[Senate Hearing 114-659]
[From the U.S. Government Publishing Office]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2017
----------
WEDNESDAY, SEPTEMBER 21, 2016
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:30 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Susan Collins, (chairman)
presiding.
Present: Senators Collins, Boozman, Cassidy, Daines, and
Reed.
Housing Vulnerable Families and Individuals:
Is There a Better Way?
opening statement of senator susan m. collins
Senator Collins. The hearing will come to order.
Good morning. I am pleased to be joined today by our
ranking member, Senator Jack Reed, as we begin our hearing
examining whether there are more effective ways to meet the
housing needs of vulnerable families and individuals.
The question of how best to house families and individuals
in need of assistance has simply not received the attention it
deserves.
Today, I want to focus on whether the place-based rental
assistance of the current public housing and project-based
Section 8 programs still has a beneficial role to play. Should
limited Federal resources be directed to tenant-based Section 8
vouchers and existing projects converted to vouchers?
We focus on public housing and project-based Section 8
because unlike, for example, housing for the elderly or housing
for the disabled programs, public housing and Section 8,
intended to serve a diverse population, are not limited to a
particular demographic group.
Public housing and project-based Section 8 both provide
rental assistance that is tied to specific properties, limiting
a family to receiving assistance only at that property. The
tenant-based Section 8 program, on the other hand, enables a
family to move at its discretion while continuing to receive
rental assistance.
The biggest difference between public housing and project-
based Section 8 is that public housing was built and is owned
and operated with Federal funds by public housing agencies that
are entities of State and local governments. Project-based
Section 8 properties are privately owned, and HUD has entered
into a long-term contract with the owner to provide rental
assistance.
This conversation is particularly timely, given the overall
fiscal constraints of the current budget caps and our Nation's
$19.5 trillion national debt.
In addition to the overall fiscal constraints, this
subcommittee annually faces the uncertainty of how much
offsetting receipts will be credited from the Federal Housing
Administration's mortgage insurance premiums. These offsetting
receipts significantly affect our ability to fund our programs.
Ensuring that sufficient funds are provided to renew existing
rental assistance has, however, always been a priority.
The challenge is that the cost of renewing rental
assistance continues to grow by hundreds of millions, if not
billions, of dollars each year. Rental assistance consumes an
ever-larger share of HUD's budget. For fiscal year 2017, the
rental assistance takes up 84 percent of HUD's overall budget,
reducing funds available for other critical priorities,
including the popular Community Development Block Grant and
HOME programs. We have a wonderful chart, which I have asked to
be brought over, that demonstrates visually how much of HUD's
budget--right on cue--is consumed by rental assistance. And
that is just keeping us even. Keep in mind that we are not
beginning to serve many people who qualify for rental
assistance and are very low income individuals.
[The chart follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Collins. Directing 84 percent of HUD's budget to
rental assistance might be reasonable if it were to effectively
meet the housing needs of all vulnerable families and
individuals. However, as I pointed out, with notable yet
relatively small exceptions, such as the HUD voucher program,
the VASH program for our homeless veterans, our expenditures on
rental assistance are barely holding on to the existing
inventory of Section 8 and public housing units.
As the directors of homeless shelters will attest, there
are so many families and individuals, including homeless young
people, with tremendous unmet housing needs all across the
country.
The issue goes beyond those who are actually homeless.
Nationally only one out of four families eligible for housing
assistance receives it. According to HUD's most recent
estimate, approximately 7.7 million households experiencing the
worst case housing needs, that is, renters whose incomes are
below 50 percent of the area median, do not receive government-
funded rental assistance and who pay more than half their
monthly incomes for rent or live in severely substandard
conditions, or both. In other words, we have this huge group of
individuals who are very low income, and we are barely
scratching the surface of serving them.
In addition to the funding challenges, emerging research
also raises the question of whether project-based assistance is
the best approach. Research released by a group of Harvard
economists in 2015 makes the case that not only does the
quality of the neighborhood contribute to the health, well-
being, and overall success of all of the residents, but also it
had a significant impact on children moving into better
neighborhoods. For these children, better neighborhoods
contributed to improved long-term outcomes, including future
earnings and college attendance, with each additional year in a
high-poverty neighborhood leading to worse long-term outcomes.
Both OMB Director Shaun Donovan and HUD Secretary Julian
Castro have pointed out that the single biggest predictor of a
child's opportunity and even life expectancy is the ZIP code of
the community in which that child grows up.
Unfortunately, existing public housing and project-based
Section 8 properties are found predominantly in high-poverty
neighborhoods. The Census Bureau defines an extreme poverty
area as one with a poverty rate of 40 percent or higher. For
public housing, 34 percent of properties are located in extreme
poverty areas. For tenant-based vouchers, only 14 percent are
located in extreme poverty areas.
I am concerned that the funding of existing project-based
assistance in high-poverty neighborhoods may be creating more
problems than it solves. With that in mind, if project- or
place-based housing still has an important role to play, would
we be better off divesting the current stock and investing in
project-based housing in high-opportunity areas? That is one of
the many issues I want to explore with our panel today.
As we consider alternative approaches to rental assistance,
we should not forget that changes to the administration of the
voucher program may also lead to better ways to assist
vulnerable families and individuals. The Center on Budget and
Policy Priorities, for example, points out that in 2015, over
70 percent of voucher tenants lived in the 100 largest
metropolitan areas across the country and that in 35 of those
100 areas, voucher administration was divided among 10 or more
agencies. In such situations, the large number of public
housing agencies may well act as an unintentional barrier to
mobility across a metro area. So looking at limited
consolidation of housing agencies is one issue that we should
explore as to whether it would lead to more opportunities for
voucher residents to move to areas of greater opportunities.
That is only one example of the kinds of reforms that have been
suggested.
This morning, I have highlighted concerns that have been
expressed about project-based rental assistance, concerns that
lend themselves to the argument that we should consider
replacing these units with Section 8 vouchers. But I want to be
clear that the purpose of this hearing is to explore all of the
options and that while I find these ideas intriguing, I do not
have a preconceived policy preference. I am trying to figure
out what is a very complicated issue and how we can better
serve our very low-income families and ensure that we are
targeting Federal investment to achieve better results for
those families and to produce brighter futures for our most
vulnerable children.
[The statement follows:]
Prepared Statement of Senator Susan M. Collins
I am pleased to be joined today by our Ranking Member, Senator Jack
Reed, as we begin our hearing examining whether there are more
effective ways to meet the housing needs of vulnerable families and
individuals.
The question of how best to house families and individuals in need
of assistance has not received the attention it deserves. Today, I want
to focus on whether the place-based rental assistance of the current
public housing and project-based Section 8 programs still has a
beneficial role to play. Should limited Federal resources be directed
to tenant-based Section 8 vouchers and existing projects converted to
vouchers? We focus on public housing and project-based section 8
because unlike, for example, the Housing for the Elderly and Housing
for the Disabled programs, public housing and Section 8 are intended to
serve a diverse population, and are not limited to a particular
demographic group.
Public housing and project-based Section 8 both provide rental
assistance that is tied to specific properties, limiting a family to
receiving assistance only at that property. The tenant-based Section 8
program, on the other hand, enables a family to move at its discretion
while continuing to receive rental assistance. The biggest difference
between public housing and project-based Section 8 is that public
housing was built and is owned and operated with Federal funds by
public housing agencies that are entities of State and local
government. Project-based Section 8 properties are privately owned, and
HUD has entered into a long-term contract with the owner to provide
rental assistance.
This conversation is particularly timely given the overall fiscal
constraints of the current budget caps and our Nation's $19.5 trillion
national debt. In addition to the overall fiscal contraints, this
subcommittee annually faces the uncertainty of how much offsetting
receipts will be credited from the Federal Housing Administration, or
F.H.A.'s, mortgage insurance premiums. These offsetting receipts
significantly affect the ability of the subcommittee to fund its
programs. Ensuring that sufficient funds are provided to renew existing
rental assistance has always been a priority.
The challenge is that the cost of renewing rental assistance
continues to grow by hundreds of millions, if not billions, each year.
Rental assistance consumes an ever larger share of HUD's budget. For
fiscal year 2017, rental assistance takes up 84 percent of HUD's
overall budget, reducing funds available for other critical priorities
including the popular Community Development Block Grant and HOME
programs.
Directing 84 percent of HUD's budget to rental assistance might be
reasonable if it effectively met the housing needs of all vulnerable
families and individuals. However, with notable, yet relatively small,
exceptions such as HUD-VASH vouchers for homeless veterans, our
expenditures on rental assistance are barely holding on to the existing
inventory of Section 8 and public housing units. As the directors of
homeless shelters will attest, there are still families and
individuals, including homeless young people, with tremendous unmet
housing needs across the country. The issue goes beyond those who are
actually homeless. Nationally, only one out of four families eligible
for housing assistance receives it. According to HUD's most recent
estimate, approximately 7.7 million households experiencing worst case
housing needs--that is, renters whose incomes are below 50 percent of
the area median, do not receive government-funded rental assistance and
who paid more than half their monthly incomes for rent or live in
severely substandard conditions, or both.
In addition to funding challenges, emerging research also raises
the question of whether project-based assistance is the best approach
to meeting housing needs. Research released by a group of Harvard
economists in 2015 makes the case that not only does the quality of a
neighborhood contribute to the health, well-being, and overall success
of its residents, but also it had a significant impact on children
moving to these neighborhoods. For these children, better neighborhoods
contributed to improved long-term outcomes, including future earnings
and college attendance, while each additional year in a high-poverty
neighborhood led to worse longterm outcomes.
Both O.M.B. Director Shaun Donovan and HUD Secretary Julian Castro
have often pointed out that the single biggest predictor of a child's
opportunities, and even life expectancy, is the ZIP Code of the
community where they grow up. Unfortunately, existing public housing
and project-based Section 8 properties are found predominantly in high-
poverty neighborhoods. The Census Bureau defines an ``extreme poverty
area'' as one with a poverty rate of 40 percent or higher. For public
housing, 34 percent of properties are located in extreme poverty areas.
For tenant-based vouchers, only 14 percent are located in extreme
poverty areas.
I am concerned that the funding of existing project-based
assistance in high-poverty neighborhoods may be creating more problems
than it solves. With that in mind, if project or place-based housing
still has a role to play, would we be better off divesting the current
stock and investing in project-based housing in high-opportunity areas?
I look forward to hearing from our panel today on this point.
As we consider alternative approaches to rental assistance, we
should not forget that changes to the administration of the voucher
program may also lead to better ways to assist vulnerable families and
individuals. The Center on Budget and Policy Priorities, for example,
points out that in 2015, over 70 percent of voucher tenants lived in
the 100 largest metropolitan areas across the country and that in 35 of
these 100 areas, voucher administration was divided among ten or more
agencies. In these situations, the large number of public housing
agencies may well act as an unintentional barrier to mobility across a
metro area. Even limited consolidation of housing agencies in these
areas could lead to more opportunities for voucher residents to move to
areas of greater opportunity.
This is only one example of reforms that experts have suggested. I
have no doubt that our panel has other such ideas as well.
This morning I have highlighted concerns that have been expressed
about project-based rental assistance, concerns that lend themselves to
the argument that we should consider replacing these units with Section
8 vouchers. I want, however, to be clear that I approach today's
hearing with no pre-conceived policy preferences. This hearing is an
opportunity to have a broader conversation that challenges us to
explore what is possible and evaluate if we can target the Federal
investment in rental assistance to achieve better results to produce
brighter futures for our most vulnerable children.
Senator Collins. It is now my pleasure to turn to our
ranking member, Senator Jack Reed of Rhode Island.
STATEMENT OF SENATOR JACK REED
Senator Reed. Well, thank you, Madam Chairman.
This is a very important hearing and we are honored to have
a distinguished panel of witnesses. So welcome, all.
Senator Collins and I both share a commitment to finding
innovative ways to provide adequate, decent, affordable housing
for all of our citizens. I must commend her for her leadership
on this issue and so many others.
Again, we have called upon some very distinguished and
insightful witnesses.
Ms. Erika Poethig from the Urban Institute, thank you.
Erika has an extensive background on affordable housing
preservation, which is evidenced by her prior roles at HUD and
the MacArthur Foundation in Chicago. She has led numerous
research efforts that have informed many of the transformative
HUD policies that are under discussion today. Thank you for
your work, for what you have done, and thank you for being here
today.
We are also joined by Mr. Ed Olsen, who is no stranger to
Congress. You have testified about low-income housing policy
many times with insights and with quite insightful comments on
that area. So thank you very much, Mr. Olsen.
And finally, we are joined by Mr. Rick Gentry. Thank you.
San Diego Housing Commission. Mr. Gentry has on-the-ground
experience with implementing HUD programs and can offer some
innovative ways to think about this problem. Thank you again
for joining us, Mr. Gentry.
We are here today because the Nation faces an affordable
housing crisis. Only one out of every four eligible low-income
households in this country receives the rental assistance they
need to avoid homelessness. In Rhode Island, nearly 42,000
households spend more than 50 percent of their income on rent,
and that is a 49 percent increase since 2000. So we are not
doing better. We are falling behind. In fact, we will need to
develop at least 3,460 units in Rhode Island of affordable
housing each year just to keep pace with the growing population
of our elderly and multi-generational residents. I can just
tell you we are not even coming close to generating that kind
of enhanced and new housing properties.
This gap is not unique to Rhode Island. It spans the entire
Nation. As the chairman has pointed out, we dedicate 84 percent
of HUD's budget to preserving rental assistance for nearly 5
million households, and we are just racing to stay in place. We
are not getting ahead. According to HUD, the severely burdened
renters group by 54 percent across this Nation between 2001 and
2013. This is a national crisis. It is getting worse. It is not
getting better.
7.7 million renters are paying more than 50 percent of
their monthly income on rent. That is way beyond what is
reasonable for families. And in addition, it squeezes out other
valuable investments, and it frankly squeezes out investments
in demand in the economy so that when you look at growth rates
that are tepid, some of it is because people do not have the
discretionary income they used to have because of their rental
burden.
So in order to effectively address this gap in quality,
affordable housing, we need more resources, more units, more
resources to support individuals in those units.
Just last year, we were faced with another threat of cuts
due to sequester in the level of defense and non-defense budget
caps, and with Senator Collins' leadership particularly, we
were able to push back on that and able to raise the caps for
both defense and non-defense. We are in that same dilemma, as
we speak, anticipating next year's budget. We know if the caps
do not go up, the problem will get worse. If the caps only go
up for defense, this problem will get worse, in fact, quite a
bit worse because there will be a tendency to offset those
increases with further decreases on the domestic side.
So we have to face this challenge. And again, that is why
this hearing is so important and so timely. Even if we do get
relief, as the chairman has pointed out, essentially we are
just making sure that we cover the rental assistance program.
We are not doing the innovative extra things to create new
units, to move people into those units, also to work with other
agencies because one of the factors of how successful housing
is supportive services for those who are in the housing. So we
have to keep working.
I am pleased that both houses unanimously passed the
Housing Opportunity through Modernization Act. That bill made
important changes to HUD programs, even created savings that
allow us to either house more families or reduce the cost of
housing. So we are making progress there. A step in the right
direction.
Today, we will consider other ways that we can reduce the
cost of rental housing assistance while also expanding the
supply of affordable housing for low-income individuals and
families.
While today's hearing will focus on how HUD can better
serve the vulnerable population, HUD alone cannot solve this
problem. It will require working across Federal departments and
in partnership with States and local governments because this
has to be literally a team effort. So we are obligated to
figure out the most cost-effective way to do that. This hearing
can help us do that.
I thank you and I thank the chairman. Thank you, Madam.
Senator Collins. Thank you very much, Senator Reed.
We will now turn to our panel. I think Senator Reed
essentially did a very nice job of introducing our panel, for
which I thank him.
And so our first will be Dr. Ed Olsen, Professor of
Economics and Public Policy at the University of Virginia.
STATEMENT OF DR. EDGAR OLSEN, PH.D., UNIVERSITY OF
VIRGINIA PROFESSOR OF ECONOMICS AND PUBLIC
POLICY
Dr. Olsen. Thank you, Senator Collins. I am delighted to be
here today to share with you and the members of the committee
what I know about the performance of low-income housing
programs and share some ideas about how to get better outcomes
from the money spent on them.
I speak from the perspective of a taxpayer who wants to
help low-income families, albeit a taxpayer who has spent more
than 40 years studying the performance of these programs. What
I know is based in part on the research of hundreds of other
researchers who like me have no financial interest in
particular ways of delivering housing assistance. So I am
particularly pleased that the hearing will consider major
reforms of the current system because low-income housing
assistance is fertile ground for reforms that would allow us to
serve many more of the poorest households without greater
public spending.
In my view, the current system has two main defects.
First, the majority of current recipients are served by
programs of project-based assistance, whose cost is enormously
excessive for the housing provided. The best study of HUD's
largest program that subsidized the construction of privately
owned projects indicated an excess taxpayer cost of at least 72
percent. The best study of public housing indicated an even
larger excess cost.
The second major defect of the current system is that it
provides large subsidies to some households while offering none
to others in identical circumstances. And it provides subsidies
to many people who are not poor while offering none to many of
the poorest. Less than 35 percent of families with extremely
low incomes on HUD's definition receive housing assistance.
Phasing out programs of project-based assistance in favor of
the system's most cost-effective program, the tenant-based
voucher program, would ultimately free up the resources to
provide housing assistance to millions of additional people.
I will offer several specific proposals to that end.
The low-income housing tax credit is the largest and
fastest growing low-income housing program. Its costs are
excessive for the housing provided, and most of the families
served are not poor. Therefore, I think we should phase out
funding for new tax credit projects and replace these tax
credits with refundable tax credits for the poorest homeowners.
The best evidence also indicates that above-market rents
are paid when the government renews use agreements with owners
of privately owned subsidized projects. Therefore, when
existing housing projects come to the end of their use
agreements, we should not renew them, but instead give their
tenants portable vouchers.
I also have some proposals for public housing reforms that
would better use the funds and assets currently available to
public housing authorities.
First, we should require each public housing authority to
offer a housing voucher to each public housing tenant using its
current budget for public housing.
Second, we should allow public housing authorities to
charge market rents for the units vacated by families that
accept the vouchers and use the increased revenue to improve
their projects.
Third, we should allow public housing authorities to sell
any of their projects to the highest bidder with the
restriction that they must provide occupants with housing
vouchers and use the net proceeds of the sale to improve the
remaining projects.
Finally, the housing voucher program provides very large
subsidies to recipients while offering nothing to other
families in identical circumstances. The national mean subsidy
to a household with one adult and two children and no countable
income is about $12,000 a year. A voucher subsidy of this
magnitude enables its recipient to occupy a rental unit of
about average desirability. From the viewpoint of poverty
alleviation and basic fairness, it is surely much better to
provide somewhat more modest housing to more of the poorest
households rather than housing of this quality to a fortunate
few. Therefore, I think we should provide new voucher
recipients with a less generous subsidy and use the savings to
provide vouchers to more of the poorest households.
I realize that this subcommittee does not have the
authority to implement many of these suggestions, so I will
make one recommendation that is clearly within the committee's
authority and that would, I believe, have an enormous positive
effect on the future course of low-income housing policy.
Specifically, I recommend that the committee appropriate
the money for analyses of the highest quality that compare the
cost-effectiveness of housing vouchers with the cost-
effectiveness of various types of tax credit projects,
including ones that renovate HUD's subsidized projects and ones
involved in public housing's rental assistance demonstration.
The cost of these studies would be trivial compared to the
amount of money spent on these programs each year.
Thank you.
[The statement follows:]
Prepared Statement of Dr. Edgar Olsen, Ph.D.
Low-income housing assistance is fertile ground for reforms that
would provide better outcomes with less public spending. The majority
of current recipients are served by programs whose cost is enormously
excessive for the housing provided. Phasing out these programs in favor
of the system's most cost-effective program would ultimately free up
the resources to provide housing assistance to millions of additional
people and reduce taxes.\1\
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\1\ Edgar O. Olsen, ``The Effect of Fundamental Housing Policy
Reforms on Program Participation,'' University of Virginia, January 14,
2014, http://eoolsen.weebly.com/uploads/7/7/9/6/7796901/
ehpfinaldraftjanuary2014coverabstracttextreferencetablesonlineappendices
.pdf.
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Furthermore, the current system of low-income housing assistance
provides enormous subsidies to some households while offering none to
others that are equally poor, and it provides subsidies to many people
who are not poor while offering none to many of the poorest. Avoiding
these excessive subsidies and focusing assistance on the poorest
families will contribute further to poverty alleviation. Well-designed
reforms of the current system of low-income housing assistance would
substantially alleviate poverty with less public spending.
overview of current system
To appreciate the potential for alleviating poverty through housing
policy reforms, it is essential to know the nature of current programs
and the evidence about their performance.\2\ The bulk of low-income
housing assistance in the United States is funded by the Federal
Government through a large number of programs with a combined cost of
more than $50 billion a year. Unlike other major means-tested transfer
programs in the U.S., low-income housing programs do not offer
assistance to many of the poorest families that are eligible for them.
Eligible families that want assistance must get on a waiting list.
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\2\ For a detailed overview of the current system of low-income
housing assistance and a summary of the evidence, see Edgar O. Olsen,
``Housing Programs for Low-Income Households,'' in Means-Tested
Transfer Programs in the U.S., ed. Robert Moffitt (Chicago: University
of Chicago Press, 2003); and John C. Weicher, Housing Policy at a
Crossroads: The Why, How, and Who of Assistance Programs (Washington,
DC: AEI Press, 2012). For a more detailed account of the evidence, see
Edgar O. Olsen and Jeff Zabel, ``U.S. Housing Policy,'' in Handbook of
Regional and Urban Economics, ed. Giles Duranton, J. Vernon Henderson,
and William Strange, vol. 5 (Amsterdam: North-Holland, 2015).
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Most low-income housing assistance in the U.S. is for renting a
unit, and the most important distinction among rental housing programs
is whether the subsidy is attached to the dwelling unit (project-based
assistance) or the assisted household (tenant-based assistance). If the
subsidy is attached to a rental dwelling unit, families must accept the
particular unit offered to receive assistance and lose the subsidy if
they move, unless they obtain alternative housing assistance before
moving.
Each family offered tenant-based assistance is free to occupy any
unit that meets the program's minimum housing standards, that rents for
less than the program's ceiling, that is affordable with the help of
the subsidy, and whose owner is willing to participate in the program.
Families retain the subsidy if they move to another unit meeting these
conditions. Figure 1 indicates the percentage of households that
receive rental assistance of various types.
[The chart follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Figure 1. Percentage of Households That Receive Each Type of Rental
Assistance
Source: Author's calculations based on 2013 American Housing Survey.
Note: Includes assistance from U.S. Department of Housing and Urban
Development and other sources.
The Department of Housing and Urban Development (HUD) housing
voucher program is the only significant program that provides tenant-
based assistance. It is the second-largest low-income housing program,
serving about 2 million households and accounting for about 32 percent
of all households that receive low-income rental assistance.
There are two broad types of project-based rental assistance:
public housing and privately owned subsidized projects. Both types have
usually involved constructing new projects. In almost all other cases,
they have required substantial rehabilitation of existing buildings.
Many of these programs no longer subsidize the construction of
projects, but most projects built under them still house low-income
households with the help of subsidies for their operation and
renovation. Overall, project-based assistance accounts for about 68
percent of all households that receive low-income rental assistance.
Public housing projects are developed and operated by local public
housing authorities established by local governments, albeit with
substantial Federal subsidies and regulations that restrict their
choices. For example, regulations limit the circumstances under which
housing projects can be sold and what can be done with the proceeds. In
the public housing program, government employees make most of the
decisions that unsubsidized for-profit firms would make in the private
market--what to build, how to maintain it, and when to tear it down.
Decisions about where to build projects have been heavily influenced by
local political bodies. The public housing stock has declined by about
400,000 units since its peak in 1991. About 1 million households live
in public housing projects.
Government agencies also contract with private parties to provide
housing in subsidized projects. Most are for-profit firms, but not-for-
profits have a significant presence. The largest programs of this type
are the IRS's Low-Income Housing Tax Credit, HUD's Section 8 New
Construction and Substantial Rehabilitation and Section 236 Rental and
Cooperative Housing for Lower-Income Families programs, and the U.S.
Department of Agriculture's Section 515 and 521 programs. Under these
programs, in exchange for certain subsidies, private parties agree to
provide rental housing meeting certain standards at restricted rents to
eligible households for a specified number of years.
None of these programs provide subsidies to all suppliers who would
like to participate. This is highly relevant for their performance. In
general, subsidies to selected sellers of a good have very different
effects than subsidies to all sellers. Subsidies to selected sellers
lead to excessive profits and much greater wasteful rent seeking. About
4 million households live in projects of this type.
Performance of U.S. Low-Income Housing Programs
Many aspects of the performance of low-income housing programs have
been studied, such as their effects on recipients' labor earnings and
the types of neighborhoods occupied by them.\3\ We certainly do not
have evidence on all aspects of performance for all programs, and the
evidence leaves much to be desired in many cases. However, we cannot
avoid making a decision about reforms until we have excellent evidence
on all aspects of performance for all programs. Enough evidence exists
to give policymakers confidence that certain changes would move the
program in the right direction. Making no change in current policies is
a decision.
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\3\ Olsen and Zabel, ``U.S. Housing Policy.''
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Of all the differences in the performance of various methods for
delivering housing assistance to low-income families, differences in
cost-effectiveness are by far the most consequential for poverty
alleviation. Evidence on housing programs' performance indicates that
project-based assistance is much more costly than tenant-based
assistance when it provides equally good housing. These studies define
equally good housing to be housing that would rent for the same amount
in the same locality in the unsubsidized market. This measure accounts
for the desirability of the neighborhood and the housing itself. In the
best studies, the estimated magnitude of the excess cost is
enormous.\4\
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\4\ For a detailed summary of the evidence on the cost-
effectiveness of low-income housing programs, see Edgar O. Olsen,
``Getting More from Low-Income Housing Assistance,'' Brookings
Institution, September 2008, http://www.brookings.edu/papers/2008/
09_low_income_housing_
olsen.aspx.
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The best study of Section 8 New Construction and Substantial
Rehabilitation, HUD's largest program that subsidized the construction
of privately owned projects, found an excess total cost of at least 44
percent.\5\ That is, the total cost of providing housing under this
program was at least 44 percent greater than the total cost of
providing equally good housing under the housing voucher program. This
translates into excessive taxpayer cost of at least 72 percent for the
same outcome. It implies that housing vouchers could have served all
the people served by this program equally well and served at least 72
percent more people with the same characteristics without any increase
in public spending.
---------------------------------------------------------------------------
\5\ James E. Wallace et al., Participation and Benefits in the
Urban Section 8 Program: New Construction and Existing Housing, vol. 1
and 2 (Cambridge, MA: Abt Associates, 1981).
---------------------------------------------------------------------------
The best study indicates even larger excess costs for public
housing.\6\ More recent evidence has confirmed the large excess cost of
the Section 8 New Construction and Substantial Rehabilitation Program,
and U.S. General Accounting Office (GAO) studies have produced similar
results for the major active construction programs: LIHTC, HOPE VI,
Section 202, Section 515, and Section 811.\7\ In contrast, a succession
of studies over the years have found that the total cost of various
types of tenant-based housing assistance have exceeded the market rent
of the units involved by no more than the modest cost of administering
the program.\8\
---------------------------------------------------------------------------
\6\ Stephen K. Mayo et al., Housing Allowances and Other Rental
Assistance Programs--A Comparison Based on the Housing Allowance Demand
Experiment, Part 2: Costs and Efficiency, Abt Associates Inc., 1980.
\7\ Meryl Finkel et al., Status of HUD-Insured (or Held)
Multifamily Rental Housing in 1995: Final Report, Abt Associates Inc.,
May 1999, Exhibit 5-1; Mark Shroder and Arthur Reiger, ``Vouchers
Versus Production Revisited,'' Journal of Housing Research 11, no. 1
(2000): 91-107; U.S. General Accounting Office, Federal Housing
Programs: What They Cost and What They Provide, GAO-01-901R, July 18,
2001, http://www.gao.gov/products/GAO-01-901R; and U.S. General
Accounting Office, Federal Housing Assistance: Comparing the
Characteristics and Costs of Housing Programs, GAO-02-76, January 31,
2002, http://www.gao.gov/products/GAO-02-76.
\8\ Mayo et al., Housing Allowances and Other Rental Assistance
Programs--A Comparison Based on the Housing Allowance Demand
Experiment, Part 2: Costs and Efficiency; Wallace et al., Participation
and Benefits in the Urban Section 8 Program: New Construction and
Existing Housing; Mireille L. Leger and Stephen D. Kennedy, Final
Comprehensive Report of the Freestanding Housing Voucher Demonstration,
vol. 1 and 2 (Cambridge, MA: Abt Associates Inc., 1990); and ORC Macro,
Quality Control for Rental Assistance Subsidies Determination, U.S.
Department of Housing and Urban Development, Office of Policy
Development and Research, 2001, chap. 5.
---------------------------------------------------------------------------
The preceding evidence on the cost-effectiveness of project-based
assistance applies to units built or substantially rehabilitated under
a subsidized construction program and still under their initial use
agreement. Evidence from the Mark-to-Market program indicates the
excessive cost of renewing use agreements for privately owned
subsidized projects. In most cases, owners are paid substantially more
than market rents for their units.\9\
---------------------------------------------------------------------------
\9\ For a summary of the evidence, see Olsen, ``Getting More from
Low-Income Housing Assistance.'' 14.
---------------------------------------------------------------------------
The results concerning the cost-effectiveness of different housing
programs illustrate the virtue of substantially relying on market
mechanisms to achieve social goals, especially the virtue of forcing
sellers to compete for business. Under a program of tenant-based
assistance, only suppliers who provide housing at the lowest cost given
its features can remain in the program. If the property owner attempts
to charge a voucher recipient a rent in excess of the market rent, the
tenant will not remain in the unit indefinitely because he or she can
move to a better unit without paying more for it. Under programs of
project-based assistance, suppliers who receive payments in excess of
market rents for their housing can remain in the program indefinitely
because their tenants would lose their subsidies if they moved. These
suppliers have a captive audience.
Recent events in Washington, DC, vividly illustrate the pitfalls of
providing subsidies to selected suppliers.\10\ The mayor has proposed
spending about $4,500 per month per apartment to lease units in
buildings owned mainly by contributors to her campaign. This cost does
not include services to these families, and most units are dormitory
style. It has been estimated that these agreements would increase the
market value of the properties tenfold. At the same time, families with
HUD's Section 8 housing vouchers have been able to find regular two-
bedroom apartments for rents around $1,600 a month. These are better
than average rental units that meet HUD's housing standards. The median
rent of two-bedroom units in DC is about $1,400.
---------------------------------------------------------------------------
\10\ Aaron C. Davis and Jonathan O'Connell, ``Shelter Plan May
Benefit Mayor's Backers,'' Washington Post, March 17, 2016; and Fenit
Nirappil, ``Shelters' Cost Stun Some D.C. Lawmakers,'' Washington Post,
March 18, 2016.
---------------------------------------------------------------------------
The evidence on cost-effectiveness argues strongly for phasing out
project-based assistance in favor of tenant-based assistance. This
would contribute greatly to poverty alleviation without spending more
money by increasing the number of poor families that receive housing
assistance.
Phasing out project-based assistance will contribute to poverty
alleviation for another reason. Under the current system, the best
units in new projects in the best locations have very high market
rents. They are much more desirable than the average rental unit. The
worst units in the oldest projects in the worst locations have very low
market rents. Identical families living in the best and worst projects
pay the same rent. Therefore, the current system provides enormous
subsidies to some families and small subsidies to others in the same
economic circumstances.
Equalizing these subsidies would contribute to poverty alleviation.
Under the housing voucher program, identical households within the same
housing market are offered the same assistance on the same conditions.
Therefore, providing incremental housing assistance in the form of
housing vouchers rather than subsidized housing projects would
contribute to poverty alleviation by giving larger subsidies to the
families that would have received the smallest subsidies in the absence
of reform and smaller subsidies to similar families that would have
received the largest subsidies.
These inequities have not been carefully documented but are obvious
to all knowledgeable observers. A recent segment on PBS NewsHour
revealed that $500,000 had been spent per apartment to build a housing
project for the homeless in San Francisco.\11\ This is expensive even
by Bay Area standards. The median value of owner-occupied houses in the
San Francisco metro area was $558,000, and the median household income
of their occupants was $104,000. So this government program provided
apartments to the poorest families that were almost as expensive as the
houses occupied by the average homeowner.
---------------------------------------------------------------------------
\11\ PBS NewsHour, aired October 9, 2013 (New York, MGM
Television).
---------------------------------------------------------------------------
Ensuring that the homeless occupy housing meeting reasonable
minimum standards does not require anything like the amount of money
spent on these units. More than 20 percent of owner-occupied houses in
the San Francisco area sell for less than $300,000. Furthermore, almost
half of the families in the area are renters whose median income is
about $50,000. They live in much less expensive units than homeowners.
We do not need to build new units to house the homeless. They can
be housed in satisfactory existing units at a much lower taxpayer cost.
More than 6 percent of the dwelling units in the area were vacant at
the time.
In Portland, Oregon, where the median value of owner-occupied
houses was $249,000, $360,000 per apartment was spent to build another
housing project for the homeless.\12\ These cases are not anomalies.
The HUD website is filled with photographs of such housing. The desire
of the people involved in the current system to provide the best
possible housing for their clients is understandable. However, this is
not costless. Dollars spent on these high-cost projects are dollars not
spent providing housing to more people.
---------------------------------------------------------------------------
\12\ Peter Korn, ``Police threaten complaint as calls mount at the
commons,'' Portland Tribune, January 9, 2014.
---------------------------------------------------------------------------
Tenant-based assistance has other important advantages in addition
to its greater equity and its much lower cost for providing equally
desirable housing. For example, it allows recipients to choose housing
that better suits their preferences and circumstances, such as living
close to their jobs. This increases their well-being without increasing
taxpayer cost.
In contrast to occupants of subsidized housing projects, voucher
recipients have chosen to live in neighborhoods with lower poverty and
crime rates. Susin found that public housing tenants live in census
tracts with poverty rates 8.8 percentage points higher than in the
absence of assistance, tenants in HUD-subsidized privately owned
projects live in tracts with poverty rates 2.6 percentage points
higher, and voucher recipients live in tracts with poverty rates 2.3
percentage points lower.\13\ Michael C. Lens, Ingrid Gould Ellen, and
Katherine O'Regan found that occupants of tax-credit projects live in
neighborhoods with crime rates about 30 percent higher than voucher
recipients and only slightly lower than the crime rates in public
housing neighborhoods.\14\ Because voucher recipients have much more
choice concerning the location of their housing, this suggests that
subsidized housing projects are poorly located from the viewpoint of
recipient preferences.
---------------------------------------------------------------------------
\13\ Scott Susin, ``Longitudinal Outcomes of Subsidized Housing
Recipients in Matched Survey and Administrative Data,'' Cityscape 8,
no. 2 (2005): 207.
\14\ Michael C. Lens, Ingrid Gould Ellen, and Katherine O'Regan,
``Do Vouchers Help Low-Income Households Live in Safer Neighborhoods?
Evidence on the Housing Choice Voucher Program,'' Cityscape 13, no. 3
(2011): 135-59.
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Voucher recipients have exercised this choice in a way that
benefits their children. A widely cited, recent paper shows that better
neighborhood environments lead to better adult outcomes for children in
recipient households.\15\ They have higher college attendance rates and
labor earnings and are less likely to be single parents.
---------------------------------------------------------------------------
\15\ Raj Chetty, Nathaniel Hendren, and Lawrence F. Katz, ``The
Effects of Exposure to Better Neighborhoods on Children: New Evidence
from the Moving to Opportunity Experiment,'' American Economic Review
106, no, 4 (2016): 855-907.
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Before considering reforms of low-income housing policy, it is
important to address a bit of folklore that has been influential in
housing policy debates: that construction programs perform better than
housing vouchers in tight housing markets. Todd Sinai and Joel
Waldfogel show that additional housing vouchers result in a larger
housing stock than the same number of newly built units in subsidized,
privately owned housing projects.\16\
---------------------------------------------------------------------------
\16\ Todd Sinai and Joel Waldfogel, ``Do Low-Income Housing
Subsidies Increase the Occupied Housing Stock?'' Journal of Public
Economics 89, no. 11-12 (2005): 2137-64.
---------------------------------------------------------------------------
In light of other evidence, the most plausible explanations are
that subsidized construction crowds out unsubsidized construction
considerably and that the housing voucher program induces more
recipients to live independently. The voucher program serves poorer
households that are more likely to be doubled up in the absence of
housing assistance. Crowding out is surely greatest in the tightest
housing markets. In the absence of subsidized construction in these
markets, unsubsidized construction would be high, and unemployment
among construction workers would be low. Subsidized construction would
divert workers from unsubsidized construction.
Furthermore, it is reasonable to believe tenant-based vouchers get
families into satisfactory housing much faster than any construction
program, even in the tightest housing markets. For example, the amount
of time from when new vouchers are allocated to housing authorities to
when they are used by voucher recipients is surely less than the amount
of time from when new tax credits are allocated to State housing
agencies to when tax-credit units are occupied.
Even though some households do not use the vouchers offered,
housing authorities can put all, or almost all, their vouchers to use
in less than a year in any market condition. They can fully utilize
available vouchers by over-issuing vouchers early in the year and then
adjusting the recycling of the vouchers that are returned by families
that leave the program late in the year. No production program can hope
to match this speed in providing housing assistance to low-income
households.
Proposed Reforms of Low-Income Housing Policies to Alleviate Poverty
The available evidence on program performance has clear
implications for housing policy reform. To serve the interests of
taxpayers who want to help low-income families with their housing and
the poorest families that have not been offered housing assistance,
Congress should shift the budget for low-income housing assistance from
project-based to tenant-based housing assistance as soon as current
contractual commitments permit and phase out active construction
programs.
This section describes proposals for reform of low-income
assistance that will alleviate poverty without spending more money. The
reforms deal with all parts of the current system--active construction
programs, existing privately owned housing projects, public housing,
and the housing voucher program.
Active Subsidized Construction Programs. The Low-Income Housing Tax
Credit (LIHTC) is the largest active construction program. It
subsidizes the construction of more units each year than all other
programs combined. LIHTC recently became the Nation's largest low-
income housing program, serving 2.4 million households, and it is the
fastest growing. The tax credits themselves involved a tax expenditure
of about $6 billion in 2015. However, these projects received
additional development subsidies from State and local governments,
usually funded through Federal intergovernmental grants, accounting for
one-third of total development subsidies.\17\ Therefore, the total
development subsidies were about $9 billion a year.
---------------------------------------------------------------------------
\17\ Jean L. Cummings and Denise DiPasquale, ``The Low-Income
Housing Tax Credit: An Analysis of the First Ten Years,'' Housing
Policy Debate 10, no. 1 (1999): 299.
---------------------------------------------------------------------------
Furthermore, the GAO found that owners of tax-credit projects
received subsidies in the form of project-based or tenant-based Section
8 assistance on behalf of 40 percent of their tenants.\18\ The
magnitude of these subsidies has never been documented. If their per-
unit cost were equal to the per-unit cost of tenant-based housing
vouchers in 2015, they would have added more than $8 billion a year to
the cost of the tax-credit program. If so, the full cost of housing
people in tax-credit projects would have been about $17 billion in
2015.
---------------------------------------------------------------------------
\18\ U.S. General Accounting Office, Tax Credits: Opportunities to
Improve Oversight of the Low-Income Housing Program, GGD/RCED-97-55,
1997, 40.
---------------------------------------------------------------------------
Unlike HUD's programs, the LIHTC is poorly targeted to the poorest
households. Some tax credits are used to rehabilitate older housing
projects built under HUD and U.S. Department of Agriculture programs
that continue to provide deep subsidies to their occupants. Other tax-
credit units are occupied by families with portable Section 8 housing
vouchers. The families in these units typically have very low earnings.
However, the majority of occupants of tax-credit projects do not
receive these deep subsidies related to their income. Their average
income is more than twice the average for the occupants who receive the
deep subsidies, and they are well above poverty thresholds.\19\
---------------------------------------------------------------------------
\19\ Ibid., 146.
---------------------------------------------------------------------------
The poor targeting of its subsidies and the evidence on its cost-
ineffectiveness argue strongly for the cessation of subsidies for
additional LIHTC projects. Reducing new authorizations under the
program by 10 to 20 percent each year would achieve this outcome in an
orderly fashion. The money spent on this program would be better spent
on expanding HUD's well-targeted and cost-effective Section 8 Housing
Choice Voucher Program.
Because the congressional committees that oversee the two programs
are different, this transfer of funds would be difficult to arrange.
However, the committees that oversee the LIHTC could divert the reduced
tax expenditures on the LIHTC to a refundable tax credit for the
poorest low-income homeowners, thereby offsetting to some extent the
anti-homeownership bias of the current system of low-income housing
assistance. About 25 percent of all unassisted households in the lowest
real-income decile are homeowners.\20\ To avoid excess profits to
sellers, it is extremely important that buyers are able to purchase
from any seller.\21\
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\20\ In determining a household's real income, this calculation
adds an imputed return on home equity to the income of homeowners and
accounts for differences in family size and composition and price
levels across locations. Edgar O. Olsen, ``Promoting Homeownership
Among Low-Income Households,'' Urban Institute, August 20, 2007, Table
1, http://www.urban.org/UploadedPDF/411523_promoting_homeownership.pdf.
\21\ Edgar O. Olsen and Jens Ludwig, ``The Performance and Legacy
of Housing Policies,'' in The Legacies of the War on Poverty, ed.
Martha Bailey and Sheldon Danziger (New York: Russell Sage Foundation,
2013), 218-21.
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Existing Privately Owned Subsidized Projects. The second broad
proposal to reform low-income housing policy in the interest of poverty
alleviation is to not renew contracts with the owners of private
subsidized projects. The initial agreements that led to building or
substantially rehabilitating these projects called for their owners to
provide housing that meets certain standards to households with
particular characteristics at certain rents for a specified number of
years. At the end of the use agreement, the government must decide on
the terms of the new agreement, and the private parties must decide
whether to participate on these terms. A substantial number of projects
end their use agreements each year. When use agreements are not
renewed, current occupants are provided with other housing assistance,
almost always tenant-based vouchers.
Up to this point, housing policy has leaned heavily in the
direction of providing owners with a sufficient subsidy to induce them
to continue to serve the low-income households in their projects. We
should not repeat these mistakes. Instead we should give their tenants
portable vouchers and force the owners to compete for their business.
The evidence on the cost-effectiveness of renewing use agreements
versus tenant-based housing vouchers indicates that offering such
vouchers would reduce the taxpayer cost of assisting these families.
The savings could be used to assist additional families.
It is important to realize that for-profit sponsors will not agree
to extend the use agreement unless this provides at least as much
profit as operating in the unsubsidized market. Because these subsidies
are provided to selected private suppliers, the market mechanism does
not ensure that rents paid for the units will be driven down to market
levels. If this is to be achieved at all, administrative mechanisms
must be used. Administrative mechanisms can err in only one direction--
providing excess profits. If the owner is offered a lower profit than
in the unsubsidized market, the owner will leave the program. We should
leave the job of getting value for the money spent to the people who
have the greatest incentive to do so: namely, the recipients of housing
assistance.
It is often argued that giving families that live in privately
owned subsidized housing projects portable housing vouchers at the end
of the use agreement will force them to move. This would not be the
case if tenants are offered the same options as they are offered under
the current system when the project's owner opts to leave the program.
HUD will pay the market rent for the unit as long as the tenant wants
to remain in it but offers the tenant the option of a regular housing
voucher. This would enable the family to continue to live in its
current unit without devoting more income to rent, and it would offer
the family other options that it might prefer.
It is also argued that the failure to renew use agreements on
privately owned subsidized projects reduces the number of affordable
housing units. If the occupants of these projects are offered portable
vouchers, this could not be further from the truth. When use agreements
are extended, the only unit that is made affordable to an assisted
family living in the project is its own unit. If that family is offered
a portable voucher, many units become affordable to the family.
Contrary to the arguments of lobbyists for project-based housing
assistance, failing to renew use agreements on subsidized housing
projects increases rather than decreases the stock of housing that is
affordable to low-income households.
Public Housing. The public housing reform proposals are proposals
to better use the funds and assets currently available to public
housing authorities. They are designed to alleviate poverty by
delivering better housing to tenants who remain in public housing,
providing current public housing tenants with more choice concerning
their housing, assisting additional households, and reducing the
concentration of the poorest families in public housing projects. The
proposals would require congressional action to change the restrictions
on housing authorities, except possibly for those participating in
HUD's Moving to Work Demonstration.
Currently, HUD provides public housing authorities with more than
$6 billion each year in operating and modernization subsidies for their
public housing projects. My proposal would give each housing authority
the same amount of Federal money as it would have gotten with the old
system, so no authority would be able to object on the grounds that it
would have less to spend on its clients. However, the proposal would
alter greatly the restrictions on the use of this money and increase
the total revenue of housing authorities.
The proposal requires every public housing authority to offer
current tenants the option of a portable housing voucher or remaining
in their current unit on the previous terms, unless the housing
authority decides to demolish or sell its project. To ensure that
housing authorities can pay for these vouchers with the money
available, the generosity of the voucher subsidy would be set to use
the housing authority's entire Federal subsidy in the highly unlikely
event that all public housing tenants accepted the vouchers. The
generosity of these vouchers would almost always differ from the
generosity of regular Section 8 vouchers, although the difference would
be small in most cases.
Housing authorities would be allowed to sell any of their projects
to the highest bidder with no restrictions on its future use. This
would provide additional revenue to improve their remaining projects or
provide vouchers to additional households. The requirement that these
projects must be sold to the highest bidder maximizes the money
available to help low-income families with their housing. It also
avoids scandals associated with sweetheart deals.
Many housing authorities would surely choose to sell their worst
projects. With uniform vouchers offered to families living in all of a
housing authority's projects, it is reasonable to expect that the
vouchers will be accepted by more tenants in the worst projects. These
are the projects that would be the most expensive to renovate up to a
specified quality level. They are the types of projects that have been
demolished under the HOPE VI program and that Congress intended to
voucher out under the 1998 Housing Act. By selling the public housing
projects on which they would have spent the most money and providing
their occupants with vouchers that have the same cost as the
authority's average net expenditure on public housing units, the public
housing authority would free up money to better maintain its remaining
units or provide vouchers to additional households.
When a project is sold, the remaining tenants in that project would
be offered the choice between vacant units in other public housing
projects or a housing voucher, the standard procedure when projects are
demolished or substantially rehabilitated. When public housing units
are vacated by families that accept vouchers, the housing authority
would offer the next family on the waiting list the option of occupying
the unit or a portable housing voucher. If the family takes the
voucher, the housing authority would be allowed to charge whatever rent
the market will bear for the vacant unit. This would provide additional
revenue to housing authorities without additional government subsidies.
To reduce poverty concentrations in public housing projects,
Congress might want to eliminate the income-targeting rules for
families that pay market rents for public housing units. Indeed, it
might want to eliminate upper-income limits for these families. Under
current regulations, at least 40 percent of new occupants must have
extremely low incomes. Under the proposal, the new occupants will
receive no public subsidy, and so income targeting would serve no
public purpose.
Each year some former public housing tenants who had used the
proposed vouchers to leave their public housing units would give up
these vouchers for a variety of reasons. The money saved from their
departure should be used to offer similar vouchers to other families
eligible for housing assistance. The recycling of voucher funds would
ensure that the tax money spent on public housing will continue to
support at least the same number of families.
The preceding proposals would benefit many current public housing
tenants without increasing taxpayer cost. The public housing tenants
who accept vouchers would obviously be better off because they could
have stayed in their current units on the old terms. They would move to
housing meeting HUD's housing standards that better suits their
preferences. Tenants who remain in public housing would benefit from
better maintenance of their units.
The only public housing tenants who might be hurt by the proposal
are tenants who want to remain in the projects that housing authorities
decide to sell. Since it is impossible to justify renovating structures
that reach a certain level of obsolescence and dilapidation, the
initial opposition of a small minority of public housing tenants should
not prevent benefits to the majority. Generally, public housing
redevelopment has not required occupants' consent.
Given the difficulty of predicting all of the consequences of such
far-reaching changes, we should start with a controlled experiment
involving innovative public housing authorities willing to implement
these proposals for a randomly selected subset of their public housing
projects. This experiment would produce evidence on the effects of the
proposals, and it would provide useful information for modifying them
to avoid unforeseen negative consequences and achieve better outcomes.
Housing Voucher Program. Even though HUD's Housing Choice Voucher
Program is the country's most cost-effective and equitable low-income
housing program, it too offers opportunities for reform in the interest
of poverty alleviation. The Housing Choice Voucher Program provides
very large subsidies to its recipients while offering nothing to other
families in similar circumstances.
In 2015, the national mean subsidy for a household with one adult,
two children, and no countable income was almost $12,000. The poverty
threshold for this family was about $20,000. A voucher subsidy of this
magnitude enables its recipient to occupy a rental unit of about
average desirability among two-bedroom units, that is, a unit with
about the median market rent.
From the viewpoint of poverty alleviation correctly conceived, it
is surely better to provide somewhat more modest housing to more of the
poorest households rather than housing of this quality to a fortunate
few. The current welfare system provides recipients of housing vouchers
with resources well above the relevant poverty threshold, while leaving
others without housing assistance well below it.
In the interest of ameliorating this inequity and reducing poverty
without harming current recipients, new recipients could be offered
less generous subsidies so that more households could be served with a
given budget, and current voucher recipients could receive the generous
subsidies that are offered by the current program. Because more than 10
percent of voucher recipients exit the program each year, this
initiative will allow more families to be served each year without
spending more money and will improve the program's equity. Eventually,
all participants in the same economic circumstances would receive the
same lower subsidy.
The new subsidy level could be chosen so that the voucher program
could serve all of the poorest households that asked for assistance. At
current subsidy levels, many more people want to participate than can
be served with the existing budget. Reducing the voucher subsidy by the
same amount for households at all income levels would make families
currently eligible for subsidies less than this amount ineligible for
voucher assistance. These are the currently eligible households with
the largest incomes. This would free up money to provide vouchers to
needier households that would not have been served by the current
system.
By reducing the subsidies sufficiently, we would reach a point
where all of the poorest household that ask for assistance would get
it. Olsen analyzes the effect of alternative reforms of this type on
who is served by the voucher program.\22\ This reform would surely
reduce evictions and homelessness, although these effects have not been
studied.
---------------------------------------------------------------------------
\22\ Olsen, ``The Effect of Fundamental Housing Policy Reforms on
Program Participation.''
---------------------------------------------------------------------------
conclusion
The rapid growth of spending on entitlement programs for the
elderly that will occur until they are substantially reformed will
create pressure to reduce spending on programs such as low-income
housing programs whose budgets are decided each year by Congress. In
this situation, we should be focusing on how to get more from the money
currently allocated to these programs.
Building new units is an extremely expensive way to provide better
housing to low-income households, and subsidizing selected suppliers is
especially expensive. Renting existing units that meet minimum
standards is much cheaper. This also avoids providing recipients of
low-income housing assistance with better housing than the poorest
families ineligible for assistance. The proposed reforms will gradually
move the system of low-income assistance toward more cost-effective
approaches and enable us to provide housing assistance to millions of
additional people without spending more money.
It is often argued that a shortage of affordable housing calls for
subsidizing the construction of new units. This argument is seriously
flawed. Almost all people are currently housed. If we think that their
housing is too expensive (commonly called unaffordable), the cheapest
solution is for the government to pay a part of the rent. The housing
voucher program does that. This program also ensures that its
participants live in units that meet minimum standards. Building new
units is a much more expensive solution to the affordability problem.
Furthermore, it is not necessary or desirable to construct new
units to house the homeless. The number of people who are homeless is
far less than the number of vacant units--indeed, far less than the
number of vacant units renting for less than the median. In the entire
country, there are only about 600,000 homeless people on a single night
and more than 3.6 million vacant units available for rent. Even if all
homeless people were single, they could be easily accommodated in
vacant existing units, and that would be much less expensive than
building new units for them. Furthermore, most of the 600,000 people
who are homeless each night already have roofs over their heads in
homeless shelters, which are also subsidized. The best provide good
housing.
Reducing the substantial differences in subsidies across identical
households that characterize the current system would contribute
further to poverty alleviation. It would help fill the gap between
poverty thresholds and the resources of the poorest households. The
current system provides substantial subsidies to recipients while
failing to offer housing assistance to many others who are equally
poor. Even among the fortunate minority who are offered assistance, the
variation in the subsidy across identical households living in
subsidized housing projects is enormous. The best housing projects
offered by a particular program are much more desirable than the worst,
but tenants with the same characteristics pay the same rent for units
in either. Because the most cost-effective program offers the same
subsidy to identical recipients, the shift away from other programs
toward it will focus more of the system's resources on the poorest
families.
Senator Collins. Thank you very much, Professor. I very
much appreciate the number of years you have spent on this
issue and your very specific recommendation.
We will next hear from Erika Poethig, Institute Fellow and
Director of Urban Policy Initiatives at the Urban Institute.
Thank you for being here.
STATEMENT OF ERIKA POETHIG, FELLOW AND DIRECTOR OF
URBAN POLICY INITIATIVES, THE URBAN
INSTITUTE
Ms. Poethig. Thank you, Madam Chairwoman, Ranking Member
Reed, and members of the THUD Subcommittee for the opportunity
to be an expert on this panel.
My name is Erika Poethig. I am Director of Urban Policy
Initiatives at the Urban Institute, which is a nonprofit
research organization dedicated to the power of evidence to
improve lives and strengthen communities.
The views expressed before you today are my own and should
not be attributed to the Urban Institute, its trustees, or its
funders.
There is an overwhelming body of evidence that Federal
rental assistance makes a difference in people's lives and
communities. Increasingly, research demonstrates that housing
serves both as an essential safety net and as a platform from
which individuals, families, and older adults can improve their
health, education, and economic outcomes. When families cannot
afford housing, it undermines their ability to get to the next
rung on the economic ladder and prevents older adults from
aging safely and securely.
Yet, America's housing policy has never fully met the
demand for affordable rental housing. Today, there are nearly
20 million households that qualify for housing assistance, but
only one in four receives it.
I would like to make two points. One, we must expand
Federal rental assistance. And, two, as we work to do so, we
must use the best evidence available to reform existing
policies and programs. Let me elaborate on these two points.
First, this committee has made the smart decision to
prioritize Federal investment in rental assistance. But given
the current and growing need, we must build a new generation of
rental assistance focused on the most vulnerable households. We
leverage housing as a platform for service delivery and access
to opportunity by targeting expanded rental assistance to
families with children earning less than 30 percent of area
median income, people with disabilities, and older adults on
fixed incomes.
Targeting these vulnerable populations pays dividends.
Stable housing generates cost savings to other Federal
programs. For instance, evidence suggests that for homeless
families, rental assistance is more effective than costly
services. At the same time, connecting the housing platform to
services for older adults, such as health care coordination,
has proven reductions in Medicare spending. This is one
opportunity to bring new resources to the table as we work to
expand rental assistance.
Second, evidence tells us that housing policy is one
important lever to promote upward mobility. A low-income child
that gains access to a low-poverty neighborhood will see their
income as an adult grow by 30 percent. Unfortunately, our
current programs are not well designed to enable individuals to
reach their full potential. We need to reform existing policies
and programs.
For instance, greater flexibility is needed to move
project-based subsidy contracts to buildings in lower poverty
neighborhoods. At the same time, we need to prioritize place-
based investment strategies that can catalyze neighborhood
revitalization and improvement, and we need to preserve
existing assets in low-poverty communities.
Finally, the voucher program is a great tool to promote
upward mobility. However, the program could be strengthened by
the use of small area FMRs (Fair Market Rents) and by marrying
vouchers to greater supports for mobility. That is why I am
very excited and thankful to see that this committee included
the mobility demonstration in the fiscal year 2017
appropriations bill that passed the Senate. The demonstration
will generate timely and needed evidence to ensure that
vouchers are indeed a platform for upward mobility.
Thank you very much for this invitation to testify. I look
forward to your questions.
[The statement follows:]
Prepared Statement of Erika C. Poethig
Thank you for asking me to testify at this hearing. My name is
Erika C. Poethig, and I am an Institute fellow and director of urban
policy initiatives at the Urban Institute in Washington, DC. The views
expressed here are my own, not those of the Urban Institute, its
trustees, or its funders.
Congress committed the first national resources to public housing
during the Great Depression. That decision altered the course of
millions of lives for the better, providing the most vulnerable
Americans with a home that was otherwise out of reach and giving
children the promise of a better future. Today, the long bipartisan
legacy of affordable rental housing is in doubt. Millions of Americans
are unable to find safe and secure housing that they can afford.
Housing assistance plays an important role improving lives across
the age continuum. Yet America's housing policy has never fully met the
demand for affordable rental housing. Over the next 15 years, the
demand for rental housing will continue to grow. During this same time
period, the number of senior renters is projected to double, increasing
from 5.8 million to 12.2 million households. More than a quarter will
pay more than 50 percent of their income for rent (Goodman, Pendall,
and Zhu 2015). Absent increased resources for Federal rental
assistance, America's older adult population will face increased
housing instability and homelessness, which can lead to poor health and
diminished quality of life. At the same time, safe and stable housing
also plays an important role in the early stages of life. Rigorous
evidence has demonstrated that housing assistance is an essential
driver of economic mobility for low-income children. In order to meet a
growing unmet need, we must expand Federal rental assistance to serve
the most vulnerable households including older adults, people with
disabilities, and families with children.
Today, over 5.1 million households use Federal rental assistance,
which includes the housing choice voucher program, project-based rental
assistance, public housing, and USDA programs. While we work to expand
the Federal investment in housing assistance, we can also use the best
evidence available to reform existing policies and programs in order to
maximize better health, education, and economic mobility outcomes. Such
reforms will require better alignment between Federal housing programs
and policies, increasing incentives to move and preserve subsidies in
lower poverty neighborhoods, tailoring approaches to address the
continuum of housing and service needs, and capturing and reinvesting
savings housing generates for Medicare and Medicaid.
Rental Assistance Creates Positive Benefits to Individuals and Families
The evidence of the importance of housing assistance for people's
lives is overwhelming. Research demonstrates that housing is both an
essential safety net and a platform from which families can improve
their health, educational, and economic outcomes. Since 2008, more than
40 studies, by a wide array of scholars across many different
institutions, have focused on how housing matters for individuals and
communities. This body of research, which has been largely supported by
the John D. and Catherine T. MacArthur Foundation, has found that
housing location, stability, quality, and affordability affect
kindergarten readiness, children's math and reading scores, child
development, mental and physical health, and income growth.
There are four important ways housing assistance serves as a
platform for better outcomes.
First, housing assistance frees up resources that can be invested
in improving economic mobility and better health outcomes. For
instance, when families cannot find affordable housing, they make
tradeoffs that affect medical care, children's health, child enrichment
activities, food security, and retirement savings (JCHS 2015; Newman
and Holupka 2014). One third of households in the Milwaukee Eviction
Court Study--a sample composed almost exclusively of very low-income
renters who were trying unsuccessfully to afford their rent without a
subsidy--paid at least 80 percent of their household incomes for rent
(Desmond 2012). This leaves very little income to pay for other
expenses. For seniors, rental assistance is an essential protection, as
the potential to increase income is limited. Housing costs account for
the largest proportion of older adults' expenses. Seniors spend more on
housing than healthcare or anything else (Johnson 2015).
Second, housing assistance can reduce frequent moves for children
and seniors. When families are not stably housed, it can lead to
frequent school moves, high rates of absenteeism, and low test scores
among children (Cunningham, Harwood, and Hall 2010). For older adults,
housing stability coupled with age-restricted housing can create a
platform to healthcare coordination and services that slows growth in
Medicare costs. The Support and Services at Home (SASH) model leverages
housing as a platform to connect residents of federally assisted
housing with community-based services and care coordination. A recent
study estimated that the growth in Medicare expenditures for early SASH
participants was $1,756-$2,197 lower than the growth in expenditures
for the comparison groups (Sanders 2014).
Third, housing assistance can be used to revitalize communities. In
1986, New York City Mayor Ed Koch launched a 10-year, $5.1 billion
capital plan for housing, investing local, State, and Federal resources
to revitalize a distressed housing stock and preserving its
affordability. Based on analysis by scholars from the New York
University Furman Center for Real Estate and Urban Policy, this
investment more than paid back the local investment through increased
property tax receipts. The positive spillover effects from the
investment were significant enough to justify government support for
housing production, including the State and Federal resources (Ellen et
al. 2003). In the same study, Ellen and colleagues did not find the
same spillover effects for the tenant-based voucher program largely
because voucher holders are more dispersed and the aim of the program
is not to revitalize neighborhoods but rather enable low-income
households to rent housing from private landlords. At the same time,
some evidence suggests that larger concentrations of voucher holders
can produce negative effects in a neighborhood (Galster, Tatian, and
Smith 1999; Popkin et al. 2012). When Galster and colleagues looked
across neighborhoods they found that positive effects associated with
concentrations of voucher holders were limited to high-value,
predominantly white neighborhoods.
Fourth, housing assistance can help low-income individuals and
families access low-poverty neighborhoods that would otherwise be
unaffordable. In the United States, access to opportunity is intimately
tied to place. Where you live determines school quality, available
transportation options, proximity to jobs, and community assets.
Because place is so closely linked to access to opportunity, housing
policy can provide critical ladders of mobility for people experiencing
poverty (Blumenthal and McGinty 2015). Moving to low-poverty
neighborhoods can also improve mental health and lower incidence of
diabetes and obesity, as demonstrated by the Moving to Opportunity
(MTO) experiment (Ludwig et al 2013).
In 2015, a team of researchers led by Stanford economist Raj Chetty
and Harvard economist Nathaniel Hendren published new empirical
evidence that strongly supports the notion that opportunity and
economic mobility are shaped, in part, by where you grow up (Chetty and
Hendren 2015). Linking data from the MTO experiment to longitudinal
data from the IRS, they conducted a national rigorous study of five
million families to measure how strongly economic mobility and
opportunity are shaped by the neighborhood in which you grow up. Their
findings show that every year a child is exposed to a better
environment improves a child's chances of success. Moving a young child
from a high-poverty neighborhood to a low-poverty neighborhood improves
her chances of going to college, lowers her chances of being a single
mother, and increases her expected earnings by 30 percent. Chetty and
Hendren's research also points to wide regional differences in access
to opportunity.
Although Chetty and Hendren's study is based on a mobility
experiment that used housing choice vouchers, vouchers are not the only
mechanism for enabling low-income children to access low-poverty
neighborhoods. The study's key insight is that place matters and the
longer a low-income child spends in high-opportunity neighborhoods, the
better she is able to climb the rungs on the mobility ladder. It is
possible that these results might also hold true for project-based
rental assistance and public housing located in low-poverty
neighborhoods.
Demand for Affordable Rental Units is Increasing
Housing affordability is a long-term, systemic problem that has
become a crisis. This problem touches nearly every community in the
United States and undermines the ability of low-income individuals and
families to get to the next rung on the economic ladder. This is a
perpetual problem, driven by stagnating low wages and increasing
operating costs. The dynamic is particularly problematic now because
demand for affordable rental housing is surging and is not being met
with sufficient supply.
Since 2000, the number extremely low-income households (ELI) has
grown at a greater rate than the number of affordable housing units.
Simply put, the demand for affordable housing is outpacing the supply.
These two pressures make finding affordable housing even tougher for
individuals and families with low incomes. The number of households who
are housing cost--burdened is at a record high. In 2013, over one in
four renters in the United States, or 11.4 million households, were
facing severe rent burdens, meaning they spend more than half of their
income on housing (JCHS 2016). Affordability challenges are especially
pronounced at the lowest end of income spectrum. Over 70 percent of
severely cost-burdened renter households are ELI, meaning they make
less than 30 percent of the area median income (AMI).
The problem is not isolated to tight rental markets on the coasts.
Forty-eight percent of very low income renters who live in non-metro
areas face severe rent burdens. Housing in rural areas is twice as
likely to lack complete plumbing as typical U.S. housing, and in tribal
areas, substandard housing is even more common (JCHS 2016).
For those who are not living in assisted housing, the conditions
are deplorable. HUD's biennial Worst Case Needs report documents
housing needs for very low income renters (people with incomes no
greater than 50 percent of AMI) who do not receive rental assistance.
HUD considers two forms of worst-case housing needs: severe rent
burden, which means spending 50 percent or more of household income on
rent and utilities; and severely inadequate housing, which refers to
housing with one or more serious heating, plumbing, and electrical or
maintenance problems. In 2013, there were 7.7 million very low income
unassisted renters who had worst-case housing needs, which is 49
percent greater than in 2003. Severe rent burdens accounted for more
than 97 percent of worst-case housing needs (Steffen et al. 2015).
Severe housing burdens are so prevalent partly because low-wage
workers do not earn enough to afford adequate housing. A worker earning
the Federal minimum wage would need to work 104 hours a week to afford
a typical two-bedroom apartment. Renters on average earn $14.64 an
hour, while full-time wage earners on average need to earn $18.92 an
hour to afford a two-bedroom apartment. At the State level, the average
hourly wage a full-time worker needs to earn to afford a two-bedroom
apartment ranges from $12.56 in Arkansas to $31.54 in Hawaii (Leopold
et al. 2015).
Supply of Affordable Housing Units is Not Keeping Pace With Demand
These affordability challenges for the lowest-income families
coincide with a broader surge in rental demand. Between 2010 and 2030,
the growth in rental households will exceed that of homeowners, five
new rental households for every three homeowners (Goodman, Pendall, and
Zhu 2015). According to recent analysis by my colleagues Rolf Pendall
and Laurie Goodman, the United States added more than one million new
households in 2015, but only 620,000 net new units were added to the
stock, creating a shortage of just over 430,000 units. This gap has
pushed up home prices and rents, a trend that is likely to continue
(Pendall and Goodman 2016). Meanwhile, the stock of nonsubsidized
housing that is affordable to extremely low-income renters has steadily
declined. Thirteen percent of nonsubsidized units with rents at or
below $400 in 2001 had been demolished by 2011. Nearly half (46
percent) of the remaining units were built before 1960, putting them at
high risk of demolition (JCHS 2013). These market pressures are felt
first by families at the lowest end of the income spectrum, many of
whom are already severely cost burdened, further exacerbating their
ability to find safe, stable, affordable housing.
The supply of affordable rental housing is not keeping pace with
demand, in part because without scarce government subsidies, it is
nearly impossible to build and operate rental housing in most markets
(Blumenthal and Handelman 2016). Developers cannot make projects
targeted to low-income renters pencil out, meaning that the expected
revenue stream from rents is too low to cover the costs of maintaining
the property and to pay back the debt incurred in development. Lenders
loan money for housing development based on the property's expected
income, and when rents are set to affordable levels, there's a huge gap
between the money needed to build and the money lenders and investors
are willing to provide. Increasing rents to generate additional
expected income puts apartments out of reach for extremely and very low
income households. In order for developments to pencil out, owners need
subsidy contracts that guarantee a long-term commitment to cover the
gap between what extremely low-income tenants can afford and the
established rent.
the private market alone cannot supply affordable housing
These market dynamics are why building affordable rental housing is
truly a public-private partnership. But private contributions alone
cannot close the affordability gap.
Public subsidies are needed to close the gap between the costs of
constructing and operating affordable housing developments and the
revenue such developments are able to bring in. The largest subsidy
source for low-income housing development, the Low-Income Housing Tax
Credit, is designed to make units affordable to households with incomes
at 50-60 percent of AMI, up to twice the ELI limit. The assistance
available through Federal block grant programs (such as the Community
Development Block Grant) and most State and local programs cannot keep
housing affordable to ELI renters over the long term (Cunningham,
Leopold, and Lee 2014).
HUD's rental assistance programs are increasingly the only source
of affordable housing for ELI renters in many areas. Yet, the need for
rental assistance far exceeds the supply. Unlike other safety net
programs--like Social Security, food stamps, Medicaid, or Medicare--
housing assistance is not treated as an entitlement only 24 percent of
the 19 million eligible households receive assistance (JCHS 2013). As a
result, millions of low-income individuals and families face serious
challenges ranging from severe cost burdens to overcrowding to
homelessness.
Federal Rental Assistance Serves One in Four Eligible Households
Through a Variety of Programs
Publicly and privately owned rental housing supported with Federal
rental assistance represents an important supply of affordable rental
housing, especially for extremely low-income households. Over 5.1
million households use Federal rental assistance, which includes the
housing choice voucher program, project-based rental assistance and
public housing. Altogether these three programs cost nearly $35 billion
in fiscal year 2016 and that is to support a level of subsidy that does
not come close to fully meeting the need (NLIHC 2016). Sixty-eight
percent of rental assistance recipients are extremely low income,
meaning they earn 30 percent of area median income or less.
A mix of housing options is essential to serve the varied needs
individuals and families living in public and assisted housing.
Recipients of rental assistance include working families, single
adults, seniors, and people with disabilities. In 2014, over 70 percent
of non-elderly, non-disabled households receiving HUD rental assistance
worked (CBPP 2015). About one third of rental assistance recipients are
families with children. More than half of the recipients of Federal
assistance are seniors or people with disabilities. And, as the older
adult population grows and the number of senior renters doubles over
the next 15 years, they are likely to become a larger share of
households with rental assistance. For this population, rental
assistance is an essential protection, as the potential to increase
income is limited. Policies to support the housing needs of low-income
older adults could substantially improve their financial security
(Johnson 2015). Project-based units are especially important to seniors
and people living with disabilities as it allows for the colocation of
housing and services.
A brief overview of the programs follows:
--The housing choice voucher program is the dominant form of Federal
rental assistance. These tenant-based vouchers provide 2.1
million households with the opportunity to find housing in the
private rental market. Vouchers typically help pay the
difference between what a family can afford and the actual rent
of a unit that meet's HUD's health and safety standards, up to
a regionally determined rent limit (Leopold et al. 2015).
Families are expected to contribute the larger amount of either
30 percent of family income or the minimum rent amount of up to
$50. By law, 75 percent of new households admitted to the
voucher program each year must be ELI. Nearly 40 percent of the
households receiving housing vouchers are families with
children, while another 40 percent are elderly or disabled,
with some overlap (CBPP 2015).
--Project-based rental assistance operates through an agreement
between a private property owner and HUD. The program serves
1.2 million families. Households must contribute the greater of
30 percent of their income or a minimum rent of $25, while the
subsidy compensates the landlord for the difference between the
tenant portion and the contract rent. By law, 40 percent of the
project-based assisted units in a development must be
designated for ELI households (CBPP 2015). The vast majority of
developments were built between the 1960s and mid-1980s using
financial incentives that included low-cost mortgages and
subsidy contracts, but Congress has not authorized new subsidy
contracts since the late 1980s (Treskon and McTarnaghan 2016).
Nearly 50 percent of households assisted through the project-
based rental assistance program are elderly, and 15 percent are
disabled, with some overlap (CBPP 2015).
--Public housing units are owned and operated by local public housing
agencies. The program serves 1.2 million households, 72 percent
of which are extremely low-income. Some public housing
developments have been redeveloped as mixed-income properties,
primarily through HOPE VI and the Choice Neighborhoods
Initiative. New public housing is no longer being developed.
The backlog of capital needed to support existing public
housing has reached such a scale that it stands to jeopardize
the number of desperately needed units available. In 2010, HUD
estimated that 1.2 million public housing units needed an
estimated $25.6 billion for large-scale repairs (Finkel et al.
2010). As demand for affordable housing continues to rise, the
need to preserve the existing stock of affordable units is
vital--and less costly than building new rental housing. When
the full costs of both construction and upkeep are tallied, new
construction costs 25 to 45 percent more than preservation
(Wilkins et al. 2015; Brennan et al. 2013). Of the households
living in public housing, 33 percent are families with
children, 31 percent are elderly, and 21 percent are disabled
single adults or disabled adults with children.
Rental Assistance Strategies Need to Work for Both People and Places
U.S. rental housing policy is made up of many different tools and
levers that operate at the Federal, State, and local level. At the
Federal level, the Low Income Housing Tax Credit is the largest driver
of rental housing production, but it is not designed to meet the needs
of the lowest-income Americans. HUD's programs still fill that gap
through tenant-based and project based-assistance, which primarily
includes housing choice vouchers, public housing, Section 8 project-
based vouchers, Section 202 and Section 811 supportive housing, and the
newly established Housing Trust Fund. At the State level, housing trust
funds often play an important role in filling financing gaps in LIHTC
deals or providing rental assistance with State generated revenues. For
instance, 50 percent of the real estate transfer taxes collected in
Maine are dedicated to the HOME fund, which provides gap financing as
one of the eligible activities. Some States also raise capital through
bonds and tax credits for housing. For instance, there is a referendum
on the ballot in Rhode Island that would raise $50 million in bond
proceeds for affordable housing (Dunn 2016). Some States provide
incentives or require developers and local communities to better
integrate rental housing into low-poverty communities. At the local
level, cities and counties design and implement housing programs using
resources from CDBG and HOME tailored to local need. Cities also create
incentives to leverage private-market development to create greater
affordability and access to opportunity for low-income residents. Some
cities also dedicate significant local resources to affordable rental
housing.
This multiplicity of tools and approaches at different levels of
government is both a strength and weakness. It allows communities to
tailor housing strategies to market conditions, population need, and
goals such as affordability, stability, quality, and access to
opportunity; there are many ways to try to ``move the dial.'' But it
also signals a basic need that is underfunded at every level of
government. Every generation we create a new tool or strategy aimed at
solving a problem that is largely the result of insufficient resources.
We need an evidence-based portfolio of tools that can be tailored
to local context. But we also need sufficient investment to meet the
need of America's most-vulnerable households.
Below I outline five key ingredients to expanding and reforming
rental housing assistance to better meet the needs of people who cannot
afford housing, especially in areas of opportunity.
Expand Resources for Rental Assistance
A full expansion of assistance to all eligible ELI households is a
necessary ingredient to serving vulnerable households. Under current
policy, housing assistance is delivered through programs with more
losers than winners: only one in four eligible households receive
assistance. This imbalance creates fundamental challenges in the
housing system and reduces its general effectiveness.
For these and other reasons, in 2014, the Bipartisan Policy
Center's Housing Commission called for expanding the housing voucher
program to ensure that rental assistance is universally available to
all ELI households (Lubell 2014).The BPC estimated that expansion of
vouchers would extend subsidies to an additional 3.1 million
households, bringing the total assisted to 6.7 million. Through the
proposal, higher-income households would transition off vouchers,
shrinking the gap from 3.1 million to 2.9 million (BPC 2015).
Housing vouchers are extremely effective in helping low-income
families pay rent by filling the gap between what a household can
afford and the fair-market rent. Rigorous evidence from the Welfare to
Work voucher program found that receipt of a voucher reduced
homelessness by 74 percent (Patterson et al. 2004). Researchers at the
Urban Institute estimated that expanding housing vouchers to households
with children would reduce child poverty 20.8 percent from the current
baseline (Giannarelli et al. 2015).
Improve Access to Low-Poverty Areas
However vouchers alone may not be enough to effectively expand
housing choice at scale. Even with a voucher, families face constrained
choices due to factors such as lack of good information about
neighborhood and housing options, lack of affordable units in
opportunity-rich areas, and discrimination (Luna and Leopold 2013).
Therefore, expanding resources for vouchers alone will not necessarily
facilitate greater access to low-poverty neighborhoods.
The Obama administration has made some important strides to
increase housing choice voucher use in low-poverty communities. In
particular, HUD has proposed to expand the use of Small Area Fair
Market Rents (SAFMRs) in order to enable housing vouchers to be used in
neighborhoods with higher rents and presumably more amenities (Kahn and
Newton 2014). HUD's proposal, which concluded its comment period on
August 15, would require State and local housing agencies to use SAFMR
to set voucher subsidies in metro areas where vouchers are
disproportionately concentrated in low-income areas, and allow agencies
elsewhere to voluntarily adopt SAFMRs. Although the HUD approach is
sound, the Center for Budget and Policy Priorities has recommended that
HUD adjust its criteria for deciding where to require SAFMRs to ensure
the policy is doing the most good (Fischer 2016). In hot-market areas,
for instance, the policy may not be sufficient to help families access
opportunity areas and may need to be coupled with other strategies such
as counseling, source-of-income protections, portability between
housing authorities, and move-in assistance.
Additional low-cost or no-cost strategies for encouraging access to
opportunity neighborhoods includes giving greater weight to the
location of voucher holders when assessing public housing authority
performance, reinforcing compliance with the Affirmatively Furthering
Fair Housing rule, and giving housing authorities an administrative fee
bonus for better location outcomes (Sard and Rice 2016).
A complimentary strategy is HUD's policy for transferring budget
authority via Section 8(bb)(1) of the Housing Act. This tool can be
used for properties receiving the budget authority to move the subsidy
contract to a building in a low-poverty neighborhood. PBRA subsidy
contracts are a very important piece of a financing or refinancing
request. They help an affordable housing development pencil out, and
provide housing for extremely low-income households in areas with
greater opportunity.
Preserve Access to Low-Poverty Areas
At the same time, it is important to preserve existing Federal
investments in lower-poverty communities. Losing this resource by
contract expiration of project-based assistance or vouchering out
public housing would be a step backward in efforts to deconcentrate
poverty and expand access to opportunity. Project-based rental
assistance (PBRA) units house over 1.2 million low-income households
(Jordan and Poethig 2015). Thirty-three percent of active PBRA units
are at risk of loss largely because contracts that will expire in the
next 24 months, which will allow property owners to leave rental
affordability programs if they choose, or they are in poor physical
condition. This amounts to over 446,000 units at risk of losing their
affordability status. Sixteen percent of these at-risk PBRA units are
in neighborhoods with poverty rates below 10 percent. Preserving these
units leverages previous and existing investments to help keep low-
income families in higher opportunity communities. Several States and
cities have model approaches to encouraging preservation of at-risk
units, but they rely heavily on support from the philanthropic sector
and HUD regional office engagement, which is not uniform across the
country (Treskon and McTarnaghan 2016).
Another effort to improve and preserve the public housing stock is
the Rental Assistance Demonstration (RAD). This effort, currently still
a pilot program, helps convert public housing projects in need of
repair to project-based vouchers or rental assistance contracts. Doing
this enables public housing agencies more flexibility to access much-
needed private capital or other public funding sources, providing
another stream of resources outside the Federal Government to help
preserve and repair the backlog of capital needs. While this program
holds promise, it is not yet clear how RAD will reach, if at all, some
of the most distressed public housing units or units located in higher-
poverty communities with less market activity. We also need to know
more about how residents are faring through this conversion; an
evaluation underway by scholars at the Urban Institute is looking at
exactly this point. It is essential to better understand both the
impacts to properties and the people who call them home before reaching
a conclusion about the broader implications of the program.
Solve the Wrong Pockets Problem
More than half the recipients of Federal assistance are seniors or
people with disabilities (CBPP 2015). Housing stability and easy access
to services and amenities are paramount factors for these groups. A
growing body of evidence finds cost savings to other systems when
seniors and people with disabilities are stably housed and connected to
services. Yet, we do not have standard mechanisms for capturing those
savings in other systems like health and reinvesting them in the
housing supply.
One approach is to build a case that housing assistance should be a
reimbursable expense for Medicaid, especially when stable housing is
proven to lower healthcare costs. Another approach is to provide HUD
with demonstration authority to test different approaches, such as pay
for success, which would enable cost savings in one system to be
reinvested in affordable housing production or rental assistance. There
are several examples of pay for success transactions paying for
services on the site of affordable housing, but not the housing itself.
Some additional Federal incentives might encourage local demonstrations
that would use a pay for success model to finance rental assistance
(Pay for Success n.d.).
Grow the Evidence Base
As we anticipate future demand for affordable rental housing, it is
critical that we continue to grow our knowledge base about the most
effective strategies for meeting these needs. At all levels of
government, public leaders are increasingly leveraging the rapid growth
of available data to evaluate how well their programs are working--and
at what cost. Evidence-based policymaking is an approach to learning
and doing ``what works'' that involves both real-time performance
management strategies and longer-term evaluation of programs, as well
as innovative data linking and analysis that can reveal new insights
about how programs should be targeted. This data-centric approach can
build ground for bipartisan compromise, as evidenced in the
establishment of the Commission on Evidence-Based Policymaking, which
has been spearheaded by Speaker Ryan and Senator Murray.
While a great deal of research has shown the value of housing
assistance and mobility in increasing access to opportunity and
improving long-term outcomes, much more research and experimentation is
needed to discern the best ways to help families take advantage of
mobility. The Mobility Demonstration proposed in the President's budget
would go a long way toward building an evidence base for strategies
that encourage moves to low-poverty neighborhoods. It is also critical
that Moving to Work (MTW) agencies are investing in high-quality
evaluations of the interventions they are developing under their
authority.
At the same time, we need to invest more in research on how these
place-based investments may contribute to neighborhood revitalization
and improved resident outcomes. HUD has learned through the evolution
from HOPE VI to the Choice Neighborhoods program that a more
comprehensive community development approach to public housing
transformation better integrates the developments into their
surrounding communities and enables the public housing agency and its
partners to address longstanding issues such as crime, education, and
employment as part of overall redevelopment efforts. Through these
efforts, we have also learned that we need better mechanisms to protect
tenants from long-term displacement and support their ability to stay,
should they so choose. In communities that are revitalizing, place-
based investments such as public housing or PBRA can be an important
way to help residents stay and benefit from these changes but we need
better ways to track these results.
Continuing to build the evidence base on rental assistance will
require both increasing the supply of data available to researchers and
pursuing further opportunities to integrate existing datasets. While
much can be learned from surveys and from Federal, State, and local
administrative datasets, private property owners and managers are an
essential group in the evidence-building process; they often have more
nuanced, on-the-ground information about tenure and outcomes than
governments can collect. But because providing such information usually
isn't mandated by housing assistance programs, incentives should be
developed to encourage owners and managers to regularly submit data on
tenant outcomes. The form these incentives take may vary by program,
but getting more consistent information from private owners will give
researchers a clearer picture on best practices for place-based housing
assistance.
Finally, researchers must be able to better take advantage of the
rich datasets already available. Chetty's and Hendren's groundbreaking
research relied in part on connecting previously unlinked datasets from
government offices like the Census, the IRS, the Department of Housing
and Urban Development, and the Integrated Postsecondary Education Data
System. A range of other important data linking efforts are under way,
including the development of integrated data systems hosted by
universities, research organizations, or governments that serve as one-
stop-shops for researchers to connect datasets across scales and policy
areas. Though legal barriers and the important need to protect
individual privacy can make data linking slow, only by expanding access
to public data resources can researchers most effectively glean deeper
insights about families' needs and how these programs are able to meet
them.
Senator Collins. Thank you so much for your testimony.
We will next hear from Richard Gentry, the President and
CEO of the San Diego Housing Commission. I look forward to
hearing your testimony.
STATEMENT OF RICHARD GENTRY, PRESIDENT AND CEO, SAN
DIEGO HOUSING COMMISSION
Mr. Gentry. Thank you, Senator Collins, for having me here
today, and thank you, Senator Reed, for that kind introduction.
I do not know the quality of my track record, but I have been
around for a while. I began my 45th year in this industry
earlier this month, and I have worked in it all the way from my
home State of North Carolina to now southern California. And I
have seen a wide variety of iterations of affordable housing in
the country, and that does come to bear on what my testimony
is.
I will point out that I presented written testimony for the
record. I am not going to try to repeat that. We certainly do
not have the time for that, but I would like to hit three or
four of the highlights from that paper.
Number one is I do not think it is good to start with
defending particular programs. I think what is important are
the principles involved in who we serve and who pays the bill
for who we serve, and those principles are fairly obvious but I
think bear restating. And that is, that we should look to
achieve the greatest benefit of the program for the low-income
families who are served and also to maximize the efficiencies
and expenditures by the taxpayers who are footing the bill for
all of these programs one way or the other.
I think that the methodologies involved in responding to
those two principles are basically twofold. One I think is
providing choice to the families involved. And I think that we
transform low-income families from passive clients into active
consumers when they are able to make choices which, in turn,
empower them, and the choice of where a family lives is one of
the most basic I think that any of us can have. I think that
what can help turn a low-income family into a middle-income
family is the recognition that they have a choice in their
lives and that the choices they make can empower them and their
families.
I think, in turn, the methodology locally that will help to
create those choices are, as much as possible, local
decisionmaking. I think different jurisdictions across the
country have unique housing needs. I have seen that in the
course of my career which has taken me from North Carolina to
Texas back to Virginia, to Chicago, where I worked across the
country as a low-income housing tax credit syndicator, and now
to San Diego.
I think that decisions are best made when they are made on
the local level. There is a term that is in great use in the
European Union that I think would apply to this country as
well, and that term is ``subsidiarity.'' And subsidiarity means
over there that when I make a decision in Brussels, if it can
be made in London, why make it in London if it can be better
made in Liverpool. And I think the analogy here is why make a
decision in Washington, D.C. if that decision can be made in
Sacramento. Why make it in Sacramento if it can be made in San
Diego?
So I think getting the decisionmaking as close to the local
action as is possible with the flexibility inherent in those
decisions is another key to providing choice to the families
and ensuring not only do the families get served well but that
the taxpayers are rewarded with efficient programs as well.
That said, it is my belief in my 44 years of experience
that public housing is itself a failed business model. It does
not work. It is a top-down command-and-control, one-size-fits-
all formula that tries to wedge everybody into the same box.
And that is not to denigrate either the residents of the
programs or the program operators. Indeed, if you can make a
public housing program work, you can make just about anything
in this country work in my opinion.
What I believe, though, is that the public housing program
as it has been traditionally applied is like a metaphor of an
assembly line. High volume of the same thing, which may have
fit this country well in decades past. I think a better
metaphor for our current society is that of a network of smart
phones and personal computers that have the same platform but
provide great variety in use of flexibility for the end user.
That said, the Section 8 housing choice voucher program works
very well in providing that flexibility.
I will point out as well that what we have tried to do in
San Diego--and I would refer you to the San Diego model as
spelled out in the paper and as described in great detail on
the Housing Commission's website--is what I believe the
industry needs to move to. That is a balance between supply-
side and demand-side housing for this business. And please bear
with me. I always get those two mixed up.
The supply side is making sure that there is product to be
housed in and the subsidies needed for that. Demand side is
subsidies to the consumer to help them choose where to live and
live in it successfully. I think getting a proper balance
between those two is utterly crucial as we move forward.
I would be glad to go into that in more detail during
question and answer.
[The statement follows:]
Prepared Statement of Richard C. Gentry
introduction
Good morning, Chair Collins, Ranking Member Reed, and members of
the subcommittee. I am Richard C. Gentry, the President and Chief
Executive Officer of the San Diego Housing Commission, which serves
low-income residents in the city of San Diego--the eighth largest city
in the Nation and second largest city in California. I am honored to be
here today to testify about Federal Section 8 Housing Choice Voucher
rental assistance and public housing.
I began working in San Diego in 2008; however, my experience in
affordable housing spans 44 years--beginning with the U.S. Department
of Housing and Urban Development (HUD) in 1972. I have served as the
CEO of the public housing authorities in Austin, Texas, and Richmond,
Virginia, as well as working in the private sector as the Senior Vice
President of Asset Management for the National Equity Fund in Chicago,
Illinois, the Nation's largest nonprofit Low-Income Housing Tax Credit
syndicator, and as the Vice President for Public Housing Initiatives at
the Local Initiatives Support Corporation (LISC) in Washington, D.C. My
opinions today reflect the diversity of my background and the breadth
of my experience.
Federal housing programs should be guided by two principles:
1. Achieving the greatest benefit of the program for the low-
income families that are served; and
2. Maximizing efficiencies in the expenditure of taxpayer funds.
With this in mind, methodologies need to be evaluated to determine
if they are the best practices to accomplish the mission of assisting
individuals and families in the most effective way.
As methodologies are evaluated, two additional factors are
essential to consider:
1. Housing Choice--Low-income families are transformed from
``clients'' into ``consumers'' when they are able to make
choices, which empowers them. A lack of choices hinders
families from reaching the middle class.
2. Local Decision-making--Different jurisdictions across the
country have unique housing needs. With this in mind, decisions
are most effective when they are localized as often as possible
and are made at the level closest to the jurisdiction.
Public Housing and Section 8 Housing Choice Voucher Rental Assistance--
History
Federally funded public housing in the United States dates back to
the Housing Act of 1937, which provided Federal funds to public housing
for low-income working class families. However, public housing
proliferated after the Housing Act of 1949, which began applying income
limits so that public housing served low-income residents, while
working class families were supported in their access to private sector
housing.
HUD was created by legislation in 1965 to oversee Federal housing
programs for vulnerable low-income households, such as seniors,
individuals with disabilities, and families.
The Housing and Community Development Act of 1974 and subsequent
revisions to it, along with program rules from HUD, created the Section
8 Housing Choice Voucher rental assistance program.
It is important to note that private sector rental housing today
continues to provide the majority of the rental housing opportunities
for both Americans who receive Federal housing assistance and those who
do not.
According to HUD, approximately 1.1 million American households
live in public housing, which is 1 percent of the approximately 116
million households in the United States, based on U.S. Census Bureau
data. In addition, approximately 3.4 million households, or 2.9 percent
of all households in the United States, receive Federal Housing Choice
Voucher rental assistance or Project-Based rental assistance, according
to HUD's proposed budget for fiscal year 2017 (October 1, 2016--
September 30, 2017).
With that said, I believe that the United States' traditional
public housing program is no longer viable in its current form to
continue serving the needs of low-income Americans. America's
traditional public housing program has been, since its inception, a
top-down, one-size-fits-all, centralized, command-and-control program
operated in Washington, D.C., that is intended for implementation
uniformly across the country. In a country as large and diverse as the
United States, a public housing program with centralized mandated rules
does not work.
This is not criticism or denigration of the low-income individuals
and families who live in public housing or those who operate the
program. However, the program's structure is flawed and needs to be
changed to more efficiently use taxpayer resources to serve the housing
needs of low- income Americans.
The public housing program reflects an assembly line methodology of
producing a high volume of uniform housing across jurisdictions, which
was better suited to American culture decades ago in the 1930s, 1940s
and 1950s.
However, today's culture reflects the influence of technological
advancement and is analogous to a network of smartphones and personal
computers supported by a standard structure, but with variabilities to
meet individual needs. The Section 8 Housing Choice Voucher rental
assistance program better serves this culture, delivering
individualized assistance tailored to the needs of the individual
customer.
The Section 8 Housing Choice Voucher rental assistance program is
the most useful affordable housing program that I have seen the Federal
Government develop in my 44 years working with affordable housing. It
is the most effective option available in the United States today and
in the future for providing affordable housing for low-income
individuals and families.
In addition, it is important to keep in mind the need for funding
at appropriate levels if public housing is converted to Housing Choice
Voucher rental assistance. In its fiscal year 2017 budget, HUD proposed
funding approximately $9,500 per family for Housing Choice Voucher
rental assistance ($20.9 billion for 2.2 million families), compared
with approximately $5,863 per family for public housing ($6.45 billion
for 1.1 million families). Therefore, to successfully address
affordable housing needs, the conversion of public housing to Housing
Choice Voucher rental assistance requires a corresponding increase in
funding per family.
As this subcommittee considers the question, ``Housing vulnerable
families and individuals--is there a better way?'' I submit that
providing affordable housing opportunities should look much like the
San Diego model, with the innovative approaches we have implemented at
the San Diego Housing Commission (SDHC).
public housing conversion--the san diego model
A landmark agreement on September 10, 2007, between SDHC and HUD
transferred full ownership and operating authority for 1,366 public
housing units to SDHC--the largest public housing conversion at the
time.
``San Diego knows more about what San Diego needs than the Federal
Government does. And when San Diego came to me and said we need to do
this, I was compelled to listen,'' said Orlando Cabrera, the former HUD
Assistant Secretary, who approved the landmark agreement with SDHC.
SDHC paid HUD $1,366--a nominal $1 per unit--to acquire 137
properties with a combined fair market value of $124.2 million. All the
properties were debt-free.
In exchange, SDHC committed to leverage the equity lying fallow in
these former public housing units to create at least 350 additional
affordable housing units--a number SDHC far surpassed.
The SDHC Board of Commissioners and the San Diego City Council
approved SDHC's application to withdraw from HUD's public housing
program, which HUD also approved.
``What the San Diego Housing Commission did was basically say we
can't rely on the Federal taxpayer to continue to maintain units,
because it's not serving our residents well. It's not serving our
community well. They essentially took resources, and then they created
better units with them,'' said former HUD Assistant Secretary Cabrera.
Creating and Preserving Additional Affordable Housing
SDHC presented HUD with a variety of options it was considering to
fulfill the obligation for the creation of additional affordable rental
housing units.
HUD responded on Oct. 17, 2008, by approving seven options, all of
which required SDHC to have a property ownership.
Ultimately, SDHC chose two courses of action that would create and
preserve affordable housing for families in the city of San Diego:
1. Purchase the land and provide a loan and ground lease to the
developers. After the 15-year tax credit compliance period,
SDHC would have the option to buy the public-private
partnership properties.
2. Purchase property directly or in partnership with a government
agency.
Also required were a series of administrative steps to obtain the
appropriate local approvals from the SDHC Board of Commissioners and
the San Diego City Council, sitting as the Housing Authority of the
City of San Diego.
These approvals would bring about internal changes to past
operating practices and set up SDHC for the financing and ongoing
management of the public housing conversion program.
SDHC then implemented an innovative Finance Plan that was developed
in 2009, which leveraged significant private sector financial
investment.
San Diego City Councilmember Todd Gloria, who served on the SDHC
Board of Commissioners at the time the agreement with HUD was being
negotiated, said: ``I think the concern that I had was how do we
maintain the solvency of the agency as we saw the subsidy being
reduced. That obviously produced a lot of financial challenges to the
organization.''
SDHC leveraged the equity from this new real estate portfolio to
create or preserve 810 additional affordable housing in the city of San
Diego through direct acquisitions and public- private partnerships. All
of the units will remain affordable for at least 55 years.
Minimizing Financial Risk
In its loan underwriting, SDHC sought to minimize any financial
risk. Among the key elements of the borrowing:
--Both Fannie Mae and FHA mortgage programs were used as sources of
borrowing, providing more than one option for capital under
circumstances when time was of the essence.
--SDHC limited its use of equity to only 78 converted public housing
properties of five units or more, a total of 1,254 units.
--While lenders would have accepted a loan-to-value ratio (LTV) of 80
to 85 percent, SDHC limited itself to 70 to 75 percent,
providing additional cash flow to support the debt load going
forward.
--Variable interest rates were slightly better at the time, but SDHC
used fixed-rate loans only to better quantify its risk, and
used 30-year instead of 10-year loans.
--Reserve accounts also were established.
When SDHC closed its loans with Fannie Mae on December 30, 2009, it
had raised $37.1 million at a 7.32 percent interest rate.
The FHA loans closed on August 31 and September 30, 2010. SDHC
raised $58.2 million with a 3.76 percent interest rate.
Rehabilitating Former Public Housing Units
Lender requirements prompted SDHC to collect financial statements,
rent rolls, appraisals, title and zoning reports, regulatory agreements
and other documents--as many as 80 reports per property--on the 78
former public housing properties that were leveraged.
After the properties were reviewed, lenders requested that SDHC
perform critical and non- critical repairs. While the original work
list was lengthy, it was limited in scope.
SDHC capitalized on this opportunity to expand the scope of work
and provide a more comprehensive rehabilitation program than what was
required by the lenders. At the conclusion of rehabilitation, nearly
$3.2 million had been invested in the physical assets.
Housing Choice Vouchers for Residents
When the former public housing units converted to SDHC ownership,
residents were provided with Federal Section 8 Housing Choice Vouchers.
They could then use the vouchers at their existing units or take
them with them as rental assistance to another rental home of their
choice.
This expanded the opportunities for affordable housing to hundreds
of additional San Diego families and provided them with more choices.
Approximately 50 percent of the residents chose to stay at their
existing units.
Vacancies in SDHC properties were filled with families who met the
income eligibility established in the agreement with HUD.
Local Action Amid Declining Federal Investment
The public housing conversion emerged from a growing realization by
the SDHC Board of Commissioners and executive leadership that SDHC's
dependence upon the Federal Government's historic investment in
construction and maintenance of public housing could not be sustained
under the current Federal model.
Federal public housing subsidies for operations and maintenance
were based on a formula, were not keeping pace with need, and were
counterproductive to good private sector management techniques. Across
the Nation, fewer new public housing units were being developed despite
a growing demand for workforce and family housing.
``I think one of the most important things is that it created
public-private partnerships, gave the Housing Commission the ability to
sustain even more affordable housing units and to serve more people, to
serve more families. And today if you look at the environment around us
where you see an economic downturn, foreclosures, families who are in
greater need than they were before, you know it was a really smart
thing to do,'' California State Assembly member Toni Atkins, the former
Speaker of the California State Assembly and a former San Diego City
Councilmember, said in 2012.
On October 2, 2012, SDHC published a special multimedia digital
report about the landmark public housing conversion and SDHC's Finance
Plan, which is used today by other public housing authorities as a
manual to emulate. The report, ``Creating Affordable Housing Through
Public Housing Conversion,'' is posted on SDHC's website: http://
www.sdhc.org/uploadedFiles/Media_Center/Digital_Reports/Public
HousingConversionReport.pdf.
In addition to SDHC's own particular type of public housing
conversion, there is another landmark Federal program that provides
additional public housing authorities with similar opportunities to
transform or enhance their public housing:
Rental Assistance Demonstration
Nearly 4 years after SDHC's landmark public housing conversion
agreement with HUD, the Federal Consolidated and Further Continuing
Appropriations Act, 2012, was enacted on November 18, 2011, creating
the Rental Assistance Demonstration (RAD) program.
RAD allows public housing to be converted to long-term, Section 8
Housing Choice Voucher project-based rental assistance contracts. This
conversion under RAD enables properties to obtain private financing to
perform maintenance that had been deferred.
Although SDHC has not yet participated in RAD, we may utilize RAD
in the future for our 189 remaining public housing units, and we
support the public-private principles RAD is based upon.
providing federal rental assistance
Section 8 Housing Choice Vouchers
SDHC's largest program is Section 8 Housing Choice Voucher rental
assistance.
More than 15,000 low-income households in the city of San Diego,
including formerly homeless San Diegans and chronically homeless
Veterans, receive Federal Section 8 Housing Choice Voucher rental
assistance from SDHC.
These households include more than 37,000 men, women and children.
Approximately 56 percent of these households are seniors or
individuals with disabilities.
In addition to assisting low-income households to obtain rental
housing, SDHC's Housing Choice Voucher program invests millions of
dollars in the local economy each year.
In fiscal year 2016 (July 1, 2015--June 30, 2016), SDHC paid
$143,377,584 to approximately 5,600 participating landlords in the city
of San Diego, who are essential to providing affordable housing to low-
income San Diegans.
SDHC engages with private sector landlords to establish more
affordable housing opportunities by providing Federal rental
assistance.
SDHC partners with HUD to provide the most vulnerable San Diegans
with rental assistance to help them locate housing in the competitive,
high-cost San Diego rental housing market.
In addition, this program allows local agencies, such as SDHC, the
flexibility to categorize Housing Choice Vouchers in ways that best
serve their local communities, such as:
--Project-Based Housing Vouchers: Federal Project-Based Housing
Vouchers are awarded to specific affordable housing
developments to provide rental assistance linked to their
units. When a tenant moves, the rental housing voucher remains
with the affordable housing unit so that another low-income or
homeless San Diegan is able to move into the unit and receive
rental assistance.
--Sponsor-Based Housing Vouchers: SDHC awards Federal Sponsor-Based
Housing Vouchers to nonprofit organizations, or ``sponsors,''
that provide supportive services to homeless San Diegans.
Sponsor-Based Housing Vouchers provide rental assistance that
pays up to 100 percent of the tenant's rent, depending on their
income level.
Moving to Work
The U.S. Government's creation of the ``Moving to Work'' program in
1996 established a significant tool to provide affordable housing
opportunities, combining the flexibility to foster innovation with
continuing government oversight from HUD. Public housing authorities
must submit their proposed new MTW programs to HUD for approval.
MTW lessens the impact of the top-down approach of the public
housing program because it provides flexibility and allows local
agencies to determine the most effective programs for their
communities.
MTW has been especially significant in the expensive housing
markets of California, including San Diego.
SDHC is one of only 39 public housing agencies, out of 3,400
nationwide, to receive the MTW designation from HUD, which allows
flexibility to create innovative, cost-effective approaches to provide
housing assistance to low-income families.
I want to thank the members of this subcommittee for your efforts
to extend the contracts of MTW agencies, such as SDHC, for 10 more
years, through 2028, which was approved in the Consolidated
Appropriations Act of fiscal year 2016 on December 18, 2015.
This Congressional action also will expand the MTW program to an
additional 100 public housing agencies across the country. I believe
that the MTW program should eventually apply to all public housing
agencies other than those identified by HUD as ``troubled'' to provide
them with the structure and flexibility to design programs in their
communities.
In San Diego, the MTW program has allowed SDHC to encourage
families and reward them for productive activities, as you will see in
my comments about the SDHC Achievement Academy.
SDHC's MTW initiatives provide: opportunities for Section 8 Housing
Choice Voucher rental assistance participants and public housing
residents to become more financially self-reliant; funding toward the
creation and preservation of affordable housing for homeless San
Diegans; and rental housing vouchers to address homelessness.
SDHC Achievement Academy
A significant component of SDHC's MTW initiatives is that we want
to reward households for taking steps to move to work. The SDHC
Achievement Academy is a critical MTW initiative to help low-income
residents break the cycle of poverty and become more financially self-
reliant.
On October 4, 2010, SDHC opened the SDHC Achievement Academy, a
state-of-the-art learning and resource center and computer lab at
SDHC's headquarters in Downtown San Diego. The SDHC Achievement Academy
provides programs that emphasize career planning, job skills and
personal financial education--at no cost to Section 8 Housing Choice
Voucher rental assistance participants and public housing residents.
In fiscal year 2016 (July 1, 2015--June 30, 2016), 1,930
participants received services at the SDHC Achievement Academy.
The SDHC Achievement Academy's main program is Family Self-
Sufficiency (FSS).
Heidi, age 39, was a homeless, pregnant teen when she began
receiving Federal rental assistance from SDHC in 1997. She began
participating at the SDHC Achievement Academy in 2012 and enrolled in
FSS.
Working as a waitress, she was able to obtain an associate's degree
in 2007. Two years later, she graduated from California State
University, San Marcos with a bachelor's degree in criminology and
justice studies. In spring of 2016, she earned her doctorate degree in
sociology from the University of California, San Diego.
``There is absolutely no way that I would have had the opportunity
to go to school if I didn't have my rent subsidized. I didn't have to
work three jobs to support my family. I was able to take that time and
go to school. I always felt like I had someone in my corner, someone
that supported me, someone that wanted me to be successful, and I'm
speaking specifically of FSS,'' Heidi said.
Heidi is looking for work as a professor and plans to phase out of
Federal rental assistance, making assistance available for another low-
income family.
SDHC utilized MTW flexibility to redesign the SDHC Achievement
Academy's FSS, program, to provide enhanced opportunities for families
to become more financially self-reliant.
Currently, 327 individuals are participating in the SDHC
Achievement Academy's FSS program.
A voluntary, 2-year program, FSS provides a variety of courses,
including: job training, career planning, and financial literacy
education, such as budgeting, saving, establishing good credit, and
income tax preparation.
Participants are required to follow a career plan and obtain a job
working at least 32 hours per week. FSS is available at no charge to
the head of household receiving SDHC HCV rental assistance and public
housing residents.
SDHC Achievement Academy FSS participants are able to earn up to
$10,000 in an interest-bearing escrow account based upon their
educational and employment-related accomplishments. Funding for these
financial incentives is provided by HUD. FSS program participants may
use these funds as they wish when they complete the program.
Path to Success
With the flexibility provided by MTW, SDHC created the Path to
Success initiative to encourage Housing Choice Voucher families to
become more financially self-reliant.
Under Path to Success, SDHC identifies Housing Choice Voucher
rental assistance participants who are able to work (Work-Able).
With approximately 2,800 Work-Able families now paying toward their
rent for the first time, SDHC's goal is to expand the Housing Choice
Voucher program to those families on the waiting list, if it is
financially feasible.
Providing rental assistance to families who are not working
requires more Federal funds than assisting working families who
contribute toward their rent.
Work-Able Families:
--Households with at least one adult who is under 55, not disabled,
and not a full-time student ages 18-23.
--Full-time students ages 18-23 are considered Work-Able if they are
the spouse, head or co-head of the household.
--Income and household circumstances are reviewed every 2 years
instead of annually.
SDHC sees Housing Choice Voucher participants as partners in
utilizing limited Federal funds to help as many families in need as
possible.
Path to Success sets minimum monthly rent payment amounts for Work-
Able families.
New minimum monthly rent payment amounts were implemented for Work-
Able families, effective July 1, 2015:
--Households with one Work-Able person now pay a minimum rent of $300
(up from $200); and
--Households with two or more Work-Able individuals now pay a minimum
rent of $500 (up from $350).
When the Path to Success initiative was implemented on July 1,
2013, the initial minimum monthly rent payment amounts were based on
California's minimum wage standards--$8/hour at the time.
SDHC determined what a Work-Able household could earn working 20
hours a week at minimum wage, and then calculated minimum rent payment
amounts that would be approximately 30 percent of that monthly figure.
SDHC's Housing Choice Voucher program includes 6,587 Work-Able
households. Of these, 2,814 pay minimum rents.
Work-Able families pay either the minimum monthly rent payment
amount or the rent payment amount based on the family's annual income,
whichever is greater.
Adjusted annual income is separated into income ranges. The lower
edge of the range is used to calculate the family's rent payment.
Example:
--The monthly rent payment amount for any family with adjusted annual
income between $20,000 and $24,999 will be calculated using
$20,000 as their income.
--It is possible that a family's monthly rent payment amount may
decrease under Path to Success.
Hardships
Families may apply for a temporary hardship exemption from the
minimum monthly rent payment amounts.
If the exemption is approved, the household is required to
participate in SDHC Achievement Academy work readiness programs for the
duration of the hardship period.
Elderly/Disabled Families:
The Path to Success minimum rent payment amounts do not apply to
Elderly/Disabled households:
--Households where all adult family members are 55 or older,
disabled, or a full-time student ages 18 to 23.
--Income and household circumstances will be reviewed every 2 years
instead of annually.
--The minimum monthly rent payment amount for an Elderly/Disabled
family is $0.
Choice Communities
In San Diego, one of the programs that helps to achieve economic
integration through more economically diverse, balanced communities is
SDHC's Choice Communities program (not the Federal Choice Communities
program), an MTW initiative that began on January 1, 2010.
SDHC's Choice Communities program helps Section 8 Housing Choice
Voucher rental assistance participants move from high- and medium-
poverty areas to low- poverty neighborhoods in the city of San Diego.
Since the launch of the program, 290 low-income families in the
city of San Diego have been able to move to areas with more options for
transportation, schools, and employment opportunities.
Leasing a three-bedroom home from a private landlord was possible
for Maria and her two sons, ages 6 and 12, because of SDHC's Choice
Communities program. A no-interest loan through the program helped
Maria pay the security deposit for the rental home.
``I would not have been able to do that on my own because that's a
lot of money for me as a single mom,'' said Maria, who works in
customer service for a local hospital. Maria has received Federal HCV
rental assistance for the last 6 years.
The Choice Communities program:
--Allows a higher monthly rent subsidy, or ``payment standard''
--Provides no-interest loans of up to $1,450 for security deposits,
to be paid to the property owner, with low monthly repayments
--Provides additional resources, information and guidance to families
interested in moving to one of the specified low-poverty Choice
Communities
Overall, 807 Housing Choice Voucher families live in Choice
Communities, including families who lived in these neighborhoods before
the Choice Communities program began or who are new to SDHC's Housing
Choice Voucher program and chose to live in these communities.
I believe that, as we move forward, many of the programmatic tools
already exist to assist low- income families, as I have shown with the
San Diego model for public housing conversion and SDHC's MTW
initiatives. To help low-income families move out of poverty, it is
essential for local agencies to be provided with the flexibility to
choose the options that show the greatest success in their communities.
As local agencies make these decisions, they are held accountable by
HUD and local governing bodies, such as the SDHC Board of Commissioners
and the Housing Authority of the City of San Diego.
addressing homelessness
The flexibility to meet local needs is utterly essential to
effective affordable housing strategies. Challenges are not the same in
all cities and counties across the country. A specific challenge for
affordable housing in San Diego is homelessness.
The San Diego region ranks fourth in the Nation in homeless
population, behind New York, Los Angeles, and Seattle, according to the
Annual Homeless Assessment Report to Congress, published in November
2015.
Housing First Model
The future of affordable housing includes providing housing
opportunities for homeless seniors, Veterans, families, and
individuals.
SDHC is a driving force of the national Housing First model in the
city of San Diego--to provide homeless individuals with housing as
quickly as possible, with supportive services as needed.
As an MTW agency, SDHC on July 1, 2010, became one of the first
public housing authorities in the Nation to receive approval from HUD
use Federal rental housing voucher funding to provide long-term housing
for chronically homeless individuals.
HUD also approved SDHC's request to utilize its MTW status to
invest its Federal funds to preserve or build affordable housing for
homeless San Diegans.
housing first--san diego
SDHC is applying the power of these Federal resources to address
homelessness through HOUSING FIRST--SAN DIEGO, SDHC's 3-year
Homelessness Action Plan (2014-17), which was launched on November 12,
2014.
Award Development Funds--Up to $30 Million over 3 years (Up to $10
million each year) to create permanent supportive housing that will
remain affordable for 55 years.
To date, SDHC has awarded $12 million in Federal, State, and City of
San Diego funds administered by SDHC to four developments,
which will provide a total 167 affordable housing units for
homeless individuals.
Commit up to 1,500 Federal Rental Housing Vouchers for Permanent
Supportive Housing to provide housing to homeless individuals and
families (Award up to 300 new housing vouchers each year to complement
576 housing vouchers already awarded).
To date, SDHC has awarded a total of 822 Federal rental housing
vouchers.
Renovate Hotel Churchill--72 Units of Permanent Supportive Housing:
56 units for homeless Veterans; 8 units for transitional age youth ages
18-25, such as youth aging out of foster care; and 8 units for adults
exiting the corrections system who also need supportive services.
The grand reopening of the historical Hotel Churchill was celebrated
on Monday, September 19. SDHC worked with our nonprofit
affiliate, Housing Development Partners, to rehabilitate Hotel
Churchill. SDHC invested $9.2 million in MTW funds; $2.9
million in HOME Investment Partnerships Program funds awarded
by HUD to the City of San Diego and administered by SDHC; and
$3.2 million in City of San Diego funds administered by SDHC
toward the $20.6 million rehabilitation cost.
Invest MTW Federal Funds to Acquire Property that sets aside 20
percent of its units for permanent supportive housing for homeless San
Diegans.
SDHC invested $15 million in MTW Federal funds to purchase the 120-
unit Village North Senior Garden Apartments. Twenty percent of
the units--24 units--are set aside for homeless seniors.
Dedicate SDHC-Owned Housing Units--25 for Homeless San Diegans.
SDHC is one of the first public housing agencies in the Nation to
commit affordable rental housing that it owns for this purpose.
This is a rapid re-housing component of HOUSING FIRST--SAN DIEGO.
Since the program began, 13 families have become financially
self-reliant and are now able to pay full rent or have moved to
another apartment. The program served 135 individuals,
including 87 children and 13 Veterans.
SDHC's multimedia digital report about HOUSING FIRST--SAN DIEGO was
published on November 21, 2014, and is posted on SDHC's website:
http://www.sdhc.org/uploadedFiles/Media_Center/Digital_Reports/SDHC%20
Homelessness%20Action%20Plan.pdf.
New initiatives for the second year of HOUSING FIRST--SAN DIEGO
include:
--The 1,000 Homeless Veterans Initiative.--Provide housing
opportunities for 1,000 homeless Veterans in the city of San
Diego within 1 year--March 2017.
Nearly 330 homeless Veterans have secured housing through SDHC's
The 1,000 Homeless Veterans Initiative, which has four program
components:
--Landlord Outreach--``Housing Our Heroes''
--Rapid Re-housing Assistance
--SDHC Federal Veterans Affairs Supportive Housing Vouchers
--SDHC Federal Housing Vouchers with Supportive Services
The Guardian Scholars Program at San Diego State University
(SDSU)--A nationally unprecedented partnership between SDHC and SDSU to
provide rental assistance for up to 100 students who have been homeless
or at risk of homelessness.
The Monarch School Project--Federal housing vouchers for 25
families with students impacted by homelessness.
News releases about these new initiatives are available on SDHC's
website:
--July 20, 2016: The 1,000 Homeless Veterans Initiative http://
www.sdhc.org/uploadedFiles/Media_Center/News_Releases/
NR%20Housing%20Our%20
Heroes%20%20Progresss%20Report7.20.16.pdf.
--December 3, 2015: The Guardian Scholars Program and The Monarch
School Project http://www.sdhc.org/uploadedFiles/Media_Center/
News_Releases/NR.
SDHC-SDSU%20HousingFirstSanDiego.12.3.15.pdf.
conclusion
Creating more affordable housing opportunities for low-income
families requires innovative solutions that foster public-private
partnerships.
As SDHC's experience demonstrates, converting public housing to
Section 8 Housing Choice Voucher rental assistance is the type of
ingenuity needed to maximize the benefit to low-income families, and to
ensure that taxpayer funds are utilized efficiently.
With Section 8 Housing Choice Voucher rental assistance, low-income
families are able to choose the housing that meets their individual
needs, empowering them to be active consumers instead of clients--an
option that public housing does not provide. In addition, the local
economy benefits from the infusion of Federal funds paid to private
landlords, who are essential partners.
The flexibility afforded by the MTW program enhances Section 8
Housing Choice Voucher rental assistance to achieve additional
beneficial results.
As approaches toward affordable housing evolve in the United
States, I encourage all of us to be constantly open to identifying a
continuously changing variety of solutions and to recognize the
importance of both the government and the private sector to meeting the
housing needs of our unique communities.
Senator Collins. Thank you very much for your testimony as
well.
Let me start with you, Mr. Gentry. The conversion of public
housing at the San Diego Housing Commission was a long,
multiyear effort, and I am sure at times that it was an
extremely difficult one. I have a couple of questions for you.
One, as you reflect on the experience, what was the biggest
challenge and the greatest success?
MOVING TO WORK PROGRAM
And second, how important was the Moving to Work program,
which we have expanded, or was the Moving to Work program an
important part of that conversion?
Mr. Gentry. Ma'am, the biggest challenge was simply getting
people to understand that we were not walking away from our
responsibilities. In fact, we had a lot of criticism early on
from people who you would have thought would have some of our
best supporters that we were walking away from our
responsibilities and did not want to serve poor people anymore.
And the analogy I use for that is that people sometimes cannot
differentiate between methodology and mission, and if the
methodology changes, I think you have abandoned your mission.
My belief is that methodologies are in constant flux,
constant change, and we should be continuing trying to do
things better as we move forward and that is, we are
continually breaking the mold and doing things in better and
different ways. It does not mean we are walking away from our
mission.
So I think simply getting folks to understand and support
what we were doing throughout the community and also in this
city frankly was our biggest problem. Beyond that, it was just
a matter of working it out.
In terms of Moving to Work--and San Diego is one of the
original Moving to Work agencies--my predecessor had
unfortunately let the Moving to Work program lapse over the
years so that it was abeyance at the time that the public
housing conversion was approved by HUD, which was in September
of 2007.
DEMOLITION/DISPOSITION ACTIVITY
The authorizing legislation was the demolition disposition
part of the Housing Act of 1998. And in that regard, the
conversion can be done by any agency whether they are moving to
work or not.
I will point out also, because the critics will hear the
demo dispo word and think that we got rid of property or walked
away from our responsibilities, the Housing Commission in San
Diego did not demolish a thing. We have not disposed of a
thing. We still have those 1,366 units in our inventory. It is
just that they are operating on San Diego Housing Commission
principles now rather than public housing principles.
Senator Collins. Ms. Poethig, we know that the research
tells us that the ZIP code in which one is raised is a likely
predictor on how one is going to do in life. So it has a real
impact on our children. You can go by public project housing in
Washington, D.C. It is often dilapidated in high-poverty areas.
The schools in those areas are not good.
Is continued subsidization of public housing in
neighborhoods like the ones I described just perpetuating
problems and an ineffective use of Federal resources?
There is an amazing study that was done by the Robert Wood
Johnson Foundation that you may be familiar with that
determined that the variation between neighborhoods can be so
dramatic that in Richmond, Virginia, babies born within 5 miles
of downtown Richmond face up to a 20-year difference in life
expectancy.
PROJECT-BASED RENTAL ASSISTANCE
Ms. Poethig. Madam Chairwoman, I share your concern about
the public housing units that are in neighborhoods over 40
percent concentrated poverty and that there have to be better
alternatives, if there are better alternatives. And I am happy
to submit more information for the record because I think we
should draw upon the experience of the vouchering out of public
housing in Chicago, the Robert Taylor homes in particular, that
were vouchered out without a particular plan, and what happened
was people actually resegregated into some of the very same
communities. So vouchers did not necessarily promote the
mobility of those families, and there were other concerns
associated with rapid vouchering out that did not have an
attendant plan.
Senator Collins. Thank you.
I have 5 seconds left, so I guess I will have to yield to
my ranking member. And I will come back to you, Dr. Olsen, on
the next round. Senator Reed.
Senator Reed. Well, thank you very much, Madam Chairwoman.
HOUSING CHOICE VOUCHERS
Ms. Poethig, again, without the basis of the kind of
analysis that Dr. Olsen and Mr. Gentry and you have done, the
perception is, particularly after 2007-2008 with the housing
crisis, people would buy houses because you could do it. If you
saw ``The Big Short,'' you could do it with lots of interesting
approaches.
Now there has been a huge shift into the rental market,
driving the price up. And underlying the discussion about
vouchers versus place-based support is the assumption that a
voucher will get you a home. In fact, in some of these studies,
the voucher will get you a home in a really great ZIP code.
What is the reality? Does the voucher get you a home, or you
have a voucher, but you do not have anyplace to live?
Ms. Poethig. Thank you, Senator.
So as you know, the Raj Chetty study, the study by Harvard
economists, has this incredible result. But Dr. Chetty has also
said that it is mathematically impossible to imagine that all
the people living in public housing in highly concentrated
areas of poverty could, in fact, find housing in areas of low
poverty. So that is just at a macro level.
Then within certain markets in certain communities, it is
absolutely appropriate to be concerned about whether there is a
supply of affordable rental housing available, particularly as
we are going to be growing in the number of renters, even
exceeding the number of homeowners in the next 15 years. And as
that demand grows, it will put pressures on the supply that is
not currently keeping up with demand. Currently we have 11.2
severely cost-burdened households, 70 percent of which are
extremely low-income. These are people without assistance. So
we have a ready group of people that fall in and out of
homelessness as a result of not having sufficient supply.
Senator Reed. Dr. Olsen, your comments? Because, again, I
think this is a critical question because there is some
compelling logic but also the reality is will this result in
higher cost to the Federal Government as rental prices go up.
Will it result in homes as people who have a voucher but do not
have a home?
HOUSING ASSISTANCE SUPPLY EXPERIMENT
Dr. Olsen. I do not think we need to be subsidizing
construction to get the number of units that we want. The
private market will do that.
But let me just tell you more specifically what would
happen if you authorize more vouchers. We know this from the
Experimental Housing Allowance Program, which operated an
entitlement voucher program called the Housing Assistance
Supply Experiment in two places. What happened in response to
providing a lot of vouchers was that units that did not meet
the standards were upgraded to meet them. So you had an
increase in the supply of units meeting the standards, largely
without additional units.
The homeless are the only people who do not have housing,
but we don't need additional units to house them, there are
about 600,000 homeless a night. There are over 3 million vacant
apartments every night. The reason homeless people are not in
those vacant apartments is they do not have the ability to pay
for them.
HOUSING CHOICE VOUCHER PROGRAM
Senator Reed. But this discussion is touching upon public
housing. Ms. Poethig suggested that to take the public housing
off, as in a way San Diego did--take it out and give people
vouchers in lieu of that, that is adding to a population
already existing of homeless people. And those 3 million empty
units exist because some of them are too expensive even with
the most elaborate public subsidies. If we go ahead and go to a
tenant-based voucher system, do we build in the law the
guarantee that they must be housed and where they are housed?
Dr. Olsen. I do not think we are anticipating tearing down
all public housing over a very short time horizon. We are
talking about a very gradual process of getting rid of the very
worst units, like we have already done. We have already lost
400,000 units from the peak, very gradually, 20,000 a year,
over many years. The private market can easily accommodate the
number of people who would go onto the market even if you tear
down public housing units.
LOW INCOME HOUSING TAX CREDITS
The other thing to know about the voucher program is that
it leads to more additional units than subsidized construction
programs like the tax credit. That may seem very
counterintuitive, but the explanation for it is that lots of
people who are served by all types of housing assistance are
doubled up prior to getting housing assistance, such as young
mothers with children living with their parents. About 25
percent of the people in the voucher program were previously
doubled up. Any housing program serves a certain number of
people of this type.
HOUSING CHOICE VOUCHER PROGRAM
Because the voucher program serves the poorest people,
there are more people served by that program who are doubled
up. And so it increases the demand for new units more. The
empirical result is that additional voucher units increase the
housing stock more than additional units subsidized under
construction programs. These results are reported in a paper in
the ``Journal of Political Economy.''
Senator Reed. When was that?
Dr. Olsen. ``Journal of Public Economy.'' Sorry.
Senator Reed. When was that?
Dr. Olsen. It was about 5 years ago. There is a reference
to it, I think, in my written testimony, but if there is not, I
will give it to you.
Senator Reed. I would appreciate that. But I think what we
are sensing--and again is that in these 5 years, there has been
a tremendous shift into the rental market by college graduates
who cannot afford homes, by people who choose to live in these.
So I think that the data we are looking at right now and the
trend that Ms. Poethig suggested are the increasing demand by
relatively upscale individuals for housing is going to keep
rental prices high and vouchers higher also.
But thank you. I will have a second round.
Dr. Olsen. Just to follow up on that, the other thing that
is happening, yes, more people are renters, but units that were
formerly owner-occupied have been shifted to the rental market.
There is a shift both in the demand and supply side.
Senator Reed. Thank you.
Senator Collins. Senator Cassidy.
Senator Cassidy. Folks, thank you.
You all know so much more than me. So I am going to pose a
bunch of questions just as an academic, and then ask each of
you to reply as you think is pertinent.
EMERGENCY RELIEF
One is very practical. The State I represent just had a
huge flooding episode. Right now, it is the fourth worst
natural disaster in the history of the United States, moving on
way up to the third.
Now, there have been some reports that this has
particularly impacted, as you might guess--there are 85,000
homes flooded, so assume three to four people per home. We have
350,000 to 400,000 people displaced out of their home.
I gather that those who have had the hardest time have been
in subsidized housing, kind of what you just said, Dr. Olsen,
but at large and acutely, that there is a sudden demand for
rentals and prices go up, and folks with Section 8 have the
least options. I do not have a solution. I am posing that
because that is what we are grappling with. We would like your
thoughts on that. Is it just that is the way life is?
Dr. Olsen. Well, in the short run, the question is where
should these people live. There were some vacancies to start
with, but I am guessing not nearly enough to accommodate all of
these people.
What happened after Katrina was that a lot of people had to
move out of the area. They moved to Houston. They moved to
Dallas. They moved to Atlanta.
Senator Cassidy. They moved to Baton Rouge.
Dr. Olsen. In the first instance, Baton Rouge, the closest
place.
That may be an inevitable part of the solution. There are
not enough units there. They have to have housing now. They
cannot wait for a house to be built. So it may be that a part
of the solution, given the numbers you have said, is some
people are going to have to move elsewhere.
Senator Cassidy. Solutions/results. Folks may not wish to
be disrupted, but it just may be that is the result.
Dr. Olsen. Right.
Senator Cassidy. Does anybody else have a thought?
Ms. Poethig. I would just add, I mean, that given the
natural disaster, we do not have a flexible enough supply to be
able to absorb the demand that happens after a natural
disaster. As Dr. Olsen, Ed, pointed out, I think Houston and
Baton Rouge and other communities ended up receiving many of
the people who were displaced over time. So I acknowledge they
have not necessarily all----
Senator Cassidy. The chairwoman is going to cut me off, so
I am going to cut you off first.
TENANT-BASED RENTAL ASSISTANCE
Ms. Poethig, you had mentioned that sometimes when you shut
down Robert Taylor, you end up with a similar concentration of
poverty but elsewhere. So now is a set of questions that I can
imagine a homeowner who understands that we are going to begin
moving folks into neighborhoods of less poverty. What you just
said implied that if they were moved into a neighborhood of
less poverty, that neighborhood became impoverished with
negative social indicators.
So I am asking, what is the academic literature or the
empiric experience show when you begin moving folks out of
housing projects and/or with Section 8 housing into
neighborhoods with less poverty? What is the impact of social
indicators and property value upon the neighborhood into which
they move? Does that make sense?
Ms. Poethig. So I think one of the most important
principles, if we were to consider this policy, is a policy of
responsible relocation. That includes considerable supports for
people as they make particular housing choices. And so that
responsibility would include better information and ways in
which they can move into neighborhoods fully equipped to be
responsible residents in those particular communities.
PROJECT-BASED RENTAL ASSISTANCE, AND LOW INCOME HOUSING TAX CREDITS
There is research by George Galster that looks at voucher
holders in comparison to place-based investments in low-poverty
communities and finds, generally speaking that those place-
based investments lead to more positive results.
Senator Cassidy. Place-based means what?
Ms. Poethig. It would mean public housing or PBRA, project-
based rental assistance, in some cases tax credit properties,
than dispersed voucher holders.
HOUSING SUBSIDIES
Senator Cassidy. I am not quite sure I follow all of that.
No offense, but there is just some lingo that you know that I
do not.
Mr. Gentry, you got an average neighborhood in San Diego
has homes--you know, middle class neighborhood--the homes are
$450,000.
Yes, sir. So empirically when you all move folks into those
types of neighborhoods, again middle class folks, even though
the home is so expensive, what happened to the property value
and social indicators in those? And again, you all know your
technical language so much. If I can ask you just to kind of
make it a little bit plainer English so I can comprehend.
Mr. Gentry. Well, I will make it very plain. I think the
problem is one of algebra, frankly.
Senator Cassidy. Is what?
Mr. Gentry. Algebra. You have a certain amount of money and
you have a certain number of people you serve. We serve people
in what I call the modest marketplace. We do not have the
amount of subsidy to help people move into higher-income
neighborhoods.
Senator Cassidy. But in San Diego, higher income--again,
your property values are so high, you do not have to be a
wealthy person to have a house which is valued very highly.
Mr. Gentry. However, in San Diego, there are wide varieties
of variations in the value of those properties and the cost of
those properties. So our Section 8 voucher holders tend to wind
up fairly concentrated as well. If you know San Diego well,
they tend to be south of Interstate 8. They tend to be east,
southeast, and south down around the border. And we do not have
a whole lot of voucher holders in La Jolla or Point Loma. We
have got a few.
CHOICE NEIGHBORHOODS INITIATIVE
If you notice in my paper, I do say that we have our own
choice communities program where we have helped, but that has
only served about--less than 300 families who have been able to
move out of the nontraditional neighborhoods. And I will point
out if everybody did, we would serve fewer families.
So the tension--and ``tension'' I think is the applicable
word here--is that if you spend more per family to live in
higher-income neighborhoods, which is what the rent in those
neighborhoods warrant, with the same cost of dollars, you serve
fewer families. So where do you draw the balance?
I think each community in the country is going to be
different. I can tell you in Oakland, California and much of
the Bay area, the Section 8 voucher program has pretty well
stopped working because the value has gotten up so high and
landlords who do not need the program to fill the properties do
not participate that the Oakland Housing Authority has started
project-basing most of its voucher supply or a good bit of it
just in order to make the programs work and to provide
resources for the residents.
San Diego has not gotten to that point yet, although it
could be on the horizon if we do not get more absolute supply
into the marketplace over the next few years.
HOUSING CHOICE VOUCHER PROGRAM
So I think in different parts of the country--you go to
Oklahoma, Mississippi, and my home State of North Carolina, you
still got good applicability and the voucher program works very
well. But it is going to be different in different places. You
are going to have marketplace dynamics you need to take into
account. Somewhere within all this tension, you are going to
find solutions, but they need to be community-based and city-
based and locality-based, sir.
Senator Cassidy. I yield back. I am sorry. Thank you for
being forbearing.
PROJECT-BASED RENTAL ASSISTANCE
Senator Collins. Thank you, Senator.
Dr. Olsen, earlier we heard Mr. Gentry describe the public
housing approach as a failed business model. Do you agree with
that?
Dr. Olsen. Yes, because as I say, the cost-effectiveness
studies show it is very costly for the housing that you get and
other disadvantages too in terms of the location. The housing
authorities in the early years tried to get the projects in
better neighborhoods, but local opposition prevented that. So
most of the projects were built in very low-income
neighborhoods. That is part of how we got to where we are
today.
But in any event, we are where we are today. As you said,
we have a lot of projects in very poor areas, and they are
often in very bad condition as well. And I think we should try
to get away from that and give these people vouchers and let
them try to spread out over the community.
PUBLIC HOUSING CAPITAL FUND
Senator Collins. Ms. Poethig, Congress is now providing
roughly 50 percent of the annual capital needs for the public
housing. And that is clearly, from your perspective, part of
the problem because it means that there are nearly 10,000
public housing units that are at high risk of being lost each
year because they are simply crumbling, and they are not safe,
and they are not suitable for people to live in them.
I know that your first preference is likely more funding,
but putting that issue aside, do you believe that we should be
going more in the direction of project-based rental assistance
and Section 8 tenant vouchers?
TENANT-BASED AND PROJECT-BASED RENTAL ASSISTANCE
Ms. Poethig. So I believe that one of the efforts that we
should build upon is the use of subsidy contracts. So this is
the primary form in project-based rental assistance. And with
project-basing vouchers, this has been a tool that others have
used to enable development to happen because they enable
developers to go the private marketplace and seek funding to
build the units themselves with a hope that they are actually
building in lower-poverty communities.
So I do believe that the subsidy contracts are a very
important tool, coupled with other supply tools that enable
housing to be built for people with extremely low incomes. The
tax credit does not work for people with extremely low incomes.
It needs to be married to rental assistance.
Senator Collins. Mr. Gentry, I really am impressed with
what you were able to accomplish in San Diego. I imagine it was
both difficult and at times controversial. I am wondering what
happened, if you could walk us through more detail, such as is
in your written statement. What happened to the public housing
that you converted? Did it become project-based, tenant
housing? Was it razed? What happened? Did tenants buy some of
it at very low cost? What happened to it?
Mr. Gentry. We still have the physical properties in our
portfolio. And I will point out, if you go on our website, we
have got every one of our properties on Google map. You can do
a windshield survey of every one of them just at your desk.
HOUSING CHOICE VOUCHER PROGRAMS
What we did, we promised HUD three things when HUD approved
this in 2007. Number one is that we would not project-base any
of the subsidies. We would allow these families to take the
subsidy and walk if they wanted to and choose where they wanted
to live. I was not in San Diego when that decision was made in
2007, but I think it was a pretty gutsy decision to make for
those properties.
Now, it was made with the realization that our properties
were better than much of the typical public housing stock, and
I recognize that. And you will see that on that windshield
survey. But still, that was a pretty gutsy decision.
The second thing we promised HUD was that we would
backfill--and this gets to your question. We would backfill.
For every family that moved out, we would backfill with another
family below 80 percent of median income, elderly below 50
percent back into those units at a rent that the families could
afford to pay, which was pegged at just about what a tax credit
rent and just about what a Section 8 rent would be to a
landlord in San Diego.
Then third and the most exciting, we told HUD if they would
give us the deed to those properties, we would convert those
properties. We would convert the equity to debt, and we would
create at least another 350 units of affordable housing. In
2010 to 2014, we issued $95 million in debt on those
properties. Then we purchased, either direct and outright or in
partnership with private sector players, 810 units of
affordable housing with debt paid for by those existing public
housing properties.
Now, the silver lining in the cloud of the economic
downturn in California was that we were able to pick up
properties at the depth of the recession. That helped. But we
would have far exceeded the 350 goal we set with HUD
regardless. And it was an exhilarating process, and it was a
wonderful thing to help accomplish.
But basically what we did was to release the value that was
pent up fallow in the ground on those properties and to reuse
it. And then we were able to glean from the existing
marketplace in a downturn in a countercyclical way to reuse
excess properties in a public sector way that are being well
used now that prime values are way back up. So it was a
wonderful process.
Now, I know people will say that you could not replicate
the San Diego model, say, in other more traditional housing
authority markets. You mentioned Richmond, Virginia a while
ago. I was the CEO down there from 1990 to 1998. A far
different set of circumstances. You would not do in Richmond
what we did in San Diego, but you would go through the same
decision-making process to figure out what Richmond could do,
needed to do if the Richmonders had the same authority to make
their own decisions as we had in San Diego.
Senator Collins. That is why you argue for more flexibility
at the local level in your initial statement.
Mr. Gentry. It is utterly essential.
And I will point out that, too, if you look at the
different programs, no supply-side program is going to get the
cost down below the affordability level for any family below
about 50, maybe 40 percent of median income. You get down into
the extremely low families, let us say, 30 percent or less,
they cannot pay enough rent to cover the cost of operations.
You have got to have a subsidy to make the property operate in
addition to producing it. And that is where a demand-side
subsidy like Section 8, like the vouchers program or operating
subsidy in public housing, is utterly essential. So if you have
got a good balance and marriage of supply-side subsidies to
produce the property and then demand-side to help the extremely
poor afford to stay there, then you can make it work.
And in my experience, there are only three kinds of
subsidies that have ever worked. There is a supply-side subsidy
that buys down the cost of the property. There is a demand-side
subsidy that helps the consumer pay their way. And sometimes
there is an internal subsidy where you get a range of incomes
where the relatively higher-income folks pay more than the
relatively lower-income. I have never seen anything that is not
a variation or a combination of those three. And there is no
magic. You have got to have one or some combination of those
three to make any affordable housing property work.
Senator Collins. Thank you.
Senator Reed.
PROJECT-BASED RENTAL ASSISTANCE
Senator Reed. Thank you very much.
Ms. Poethig, we are talking about basically three
categories of housing: public housing, then project-based
assistance housing, and individual vouchers. Focus for a moment
on the project-based.
In my view--and your comment would be appreciated--there
are some external benefits to that beyond the housing,
particularly with seniors where you have a certain community.
You have access to medical care. You have access to
transportation, which is much more efficient. And so when we
evaluate these place-based vouchers, we have to add in these
factors too I would assume. And also, it tends to make the
project much more valuable. Is that accurate?
Ms. Poethig. Thank you, Senator.
As you know, housing is a very important platform,
especially for older adults, and 50 percent of project-based
rental assistance is actually serving older adults and people
with disabilities. So that is an important part of the
population that is benefiting from that particular platform.
We have a growing body of evidence that not only
demonstrates that it has benefits for the people living in the
housing but also saves money, particularly to Medicare. So the
particular study that I have been most persuaded by is
something called SASH. It is a model in Vermont that has health
coordinators operating on the platform of housing, nurse
practitioners who are connecting them to healthcare services
not only for the people in that housing but also serving people
in rural communities as well. So the housing serves as a
platform for other low-income people with healthcare needs in
rural communities. And it is essentially creating a net savings
to Medicare.
So my concept is how--and this committee has shown such
great leadership in the past in partnership with other
committees--to imagine the partnerships to look at the
convergence or the opportunities between thinking about housing
as a platform, particularly for older adults, and the ways in
which it could save resources and Medicare as a potential
opportunity for investment.
Senator Reed. One of the institutional issues around here
is that we do housing, that somebody else does Medicare. So if
we find savings--you know.
Ms. Poethig. I know, yes.
Senator Reed. That is our problem. Trust me, she will
figure it out.
[Laughter.]
Senator Reed. I was very impressed with your comments, Mr.
Gentry, about the locality issues being so critical. And as you
point out, in San Diego, because of local forces, you are
moving forward with your concepts. But up in Oakland, they have
seen rents rise so high that the vouchers are just--yes, I have
got a piece of paper, but I do not have a place to live. They
are actually going back into the public housing issue. Is that
more widespread than just Oakland?
Mr. Gentry. Well, actually they are not going back into
public housing. What they are doing is project-based----
Senator Reed. Project-based.
Mr. Gentry. But that is where the genius of the voucher is
so useful. It is flexible. You can use it for project-basing.
You can use it for sponsor-basing, meaning a third party tells
you who you can issue the voucher to. Or you can use it as a
classic finders keepers utilizing the marketplace. And you can
vary it based on what the marketplace needs if you have the
good sense and the courage to make your own decisions, then to
be accountable for it.
You can also use the voucher for special purposes. I will
point out, there are a lot of nice things about living in San
Diego, but one of San Diego's particular problems is the
homelessness problem. We have got, not on a per capita basis
but in whole numbers, the fourth worst problem in the country
behind New York City, L.A., Seattle, and then us. You know, you
are not going to freeze to death on the streets in the
wintertime, such as the winter is in San Diego. And we have got
a huge problem there.
MOVING TO WORK PROGRAM
We have targeted much of our Section 8 product to dealing
with the homeless, and we have put on the street--and I
reference this in my testimony--2 years ago November a program
called Housing First San Diego where we have a multi-pronged
approach to dealing with the homelessness problem using the
vouchers as a major part of our approach in two ways. One, the
subsidy itself to help people live in the private marketplace,
and secondly, where we have been able to realize efficiencies
and savings, because we are a Moving to Work agency, we have
invested that back in property on the supply side. We can take
a demand-side subsidy, repurpose it, use it on a supply side
too, as we need to, to accommodate our marketplace and our
needs and problems.
Two days ago, we dedicated the old Hotel Churchill, which
is a 102-year-old hotel that we have rehabilitated in an
historic preservation way. This housing is now housing 72
formerly homeless folks in single-room residency fashion, 56 of
whom are veterans. We would not have been able to do that
without, number one, vouchers and, number two, the Moving to
Work status. So I think it is the flexibility of the program
and then the flexibility within that of our organization
through the MTW program together are just huge in allowing us
to solve San Diego problems in San Diego ways.
Senator Reed. Thank you very much.
Senator Collins. Thank you, Senator.
It is my understanding that Senator Cassidy is going next,
and then we will come to Senator Boozman.
VOUCHER PROGRAMS
Senator Cassidy. Dr. Olsen, again, I am trying to follow
what you all are saying. I thought I gathered what you said
earlier that a voucher is more successful in expanding housing
stock, if you will, the demand-side subsidy, than the supply-
side subsidy.
Dr. Olsen. That is what the study shows, yes.
Senator Cassidy. But it does seem from what we have learned
from San Diego in that comment is that if you are in a really
high-value real estate, that you really do need a supply-side
subsidy if you are going to make something affordable.
Dr. Olsen. Yes. I do not agree with that. And actually the
way the voucher program works is the subsidy is much higher in
the most expensive market.
Senator Cassidy. Well, let me ask because Mr. Gentry
mentioned in Oakland and the Bay area that really the program
is falling apart I gather because rents are so high. And then
he mentioned his own place. There is a tension. Sure, we can
move somebody up to a higher place, but then we serve fewer
families sort of thing.
Dr. Olsen. I do not understand that. The payment standard
in different places is a percentile of the rent distribution.
It is basically median rent. So in places where median rent is
high, the subsidy is very large. The only sense I can make of
it is the subsidy level is the same throughout an entire metro
area. And so there can be parts of a metro area where the rents
are so high that people with vouchers cannot live there. But I
don't know whether that would apply to the entire Oakland area.
The generosity of the voucher subsidy is much greater in San
Diego and in Oakland than it is in Charlottesville, for
example.
Senator Cassidy. Mr. Gentry, any kind of comment?
Mr. Gentry. Just that grand solutions do not always fit
particular issues and problems, and there has to be a
flexibility. In a country as big and large as this one is with
all the variations from a Charlottesville--and I have lived in
Virginia. Charlottesville is a wonderful place--the difference
from a Charlottesville to a Chicago, to a San Diego are
immense. And I think you have got to have some local
flexibility, some local decision-making.
And I think the thing I would disagree on is that it is not
enough just to be able to help people pay their rent. You have
got to also ensure that people in the future will be able to
pay the rent, and that involves making the proper kinds of
investments in properties. Just as it is typically to a
family's benefit to become a homeowner at some time rather than
a renter, at some point in time localities need to also make
sure they own enough properties to guard against the kinds of
problems that Oakland is running into.
I will point out that from my understanding of the Oakland
situation, it is not that the housing authority there is using
the Section 8 subsidy on its own properties. It is using the
subsidy to encourage private sector individuals to get involved
but in a project-based, place-based way because that is what
the local marketplace requires rather than a classic finders
keepers.
Senator Cassidy. Let me ask you one more thing. I once
heard a criticism of Section 8 housing that it establishes a
rather steep marginal tax rate. As someone earns more money,
they get less for their voucher, and in a sense it pays them
not to earn more money. You could add other such benefits, and
somebody told me that in his State, the beginning job would
have to be $55,000 plus medical benefits to account for
everything someone could receive by not working but receiving
all this.
Ms. Poethig, I see you nodding your head. Do you mind
commenting on that?
Ms. Poethig. Certainly, and thank you, Senator.
So HUD has commissioned a study, a rent reform study, that
is looking at these issues related to having a different rent
structure such that you would not create a disincentive for
people to increase their----
Senator Cassidy. Implicitly there currently is and they are
trying to modify it.
JOBS PLUS DEMONSTRATION
Ms. Poethig. They are trying to look at models for
modification for doing that. We know in other important
demonstrations, the Jobs Plus demonstration in particular that
did create a different incentive, it did not essentially
disincentivize someone to earn more. We saw a benefit not only
to increase earnings for that particular person but also longer
job retention. So we hope to see some of the same kinds of
results in increasing self-sufficiency by modifying----
Senator Cassidy. Let me go because I am almost out of time.
Dr. Olsen.
SECTION 8 AND WORK DISINCENTIVES
Dr. Olsen. If I could just comment on that, sir. Actually
this is a feature of each of the major types of housing
assistance. It is true in public housing, other HUD project-
based assistance, and vouchers. The more you earn, the less the
subsidy you get. You lose 30 cents for every additional dollar
you earn.
It is also a feature of other major welfare programs such
as TANF and Food Stamps. The evidence indicates that these
programs have work disincentive effects, just as you mentioned.
Senator Cassidy. Okay. Well, I am out of time. I yield
back. Maybe I am not out of time.
[Laughter.]
Senator Collins. Thank you.
Senator Boozman.
Senator Boozman. Thank you very much.
RETURN ON INVESTMENT
Dr. Olsen, I think we would all agree that finding and
identifying ways to provide flexibility and better return on
investment for Federal dollars is certainly important when it
comes to Federal programs, including those administered by HUD.
What do you believe are the biggest problems to return on
investment of Federal dollars, and where would be a much needed
area to provide flexibility within existing programs?
Dr. Olsen. I think that the biggest opportunities for
getting more bang for the buck is to phase out project-based
assistance, and my views on that are based on evidence on the
cost-effectiveness of the major HUD programs of project-based
assistance, public housing, the Section 8 New Construction
program, and Section 236, compared with housing vouchers. So I
think we need to work our way out of those programs and not
commit money to additional programs of that type.
HOMELESSNESS
Senator Boozman. Thank you.
Mr. Gentry, homelessness is neither a rural or urban issue.
It is a national issue.
What lessons can we learn from your experiences of the
Housing First model when it comes to addressing the issue of
homelessness in America?
Mr. Gentry. The lesson I think is getting the proper
balance among what are basically three types of homeless
housing systems.
One is emergency and shelter housing, which the Housing
Commission does administer on behalf of the City of San Diego,
and those are shelter beds for those in immediate need.
Second is the need for some transitional housing, which
typically also is a congregate setting where individuals and
families can get some of their needs attended to while they are
getting ready for living in the marketplace.
The third, though--and this is what has drawn a lot of
attention lately and I think what we are moving toward--is the
Housing First model, which means you help people get a
permanent structured live-in, a house, an apartment, whatever
you want to call it where it is an individual family occupant,
not congregate housing, and then using that as the basis for
attending to the other problems which have helped to make them
homeless.
I would contend that there are basically three types of
causes for homelessness as well.
One is the intersection of mental health and substance
abuse issues, which has particularly gotten troublesome over
the years with the demise of some of the old large mental
hospitals that used to be in existence in every State and
pretty much are gone now. And I think there is a mental health
crisis in this country.
Second is that particularly with the economic downturn or
the Great Recession, we saw families who had no other issue
other than perhaps the lack of an extended family and short-
term economic problems, and a rapid re-housing approach helped
them, which is short-term assistance.
And then you have a third one that is not always understood
or talked about much, but it typically applies heavily for
women and children. And that is domestic abuse and needing a
place to land and to resettle there.
So I think, again, there are no grand solutions, but I
think if you look at a Housing First model as a basis which you
want to get everybody to and then you go through some of the
other intermediary steps and on occasion you get to recognizing
there are different causes for different families and
individuals, you can work out solutions.
HOW TO IMPROVE HUD
Senator Boozman. Very good.
Really for all of the panel, what I would like to know is
if you had to assign a grade, if you had to critique HUD's
efforts to reduce poverty through its housing policies, what
would you say it would be? Dr. Olsen.
Dr. Olsen. It would not be a high one, but I am mulling
this over. I mean, on the one hand, you have the housing
voucher program, which I think serves a lot of people and is a
highly cost-effective program. So that is a big plus. But on
the other hand, they administer programs that are highly cost-
ineffective.
Those programs are declining within HUD. The number of
public housing units is going down. The number of units in
privately owned HUD projects is going down. The low-income
housing tax credit is the big growth part of the system. So in
some sense, I suppose HUD's performance is improving. Let us
put it that way.
Senator Boozman. Yes, ma'am.
Ms. Poethig. So I think I would agree. HUD's performance
has been improving, but I think where it could really
accelerate efforts are some of the administrative reforms that
would enable the voucher program in particular to live up to
expectations, which it is not currently doing if we imagine it
as a mobility to opportunity strategy. So I think more can be
done to ensure that it is offering true choice and opportunity.
At the same time, I think there is more we can do to be
flexible in terms of this concept that Mr. Gentry and I have
been talking about, the subsidy contracts, being able to move
them, make them more flexible to be matched to some other
capital programs like the low-income housing tax credit to make
sure that we have opportunities for extremely low-income
households.
My one worry is that there is discrimination against
voucher holders in many, many markets, and the ability to
protect them is a local policy and that is not evenly
distributed across the country. And so we have not talked about
that discrimination today, and I think that is a major factor
that really dampens the success of the program if we imagine
vouchering out.
Senator Boozman. Thank you.
Dr. Olsen. Could I just follow up?
Mr. Gentry. I would say that HUD is almost never--I have
got a lot of friends at HUD. So they can take this as they hear
it.
You never get much creativity out of HUD. It is not the
nature of a bureaucracy to be creative or to change its way of
doing business.
But HUD does do what you all tell them to do. And I would
commend you all for extending and expanding the Moving to Work
program last December. That would never have happened waiting
for HUD to make a decision. I will not get into that. But the
fact that you all required them to do it I think was
remarkable, and I think probably the creativity and the
direction will come from here. It will not come from over
there. And I would make every housing agency in the country,
frankly, that was not troubled a Moving to Work agency, give
them the ability make their own decisions and to be accountable
for the results. I think you will see some differences out
there.
Senator Collins. Dr. Olsen, I know you wanted to jump in.
Dr. Olsen. Thank you.
Senator Collins. You are welcome.
Dr. Olsen. So I just wanted to support something Erika just
said. A very important initiative within the voucher program is
the small area fair market rents initiative. Under the current
program, the subsidy is the same no matter where you live in a
metro area, whether it is the most expensive, the least
expensive. So, of course, voucher recipients do not live in the
most expensive.
There is the recent study by Raj Chetty and others that
estimates the advantages to children of growing up in a
neighborhood with a lower poverty rate. I have read that study
carefully, and it is a excellent study.
What the small area fair market rents do is they lower the
subsidy in the areas with the highest poverty rates and
increase the subsidy in areas with the lowest. So they create a
financial incentive for people to live in lower-poverty areas.
This is actually in use in Dallas. It is part of the result of
some litigation. HUD has proposed a regulation to expand it. If
you want to get low-income children into lower-poverty
neighborhoods, I think this is an excellent idea. It
illustrates the flexibility of the voucher program for
achieving the sorts of things you want to achieve.
Senator Collins. Thank you very much.
I want to thank all of our witnesses today. You greatly
enhanced our understanding of the challenges that we face. We
want to make sure that as we look at that 84 percent of HUD's
budget, that we are serving as many vulnerable families as we
possibly can. I think we have to look at new models and new
ways and what is going on at the local level and at the State
level to see if we can stretch those dollars further and get
better results. That is why we wanted to have this oversight
hearing today. We very much appreciate your being with us and
sharing your views.
The hearing record will remain open until next Friday,
September 30th. So you may receive some additional questions
for the record from members of the committee, including those
who were unable to be with us today.
SUBCOMMITTEE RECESS
I want to thank the staff also for their hard work on this
issue. I know I learned a great deal from this hearing.
I want to thank the ranking member also for his usual
thorough and excellent participation. And thank you, Senator
Boozman, for joining us and Senator Cassidy and Senator Daines
who were here earlier.
This hearing is now adjourned.
[Whereupon, at 11:55 a.m., Wednesday, September 21, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING
[Clerk's Note.--The following outside witness testimonies
were received subsequent to the hearing for inclusion in the
record.]
Prepared Statement of the Affordable Rental Housing ACTION
On behalf of the Affordable Rental Housing ACTION (A Call To Invest
in Our Neighborhoods) Campaign--a national, grassroots coalition of
over 1,300 organizations and businesses dedicated to creating and
preserving affordable homes for low-income families using the Low-
Income Housing Tax Credit (Housing Credit)--we appreciate the
opportunity to submit comments to the Senate Appropriations
Subcommittee on Transportation, Housing and Urban Development, and
Related Agencies on the occasion of its hearing on Housing Vulnerable
Families and Individuals. A full list of ACTION Campaign members is
attached.
a proven tool to address a vast and growing need
The Housing Credit is our Nation's most successful tool for
encouraging private investment in the production and preservation of
affordable rental housing. Since 1986, the Housing Credit has financed
nearly 3 million apartments, providing roughly 6.7 million low-income
families, seniors, veterans, people with disabilities, and other
vulnerable populations with access to homes they can afford.
Though the Housing Credit has provided affordable homes for
millions of low-income households, the unmet need for affordable rental
housing continues to far outstrip the available resources. An
unprecedented 11.4 million renter households--more than one in four of
all renters in the U.S.--spend more than half of their monthly income
on rent, leaving too little for other expenses like food, medical bills
and transportation.
Meanwhile, we continue to lose affordable housing from our Nation's
stock. Nearly 13 percent of the Nation's supply of low-income housing
has been permanently lost over the past 15 years. Over the next decade,
the demand for affordable housing will become even greater as 400,000
new households enter the rental housing market each year, many of whom
will be low-income. According to a recent study by Harvard University's
Joint Center for Housing Studies and Enterprise Community Partners, the
number of renter households who pay more than half of their income
towards rent could grow to nearly 15 million by 2025.
a model public-private partnership
For 30 years, the Housing Credit has been a model public-private
partnership program, bringing to bear market forces, State-level
administration and more than $100 billion in private sector resources.
Under the program, private sector investors provide upfront equity
capital into a property in exchange for a credit against their tax
liability in future years. Credits can be claimed only after properties
are built and occupied by income-eligible residents at affordable
rents. This unique structure transfers the real estate risk from the
taxpayer to the private sector investor.
The Housing Credit also benefits from State-level administration,
which reflects local priorities. Each State determines how to allocate
Housing Credits to respond to specific local needs, directing resources
where they are needed most. State allocating agencies also oversee a
rigorous approval process for these developments and monitor properties
for compliance with program rules after their completion.
Each State is required by the tax code to provide only enough
subsidy to ensure financial feasibility, and underwrite Housing Credit
properties at three different stages of the development process to
ensure they provide no more Housing Credit than necessary to each
development.
accountability through the tax code
In the rare event that a property falls out of compliance anytime
during the first 15 years after it is placed in service, the Internal
Revenue Service is able to recapture tax credits from the investor.
Therefore, it is in the interest of the private sector investors to
ensure that properties adhere to all program rules, including income
eligibility, rent limits and high quality standards. This rigorous
private sector oversight is a hallmark of the program, and has
contributed to its unparalleled record of achievement. In fact, only
0.62 percent of all properties during the Housing Credit's 30-year
history have gone into foreclosure, a record far better than any other
real estate class.
incentive to address a market failure
Developing new affordable homes for the growing population of cost-
burdened low-income renters is not feasible without the Housing Credit,
since the rents that low-income households can afford are not high
enough to cover the costs of building and maintaining properties.
According to Harvard University's Joint Center for Housing Studies
(JCHS), to develop new apartments affordable to renter households
working full-time and earning the minimum wage without the Housing
Credit, construction costs would have to be reduced by 72 percent of
the current construction cost average--making the homes either
substandard or financially infeasible.
complement to other housing programs
Congress designed the Housing Credit as a project-based capital
funding source for the production and preservation of affordable
housing. As such, the Credit plays a different role in the effort to
meet the Nation's affordable housing needs than tenant-based rental
assistance programs, such as the Housing Choice Voucher (voucher)
program, play. The Housing Credit increases the supply of affordable
housing, while vouchers make existing housing more affordable to low-
income households.
Vouchers alone cannot address several challenges for affordable
rental housing, including recapitalizing and preserving aging
properties, revitalizing low-income communities, expanding supply in
tight markets, producing housing for households with special needs, and
building housing near areas experiencing job growth. Furthermore,
absent the Housing Credit program, the cost of vouchers would almost
certainly rise significantly, as voucher holders living in Housing
Credit properties would instead need to find market-rate apartments.
Conversely, without rental assistance, it can be very difficult to
provide even Housing Credit housing at rents affordable to the lowest-
income households. In practice, the Housing Credit and vouchers
complement each other, and are often used together to meet the needs of
extremely low-income households.
In addition, the Housing Credit is a central component of HUD's
Rental Assistance Demonstration (RAD), a public housing revitalization
initiative that Congress has recently expanded threefold from its
original authorization. To date, the Housing Credit has provided
approximately 40 percent of the financing being used to recapitalize
over 180,000 units of public housing under RAD, underscoring the
importance of the Housing Credit in preserving federally assisted
properties for the long term in the absence of sufficient Federal
appropriations for public housing.
support the affordable housing credit improvement act
Though the need for Housing Credit-financed housing has long vastly
exceeded its supply, Congress has not increased Housing Credit
authority in 16 years. To make a meaningful dent in the affordable
housing supply gap, we urge Congress to pass the Affordable Housing
Credit Improvement Act, sponsored by Senator Maria Cantwell (D-WA) and
Senate Finance Committee Chairman Orrin Hatch (R-UT), which would
increase Housing Credit authority by 50 percent. While the bill is not
under the jurisdiction of this Subcommittee, we encourage all
Subcommittee members to join Subcommittee Chairwoman Susan Collins (R-
ME), Subcommittee member Senator Bill Cassidy (R-LA), and full
Committee members Senators Patrick Leahy (D-VT), Lisa Murkowski (R-AK),
and Jeff Merkley (D-OR) as cosponsors of the bill.
For the millions of families paying more than half of their income
towards housing--choosing between paying the rent or their medical
bills, making repairs to their cars, or enrolling in job training
classes--protecting and expanding the Housing Credit is critical.
[This statement was submitted by Barbara Thompson, Executive
Director, National Council of State Housing Agencies, ACTION Co-Chair,
and Scott Hoekman, Senior Vice President & Chief Credit Officer,
Enterprise Community Partners, ACTION Co-Chair.]
ACTION Campaign Members
Co-Chairs
National Council of State Housing Agencies
Enterprise Community Partners
Steering Committee Members
Affordable Housing Tax Credit Coalition
Council of Affordable and Rural Housing
Council of Large Public Housing Authorities
Corporation for Supportive Housing (CSH)
Housing Advisory Group
Housing Partnership Network
LeadingAge
Local Initiatives Support Corporation
National Assoc. of Affordable Housing Lenders
National Assoc. of Home Builders
National Assoc. of Housing & Redevelopment Officials
National Assoc. of Realtors
National Assoc. of State & Local Equity Funds
National Equity Fund
National Housing and Rehabilitation Association
National Housing Conference
National Housing Trust
National Low Income Housing Coalition
National Multifamily Housing Council
Stewards of Affordable Housing for the Future
Volunteers of America
National/Regional
Affordable Housing Investors Council
Alliant Capital
Apartment Realty Advisors (ARA)
Balfour Beatty Construction
Ballard Spahr, LLP
Berkadia
Bryan Cave, LLP
Center for American Progress Action Fund
Centerline Capital Group
Certified Commercial Investment Member Association
Cinnaire
City Real Estate Advisors
CohnReznick
The Community Builders, Inc.
Council of Independent State Housing Associations
Council of State Community Development Agencies
Equity Residential
Federation of Appalachian Housing Enterprises, Inc.
Habitat for Humanity International
Holland & Knight
Housing Assistance Council
Liz Bramlet Consulting
Klein Hornig LLP
Housing Trust of America
Hudson Housing Capital
Institute of Real Estate Management
Low Income Investment Fund
McGladrey LLP
Mercy Housing, Inc.
Meridian Investments
Michaels Development Company
Midwest Housing Equity Group, Inc.
Mortgage Bankers Association
National Affordable Housing Management Association
National Alliance of Comm. Econ. Dev. Associations
National Apartment Association
National Assoc. of Local Housing Finance Agencies
National Assoc. for County Community Economic Dev.
National Community Development Association
National Council on Agricultural Life and Labor
National Development Council
National Foundation of Affordable Housing Solutions
National Housing Law Project
National Leased Housing Association
National NeighborWorks Association
National Resources Defense Council
National Trust Community Investment Corporation
NDC Corporate Equity Fund, LP.
The NHP Foundation
Nixon Peabody LLP
Novogradac & Company LLP
Pacific West Communities, Inc.
PIRHL
PNC Real Estate
Preservation Management Inc.
Prudential Affordable Mortgage Company
Rabobank
RBC Capital Markets--Tax Credit Equity Group
Recap Real Estate Advisors
Reno & Cavanaugh, PLLC
Pillsbury Winthrop Shaw Pittman, LLC
Selfhelp Community Services
Smart Growth America
Southeastern Affordable Housing Management Assoc.
Squire Sanders
TAG Associates, Inc.
Tax Credit Group of Marcus & Millichap
TCAM Asset Management
Urban Institute
U.S. Green Building Council
U.S. Vets Initiative
Vitus Group
WNC & Associates, Inc.
The Woda Group, LLC
Alabama
Alabama Council for Affordable Rural Housing
Arbour Valley Development
Arlington Properties, Inc.
The Bennett Group
City of Mobile Community Planning and Development
Development Services Inc.
Drake Law Firm
Highland Commercial Mortgage, LLC
Ledic Realty Company
Lighthouse CDC
Morrow Companies
Opelika Housing Authority
RSM US, LLP
South East Alabama Self-Help Association, Inc.
Tidwell Group, LLC
Alaska
Alaska Coalition on Housing and Homelessness
Catholic Social Services
Cook Inlet Housing Authority
The Easter Group
The Leeshore Center
Love INC of the Kinai Penninsula
NeighborWorks Alaska
Sitka Community Development Corporation
Statewide Independent Living Council of Alaska
United Way of Anchorage
Arizona
A New Leaf, Inc.
Arizona Housing Alliance
Capitol Mall Association
Chicanos Por La Causa
City of Yuma
Comite de Bien Estar
Corporate Social Responsibility
Foundation for Senior Living
Guadalupe Community Development Corp.
Law Offices of William D. Black
Milestone Housing Development Corp.
Morton Consultant Services
Native American Connections
Pima County CDNC
PPEP Microbusiness & Housing Development Corp.
Surrano Law Offices
Tonalea Chapter
UMOM New Day Centers
WESCAP Investments, Inc.
Arkansas
Affordable Housing Association of Arkansas
Arkansas Coalition of Housing and Neighborhood-Growth for Empowerment
(ACHANGE)
Arkansas NAHRO
Boys, Girls, Adults Community Development Center
Des Arc Housing Authority
Housing Authority of Hot Springs
Housing Authority of Star City
Jonesboro Housing Authority
Judsonia Housing Authority
Mississippi County Public Facilities Board
Northwest Regional Housing Authority
PDC Companies
RichSmith Development, LLC
Siloam Springs Housing Authority
Texarkana Arkansas Housing Authority
White River Regional Housing Authority
California
A Community of Friends
Affirmed Housing Group
Affordable Housing Associates
AMCAL Multi-Housing, Inc.
Beacon Communities
Bear River Tribe
Belle Haven Community Foundation
Bocarsly Emden Cowan Esmail & Arndt, LLP
BRIDGE Housing
Burbank Housing Development Corporation
Cabrillo Economic Development Corporation
California Coalition for Rural Housing
California Council of Affordable Housing
California Dept. Housing & Community Development
California Housing Consortium
Candeur Group, LLC
Century Housing Corporation
California Housing Partnership Corporation
Casa de Redwood
Charities Housing
Chelsea Investment Corporation
Chinatown Community Development Center
City of Oxnard Affordable Housing & Rehab Division
Clark Realty Management
Community Build
Community Economics, Inc.
Community Housing Assistance Program, Inc.
Community Housing Improvement Program [CHIP]
Community HousingWorks
Community Revitalization and Development Corp.
County of San Bernardino
Curtom Building & Development
Desert Manna
EAH Housing (also listed in Hawaii)
East Bay Asian Local Development Corporation
East Bay Center for the Performing Arts
East LA Community Corporation
East Oakland Community Development Corporation
Eden Housing, Inc.
Episcopal Community Services of San Francisco
Fresno Economic Opportunities Commission
Gar-Mar Associates
Habitat for Humanity of Greater Los Angeles
Highridge Costa Housing Partners, LLC
Housing Authority of San Luis Obispo [HASLO]
Housing Authority of the County of Monterey
Housing Authority of the County of Santa Barbara
Housing Authority of the County of Tulare
Housing California
Housing On Merit
Housing Resource Connection
Hunt Companies, Inc.
Innovative Housing Opportunities
Jamboree Housing Corporation
The Kennedy Commission
LifeSTEPS
Laurin Associates
LeadingAge California
LINC Housing
Little Tokyo Service Center CDC
M.E. Shay & Co.
Mentis Mental Health Services
Merritt Community Capital Corporation
Meta Housing Corporation
MidPen Housing Corp.
Mutual Housing California
Napa Emergency Women's Services
National Community Renaissance
National CORE
Neighborhood Partnership Housing Services
NeighborWorks Orange County
Non-Profit Housing Association of Northern California
Opportune Companies
Pacific Meadows Senior Housing
Palm Communities
PAH Community
PAHC Management & Services Corporation
PATH Ventures
People Self Help Housing
Peterson & Associates Affordable Housing Connections
Related California
Resources for Community Development
Retirement Housing Foundation
Riverside Charitable
Rural Community Assistance Corporation (RCAC)
Sacramento Housing Alliance
San Diego Housing Federation
San Fernando Valley Homeless Coalition
Self-Help Enterprises
Southern California Association of Non-Profit Housing
SRO Housing Corporation
Sun Country Builders
Thomas Safran & Associates
TJ Bly Company, LLC
TOWNSPEOPLE
Transition House
TWG Architects, Inc.
Urban Housing Communities, LLC
The Vecino Group
Wakeland Housing and Development Corporation
Wasatch Advantage Group, LLC
The Watershed Center
Western Community Housing, Inc.
Women Organizing Resources, Knowledge and Service
Yolo County Housing
Colorado
Adams County Housing Authority
Archway Housing & Services
Aurora Housing Authority
The Burgwyn Co., LLC
CARE Housing Services
Cathedral Development Group, Inc.
Community Resources and Housing Development Corp.
Community Restoration Partners, LLC
Element Properties
Fort Collins Housing Authority
Funding Partners
Grand Junction Housing Authority
Homeward 2020
Housing Colorado
Julesburg Housing Authority
Loveland Housing Authority
Medici Communities, LLC
Metro West Housing Solutions
Monroe Group Ltd.
RCH Jones Consulting
Rocky Mountain Communities
Ross Management Group
S.B. Clark Companies
San Miguel Regional Housing Authority
SERVE 6.8
South Metro Housing Options
Steele Properties, LLC
Urban Land Conservancy
Urban Residential Partners
Vos Consulting
Wolf Family I, Inc.
Zocalo Community Development
Connecticut
The Carabetta Companies
Connecticut Housing Coalition
Housing Authority of New Haven
Mutual Housing Assoc. of Southwestern Connecticut
New Neighborhoods, Inc.
Norwalk Housing Authority
Urban Initiatives
Vesta Corporation
Delaware
Delaware Community Investment Corporation
Delaware Housing Coalition
Delaware Valley Development Company
Leon N. Weiner & Associates, Inc.
NCALL Research, Inc.
Woodlawn Trustees, Inc.
District of Columbia
Affordable Housing Developers Council
Audubon Enterprises
Coalition for Nonprofit Housing & Community Dev.
CSG Urban Partners
Housing Assoc. of Nonprofit Developers
Institute for Responsible Housing Preservation
Jubilee Housing, Inc.
Manna Inc.
Montgomery Housing Partnership
Somerset Development Company
Transitional Housing Corporation
Florida
Ability Housing
Agorazo Development, Inc.
AmeriNational
Arrington Financial Capital, LLC
The Auburn Group
Beneficial Communities
Biscayne Housing Group
Blue Sky Communities, LLC
Broad and Cassel
Carlisle Development Group
Carrfour Supportive Housing
Centennial Management
Coalition of Affordable Housing Providers
Community Realty Agency & Information Group
Delray Beach Housing Authority
Dukes Construction Company
Florida Alliance of CDCs
Florida Council for Affordable and Rural Housing
Florida Supportive Housing Coalition
Fort Lauderdale Community Center
The Gatehouse Group, Inc.
Global Development Initiatives, LLC
Green Mills
Housing Authority of Pompano Beach
Housing Finance Authority of Palm Beach County
Housing Trust Group, LLC
Innerprise
JPM Development, LLC
Kipling Capital, LP
Kiss & Company, Inc.
Landmark Companies, Inc.
Lee County Housing Finance Authority
MCJ Associates, LLC
Norfolk, LLC
Norstar Development USA
The NRP Group
The NuRock Companies
Orange State Construction, Inc.
Palm Beach County Housing Authority
Picerne Development Corp of Florida
Pinellas County Housing Authority
Pinnacle Housing Group, LLC
Raymond James Tax Credit Funds, Inc.
Related Urban
The Richman Group of Florida, Inc.
Roundstone Development, LLC
Royal American
Soho Advisory Partners LLC
South Florida Community Development Corporation
Southport Financial Services, Inc.
SPECTRA
Tacolcy Economic Development Corp.
Tampa Housing Authority
Vestcor Development Corp, Inc.
Victory Fields, LLC
Wendover Housing Partners, Inc.
West Palm Beach Housing Authority
Georgia
Affordable Housing America, Inc.
Alliance Fund Advisors
Alliance Fund Management
Ambling Management Company
American Covenant Senior Housing Foundation, Inc.
Athens Land Trust
Atlanta Neighborhood Development Partnership
The Benoit Group
The Braden Group
Charis Community Housing, Inc.
Coleman Talley LLP
Cordele Housing Authority
Delmar Realty Advisors
Georgia Affordable Housing Coalition
The Integral Group
Invest Atlanta
JBH Financial Brokerage & Associates LLC
Landbridge Development, LLC
Mansermar Inc.
Marietta Housing Authority
Mize & Mize
ORION Real Estate Services, Inc.
Paces Foundation
Partnership Housing Affordable to Society Everywhere
Pittsburgh Community Improvement Association, Inc.
Project Interconnections, Inc.
Purpose Built Communities
Rea Ventures Group, LLC
Resource Housing Group
Sprague and Rosenberger
State Tax Credit Exchange
SUMMECH CDC
Tapestry Development Group
TBG Residential
Triumph Management Group, LLC
Hawaii
EAH Housing (also listed in California)
Hawaii Housing Finance, LLC
Hawaii Workforce Development Council
Housing Hawaii
Management Specialists Co.
Idaho
Community Council of Idaho, Inc.
Community Development Incorporated
HOPE Development, LLC
The Housing Company
New Beginnings Housing, LLC
Northwest Associates
Northwest Real Estate Capital Corp.
The Pacific Companies
Somerset Pacific
Thomas Development Co.
Illinois
Affordable Housing Investment Brokerage
Applegate & Thorne-Thomsen, PC
Bickerdike Redevelopment Corporation
Brinshore Development, LLC
Chicago Community Development Corporation
Chicago Rehab Network
City of Chicago
Consecra Housing Network
Cook County Housing Authority
FLS Group, LLC
Full Circle Communities, Inc.
General Capital Management Inc.
Hooker DeJong Architects, Inc.
Housing Action Illinois
Housing Authority of the County of DeKalb
Illinois Housing Council
JP Morgan
Laborers' Home Development Corp.
Lake County Housing Authority
Lightengale Group
Madison County Housing Authority
MB Financial Bank
Metroplex, Inc.
North Chicago Housing Authority
Peoria Citizens Committee for Economic Opportunity, Inc.
Perry Group, Ltd.
Pike County Housing Authority
The Renaissance Companies
The Resurrection Project
SE Clark & Assoc. Inc.
Springfield Housing Authority
Valerie S. Kretchmer Associates, Inc.
Winnebago County Housing Authority
Indiana
Affordable Housing Association of Indiana
Affordable Housing Corporation
Biggs TC Development, LLC
Bingham Greenebaum Doll LLP
Brown County Career Resource Center
Community Action of Greater Indianapolis, Inc.
Dauby, O'Connor & Zaleski, LLC
The Englewood Group
Fort Wayne Housing Authority
God's Helping Hand
Hamilton County Area Neighborhood Development, Inc.
Herman & Kittle Properties, Inc.
IAB Financial Bank
Indiana Affordable Housing Council
Indiana Association for Community Economic
Development
Indiana Health Centers Inc.
KCG Development
Keller Development, Inc.
Milestone Ventures, Inc.
Neighborhood Development Associates, LLC
New Albany Housing Authority
New Generation Management, Inc.
NSP Consultants, LLC
Paragus, LLC
Pedcor Companies
Pioneer Development Services, Inc.
TWG Development
Valenti Development, LLC
Westside Community Development Corp.
Wooden McLaughlin
Iowa
Affordable Housing Network, Inc.
Anawim Housing
AEGON USA Realty Advisors, LLC
Barnes Realty
Burns & Burns, LC
Community Housing Initiatives, Inc.
Fort Madison Housing Authority
J. Development Company
Hatch Development Group
Home Builders Association of Iowa
Perennial Property Management
Polk County Housing Trust Fund
Simonson & Associates Architects, LLC
Kansas
10up
Cohen-Esrey Real Estate Services, LLC
Homestead Affordable Housing, Inc.
Housing Opportunities, Inc.
JC Builders, Inc.
Kansas City Equity Fund, LLC (also listed in Missouri)
Kansas Housing Resources Corporation
Kim Wilson Holding Inc.
Marsh & Company, P.A.
Mennonite Housing Rehabilitation Services, Inc.
Overland Property Group, LLC
Prairie Fire Development Group (also listed in Missouri)
Topeka Housing Authority
Vintage Construction, LLC
Kentucky
AU Associates, Inc.
FAHE Capital Corporation
Family Scholar House
First World Architects Studio
Homeless and Housing Coalition of Kentucky
HOPE of Kentucky, LLC
Housing Partnership, Inc.
Kentucky Housing Corporation
KY Senior Citizens Apartments
LDG Development, LLC
Lexington Community Land Trust
Marian Development Group, LLC
Louisiana
Bauer Compliance & Consulting
Brownstone Affordable Housing Ltd.
Centerpointe Regional Housing Development, LLC
Fitness & Praise Youth Development, Inc.
Greater New Orleans Housing Alliance
Gulf Coast Housing Partnership
Harmony Neighborhood Development
Houma Terrebonne Housing Authority
Housing Authority of the City of Shreveport
Louisiana Assoc. of Affordable Housing Providers
Louisiana Community Reinvestment Coalition
Louisiana Housing Council
Mt. Pleasant Community Development Corporation, Inc.
Neville Development
Providence Community Housing
Rural Rental Housing Assoc. of Louisiana, Inc.
Standard Enterprises, Inc.
Statewide Louisiana Community Reinvestment Coalition
Maine
Auburn Housing Authority
Avesta Housing
Coastal Enterprises, Inc.
Community Housing of Maine
Developers Collaborative
Freeport Housing Trust
Maine Affordable Housing Coalition
Maine Workforce Housing, LLC
Northern New England Housing Investment Fund
Penquis Housing, Inc.
Portland Housing Development Corporation
South Portland Housing Authority
Westbrook Housing
The Wishcamper Companies, Inc.
Maryland
Bocarsly Emden Cowan Esmail & Arndt, LLP
Chesapeake Community Advisors, Inc.
Comprehensive Hsg. Assistance, Inc. (CHAI) Baltimore
Enterprise Homes
Garrett County Community Action Committee
Green Street Housing
Homes for America
The House of Easterling
Housing Assoc. of Nonprofit Developers
Howard County Housing
HTA Development, LLC
Maryland Affordable Housing Coalition
Maryland Asset Building and Cmty. Development Net.
Maryland Association of Housing and Development Agencies
Montgomery Housing Partnership
NeighborWorks Capital
Riverside Advisors LLC
Roots of Mankind Corp.
The Shelter Group
T.M. Associates, Inc.
Victory Housing, Inc.
WBC Community Development Corporation
Massachusetts
Alliance of Cambridge Tenants
Asian Community Development Corporation
B'nai B'rith Housing
Beacon Hill Capital LLC
Boston Capital
Boston Financial Investment Management
Boston Housing Authority Resident Advisory Board
Candeur Group
Capstone Communities LLC
Carlisle Tax Credit Advisors
Citizens' Housing and Planning Association
Clocktower Tax Credit Investments, LLC
Codman Square Neighborhood Development Corp.
Community Economic Development Assistance Corp.
Connolly and Partners, LLC
David Koven Consulting
Dorchester Bay Economic Development Corporation
Edwards Wildman Palmer LLP
First Financial Management Corporation
Housing Corporation of Arlington
Homeowners Rehab, Inc.
Housing Management Resources
Jamaica Plain Neighborhood Development Corporation
Jewish Alliance for Law and Social Action
Kevin P. Martin & Associates, PC
KPM
Madison Park Development Corporation
Massachusetts Assoc. of Community Dev. Corporations
Massachusetts Housing Investment Corporation
Michel Associates
NeighborWorks Southern Mass
New England Housing Network
North Shore Community Development Coalition
Norwood Housing Authority
Peabody Properties, Inc.
Preservation of Affordable Housing, Inc.
Strategic Tax Credit Investments, LLC
Tenants' Development Corporation
VIET-AID
WinnDevelopment
Women's Inst. for Housing & Economic Development
Michigan
Community Economic Development Assoc. of Michigan
Disability Advocates of Kent County
Ginosko Development Company
Housing Resources, Inc.
Inner City Christian Federation
Kalamazoo Eastside Neighborhood Association
Lapeer Housing Commission
Livonia Housing Commission
Michigan Community Action
Michigan Disability Housing Work Group
Michigan Housing Council
MORC Home Care
Neighborhood Service Organization
Occupancy Solutions, LLC
Ojibway Development, LLC
Plante Moran
Werth Development LLC
Ypsilanti Housing Commission
Minnesota
13th Ave
Aeon
Alliance Housing Inc.
Artspace Projects, Inc.
Augusta Ventures, LLC
Aurora St. Anthony Neighborhood Development Corp.
Avenues for Homeless Youth
Center City Housing Corp.
CommonBond Communities
Diversified Equities Corporation
D.W. Jones, Inc.
Dominium Development and Acquisitions, LLC
Greater Minnesota Housing Fund
Hope Community Inc.
Housing Preservation Project
Mahoney Ulbrich Christensen Russ P.A.
MetroPlains, LLC
The Metropolitan Consortium of Cmty. Developers
Midwest Minnesota CDC
Minnesota Housing Partnership
One Roof Community Housing
Podawiltz Development Corporation
Project for Pride in Living
Real Estate Equities, Inc.
Sand Companies, Inc.
The Schuett Companies
SCI Associates, LLC
Southwest Minnesota Housing Partnership
Three Rivers Community Action
Urban Homeworks
Mississippi
Adams Construction
Greater Greenville Housing
Hope Enterprise Corporation
Hughes Spellings
Lenton Development
Mercy Housing and Human Development
Mid-South Housing Foundation
Mississippi Assoc. of Affordable Housing Providers
The Park Companies
Rosedale Corporation
Ross & Yerger
SECDE Ventures, LLC
South MS Housing & Development Corporation
Tunica County CDC
Winters Construction, LLC
Missouri
Affordable Equity Partners
Affordable Housing Commission
Boonville Housing Authority
Brunswick Housing Authority
Builders Development Corporation
Hamilton Properties Corporation
Hannibal Housing Authority
Housing Authority of Joplin, MO
Housing Authority of the City of Jefferson
Independence Housing Authority
Ivanhoe Neighborhood Council
Kansas City Equity Fund, LLC (also listed in Kansas)
Lee's Summit Housing Authority
Marceline Housing Authority
MarksNelson, LLC
McCormack Baron Salazar
Missouri Workforce Housing Association
Peter & Paul Community Services
Prairie Fire Development Group (also listed in Kansas)
Slezak House
St. Louis Equity Fund, Inc.
RubinBrown LLP
Travois, Inc.
Twain Financial Partners
Wilhoit Properties Inc.
Zimmerman Properties, LLC
Montana
Bullhook Community Health Center GL Development LLC
Great Falls Housing Authority
Housing Authority of Billings
Housing Solutions, LLC
Lee and Co, PC
Missoula Housing Authority
Mountain Plains Equity Corporation
Summit Management Group, Inc.
Rocky Mountain Development Council
Nebraska
Cairo Housing Authority
Cambridge Housing Authority
Cirrus House Inc.
Columbus Housing Authority
Cornerstone Associates, LLC
Excel Development Group
Fremont Housing Authority
Holy Name Housing Corporation
Horizon Bank
Housing Partners of Western Nebraska
Lincoln Housing Authority
McCook Housing Agency
Nebraska City Area Economic Development Corp.
Nebraska Housing Developers Association
North Omaha Foundation
Oakland Housing Authority
Omaha Economic Development Corp.
Omaha Housing Authority
Ord Housing Authority
RMR Group
Schuyler Housing Agency
Seldin Company
Sunrise View Housing Authority
Urban Housing Partners, LLC
Nevada
Clark County Cmty. Resources Management Division
George Gekakis, Inc.
Mueller, Hinds, & Associates, CHTD
Neighborhood Housing Services of Southern Nevada
Nevada Council of Affordable and Rural Housing
Nevada HAND
Nevada Rural Housing Authority
Silver Sage Manor, Inc.
Silver State Housing
New Hampshire
AHEAD, Inc.
CATCH Neighborhood Housing
Concord Coalition to End Homelessness
Families in Transition
Housing Action NH
Laconia Area Community Land Trust
NeighborWorks of Greater Manchester
New Hampshire Public Health Association
Newmarket Housing Authority
NH Coalition to End Homelessness
NH Community Loan Fund
Tri-County CAP
USIS, LLC
New Jersey
Advocates for Peace & Social Justice
Alliance for Betterment of Citizens with Disabilities
Diocesan Housing Services Corporation of the Diocese
of Camden
Hoboken Housing Authority
Housing and Community Development Network of NJ
Housing Authority of Gloucester County
The Ingerman Group
Jewish Community Housing Corp. of Metropolitan NJ
MaGrann Associates
MEND, Inc.
Mercer Alliance to End Homelessness
The Metro Company
Monarch Housing Associates
New Community Corporation
New Jersey Apartment Association
New Jersey Community Development Corporation
New Jersey Housing and Mortgage Finance Agency
North Haledon Affordable Housing
Project Freedom, Inc.
PV Community Development Corporation
Tabor House
The Michaels Organization
Valley National Bank
New Mexico
City of Las Cruces
Housing Trust of Santa Fe
JL Gray Company
New Mexico Coalition to End Homelessness
YES Housing, Inc.
Santa Fe Civic Housing Authority
Sawmill Community Land Trust
Tierra del Sol Housing Corporation
New York
3D Development Group, LLC
42 Equity Partners, LLC
Arbor Housing Development
Asian Americans for Equality
Association for Energy Affordability Inc.
Belmont Housing Resources for WNY, Inc.
Benchmark Title Agency, LLC
Berkley Point
Blueprint Properties
The Bridge
Broadway-Filmore NHS
Central New York Citizens in Action, Inc.
Citizens Against Recidivism, Inc.
Community Access Inc.
Community Action Organization of Erie County, Inc.
Community Development Corp. of Long Island, Inc.
Community Development Trust
Community League of the Heights
Conifer Realty, LLC
Curtis + Ginsberg Architects LLP
East Hampton Housing Authority
Edgemere Development
Evergreen Health Services
Ewing Planning Services
First Sterling
Forsyth Street Advisors LLC
Fecteau PLLC
Fordham Bedford Housing Corporation
Geneva Housing Authority
Greater Rochester Housing Partnership
HANAC, Inc.
Harlem Congregations for Community Improvement Inc.
Hour Children
Housing Visions
The Hudson Companies, Inc.
Humand Development Services of Westchester
Ibero-American Development Corporation
The Institute for Human Services, Inc.
Ithaca Housing Authority
Ithaca Neighborhood Housing Services
Lemle & Wolff, Inc.
Lott Community Development Corporation
Lower East Side Coalition Housing Development, Inc.
Neighborhood Housing Services of New York City
Neighborhood Preservation Coalition of New York State
New Destiny Housing Corporation
New York Housing Conference
New York State Association for Affordable Housing
Northeast Brooklyn Housing Development Corporation
Ocean Bay Community Development Corporation
Oxford Consulting Inc.
PathStone
Property Resources Corporation
Providence Housing Development Corp.
R4 Capital, LLC
Regan Development Corporation
Rochester's Cornerstone Group, Ltd.
Royal Realty Development, Inc.
Rural Ulster Preservation Company
RUPCO
SFDS Development Corp.
Sobro
Southern Tier Environments for Living
Supportive Housing Network of New York
Tenderloin Neighborhood Development Corporation
Transamerica Equities, LLC
Triboro Real Estate Development, Inc.
Urbecon LLC
West Harlem Group Assistance, Inc.
White Plains Housing Authority
North Carolina
The Affordable Housing Group of North Carolina, Inc.
Affordable Housing Management, Inc.
Blue 22 Development
Brock Ventures, Inc.
CAHEC
Carolina Bank
Carolinas Council of Affordable Housing
Charlotte Mecklenburg Housing Partnership
Community Investment Corporation of the Carolinas
Community Management Corporation
DHIC, Inc.
Dixon Hughes Goodman LLP
Eagan Partners, LLC
East Carolina Community Development, Inc.
The Housing Assistance Corporation
KRP Investments, LLC
North Carolina Housing Coalition
Partners Ending Homelessness
Partnership Property Management
Pressly Development Company, Inc.
Reliance Housing Foundation
United Developers, Inc.
Weaver-Kirkland Housing, LLC
Weaver Cooke Construction
William S. Robinson & Associates, Inc.
Wilson Community Improvement Association [WCIA]
Workforce Homestead, Inc.
North Dakota
Beyond Shelter, Inc.
Fargo Housing & Redevelopment Authority
Grand Forks Housing Authority
Lutheran Social Services of North Dakota
North Dakota Coalition for the Homeless
Turtle Mountain Housing Authority
Ohio
The ABCD, Inc.
ABCAP
Affordable Housing Partners, Inc.
Arch City Development
Bethel Development
Burten, Bell, Carr Development, Inc.
CDA Flaherty Consulting
Center for Closing the Health Gap
Clark, Schaefer, Hackett & Co.
Cleveland City Council
Cleveland Housing Network
Cleveland Neighborhood Progress
Cleveland State University
Coalition on Homelessness and Housing in Ohio
Columbus Housing Partnership
Community Action Commission of Fayette County
Community Action Organization of Delaware, Madison,
and Union Counties, Inc.
Cornerstone Corporation for Shared Equity
Detroit Shoreway Community Development Org.
EDEN, Inc.
Episcopal Retirement Homes Affordable Living
Fairfield Homes, Inc.
Famicos Foundation
Friendship New Vision, Inc.
GL Housing Group
Grey Area Consultants, LLC
Housing Services Alliance
James A. Saad, LLC
Jones Walker LLP
Karen A Graham Consulting, LLC
Karen H. Bauernschmidt Co., LPA
LIHTC Working Group
Miller-Valentine Group
Mt. Auburn Good Housing Foundation
MV Residential Development LLC
National Affordable Housing Trust
National Church Residences
Neighborhood Development Services
Neighborhood Housing Services of Greater Cleveland
Ohio Capital Corporation for Housing
Ohio CDC Association
Ohio Housing Council
Ohio Housing Finance Agency
Rental Partnerships
Royal Bank of Canada
Settlement Star Services, LLC
Slavic Village Development
Star Title Agency, LLC
Toledo Fair Housing Center
The Uptown Association, Inc.
United Way of Greater Cincinnati
The Wallick Companies
WSOS Community Action Commission
Oklahoma
Belmont Development Company, LLC
Blackledge Architects
Catholic Charities of the Archdiocese of Oklahoma City
C.H.A.R.M.E.D.
City Care, Inc.
CMA Strategies
Dobson Mortgage Corp.
Elk City Housing Authority
Liberty Realty Capital Group
LIFE Senior Services
LW Development, LLC
Metro First Realty
Mountain View Housing Authority
Oklahoma City Metro Assoc. of REALTORS
Oklahoma Coalition for Affordable Housing
Oklahoma Housing Finance Agency
Oklahoma Investment Realty, Inc.
ORO Development Corporation
Progressive Independence
REI Oklahoma
Resco Enterprises, LLC
Spradling, Kennedy & McPhail, LLP
Sunview Homes
Oregon
Bienestar Oregon
CASA of Oregon
Cascade Management
Grounded Solutions Network
Housing Authority of Jackson County
Housing Authority of Yamhill County
Lincoln Community Land Trust
Mid-Columbia Housing Authority
Network for Oregon Affordable Housing
Northwest Housing Alternatives
Oregon Opportunity Network
REACH Community Development, Inc.
ROSE Community Development Corporation
United Fund Advisors
West Valley Housing Authority
Pennsylvania
Allentown Housing Authority
A.M. Rodriguez Associates, Inc.
BCM Affordable Housing
Community Action Commission
Community Action Committee of the Lehigh Valley, Inc.
Community First Fund
Cornerstone Community Partners
Fayette County Community Action Agency, Inc.
Franklin County Housing Authority
HDC MidAtlantic
The Hickman
Housing Alliance of Pennsylvania
Housing Authority of the City of Erie
Housing Authority of the County of Beaver
Housing Development Corporation MidAtlantic
Kelly & Close Engineers
NCCDC
New Kensington CDC
Pathways to Housing PA
Pennrose Properties
Pennsylvania Association of Housing & Redevelopment Agencies
Pennsylvania Developers Council
Pennsylvania Housing Finance Agency
Philadelphia Association of CDCs
Philadelphia Housing Authority
Presbyterian Senior Living
Quality Community Health Care, Inc.
Ralph A. Falbo, Inc.
The Reinvestment Fund
S&A Homes
SEDA-COG Housing Development Corp.
United Neighborhood Centers
United Neighborhood Community Development Corporation
West Market Management
WRT Design
York Housing Authority
Puerto Rico
Advancer Local Development
ERS Consulting Group, LLC
Fernando L Sumaza & Company
La Fundacion del Perpetuo Socorro
One Stop Career Center of Puerto Rico, Inc.
Rhode Island
Amos House
Barbara Sokoloff Associates
Church Community Housing Corp.
Coventry Housing Authority
Dimeo Properties
EastBay Community Development Corp.
House of Hope CDC
HOUSING ACTION Coalition of Rhode Island
NeighborWorks Blackstone River Valley
Newport Housing Authority
Olneyville Housing Corporation
Omni Development Corporation
Pawtucket Central Falls Development
Property Advisory Group
Rhode Island Housing
Roger Williams University
SWAP Inc.
Valley Affordable Housing Corp.
South Carolina
AMCS Inc.
Connelly Builders, Inc.
CPR Partners
Credit Capital, LLC
Douglas Development
Howell Linkous and Nettles, LLC
Humanities Foundation
Landmark Property Management
SC Community Loan Fund
Southern Development Management Company Inc.
South Dakota
Aberdeen Housing Authority
Dakota Nation Community Development Corporation
Dakota Resources
Development for the Disabled Inc.
GROW South Dakota
Lloyd Companies
Murray Properties, LLC
NeighborWorks Dakota Homes Resources
Oti Kaga, Inc.
Tennessee
Alco Management, Inc.
Bluff City Community Development Corporation
Elmington Property Management
Good Neighbor Foundation
Huber & Lamb Appraisal Group
Jackson Housing Authority
Knoxville's Community Development Corporation
Lexington Housing Authority
LHP Development, LLC
Metropolitan Development & Housing Agency
Pennrose Properties
Volunteer Management and Development Company
Texas
Alden Torch Financial, LLC
Anderson Development & Construction, LLC
Anson Housing Authority
Austin Community Design & Development Center
Banyan Residential
B.E. Boyd Consultant Group
Builders of Hope CDC
Call to Action_Homeless Veterans
Center for Faith & Health Initiatives
Conine Residential Group
Crowell Housing Authority
Delphi Affordable Housing Group, Inc.
Edinburg Housing Authority
Flores Residential, LLC
Fort Worth Housing Authority
Foundation Communities
Georgetown Housing Authority
Granger Housing Authority
Greenville Housing Authority
Gregory Housing Authority
Hidalgo County Housing Authority
Housing Authority of El Paso
Housing Authority of the City of Alamo
Housing Lab by BETCO
Joe Lopez Law Firm
Levelland Housing Authority
Lockhart Housing Authority
Locke Lord LLP
Maupin Development
MWS Real Estate Services
Mount Pleasant Housing Authority
Nortex Housing Finance Commission
Red Stone Equity Partners
Robert T. Pittenger CPA, PC
Rogers Housing Authority
Rural Rental Housing Assoc. of Texas, Inc.
San Antonio Alternative Housing Corporation
San Antonio Housing Authority
Spearman Housing Authority
StoneLeaf Companies
Texas Affiliation of Affordable Housing Providers
Texas NAHRO
UAH Property Management, Inc.
Utah
Adams Construction & Management
Community Development Corp. of Utah
Crossroads Urban Center, LLC
Davis Community Housing Authority
Horizon Development and Management
Housing Authority of Salt Lake City
Housing Authority of the County of Salt Lake
Housing Authority of Utah County
Housing Management and Development Corporation
Mountainlands Community Housing Trust
Neighborhood Nonprofit Housing Corporation
NeighborWorks Salt Lake
Self-Help Homes
Taylor Springs Apartments
Tooele County Housing Authority
TURN Community Services, Inc.
Utah Community Reinvestment Corporation
Utah Housing Corporation
Utah NAHRO
Utah Nonprofit Housing Corp.
Valley Behavioral Health
Weber Housing Authority
Vermont
Addison County Community Trust, Inc.
Burlington Associates
Cathedral Square Corporation
Central Vermont Community Land Trust
Champlain Housing Trust
Disability Rights Vermont
Housing Trust of Rutland County, Inc.
Housing Vermont
Lamoille Housing Partnership
Vermont Affordable Housing Coalition
Vermont Center for Independent Living
Vermont Housing and Conservation Board
Vermont Housing Finance Agency
Vermont State Housing Authority
Virginia
AHC, Inc.
Alexandria Housing Development Corporation
Alexandria Redevelopment and Housing Authority
Alliance for Housing Solutions
Arlington Partnership for Affordable Housing
Better Housing Coalition
Chesapeake RHA
Community Housing Partners
Hampton Redevelopment and Housing Authority
Harrisonburg Redevelopment and Housing Authority
The Haven, Inc.
Hopewell Redevelopment and Housing Authority
Housing Assoc. of Nonprofit Developers
Linden Capital LLC
MichiHamlett Attorneys at Law
Newport News Redevelopment & Housing Authority
NJR Real Estate Consulting Services, LLC
Norfolk Redevelopment and Housing Authority
Northern Virginia Affordable Housing Alliance
Restoration of Petersburg Community Dev. Corp.
Southside Outreach Group, Inc.
Virginia Coalition to End Homelessness
Virginia Community Development Corporation
Virginia Housing Coalition
Virginia Housing Development Authority
Virginia LISC
Virginia One Development
Virginia Supportive Housing
Wesley Housing Development Corp. of Northern Virginia
Washington
Ally Community Development
American Capital Group
Barrientos LLC
Beacon Development Group
Bellingham/Whatcom County Housing Authorities
Bellwether Housing
Betsy Lieberman Consulting LLC
Bremerton Housing Authority
Campion Advocacy Fund
Capitol Hill Housing Foundation
Cascade Affordable Housing
Catholic Charities Housing Services Diocese of Yakima
City of Seattle Office of Housing
Columbia Gorge Housing Authority
Colville Indian Housing Authority
Community Center for Education Results
Community Frameworks
Compass Health
Compass Housing Alliance
Downtown Emergency Service Center (DESC)
El Centro de la Raza
Enterprise Community Partners Pacific Northwest
Homestead CLT
HomeStreet Bank
Housing Authority of Grant County
Housing Authority of Kennewick
Housing Consortium of Everett & Snohomish County
Housing Dev. Consortium of Seattle-King County
Housing Hope
Housing Kitsap
Impact Capital
InterIm Community Development Association
Imagine Housing
King County Housing Authority
LeadingAge Washington
Longview Housing Authority
Low Income Housing Institute
Makah Tribe
Mark Flynn Consulting, LLC
Mayor of Seattle Ed Murray
McLoughlin & Associates
Mercy Housing Northwest
Northwest Youth Services
Office of Rural and Farmworker Housing
OPAL Community Land Trust
Pacifica Law Group, LLP
Parkview Services
Paul Schissler Associates
Plymouth Housing Group
Rafn Company
Renton Housing Authority
Seattle Chinatown International District Preservation
and Development Authority (SCIDpda)
The Seattle Foundation
Seattle Housing Authority
Seattle/King County Coalition on Homelessness
SEC Affordable Housing
Security Properties
Senior Services
Senior Services of Snohomish County
Shelter Resources, Inc.
SMR Architects
Solid Ground
Spokane Community Housing Association
Spokane Housing Ventures
Spokane Low Income Housing Consortium
Spokane Neighborhood Action Partners (SNAP)
The Summit Group
Tacoma Housing Authority
TPC Affordable Housing Consortium
United Marketing, Inc.
Upper Valley MEND
Walla Walla Housing Authority
Washington Community Reinvestment Association
The Washington Low Income Housing Alliance
Washington State Housing Finance Commission
Watson & McDonell
Yesler Community Collaborative
YMCA of the Inland Northwest
YWCA Seattle
King
Snohomish
West Virginia
Central Appalachia Empowerment Zone of West Virginia
Chaplin Construction, Inc.
Coalfield Development Corporation
CommunityWorks in West Virginia, Inc.
Innovation, LLC
Keyser Housing Authority
Recovery Point of Charleston
RedClay Development of West Virginia
Religious Coalition for Community Renewal
Vandalia Heritage Foundation
West Virginia Community Builders, LLC
Wisconsin
Astar Capital Management
Baker Tilly Virchow Krause, LLP
Bear Development
Cardinal Capital Management
Center for Resilient Cities
Community First Inc.
Elizabeth Moreland Consulting, Inc.
Gorman & Company
Hirsch Group, LLC
Horizon Development Group, Inc.
Inner City Redevelopment Corporation
Journey House
Layton Boulevard West Neighbors, Inc.
Oshkosh Housing Authority
Riverworks Development Corporation
Salous Inc.
SVA Certified Public Accountants, S.C.
The TheoPRO Group
Wisconsin Council for Affordable and Rural Housing
Wisconsin Housing Preservation Corp.
Wyoming
Volunteers of America Northern Rockies
Wyoming Housing Network
______
Prepared Statement of Diane Yentel, President and CEO of the National
Low Income Housing Coalition
On behalf of the National Low Income Housing Coalition (NLIHC), I
want to thank this committee for the opportunity to submit a statement
for the record regarding the hearing, ``Housing Vulnerable Families and
Individuals: Is There a Better Way?'' Given the growing affordable
housing crisis--especially among families with extremely low-incomes--I
applaud members of this committee for looking seriously at reforms to
reduce costs and serve more families in need. Bold action to improve
and expand current Federal housing programs is clearly needed.
NLIHC is dedicated solely to achieving socially just public policy
that assures people with the lowest incomes in the United States have
affordable and decent homes. Our members include State and local
housing coalitions, residents of public and assisted housing, nonprofit
housing providers, homeless service providers, fair housing
organizations, researchers, public housing agencies, private developers
and property owners, local and State government agencies, faith-based
organizations, and concerned citizens. While our members include the
spectrum of housing interests, we do not represent any segment of the
housing industry. Rather, we focus on what is in the best interests of
people who receive and those who are in need of Federal housing
assistance, especially extremely low-income people.
no silver-bullet solution
Today, the affordable housing crisis continues to reach new
heights. Rents are rising, wages are flat, and more people are renting
their homes than ever before. Yet, the supply of affordable housing has
not kept pace. As a result, record-breaking numbers of families cannot
afford a decent place to call home. Every State and every community is
impacted.
The greatest need for affordable housing is primarily concentrated
among extremely low-income renters who earn no more than 30 percent of
their area median income (AMI). NLIHC's recent report, The Gap: The
Affordable Housing Gap Analysis 2016, found that there is a shortage of
7.2 million affordable and available rental homes for the Nation's 10.4
million extremely low-income renters. This means that just three out of
10 extremely low-income families are able to find an affordable place
to call home. As a result, three out of four extremely low-income
families are severely cost-burdened, spending more than half of their
income on rent and utilities. These families are often forced to make
difficult choices between paying rent and buying groceries or visiting
their doctor. In worst cases, they become homeless.
Moreover, NLIHC's Out of Reach report shows the difference between
wages and the price of housing in every State and county. It also
estimates the hourly wage that a full-time worker needs to earn in
order to afford a modest, two-bedroom apartment. In 2016, the national
Housing Wage was $20.30 per hour. A minimum wage worker would need to
work 112 hours a week--or 2.8 full-time jobs--just to afford their
apartment. While the housing wage changes from State to State and
county to county, there is no jurisdiction where a full-time worker
earning the prevailing minimum wage can afford a modest, two-bedroom
apartment.
Housing challenges differ from community to community; there is no
silver bullet solution. Congress and the administration must use every
tool available to solve the problem. A comprehensive set of solutions
to end housing insecurity in America includes: preserving and
rehabilitating our Nation's existing affordable housing stock;
increasing investment in the production of affordable housing for the
lowest-income people; and expanding rental assistance.
the importance of public housing
Public housing is home to more than 1.1 million households and
plays a critical role in providing safe, decent housing to families
with the greatest needs. The preservation of this important community
asset must be a part of any strategy to end housing insecurity.
Research shows that the vast majority of the more than 2 million
people who live in public housing are satisfied overall with their
homes, even though they rightfully push for solutions to maintenance
and management issues. Most residents do not want to see public housing
end; they want to see it improved and expanded.
In fact, far more people are trying to get into public housing than
leave it. In NLIHC's forthcoming report, we found that the average
waitlist for public housing is about 9 months. Among the largest public
housing authorities (PHAs), the waitlist is longer than 2 years. In
many cities, the waiting list is so long that has been closed for
years.
Converting public housing into housing vouchers would result in a
significant loss to the Federal Government and local communities. The
Federal Government has already invested significant resources to
develop, maintain, and operate public housing. Communities will lose an
important asset--and the Federal Government will lose all of this
investment--if Congress were to eliminate public housing.
section 8 housing choice vouchers
Housing Choice Vouchers (HCV) are a proven tool in reducing
homelessness and housing insecurity, as well as helping families climb
the economic ladder. Housing vouchers help people with the lowest
incomes afford housing in the private housing market by paying
landlords the difference between what a household can afford to pay in
rent and the rent itself, up to a reasonable amount. Administered by
the U.S. Department of Housing and Urban Development (HUD), housing
vouchers comprise the agency's largest rental assistance program,
assisting more than 2.2 million households.
Groundbreaking research by Harvard economist Raj Chetty offers
persuasive evidence on the impact of housing vouchers on upward
mobility. Using new tax data, Chetty and his colleagues assessed the
longer-term outcomes for children who moved at a younger age as part of
the HUD's Moving to Opportunity demonstration. Chetty's study found
that children who were younger than 13 when their family moved to a
lower-poverty neighborhood saw adult earnings increased by
approximately 31 percent. Children who were younger than 13 when they
moved also lived in better neighborhoods as adults and were less likely
to be single parents.
Given the voucher program's effectiveness, Congress should not only
expand housing vouchers to more families in need, but also work towards
improving the program's effectiveness in serving low-income families.
While housing vouchers offer families the prospect of moving to areas
of opportunity, barriers to mobility prevent many from doing so. Many
private-sector landlords refuse to accept housing vouchers--whether
because of the administrative costs, because vouchers do not cover the
full cost of rent in high-cost areas, or outright discrimination. In
cases where the utility of housing vouchers is limited, public housing
plays a critical role in addressing the housing needs of low-income
families.
Converting Project-Based Rental Assistance to Vouchers Would Increase,
Not Alleviate, the Affordable Housing Crisis
Due to the low budget caps required by the Budget Control Act, this
Committee faces a very difficult task of finding the resources
necessary just to maintain current rental assistance contracts and
program levels. Since 2011, spending caps have only made it more
difficult for extremely low-income seniors, people with disabilities,
families with children, and people experiencing homelessness to access
safe, decent, and affordable housing.
For that reason, the Campaign for Housing and Community Development
Funding (CHCDF), a coalition led by NLIHC with the support of 75
national and regional organizations, has worked to work to help lift
the low spending caps, prevent across-the-board sequestration cuts, and
ensure the highest allocation of resources possible to support
affordable housing and community development.
NLIHC also serves on the Steering Committee of NDD United, a
coalition that works across industry sectors--from housing and
infrastructure to education and the environment to healthcare and
public safety--to advocate for non-defense discretionary spending,
including funding for the U.S. Department of Housing and Urban
Development (HUD) and Agriculture (USDA) Rural Housing Service.
Even within these budget constraints, we encourage this Committee
to prioritize protecting and preserving existing affordable housing
resources, like public housing.
While expanding housing vouchers to many more families is an
important part of the solution, it alone cannot fully address the scope
of the housing crisis. Additional tools are necessary to address other
challenges, including the need to recapitalize and preserve aging
properties, revitalize distressed communities, provide housing options
for low-income families in tight or gentrifying markets and produce
accessible housing for families with disabilities and special needs.
Addressing these gaps in the rental housing market requires an
investment in bricks and mortar--through the expansion and improvement
of the Low-Income Housing Tax Credit (Housing Credit), national Housing
Trust Fund (HTF), and HOME Investment Partnerships (HOME) program--as
well as the preservation of public housing and the existing affordable
housing stock.
policy recommendations
To reduce costs and improve program delivery, NLIHC recommends
consolidating PHA's administration of housing vouchers, funding a
mobility counseling pilot program, and encouraging HUD to adopt small
area fair market rents (SAFMRs) with tenant protections.
Consolidate PHA's Administration of Housing Vouchers
Currently, 2,400 PHAs administer the Nation's two million housing
vouchers. Of these agencies, 58 percent administer fewer than 400
vouchers. These small housing agencies exist in rural, suburban, and
urban markets. There are 558 housing agencies administering vouchers in
the Nation's 49 most populated metro areas.
Consolidation of the administration of vouchers would result in
administrative cost savings, bring significant benefits to families
with housing vouchers and those in need of housing vouchers, and reduce
HUD's oversight costs.
According to HUD's Housing Choice Voucher Program Administrative
Fee Study, issued in April 2015, large housing voucher programs have
lower costs than smaller programs. Cost estimates for the 130 small
housing voucher programs studied show an inverse pattern of costs per
unit, decreasing steadily with the increase in the number of vouchers
under lease.
Under the current system of multiple housing authorities in a
single housing market, a household seeking a voucher has to apply to
several different agencies to maximize their chances of successfully
competing for a voucher. For example, an eligible household in the
Washington, D.C. housing market would have to submit separate
applications to the District of Columbia Housing Authority, the Housing
Opportunities Commission of Montgomery County, the Housing Authority of
Prince George's County, the Alexandria Housing and Redevelopment
Authority, the Fairfax County Redevelopment and Housing Authority, and
the Arlington County Department of Human Services, not to mention
additional housing agencies in outer ring suburbs from which people
commute to and from jobs in the D.C. metro area.
It is obvious how time consuming and frustrating this would be for
families seeking a housing voucher. It is also costly for a housing
authority to process an application--a cost that is compounded when
several housing authorities are processing applications from the same
household. Under the current system, it is impossible to know what the
true demand for vouchers is because the same household can be on
multiple waiting lists.
Even if a household is lucky enough to rise to the top of a waiting
list and receive a housing voucher, they may face significant barriers
in using the voucher. Housing markets do not recognize jurisdictional
boundaries. If a new voucher holder received their voucher in one
jurisdiction, but found their preferred housing in the next
jurisdiction, the household would have to go through the cumbersome
process of ``porting'' their voucher from one administering agency to
another.
This process can reduce significantly the chances of successfully
executing a lease and moving to the new home.
Consolidation of an area's vouchers into a single administering
entity with a single waiting list, either with a new entity or one of
the existing housing agencies, would significantly streamline the
voucher process for households, the administering agencies, and the
landlords on whose participation the program's success depends.
Regional administration of vouchers would also result in providing
voucher holders with greater choice in where they can use their
vouchers. Federal policy changes to require the consolidation of
voucher administration would provide people more freedom to choose
where they want to live with a voucher, including moving to low-poverty
neighborhoods.
One example of a consolidated housing agency is the Southern Nevada
Regional Housing Authority (SNRHA), which is the successor to the
Housing Authorities of Las Vegas, North Las Vegas, and Clark County.
According to the SNRHA's website, ``Now, all of that expertise is under
one roof and we hope to serve you much more efficiently.'' The SNRHA
administers 10,094 housing choice vouchers.
The statute currently permits voucher administration consortia, but
many housing authorities are reluctant to give up their authority.
Congress should enact legislation that provides incentives--or
preferably mandates--for consolidation and regional administration.
Fund a Mobility Counseling Pilot Program Proposed by the
Administration
Congress should support funding for a mobility counseling pilot
program that was proposed in the President's fiscal year 2017 budget
request. Through this 3-year demonstration, HUD and PHAs will be able
to develop new models for improving voucher mobility. Under the
demonstration, PHAs in about 10 regions would provide counseling to
help HUD-assisted families move to areas of opportunity. PHAs could use
demonstration funds to improve collaboration between agencies and align
policies and administrative systems. Funds could also be used to better
recruit landlords and other activities that promote greater voucher
mobility and housing choice. The proposal also includes a research
component to study what strategies proved most cost-effective.
The Senate's fiscal year 2017 Transportation-HUD (THUD) spending
bill includes $11 million to fund the demonstration and an additional
$3 million for evaluation. The House THUD bill does not include similar
funding.
Encourage HUD to Adopt Small Area Fair Market Rents
(SAFMRs) With Tenant Protections
For several years, NLIHC has advocated for SAFMRs as one means to
help expand affordable housing choice for voucher households. SAFMRs
have the potential to augment the value of a voucher and thus enhance
the ability of a household to use their voucher in more neighborhoods,
particularly areas of higher opportunity.
SAFMRs reflect rents based on U.S. Postal ZIP Codes, while
traditional FMRs reflect a single rent standard for an entire
metropolitan region. By providing voucher payment standards that are
more in line with neighborhood-scale rental markets, SAFMRs aim to
provide relatively higher subsidies in neighborhoods with higher rents
and greater opportunities and lower subsidies in neighborhoods with
lower rents and higher concentrations of voucher holders.
HUD recently issued a proposed rule that would use a formula to
select a limited number of metropolitan areas that would be required to
use SAFMRs. While NLIHC supports changes to the voucher regulations
that enable households to use vouchers in areas of higher opportunity,
HUD must ensure that the final rule prevents adverse impacts on
households currently relying on vouchers.
We are concerned about the potential harm that a transition to
SAFMRs could cause voucher holders currently living in low-cost ZIP
codes where the SAFMR is likely to be lower than the metropolitan FMR.
This could result in a lower voucher payment standard, one that is
below current rents to which landlords are accustomed. If a landlord
does not lower the rent when the voucher payment standard declines--
which is likely--residents would have to pay more for rent and may
become cost-burdened or severely cost-burdened.
Analysis by the National Housing Law Project reveals that if
current voucher households are not held harmless, 78 percent (435,000
households) would likely suffer the impact of reduced payment standards
in the 31 areas that meet HUD's SAFMR criteria. Consequently, we
recommend that the final rule categorically exempt current voucher
households from any reduction in the payment standard as a result of
the transition to SAFMRs.
Moreover, we concerned many landlords may stop accepting vouchers
where payment standards in low-rent neighborhoods decline sharply,
adversely impacting households currently relying on vouchers as well as
future voucher recipients. In some tight rental markets, landlords may
be able to obtain the rents they want without vouchers and without
having to comply with voucher program requirements. This is
particularly true in gentrifying areas.
In order to prevent landlords from exiting the voucher program and
thereby reduce the stock available to future and current voucher
households, NLIHC recommended to HUD that its final rule incrementally
limit how far SAFMRs could fall below current metropolitan FMRs. NLIHC
proposed that for the first year of implementation, SAFMRs be set no
lower than 95 percent of the metropolitan FMR, no lower than 90 percent
the second year, and so on in 5 percent increments.
We also believe that HUD's proposed rule does not account for tight
rental markets. Several of the metropolitan areas on the list of 31
that would be required to comply have very low vacancy rates, little
rental turnover, high and rapidly rising rents, and low growth in the
rental stock. As a result, there is little or no opportunity for
mobility for renters in general and for voucher households in
particular. Voucher households often have to return their vouchers
unused because they cannot find a place to rent. In higher opportunity
neighborhoods where vacancies are scarce, voucher households encounter
strong competition from those without vouchers. Therefore, NLIHC
recommends that any metropolitan area with a vacancy rate of 5 percent
or less not be required to comply with the SAFMR rule.
an alternative approach to increase needed investments
While Federal investments in housing have a proven track record of
reducing homelessness and housing insecurity, these investments are
sorely underfunded. As a result, just one in four families that are
eligible for housing assistance get the help they need. For our Nation
to fully address the affordable housing crisis, we must identify and
allocate resources to increase investment in proven solutions.
Congress can make the investments needed to end homelessness and
housing insecurity without adding costs to the Federal Government
through reform of the Mortgage Interest Deduction. Each year, the
Federal Government spends more to subsidize the homes of 7 million
high-income households through the Mortgage Interest Deduction--most of
whom would be stably housed without the government's support--than it
does to assist the poorest 55 million families. In fact, $8 out of
every $10 under the Mortgage Interest Deduction goes to families making
more than $100,000 a year; $4 out of every $10 goes to families making
more than $200,000.
Specifically, Congress should reduce the size of a mortgage
eligible for the tax break from $1 million to the first $500,000--
impacting fewer than 5 percent of mortgage holders nationally--convert
the deduction into a nonrefundable capped credit and reinvest the
significant savings into programs that serve families with the
greatest, clearest housing needs. These changes would result in 15
million low-income homeowners who currently get no benefit from the
Mortgage Interest Deduction to receive a much-needed tax break, as well
as $220 billion in savings over 10 years to be reinvested in effective
housing programs, including Housing Choice Vouchers, public housing,
and the national Housing Trust Fund (HTF).
The HTF is a dedicated, targeted resource that provides States with
revenue to build, preserve, and rehabilitate housing that is affordable
for extremely and very low-income households. This year, the HTF
provided its first $174 million in allocations to States. NLIHC and our
State and local partners look forward to working with Congress to
expand the HTF, including though housing finance reform and reform of
the Mortgage Interest Deduction.
Thank you again for this opportunity for NLIHC to share our views
on how to improve the way we provide and administer affordable housing
in our country. If you have additional questions, please contact Public
Policy Director Sarah Mickelson at [email protected].