[House Report 109-605]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-605

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



 
                  HOPE VI REAUTHORIZATION ACT OF 2006

                                _______
                                

 July 27, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5347]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 5347) to reauthorize the HOPE VI program for 
revitalization of public housing projects, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     7
Additional Views.................................................     8

                          Purpose and Summary

    H.R. 5347 would reauthorize the HOPE VI Revitalization for 
Severely Distressed Public Housing Program through fiscal year 
2011 and would authorize the appropriation of $574 million each 
of fiscal years 2007 through 2011.

                  Background and Need for Legislation

    In 1989, the Congress established the National Commission 
on Severely Distressed Public Housing and charged this 
Commission with proposing a National Action Plan to eradicate 
severely distressed public housing by the year 2000. The Urban 
Revitalization Demonstration (URD) program, or HOPE VI, is a 
program that was born out of the Commission's work. Since 1993, 
this program has been an important part of the transformation 
of public housing by encouraging public housing authorities 
(PHAs) to seek new partnerships with private entities to create 
mixed-finance and mixed-income affordable housing that is 
developed and operated very differently from traditional public 
housing.
    The activities permitted under HOPE VI include, but are not 
limited to:
          (1) the capital costs of demolition, major 
        reconstruction, rehabilitation and other physical 
        improvements;
          (2) replacement housing and management improvements;
          (3) planning and technical assistance; and
          (4) Implementation of community service programs and 
        supportive services, or the planning for such 
        activities.
    The HOPE VI program was modified and extended by the FYs 
1994, 1995, 1996, 1997, 1998 and 1999 appropriations Acts. HOPE 
VI was originally authorized through the end of FY 2002 by 
section 535 of the Quality Housing and Work Responsibility Act 
of 1998 (QHWRA), which set forth a new section 24 of the 1937 
Act. The 108th Congress initially extended the program through 
the end of FY 2004, but more recently Congress extended the 
HOPE VI program through FY 2006.
    A study of eight HOPE VI sites undertaken by the Housing 
Research Foundation (HRF) found that, in communities 
surrounding a recent HOPE VI revitalization project:
     Per capita incomes were up an average of 71 
percent (compared to only 14.5 percent for the cities as a 
whole).
     Neighborhood unemployment rates had fallen by an 
average of 8.4 percent.
     Only 11 percent of neighborhood households were 
receiving public assistance, down from an average of 39 percent 
in 1989.
     69 percent of households qualified as low-income, 
down from 81 percent in 1989.
     Increases in commercial and residential lending 
rates increased at a faster rate than overall city increases.
     Overall and violent crime declined by an average 
of 46 percent and 68 percent respectively, compared to a 
decline of only 25 percent and 38 percent in the overall city.
    There is an ongoing need for the kind of fundamental 
revitalization in communities across the country that HOPE VI 
makes possible and which is currently unmatched by any other 
program.
    HOPE VI epitomizes public-private partnership for funding 
redevelopment projects. Mixed-finance deals have allowed the 
government to raise millions of dollars from the private sector 
for redevelopment projects using Federal funds as leverage. For 
every government dollar, these partnerships can yield three or 
four additional dollars.
    Under current law, the HOPE VI program and the 
authorization for appropriations for this program are scheduled 
to expire at the end of Fiscal Year 2006. H.R. 5347 extends the 
authorization for appropriations at the current level of $574 
million in each fiscal year through 2011 and extends the sunset 
of the program to September 20, 2011.
    The Committee recognizes that the Administration proposed 
elimination of the HOPE VI program during the past three budget 
proposals. The Administration believes that the original 
objective of the program had been met and that approximately 
the goal of replacing approximately 80,000 severely distressed 
public housing units necessitated an end to the program. At the 
same time, over the past three years, the Administration has 
countered that ending the program would provide an opportunity 
to present new mechanisms to revitalize public housing 
developments and redevelop distressed neighborhoods. The 
Committee looks forward to reviewing the Administration's new 
ideas that could provide a new phase in redevelopment of very 
distressed public housing developments and the neighborhoods 
that suffer because of the location of those distressed 
developments.
    The Committee also acknowledges that the HOPE VI program is 
not without flaws and some controversy. In 2003, a previous 
reauthorization of HOPE VI required the Department of Housing 
and Urban Development to select grantees, among other things, 
on their capacity to bring planning and ultimate development to 
fruition within a more expedited manner. Concerns have been 
raised by some that of the grant funds awarded, a large portion 
of developments have not been completed, creating significant 
backlogs as well as Federal money waiting to be utilized. From 
1992 to 2002, Congress allocated $5.7 billion to the program; 
$3 billion of that is designated to complete projects, but has 
yet to be spent. According to the Administration, from 1992-
2005, 231 HOPE VI grants were awarded, but only 54 development 
projects have been completed, due, in part to local housing 
authorities' protracted struggles to relocate poor residents 
and leverage Federal funds with local money. It is also the 
Committee's understanding that in recent years, HOPE VI 
grantees have been able to spend their funds at a faster rate 
than in the early years of the program. A report prepared by 
the Congressional Research Service shows that there has been an 
increasing rate of expenditure by more recent HOPE VI 
Revitalization Grantees.
    The Committee believes that some of the changes made in the 
2003 authorization bill enabled the HOPE VI program to make 
progress. One concern that was addressed in 2003 was a belief 
that the HOPE VI program had a bias towards larger urban areas. 
Thus, the Committee required that at least five percent of the 
HOPE VI funds be awarded to smaller communities, particularly 
rural areas, where public housing authorities are not present, 
to assist in redevelopment of town areas for affordable 
housing. Hence, the Mainstreet project, where some rural areas 
are now participating.
    Finally, the Committee will continue to monitor concerns 
that HOPE VI developments cause significant displacement of 
very-low and extremely-low income families, usually defined as 
those families earning no more than 50 percent to 30 percent 
respectfully of area median income. The Committee strongly 
supports mixed-income developments, which have shown to be 
engines for economic growth, job development, and improvements 
in services and educational opportunities for all residents. 
However, the Committee also recognizes that mixed-income 
developments should not translate into significant displacement 
or loss of affordable housing for very-low or extremely-low 
income families.
    Overall, the Committee believes that the HOPE VI program 
has been a worthwhile tool in addressing blight and distressed 
conditions in communities across the country, providing mixed-
income and affordable housing as well as private-public 
partnerships to leverage economic development. Still, according 
to a 2004 study conducted by the Urban Institute, approximately 
60,000 public-housing units as well as the corresponding 
neighborhoods across the country could benefit from HOPE VI.

                                Hearings

    No hearings were held on H.R. 5347 in the 109th Congress.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 24, 2006, and ordered reported H.R. 5347, the HOPE VI 
Reauthorization Act of 2006, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to report the bill 
to the House with a favorable recommendation was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 5347 would reauthorize the HOPE VI Revitalization for 
Severely Distressed Public Housing Program through fiscal year 
2011 in order to assist the transformation of public housing by 
encouraging public housing authorities (PHAs) to seek new 
partnerships with private entities to create mixed-finance and 
mixed-income affordable housing that is developed and operated 
very differently from traditional public housing.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Office of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 21, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed revised cost estimate for H.R. 5347, the 
HOPE VI Reauthorization Act of 2006. This estimate supersedes 
our original estimate, which was transmitted on June 6, 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 5347--HOPE VI Reauthorization Act of 2006

    Summary: H.R. 5347 would reauthorize the HOPE VI 
Revitalization for Severely Distressed Public Housing Program 
and would authorize the appropriation of $574 million for that 
program for each of the fiscal years 2007 through 2011.
    CBO estimates that the bill would authorize total 
appropriations of $2.9 billion over the 2007-2011 period, and 
that appropriation of those amounts would result in additional 
outlays of $712 million over that period. Enacting H.R. 5347 
would not affect direct spending or revenues.
    H.R. 5347 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5347 is shown in the following table. 
The costs of this legislation fall within budget function 600 
(income security).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2006    2007    2008    2009    2010    2011
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

HOPE VI Spending Under Law Current Law:
    Budget Authority \1\........................................      99       0       0       0       0       0
    Estimate Outlays............................................     650     621     531     344     148      48
Proposed Changes:
    Estimated Authorization Level...............................       0     574     574     574     574     574
    Estimated Outlays...........................................       0       1      36     110     225     340
HOPE VI Spending Under H.R. 5347:
    Estimated Authorization Level \1\...........................      99     574     574     574     574     574
    Estimated Outlays...........................................     650     622     567     454     373     388
----------------------------------------------------------------------------------------------------------------
\1\ The 2006 level is the amount appropriated for that year for the HOPE VI program.

    Basis of estimate: H.R. 5347 would authorize the 
appropriation of $574 million for the HOPE VI program for each 
of fiscal years 2007 through 2011. In 2006, $99 million was 
appropriated for this program. Assuming appropriation of the 
authorized amounts and based on historical spending patterns, 
CBO estimates that implementing this bill would cost $712 
million through 2011. Spending on the HOPE VI program has 
historically been slow due to the time it takes to award grants 
and complete revitalization projects.
    Intergovernmental and private-sector impact: H.R. 5347 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimate: The estimate supersedes the cost 
estimate for H.R. 5347 that CBO transmitted on June 6, 2006. 
The bill would extend the most recent authorization for the 
HOPE VI program. That authorization was for $574 million for 
fiscal year 2003; CBO had incorrectly referenced the 2002 
authorization, which was for ``such sums as may be necessary.''
    Estimate prepared by: Federal costs: Chad Chirico. Impact 
on State, Local, and Tribal Governments: Sarah Puro. Impact on 
the Private Sector: Nabeel Alsalam.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, ``the 
HOPE VI Reauthorization Act of 2006.''

Section 2. Extension of program

    This section authorizes the appropriation of $574 million 
each of fiscal years 2007 through 2011 for the HOPE VI 
Revitalization for Severely Distressed Public Housing Program 
and extends the sunset for this program to September 30, 2011.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

          SECTION 24 OF THE UNITED STATES HOUSING ACT OF 1937


SEC. 24. DEMOLITION, SITE REVITALIZATION, REPLACEMENT HOUSING, AND 
                    TENANT-BASED ASSISTANCE GRANTS FOR PROJECTS.

  (a)  * * *

           *       *       *       *       *       *       *

  (m) Funding.--
          (1) Authorization of appropriations.--There are 
        authorized to be appropriated for grants under this 
        section $574,000,000 for [fiscal year 2003] each of 
        fiscal years 2007 through 2011.

           *       *       *       *       *       *       *

  (o) Sunset.--No assistance may be provided under this section 
after September 30, [2006] 2011.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    The Committee on Financial Services recently passed H.R. 
5347, the ``HOPE VI Reauthorization Act of 2006''. I am one of 
the original sponsors of the legislation. I want to 
congratulate the Committee on Financial Services Chairman, Mr. 
Oxley, and Ranking Member Frank, as well as the Subcommittee on 
Housing and Community Opportunity Chair, Mr. Ney for moving 
this important legislation for consideration. The Members of 
the Subcommittee also worked tirelessly to overcome obstacles 
to extend this program. Of course, in the absence of strong 
leadership on the Committee on Financial Services on matters 
related to housing, there is a distinct possibility that the 
HOPE VI program would have expired at the end of this fiscal 
year.
    HOPE VI is a viable and critically important program, 
notwithstanding some of the criticisms that have been made of 
the program that are identified in this report [e.g. 
displacement of tenants, delays in development of projects, 
bias toward large urban areas]. As with any new federal 
program, there are lessons to be learned, and in the case of 
HOPE VI, many of these challenges identified in this report 
have been addressed in prior reauthorization bills. In 
addition, each of these issues is best understood within the 
context of the different circumstances confronting the various 
communities utilizing the HOPE VI program, particularly in its 
infancy. This might explain why HUD evaluated HOPE VI grantees 
on a case-by-case basis, rather than on the basis of formal 
enforcement policies.
    For example, in many communities the supply of available 
and affordable housing is not adequate to accommodate the 
displaced residents of public housing. The development process 
related to HOPE VI is far more complicated than envisioned by 
the architects of the program, and many delays could be 
attributed to the needs of the various stakeholders in the 
community, including residents. According to the 2003 GAO 
report on ``HOPE VI Resident Issues and Changes in 
Neighborhoods Surrounding Grant Sites'', in Tucson, AZ the 
Housing Authority submitted the revitalization plan for a site 
to the Tucson City Council approval only after the residents 
had voted to approve it. This type of deliberative process 
would add time to any development approval process whether it 
involved HOPE VI or not. Whether urban areas are favored under 
the program requirement is not really a criticism. In my view, 
this was a program outcome, and I see no reason why we would 
not want to make sure that HUD targets non-urban areas as we 
move forward to determine whether HOPE VI works because the 
housing needs of the urban communities are not drastically 
different than the housing needs of non-urban communities.
    The GAO and CRS Report findings also indicate that:
     As of June 2004,56,221 households had been 
relocated by Hope VI revitalization grantees. Of these 
households, 48 percent were moved to public housing, 32 percent 
were given Section 8 Vouchers, 6 percent were evicted, 19 
percent move to revitalized units, and 13 percent made other 
housing choices.
     The neighborhoods in which 1996 HOPE VI sites are 
located generally have experienced improvements in indicators 
such as education, income and housing; and
     Mortgage lending activity increased in HOPE VI 
neighborhoods compared to other neighborhoods.
    These findings are, in part, why I strongly support the 
HOPE VI Reauthorization bill. The bill has strong bi-partisan 
support, and HOPE VI would be reauthorized through 2011. Review 
of the factors used to assess grant application for the 
programs included--need capacity, quality and leveraging. So 
perhaps, it is more appropriate for the detractors of the 
program to measure the track record of the HOPE VI program's 
using these criteria and not individual project outcomes.
    By some measures, HOPE VI has leveraged between $5 billion 
and $8 billion of private investment in communities across the 
nation. The demand for HOPE VI grants in communities around the 
country continues to exceed the available resources. There are 
estimates that HUD received three applications for every award 
made. The need to revitalize distressed public housing is 
precisely the reason that HOPE VI was conceived. Communities 
throughout this country with old decaying and abandoned public 
housing stock often located on prime land needed to seek ways 
to improve the quality of life in their communities. HOPE VI 
provided an answer to addressing these conditions in its early 
inception, and with improvement in the way the program is to be 
operated even greater progress should be made in meeting need.
    Absent the bi-partisanship support that HOPE VI enjoys, we 
could have witnessed the elimination of the program. By 
changing the criteria to evaluate grantee applications, 
including evaluating the capacity of the grantee to undertake 
HOPE VI projects, support for the program should broaden. HOPE 
VI is an extremely competitive program that is indicative of it 
success. Communities should be able to include this federal 
resource in their comprehensive revitalization efforts 
immediately and in the future.

                                                     Maxine Waters.

                                  
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