[Congressional Record Volume 144, Number 79 (Wednesday, June 17, 1998)]
[Senate]
[Pages S6501-S6503]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       LACK OF AFFORDABLE HOUSING

 Mr. KERREY. Mr. President, today, I want to speak on an issue 
of critical importance to my state of Nebraska. Whenever I travel back 
to the Good Life, what Nebraskans call their home, the one issue that 
always percolates to the top of any conversation is the lack of 
affordable housing, and this issue can dominate any spirited civic 
dialogue in our smaller communities throughout the state.
  Talking with city officials, economic development groups, community 
planners, chambers of commerce representatives, and any of the town 
people who are deeply concerned about the prospects of their community, 
it is apparent to me, as sure as the Nebraska summer sky is blue, that 
more needs to be done to make sure communities

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have the necessary tools to produce affordable housing and create more 
home ownership opportunities.
  Home ownership should not be a far away dream, it should be a choice 
for many more Americans. Owning a home, some say, is not a right or 
privilege. I say owning a home is part of the American dream and should 
be a reachable goal for more Americans.
  There are great examples of home ownership programs throughout this 
country, and I would like to share with you some of the exciting and 
innovative ideas people are trying in Nebraska.
  Since 1990 the Lincoln Housing Authority (LHA) has enabled over 200 
families to achieve their goal of owning a home through an innovative 
Home Ownership Program. LHA makes loans to qualified clients up to a 
maximum of $3,750. And each year the buyer remains in the home and is 
in compliance, 20% of the loan will be forgiven.
  LHA also has an exciting project called Lease-Purchase Program which 
is a joint venture with the Lincoln Public Schools. Students who are in 
residential construction trade classes build one single family home a 
year. When the home is completed, the house is placed under a lease-
purchase agreement with the understanding the tenants will purchase the 
house at the end of the five year lease period.
  LHA, through innovation and unique partnerships, has made a huge 
difference in communities throughout Lincoln, where families who once 
thought home ownership was impossible, not see it as something that can 
be achieved.
  The Holy Name Housing Corproation, along with South Omaha Affordable 
Housing, have implemented a 32 single family rental project called the 
Crown Project. The project, financed by low income tax credits, 
Community Development Block Grant funds, and private financing, is an 
incubator for home ownership. These new single family homes located in 
North and South Omaha neighborhoods are rented to tenants committed to 
home ownership. This is an exciting project for members of these 
neighborhoods and an excellent example of what efficient partnerships 
can produce.
  Another fine example of what Nebraskans are doing is the example of 
the Kearney Housing Authority (KHA) and how they are seeking prudent 
partnerships that fill a need for the community of Kearney. KHA, along 
with the University of Nebraska at Kearney's Construction and 
Technology Department and the Platte Valley State Bank and Trust, is 
able to provide homeownership opportunities to families at income 
levels who otherwise could not afford it.
  What KHA did was bring in the Platte Valley State Bank and Trust--
with their financial expertise and competitive interest rates--and the 
University--who served as the contractor and the providers of excellent 
hands-on education for its students--to form a most qualified 
partnership. KHA served as ``the owner'' and saw the project from 
beginning to the end, which resulted in a huge success story, as 
families were given the chance to own a home for the first time, while 
the Kearney community received commitments from families who wanted to 
invest in Kearney.
  As Americans are discussing this week how to improve home ownership 
opportunities and make it a reality for many more in their communities, 
I want to focus on rural Nebraska and how we need to make home 
ownership and affordable housing a reality for towns throughout 
Nebraska.
  In 1996, a series of seven Nebraska regional focus groups comprised 
of community representatives and development professionals were asked 
``What are the most important things to focus on in the next 12-24 
months in your community?'' The top four priorities were leadership 
development, regional collaboration, technology, and housing.
  Housing is a fundamental community need. It enhances or erodes a 
community's image and its appeal to business, industry, and, most 
importantly, the people who live there or may want to live there. 
Housing is a fundamental human need. Without decent, safe and 
affordable places to live, people lack a resource that enables them to 
pursue a quality of life that many others possess.
  As some communities in Nebraska have seen former residents and new 
folks moving to their town, they find that their town does not have the 
housing supply to satisfy this new demand. Also, attracted by our 
state's economic development efforts, businesses are seriously 
considering rural Nebraska, but become hesitant about locating there 
when it is evident there is a lack of housing for the workers they aim 
to employ.
  To ensure that job opportunities are not lost in our communities, to 
encourage population growth and to improve the quality of life for many 
Nebraskans, the serious lack of available and affordable housing must 
be addressed. Housing must be viewed as a component of every 
community's economic development future.


                             AFFORDABILITY

  Financing affordable housing is challenging in general, but the small 
project located in a small town probably poses the greatest challenge 
of them all. Because of its size, a small project does not have the 
economies of scale that a larger project has, which creates a financial 
challenge to acquire resources into these areas. These projects cannot 
be ignored.
  42 percent of Nebraska's 1.6 million people live in communities of 
5,000 or less. Many of the new jobs coming into these towns are 
processing and manufacturing jobs, where wages range from $5 to $8 an 
hour, which is less than $17,000 annually. Indeed, the 1994 average per 
capita income in rural areas was $19,100 as compared to $22,444 in 
metropolitan areas.
  According to the Nebraska Homebuilders, the average cost to build a 
new house is $120,000 and can get higher in rural areas when lack of 
credit, few building sites, cost of infrastructure development, and 
transportation and labor costs are taken into consideration. These 
numbers strongly suggest most rural Nebraskans will not be able to 
afford new housing.


                              AVAILABILITY

  Increased demand coupled with limited production, increased building 
costs, and an aging housing stock has produced a severe housing 
shortage in many communities.
  In 1996, the Nebraska Affordable Housing Trust Fund estimated that 
Nebraska communities need, over 5 years, approximately 35,000 housing 
units to address population growth, to replace housing units that are 
substandard--29 percent of the housing stock was 58 years or older in 
1996--and to address the issues of affordability.
  Because of the population decline of the 1980s, housing quality in 
rural Nebraska has suffered. Many home builders and contractors went 
out of business due to the lack of market. Without new homes to augment 
the older homes, the present housing market does not meet the needs of 
present demand. In essence, there are housing gaps.
  Also, a greater portion of housing in rural areas is inhabited by 
senior citizens who may not have the money, energy, or desire to 
improve their homes. Older homes often fall off the market because they 
aren't inhabitable anymore.
  From a federal standpoint, there are several tools pending in the 
105th Congress that can be instrumental to communities throughout this 
country in need of affordable housing. I support these tools and aim to 
promote them among my Senate colleagues.
  First, the Low-Income Housing Tax Credit (LIHTC) is probably the most 
important tool today that can create affordable housing in communities. 
In Nebraska, the LIHTC will be most effective in serving the affordable 
housing needs of the elderly. Also, it can be a great stepping stone 
for families moving into rural communities who need sound stability and 
then can proceed to search for home ownership options, if that is what 
they desire.
  The LIHTC was created in the 1986 tax reform bill in the wake of 
decreasing appropriations for federally-assisted housing. LIHTC 
finances most affordable rental housing produced in Nebraska for low 
income working families, the elderly, and people with special needs.
  Last year's GAO report on the LIHTC gave the program a healthy and 
favorable review. The GAO report said the program is doing more than 
what federal law even expected in serving the needs of the low-income. 
Ernst & Young assessed the program, reiterated

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the GAO report, and said the present cap does not meet the needs for 
our communities.
  Presently, the cap has not been adjusted for 10 years and inflation 
has muted the effectiveness of this tool for investments into 
communities. 45% of its purchasing power has been reduced. The present 
cap has created a situation where low-income needs are not being met.
  According to Tim Kenny, Executive Director of the Nebraska Investment 
Finance Authority, which distributes the tax credit throughout the 
state, applications for the LIHTC far outnumber our state's supply. The 
need is overwhelming.
  Because of this situation, I strongly support Senate Bill 1252 which 
would increase the cap per person under the LIHTC from $1.25 to $1.75. 
This would allow affordable housing projects that are pending in 
Nebraska to go through and be utilized in areas that need housing the 
most.
  A second federal tool that can be extremely helpful in Nebraska are 
private activity tax-exempt bonds. State and local governments can sell 
tax-exempt bonds and then pass on the savings to lower income first-
time homebuyers and for the construction of low cost rental apartments.
  Presently, the cap on private activity tax-exempt bonds, set in 1986, 
is at $150 million, or $50 per capita. The cap applies to issuers of 
tax-exempt bonds for housing, economic development and other needed 
investments in communities. Cap growth is limited to State population 
increases, but not inflation.
  Similar to the Low-Income Housing Tax Credit, the cap has not been 
adjusted for ten years and inflation has muted some of the 
effectiveness of this tool for investments into communities. The 
present cap has created a situation where demand for capped bonds has 
far exceeded supply. An example is the large demand for mortgage 
revenue bonds which can be used to finance first-time homes for lower 
income families. An increase in the cap could lead to housing 
construction in areas of Nebraska which need it most.
  Senate Bill 1251 would increase the private activity tax-exempt bond 
cap to $250 million, or $75 per capita, and index it to inflation. I 
strongly support this bill as it could bring the dream of owning a home 
or renting a decent apartment closer to many Nebraskans. We have many 
qualified projects pending in Nebraska. They need to go forward.
  The other federal tool that Congress needs to enact into law this 
year is to increase the FHA loan limit and simplify the down payment 
calculations for these loans.
  Presently, 250 different loan limits exist throughout the country. 
This provision would establish one limit by raising all existing limits 
to $227,150.
  The FHA mortgage program helps meet home financing needs for people 
who are not served by the private market. Many times, the down payment 
is the biggest barrier to home ownership and the FHA loan guarantee 
helps overcome this obstacle.
  In the rural communities of Nebraska the FHA loan limit is $81,548. 
In non-metro areas only 14 percent of all new homes sell for less than 
existing rural FHA loan limits. With a loan limit of $81,548, the FHA 
loan, an effective tool for providing affordable housing, can not be 
implemented in a useful manner. The costs, as mentioned before, of 
building new quality housing, not tin huts, in most of our Nebraska 
communities are beyond the present FHA loan limit. We have to raise the 
limit if we are to utilize this tool
  Each year, FHA operates at no cost to the taxpayer. Price Waterhouse 
reported that FHA insurance premiums and loan loss recovery proceeds 
more than cover the cost of claims and operations. This proposal will 
increase new home ownership in Nebraska and I strongly support it.
  Passing these legislative proposals is important to getting tools to 
Nebraskans to create more affordable housing and home ownership 
opportunities in our communities. I will work hard to seek enactment of 
these bills into law and I appreciate the support and help of 
Nebraskans who are also working hard on making affordable housing and 
home ownership a reality in our state. Home ownership does not have to 
be a dream, it can be a reality. These tools bring that reality closer 
to more Nebraskans.
  I also would like to mention an extremely important tool that does 
not require a federal law and can work just as well. That tool is 
communication. In Nebraska, we have many hard working people within 
excellent organizations who toil long hours to bring affordable housing 
and homeownership opportunities to people throughout the State. They 
understand the importance of home ownership and know what a dream like 
owning your own home can do for a family that finally reaches that 
goal.
  I ask the communities of Nebraska to communicate with each other. 
What works great in one community might work just as great in the 
community one county over, but they might not be aware of such success. 
Communities can talk together, ask questions, meet and discuss how each 
other are getting along. Indeed, communication can be the best tool in 
creating affordable housing and home ownership. Learning from each 
other can only make us better and more aware, and we should always 
encourage more participation and more exchange of ideas.
  As I have already talked about exciting new projects occurring in my 
state, I would also like to point out there are many organizations with 
housing specialists throughout the state who are instrumental in 
getting resources to our communities. People working at these places 
have ideas, they have know how and are experts in finding the means to 
get affordable housing to where it is needed. Along with these 
dedicated professionals, we have, throughout Nebraska, active non-
profits with missions that make the quality of life for their 
neighborhoods the highest priority. Couple that fact with an army of 
dedicated volunteers means that home ownership and affordable housing 
is a realistic goal for each of our towns. Nebraska is lucky to have 
such resources.
  We need to give these local groups the tools they need to improve the 
availability of affordable, quality housing. The three tools that I 
have mentioned can help people in these communities achieve the 
American Dream and should be enacted sooner rather than later.

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