    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                      HOUSING IN THE HEARTLAND: ADDRESSING
                            OUR RURAL HOUSING NEEDS

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

                                    HEARING

                                   	BEFORE THE

                     SUBCOMMITTEE ON HOUSING AND INSURANCE

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 12, 2025

                                   __________

                               Serial No. 119-28

           Printed for the use of the Committee on Financial Services

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    60-985 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                        FRENCH HILL, Arkansas, Chairman

    BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking
        Chairman                             Member
    FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice
    PETE SESSIONS, Texas                     Ranking Member
    ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York
    ANDY BARR, Kentucky                  BRAD SHERMAN, California
    ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York
    TOM EMMER, Minnesota                 DAVID SCOTT, Georgia
    BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts
    WARREN DAVIDSON, Ohio                AL GREEN, Texas
    JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri
    BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut
    WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois
        Carolina                         JOYCE BEATTY, Ohio
    MARLIN STUTZMAN, Indiana             JUAN VARGAS, California
    RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey
    DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas
    YOUNG KIM, California                SEAN CASTEN, Illinois
    BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
    ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan
    SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
    MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia
    MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
    MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana
    ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon
    ZACHARY NUNN, Iowa                   SAM LICCARDO, California
    LISA McCLAIN, Michigan
    MARIA SALAZAR, Florida
    TROY DOWNING, Montana
    MIKE HARIDOPOLOS, Florida
    TIM MOORE, North Carolina

                          Ben Johnson, Staff Director

                                     ------

                     SUBCOMMITTEE ON HOUSING AND INSURANCE

                         MIKE FLOOD, Nebraska, Chairman

    MONICA DE LA CRUZ, Texas, Vice       EMANUEL CLEAVER, Missouri, Ranking
        Chairwoman                           Member
    JOHN W. ROSE, Tennessee              NYDIA M. VELAZQUEZ, New York
    WILLIAM R. TIMMONS, IV, South        RASHIDA TLAIB, Michigan
        Carolina                         AYANNA PRESSLEY, Massachusetts
    RALPH NORMAN, South Carolina         RITCHIE TORRES, New York
    ANDREW R. GARBARINO, New York        SYLVIA R. GARCIA, Texas
    SCOTT FITZGERALD, Wisconsin          NIKEMA WILLIAMS, Georgia
    MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
    MARIA SALAZAR, Florida               JANELLE BYNUM, Oregon
    TROY DOWNING, Montana

                          C  O  N  T  E  N  T  S

                                  ----------

                            Thursday, June 12, 2025
                               OPENING STATEMENTS

                                                                       Page
    Hon. Mike Flood, Chairman of the Subcommittee on Housing and
      Insurance, a U.S. Representative from Nebraska.................     1
    Hon. Emanuel Cleaver, Ranking Member of the Subcommittee on
      Housing and Insurance, a U.S. Representative from Missouri.....     3

                                   WITNESSES

    Mr. Richard Baier, President and Chief Executive Officer,
      Nebraska Bankers Association...................................     4
        Prepared Statement...........................................     6
    Mr. David Garcia, Policy Director, Up for Growth.................    12
        Prepared Statement...........................................    14
    Mr. Ian Maute, Director of Development, Buckeye Community Hope
      Foundation, on behalf of the Council for Affordable and Rural
      Housing (CARH).................................................    20
        Prepared Statement...........................................    23
    Mr. David Lipsetz, President and Chief Executive Officer, Housing
      Assistance Council (HAC).......................................    55
        Prepared Statement...........................................    57

                                    APPENDIX
                                  LEGISLATION

    H.R. ----, the Strategy and Investment in Rural Housing
      Preservation Act of 2025.......................................   100

          HOUSING IN THE HEARTLAND: ADDRESSING OUR RURAL HOUSING NEEDS

                                  ----------

                            Thursday, June 12, 2025

                 U.S. House of Representatives,
                 Subcommittee on Housing and Insurance,
                                Committee on Financial Services
                                                        Washington, DC.

        The subcommittee met, pursuant to notice, at 1:30 p.m.,
    2128 Rayburn House Office Building, Hon. Mike Flood [chairman
    of the subcommittee] presiding.
        Present: Representatives Flood, De La Cruz, Rose, Timmons,
    Fitzgerald, Downing, Cleaver, Tlaib, Williams of Georgia,
    Bynum, Pressley, and Pettersen.
        Also present: Representative Nunn.
        Chairman Flood. The Subcommittee on Housing and Insurance
    will come to order. Without objection, the chair is authorized
    to declare a recess of the committee at any time.
        This hearing is entitled ``Housing in the Heartland:
    Addressing our Rural Housing Needs.''
        Without objection, all members will have five legislative
    days within which to submit extraneous materials to the chair
    for inclusion in the record.
        I now recognize myself for 5 minutes for an opening
    statement.

         OPENING STATEMENT OF HON. MIKE FLOOD, CHAIRMAN OF THE
     SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S. REPRESENTATIVE
                             FROM NEBRASKA

        First of all, I would like to thank our witnesses for being
    with us today, and I very much look forward to hearing your
    testimony on the topic of housing in rural America. Thank you
    for coming 30 minutes early, given the House's schedule today.
        So far this year, we have focused this subcommittee's work
    on the rising cost of housing in America. We have spent our
    hearing in March focusing on the underlying driving force
    behind the problem, and that is a lack of housing supply. In
    May, we had an opportunity to examine some of the alternate
    building methods that can bring supply online for less cost
    like manufactured housing, modular housing, and even early
    stage experiments with 3D printing homes.
        Today, we are going to dig into the challenges with
    building housing in rural America. The problems in the rural
    parts of our country are a little different than those that we
    see in the urban areas. While a rural area may have lower land
    costs, the logistics associated with getting homes built in
    rural areas can introduce some unique challenges that drive up
    costs, such as it is more expensive to transport building
    materials to a remote part of the country.
        Longer supply chain means more cost, and those costs are
    often passed down to the home buyer or the renter. Rural areas
    may have fewer contractors and subcontractors nearby to do the
    work needed to build the home. Labor shortages can lead to
    expensive delays on a project or even stop projects altogether
    when an area simply does not have the experts needed to do the
    work at all. Alternatively, it can mean bringing labor in from
    further away from the project site, which contributes to higher
    labor costs overall. Again, these costs are passed down to the
    home buyer or the renter.
        However, as we examine what drives costs in rural housing
    markets, we will also see some common themes that we have
    already discussed in this subcommittee that will reemerge,
    namely regulatory burdens from the Federal Government that
    often hit smaller communities with less resources the hardest.
        Through my work so far in Congress, I have identified four
    key cost drivers in Federal housing projects. I call them the
    four horsemen of the housing apocalypse. Number one,
    environmental review requirements that delay a project's start
    and drive up costs; number two, build America, buy America
    requirements that drive up the cost of critical construction
    materials and appliances, sometimes 20, even 40 percent more
    than otherwise necessary; Davis-Bacon requirements, that from
    what I have heard, are much more costly due to the associated
    reporting requirements than they are for the actual cost of
    paying prevailing wages; and number four, Section 3
    requirements that make it more difficult to find contractors to
    do the job, particularly in rural areas with some of the
    workforce challenges that I mentioned.
        While many of these requirements are well-intentioned,
    their combined impact significantly drives up costs of projects
    using Federal dollars. I look forward to hearing from our
    witnesses about both the challenges that are unique to rural
    housing markets and how some of those common Federal regulatory
    challenges affect projects in rural areas.
        Finally, this hearing will also serve as an opportunity to
    explore the impact of Federal rural housing programs like the
    United States of Agriculture's (USDA's) Rural Housing Service
    (RHS). The RHS operates programs under Title V of the U.S.
    Housing Act of 1949. The Section 515 program provides
    affordable rental housing for low-income families, the elderly,
    and people with disabilities. The Section 538 program provides
    financing to increase the supply of rural housing for low-and
    moderate-income people and the Section 502 program that makes
    direct loans to low-income borrowers to rehabilitate or
    purchase a primary residence.
        Ranking Member Cleaver has a draft bill noticed to this
    hearing that would make some changes to these programs, which I
    am sure will be a subject of discussion today with our
    witnesses and our members. I am excited to dig deeper into each
    of these issues today, and I look forward to our witnesses'
    testimony.
        With that, I yield back.
        Chairman Flood. The chair now recognizes the ranking member
    of the subcommittee, Mr. Cleaver, for 5 minutes for an opening
    statement.

     OPENING STATEMENT OF HON. EMANUEL CLEAVER, RANKING MEMBER OF
           THE SUBCOMMITTEE ON HOUSING AND INSURANCE, A U.S.
                      REPRESENTATIVE FROM MISSOURI

        Mr. Cleaver. Thank you, Mr. Chairman. I also want to thank
    you for giving a great deal of your time to this and other
    issues related to contemporary housing problems.
        I represent the 5th District of Missouri, and my
    congressional district includes Kansas City, Missouri, and the
    surrounding metropolitan area. Before redistricting, I spent
    nearly two decades representing a district that stretched from
    Kansas City, Missouri, in the far west, to a city called
    Slater, Missouri, near the center of the State. Slater is a
    very small town of 2,000 that, unless you are a diehard fan of
    Steve McQueen, the King of Cool, and know about the trivia at
    his birthplace, you probably never heard of Slater.
        I spent a lot of time in rural America, having been born
    there in Texas, but rural America is home to 20 percent of the
    United States' population and growing, and covers more than 90
    percent of the U.S. landmass. A lack of new construction,
    limited investment in existing housing stock, and economic
    constraints are driving a shortage of safe and decent housing
    in rural America. Over 1/3 of rental units in rural America are
    at least 55 years old.
        Preserving an increasing housing supply in rural areas is a
    formidable challenge, but possible. Many small rural
    communities face higher construction and material costs,
    struggle to access private financing and philanthropic support,
    and lack the capacity to navigate the complexities of Federal
    programs. Many are also at risk of a disproportionate loss of
    housing stock following extreme weather events.
        Strong public investment and public and private
    partnerships are now needed. Chairman Flood and I have spent
    time this week exploring ways that Housing and Urban
    Development's (HUD's) Home Investment Partnerships Program can
    better be tailored for increasing supply in smaller and rural
    areas. In addition to HUD, rural development programs through
    the USDA are specifically designed to address the unique
    challenges in USDA-eligible areas.
        I thank Congressman Nunn for working with me on the Rural
    Housing Service Reform Act, which would improve Federal housing
    rural programs through USDA. This bill includes my Strategy and
    Investment Rural Housing Act, which would preserve existing
    housing, build new housing, and prevent unnecessary housing
    instability. For many communities, these USDA-supported housing
    constitutes the only affordable rental housing available. These
    are low-income veterans, disabled individuals, and fixed-income
    persons who need help and know housing there is available.
        At the same time, the Administration's cuts to USDA rural
    development staff are having a detrimental impact. Office
    closures and dramatic staff reductions do not create
    efficiency; they create a backlog. My hearing concerning
    reports of degraded services and impaired programs at USDA are
    happening almost daily. The President has further proposed a
    $600 million cut to USDA Rural Development and proposed to
    eliminate or reduce nearly every rural housing program. This
    includes the Section 502 Direct Loan Program, which has helped
    more than 2 million individuals in low-income rural families
    achieve homeownership. I will continue to work with my
    Democratic and Republican colleagues to find productive
    solutions to rural challenges.
        Thank you, Mr. Chairman.
        Chairman Flood. Thank you, Ranking Member Cleaver.
        Today, we welcome the testimony of Mr. Richard Baier, the
    President and CEO of the Nebraska Bankers Association; Mr.
    David Garcia, the Policy Director at Up for Growth; Mr. Ian
    Maute, Director of Development at the Buckeye Community Hope
    Foundation, testifying on behalf of the Council for Affordable
    and Rural Housing (CARH); and Mr. David Lipsetz, the President
    and CEO of the Housing Assistance Council (HAC).
        We thank each of you for taking the time to be here. Each
    of you will be recognized for 5 minutes to give an oral
    presentation of your testimony. Without objection, your written
    statements will be made part of the record.
        Mr. Baier, you are now recognized for 5 minutes for your
    oral remarks.

     STATEMENT OF MR. RICHARD BAIER, PRESIDENT AND CHIEF EXECUTIVE
                 OFFICER, NEBRASKA BANKERS ASSOCIATION

        Mr. Baier. Good afternoon, Mr. Chairman, Ranking Member
    Cleaver, and members of the Subcommittee on Housing and
    Insurance. My name is Richard Baier. I am President and CEO of
    the Nebraska Bankers Association. Prior to that, I spent almost
    9 years as head of economic development for the State of
    Nebraska where I was responsible for the State's affordable
    housing program. Maybe just as relevant to today's discussion,
    I also grew up in the small rural Kansas town of La Crosse,
    which has a population of 1,266 people.
        Fortunately, Nebraska has had one of the lowest
    unemployment rates in our country for more than a decade.
    Conversely, many of our rural counties' peak population was
    prior to 1960. Growing employers in rural parts of our State of
    Nebraska routinely cite a lack of workforce housing as a reason
    that they are unable to grow jobs.
        When evaluating the housing market in States like Nebraska,
    one factor that we often look at is the age of our housing
    stock. Recent research conducted by the Nebraska Investment
    Finance Authority notes that 19 percent of Nebraska's housing
    units were constructed before 1939. When the data is broken
    down even further via the Rural Urban Continuum Code, the data
    highlights that 28 to 36 percent of homes in Nebraska's most
    rural counties were built prior to 1940. Quite simply, rural
    Nebraska's housing stock, like that in other areas of the
    country, is past retirement age.
        There are a number of unique challenges which limit the
    ability of rural areas to maintain and build new housing. A
    majority of the homes currently being built in our rural areas
    of Nebraska are large custom homes, which carry a very hefty
    price tag. Unfortunately, there is a clear lack of housing to
    accommodate our working families.
        While it may seem counterintuitive to some, costs for
    building new housing units in rural areas are substantially
    higher when compared to similar units in urban areas, as
    referenced by Congressman Flood. These cost differences are
    driven by a myriad of economic and market factors.
    Fundamentally, Nebraska, like other rural areas of our great
    country, lacks supplies of material vendors, contractors, and
    subcontractors necessary to build new housing units.
        Finally, there are very few buildable lots or developers
    who are willing to take on the substantial risk associated with
    building housing units in rural areas. In most cases, the only
    way to build available housing lots is through public-private
    partnerships, often driven by local units of government.
        While well-intentioned, use of our existing government
    housing programs is severely limited because of differing rules
    and regulations, varying definitions, mismatched application
    cycles, and inconsistent qualifying income thresholds. As an
    example, Federal rules currently limit the Low-Income Housing
    Tax Credit Program to projects which service individuals with
    incomes below 60 percent of the area median income. Conversely,
    the National Housing Trust Fund is limited to those potential
    tenants with incomes below 30 percent of Area Median Income
    (AMI).
        Rural housing developers, to be successful, routinely layer
    or stack these various programs to make their projects
    economically feasible. I have one regional developer that I
    know that estimates that the administrative burden of layering
    these various programs adds at least 25 percent to the overall
    cost of construction.
        Current government housing programs also have substantial
    administrative and reporting burdens, as mentioned by
    Congressman Flood, such as lengthy and expensive environmental
    assessments. In response to input from member banks, the
    Nebraska Bankers Association created our Rural Workforce
    Housing Task Force in 2015, focused on finding new solutions to
    our State's rural housing crisis. The most notable solution
    resulting from this task force was the creation of our Rural
    Workforce Housing Investment Fund, which was passed and signed
    into law by then-Governor and now-Senator Pete Ricketts in
    2017. Our fund provides State matching grants to local not-for-
    profit developers in counties with less than 100,000
    inhabitants, with a focus directly on creating new owner-
    occupied and rental housing units. This fund uniquely does not
    have income restrictions but rather limits projects by the unit
    cost of construction.
        One unique caveat of the Rural Workforce Housing Fund is
    that grant recipients cannot use any other Federal housing
    programs, thus restricting the limits that might be placed on
    these projects. To date, the State of Nebraska has awarded more
    than $59 million in grants, which have been matched by $36
    million in local funds. Our member banks have contributed most
    of those dollars, and to date we have seen 331 new owner-
    occupied units, 655 rental units, and 670 units currently under
    construction.
        Thank you for the opportunity to appear before you today,
    and I look forward to our dialog.

        [The prepared statement of Mr. Baier follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Flood. Thank you, Mr. Baier.
        Mr. Garcia, you are now recognized for 5 minutes for your
    oral remarks.

     STATEMENT OF MR. DAVID GARCIA, POLICY DIRECTOR, UP FOR GROWTH

        Mr. Garcia. Thank you, Chairman Flood, Ranking Member
    Cleaver, and the rest of the subcommittee for the opportunity
    to appear today to discuss the urgency of the Nation's rural
    housing crisis. My name is David Garcia. I am the Policy
    Director at Up for Growth and Up for Growth Action. We are a
    non-profit, non-partisan organization focused exclusively on
    increasing the supply of housing across the country. We have
    over 350 member organizations nationwide, which include
    builders, advocates, and national trade associations, many of
    whom actively build in rural communities, including members
    such as Habitat for Humanity of Lincoln, Nebraska, the
    Minnesota Housing Partnership, and the Homelessness and Housing
    Coalition of Kentucky. Today, my remarks will describe some of
    the unique challenges facing rural communities, their causes,
    and the potential solutions for housing.
        Nationally, we estimate that the country is missing 3.79
    million homes, which is a significant shortfall that is
    spreading to other areas of the country that have been
    previously considered affordable. Rural communities, as stated
    earlier, they are home to 60 million people, or one in five
    residents, and an increasing number of those people are
    becoming overwhelmed by trying to pay the rent or afford a
    home. An estimated 44 percent of rural renters are cost-
    burdened, and half of those renters are considered severely
    cost-burdened.
        Buying a home has become more difficult as well. In the 3-
    years following the pandemic, home prices in non-metro areas
    grew by about 36 percent, which is much higher than in
    urbanized areas and these trends have not gone unnoticed.
    Recent polling shows that 80 percent of rural residents believe
    that housing affordability is deteriorating, and 76 percent
    agree that America faces a significant housing shortage,
    requiring immediate attention and increased housing
    construction.
        A persistently high poverty rate in rural areas can
    exacerbate these challenges. More than one in five, or 22
    percent, of rural households report an annual income below
    $25,000, compared to 18 percent nationwide.
        While the cost of living is comparatively lower in rural
    communities at times, lower wages can make it more difficult
    for residents to keep up with rising costs, making it harder
    for new housing development to pencil out, especially when
    considering the need to upgrade infrastructure such as water,
    sewer, power, as well as roads.
        Many rural communities also lack capacity to approve and
    plan for new homes. In many places, there may be just a single
    planner to review applications, ensure compliance with
    community rules, and issue permits. This lack of capacity also
    means that the hard and expensive work of updating zoning and
    land use rules is out of reach for many communities.
        Home building in rural America can be more expensive, as
    noted already a couple of times. Given the high cost of
    delivering building materials to rural construction sites and
    the lack of economies of scale given the smaller size of many
    rural developments, sourcing construction labor, contractors,
    and other labor is also difficult, which obviously in turn
    increases cost.
        While these challenges are mostly unique to rural America;
    we also find that other obstacles are similar to those in
    larger cities. For example, restrictive zoning can limit the
    construction of different types of housing, such as
    manufactured housing or accessory dwelling units. Local
    opposition to new housing, which we commonly refer to as (Not-
    In-My-Back-Yardism) NIMBYism, can stall, shrink, or even halt
    new housing altogether, just as it does in urban areas.
        Thankfully, there are bipartisan solutions that Congress
    can act on. Critical funding sources, such as the 30 percent
    basis boost for rural housing projects proposed in the
    Affordable Credit Improvement Act, can accelerate construction
    and preservation of homes. In addition, the Rural Housing
    Service Reform Act would bolster USDA's affordable housing
    programs, while the Neighborhood Homes Investment Act would
    incentivize home ownership through the rehabilitation of
    existing stock for moderate income home buyers.
        The Road to Housing Act includes a provision to eliminate
    the HUD permanent steel chassis rule for manufactured housing,
    which would greatly reduce costs on the construction of an
    important housing solution for rural America.
        Congress can also address the capacity gaps I mentioned
    earlier through targeted assistance through programs like those
    proposed in the Housing Supply and Frameworks Act and provide
    policy support in the to-be-introduced Housing Opportunities
    Made Easier Act, both of which are crucial to enabling rural
    communities to modernize outdated zoning and streamline and
    ramp up housing production.
        All of these proposals enjoy bipartisan support, including
    from members here today, such as Chairman Flood, Ranking Member
    Cleaver, Member Pettersen. Such partnerships really offer us an
    opportunity to work together to deliver affordable, quality,
    and safe housing to all Americans, from the most rural towns to
    the largest cities.
        I want to thank you again for the opportunity to contribute
    to today's hearing, and I look forward to continued dialog with
    the subcommittee.

        [The prepared statement of Mr. Garcia follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Flood. Thank you, Mr. Garcia.
        Mr. Maute, you are now recognized for 5 minutes for your
    oral remarks.

     STATEMENT OF MR. IAN MAUTE, DIRECTOR OF DEVELOPMENT, BUCKEYE
        COMMUNITY HOPE FOUNDATION, ON BEHALF OF THE COUNCIL FOR
                      AFFORDABLE AND RURAL HOUSING

        Mr. Maute. Thank you. Chairman Flood, Ranking Member
    Cleaver, and members of the committee, on behalf of the Council
    for Affordable and Rural Housing, known as CARH, we appreciate
    the opportunity to submit testimony to the committee. This
    statement outlines key issues impacting the rural multifamily
    housing industry and provides recommendations that will
    strengthen the Federal programs that preserve and expand
    affordable rental housing, as well as bring additional capital
    to increase the housing stock in rural communities across the
    country.
        CARH is an industry trade association with headquarters in
    Alexandria, Virginia, representing the interests of for-profit
    and non-profit developers, owners, management companies,
    lenders, and investors who all participate in the affordable
    rental housing industry in rural America. My name is Ian Maute.
    I am the Director of Development for the Buckeye Community Hope
    Foundation, based in Columbus, Ohio. We are a non-profit
    corporation that develops and facilitates affordable housing
    for low-income families. I am also the current president of
    CARH.
        Throughout rural America, there continues to be an
    overwhelming need for both affordable and decent housing. The
    lack of affordable housing reflects limited investments in
    these localities. Rural renters are more than twice as likely
    to live in substandard housing compared to people who own their
    homes. With lower median incomes and higher poverty rates than
    homeowners, many renters are simply unable to find decent
    housing that is also affordable.
        While the demand for rental housing in rural areas remains
    high, the supply, particularly of new housing, has decreased.
    Neither the private nor public sector can produce affordable
    rural housing independently of the other. It needs to be a
    partnership.
        The United States Department of Agriculture's Rural
    Development, or RD, Section 515 Rural Multifamily Housing and
    Section 514 Farm Labor Multifamily Properties, are essential
    for addressing affordable rural housing needs. Rental
    assistance, or RA, under the Section 521 program is essential
    for many families and elderly households residing in rural
    America.
        At the same time, most federally supported multifamily
    properties are over 35 years old and need modernization. These
    properties have suffered from Federal funding shortages and
    statutory and regulatory barriers that make recapitalization
    either difficult or impossible.
        Over the next decade, as many as 3/4 of all Section 515
    mortgages will mature, and with it, the end of the Section 520
    rental assistance contracts, straining over 250,000 families,
    elderly persons, without the ability to house themselves. Under
    current law, when a Section 515 mortgage expires, the Section
    521 RA also expires. Therefore, it is critical to establish
    legislative authority to preserve the rental assistance after
    mortgage maturity. With roughly 75 percent of RD properties
    depending on Section 521 RA, this program is a financial
    backbone of rural housing.
        The final appropriation legislation for Fiscal Year 2024
    contains language that provided RD with authority to structure
    a demonstration program that decouples RA from the Section 515
    program for 1,000 units and properties where a mortgage was set
    to expire in Fiscal Year 2024. CARH worked closely with RD on
    the implementation of the decoupling program, which is also
    known as Stand-Alone Rental Assistance, or SARA. The Fiscal
    Year 2025 continuing resolution authorized 1,000 units eligible
    for decoupling in the current fiscal year. We are very
    encouraged by the strong and growing participation in the SARA
    program, with eight properties consisting of 157 units enrolled
    in Fiscal Year 2024 and 17 properties with 403 units already
    confirmed for Fiscal Year 2025.
        We are optimistic that this program, as it becomes more
    well-known, participation will continue to increase. However,
    permanent legislative authority remains essential to ensure
    that preservation can occur consistently and nationwide. CARH
    continues to support the passage of legislation that would
    allow for decoupling on a permanent basis.
        I would like to thank Representative Cleaver for his
    support of the decoupling legislation in the previous Congress.
    We are hopeful that similar legislation will be introduced in
    this Congress.
        The Low-Income Housing Tax Credit, also known as the
    Housing Credit Program, is a vital source for addressing
    affordable housing in rural communities. It helps bridge the
    gap between what the market provides and what market demands.
    Approximately 43 percent of Section 515 properties are financed
    with housing credits. Since its inception 36 years ago,
    approximately 3.7 million affordable rental homes or units have
    been produced.
        In multifamily rental housing, the 1-year impact for
    building 100 apartment units is the creation of 161 local jobs
    with $11.7 million in local income and $2.2 million in local
    taxes and government revenue.
        One challenge impacting the effectiveness of the Housing
    Credit Program in rural areas is the unresolved tax status of
    Fannie Mae and Freddie Mac. Uncertainty over these
    classifications under the Internal Revenue Code is compromising
    their ability to participate in multi-investor housing credit
    funds, which are essential to financing smaller rural deals.
    Allowing them to fully participate in multi-investor funds
    would greatly expand capital available for underserved areas.
        CARH supports legislation that would clarify that
    government-sponsored enterprises are not subject to
    restrictions for purposes of housing credit investment.
        CARH applauds the administration and Congress for advancing
    Opportunity Zone reforms that better target rural communities,
    the bill's requirement that 30 percent of new zones be rural,
    and that 50 percent of capital directly support housing, jobs,
    and infrastructure ensures that rural areas are----
        Chairman Flood. I am sorry, Mr. Maute----
        Mr. Maute. Yes.
        Chairman Flood [continuing]. your time has expired.
        Mr. Maute. Thank you.
        Chairman Flood. We would encourage you to submit that for
    the record----
        Mr. Maute. Sure.
        Chairman Flood [continuing]. which we will gladly accept.
        Mr. Maute. Sure thing.

        [The prepared statement of Mr. Maute follows:]
       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Flood. With this, Mr. Lipsetz, you are now
    recognized for 5 minutes for your oral remarks.

     STATEMENT OF MR. DAVID LIPSETZ, PRESIDENT AND CHIEF EXECUTIVE
                  OFFICER, HOUSING ASSISTANCE COUNCIL

        Mr. Lipsetz. Chairman Flood, Ranking Member Cleaver,
    members of the subcommittee, this feels a whole lot more like
    choir practice than it does a hearing. I think we are all
    singing the same tunes so far, which feels great. My name is
    David Lipsetz, President and CEO of the Housing Assistance
    Council, commonly referred to as HAC.
        HAC is a national nonprofit and CDFI that helps local
    organizations in all 50 States construct good quality homes in
    rural communities. We also pursue assiduously nonpartisan
    research that this committee and other national policymakers
    have been relying on for over half a century.
        As we have all discussed, 20 percent of Americans living in
    rural communities, we play an outsized role in the Nation's
    economy. We sustain and power the Nation with food, fiber, and
    fuels. We have launched over half the small businesses, and we
    maintain a trade surplus.
        The reality is that despite the vast wealth generated by
    rural communities, many of the rural families are left facing
    deep economic challenges. Wages remain stubbornly low. Median
    family incomes in rural communities, 25 percent below the rest
    of the Nation. Poverty remains stubbornly high at over 80
    percent of the persistent poverty counties in rural areas. This
    reality is neither a recent nor, I would suggest to you, an
    accidental trend. It is not just free market forces and
    individuals freely choosing where to live. Public policy has a
    very heavy hand in this reality. If you hear nothing else from
    me today, please know that there are economic, tax, and housing
    policies stripping many heartland rural communities of their
    economic engines, anchor institutions, and young people.
        The good news here, though, is that Congress can chart a
    new course, one in which rural communities are treated fairly
    by Federal policy and programs that are already in place and
    that nearly all of us in this room support. These are things
    such as the mortgage interest deduction, Fannie and Freddie,
    government sponsored enterprises (GSEs), Community Reinvestment
    Act (CRA), Low-Income Housing Tax Credit (LIHTC), Opportunity
    Zones. All these things play positive roles in our housing
    finance system, and yet all have design elements that steer
    investment to the most overpriced suburban and urban markets in
    the Nation while leaving most rural communities behind.
        These programs can be improved. They can make the cost of
    capital for housing preservation and production affordable in
    each of the markets where it is working and provide public and
    private sector capacity in the communities that need it most.
        To prime the private market, put public funds to their
    highest and best use, HAC encourages this subcommittee to
    address rural America's housing needs with, one, a focus on
    that capital in small towns; and two, building up the capacity
    of public, private, religious, non-profit, and for-profit rural
    housing providers.
        Let me use the remainder of this time to focus on two
    issues. First, affordability is the greatest challenge in rural
    America. Wages have fallen far below the cost of housing. Five-
    point-six million rural households cannot afford the home they
    live in. This includes millions of homeowners facing mortgages
    and utility bills that eat up more than 30 percent of their
    income and 44 percent of rural renters that cannot afford their
    own rent. If you are not already aware, the affordability
    crisis has driven a 30 percent increase in rural homelessness
    over just the last 3 years. That is an unconscionable
    statistic.
        Thankfully, many members of this committee and across the
    House and Senate are supporting proposals that address the
    crisis, including many I see here today that support the
    Affordable Housing Tax Credit Improvement Act and its basis
    boost for LIHTC properties, the Neighborhood Homes Investment
    Act, with a tax credit that drives private investment into
    housing production. It also closes the gap between the cost of
    construction and the lower appraised values of many rural
    homes.
        Second, bipartisan momentum exists for modernizing housing
    programs that are designed for rural America and USDA's Rural
    Housing Service. Housing champions in both chambers and on both
    sides of the aisle have assembled a package of commonsense
    improvements using public-private partnerships, expanding the
    roles of Community Development Financial Institutions (CDFIs)
    and capacity-building investments in local housing
    organizations. You can find many of these in the discussion
    drafts in Mr. Cleaver's bill.
        You also noted that they are supported by bipartisan
    legislation on the Senate side by Senators Moran and Shaheen. I
    really have to thank Mr. Cleaver and Mr. Nunn for continuing
    the work in this chamber that has been launched by Ms. Smith
    and Mr. Rounds on the Senate side in the Rural Housing Service
    Affordable Act. Central to these bills is the public investment
    we put into the 533,000 units of 515 housing; 350,000 remain.
    We have the power to save them. Let us decouple rental
    assistance.
        Once again, HAC appreciates the subcommittee's time and
    your attention to this topic. I am looking forward to today's
    discussion.

        [The prepared statement of Mr. Lipsetz follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Flood. Thank you, sir.
        We will now turn to member questions. I now recognize
    myself for 5 minutes for questioning.
        Mr. Baier, in your written testimony, you shared some
    details about Nebraska's Rural Workforce Housing Investment
    Fund. The State program provides matching grants to local non-
    profit developers and communities with populations of less than
    100,000 people. These projects do not have any income
    restrictions for inhabitants. Instead, the projects are limited
    by the cost of construction for each home. New homes, single-
    family home construction is limited to $325,000 per unit and
    multifamily unit costs are capped at $250,000 per unit. Instead
    of having an ongoing requirement that any tenant meets certain
    income targets, this program is focused solely on controlling
    building costs and bringing more affordable housing supply
    online. This program has turned $59 million in State funds into
    986 total completed owner-occupied and rental units, which
    comes out to a little less than $60,000 in State investment per
    built unit.
        One of the reasons I wanted to raise this program as part
    of the conversation today about Federal programs is that this
    seems much more prudent and cost-effective for building
    workforce housing supply compared with how our Federal programs
    operate, and I think there is a fundamental question. Why? It
    is not trying to do too many things at once, in my opinion.
        Mr. Baier, if the Rural Workforce Housing Investment Fund
    program required ongoing income verification requirements for
    landlords and income requirements for any home buyer purchasing
    a home, do you think those requirements would add cost and
    bureaucracy to the program?
        Mr. Baier. Yes, Congressman, I do believe they would add
    significant cost to the way that we administer our housing plan
    in Nebraska.
        Chairman Flood. Mr. Baier, if the Rural Workforce Housing
    Investment Program included a requirement that all building
    materials and appliances used in a home be American made, would
    that add cost to the program?
        Mr. Baier. Yes, Congressman, I do believe it would add cost
    significantly.
        Chairman Flood. What if the program included requirements
    that all contractors and subcontractors on the project tracked
    and report the wages of every worker working on the project to
    comply with a sliding scale calculation of prevailing wage
    based on subcategories by profession? Do you think reporting
    would increase costs?
        Mr. Baier. I do, Congressman. We struggle with many of our
    subcontractors and contractors who may have one or two staff,
    so it would be a significant administrative burden.
        Chairman Flood. What if the program included a requirement
    that 25 percent of total labor hours on any project be done by
    low-income workers and that 5 percent of labor hours must be
    done by a business that has one of the following
    characteristics: Number one, is at least 51 percent owned by
    low-income people; number two, had at least 75 percent of the
    company's labor hours performed by a low-income worker; or
    number 3, is at least 51 percent owned by workers in Section 8
    assisted housing? Do you think those requirements would
    increase the program's costs?
        Mr. Baier. Yes, I do believe that would increase costs
    significantly, Congressman.
        Chairman Flood. Thank you. The requirements I just
    described are all requirements for the Federal dollars in the
    HUD programs like the Home Investment Partnership Program, a
    program that, like Nebraska's Rural Housing Investment Fund, is
    designed to build housing supply. I am sure we all have members
    and witnesses in this room that may agree with the intent of
    some of those specific requirements.
        Paying higher wages, providing more opportunities for
    lower-income workers, and using American materials in buildings
    are all goals that I can understand. Every one of those
    requirements carries a cost, and we need to be smarter about
    weighing the tradeoffs of those costs against their benefits.
        Congress has a tendency to load up Federal programs with
    ancillary priorities, which add cost and ultimately detract
    from the main objective of the program in the first place.
    These programs die a death of a thousand cuts. Each new
    regulatory requirement on labor, procurement, environmental
    reviews, and everything else slowly can take a housing program
    and turn it into an expensive bureaucratic exercise. We need to
    stop diverting resources from the framers, the plumbers, the
    electricians necessary to build a home to the bureaucrats and
    outside consultants necessary to fill out the paperwork.
        With that, I yield back.
        The chairman now recognizes the ranking member of the
    subcommittee, Mr. Cleaver, for 5 minutes for questions.
        Mr. Cleaver. Thank you, Mr. Chairman.
        Mr. Lipsetz, one of the biggest barriers to using HUD
    programs in rural communities, is often the amount of red tape
    and regulatory burden that comes with funding. Small rural
    communities are often not equipped administratively to navigate
    the regulatory complexities of these programs.
        I have represented towns where the police chief was also
    the fire chief and also the librarian. So when those programs
    are available and we do not get rural communities requesting
    some help because we do not have the assistance to even provide
    help, they do not have many places to go.
        HUD programs were originally designed to serve cities and
    urban areas. What changes would you suggest that Congress could
    make to broaden HUD programs to smaller and rural communities?
        Mr. Lipsetz. Mr. Cleaver, thanks for your question. It is
    very similar to Chairman Flood's, right, in that we are talking
    about the intent of programs that I think generally we all
    agree with, yet there are challenges in their application to
    these programs, and they slow down, and they create additional
    expense. Part of the reason that happens, that dynamic exists,
    is because there is not enough money in these programs. When
    the pie gets small, people fight fiercely for their piece. If
    we had commitment to enough funding for people to live in a
    decent and humane manner across this country, then we would not
    have those fights for those small pieces.
        I think one of the things that best answers your question,
    Ranking Member Cleaver, is that we help those smaller
    communities build the capacity to apply for and receive the
    funds we are talking about. There are HUD programs to do it.
    Rural Capacity Building is a very specific one. I would also
    suggest Rural Community Development Initiative Grants (RCDI) at
    USDA. That investment right there from Congress will put
    somebody on the ground in that hometown who has the ability to
    cut through some of what exists in today's world, not some
    magic world in the future where we have finally gotten rid of a
    lot of these regulations, but very much today's process.
        Mr. Cleaver. So HUD and USDA should work together in order
    to create whatever technical assistance would be needed. Since
    these programs do, in many cases, actually overlap one another,
    is that an alliance that you think would help solve the
    problem?
        Mr. Lipsetz. I think I am one of the Nation's very few
    people who have worked in both those buildings, and I can tell
    you they operate in fundamentally different ways. USDA is not
    HUD. Please do not entertain the idea of taking the Rural
    Housing Service programs and plopping them down wholesale into
    a building that has no capacity whatsoever to run them in a
    retail manner on the ground in the kind of community you
    suggested. There may be a few ways to do that but that does not
    preclude us from putting HUD and USDA together to do alignment.
    There is no reason that you could come up with that a property
    being built needs more than one environmental review. I am
    sorry. If you are layering it on at a State and Federal level,
    multiple different programs because of how hard it is to gather
    the funds, forget it. We need one environmental review at most
    for a property built in the small town that you grew up in. I
    have seen that picture of your house that you grew up in
    hanging in your office, and that is exactly what we need to be
    able to do for those communities.
        Mr. Cleaver. Thank you. Thank you very much. I remember
    quoting you about not trying to implement programs by putting
    one of these agencies inside the other or taking what they do
    and merging them.
        Mr. Garcia, do you think that the requirements such as
    Davis-Bacon prevailing wages are making it difficult for rural
    communities to use HUD programs for housing?
        Mr. Garcia. Of course, yes, I agree with that. I think
    there are two reasons for that. The first is that it kind of
    shrinks the labor pool, particularly of contractors who are not
    set up to track those kinds of requirements. As mentioned
    earlier, there are a lot of ancillary policy goals that we
    oftentimes put into these programs that are very well-meaning
    but do add cost, and this would be one of them.
        Mr. Cleaver. Thank you.
        Chairman Flood. The gentleman yields back.
        The chairman of the full committee, Mr. Hill of Arkansas,
    is now recognized for 5 minutes.
        Chairman Hill. Thank you, Chairman Flood. Thanks to our
    panel for being here to help us think through the particular
    issues that challenge housing and housing access and housing
    affordability in rural areas. I thank the Chairman and the
    Ranking Member for collaborating on this hearing.
        It is pretty challenging to do. I was a banker in rural
    Arkansas for many, many years in Mississippi Delta. Chicot
    County has a population of 7,500 people today.
        When I opened the bank there, it was probably 15,000, so it
    has shrunk in 15 years to that amount. Ashley County has a
    population of 18,000 and I would not think any of those
    counties have stick-built home builders. They might have a
    custom builder of a certain amount. So the things that I have
    noted are you do not have a regular construction infrastructure
    in many rural counties and there are no comps if you build a
    new house, so you cannot get a secondary market financing on
    the loan. It is going to be a portfolio loan for the most part.
        Flood program, there are frequently homes built on bigger
    tracts of land that part of the land is in the flood plain. The
    house is not. The house is on a 40-foot hill, but you have to
    deed it out in order to be covered under Federal Emergency
    Management Agency (FEMA), so it is expensive to survey. I have
    seen some successes over those years. I have seen some grant
    programs by the Federal Home Loan Bank be helpful to that
    particularly I say a marginal multifamily developer in a rural
    area. I have seen that be a good gap filler for a construction
    loan.
        I am interested in, Mr. Maute, what are some of the biggest
    challenges that you have seen in your list of what barriers are
    in a rural situation?
        Mr. Maute. Sure. Thank you for the question. Developing and
    building housing in rural areas, as you mentioned, there are
    several challenges. The majority of the work that we do is
    through the housing credit program, attracting investors that
    are purchasing credits at the same prices as in urban areas.
    Attracting construction debt, firm debt for small communities
    is also a challenge. The projects that we build in rural areas,
    just because of the size of the markets, are 24 units, 30
    units, maybe up to 50 or 60 units, and just are not as
    attractive to our financing partners that we want to work with.
    So, putting our capital stack together can be difficult.
        On the construction side, finding high-quality, capable
    subcontractors to build the projects is an issue. We work with
    a handful of general contractors, and a lot of times they will
    have subs that are nowhere near the geographic area that we are
    in and that they will have to work on jobs simply because they
    cannot find qualified contractors in those areas. So, it runs
    the gamut from financing to construction to filling the units
    with qualified residents.
        Chairman Hill. Would you find on the capital stack side, Do
    you have any model of working in a State with a large rural
    population where the public employees fund or something in a
    State has--I would assume if you could hit some--volume is what
    causes capital to not be attracted, just like if I cannot build
    10 houses at once, I do not want to drive an hour and a half to
    this place to start a construction job. Is there some way that
    we could mobilize retirement financing or pension financing
    because of the yields, if you have it, you think the yields
    could be competitive if they were available to a long-term
    fixed-income investor?
        Mr. Maute. Yes, that is not something that we have looked
    at personally as far as raising that sort of capital, so I do
    not know if I could really speak to that.
        Chairman Hill. How about you, Mr. Baier, any comments from
    a good banker point of view?
        Mr. Baier. Mr. Hill, I think it is a great question. I
    think we need to find all sorts of pots of capital to be able
    to address this issue. The challenge is, unlike some of my
    fellow testifiers, we are not talking about 60 units in rural
    Nebraska. We are talking about one to five units, and trying to
    generate a private sector type return on those investments is
    really difficult, and that is why in many cases our banks get
    involved in CRA activities, CDFI activities, those kinds of
    activities really to be involved in that process because
    otherwise, it does not make financial sense.
        Chairman Hill. Is it also tough on the extension of water
    and sewer in these kinds of towns, too, or is that not as big a
    barrier?
        Mr. Baier. It is a huge challenge trying to develop
    buildable lots in most of our rural communities, and I am a big
    believer in eliminating blight and substandard for that reason
    and knocking down older homes.
        Chairman Hill. Right. Thank you very much. I yield back.
        Chairman Flood. The gentleman yields back.
        The gentlewoman from Georgia, Ms. Williams, is now
    recognized for 5 minutes.
        Ms. Williams of Georgia. Thank you, Chairman Flood and
    Ranking Member Cleaver, for having this very important hearing
    today. Thank you, Mr. Cleaver, the Ranking Member of this
    subcommittee, for your work on the Strategy and Investment in
    Rural Housing Preservation Act. This would expand the USDA's
    Rural Housing Service, as well as create a new multifamily
    rental housing preservation and revitalization program that is
    very much needed.
        I might sound like a broken record because I said this the
    last time. Although I represent the fighting 5th District of
    Georgia, rural housing is important to me personally. I grew up
    in rural Alabama. I heard our Chairman, and other members talk
    about these small towns, and, Mr. Cleaver, the fireman might
    have been the police chief, but in the big city of Smiths
    Station, Alabama, where I grew up, we did not even have a
    police chief or a fireman. We have that one traffic light that
    only flashed in front of the high school. So, I know a little
    bit about rural housing because that is my lived experience.
    That is where I grew up. All of my family is still in the big
    city of Smiths Station, Alabama.
        Although I represent a district that is centered in
    metropolitan Atlanta, I get it. I get the need for rural
    housing. Not only just that, I came to Congress because as a
    Member of Congress, I understand that the policies that I enact
    impact the entire Nation. So it is important to me to have
    policies that help everyone so that future generations of
    families and children have better opportunities and more
    quality housing than I did growing up because that home that I
    grew up in rural Alabama, it was on our family land, and we
    probably did not meet all of the regulations and all of the
    codes that needed to happen because my grandpa built that home.
    It had no indoor plumbing and no running water. There are still
    people in rural America that need us to fight for them, so I
    want to make sure that we are doing that part.
        That is why I am thankful for Congressman Cleaver and
    Ranking Member Waters' work here on these important pieces of
    legislation because it is clear that while my colleagues and I
    and the Democratic Caucus are doing everything to honor
    Homeownership Month, some of my colleagues on the other side of
    the aisle are making it so much harder for homeownership in
    rural America and underserved communities. Whether it is this
    bill that we just voted on, the one big billionaire bailout or
    whatever you want to call it, or this proposed budget for next
    year. Many Americans are about to see in black and white in
    this budget which side of the aisle really cares about making
    housing affordable in this country.
        Mr. Lipsetz, research from the Consumer Financial
    Protection Bureau found that people living in rural counties
    not only tend to earn lower incomes and experience higher rates
    of poverty but are also more likely to use expensive forms of
    non-bank credit. Mr. Lipsetz, how do you think these trends
    harm the ability of rural residents to save and qualify for
    affordable housing opportunities?
        Mr. Lipsetz. Thank you, Congresswoman Williams, for your
    question. The ability for a rural household to save on average
    is quite strong, and yet the financial services surrounding
    them do not support that. My organization did an analysis some
    years ago of bank closures, and there is an astounding
    percentage of--I was trying to recall it. I was just asking--
    60-something percent of the bank branches that have closed in
    the last 30 years, you do not have financial services when you
    live in places like Smiths Station, right?
        Ms. Williams of Georgia. We had one bank, but still not
    quite enough to meet the needs of everybody who needed it.
        Mr. Lipsetz. One other piece of the puzzle that I think you
    started to hint at in your opening remarks is heirs' property.
    You come from a family property that is going to be split
    unless there are significant legal documents in place, wills
    and other things. That property is going to be split and is
    going to be in danger of loss to your family and the wealth you
    have built up in it. My organization with Fannie Mae has now
    done analysis of what the extent of heirs' property is across
    the country.
        I know this is not your question, but we are desperate to
    get Congress to take a look at the risks that half a million
    families in the United States face because their property is
    tied up in an heirs' situation that they cannot gain the full
    wealth of it.
        Ms. Williams of Georgia. Mr. Lipsetz, you are right, it was
    not part of my question, but it is very important to me, and I
    actually have bipartisan legislation that I am leading with
    Congressman Byron Donalds right here on this committee to
    address heirs' properties, so I look forward to it.
        I am running out of time here, as I always do, because I
    have so many questions when it comes to making housing
    affordable for everyone across this country. I look forward to
    working with my colleagues on this heirs' properties
    legislation that is bipartisan, that can truly help us maintain
    and build generational wealth in this country.
        Chairman Flood. The gentlewoman yields back. The gentleman
    from Tennessee, Mr. Rose, is now recognized for 5 minutes.
        Mr. Rose. Thank you, Chairman Flood and Ranking Member
    Cleaver, for holding this important hearing, and thank you to
    our witnesses for your time and being with us here today and
    sharing your expertise.
        Mr. Maute, as you may be aware, there is a current
    statutory requirement that manufactured homes be built on a
    permanent chassis, which can add, frankly, thousands of dollars
    to the cost of a manufactured home. It is my strong belief that
    this is an outdated requirement that should be removed from
    statute, and I am working on introducing legislation again this
    Congress which would do just that.
        Mr. Maute, in your opinion, would eliminating the statutory
    requirement for a chassis on every manufactured home increase
    the affordability and availability of these homes for rural
    America?
        Mr. Maute. Yes, I believe it would increase the
    affordability and allow units to be created cheaper and in a
    more efficient and quicker manner.
        Mr. Rose. I agree, and I also would say I believe it will
    open up possibilities for innovations in the manufactured
    housing space that will help us finally realize the true
    potential for manufactured housing to increase the stock of
    homes all across the country. I assume you would agree with
    that as well.
        Mr. Maute. Yes, yes, we have dipped our toe, personally, at
    my employer on looking at manufactured housing, and some of the
    technology and innovations are amazing and what it would allow
    us to do--to just sort of smooth out the construction process
    and make it predictable and not at the whims of weather would
    be great and would help things a lot.
        Mr. Rose. I would say remove the stigma maybe that is
    attached to the manufactured housing space. Do you think that
    is achievable as well?
        Mr. Maute. I do.
        Mr. Rose. Very good.
        Mr. Baier, in your testimony you highlight that Nebraska,
    like other rural areas of our great country, lacks an adequate
    supply of material vendors, contractors, and subcontractors to
    successfully build new housing units, and certainly, I hear
    this all across Tennessee. As you noted, this is a serious
    problem all across rural America. What steps can we take to
    increase the supply of these critically important skilled
    workers? Frankly, if you will, speak to why is it--normally, I
    believe markets work. Why are markets not signaling adequately
    to cause those resources to come to bear?
        Mr. Baier. Mr. Rose, thank you for the question. I would
    tell you, for me, it is a multi-pronged approach. We have to,
    as a country, begin to embrace trade and vocational education
    as first and foremost. We also have to educate parents that a
    trade occupation is a wonderful opportunity and a wonderful
    career that does not require a 4-year college education that
    comes potentially with hundreds of thousands of dollars in
    debt. As we make investments, we need to really focus our
    technical training on helping young people understand and
    embrace those opportunities and those trades.
        Mr. Rose. I could not agree more, and our Governor in
    Tennessee, Bill Lee, has done I think an exceptional job of
    focusing attention on career and technical education, what I
    call vocational education. Having been a product of that
    through agricultural education years ago, I can personally
    attest to the process of discovery that happens in our
    agriculture (ag) classrooms in helping expose young people to
    the many trades and maybe help them explore what careers might
    be of interest to them. For me, it ultimately led to a college
    degree and college education, but I still value very much the
    exposure I had to the trades as a vocational student back in
    the 1970s and 1980s, so I agree with you on that.
        Are there other things we could do that would cause the
    market to work in terms of attracting talented workers, skilled
    workers into these trades?
        Mr. Baier. I think part of that may be scholarship
    programs. It may be efforts to allow home programs to let
    community colleges or vocational schools actually build
    modulars onsite. We have a number of our community colleges
    that build one to three to five units every year and then
    auction them off. Typically, they bring more at or more than
    what the market value is of those units. So, I think as we
    think about it, we just have to get much more creative and
    invest in those opportunities. I know a lot of my banks then
    partner with those community colleges to offer sort of a first-
    time in-house mortgage to go with that modular home that is
    built at the community college.
        Mr. Rose. Thank you. I agree with everything you are
    saying.
        I want to just leave the panel with this thought. I am a
    farmer in a rural area, and my quest in life has been to
    reassemble the original land grant that John and Ann Lancaster
    acquired from the Revolutionary War, and I have succeeded to
    some degree in that, but as I have done so, I have acquired a
    number of farmsteads. So I, like many other larger farmers in
    my community, own a large number of empty houses, and we ought
    to figure out how to encourage and incentivize the owners of
    those abandoned rural houses, how to put them back into the
    housing stock.
        Thank you, Mr. Chairman. I yield back.
        Chairman Flood. The gentleman yields back. The gentlewoman
    from Michigan, Ms. Tlaib, is now recognized for 5 minutes.
        Ms. Tlaib. Thank you so much, Chairman. Thank you all so
    much for being here.
        While my district is not rural--I love my beautiful city of
    Detroit--it does still face many of the same challenges
    plaguing rural communities, as you know. No matter where you
    live, for example, we all have seen the vulnerability of our
    communities because of climate disasters, from flooding to
    fires to heatwaves. We know the climate crisis is here.
        In my district, flooding has been chronic, and many of the
    homes, to many of my seasoned residents who do not have the
    fixed income, they do not have the capability of getting the
    basement cleaned up, addressing even the increase like we are
    hearing now more than ever, mold growing in people's homes.
        In Wayne County, which is the largest county in my
    district, states of emergency have been declared, and I have
    been here since 2019, so 2019, 2021, 2023, disaster as State
    emergencies declared for severe storms and flooding. According
    to FEMA's National Risk Index, Wayne County and Oakland
    County--I have five communities in Oakland County--face risks
    from natural hazards greater than 96 percent of the U.S. census
    tracts. While climate disasters can strike anywhere, research
    has directly tied, though--this is interesting, and I know my
    ranking member would find it interesting--tied the present-day
    climate risks to historic redlining practices. Redline
    communities have suffered from reduced public and private
    investment, which impacts, again, their ability to not have
    like irreparable harm, making them again very much exposed to
    heatwaves and flooding. Similarly, many rural communities have
    suffered from the same disinvestment, as you know, and the lack
    of resources and adaptive capacity.
        Mr. Lipsetz, can you explain why historically disinvesting
    in communities, rural communities, communities like mine, how
    it has made them even more vulnerable with the climate crisis?
        Mr. Lipsetz. Congresswoman Tlaib, thank you for your
    question, and I would suggest that urban and rural markets have
    to be intertwined if this Nation's going to work well. It
    undermines our long-term political and economic viability if we
    do not see the interests that we have that are shared across
    that geography.
        More specific to your question, places like Dearborn,
    Michigan, and others that are threatened by storms, I used to
    work for Congressman John Dingell, so I know a touch about
    Dearborn.
        Ms. Tlaib. So you know about Aviation Sub, which is that--
    --
        Mr. Lipsetz. I sure do.
        Ms. Tlaib [continuing]. beautiful Detroit neighborhood
    right up against Dearborn. Both of them, it was the first time
    I have seen both of the communities coming together and saying
    we have to do something about flooding.
        Mr. Lipsetz. Yes. It is specifically what I am thinking
    about. For rural communities, when disaster strikes like
    something like there, the unfortunate reality is FEMA is not
    structured to deploy to rural places. If you take the disaster
    in North Carolina where a hurricane thousands of miles away
    wiped out small towns and communities across the hills of North
    Carolina, FEMA's ability to deploy to those areas is shockingly
    poor compared to its disaster responses for large places. That
    is what we do as Federal Government, right? We are big. We come
    in, we plop down our thing, and it is one size fits all.
        The ability for a Federal agency, if they are going to
    accept the responsibilities for disaster recovery, to be able
    to deploy both its community assistance and its individual
    assistance to these small towns needs a very firm look.
    Otherwise, we are going to leave places outside of major metro
    areas at tremendous risk for flooding.
        Ms. Tlaib. Yes, Detroit got some of the BRIC funding, the
    Building Resilient Infrastructure Communities program. It was
    really incredibly helpful. It was not a ton. People do not
    realize the $1 million, It is not even a dent into what is
    needed, and my district needs and relies, of course, on that
    Federal partnership.
        Earlier this year, when we did get the $1 million, there
    was a sense of hope among residents that we were actually going
    to try to address it. Can you speak about how shuttering the
    FEMA and programs like BRIC will impact ability for some of our
    communities? I mentioned redlining earlier, and now I feel like
    we are experiencing blue lining. I know my colleagues do not
    want to hear it, but that is what I am experiencing. I feel
    like even with our community project funding, ours got cut 70
    percent. When we were in the majority, we never cut their
    funding because Americans are Americans no matter where they
    live, and the need is the need no matter, again, their
    political affiliation. If you can talk a little bit about,
    again, the BRIC program and why that is important.
        Mr. Lipsetz. Congresswoman, that is not a program I am
    familiar enough----
        Ms. Tlaib. That is okay.
        Mr. Lipsetz [continuing]. to speak to----
        Ms. Tlaib. I do want to emphasize to my colleagues we
    should stop blue lining. Many of Americans have so many ties to
    each other. I just do not think one community should be hurt
    because of who they voted for.
        Thank you. I yield.
        Chairman Flood. The gentlewoman yields back.
        The gentleman from South Carolina, Mr. Timmons, is now
    recognized for 5 minutes.
        Mr. Timmons. Thank you, Mr. Chairman, and thank you to the
    witnesses for being here after a crazy week in the Financial
    Services Committee.
        Rural America is facing a growing housing crisis, but it is
    one we have the tools to fix. One of the clearest barriers to
    new development is the permitting process. Homebuilders back in
    South Carolina tell me that permitting delays alone can add up
    to $60,000 to the cost of building a single home. In rural
    areas, that is often enough to derail a project before it even
    begins. If we are serious about addressing the rural housing
    crisis, streamlining permitting must be a part of the solution.
        Mr. Garcia, what specific best practices should Congress
    consider promoting to reduce permitting-related costs and
    encourage more private development in rural communities?
        Mr. Garcia. Thank you, Congressman. I think there are two
    specific things that come to mind. The first is streamlining
    the requirements for specific Federal programs that provide
    critical funding for affordable housing. I think, as we heard
    earlier, many of the requirements, while well-intended, can add
    significant costs through an extended project timeline, so that
    is a critical piece, too.
        I think also providing resources for localities to
    streamline their own permitting process is really critical. We
    have a lot of municipalities that would really like to
    undertake the work of reforming the way that they plan and
    approve for housing, but they do not have the resources to do
    that, and I think that is particularly true in rural
    communities where the planning capacity is not like in larger
    cities.
        Mr. Timmons. A lot of municipalities are trying to
    encourage affordable housing, but they are kind of doing it
    through a patchwork framework that creates uncertainty. When
    you do not know what the rules are and you start a project and
    they keep moving the goalposts, it is problematic.
        I guess my question is, we have the National Flood
    Insurance Plan, which creates a framework through which people
    can create some sort of expectations. Do you think it would be
    helpful to have something similar, a menu of options that
    municipalities and local governments could use to try to create
    that best practice and create more certainty for potential
    developers?
        Mr. Garcia. Yes, I think that would be extremely helpful.
    Uncertainty is a huge barrier to development in any community,
    and to the extent a community can make the rules clear and
    precise up front, that will be a big help for getting more
    housing built.
        Mr. Timmons. Thank you for that. To you, Mr. Maute, in your
    experience working with rural communities, how does permitting
    delays or regulatory complexity affect your ability to get new
    housing projects off the ground?
        Mr. Maute. Thank you for the question. Yes, permitting
    delays, local approvals, whether it is water, sewer, tap fees,
    add a lot of uncertainty. Sometimes the goalpost is moved where
    we are anticipating one set of fees, one set of review process,
    and we go to submit our plans, our specs, and move through it,
    and it changes. So, it does create a lot of delays, a lot of
    problems, and it is mostly all tied to uncertainty, as Mr.
    Garcia stated. Knowing what something is going to be when we go
    in is paramount to our success and working with municipalities
    that understand that would also be extremely helpful.
        Mr. Timmons. Our country has seen an incredible opportunity
    using telehealth to reach rural communities that do not have
    access to good doctors. Is there a world in which we could use
    tele-inspections to streamline the permitting process, to
    streamline the inspection process? I am not saying it would
    work in every circumstance, but after maybe a year of in-person
    inspections where the contractor and the subcontractor were
    able to show that they were competent, is there a world in
    which we could transition to predominantly using videos and
    submitting them to reduce travel time of inspectors and just
    streamline these processes? Mr. Maute, is that something that
    you think would work?
        Mr. Maute. Yes, I do think that would work, and we are
    seeing it work. Following the pandemic, a lot of inspections
    went from being in person to being virtual, whether it was
    submitting videos, to as simple as someone carrying their phone
    and FaceTiming or Skyping with folks to show them the work that
    had been done. Those inspections, those review processes were
    just as efficient, if not more, than the in-person inspections.
    I do not think anything was lost when we did that and are
    continuing to do that.
        Mr. Timmons. If somebody was incentivized to create a
    really good video that would cut down on travel time and allow
    someone to basically spend 15, 20 minutes, whereas a personal
    inspection would take hours. I just feel like that is a really
    easy, streamlined, cost-saving mechanism and delays, time is
    money, and if we could streamline that portion, I think it
    would be a step in the right direction.
        I am out of time. I thank the witnesses for being here
    today. With that, Mr. Chairman, I yield back.
        Chairman Flood. The gentleman yields back.
        The gentleman from Wisconsin, Mr. Fitzgerald, is now
    recognized for 5 minutes.
        Mr. Fitzgerald. Thank you, Chairman.
        Obviously, you are well aware we have a situation where
    there are just many young adults who cannot afford a down
    payment on a home, and builders are not necessarily
    incentivized to create enough starter homes or entry-level
    homes for younger generations to begin to build wealth. Instead
    of the Federal Government being the answer to everything, I
    know there are some attempts at the local level, and I would
    love to hear if you are aware of some of those.
        The example I continue to cite is the Next Generation
    Housing Initiative. It is in Washington County, which is in my
    district in Wisconsin. It is a locally driven effort to expand
    affordable home ownership for middle-income families by
    developing about 1,000 units of new owner-occupied homes by
    2032. This is real. This is really happening right now. It was
    backed by $10 million, which was a county investment. The
    program provided infrastructure subsidies to developers and
    down payment assistance to buyers, up to $20,000 per home. What
    it does is it sets kind of a clear affordability target. It
    requires that 40 percent of the homes be sold under $340,000,
    and all of them have to be under $420,000, all right? So, I
    think there are some things we could do at the Federal level to
    assist some of these types of programs to reduce development
    costs and expand housing options. The initiative also promotes
    zoning reforms, which talk to any Wisconsin home builder right
    now, is a big part. We talked a little bit about the
    underground and everything, all the prep that needs to be done
    before a lot is ready to go and then a public-private advisory
    group that oversees the effort.
        There are some other options, too. There is some
    volunteerism that young couples can get engaged in if they want
    to earn some of those credits.
        I think, Mr. Maute, have you heard of any of these types of
    programs? Are you aware of anything that is being done at the
    local level that is similar to this?
        Mr. Maute. Where I work, we focus solely on multifamily, so
    I am not as familiar with some of the single-family programs.
    There are some States we operate in that will have a single-
    family State housing credit that folks can use. As far as on my
    day-to-day in utilizing those programs, I have not.
        Mr. Fitzgerald. Yes. Mr. Garcia, are you aware of anything?
    I know there was some stuff--the last time we had a hearing, I
    think it was in mid-May, there was some discussion about a
    program in Colorado that is very similar in some smaller
    mountainous towns I know.
        Mr. Garcia. I think there are a couple examples, both at
    the State level and the local level, where you have assistance
    for first-time homebuyers or just homebuyers in general.
    California has a statewide program called Dream for All. I
    think it is wildly oversubscribed, which tells you about the
    need for something like down payment assistance, and I think
    there is something to that.
        I think the challenge is, without a commensurate increase
    in housing supply, you are not necessarily going to drive the
    cost of the housing down, so the down payment assistance is
    useful. We also need to think about, okay, we need to increase
    housing supply overall.
        So, to your point about no incentive to build, say, starter
    homes, this is where a lot of the zoning reform, land use
    regulation changes come into play. Where you zone and plan for
    smaller starter homes that we used to build pretty routinely.
    Those are the kinds of things that if we can get the market
    working right to provide those, those are going to be naturally
    more attainable than the kind of larger homes that we see going
    for kind of exorbitant prices today.
        Mr. Fitzgerald. Right. Density should be our friend in many
    of these projects, right? Not everybody can have a three-
    bedroom, two-bathroom home. A lot of what is needed are these
    starter-type homes.
        I was just going to ask, Mr. Baier, do you see a role for--
    and have you experienced in the banking industry a role for
    financial institutions on this front?
        Mr. Baier. I appreciate the question. As I begin to think
    about my State, we are seeing partnerships. To your point,
    volume is really where we are at in terms of keeping costs down
    and providing the supply of homes. We currently, under our
    Rural Workforce Housing Program, have four different towns that
    have literally contracted with one townhouse developer because
    there was not enough demand in one community. They are then
    literally pooling their resources and saying, my community will
    guarantee 12, my community will guarantee 20, and this
    developer now is ready to embrace 40 to 60 townhomes in a very
    rural area. So, we think that volume is important. Our banks
    are coupling that with, again, low-interest loans or first-time
    homebuyer loans as part of that process.
        I applaud the work that you have done with the Access to
    Credit for our Rural Economy (ACRE) Act, which would, again,
    provide another tool----
        Mr. Fitzgerald. Yes.
        Mr. Baier [continuing]. to help with lower-cost mortgages.
    I think there are a lot of opportunities out there to build
    volume and keep costs down.
        Mr. Fitzgerald. Thank you for being here. I yield back.
        Chairman Flood. Thank you. The gentleman yields back.
        The gentlewoman from Massachusetts, Ms. Pressley, is now
    recognized for 5 minutes.
        Ms. Pressley. Thank you, Chairman Flood and Ranking Member
    Cleaver, for this truly critical hearing.
        As I have said many times before, housing is the number one
    issue I hear about from my constituents in the Massachusetts
    7th, and I am sure it is the same for all of my colleagues
    representing rural districts. Urban and rural housing issues,
    urban and rural housing issues are not opposites and not
    totally different.
        When we talk about rural housing, we cannot ignore the
    ripple effects of public health crises such as the opioid
    epidemic and how they intersect with housing insecurity and
    incarceration. To illustrate this point, let me tell you two
    stories that on the surface may look different, but at their
    core are remarkably similar.
        A story not uncommon in major cities is that of Emiliano,
    who lived in public housing his entire life, but after he
    served time for a nonviolent drug offense, he was barred from
    returning home. Unable to find employment due to his record, he
    started his own business and began the difficult journey of
    rebuilding his life but every time he applied for housing, his
    record shut the door in his face. Despite doing everything
    right, he lacked stable housing and has to stay with different
    relatives couch-surfing. He served his punishment, but he was
    still being penalized for no legitimate reason.
        In rural districts, there are stories like Maria, a mother
    of two who became addicted to opioids after a workplace injury.
    She was convicted for a possession charge and never served time
    but in her small town, there are only a few landlords, and they
    use third-party screening services that automatically flag
    anyone with a record. Like Emiliano, she was shut out before
    she even got a fair chance. With no place to go, her kids were
    placed into foster care, and she had to live in her car trying
    to fight addiction while rebuilding from nothing.
        These stories, one urban, one rural, are playing out all
    over the country. The opioid crisis, mass incarceration crisis,
    and the housing crisis are not separate issues. They are deeply
    connected. This is why I introduced the Housing First Act to
    ensure old or irrelevant criminal records do not deny people
    who are trying to reenter society and rebuild their lives to
    provide them with ability to access housing.
        Mr. Lipsetz, in your view, would improving access to
    housing for people with criminal records, including those
    recovering from opioid addiction, reduce recidivism and improve
    community stability?
        Mr. Lipsetz. Thank you for your question, Congresswoman. At
    the beginning of this hearing, Chairman Flood gave a perfect
    description of how housers like us sitting here do not need to
    be in the business of who is moving into the unit. We need to
    provide excellent units, high quality, and if they are coming
    in with a record of having served time or other issues, that is
    not our business. That is overregulation and overreach by the
    Federal Government. We need to be able to equally house folks
    who are coming into our front doors without asking us, as the
    owners or financiers of these properties, anything about that
    personal record.
        I would gladly house the families that you are talking
    about in the units we work with, and we are able to as a CDFI
    unless there are other public moneys in the property. That is
    not my business. I am a houser, and every single American who
    knocks on the front door, who needs a place to live, that is my
    job.
        Ms. Pressley. Thank you. Mr. Lipsetz, have you seen models
    of public housing agencies or nonprofits partnering with
    treatment or reentry programs to implement this kind of
    supportive housing approach?
        Mr. Lipsetz. Yes, not for my current work, but for a
    previous employer. I did see Oakland Housing Authority
    partnering with its county to do reentry programs, being able
    to set aside some of its Section 9 public housing units for
    that use specifically. It was an extraordinarily well-received
    program in the city of Oakland and functional for the families
    that had someone coming back, a head of household who had been
    incarcerated, to reunite with children. It is not a rural
    story----
        Ms. Pressley. Thank you.
        Mr. Lipsetz [continuing]. I am telling you.
        Ms. Pressley. Thank you. Thank you very much. So the point
    is, if we do not make safe and affordable housing accessible to
    people who are trying to get back on their feet, overcome their
    drug addiction, and just provide for their families, we are
    just reinforcing the cycle of homelessness and incarceration.
    Sam agrees.
        My Housing First Act offers a pathway to treat people with
    dignity and to break this vicious cycle in urban, suburban, and
    rural communities.
        Thank you, and I yield back.
        Ms. De La Cruz [presiding]. Thank you. Hello, good
    afternoon. I would like to recognize myself, Congresswoman
    Monica de la Cruz.
        I have the honor of representing a rural district in deep
    south Texas on the border, McAllen. Housing is something of
    great importance, not only because it is a rural community, but
    also because of the economic challenges that we have down
    there. I am committed to finding affordable housing solutions
    for the people in my district and really for across the
    country.
        South Texas is seeing innovative building solutions. As you
    know, the population of Texas is increasing by leaps and
    bounds, and so we are looking for low-cost solutions. There is
    a Starbucks locally that has opened a 3D-printed building, a
    3D-printed Starbucks. It is a low-cost modular. Low-cost
    modular homes are being constructed in rural areas by
    nonprofits, ``come dream. come build'' in partnership with
    multiple U.S. banks. There is the largest 3D neighborhood
    nearing completion in the State of Texas. These are innovative
    solutions to our building and housing challenges.
        My question is for Mr. Garcia. What do you see as the
    largest obstacle private companies face when seeking to deliver
    low-cost, innovative housing solutions like modular or 3D-
    printed homes to our rural communities?
        Mr. Garcia. Thank you for the question, Congresswoman.
    There are a few challenges that offsite or industrialized
    construction builders face. The first is that many times local
    rules or regulations do not allow for that kind of housing to
    be sited in specific neighborhoods. So, you may have a zoning
    regulation that forbids any type of manufactured housing that
    may be rooted in kind of an outdated view of what manufactured
    housing really is or looks like.
        Ms. De La Cruz. Those would be local policies, correct?
        Mr. Garcia. Those are local, yes. We mentioned this
    earlier, but there are some outdated rules at HUD that we
    should be examining and revising as well. There is mention of
    the permanent steel chassis rule. If we were to remove that, it
    would reduce costs and time to build manufactured housing
    pretty significantly and, particularly in places where you have
    a high cost of housing, those kinds of changes can be really
    impactful to bring more affordable housing.
        Ms. De La Cruz. For the American public that is listening
    right now, what is the chassis rule?
        Mr. Garcia. So the chassis rule is essentially a rule by
    HUD that says that any home that is manufactured needs to have
    a steel chassis to be permanently--or if it is not going to be
    permanently affixed, so that it can be moved, even though the
    vast majority of manufactured homes never move once they are
    sited. So, we have an unnecessary amount of extra materials
    that go into a manufactured home that really do not need to be
    there.
        Ms. De La Cruz. What is the percentage of manufactured
    homes that actually move?
        Mr. Garcia. I think it is pretty low. I do not have a
    statistic off the top of my head, but it is shockingly low.
        Ms. De La Cruz. Thank you. We need to continue to innovate
    and find solutions to the challenges that our rural housing
    communities are facing. Data from the National Association of
    Realtors shows we are only building one new home for every two
    new jobs created nationally and this ratio is often worse in
    rural communities. Meanwhile, rural housing development faces
    unique infrastructure challenges, including inadequate roads,
    utilities, and broadband access, plus higher per-unit
    construction costs due to smaller project scales.
        Mr. Garcia, again, what specific Federal programs or policy
    changes would you recommend to make rural housing construction
    economically viable for developers?
        Mr. Garcia. Thank you for the question. I think to make
    more projects economically viable; we really just need to look
    at the cost of construction. As we noted earlier, costs of
    construction are high across the country, but are particularly,
    I would say, harmful in rural communities where it costs more
    to bring materials to the sites, it costs more to source labor
    and contractors. So, anything we can do to bring down materials
    and labor costs is going to be really important to making those
    projects work better.
        Ms. De La Cruz. Thank you. I yield back.
        I now recognize the gentleman from Montana. Mr. Downing is
    now recognized for 5 minutes.
        Mr. Downing. Thank you, Madam Chair, and I thank the
    chairman for putting this together. I really appreciate the
    constructive dialog today on barriers to rural housing
    development.
        Just a couple of stats. Montana's 2nd Congressional
    District that I represent is the largest by land mass after
    Alaska, so we have a lot of dirt and a lot of long roads. A
    couple of things I have talked about in this committee, in the
    past, but I really think about the path to ownership being that
    fundamental part of the American dream, and I think of the
    limiting factors there. I talk to folks about the small amount
    of increase in building a home and how many potential buyers
    that even a small, modest increase price out of the market and
    how important that is.
        Something that really sticks in my mind is the 24 percent
    of the current average single-family home sale price is from
    regulations across all levels of government, so things that I
    think about.
        I am going to shift gears here for a second because I would
    like to focus my initial questions on communities that are
    frequently left out of these discussions, and those are tribal
    communities. Montana is home to seven federally recognized
    Indian reservations, and each one plays a critical role to the
    local community and culture. Native American residents in
    Montana, especially those living on reservations, experience
    significantly lower homeownerships, up to 12 percent lower than
    Montana's overall population.
        I am going to start with Mr. Garcia. Can you describe the
    unique challenges that Native Americans face when it comes to
    homeownership?
        Mr. Garcia. Thank you for the question, Congressman.
        Some of the unique challenges include pretty significant
    rates of poverty. When you have that kind of impoverishment in
    any community, it is going to be difficult for them to not just
    pay the rent but save any sort of money to make a down payment
    and build wealth.
        I think the other challenge that they can face is just
    access to credit and financing sources. It is just not
    available to the tribal communities like they are to the
    broader public.
        Mr. Downing. Thank you. Mr. Lipsetz, do you have anything
    to add to that?
        Mr. Lipsetz. Thank you, Congressman. Yes, we have actually
    worked with the Northern Cheyenne Tribe in your district quite
    a bit, and it is access to credit. It is not just the
    regulatory costs that you were mentioning, 24 percent, which I
    think everybody here finds a challenge with that, but the cost
    of capital delivered to the reservation without a well-
    structured banking environment, or a lot of financial services
    is going to cost the individual family more.
        One of the few ways that I have seen that addressed well is
    there is a very strong network of native CDFIs that can de-risk
    that lending for private organizations. They are not trying to
    grab market share. They are bringing in a portion of the cost
    of the house to bring it down for the private lender, and being
    able to fund those native CDFIs is a not-small piece of the
    puzzle.
        Mr. Downing. Thank you. Back to Mr. Garcia. What
    combination of Federal housing assistance and technical support
    can help rural native communities leverage private sector
    investments?
        Mr. Garcia. I do not know if I have a good answer to that
    question. I would defer back to some of my colleagues on that.
        Mr. Downing. Mr. Lipsetz?
        Mr. Lipsetz. I am sorry, sir. Could you repeat the
    question?
        Mr. Downing. What combination of Federal housing assistance
    and technical support can help rural native communities
    leverage private sector investments?
        Mr. Lipsetz. As housers, it is the hardest part of the
    portfolio to support. Native housing on reservation is
    extraordinarily expensive and challenging. There is a piece in
    the Rural Housing Service Reform Act sponsored by Senator
    Rounds and Senator Smith, a bipartisan piece of legislation
    that would take USDA's 502 Direct program, take a portion of
    the funding for that, and lend it to the tribe. The tribe
    itself then can make the loan to the individual household on
    the ground, and they have done this successfully in a
    demonstration program.
        If RHS Reform Act moves, I strongly recommend that being
    one of the principles in there because folks like Northern
    Cheyenne and others can actually then access a loan from a
    trusted lender on reservation.
        Mr. Downing. Thank you. In my last seconds here, I am going
    to switch gears to housing more generally. I will go to Mr.
    Baier. What role can public-private partnerships play in
    addressing rural housing shortages? What are some effective
    models you have seen that align private capital with local or
    regional development goals?
        Mr. Baier. Great. Thank you for the question. I think a lot
    of it, first and foremost, is on lot development, making sure
    we have a place to place homes in terms of public-private
    partnerships, and then also developing those partnerships
    between local developers and the various tools we have talked
    about at the State level and eliminating friction that exists
    because right now, it is almost impossible because of the
    friction to make them doable.
        Mr. Downing. Right. Thank you. Unfortunately, I have run
    out of time, so Madam Chair, I yield.
        Ms. De La Cruz. Thank you. The gentlewoman from Colorado,
    Ms. Pettersen, is now recognized for 5 minutes.
        Ms. Pettersen. Thank you, Madam Chairwoman, and thank you
    to everybody for being here today. My name is Brittany
    Pettersen. I represent Colorado's 7th congressional District.
    This is Sam. Hopefully, he will be good throughout this
    testimony.
        I really appreciate the conversation on an issue that is so
    important to my State, to all of us across the country. In
    Colorado, we are dealing with unique challenges as we have seen
    climate continue to increase costs for insurance and because of
    the climate disasters that have been coming throughout
    Colorado, increased wildfires and hail. This is Davis. He is
    not being as good as the baby here, buddy.
        Our State is being hit with not just an undersupply of
    housing but also the rising insurance costs. We have seen that
    some people are unable to get insurance at all. Right now, we
    are actually 100,000 homes short of what is needed, and the
    premiums for insurance are nearly up 60 percent. The number one
    driver is from hail damage. So we know we are seeing this
    crisis across the country, and nationally, prices have surged
    nearly 50 percent, and rent is up over 25 percent over the last
    5 years.
        Unfortunately, instead of actually addressing these
    challenges, the Trump Administration has delayed housing
    funding, undermined the agency's task with housing assistance,
    and the President has proposed slashing housing investments
    across the country. This would be devastating to Colorado and
    our urban communities, but also especially our rural
    communities. We have also seen an increase in costs because of
    the instability with tariffs and the rising costs there as
    well.
        So, Mr. Lipsetz, as we have seen more extreme climate-
    driven natural disasters across the country, and unfortunately,
    the move to eliminate the BRIC program, which invests in pre-
    disaster mitigation and strengthens our resiliency. Since I led
    a letter opposing this and demanding an answer and still have
    not received anything from the administration on their move to
    do this, can you please answer, to take a stab at it since we
    have not heard back, and what opportunities the BRIC program
    provided and how important it is?
        Mr. Lipsetz. As I said to your colleague from Michigan just
    a bit ago, the BRIC program is not something I have expertise
    in. It is not a program I know well. I know that most of the
    work we do at the Federal level, we do not have a lot of
    regulatory control over insurance and insurance costs, but that
    the borrowers that we work with are facing much higher
    increases than you just described because it is mostly in the
    multifamily sector facing significant costs from that.
        Our effort at the Federal level has been more for
    resiliency. We have called for better per-unit funding for
    programs so that we can get ahead of disaster, so that we can
    make the homes more resilient and be able to work with the
    insurance companies to bring that cost down. BRIC is, again,
    not a program I know well.
        Ms. Pettersen. Thank you for answering that. I know it is
    important when we look at building resiliency and how we are
    building new types of homes and thinking about things
    differently with climate change. The Trump Administration's
    budget proposal eliminates a majority of rural housing
    programs, including Section 502, the single-family direct
    loans, the Section 523 mutual and self-help housing grants, and
    the 523 land development loans, which is alarming to me when I
    think about the challenges some of my mountain communities are
    facing when we have seen an increase in people moving there as
    they are able to work remotely and people who have lived there
    their entire lives being unable to stay in their communities.
    So, can you speak on the effectiveness of these housing
    programs and the impacts to our rural communities?
        Mr. Lipsetz. I would love to. The proposal in the
    President's budget would be devastating for rural communities.
    To zero out the programs that are funding some of the only
    development happening in those towns would be an unconscionable
    move for those folks.
        I have to commend the House and the leadership in the House
    now of the mark that you guys put together for the budget of
    restoring some of those programs, so thank you very much.
    Breathe a small sigh of relief. Hopefully, we are not talking
    about zeroing out some of the only production and preservation
    programs that Colorado families and others are depending on.
        Specific to the 502 Direct program, this is an
    extraordinarily effective program where you are taking families
    at some of the lowest credit score levels with modest income,
    putting them into home ownership for only about $9,000 per unit
    for a lifetime. It is an important program.
        Ms. De La Cruz. Time has expired.
        Ms. Pettersen. Oh, thank you, Madam Chairwoman, and thank
    you for your comments.
        Ms. De La Cruz. The chair now recognizes the gentleman from
    Iowa. Mr. Nunn is recognized for 5 minutes.
        Mr. Nunn. Thank you very much, Madam Chairwoman, for
    holding this, and thank you very much for the panel being here
    talking on a very important issue, affordable housing,
    particularly rural affordable housing in places like Iowa.
        Iowa, like much of America, faces a growing affordable
    housing crisis. Nearly 40 percent of Iowans spend at least 1/3
    of their overall take-home salary just on being able to afford
    a place to live, and it is not that expensive, my friends, in
    Iowa.
        Our rural communities are already grappling with population
    decline and economic strain, risk of losing the very housing
    that keeps seniors, families, working Iowans, farmers rooted in
    our most rural communities. My constituents are not asking for
    a handout. Let us be clear. They are asking for a fair chance
    to live where their parents and their grandparents worked,
    where they worshipped, where they started a new life.
        Modernizing USDA's delivery system, expanding loan terms
    from 2 to 5 years, and allowing funding for site development
    activities like surveying and design, these reforms do not
    represent radical ideas, they represent common sense. They help
    us root out fraud, and they advance meaningful reform. We
    recognize this common sense in Iowa, which is why I have worked
    with my friend across the aisle, Ranking Member Cleaver here,
    on delivering bipartisan reforms to USDA's rural housing
    program.
        Mr. Lipsetz, I am going to turn to you. I know you are the
    Democrats' witness, but I think we are looking for
    comprehensive bipartisan solutions here. One of the programs we
    are reviewing is Section 515, which just happens to be the area
    code for rural Iowa and Des Moines. A program that Iowa adopted
    earlier, today the State manages about 180 properties and more
    than 3,600 apartment units under this program. These properties
    provide critical housing in towns where no other affordable
    housing option exists, but we are losing them, and we are
    losing them quickly. When you work with many of these
    properties that you are working with today, what challenges do
    you see in recapitalizing them?
        Mr. Lipsetz. Thank you for your question, Congressman. I
    think, as you may have heard throughout this hearing, you would
    be hard-pressed to pick a Democratic or Republican witness out.
    It might have been who invited us, but there has been an
    extraordinary amount of continuity across, in the same way that
    your work with Congressman Cleaver represents the Strategy and
    Investment in the Rural Housing Preservation Act. It lays out
    an authorization for programs that are needed for that
    capitalization. You are authorizing $200 million a year for the
    Multi-Family Housing Preservation and Revitalization (MPR)
    program at USDA, which would do exactly what you just called
    for.
        If we gain the support of the rest of the members around,
    that bill also does one of the most fundamental elements you
    could do for the multifamily housing programs at USDA, which is
    to decouple rental assistance from the mortgage. The moment you
    pay your last mortgage payment, you have lost your ability to
    get that very modest subsidy to continue to house folks who are
    in the building today, decouple the two, allow for the rental
    assistance to continue, and you have helped a small business
    person in Iowa or someone else whose business just happens to
    be owning property and renting it out to continue to work.
        Without that reform, the 380,000 units that remain are gone
    in 20 years. My organization has done that analysis. Two years
    from now, 2027, the rate of decline of the program is going to
    skyrocket. It is crisis time. Like we need action on that, and
    a lot of it shows up in the Strategy and Investment in Rural
    Housing Preservation Act that you have been involved with, and
    I am thrilled to see you pushing that agenda.
        Mr. Nunn. Mr. Lipsetz, thank you, and I think you are
    absolutely right. This is a crisis we can avert if we start
    working on it today. Again, I want to say thank you to the
    bipartisan effort on this.
        Mr. Maute, I will turn to you, the work that you have done
    as well. One of the challenges that I think we have noted here
    is outdated technology and limited USDA staffing undermining
    the government's ability to track compliance, waste, fraud, and
    abuse, and then USDA becomes a roadblock for a lot of this
    rather than an aid. Could you talk to us a little bit about
    what we could do to help fix the USDA challenges?
        Mr. Maute. Absolutely. Thank you for the question. So yes,
    RD is full of great people and great staff that care a lot
    about what they do. They are certainly hampered by their
    outdated technology. Their information technology (IT) is, no
    exaggeration, 35 to 40 years behind. Us as borrowers and owners
    cannot simply go on and look at a loan balance. We have to
    contact someone to do that for us. So one, investments in IT,
    investments in staff and training would go a long way to speed
    up the approval processes that we need to develop the housing
    that we build.
        At CARH, we met with both USDA and HUD staff early this
    year and presented memos to them on ways to improve their
    procedures and their work that they do, and we have submitted
    those to the committee for review.
        Mr. Nunn. Thank you very much. This is coming directly from
    my homeowners, my property builders in Iowa, as well as those
    who want to rent. Let us have it stronger going forward.
        Thank you, Madam Chair, for the opportunity to join.
        Ms. De La Cruz. The gentlewoman from Oregon is now
    recognized, Ms. Bynum, for 5 minutes.
        Ms. Bynum. Thank you, Madam Chair.
        USDA Rural Housing Service and Federal Housing
    Administration programs serve as crucial lifelines for
    homeownership in rural America, and rural communities face
    unique challenges with limited access to credit, which
    restricts funding options for potential homebuyers. These
    Federal programs also provide affordable financing options that
    would not otherwise exist in many rural communities, and I
    believe that we should look to find ways to strengthen these
    programs and not cut them so that they are reaching more
    families.
        My question is for Mr. Lipsetz. What specific improvements
    to USDA Rural Housing Service and Fair Housing Administration
    (FHA) programs would you recommend to better serve rural
    homebuyers and how can we streamline these programs to make
    them more accessible while ensuring they are adequately funded
    and staffed to meet growing demand in underserved rural
    markets?
        Mr. Lipsetz. Congresswoman, thank you for the question.
    Very specifically, extend the loan terms of the 502 loan up to
    40 years to help more households qualify. Allow USDA to release
    502 borrowers from liability when their loan is assumed or
    transferred to a new borrower. Clarify for them that homeowners
    with a Section 502 loan can operate in-home childcare centers
    and the other things which are very common in rural places. We
    use our homes for many things, including our small businesses.
    Allow for properties with existing Accessory Dwelling Units
    (ADUs) to be eligible also for the 502 Guarantee Program.
        These are all common sense, bipartisan reforms that we just
    talked about, the Strategy and Investment in Rural Housing
    Preservation Act, which your ranking member and colleague have
    supported. There is a Rural Housing Service Reform Act, which
    takes all of those principles and expands it to include the
    things I just listed for USDA's single-family housing programs.
    This is often the only loan that is happening for rural
    homeowners to be able to use in some of these towns. Take those
    away, and we are going to significantly reduce the number of
    homeowners in small towns building generational wealth and
    housing their families in a decent manner.
        Ms. Bynum. Thank you. Also, my second question, Mr.
    Lipsetz, is President Trump's proposed budget cuts to the USDA
    by $7 billion and the Department of Housing and Urban
    Development by $33 billion, do you think that this will make
    these programs more effective at helping to lower the cost of
    housing or less?
        Mr. Lipsetz. Thank you for your question. Far less. What we
    do as rural housing folks is we are seeding local economies
    with housing preservation and production that allows the
    private market to grow. These are places where the private
    market is not functioning well and needs a bit of gas in the
    tank through CDFIs, through the programs at USDA and HUD. If
    you can get that dollar to a local community, the members in
    CARH, who sits next to me, can take those and use them as
    private owners to continue to develop. Right now, the level of
    dysfunction in some of these local economies is not allowing
    them to move forward.
        If you take that little--little, by the prospect of the
    whole Federal Government--if you take that little bit of
    subsidy out, you are never going to build a private market to
    function there, and you are certainly not going to house the
    folks who are there today who need it right now.
        Ms. Bynum. So, do you expect rural homebuyers would be
    benefited by cuts to programs designed to address rural housing
    affordability issues?
        Mr. Lipsetz. Certainly not, and I commend the House on
    their mark of having restored many of those programs compared
    to the President's budget. It was a bold move on your part and
    much appreciated from a small-town perspective.
        Ms. Bynum. Thank you. I think, Madam Chair, it is critical
    that we use our responsibility as members sitting on this
    committee to examine the root causes of why fewer and fewer
    people, especially younger Americans and people in rural areas,
    believe that the path to homeownership is becoming
    unattainable. I think everyone on this committee can agree that
    we are going through a housing crisis in this country. When the
    cost of building and buying a home is at record highs, we
    should be bolstering homeownership and homebuilding programs,
    not cutting them. So, let us make owning a home an attainable
    goal for all Americans.
        Thank you, Madam Chair. I yield back.
        Ms. De La Cruz. I would like to thank all the witnesses for
    their testimony today.
        Without objection, all members will have five legislative
    days to submit additional written requests for the witnesses to
    the chair. The questions will be forwarded to the witnesses for
    their response. Witnesses, please respond no later than July
    17, 2025.

        [The information referred to can be found in the appendix.]

        This hearing is now adjourned.

        [Whereupon, at 3:12 p.m., the subcommittee was adjourned.]

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