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THE SECTION 8 HOUSING
ASSISTANCE PROGRAM:
PROMOTING DECENT AFFORDABLE
HOUSING FOR FAMILIES AND
INDIVIDUALS WHO RENT—DAY 3
Tuesday, June 17, 2003
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:07 p.m., in Room 2128, Rayburn House Office Building, Hon. Robert Ney [chairman of the subcommittee] presiding.
Present: Representatives Ney, Tiberi, Waters, Velazquez, Watt, Clay, Scott and Davis.
Chairman NEY. [Presiding.] The subcommittee will come to order.
I want to welcome the witnesses to the Hill and appreciate your testimony on this important issue. I also would just remind you that the lights will be activated. When you begin to speak, it will be green. Yellow means you have about a minute, and then red, we would ask you to summarize and complete your Statement. Also without objection, hearing no objection, any written statements you have will be part of the record.
Today, the subcommittee holds its third in a series of hearings to examine the current operation and administration of the Section 8 housing choice voucher program and review various proposals intended to make the program more effective and cost-efficient.
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Since the 1970s, rental vouchers have been a mainstay of the Federal housing policy. Currently, the Section 8 housing voucher program supplements rent payments for approximately 1.5 million individuals and families. While the concept of the program remains sound, the program has often been criticized for its inefficiency. More than $1 billion is recaptured in the program every year, despite long waiting lists for vouchers in many communities.
Michael Liu, Assistant Secretary of Public and Indian housing at the Department of Housing and Urban Development, testified at the first hearing on May 22, 2003. His testimony focused primarily on the Administration's proposal entitled ''Housing for Needy Families,'' or HANF. HANF would reform the Section 8 housing choice voucher program into a State-administered block grant program.
I will dispense with the rest of my written statement, and without objection make them part of the record because we are going to have a vote and I want to make sure you get your ample time. Then we will come back. I just want to say this is a very serious issue, obviously a contentious issue. I have introduced a bill at the request of the Department. We are having hearings in the Capitol and we fully intend to have hearings in different parts of the United States on this issue.
So with that, I will see if there are any opening statements.
[The prepared statement of Hon. Robert W. Ney can be found on page 280 in the appendix.]
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
I am glad to be here for this third in a series of hearings on the administration's Section 8 block grant proposal. This is an important issue that must be fully vetted from all angles. I thank the Chairman and Ranking Member for the thorough review of HANF and look forward to the testimony of today's witnesses. Over the course of these hearings, we have heard many concerns raised about the block grant proposal, and the indications are that there are more to come.
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The history of these hearings has reminded me of Secretary Rumsfeld's discussion of known knowns, known unknowns, and unknown unknowns. By using the Secretary of Defense's words, I am not trying to compare housing block grants to the war on terrorism. But for tenants with nowhere else to go, this is very much a matter of survival. We began with the known knowns, the concerns which we agree are likely to come to pass. HANF will likely result in lifetime limits on benefits. It will create an unnecessary and costly extra layer of bureaucracy, severely limit the number of new families brought into the program, and splinter the Section 8 program into 50 individual State programs.
Then, we heard from witnesses on some of the known unknowns, the concerns for which there are no answers. Will HANF reduce the number of families currently receiving benefits, due to the eroding value of block grants? Will it eliminate the flexibility of vouchers? Today, I am interested in hearing about two more of these known unknowns. First, will block granting dampen landlord participation in the program? Currently, HANF includes no assurance of continued funding of existing vouchers from year to year. It also gives States the authority to cut the subsidy level of vouchers and place lifetime limits on benefits, leaving Section 8 families with nowhere to live. Wouldn't this force landlords to undergo lengthy and expensive legal eviction processes for each of their tenants, and thereby discourage their participation in the program? The Administration has failed to adequately weigh in with answers.
Second, how do we know that in a time of fiscal constraints, the Section 8 block grant will actually be used for housing? What is to prevent a governor from playing favorites with the vouchers and rerouting them to different neighborhoods, opening the door to corrupt mismanagement of the program? Are there safeguards to prevent such an occurrence? The unknown unknowns are out there waiting to throw additional barriers in the paths of tenants and landlords. By the time they are discovered, they will have already done their damage. Is that a risk we want to take, or should we just accept the one thing I know for sure: HANF will not work.
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When looked at from this point of view, this hearing begins to take on the feeling of a work of Dr. Seuss. And as happens in all of his work, I fear this proposal has the potential to end with a move from the sublime to the ridiculous.
Thank you, Mr. Chairman.
Chairman NEY. I thank the gentlelady for her statement.
Mr. Scott of Georgia?
Mr. SCOTT. Mr. Chairman, we have so many panelists, I will just move on to the panel.
Chairman NEY. I want to thank the members and introduce the panel. Conrad Egan is the Executive Director of the National Housing Conference, having previously served as Executive Director of the Millennial Housing Commission. He is currently the Chairman of the Fairfax County, Virginia Development and Housing Authority. Howard Husock is the Director of Case Studies, Public Policy and Management at Harvard University's Kennedy School of Government. He is also a research fellow at the Kennedy School Taubman Center for State and Local Government. Currently, he is the Director of the Manhattan Institute Social Entrepreneurship Initiative.
Bruce Katz is a Vice President and Senior Fellow at the Brookings Institution here in Washington, D.C. He is the founding director of the Brookings Center on Urban and Metropolitan Policy. Prior to his appointment at Brookings, Mr. Katz was chief of staff to Henry Cisneros, former secretary of HUD. Jill Khadduri is a principal associate at Abt Associates, Incorporated, a social science research firm based in Cambridge, Massachusetts and Bethesda, Maryland. From 1988 to 2000, she was the Director of Policy Development at HUD's Office of Policy Development and Research.
Dr. Ed Olsen is a professor of economics at the University of Virginia in Charlottesville, Virginia. He has been involved in housing policy analysis since the late 1960s and has served as a consultant to HUD during five administrations. Dr. Olsen has published extensively on the effects of public housing, housing allowances and rent control. The last panelist is Margery Austin Turner. She directs the Urban Institute's Metropolitan Housing and Community Center here in Washington, D.C. She is a nationally recognized expert on urban policy and neighborhood issues, with much of her current work focusing on the Washington metropolitan area.
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I want to welcome all the panelists and we will start with Mr. Egan.
STATEMENT OF MR. CONRAD EGAN, PRESIDENT AND CEO, NATIONAL HOUSING CONFERENCE, WASHINGTON, DC
Mr. EGAN. Thank you, Mr. Chairman. It is a pleasure to be here today. As you indicated, I am the former Executive Director of the Millennial Housing Commission, and I will speak principally today from that standpoint. The Millennial Housing Commission was created by Congress a short while ago, which appointed its 22 Commissioners and its co-chairs, former Representative Susan Molinari and Dick Ravitch, and asked the commission to come back no later than May 30 of last year with a report on how particularly this Congress, but also other parts of the Federal government could do a better job to support good housing for all Americans. We did produce our report on time and within budget. I hope that the comments I will make today will be some indication of the return on investment that the Congress made in the commission.
One of the things that the Commission was asked to do and which I will focus on today is to examine whether the existing programs of the Department of Housing and Urban Development work in conjunction with one another to provide better housing opportunities for families, neighborhoods and communities, and how such programs can be improved with respect to such purpose. I am quoting, Mr. Chairman, from the statute. The Commission responded in many ways to that charge.
One of the programs that they focused on was the Section 8 housing assistance program. I will repeat the recommendation that the Commission put forward. It is under the title ''Expand and Strengthen the Housing Choice Voucher Program to Improve the Access of Extremely Low-Income Households to the Private Housing Stock.'' If I could quote from the introductory part of that recommendation: Since the 1970s, the housing voucher program has effectively assisted millions of lower-income renters, particularly extremely low-income households, who were most likely to have severe affordability problems and/or live in inadequate housing.
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Because the program is flexible, cost-effective and successful in its mission, the Millennial Housing Commission believes housing vouchers should continue to be the linchpin of a national policy providing very low-income renters access to privately owned housing stock. In addition to that, the Millennial Housing Commission recommends appropriation of additional funds for substantial annual increments of vouchers to address the housing problems of extremely low-and very low-income families who lack access to other housing assistance. The Commission also pointed out the important relationship between the Section 8 housing assistance program and homeownership.
The Commission did go on, though, to recommend some improvements to the program. I will just briefly list them. The detail is in my statement and my colleagues I am sure will also have additional detail in addition to those who preceded this panel here today. First of all, it is important to improve utilization and success rates. Secondly, it is important to increase landlord participation, and I particularly appreciate Representative Velazquez's question in that area and I hope we can explore it when we have an opportunity. Thirdly, it is important to link the Section 8 program to housing production programs. It is important to link vouchers to work opportunity and self-sufficiency initiatives. It is also important to link vouchers to non-housing programs. As you can see the Commission liked this word ''link.'' They used it a lot.
Finally, the Commission recommended allowing a more flexible use of Section 8 project-based units. I realize this hearing is not the subject of that particular item, but I would hope that the subcommittee could at some point devote some time and attention to that. This is what I call the mobility option for project-based subsidies in order to keep them in the housing portfolio and to provide for better preservation and revitalization of project-based properties assisted by the Section 8 program.
In conclusion, Mr. Chairman, let me summarize the Commission's position on the Section 8 housing assistance program thusly. First, the program works well in its current form. Second, it could be improved by implementing the above recommendations. And third, substantial annual increments of additional funds should be appropriated to better address the housing problems of extremely and very low-income families, and to increase opportunities for homeownership.
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Thank you, Mr. Chairman.
[The prepared statement of Conrad Egan can be found on page 310 in the appendix.]
Chairman NEY. I want to thank you.
Mr. Husock?
STATEMENT OF MR. HOWARD HUSOCK, ALFRED TAUBMAN CENTER FOR STATE AND LOCAL GOVERNMENT, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY, CAMBRIDGE, MA
Mr. HUSOCK. Thank you very much, Mr. Chairman. It is a privilege to address the subcommittee once again.
The proposal to rename and restructure the Section 8 housing choice voucher program as housing assistance for needy families or HANF should be considered among the most promising housing proposals in many years. Its promise lies in the potential it holds for considering housing policy not in a vacuum, but in the context of domestic social policy more broadly, and thereby potentially encouraging long-term improvement in the life choices and prospects of those households whose rent is paid for by a housing voucher.
HANF, of course, sounds a lot like TANF, the core public assistance program, and well it should. For although largely unacknowledged in our recent focus on physical improvements to public housing or the drive to increase the number of housing vouchers actually utilized, the fact of the matter is that there are demographic overlaps, significant ones, between the public assistance population and the housing assistance population, such that common supervision at the State level is a logical new step. HUD reports, for instance, that among non-elderly, non-disabled heads of households receiving housing vouchers, 28 percent, that is 219,000 households nationwide, are also current recipients of TANF. Like TANF recipients, they are predominantly comprised of single-parent families. HUD reports that of 1.01 million non-elderly, non-disabled Section 8 households, 783,000, that is 78 percent, are headed by single parents.
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Indeed, it is important to keep in mind when considering housing policy that although we hear frequent alarms, it is an exaggeration to say that we have a general housing affordability crisis in the United States. Affordability, rather, is a problem for the elderly, poor, and the disabled, and particularly single-parent families with children. HUD has reported indeed that only 8 percent of voucher holders are two-parent families with children.
Section 8 vouchers, moreover, are a means through which new single-parent families prone to long-term poverty, headed primarily by young mothers, can be established in the first place. Indeed, between April 2002 and April 2003, 13,600 new voucher holders, 6 percent of all new admissions to the program, were under 21 years of age. Such households are typically the focus of a wide range of social service interventions from job training to nutrition programs.
It is common sense, then, for our housing voucher policy to be considered and administered in the same context as our larger social policy. That is a policy which could be summarized since the welfare reform act as one of short-term assistance meant to enable long-term self-improvement and self-reliance. To that might be added discouraging those who are not economically ready to start their own households from starting them. The centerpiece change of the HANF proposal, the creation of the housing voucher block grant, and a shift in program administration from the local to the State level, may help us achieve those goals.
Local public housing authorities, which have historically administered Section 8, have a narrow mandate to provide safe and sanitary housing. But given who lives in our subsidized housing, the programs must be more broadly considered and aligned specifically with the goals which state governments are asked to implement, not just through TANF, but through other social programs as well, including the administration's current efforts to encourage marriage and two-parent families.
A block grant and state administration of Section 8 can set the stage for a period of housing policy innovation, much as we saw state governments experiment, many successfully, for instance HHS Secretary Thompson in Wisconsin when he was Governor there, with welfare-to-work programs in the early 1990s, even before the passage of TANF and in fact presaging that passage. Not that all States will move in new directions. Some may prefer the current approach and they will be allowed to continue it. But other jurisdictions may choose otherwise and seek to craft new housing policies in conjunction with broader state transitional assistance policies.
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Such policies could indeed involve a time limit, or they could involve a declining public share of rent payment over the fixed lifetime of a voucher, as well as a combination with social services such as financial counseling and household management. Such approaches are not merely hypothetical. They have been in use effectively, for instance, by the Charlotte, North Carolina housing authority since 1993, in Congressman Watt's district, for some of its public housing tenants. State government, however, is more likely to have the capacity to undertake such policy innovations and far more likely to be inclined to do so if those considering social policy broadly are also those reviewing housing policy.
It is a mistake, in my view, to see the problems with Section 8 to date as lying mainly in the high turnback of unused appropriations or in the need to convince more property owners to accept more voucher holders. It is highly likely that most property owners in areas of reasonably strong demand will choose and continue to choose to avoid the complications that Federal program participation brings with it. It is far more likely for voucher holders to become concentrated in areas of weaker demand, and indeed program data from HUD again shows that in 11 of 25 cities that HUD surveyed, there are neighborhoods in which voucher holders constitute 25 percent or more of the population. I believe Senator Mikulski has called these ''horizontal ghettos.''
The southern suburbs of Chicago where Section 8 has been particularly controversial, I would hope that this committee might have hearings in that area if possible, have absorbed for instance 58 percent of the Cook County Housing Authority's vouchers. The majority of the voucher holders who have moved from the District of Columbia to its suburbs have moved to Prince George's County. In Philadelphia, 45 percent of voucher holders inhabit just two of the city's five major neighborhoods, South Philadelphia and Northeast Philadelphia. If you visit the south suburbs of Chicago, you will meet local elected officials and residents, many of them African American, who will express grave concern about this phenomenon, fearing the effects of such concentration on the social fabric of their communities.
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As I wrote in the Manhattan Institute publication City Journal, in south suburban Chicago, with one of the highest concentration of voucher holders in the country, lower middle class African American residents complained. They thought they had left bad neighborhoods behind, only to find the Federal government is subsidizing bad neighborhood effects to follow them. Vikkey Perez of Richton Park, Illinois, owner of Nubian Notion Beauty Supply, fears that the small signs of disorder she sees with voucher tenants, un-mown lawns, shopping carts left in the street, are symbols of potential neighborhood undermine. ''Their lifestyle does not blend with our suburban lifestyle,'' she told me. Kevin Moore, a hospital administrator and homeowner in nearby Hazelcrest, Illinois, complained that children in voucher homes went unsupervised and that boom-boxes played late in the night. ''I felt like I was back on the west side,'' he said, referring to the neighborhood where he grew up and had worked hard to leave behind.
If voucher concentration is probable for economic reasons, it is important for program guidelines to encourage voucher beneficiaries to take steps to end or reduce over time their assistance. In fact, such encouragement is just as important in areas where voucher concentrations are low as where they are high.
[The prepared statement of Howard Husock can be found on page 313 in the appendix.]
Chairman NEY. I am sorry to have to interrupt. We have got 5 minutes left on a vote, so what we need to do is to go over and vote. We have two 5-minute votes after that, which will be 10 minutes, and we will be back. I apologize for the unpredictability of the votes, but we will be back. The committee will be in recess, returning upon the call of the Chair.
Thank you.
[RECESS]
Chairman NEY. The committee will come back to order. I think we had finished the time of Mr. Husock, and we will move to Mr. Katz.
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STATEMENT OF MR. BRUCE J. KATZ, DIRECTOR, CENTER ON URBAN AND METROPOLITAN POLICY, THE BROOKINGS INSTITUTE, WASHINGTON, DC
Mr. KATZ. Thank you, Mr. Chairman, for the opportunity to testify today on the performance and potential of housing vouchers. I will just make four basic points drawn from my written testimony.
First, housing vouchers are a critical and generally successful component of Federal housing policy. They are unique among Federal housing programs in that they allow the recipient rather than the developer to decide where a family lives. This gives families greater choice in metropolitan rental markets, and by so doing enables them in theory to move to areas of growing employment and quality schools. Vouchers are therefore the only Federal housing program that recognizes the radical decentralization of labor markets that has taken place over the past 30 years, and they are the only Federal housing program that tries to replicate for low-income renters what all middle-class households enjoy, the ability to make decisions on housing in connection with decisions on jobs and schools.
Second, vouchers and the administration of vouchers are not perfect and need improvement. I emphasize four shortcomings in my testimony. Success and utilization rates are not where they should be. Landlord participation remains a constant challenge, as Conrad mentioned. Central city recipients, minority recipients, elderly recipients and recipients with disabilities all face special challenges in exercising choice in the market. And administration of the voucher program remains highly fragmented and insular: too much devolution in a sense, and too little accountability and competition.
My third main point is that the Administration's proposal to block grant vouchers to the States is not the right reform. I think this proposal has multiple fatal flaws. In my view, States are not the place to vest administration of the program. The voucher program is about markets and housing markets for the most part are metropolitan and in many parts of the country actually cross state lines. I believe block granting for the States would actually complicate, rather than streamline voucher administration, given the absence of an adequate delivery system in most States. The proposal would require the creation of a new layer of governance that does not now exist and could be a recipe for administrative chaos in the short term. I am also concerned that the shift to a block grant could substantially alter the method by which Congress determines funding for the voucher program. In the real world, rents rise, and any program that wants to leverage private sector participation needs to reflect that simple fact. In the event that block grant funding is not sufficient to cover the program's needs, States would probably take one of several actions: shift assistance to households with more moderate incomes; require recipients to pay a higher share of their income for rent; or limit the ability of households to use vouchers in low-poverty areas. All these funding scenarios could have a profound impact on which landlords participate in this program, since in the end what landlords want is certainty and predictability in program rules and funding levels.
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Finally, I believe the effort to model voucher administration after welfare reform is misguided. The simple fact is that vouchers serve a much broader universe of households than welfare recipients. Only 13 percent of voucher recipients receive a majority of their income from welfare benefits. The preponderance of voucher holders either work or are elderly or have disabilities. The voucher program is in essence not simply the housing equivalent of welfare. If we want housing to work with welfare, we need a strong voucher program.
Fourth, I believe the voucher program does need reform. I recommend that Congress give voucher recipients the tools they need to exercise choice in the market. Information is one such tool. Why shouldn't every voucher recipient have ready access, easy access to information about rental housing vacancies, school performance and employment accessibility so that they can make informed housing decisions, essentially, the rental market equivalent of the multiple listing services used for homebuyers? I specifically recommend that Congress authorize and fund HUD to test the feasibility of making information on metropolitan housing markets and school performance transparent and accessible.
I also recommend that Congress try to match the administration of vouchers to the real geography of housing markets in metropolitan areas. I think Congress should experiment with a continuum of metropolitan approaches to voucher administration that include collaborative activities among local PHAs, the competing-out of administrative responsibilities to private sector entities both for-profit and nonprofit, as well as in some places the actual consolidation of separate agencies. I discuss this further in my written testimony. Again, I believe metropolitan areas, not States, are the right geography for thinking about housing policy and rental assistance.
So in conclusion, the voucher program has been a mainstay of Federal housing policy for the past 30 years. More than any other Federal housing program, it places power and resources where it belongs, in the hands of low-income renters. By so doing, it enables them to make decisions about housing, jobs and schools in a unified way. The program, and particularly the administration of the program, does need some improvement, but reform needs to proceed in a measured and responsible way to avoid making the cure worse than the disease.
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Thank you very much.
[The prepared statement of Bruce J. Katz can be found on page 319 in the appendix.]
Chairman NEY. I thank the gentleman for his testimony.
Ms. Khadduri?
STATEMENT OF MS JILL KHADDURI, PRINCIPAL ASSOCIATE, ABT ASSOCIATES INC., BETHESDA, MD
Ms. KHADDURI. Thank you, Mr. Chairman. I appreciate the opportunity to be on this panel.
My name is Jill Khadduri and I work at Abt Associates, a national social science research firm. My company has done most of the basic program evaluation on the voucher program from the 1970s until now. We also provide technical assistance to voucher program administrators. Examples of research we have done recently that may be of particular interest to this committee include a study of voucher utilization rates, a study of voucher success rates, and a study of the circumstances that may bring a voucher program into conflict with residents of the neighborhood.
Mr. Chairman, the voucher program is not flawed. Its basic design is sound and it is an effective program for meeting the housing needs of low-income households, particularly families with children, the poorest households, and people with disabilities. At the same time, the idea of consolidating administration of the voucher program at the State level is very attractive. It would overcome some of the relative shortcomings of the voucher program.
However, it is essential that any such consolidation into a State block grant should have four features. First, the choice-based character of the voucher program must be preserved. Second, any flexibility for States to alter the structure of the subsidy formula, impose time limits, or alter the housing quality inspection should be carefully tested and evaluated before all States have such flexibility. Third, the program should have clear performance goals and reporting requirements, including preservation of the requirement to report household level data in standard format. Finally, the annual appropriation of funds for the program should be tied to maintaining current numbers of families assisted at adequate assistance amounts for each household, and a steady program growth to reduce the unmet need for rental housing assistance.
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Let me turn to the results of some of our recent studies to tell you why I believe the voucher program is not in crisis. The utilization problem is well on its way to being solved. What we found when we did intensive case studies at 48 housing authorities is that many of the programs that had been using their voucher funds at low rate made substantial improvements once they got the word from HUD that funds not used would be taken away. We also found that many of the housing authorities with low utilization rates had staffing problems. The voucher program director had left and basic program functions such as issuing new vouchers had ground to a halt. An important finding of that study is that while it is relatively more difficult for housing authorities in difficult market conditions to use all their voucher funds, good program administrators find ways of doing so.
Success rates for families, as I am sure this committee knows, are not the same as utilization rates for local programs. Not all families who are issued vouchers succeed in using them, but a large fraction does so. Our study of voucher success rates at urban PHAs found an overall success rate of 69 percent in 2000. Success rates were high for all types of households. They were high for all racial and ethnic groups. They were high for people with disabilities and they were especially high for those households with the lowest incomes.
Vouchers are not harmful to neighborhoods. The isolated cases of neighborhood conflict that we studied in 1999 and 2000 showed that neighborhood concerns about vouchers can be avoided by program administrators who are alert for possible over-concentration of vouchers in small areas. They can be overcome when administrators act quickly when a complaint arises to find out the facts of the case and work actively with neighborhood groups. A common theme of this study is that good program administration is at the heart of the distinction between excellent and inadequate program results. The voucher program design is sound.
Having said that, there are some very good reasons to consolidate program administration at the State level and to give the States greater discretion over some features of the design of the program. The advantages of state-level administration are, first, States would be in a position to rationalize the administration of the program which now is fragmented into more than 2,500 entities. Many administer very small numbers of vouchers and are inefficiently staffed. Overlapping jurisdictions confound good program administration.
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Our utilization study found that there were often not two, but three programs operating in the same geography, to the confusion of low-income families and owners of rental housing. Our neighborhood relations study found that overlapping jurisdictions made it difficult to avoid and to solve neighborhood conflict. It was hard for a housing authority to tell where another administrator's vouchers were being used. It was hard for a neighborhood group to know who was in charge.
Second, state administration would help overcome the barriers that currently exist to the use of vouchers across jurisdictional lines. Third, States would be in a good position to coordinate the voucher program with other programs that serve needy populations, welfare reform and services for people with disabilities, for example. Finally, if we are to experiment with changes to the basic design of the voucher program, States are the right level for this to happen. States have more freedom than the Federal government to experiment with controversial changes such as time limits. At the same time, they have more ability than local housing authorities to create carefully designed and evaluated experiments.
I am not going to respond directly to the Administration's proposal for a block grant called HANF, Housing Assistance for Needy Families. Instead, I will elaborate on the four features that I said at the outset were essential to any proposal that Congress might decide to enact in a consolidated administration at the State level. First, the choice-based nature of the program should be preserved. We already have a housing block grant. It is called the HOME program. Permitting States to attach vouchers to housing developments would make a voucher block grant no different from HOME and would threaten the budgets for both programs.
Second, while state administrators of a voucher block grant should have immediate flexibility in some features of program design, features that go to the heart of the program such as time limits and the program's housing quality standard and also the structure of the subsidy formula should be permitted only after being very carefully tested and evaluated rigorously. I recommend modeling this feature of any voucher block grant on the AFDC state waivers that preceded welfare reform. Individual States should be permitted to implement such changes only with careful experimental design and evaluation of results.
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Third, legislation enacting a voucher block grant should include performance goals and measures and should mandate the continuation of the collection of household-level data on income levels, demographic characteristics, subsidy amounts and the location of housing units. This is essential so that Congress and the American public know what they are paying for. It is also essential for estimating budget levels for the program, what is needed to sustain the current program level, and what is needed for the program to grow.
Finally, the legislation enacting a voucher block grant should include explicit statutory language relating the program's funding level to housing needs. Only such a congressional declaration of intent and good data on households served and subsidy levels will overcome the fears of those who believe that a voucher block grant would mean the loss of the Federal commitment to meeting the housing needs of low-income renters.
Thank you, Mr. Chairman.
[The prepared statement of Jill Khadduri can be found on page 329 in the appendix.]
Chairman NEY. Thank you. I thank the witness for your testimony.
Mr. Olsen?
STATEMENT OF MR. ED OLSEN, PROFESSOR OF ECONOMICS, UNIVERSITY OF VIRGINIA, CHARLOTTESVILLE, VA
Mr. OLSEN. Thank you, Mr. Chairman. I welcome this opportunity to talk with you and the members of your committee about reform of the housing choice voucher program. I speak from the perspective of a taxpayer who wants to help low-income families, albeit a taxpayer who has spent the last 30 years studying the effects of low-income housing programs.
Given the current economic slow-down and the added expense of fighting international terrorism, it is clear that little additional money will be available for low-income housing programs over the next few years. The question is how can we continue to serve the families who currently receive housing assistance and serve the poorest families who have not been offered assistance without spending more money. The answer is we must use the money available more wisely. Research on the effects of housing programs provides clear guidance on this matter. It shows that tenant-based housing vouchers provide equally desirable housing at a much lower total cost than any type of project-based assistance under any market conditions. My written testimony summarizes the evidence.
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These results imply that we can serve the current recipients equally well that is, provide them with equally good housing for the same rent and serve many additional families without any increase in the budget by shifting resources from project-based to tenant-based assistance. The magnitude of the gain from this shift would be substantial. The smallest estimates of the excess cost to project-based assistance imply that a total shift from project-based to tenant-based assistance would enable us to serve at least 900,000 additional families with no additional budget.
These findings have important implications for how the Federal budget for housing assistance should be spent. First, the money currently spent on operating and modernization subsidies for public housing should be used to provide tenant-based vouchers to public housing tenants as proposed by the Clinton Administration and by Senator Dole during his Presidential campaign. If housing authorities are unable to compete with private owners for their tenants, they should not be in the business of providing housing.
Second, contracts with the owners of private subsidized projects should not be renewed. Instead, we should give their tenants portable vouchers and force the owners to compete for their business.
Third, the construction of additional public or private projects should not be subsidized. No additional money should be allocated to HOPE VI, there should be no new HUD production programs, and the indexing of the low-income housing tax credits for inflation should certainly be rescinded until a careful analysis of the cost-effectiveness of this program overturns the results of the recent GAO study.
Fourth, Congress should declare a moratorium on further project-based assistance under the housing choice voucher program until it can consider the results of a study that compares the cost-effectiveness of already committed project-based vouchers with tenant-based vouchers.
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Finally, if Congress decides to convert the housing choice voucher program to a housing block grant to the States, it should require that the entire budget for the program be used for choice-based assistance. Evidence indicates clearly that States will devote the bulk of an unrestricted housing block grant to project-based assistance.
These reforms will give taxpayers who want to help low-income families more for their money by greatly increasing the number of families served, without spending more money or reducing support for current recipients.
The usual objections to exclusive reliance on tenant-based vouchers have little merit. Tenant-based vouchers get recipients into adequate housing faster than production programs, even in the tightest housing markets, and they are more cost-effective than production programs in all market conditions. Production programs do not have a perceptibly greater affect on neighborhood revitalization than tenant-based vouchers, and we do not need production programs to increase the supply of adequate housing.
Unlike other major means-tested transfer programs, housing assistance is not an entitlement, despite its stated goal of a decent home and a suitable living environment for every American family. This feature of housing assistance is a historical accident, and it is not defensible given the methods currently available for delivering housing assistance. It is impossible to justify providing assistance to some families, while denying it to other families with the same characteristics. If we provide housing assistance at all, it should be an entitlement to everyone who is eligible. If anyone is eligible, it should be the families with the lowest incomes.
Contrary to popular opinion, this does not require spending more money on housing assistance. It can be achieved without additional funds by shifting money from less cost-effective methods for delivering housing assistance to choice-based vouchers as soon as current contractual commitments permit, and reducing gradually the large subsidies received by current voucher recipients.
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I urge the committee to take the bold steps necessary to serve the poorest families who have not been offered housing assistance, and I appreciate the willingness of the members of the committee to listen to the views of a taxpayer whose only interest in the matters under consideration is to see that tax revenues are used effectively and efficiently to help low-income families.
[The prepared statement of Ed Olsen can be found on page 351 in the appendix.]
Chairman NEY. Thank you.
Ms. Turner?
STATEMENT OF MS. MARGERY AUSTIN TURNER, DIRECTOR, METROPOLITAN HOUSING AND COMMUNITIES CENTER, THE URBAN INSTITUTE, WASHINGTON, DC
Ms. TURNER. Thank you, Mr. Chairman.
I would like to highlight three points from my written testimony that is based on research conducted in my center at the Urban Institute, but also by other researchers inside and outside of government.
First, the housing choice voucher program is tremendously effective and beneficial, although it is not working as well as it can and should be. We know how to make vouchers work better, and I suggest three strategies in particular that could improve outcomes for voucher recipients.
Third, there is no reason to expect that States would voluntarily adopt any of these promising strategies under a block grant. Instead, it seems more likely that they would implement untested changes that risk undermining the current success of the voucher approach. I would like to just elaborate a bit on each of those points.
The most important advantage of the voucher program is that it gives recipients the freedom to choose the kinds of housing and the kinds of locations that best meet their needs. As a result, many voucher recipients today live in healthy neighborhoods that offer social, educational and economic opportunities for themselves, but most importantly for their children. The current program certainly does not work perfectly in this regard.
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First, vouchers have not been as effective in promoting neighborhood choice and mobility for minority recipients as they have been for white recipients. In addition, as others have said, there are some families who receive vouchers, but are not able to find a house or an apartment in which they can use that voucher. There are a lot of reasons for that problem, including shortages of moderately priced rental housing, tight market conditions, racial and ethnic discrimination, landlords who are not willing to participate in the program, and sometimes ineffective local program administration. There is a growing body of experimentation around the country and research that suggests three very promising strategies for addressing these issues and strengthening the housing choice voucher program. First, vouchers should be linked with mobility counseling and housing search assistance. In experimental programs, housing authorities that have partnered with nonprofits to help voucher recipients learn about neighborhoods available to them, track down homes and apartments for rent in those neighborhoods, and negotiate effectively with landlords have been able to open up more options for these voucher recipients, resulting in greater mobility to low-poverty neighborhoods and racially mixed neighborhoods, especially for families from distressed inner-city communities who might otherwise have difficulty in the private market.
Second, local housing authorities need to strengthen their landlord outreach and the services and incentives they provide to landlords who participate in the voucher program. There are several programs that have had success in expanding the options and choices open to voucher recipients by reaching out to landlords, listening to the concerns that they raise about the way the program operates, solving the red tape and other problems with program administration, and in some cases offering financial rewards to landlords who accept some of the most difficult to place families.
Third, HUD should be promoting regional collaboration and even regional administration of the voucher program. In most urban areas, the voucher program is administered by too many different local housing authorities, each operating in a single city or county. This fragmentation makes the program very confusing for families, but also for landlords, and it interferes with the portability feature that should allow families to move anywhere they want to in the region with their voucher.
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Housing authorities in some metropolitan areas have addressed some of these issues by entering into mutual agreements that make their operations much more efficient and coherent. But HUD should be taking an active role in encouraging collaboration of that kind and testing the effectiveness of more comprehensive regional program administration.
Under a block grant, it is conceivable that some States might choose to implement one or more of those promising strategies, but it seems unlikely, absent any strong programmatic mandate or incentive system. Instead, it is more likely that the quality of local program administration would deteriorate, particularly given the fiscal distress that many States are currently experiencing. Some States might use a block grant's flexibility to implement untested innovations like time limits or reduced subsidy levels that could undermine the success we have seen with vouchers and worsen the housing hardships that low-income families face.
So instead of resolving the fundamental dilemma of inadequate funding for affordable housing in this country, a block grant would make housing hardship into a State problem, rather than a Federal problem, and it would open the door to untested program changes that could undermine the proven strengths of the voucher approach. Thank you.
[The prepared statement of Margery Austin Turner can be found on page 400 in the appendix.]
Chairman NEY. Thank you for your testimony, and all the witnesses.
I have just a couple of questions, and anybody can feel free to answer. Basically, I wondered if you considered HANF good, just kind of cut to the chase, is HANF good or is it bad? It is not a trick question. It is just a yes or no.
[LAUGHTER]
Is it good or is it bad? The other thing I would want to ask is, do we need to change the way we administer the program? If you want to start in either direction.
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Mr. EGAN. Mr. Chairman, to answer your first question, I would say that given what my colleagues have said here today and what others have said, that without some very, very fundamental changes to the current proposal, that HANF would not be a positive development. Secondly, there are many things that can be done to improve the program. My colleagues again here today have stated many of them, and I will not repeat them, but I think the more that we can increase utilization, involve landlords, connect with service and self-sufficiency opportunities, that the greater the success of the program will be.
Mr. HUSOCK. HANF is good, because it will allow positive experimentation. We heard the same kinds of alarms sounded before the 1996 Welfare Reform Act, and things have worked out rather well in terms of encouraging self-sufficiency. The thrust of my remarks was let's line up social policy with housing policy. The populations are very similar, and let's allow States rather than housing authorities, which do not have the capacity to innovate, to take on that challenge.
Mr. KATZ. HANF is bad, because the State infrastructure is just not in place for administering housing, and housing is just not the same as welfare reform. There are radical differences here that we need to understand. Voucher reform is needed to make choice for all low-income recipients real by matching up housing, schools and jobs. I think the major issue is to try to have more of a metropolitan approach to voucher administration, which is the way markets operate.
Ms. KHADDURI. HANF is a step in the right direction, but as currently designed, I do not think it should be enacted. First, it does not preserve the choice-based character of the voucher program, if I read the draft legislation correctly, the introduced legislation correctly. I also do not think it has the explicit mandates for reporting of household-level information that would be essential in order to overcome the fears of many who have testified before this committee, that what we are looking at is a block and cut scenario. I think in order to avoid such scenarios, the Congress needs to continue to know how many families are assisted, who those families are, where they live, and how much subsidy money they are getting. I do not think that the legislation as currently drafted and introduced provides those guarantees.
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I share the concerns of many others who have testified about such program changes as time limits. I think I would agree more with Mr. Husock that lining up vouchers with other elements of welfare policy is something that needs to be done, and we have not gone far enough in doing it. But I think we should approach it in small steps and carefully test those steps, as was the case before the enactment of welfare reform.
Mr. OLSEN. I would say that if HANF block grant money is not limited to choice-based assistance, it will be a disaster. But beyond that, I think we should have severe restrictions on the targeting on the poorest people, just as we have under the current program, with no discretion on the part of the Secretary to overrule that.
Ms. TURNER. HANF is a bad idea. It does not address the problems that we know exist in the voucher program, and it runs the risk of creating much more serious problems. If there is going to be a serious consideration of real reform of the voucher program, it should focus on getting the program administered more rationally at a regional, at a metropolitan level so that it works really effectively in terms of outreach to landlords and real housing choice for families.
Chairman NEY. Thank you, and welcome to Congress. It was three to three.
I yield to our ranking member, Ms. Waters of California.
Ms. WATERS. Thank you, Mr. Chairman. Let me just say to you, Mr. Chairman, that no one will be able to accuse you of not really doing a great job on Section 8. I think this is our third hearing, so you certainly have brought in a lot of voices for us to hear with all of these hearings. I appreciate the panelists who are here today.
I was particularly struck by some interesting research that was done by one of the panelists that happened to conclude that somehow housing policy encourages single-parent families and provides a subsidy to single-parent families, when in fact we should be teaching single-parent families how not to be single-parent families, and somehow this policy just exacerbates the problem. Also in this paper, it appears to be a lot of knowledge and information about the use of Section 8 vouchers by minorities who move into neighborhoods where they take their unsupervised children and play boom-boxes.
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I would like to know if this extensive and very scholarly research that is contained in this paper also helps us to understand what happens, and first of all, are there whites that use Section 8 vouchers? I guess my question would be directed toward the scholar from the John F. Kennedy School of Government, Mr. Howard Husock. In your research, can you tell me about whites who use vouchers and what happens when they move into suburban areas? What does your research show about the size of their boom-boxes or anything else?
[LAUGHTER]
Mr. HUSOCK. Thank you very much for the opportunity to respond, Congresswoman Waters. I would just like to point out for the record that I was quoting minority homeowners who were expressing that concern. So it is fine to characterize my remarks as reflecting some sort of antipathy toward minority aspiration, but I can assure you that that is the farthest thing from the truth.
Ms. WATERS. Oh, I am sorry. I guess what I was asking, are you able to quote any whites about what happens when people with vouchers move into their neighborhoods?
Mr. HUSOCK. The particular essay that I wrote that included those interviews was based on interviews with minority homeowners because of the concern that I had for their property values. So I was not looking at white neighborhoods. But if white people were moving in and playing boom-boxes next to black people, that would be just as serious a problem in my opinion, nor would I assert that that could never happen.
Ms. WATERS. And how predominant is the playing of these boom-boxes? Do they play them all evening, on Saturdays or Sundays? What does your research show you?
Mr. HUSOCK. I think you would have to ask Mr. Moore of Hazelcrest, Illinois, who I quote as saying that. I am sure if you hold hearings in south suburban Chicago, and I hope you will, because you will find that there is a large group of African American homeowners who are very concerned about this program. He would be glad to apprise you of the extent of boom-box playing.
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Ms. WATERS. In addition to your scholarly research on boom-boxes, could you describe more to me about the unsupervised children of people who have vouchers? How does it compare with people who don't use vouchers? Where is it predominantly showing up? Just how big is this problem of unsupervised children does your research show? What can you tell us about this?
Mr. HUSOCK. I was quoting one individual who said that.
Ms. WATERS. Okay. That is fine. Now, do you have any information in your research about discrimination that was described by one of the panelists who indicated that oftentimes minorities do not have the opportunity to use their vouchers in certain areas and in certain ways because they are discriminated against? Did you find that in your research?
Mr. HUSOCK. I did not research that topic. However, as you see in my prepared remarks, I examined HUD's research on concentration and inferred from that high degree of concentration that existed, that it may be inevitable that concentrations of Section 8 families develop because private property owners with other options appear to choose not to rent to Section 8 voucher holders, as evidenced by significant concentrations that we are seeing.
Does that mean that no discrimination occurs? It is probably an economic discrimination. It is probably discrimination based on not wanting to participate in Federal programs, but we are seeing significant concentrations. We can rail against that and say, well, we must do, as other panelists have suggested, more to counsel people to get into other neighborhoods and to open up those neighborhoods.
At the same time, I think we have to expect that that is going to be a very difficult road. That is why I welcome the possibility of social policy experimentation at the State level, because if you are going to have significant concentrations or you are going to have some individuals moving into areas in which they are pioneers, if you will, then I think it is very important that there be strong guidelines that align Section 8 policy with TANF and other social policy elements of the Federal government. This is because my concern lies with the aspirations of upwardly mobile families, particularly upwardly mobile minority families who I think are very concerned about this program, as I am sure you are aware.
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Ms. WATERS. Are you aware that 48 percent of all the Section 8 vouchers are with whites?
Mr. HUSOCK. I don't really understand myself to be making a race-based argument. If you understand it that way, then I regret that, but that is certainly not my intention. My focus is on the economics of Section 8 and on the possibility of how we can encourage Section 8 families to themselves become upwardly mobile. I am suggesting that the TANF Act gives us a blueprint that we can apply to housing assistance. The fact that there has been friction and people express themselves perhaps crudely and I quote them, and I can therefore be open to caricature, well, I am sorry, but that is certainly not my intention here.
Ms. WATERS. Well, certainly I need to share with you that when a panelist appears before this committee, and particularly one from Harvard with a paper that talks about unmowed laws and shopping carts left on the street, and particularly quoting minorities and referencing minorities in relationship to unsupervised children and boom-boxes, that is racist, sir.
Mr. HUSOCK. I take strong exception to the idea that quoting African American homeowners making such remarks would be regarded as racist on my part. I am not quite sure how you jump to that conclusion.
Ms. WATERS. What is racist on your part is that you come in representing that you are from John F. Kennedy School of Government, without any respectable research, and you tend to use some isolated comments to describe a group of people. That, sir, is racist. Now, if you don't understand that, then we need to come up to Harvard and help them to understand the difference between using descriptions that are extremely negative, assigning it to one group of people without any data or research to support it. Yes, sir, that is racist.
Mr. HUSOCK. May I point out for the record that in the quotation that the Congresswoman is referring to, I do not refer to the race of the Section 8 families.
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Ms. WATERS. Yes, you do in many ways.
Mr. HUSOCK. I refer to the race of the minority homeowners.
Ms. WATERS. We know how the language is couched, sir. We have been in this business for a long time, particularly I. And I understand exactly what you are saying and I do not like it. Now, you have a right to say it, but I have a right to tell you I don't like it. Thank you very much and I yield back the balance of my time.
Chairman NEY. The time has expired.
Mr. Scott of Georgia?
Mr. SCOTT. Yes, I certainly find the line of questioning very interesting. It could stand some illumination in the fact that for your information, the consumption of boom-boxes and the hip-hop music that corresponds with it now has now moved over from being a predominantly African American consumption to being a predominantly white consumption, thanks largely to Eminem.
[LAUGHTER]
At any rate, I hope that this very exercise and this line of questioning shows the seriousness of this issue and the concerns of this committee that we not cause any more aggravation with the Section 8 program. It is having enough difficulties as it is. I do recall the line of questioning. Our friend from Harvard appeared before this committee when we were doing all we could to make sure that we continued the HOPE VI. It just appears to me that there is a consistency in your testimony that tends to not be complimentary of what I think is the best direction of this committee, one, to save HOPE VI and reinstitute it, and certainly to save the good points of Section 8.
But I do find very interesting, you know, when you use research papers and you write, you may use a quote, you may go anyplace, but the intent of the research paper is not governed by anything other than the driver of that car. You are the driver of the car. It just seems to me that you may go out to find various things that may substantiate your position.
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But at any rate, I just wanted to get some clarification of why you mentioned this in your report. As I have written in the Manhattan Institute publication City Journal in suburban Chicago, with one of the highest concentration of voucher holders in the country, middle-class African Americans complain that they thought they left the ghetto behind, only to find that the Federal government is subsidizing it to follow them. I am trying to figure that out. And then you go on to say that Vikkey Perez of Richton Park, Illinois, owner of Nubian Beauty Supply, fears that the small signs of disorder that have come with the voucher tenants, the unmowed laws and shopping carts left in the street, and could undermine the neighborhood. ''Their lifestyle,'' she says, ''does not blend with our suburban lifestyle.''
The point I am trying to get at is why would you go there? What are you trying to accomplish there if it is not racially charged, because it is not the case in many of the instances where Section 8 has been used. I am just wondering why would you go there.
Mr. HUSOCK. I went to south suburban Chicago on the recommendation of those who were familiar with the Section 8 program, because I was told there was great concern about the implementation of the program there. I would just like to point out for the record that the scholar William Julius Wilson has talked about the declining significance of race and the importance of social class difference as an important determinant of overall social policy.
That is what you are seeing in south suburban Chicago. You are seeing people from different social classes involved in an unfortunate, somewhat acrimonious arrangement. I understand that this does not apply to every situation. The paper that you are holding in your hand was my written testimony. It is not a research paper and I did not represent it as such. But I think that a candid account of the potential for friction between social classes should be part of a reasonable discussion about Section 8 that need not be characterized as it has been.
Mr. SCOTT. I guess what I am trying to get at is what is your point? You continue to make, even to go further, even go beyond using quotes, you come to some conclusion that says if voucher concentration is probable for economic reasons, it is important for program guidelines to encourage voucher beneficiaries to take steps to end or reduce their need for such assistance over time. In fact, such encouragement is just as important in areas where voucher concentrations are lower. Again, go to the south suburbs of Chicago and you will meet minority, first-time homeowners criticizing Section 8 in terms far stronger than I would dream of using here for, in their view, supporting households which they see as having brought problems to their neighborhoods.''
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Mr. HUSOCK. Yes.
Mr. SCOTT. That just troubles me because I just think it is like finding a needle in the haystack. We have so many great stories about how Section 8 has revitalized communities and what a great program it is. It just seems to me that you tend to go out of your way here to bring some information and come to some conclusion. Again, just as the gentlewoman from California said, it is not just coming from somewhere. You are coming from, you are making a Statement from arguably one of the most respected institutions in America, next of course to Florida A&M University, which incidentally last year received more merit scholars than did Harvard.
[LAUGHTER]
But we really have got to kind of pull the cover over some of these kinds of statements so that we don't give the credibility to them. This is just a little bit overblown here. I just want to call attention to that. You are certainly free to come to any conclusions, but it just seems to me there is some rather narrow purpose on this here that we certainly want to make sure that we raise the temperature on and let you know that we certainly are not in accord with them on this committee, and we find that they are certainly not received in a positive way, because we know of too many very positive cases. I guess really to take African Americans and put these words into them to say, it really tends to goad us, certainly me, the wrong way.
Mr. HUSOCK. Candidly, I included that in my testimony because I thought that you would be interested, not because I was seeking to characterize it. I truly indeed thought that you would want to know honestly, from the bottom of my heart, I thought you would want to know what I believe was the suffering that I encountered in that room when I met with those homeowners. I thought you would want to know that and that you would care, and that is why I put it in there. If I have offended because of that, I truly regret that.
Mr. SCOTT. The point that I am bothered about is the fact that not that they are there, people can say things, but from a person in your position to come and to make a blanket concluding statement of negativity about this program. I do not question that. I mean, we do not know whether that happened or not. You say it happened, but the mere mention of using, from people who need the program the most to be the ones as the carrier of this, and with your credentials. So that is my point.
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I yield back.
Chairman NEY. The time of the gentleman has expired.
I don't know about Florida A&M, but as a graduate of The Ohio State University, we have a warm spot in our heart for Miami.
[LAUGHTER]
Mr. Watt?
Mr. WATT. Thank you, Mr. Chairman.
We have a little private joke going up here about the Chairman passing over me. Let me see if I can get us out of the anti-Husock posture and on to another subject. I saved you last time you were here, Mr. Husock.
[LAUGHTER]
Mr. HUSOCK. I remember that, too.
Mr. WATT. I did you that favor last time.
Mr. HUSOCK. I wrote you that letter.
Mr. WATT. This is getting to be habit-forming here.
[LAUGHTER]
Let me applaud Mr. Katz and Ms. Turner for emphasizing a point, both of them independently, that I think is very important and I don't want to go unnoticed here. Both of you mentioned the need for Section 8 voucher recipients to have a broader base of information about available housing. I think Mr. Katz referred to it as a multiple listing of Section 8 availability.
I want to emphasize to the chairman and other members that in last year's housing bill, which did not go any further after it passed our community virtually unanimously, but there was a provision that sanctioned something called the socialserve.com program that has been used in Charlotte and some of the surrounding areas where they have come up with a really good listing of apartments that are available for low-income people, landlords who take Section 8 vouchers, all different kinds of criteria. They have developed this and we actually were able to get some assistance for the continuation and expansion of that program. It would be similar to a multiple listing of low-income housing availability.
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Second, I want to, not to beat up on Mr. Husock, but to give Mr. Katz and Mr. Husock the opportunity to debate back and forth. Mr. Husock said that 28 percent of the recipients of Section 8 vouchers are also TANF recipients. For the life of me, I cannot figure out why you would take a 28 percent rate and say that that justifies treating the program in exactly the same way that you treat TANF. I would think that the 72 percent that is left might dictate how you treat the program, but that is not the point I want to make. Mr. Katz said that it is about 13 or 14 percent, but either way it is a fairly small fraction. It is not even one-third of the recipients are recipients of welfare.
So Mr. Husock, how do you get from even a 28 percent usage rate being welfare recipients to the conclusion that somehow the same model, even if we accept that the TANF model is a good model, which some of us do not accept, but if you accept that, I don't see how you get from 28 percent to the whole thing ought to be treated as a welfare program.
Mr. HUSOCK. A couple of things. First on the data itself, I specified 28 percent of non-elderly, non-disabled. If you include elderly and disabled, you get to a lower figure, as Mr. Katz did. So we are not really disagreeing about the figures.
Mr. WATT. Well, that even more makes me concerned about what you said.
Mr. HUSOCK. Okay. I got the idea that they ought to be aligned because 28 percent, or whatever percentage you take, is still over 200,000 families in this country. That is a lot of people.
Mr. WATT. Yes, but you have 800,000 people who are not. Why should they be following the model of welfare? They are not on welfare.
Mr. HUSOCK. What we do not know, I think, is whether it is fair to say that the TANF families are current TANF recipients. My concern is whether we are, as Congresswoman Waters pointed out about my concern about single-parent families, whether we are encouraging formation of families which are going to go on to have a lot of, you know, are prone to high poverty.
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Mr. WATT. You are making a different point. What is the rationale for not doing that, Mr. Katz?
Mr. HUSOCK. Right. We don't know how many there are, so it is not necessarily a bad idea to say there ought to be a time limit, which is where I am going with this.
Mr. WATT. I am not suggesting it is a bad idea. I am just trying to figure out how you think it is a good idea, how you take 28 percent and make it a good idea. I think I could make the case that 72 percent makes it a bad idea a hell of a lot more than 28 percent making it a good idea. I wasn't even trying to do that.
Mr. Katz, go ahead.
Mr. KATZ. I just wanted to reinforce your point. TANF is very different from housing. The first difference is that States were administering welfare prior to TANF. They were administering the AFDC program. They were experimenting with the program. They were getting waivers from the prior administration. So there was expertise. There was an infrastructure of administration on welfare that does not exist at the State level on housing. That is number one.
Number two, I think the real conversation we should be having is how does housing serve as the platform for helping welfare recipients make the transition to work. And then how does it reward work once welfare recipients have made that transition? Because once they have made that transition, it is not like they are earning sufficient wages to afford housing in most metropolitan markets in the United States.
So I think the HANF connection between housing and welfare is a really curious one. I think we have got to understand the role housing assistant can play in helping welfare recipients make the transition to work, and then stay in work, because the affordability problem does not go away even after employment.
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Mr. EGAN. Mr. Chairman, with your permission could I add to that?
Chairman NEY. Yes.
Mr. EGAN. I would like to speak from experience at the local level. As the Chairman indicated, I am the Chairman of the Fairfax County, Virginia Redevelopment and Housing Authority. I am struck with the ''therefore'' answer here. Just because the States administer TANF, therefore why should the voucher program also be administered by the States. Our experience is that where the connections with jobs, day care, transportation, supportive services are made are at the local level. We make those connections. I do not see therefore the HANF proposal, as I indicated earlier, adding any value to those relationships. In fact, my staff contends that they in fact would detract value from those relationships.
Mr. WATT. Thank you.
Mr. Chairman, I don't want to ask another question. I do want to make two very quick points, though. Number one, I am distressed that Mr. Husock seems to think that we should still be in the business of experimenting with poor people. That is one point and that is not a question.
Second, for the life of me, I have not been able to figure out what Ms. Khadduri, the point that you were making which contrasts substantially I think with the point that Ms. Turner was making, that simply putting something at the State level makes it more effective. If that were the case, I don't know why we are even involved in the Section 8 program. I mean, we ought to just get out of the business and let the States do it. That is not a question. There are a couple of points in your testimony where you just kind of assume that something is better because it is not here. I do not necessarily accept that.
Thank you, Mr. Chairman.
Chairman NEY. Thank you.
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Mr. Clay?
Mr. CLAY. Thank you, Mr. Chairman, Ranking Member Waters, and good afternoon, witnesses.
Let me try a more targeted approach. Let me ask Mr. Olsen first, you stated that the housing choice voucher program is by far the most cost-effective program of housing assistance in the United States. Why do you want to change it? Tell me how the conversion to block grants will make the Section 8 voucher program better? And how will it be better for recipients?
Mr. OLSEN. Actually, Ms. Khadduri would probably be better for answering this because what I know about this is really by reading a paper that she wrote. I think the advantages of going to block grant are not really large, but she argues and I agree with her that it will improve the portability of vouchers across different areas. There would also be some administrative savings by not having multiple housing authorities dealing with the same geographical area.
Mr. CLAY. I will get to Ms. Khadduri. I want you to answer.
OLSEN: Okay. I think those would be the main ones. I think I am forgetting one, but I don't regard it as large. I think the best-case scenario is that it would improve the program slightly. It has its flaws, but I think this is a very fine program.
Mr. CLAY. I just wanted to hear your thinking along those lines.
Ms. Turner, you talked about portability of vouchers by region. Let me ask you out of ignorance, could HUD institute this policy now?
Ms. TURNER. I think HUD could be doing a lot to encourage the housing authorities in a region to collaborate with each other more effectively, to share waiting lists, to share application forms, and to streamline the process when families want to move from one jurisdiction to another. But HUD could go further. It could launch a demonstration inviting a regional institution in a metropolitan area to test the effectiveness of region-wide program administration, really assuming the responsibilities that are currently performed by individual housing authorities.
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Mr. CLAY. You also raised the concern that States could use the block grants for untested methods. I guess that is somewhat sounding the alarm, that it could be a disaster to do this.
Ms. TURNER. Yes, I think it could. Again, unlike TANF where we currently have no evidence on what would happen if there were time limits, what would happen if subsidy levels were reduced, what would happen if other cost saving restrictions were imposed on this program. We can make some assumptions. I think those kind of changes in the program would undermine landlord participation, undermine families's ability to move to neighborhoods of their choice, and leave working families living in unaffordable housing without the assistance they need to pay high rent levels.
Mr. CLAY. Thank you.
Let me ask for the entire panel, if you could each approach this question and try to come up with a response. Why are we going to take a successful program, send it to the States, and create problems for systems that are not adequate to administer the Section 8 program? If you could just start on that end and give it a shot.
Mr. EGAN. Mr. Clay, thank you. Let me just build upon my earlier comment and speak mainly from my experience at the local level in Fairfax County. We have found that the kind of things that make for a successful program at the local level are a high degree of landlord participation, the opportunity to increase utilization rates, to provide mobility counseling and other kinds of supports that happen at the local level. We don't see the State adding value to those activities. We do not understand why putting the decision making power in Richmond would make the program work better in Fairfax County.
Mr. CLAY. And that relationship is derived from the local PHA and the Federal government.
Mr. EGAN. I cannot imagine why a landlord in Fairfax County, who we work with very carefully and closely and supportively, would be aided and helped and encouraged to participate any better in the program by someone in Richmond developing that relationship.
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Mr. CLAY. Thank you.
Mr. Husock?
Mr. HUSOCK. Before Governor Thompson of Wisconsin became HHS Secretary and initiated his welfare to work program, we didn't know what the results of that were going to be either. So if we were to initiate adjustments in the Section 8 program based on encouraging long-term self-sufficiency and upward mobility, and to do it on a waiver basis as was suggested by Dr. Khadduri, I believe, such that the default would be on the States to demonstrate that there was a reasonable chance and they had thought their innovations out in a rigorous way, I don't think there is any reason to presume that we are courting danger. Again, we saw experimental, I guess that is a politically incorrect word here, work pre-TANF. And we can see the same kind of thing again on a waiver basis, nothing precipitous, but I think that there is no reason to presume that States are going to follow it up.
Mr. CLAY. But Mr. Husock, this is not a debate about TANF. I think the jury is still out on that. I mean, so what? We have dumped people off of the TANF rolls, and we do not know what has happened to those people. We don't know what their plight is. Some have been successful, but not all. So let's not compare TANF to HANF because I do not think it is similar. I really don't.
Because I am running out of time, I would like to go to Mr. Katz, and thank you for your answer.
Mr. KATZ. When I was in the government, what we used to call this kind of proposals was an ''OMB special.''
[LAUGHTER]
This is a proposal that from my perspective is designed to cut the budget over time, to de-couple funding decisions from market pressures, from rent increases, and basically push the problem down to state governments, which obviously at this point in time are under dire fiscal stress. So I think we know what ultimately is behind this kind of proposal.
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Mr. CLAY. Thank you.
Ms. Khadduri?
Ms. KHADDURI. I guess I differ from Mr. Katz in that I am willing to assume that those who have proposed administration at the State level do so out of the best of motives, rather than out of the worst of motives. I do think that consolidating the administration of the program at the State level could make it a great deal more efficiently operated.
As I said in my testimony and I have enlarged on it elsewhere, the program really has become a crazy quilt of lots of tiny little administrators of programs and of overlapping jurisdictions within a metropolitan area. Sometimes the city and the county administer vouchers in the same place. It does not make any sense, and it does get in the way of effective program administration because landlords do not know what the rules are since they are dealing with two different housing authorities. Families don't know which waiting list to get on.
I also think that the possibility for coordination of goals and processes for linking the voucher to other social programs is something that really ought to make us consider state-level administration. For example, programs for people with chronic mental illness and with developmental disabilities, by and large those policies are created and implemented at the State level. This is a population that uses the voucher program a great deal, but it has been difficult to serve that population as effectively as it might be with vouchers because of the disconnect between the local administration of the vouchers.
Mr. CLAY. And after all of that having been said, will you take into consideration the dire financial straits that our States are experiencing now, and you still have confidence that they will be able to administer this program in a manner where they will not go in and try to manipulate that funding for other areas.
Are you still confident that the States are capable of doing that? I mean, look, these States are really dying on the vine. They are in big trouble financially. And yet you are confident we can give them this block grant and that they will focus all of that funding towards Section 8 programs, especially those States that do not have any experience in housing? I know my time is up.
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Ms. KHADDURI. As I said before, I think this should be a voucher program. I think the use of the program should be limited to tenant-based assistance, either rental assistance or homeownership assistance, but that States should not be given broad flexibility to use the program for other kinds of housing-related things.
Mr. CLAY. Thank you, and I am sorry for going over, Mr. Chairman.
Chairman NEY. We are overtime on this one, I wanted to note.
Mr. Davis?
Mr. DAVIS. Thank you, Mr. Chairman. I thought we were at the NBA 5 minutes for a second, and not real-time 5 minutes.
Mr. Husock, I was a little bit tempted to start with you earlier, but my friend from North Carolina, Mr. Watt's, effort at salvation only got you to purgatory, so I am going to leave you alone at that point.
What I do want to do, though, is start with Dr. Turner. One of the observations that you make, Dr. Turner, I suppose is somewhat related to some of Mr. Husock's observations. It is the fact that, whether it is racially based or whether it is based on some kind of class stigma, you name the basis of the stigma, there has been an effort on the part of some people to stigmatize the program, and certainly some communities have reacted perversely or negatively to Section 8 people ''coming into the neighborhoods.''
Can you talk for a second about how we can grapple with that problem? How we can deal with the problem of better educating people about Section 8? Because I think, number one, there is enormous misconception about it. I think Ms. Waters's point is certainly accurate that the majority of people in the program are members of, I hesitate to say majority, because I guess that would vary from State to state, but certainly a large number are white or Caucasian. That is a common misconception about the program, that it is mainly blacks or Hispanics.
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Another common misconception about the program is that a significant number of people on it are on welfare. Even by Mr. Husock's account, it is only 28 percent. So how do we grapple with some of the various stereotypes and misconceptions that do exist around this program?
Ms. TURNER. Thank you. I think that is an important challenge for the program, to overcome the stereotypes in receiving communities and also the stereotypes among landlords. In general, families who receive Section 8 vouchers have been quite successful in getting access to neighborhoods all over the metropolitan area. The program does not result in very much clustering. There are some exceptions to that, and those exceptions are cause for concern, but they are the exception, they are not the rule. Our research suggests that when that kind of clustering occurs, it is because of the persistence of race-and ethnicity-based discrimination and segregation in housing markets. It is because so many doors are closed to voucher recipients that they end up becoming clustered, often in the few neighborhoods that have not slammed their doors.
Mr. DAVIS. Let me ask you a larger question, if I can take advantage of a chance to get into a slightly broader area, we recognize that there is an enormous amount of discrimination that still goes on in housing in this country, and the consequence of it is that our schools are re-segregating. Another consequence of it is that successful programs such as this end up getting stigmatized.
How do we, as a practical matter, deal with that larger issue of integrating our neighborhoods in the context of using this kind of a program? Can you talk about ways that we could possibly better use Section 8 to accomplish the goal of integrating neighborhoods?
Ms. TURNER. It is obviously going to take more than the Section 8 program to win the fight against segregation and discrimination. But of all our housing programs, Section 8 offers the most in this regard because it gives individual families the freedom to choose where to go and it lets one family at a time make a neighborhood choice and move into a neighborhood. When the program is used effectively, families of all races get a chance to look at the neighborhoods available to them; neighborhoods where they are race predominates; neighborhoods where they would be in a minority; look at them and decide is this the neighborhood that offers a better life for me and my children.
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When the program works well, they get help making that move and an effective housing authority would be reaching out to that receiving community, not sending up alarm bells if there is somebody new moving in here, but watching and being ready to help that family and help the community overcome any challenges of misunderstandings that might arise.
Mr. DAVIS. Let me turn to a slightly different question in the time that I have left. There are at least two or three of you on the panel who have expressed some sympathy with the idea of decentralizing this program, if you will. I am not quite sure that I understand that argument. Number one, it is already a program that is decentralized. It is primarily administered at the local level as it is. I could see it if we were talking about a Federally administered program that you wanted to devolve into the local communities. This is, in effect, a locally administered program that you want to shift back up to the States. It is kind of the opposite of the usual Federalism thrust.
Let me ask those of you who are sympathetic to the goals of HANF, why not simply find ways to strengthen our local housing authorities, which seems to me to be a slightly more rational response to this problem?
Mr. HUSOCK. I actually have some sympathy with that point of view. I think that HANF seems to be the vehicle, candidly, that could serve to practically become a means to adopt some changes in the program. But as I pointed out in my testimony, in Congressman Watts's home town of Charlotte, I think the housing authority there is doing a great job, because you happen to have an executive director who was bold and willing to experiment and not afraid of getting called names for trying out a voluntary time limit.
If more housing authorities were encouraged to act in those directions, that I think would be a very positive thing. So I do not rule out the idea that housing authorities can do a good job. It just seems to be as a practical matter, we are more likely to get quicker change by aligning social and housing policy at the State level.
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Mr. DAVIS. If the chair would give me an additional minute or so let me try to make one additional point that I do think comes to mind as I listen to a lot of you. There is talk from at least some of you about the utility of putting this program in the hands of the States, and you are making the usual arguments about experimentation and about innovation. I think we have heard all those arguments before.
One thing that strikes me as being very different, though, is the complete absence of standards that HANF would contain for what makes for a successful program. It is one thing to say to the States, go forth and innovate, go forth and create, but we are not giving them very many standards.
Mr. Husock, you just outlined the kind of local program that you think works. That is well and good. The problem is that HANF does not do a very good prescriptive job of saying this kind of program works or that kind of program doesn't work. So I will just close with this observation that if we are even going to seriously consider as a committee and as an institution adopting HANF, which I hope we don't, but if we are going to consider doing that and if we are going to consider making these kinds of changes, it strikes me that we have to at least staple some genuine standards onto the administration of Section 8. Otherwise it will become simply survival of the fittest and that will not be a good thing for a lot of people dependent on this program.
Thank you, Mr. Chairman.
Chairman NEY. Ms. Velazquez is next, but Mr. Scott, did you have a comment?
Mr. SCOTT. Yes, I just had one point I wanted to make right quick. I appreciate your giving me my time. The other point I wanted to discuss was that it just concerns me, of all the things about this move, is the move to the States. Let me tell you why. I served in the State legislature of Georgia for 28 years, served 20 in the senate, and all of those years on the Budget Committee. One of the things that bothers me about this is there is no cry coming from the States of ''give me this program.'' Many of them said they really don't want it; many of them are not equipped to handle it; they have no housing experience; there are no housing authorities there.
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The other thing is, these are block grants going down to States, many States of which have constitutional amendments to have balanced budgets, which means quite frankly that if those funds are not dedicated, the only way they can be dedicated is to come with laws that the legislature will pass that they cannot be touched. None of those things are coming with this. This is money being given.
So we really have some very fearful concerns that have not been addressed that to give this program to the States is just like throwing red meat out into the lion's den, to paraphrase a word.
Mr. DAVIS. Would you yield for a second, Mr. Scott? Mr. Chairman, if you will just let me make one brief follow-up point.
Chairman NEY. I will note that it will be on Ms. Velazquez's time.
Mr. DAVIS. I can do it in 20 seconds, Ms. Velazquez.
Chairman NEY. I will give you 10.5 seconds.
Mr. DAVIS. Okay. One of the things that really keeps occurring to me is that whenever we talk about transferring these responsibilities to the States, has anybody ever bothered to ever poll the Governors or the Governors Association to ask them if they want these things? Those of you who are advocating that, has anybody even bothered to poll the Governors Association and ask them? Okay, I read that as a no. Thank you.
Mr. SCOTT. That is my point.
Chairman NEY. We will turn to the gentlelady from New York who has extended time.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Mr. Husock, I am sorry to have missed the earlier questioning of this panel. I understand, however, that several of my colleagues addressed negative implications and the tone of your testimony. I am glad that I went to another meeting so that I took some fresh air. I really was outraged by your testimony and your subjectivity. I resent the fact that we invite witnesses who can come here, read a Statement such as yours, and then say that those things cannot be attributed to you because these are words of other people. I don't know if what you wrote quoting other people was true or not.
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Anyway, so let's discuss not what you are attributing to other people what they said, but let's discuss part of your testimony that can be attributed to you. You advocate time limits on short-term assistance to enable long-term reliance. Approximately 70 percent of people on vouchers are already working. How will terminating their assistance help these families to improve their situation and achieve self-sufficiency?
Mr. HUSOCK. My concern is the formation or, candidly, is inviting more people to participate over time by encouraging the formation of new households that are in need. I am hopeful that if we had a time limit, and maybe it should be a time limit for new households, for new enrollees, because we should not change the rules in the middle of the game. I take the point.
If we can set the rules such that those who are enrolling in the program now understand, and this is how it was done in Charlotte. In Charlotte, the time limit was linked up with HOPE VI and those who were entering the HOPE VI program projects, they said, okay, this is a really good new unit and we think that in order to enroll in this program and to move into this, you ought to think about a five-year voluntary time limit. That is the way that Charlotte proceeded. I think that is really a national model.
I am not endorsing a blanket time limit. I am saying we ought to look to the States to experiment. If States in their wisdom under the guidance of elected officials such as yourself think it is precipitous to move people off of Section 8, and we don't really even have data, by the way, on how long people stay in Section 8. HUD is not keeping that data and disseminating it, to my knowledge, so it may be that most people are not even on the program that long and it would not even be that big of a change. But it would be a big change for people who are coming into the program for the first time. I think a voluntary time limit or perhaps a mandatory time limit under some States's or localities's aegis is worth trying in a well-evaluated way, as Dr. Khadduri has said.
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Ms. VELAZQUEZ. Mr. Olsen, I am intrigued by the proposal that you set out in your testimony to have PHAs success rate determine rates to which they can over-extend vouchers. How would you handle the potential problem of more families finding a home than there are vouchers available? Who then decides which family gets the voucher? What would you do to make up the time lost to the family searching for a home, only to be denied a voucher? How would you compensate the landlord for any income lost as a result of potential tenants who were turned away believing the voucher holder would move in?
Mr. OLSEN. I think that we should expect that everyone who is offered a voucher would use it. We have had an Entitlement Housing Assistance Program. We tried it during the experimental housing allowance program, an entitlement program, the participation rate was less than 50 percent. Those vouchers were much less generous than the current vouchers. Their cost was about $3,000 a year, rather than $6,000 a year in today's prices.
It is often said, people afforded vouchers can't find a unit. It is not that the unit is not there. The units are there. It is a question of how much incentive people have to find them. And when you had an entitlement program, many people chose not to, some of them went out and searched and simply could not find a unit within the amount of time they were willing to devote to it. But these were largely people who were eligible for the smallest subsidies. People eligible for very small subsidies just decided they were not going to do it. That has been found in the Section 8 voucher program. The participation rate is highest among the poorest people. Why? Because they receive the largest subsidy for finding a unit.
Ms. VELAZQUEZ. But let's take New York, for example.
Mr. OLSEN. Yes.
Ms. VELAZQUEZ. There are almost 100 percent of vouchers being used, and then the units are not there.
Mr. OLSEN. Well, the units must be there if all of the vouchers are used. Are you saying all of the people are getting into units?
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Ms. VELAZQUEZ. What I am saying is we are facing a housing crisis in New York City, and the same way in Los Angeles and other urban cities across the country.
Mr. OLSEN. Usage is not going to be a problem, certainly in the current situation, because there are about 30 times as many families eligible for vouchers who already live in units that meet the program's standards as there are vouchers to allocate. In the current situation, there can never really be a problem of using all of the vouchers. This is a matter of mismanagement. When they are not used, in my book it is a matter of mismanagement by local housing authorities, not adjusting their over-issuing of vouchers to the success rates they have actually observed.
It is like college admission officers. If college admission officers did as poorly as some of the housing authorities, not all of them, as some of them, they would not be around. They would not have the job that much longer. So I view low utilization rates as a failure of administration by local housing authorities.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Chairman NEY. Thank you.
Ms. Waters, any additional questions?
Ms. WATERS. If I may, Mr. Chairman. You have been very generous and gracious with your time. We did not have an opportunity to delve into this idea that somehow this housing program could teach morality. I am really concerned about the thinking that we encourage with Section 8 single-parent families, by giving women, single-parent women housing, somehow we support the idea that they are not married, or we support the idea that they are having babies out of wedlock. I am very bothered by that.
Let me ask, what would you suggest we do with single-parent households that need housing, that qualify for housing? How would you develop a policy that would encourage them to get married, if that is some kind of value that you think should be inserted into this policy? How would you do that, Mr. Husock?
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Mr. HUSOCK. I meant to point out just the figures speak for themselves, that the largest group of those who receive Section 8 housing vouchers are single-parent families, especially among non-elderly, non-disabled. So I think it is a program that addresses that group, I think that is incontrovertible.
My thought was that if for new enrollees particularly, over time they had the sense that this was a declining subsidy, perhaps not a precipitous cut-off, but a decline over time, again something that jurisdictions can consider, then they would make life choices, maybe they would say, gee, the rent is going to go up and if I want to buy this unit, maybe it is worth thinking about whether I want to make some kind of a lifestyle choice that would have some sort of co-household head. This is a category of HUD's too.
Ms. WATERS. I am sorry. I want to make sure I understand your Statement. It was kind of couched in some interesting language. You are saying that find somebody with enough money to help you pay the rent and get married. It is an economic decision?
Mr. HUSOCK. I am suggesting that financial incentives could play a role, sure.
Ms. WATERS. That is very interesting. Thank you very much.
Chairman NEY. A question I had, and I want to get to the second panel, but a quick question I had, Mr. Katz, you were talking about urban metropolitan areas and some consolidation. Do you have any thoughts about the smaller areas where you have 30 or 40 vouchers, you know, rural or small areas?
Mr. KATZ. I think that is an interesting question as to who ultimately should bear responsibility for administering the program in non-metropolitan areas. Perhaps that is where the States should play a role. Now, some of those smaller areas are obviously right at the fringe of metropolitan areas, directly in the path of growth. From my perspective, I would consider them to actually be part of the metropolitan areas, even if they are not defined as such.
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I still think the question of who administers is different from the question of how the funding arrangement is set out, and all the other programmatic restrictions and issues that have been discussed today. So I think this question of who administers is separate from some of the programmatic issues that have been discussed. That is why, from my perspective, the HANF proposal, whether it is for an entire state or just for non-metropolitan areas, is very troublesome.
Chairman NEY. Thank you.
I want to thank the panel. I think you have been a tremendous panel and I appreciate your time here up on the Hill. Thank you.
Panel two can come forward, thank you. We had panel one and panel two, and we moved to panel three.
[LAUGHTER]
Let me just introduce the witnesses. Sheila Crowley is President and CEO of the National Low Income Housing Coalition. She is a member of the board of the National Housing Trust, the Poverty and Race Research Action Council and the Technical Assistance Collaborative. Dr. Crowley lectures widely on the issues of social policy, social justice and legislative advocacy. Welcome to the Hill.
Henry Marraffa, Jr., has served on the Gaithersburg City Council since 1995. He is testifying today on behalf of the National League of Cities, where he serves on the Community Economic Development Steering Committee. Ann O'Hara is a co-founder and Associate Director of the Technical Assistance Collaborative in Boston, Massachusetts. Previously, she served the Commonwealth of Massachusetts as the Assistant Secretary for Housing and Director of Rental Assistance Programs. John Sidor has 25 years of experience in the housing and community development field and is currently a public policy management consultant. He is also adjunct faculty member in the graduate program of strategic leadership at Mountain State University in Martinsburg, West Virginia.
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I want to welcome the panel. Thank you for your indulgence of the time waiting. We will begin.
STATEMENT OF MS. SHEILA CROWLEY, PRESIDENT, NATIONAL LOW INCOME HOUSING COALITION, WASHINGTON, DC
Ms. CROWLEY. Chairman Ney and Ranking Member Waters, thank you very much for the opportunity to testify today on the housing voucher program. I am Sheila Crowley. I am President of the National Low Income Housing Coalition and I am representing our members who share the goal of ending the affordable housing crisis in America and who have substantial experience with and expertise on the housing voucher program. We understand the program's value, its issues, and its challenges.
We have advocated with Administrations and Congresses of both parties to expand and improve the program since it began in 1974, which coincides with the founding of the National Low Income Housing Coalition. We consider the housing voucher program to be a co-equal partner in what we see as the trio of solutions to the affordable housing crisis, that is production, preservation and income subsidies. We strenuously oppose the proposal to convert the Section 8 housing voucher program to a block grant.
This committee has carefully studied the depth and breadth of the affordable housing crisis and has come to the same conclusions as many others that there is a serious shortage of housing units that are affordable for the lowest income households. The latest analysis of the affordable housing crisis is contained in the 2003 state of the nation's housing report issued by the Joint Center for Housing Studies of Harvard just this morning. I would like to request that copy of the report be placed in the record.
Chairman NEY. Without objection.
[The following information can be found on page 411 in the appendix.]
Ms. CROWLEY. Okay. I think you will find this to be of satisfactory scholarly rigor.
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Despite housing being the one bright spot in an otherwise dismal economy, the Joint Center reports that three in ten U.S. households have housing affordability problems, and 14.3 million households are spending more than half of their income for their housing. Three-quarters of these are households that are in the bottom income quintile and the gap between the number of renter households in the bottom 20 percent of income and the number of housing units they can afford now stands at two million.
Our assessment of the housing voucher program is that it is essential. It is largely successful. It should be funded at an increased level, and it is in need of reform. Problems that have inhibited voucher utilization can be grouped into three categories: administrative shortcomings, discrimination against voucher holders, and the lack of modestly priced housing stock.
H.R. 1841 only addresses the administration of the voucher program and does so, in our opinion, in a heavy-handed and off-target manner. The rationale to block grant the voucher program to States in order to improve its administration fails to recognize substantial improvement in voucher utilization in the last two years, and indeed the information that we have gotten most recently from HUD is that the utilization rate is now over 95 percent.
There are numerous reasons to reject this proposal. I have reviewed many of them in my written testimony. You have heard many of them from other panelists. But let me say that its greatest flaw is the failure to guarantee that the funding of the housing voucher program would keep pace with housing costs. States would be unable to continue to serve the same number of low-income people at the level needed to assure housing affordability, much less expand assistance to help the many thousands of people on housing voucher waiting lists.
Protestations that erosion of the voucher program is not the intent of the proposal notwithstanding, the mounting Federal deficit and the corresponding debt that it will create will force harsh measures in the not-too-distant future. In the current fiscal environment, converting the housing voucher program to a block grant is best understood as stage-setting for future cuts to the program.
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There are several straightforward things that Congress can do to improve voucher utilization, some of which were in H.R. 3995, your omnibus housing bill from the last Congress, and in bills in the Senate. First, HUD has the option to reallocate unused vouchers from one administering agency to another, and Congress should require reallocation from communities that cannot use all their housing vouchers to those who can, and to the extent possible keep those housing vouchers in the same region. The threshold for reallocation should be quite high, a 95 percent utilization rate.
Second, Congress should enact reforms that will incentivize owners of rental property to participate in the program, in particular making the inspection process more flexible and less time consuming for owners, a proposal that was detailed in H.R. 3995. And third, Congress should establish a housing success fund or other mechanism to help housing voucher holders find and access available housing with funds for application fees, credit checks, security deposits and the like, as well as supporting housing search assistance, outreach and counseling and those kinds of things.
We know that some landlords decline to accept housing vouchers because they object to the people who are voucher holders. Congress should consider a testing program that would attempt to discern the extent to which discrimination against voucher holders violates Federal fair housing laws. Ultimately, the success of the housing voucher program does depend on the availability of safe and affordable housing.
This committee came to bipartisan agreement last year on the need for some new form of investment in housing production. Many others have come to that agreement. So in closing, I would like to urge the committee to take up H.R. 1102, the National Affordable Housing Trust Fund Act of 2003, which now has 200 cosponsors in the House, at your earliest possible convenience.
Thank you for inviting me here today.
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[The prepared statement of Sheila Crowley can be found on page 284 in the appendix.]
Chairman NEY. Thank you.
Next witness?
STATEMENT OF MR. HENRY MARRAFFA, JR., COUNCILMEMBER, GAITHERSBURG, MD, ON BEHALF OF THE NATIONAL LEAGUE OF CITIES
Mr. MARRAFFA. Chairman Ney, Ranking Member Waters, members of the subcommittee, my name is Henry Marraffa. I am a council member of the City of Gaithersburg, Maryland and a member of the National League of Cities, and I serve on the Community and Economic Development Steering Committee. It is my pleasure to be here today to testify on behalf of the National League of Cities and over 18,000 municipalities across the country, on the proposed changes to the Section 8 housing assistance program.
Section 8 housing, also known as the Housing Choice Voucher Program, is a key part of the Federal government's efforts to addressing an ongoing national housing crisis through the private housing market. The NLC believes a radical change in the nation's largest low-income housing program will substantially damage a program that is effective in providing housing assistance to low-income families, the elderly and disabled individuals.
H.R. 1841, the Housing Assistance for Needy Families legislation, poses significant threats to the success of the Section 8 program. In particular, the National League of Cities is concerned with specific provisions of the legislation that threaten, one, the overall level of Federal funding and the funding structure of the program; number two, the reduction in and constraints on assistance available to low-income families; number three, local control over housing programs; and number four, an increase in administrative burden.
Currently, Congress adjusts funding each year based on changes in actual costs to ensure that housing agencies have sufficient funds to cover all the vouchers they have used. H.R. 1841 makes no provision for adjusting total block grant funding based on housing costs, general inflation or any other factor. The formula proposed would only consider housing costs to decide the percentage of the total funding provided for the block grant nationally that would go to each state, not the cost of the housing at the local level.
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If Federal funding falls behind the program's needs, States would have to contribute their own funds, which they sorely do not have right now, or scale back the programs. They will do this in a number of ways: by reducing the number of families that receive housing vouchers; by shifting housing assistance to higher income families; they also will shift rent burdens to families participating in the program; or limiting opportunities to use vouchers to escape the high-poverty areas.
As things stand now, three out of four low-income families eligible for vouchers do not receive housing assistance because of funding limitations. In Montgomery County alone, where I live, we have approximately 62,000 residents who cannot afford the market rate of $1,180 for a two-bedroom apartment. Our voucher program has a waiting list that is currently at 4,370.
Local flexibility is the key to the success of the Section 8 voucher program. Public housing authorities, with the cooperation of local governments, have a long history of administering the voucher program in a way that supports families and ensures accountability and protects the public's interest. For instance, in my city of Gaithersburg, the Housing Opportunity Commission of Montgomery County, with which we work, administers the Section 8 voucher program currently to 4,292 lease vouchers. That is a 96 percent utilization rate. We actually do not have enough vouchers.
Finally, one of the most problematic aspects of the proposal is the State's ability to discriminate against sub-state areas. A state could shift vouchers from one community to another community; provide more administrative resources to one area to the exclusion of another; or even bar the use of vouchers in certain regions. This is politics at its worse. Such a discriminatory action would be detrimental not only to a local community not in good standing in the State, but also would ill-serve the overall needs of the low-income people living there.
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In conclusion, while the Section 8 voucher program has been successful across the country, the National League of Cities recognizes, along with most everyone else who has testified, that the program is not perfect. Perhaps some of the technical aspects of the program should be revisited by the experts who administer the programs. The National League of Cities is committed to assisting Congress and this administration in such a review. Local government and public housing authorities belong and should remain the front line to play a primary role.
I would like to state for the record that the National Association of Counties, the National Association of Local Housing Finance Agencies, and the National Community Development Association share our strong commitment to local control and endorse the position of the National League of Cities as reflected in our testimony today and our written testimony.
I would like to especially thank the Center on Budget and Policy Priorities and the Council on Large Public Housing Authorities for their technical assistance in preparing this testimony. I appreciate the opportunity to be in front of you all on behalf of the National League of Cities, and I would be happy to answer any questions at the end.
Thank you very much.
[The prepared statement of Henry Marraffa Jr. can be found on page 335 in the appendix.]
Chairman NEY. I want to thank you.
Next witness?
STATEMENT OF MS. ANN O'HARA, ASSOCIATE DIRECTOR, TECHNICAL ASSISTANCE COLLABORATIVE, BOSTON, MA, ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH DISABILITIES HOUSING TASK FORCE
Ms. O'HARA. Chairman Ney, Ranking Member Waters, and members of the subcommittee, I would like to thank you as well for the opportunity to provide testimony today on H.R. 1841. I do so on behalf of the Consortium for Citizens with Disabilities, a coalition of approximately 100 consumer advocacy provider and professional organizations who advocate with and on behalf of people with disabilities and their families.
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My work has been to expand access to Section 8 vouchers and other Federal housing programs for people with disabilities. My professional experience includes 6 years overseeing the Commonwealth of Massachusetts's statewide Section 8 program. The CCD Housing Task Force represents people with disabilities who have very low incomes, including three million who rely on Federal supplemental security income payments of $550 a month. They are participants in the program. They are on waiting lists for the voucher program, or they are trying to get on waiting lists. They live in institutions, in nursing homes, in board and care homes that are substandard, in emergency shelters, or at home with aging parents who don't know how the rent will be paid once they die.
Two weeks ago, we released a study, Priced Out in 2002, which found that people with disabilities receiving SSI in the United States today need to pay 105 percent of their monthly income in order to rent an apartment at the HUD fair market rent. A deep housing subsidy like Section 8 is the only way to solve a housing affordability gap of this magnitude. In the past 8 to 10 years, the Section 8 program has become a lifeline for people with disabilities, particularly since more than 400,000 units of public and assisted housing are now designated as elderly-only.
The CCD Housing Task Force is strongly opposed to the block grant proposal. We believe that a block grant modeled after TANF has virtually no relevance to people with disabilities or to elderly households or families that work, for that matter, who comprise the vast majority of Section 8 participants. We believe that Congress should continue to have the direct responsibility for ensuring adequate funding for all vouchers and for establishing Section 8 policies. And we believe that the Section 8 program should continue to be targeted to the most critical housing needs in our country today, those of extremely low-income people.
We would like to point out a few specific concerns regarding the legislation. As others have said, the block grant is very likely to cap program expenditures as rents rise. As a result, the number of households inevitably would go down or the rent paid by the tenant would inevitably go up. Neither of these options is acceptable to the disability community.
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Second, with a flexible block grant, state administrators could easily redirect voucher funding away from people with disabilities to serve more popular political constituencies. They could implement time limits that would be disastrous for people with disabilities whose impairments are not subject to arbitrary time limits. And they could implement policies that segregate people with disabilities, rather than promote community integration.
We strongly oppose new targeting policies in the legislation that would permit higher-income households, including those for people with disabilities above 80 percent of median income. There are other housing programs that can assist people at these income levels. Fourth, a block grant proposal would end the congressional strategy to provide Section 8 vouchers for people with disabilities who are no longer eligible to move into elderly-only buildings. It could also jeopardize 10,000 vouchers currently funded from the Section 811 appropriations.
Finally, there is ample evidence that a State-administered block grant will not work; that the transition would cause chaos in a program that, despite its problems, continues to work well. Many States have not done a good job running Section 8. Many States do not want to administer a block grant program, and others lack the capacity to do so.
Section 8 relies on an important third partner, the landlord. Any radical change proposed would prompt many landlords to sit on the sidelines. Tenants would also be uncertain about the future of their rent subsidy, a situation that would be disastrous for people with disabilities who have nowhere else to turn.
We believe there are reforms and improvements which could be made to the voucher program. They have been mentioned by almost every speaker, like increasing local flexibility in setting maximum rents, flexibility that was actually in the program before Quality Housing and Work Responsibility Act was passed in 1998. We believe that vouchers should be linked more effectively to affordable units, especially accessible housing developed with HOME or tax credit financing. We believe that PHAs should be able to get access to voucher success funds for landlord outreach housing search and other costs associated with helping people find housing.
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Chairman NEY. I am sorry to interrupt, but they have called a vote, so if we can get a brief summary on yours because we might have some questions.
Ms. O'HARA. In conclusion, Mr. Chairman, we would like to see Congress and HUD work together to seek solutions to these issues.
Thank you.
[The prepared statement of Ann O'Hara can be found on page 343 in the appendix.]
Chairman NEY. Thank you.
Mr. Sidor?
STATEMENT OF MR. JOHN SIDOR, PRINCIPAL, THE HELIX GROUP, HARPERS FERRY, WV
Mr. SIDOR. Yes, thank you, Mr. Chairman and subcommittee members. I appreciate the opportunity to speak to you.
Let me just simply summarize my comments and say while I think the voucher program is a pretty good program, and probably a key component of national housing policy, it has two flaws that I think make it less effective than it should be and over time will make it a less effective program particularly. And that is, we tend to put vouchers where there are relatively few jobs for people of modest skills and education levels, and vouchers tend to be used in isolation from other resources, particularly human development resources.
I have prepared a Statement in which I elaborate on both these points. It shows an indication of where jobs are and where vouchers are, and the disconnect, and shows some examples of state administration. Twenty-eight States administer the program, having an average voucher administration of 6,600. I think their networks of delivery systems really can overcome both these issues of providing vouchers where jobs are and using vouchers in conjunction with other resources.
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Therefore, I support the idea in concept of a State-administered voucher program, not a HANF program, but a State-administered voucher program in which States have the option to administer the program, modeled something like the CDBG program.
Is that a quick enough summary?
[The prepared statement of John Sidor can be found on page 388 in the appendix.]
Chairman NEY. Thank you.
I will be very quick because of the series of votes. I want to ask Ms. O'Hara, did you say 105 percent of the income level for a person who has a disability?
Ms. O'HARA. Yes. That is the national average.
Chairman NEY. You mean 105 percent is paid for the apartment?
Ms. O'HARA. It would cost 105 percent of the Federal SSI monthly payment to rent an apartment priced at the one-bedroom fair market rent.
Chairman NEY. We would like to pursue that further, just because the average is 30 percent, if a person does not have a form of a disability.
Ms. O'HARA. That is right.
Chairman NEY. The question I wanted to ask Ms. Crowley, is there anything that you think needs changing? I read your testimony, so I am clear where you are at on Section 8. Are there some ideas you would have that things do need changing within the administration of this program? Are you saying we keep it right as it is?
Ms. CROWLEY. I certainly think that there are ways to make the administration more efficient. For example, authorities that have a small number of vouchers, could create some sort of consortia. That would make more sense. I certainly think that the work that Bruce Katz has done on metropolitan understanding of regional areas contributes to understanding how it is that housing markets work, and that if housing authorities could in fact come together and figure out how to do regional administration, that would make a lot more sense than a lot of this overlap.
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On the small ones I live in this little city of Fredericksburg, Virginia. The State of Virginia administers the voucher program for about 40-some different small jurisdictions that do not have their own housing authorities. Three of them were together in Fredericksburg and surrounding counties. It was very inefficient. And so those three jurisdictions came together in and of themselves, made the decision to do it on a regional basis, contracted with a nonprofit that was doing other kinds of housing programs, building housing with tax credits and those kinds of things, but has housing expertise, and got the Virginia Housing Development Authority to agree to that, made a proposal, and that is going very nicely.
So there are certainly lots of options that are available and that I think we should encourage them as much as possible
Chairman NEY. Thank you.
The gentlelady from California?
Ms. WATERS. I am fine, Mr. Chairman. There is one thing that I have not given enough thought to, but I want to, and that is support for landlords. I want to find out the problems that are associated with the landlords and why some do not want to accept vouchers, and see if the bureaucracy has grown so much that it is discouraging them, and see what we can do; see if there are any real problems there. That is one area I am going to pay a little bit of attention to. The other is automatic. We support the program as it is and are opposed to moving this to the States. The one area where I think we can do something is working with landlords.
Ms. CROWLEY. If I may, that certainly was an area that was addressed in H.R. 3995 last year and that could easily be incorporated into a much less drastic piece of legislation.
Chairman NEY. Thank you.
Mr. Sidor, one quick question or clarification. You support block granting it, but you do not support HANF?
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Mr. SIDOR. I think that is true. I think that they should have the option of administering a flexible voucher program, not HANF as proposed in the legislation.
Chairman NEY. Thank you.
The chair notes that some members may have additional questions for the panel which they may wish to submit in writing. Without objection, the hearing record will remain open for 30 days. Hearing no objection, it is open for 30 days for members to submit written questions to these witnesses and place their responses in the record.
With that, we will conclude the hearing. I want to thank you for your time on the Hill.
[Whereupon, at 4:54 p.m., the subcommittee was adjourned.]
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