[Congressional Record Volume 143, Number 56 (Monday, May 5, 1997)]
[Extensions of Remarks]
[Page E826]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF THE MULTIFAMILY HOUSING REFORM AND AFFORDABILITY ACT

                                 ______
                                 

                          HON. JAMES P. MORAN

                              of virginia

                    in the house of representatives

                         Thursday, May 1, 1997

  Mr. MORAN. Mr. Speaker, today, I along with my colleague Deborah 
Pryce, are introducing legislation to address HUD's mark-to-market 
approach and portfolio restructuring of section 8 housing. For the past 
2 years, Congress has been faced with the question of how to address 
the pending expiration of section 8 contracts on some 800,000 units of 
affordable housing nationwide. During this fiscal year and with greater 
frequency into the next century, affordable rental housing units 
assisted under the section 8 program are at risk.
  Properties assisted under the section 8 program and the many 
thousands of families, seniors, and disabled who live in section 8 
housing, are hurt by uncertainty about the future. They are all at risk 
because this program must be reformed in order to survive. From a cost 
standpoint, program accountability and program administration by HUD, 
section 8 has become a convenient political scapegoat.
  We must acknowledge that there is some truth in the criticisms made 
about this program. I have joined with my colleagues in questioning the 
long-term cost-effectiveness of maintaining the current HUD section 8 
program. I am concerned when I read public accounts that document the 
fact that rents on section 8 assisted rental housing units are far 
above what could reasonably be considered market rates. I am concerned 
when this Government provides billions of dollars of rental subsidies 
only to be made painfully aware of the neglect, and in some cases, 
outright fraud committed by owners and managers of such assisted 
housing units. I am also concerned when HUD representatives say they 
lack the capacity to administer this program effectively. As a former 
mayor, I wonder who at the local level will be the first to step 
forward to take HUD's place. In an age when we have begun to end 
welfare as we know it, I am also concerned how we can justify the 
provision of rental assistance to individuals who are allowed to hold 
on to such assistance for an indefinite period of time. At the same 
time, thousands wait years for a chance to receive assistance that is 
in short supply.
  These concerns have been discussed at length in Congress. The 
problems and concerns we face in the long-term provision of affordable 
housing in this country are well documented. A shrinking HUD budget and 
the cost of renewing section 8 at current rents are on a collision 
course destined to lead us to drastic measures and hard choices. Within 
the next 5 years, contracts on more than 2.7 million units, more than 
90 percent of the entire section 8 low-income housing stock, will 
expire. Estimates show that by the year 2002, the cost to renew all 
contracts under the current program will be between $17 and $20 billion 
annually: a cost equal to HUD's entire current budget. Faced with this 
reality, we have relied for 2 years on Band-aids of demonstration 
programs and 1-year appropriations.
  While I congratulate and respect the work and creativity of my 
colleagues in the House and Senate who have faced this issue, I believe 
the time for temporary fixes has ended. We must act to define and enact 
responsible legislation of a permanent nature. We owe that to the 
residents of this housing, to the responsible owners and managers who 
care for it, to the financial institutions that have a stake in its 
financial future and to the American public who have invested hard-
earned tax dollars to support its development and preservation since 
the mid-1970's.
  The proposal we are introducing today builds on a proposal introduced 
late last session by Senator Connie Mack. The principle focus of both 
our bills is to reduce the cost of the section 8 program and provide 
the certainty of continued housing assistance for those in need. This 
legislation provides a way to address this matter responsibly. Our 
reform proposal reins in exorbitant rental contracts that can reach 180 
percent of the fair market rent. Existing debts on all FHA-insured 
properties are restructured to lower operating and maintenance costs, 
and bring Federal rent subsidies down to local market levels. In 
return, owners of multifamily housing must agree to maintain the 
property for low-income tenants for at least another 20 years.
  Owners who wish to renew their section 8 contracts without going 
through the restructuring process can do so as long as the current 
rents do not exceed 120 percent of the fair market rent. In light of 
HUD's diminishing administrative capacity and budget reductions, the 
responsibility for restructuring can be assumed by State housing 
finance agencies or State-qualified local agencies. Residents should be 
given opportunities to comment and participate in the program. 
Negligent owners, who have materially violated their regulatory 
agreements, would be barred from the new program and encouraged to sell 
the property to resident groups, nonprofits, or other entities willing 
to participate in the new program. I would also not rule out 
strengthening the bankruptcy laws to increase recovery from negligent 
owners and imposing tougher sanctions on owners who abuse the new 
program. These reforms have a potential to save the program by 
preserving a large share of the existing units, reducing the number of 
potential evictions, lowering the risk to the FHA insurance fund and 
saving precious tax dollars.
  In closing I welcome the interest and support of all Members who 
believe, as I do, that this issue must be resolved promptly and 
responsibly. I believe that the action taken here today is a step to 
encourage a more detailed discussion and thorough debate on an issue we 
can no longer defer. I look forward to working with my colleagues on 
the Banking Committee as well as the Appropriations Committee, on which 
I serve, who will take the lead in reaching a fair and reasonable 
solution.

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