culture, and economy of the Sonoran Desert. ISDA is a sub-
awardee of RCB funds that was awarded $15,000 to support organization 
operations. ISDA operates a social enterprise Inn and Conference Center 
that the organization utilizes as a business incubator and job training 
site. Because of decreased activity caused by the pandemic, revenue has 
decreased by 70%. ISDA expects to lose $150,000 in revenue due to the 
pandemic. ISDA also experienced revenue loss at a historic plaza it 
operates with mixed use commercial tenants. Due to businesses 
shuttering, ISDA has projected a loss of $40,000 in rental income. 
Despite facing significant organizational challenges, ISDA continues to 
offer emergency utility assistance, help stakeholders in accessing 
SNAPs benefits, rental assistance, and conducting minor home repair and 
appliance replacement. ISDA has also provided mobile hotspots and 
laptops that allow clients to continue engaging in virtual small 
business development programming. RCB funds continue to support this 
kind of dynamic organization, building capacity across fragile 
communities.

                          SUBCOMMITTEE RECESS

    Secretary Fudge. Thank you.
    Senator Schatz. [Whereupon, at 10:44 a.m., Thursday, June 
10, the subcommittee was recessed, to reconvene at a time 
subject to the call of the Chair.]