[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
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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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