SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOCSTRENGTHENING AND REJUVENATING
OUR NATION'S COMMUNITIES AND
THE HOPE VI PROGRAM
Tuesday, April 29, 2003
U.S. House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Financial Services,
The subcommittee met, pursuant to call, at 2:14 p.m., in Room 2128, Rayburn House Office Building, Hon. Robert Ney [chairman of the subcommittee] presiding.
Present: Representatives Ney, Tiberi, Harris, Waters, Carson, Lee, Watt, Clay and Scott. Also in attendance was Mr. Leach.
Chairman NEY. [Presiding.] The subcommittee will come to order. The subcommittee meets today to discuss our nation's communities and the HOPE VI program, which is administered by the Department of Housing and Urban Development.
As today's witnesses well know, Homeownership and Opportunity for People Everywhere, HOPE, is the name given to a series of housing programs initially authorized by the Cranston-Gonzalez National Affordable Housing Act in 1990. The HOPE programs are numbered one through five, with HOPE VI added later. The HUD Reform Act of 1989 authorized the establishment of the National Commission on Severely Distressed Public Housing. The task of this commission was to conduct case studies and site examinations of public housing developments. The commission reported that approximately 86,000 public housing units were severely distressed and recommended that these units be removed from the housing stock. HOPE VI was begun as a result of the findings of this commission.
Page 2 PREV PAGE TOP OF DOC The purpose of HOPE VI programs is to revitalize severely distressed public housing developments and transform them into safe, livable environments. The required element of the program is the provision of a effective targeted self-sufficiency initiatives so that public housing can regain its role as housing for low-income families who are determined to improve their status. HOPE VI funds are used to provide three types of grantsplanning, implementation and demolition. Until 1998, the bulk of funding provided for HOPE VI was rewarded to planning and implementation grants. Since 1998, most of the grantees were awarded funds for the demolition of obsolete projects or units. A number of concerned housing support groups and legislators are now questioning the necessity of many of the demolitions and are debating the future of the HOPE VI program.
President Bush's fiscal year 2004 budget proposal does not include funding for HOPE VI. So far, HUD maintains that the program resulted in the demolition of 55,000 of the 140,000 public housing units that have been approved for demolition under HOPE VI. In addition, because progress is often slow under HOPE VI programs for various reasons, billions of dollars in HOPE VI funds remain in the pipeline and demand the concentrated attention of HUD and the current grantees.
Despite the success and popularity of the HOPE VI program, not all proponents of affordable housing support this program. The intended purpose is to provide quality housing for low-income families, yet some experts maintain that few of the newly constructed units are available to these families upon the completion of a project. In some revitalization areas, as many as 75 percent of the original public housing tenants become displaced. As conscious stewards of the taxpayer's income, we must investigate if this is the best use of government funding or not. Clearly, the HOPE VI program is in need of review. We must determine whether it is proper to phase out HOPE VI, and if HOPE VI is to be continued, then whether reforms are necessary.
Page 3 PREV PAGE TOP OF DOC Both Congressman Leach, H.R. 1614, and Congressman Watt, H.R. 1077, have introduced legislation in the 108th Congress that includes changes envisioned in H.R. 3995 and H.R. 5499. These bills are virtually identical, with the exception that the Leach bill includes a section that would allow HOPE VI grants to be used to assist small communities to develop affordable housing as part of the Mainstreet Redevelopment Program. We hope to have an agreement on these two bills and move to markup hopefully within the next month.
Although today's hearing is to discuss the HOPE VI program, interested parties may have noticed today the front page of the Washington Post article that referred the Administration's housing assistance for needy families, or HANF proposal. I do intend to introduce this legislation tonight upon requestI want to stress upon requestof the Administration, and hold the first in a series of hearings on the section 8 program beginning May 22. Section 8 reform is a worthy topic and it necessitates thoughtful debate and discussion. I look forward to the leadership of this subcommittee as we move forward in studying this proposal. Again, we have to lay it on the table for discussion. Personally, I am in a neutral position on this whole proposal. We need to have public hearings and we need to have discussions among members of the committee and advocates for housing across the United States and with HUD to see if block granting works. So at the request of the Administration for discussion purposes, I am going to introduce this.
I want to thank all of our witnesses for taking time from their busy schedules to be here today. I look forward to hearing the testimony and having a good discussion on the HOPE VI program. I would like to thank members for being here today, and without objection, all members' opening statements will be placed in the record.
The gentleman from Georgia?
Mr. SCOTT. Thank you very much, Mr. Chairman, and let me commend you for having this very, very important hearing on a most worthy and important program.
Page 4 PREV PAGE TOP OF DOC The HOPE VI program is an extraordinary, creative and beneficial program. I want to thank this distinguished panel for coming before us and for sharing your testimony. The HOPE VI program is important to my district and the Atlanta metro area of Georgia because both the Fulton County Housing Authority and the Atlanta Housing Authority have both received HOPE VI grants. Because of their successes with this program, I am a cosponsor of both Mr. Leach's bill and Mr. Watt's bill, and their efforts to reauthorize and improve HOPE VI. I think it is very important to note this strong bipartisan Republican-Democratic partnership to revitalize and reinstitute HOPE VI.
With neighborhood revitalization as the cornerstone of its strategy, since 1994 the Atlanta Housing Authority has reduced its workforce by more than 53 percent. It has increased the number of families it serves by 17 percent. It has privatized the management of 100 percent of its real estate and leveraged $184 million of federal grants, including three HOPE VI grants totaling $1.3 million, into $2.5 billion of local economic activity. What a success story is the program in the HOPE VI in my district. The Atlanta model of mixed-income community development is a proven, sustainable neighborhood strategy that is definitely eliminating the institutional poverty. These achievements have been reached and achieved under the leadership, the sterling leadership of one of our panelists, Ms. Renee Lewis Glover, from my district in Atlanta, Georgia, and we are so proud to have you here, Ms. Glover, who is the chief executive officer of the Atlanta Housing Authority.
If I may, Mr. Chairman, let me just take a moment to introduce Ms. Glover to us. Ms. Renee Glover joined the Atlanta Housing Authority as CEO in September of 1994. The Atlanta Housing Authority is the sixth largest housing authority in the United States. It owns and operates approximately 9,500 multi-family apartments and administers approximately 12,000 section 8 vouchers. Ms. Glover was named public official of the year 2002 by Governing magazine, and she has been recognized as one of the top 10 women in government by the Center for American Women and Politics, the Ford Foundation, and the Council for Excellence in Government. She served on the national advisory council of Fannie Mae, and was appointed by Congress to the Millennial Housing Commission in 2000, charged with providing legislative recommendations on national housing policies. Prior to joining the Atlanta Housing Authority, Ms. Glover was a corporate finance attorney in Atlanta and New York City. She received her juris doctorate degree from Boston University, her master's degree from Yale University, and her undergraduate degree from Fisk University. I welcome Ms. Glover today to our committee and we look forward to your testimony.
Page 5 PREV PAGE TOP OF DOC Thank you very much, Mr. Chairman.
Chairman NEY. I thank the gentleman for his statement.
Mr. Watt of North Carolina?
Mr. WATT. Thank you, Mr. Chairman. I will be brief, although I have a lot to say about HOPE VI and the process by which we got here.
First of all, I want to thank the chairman for convening this hearing. This is exactly the way the process should work. A debate starts about the value of a particular federal program and the best way to resolve that debate is to have people who have been in the middle of the programs come and talk about the value, the problems, the challenges that they have experienced in the program, and then try to see whether there is any way to accommodate those problems and concerns and challenges. I think that is what we have been trying to do throughout this process. We introduced a bill last year to reauthorize HOPE VI and improve it by addressing some of the concerns that had been identifieddisplacement of residents, housing authorities who were getting funds and were not ready to immediately start to use those fundsthe range of issues. So the bill that we introduced last year and reintroduced this year addresses those concerns.
Then Mr. Leach approached me about an amendment which had been offered to last year's bill that had passed the committee, which we left out of the bill this year, and wanted to know if I would be offended if he dropped another bill that had that amendment in it, and I said, not only would I not be offended, I would join as a cosponsor in your bill. So I have got two bills out there now that I am supporting. All that does is add value to the discussion about how to do this.
The other thing I want to say to the representative from HUD in particular is that I have not been one, despite the fact that I have authored the bills to reauthorize HOPE VI, I have not been one, and I think Secretary Martinez will verify this, to say that I have closed my mind to alternatives that would improve or make the HOPE VI program a better program. What I am waiting on is a specific proposal from this Administration. I think some of the things I have heard that may be being thought about by the Administration may have some value to them, but I do not think we can solve the problem by zeroing out HOPE VI, and then talking about how we revised the program. I think now is the time to have that discussion and this is the process within which to initiate that discussion.
Page 6 PREV PAGE TOP OF DOC So I will end where I began, which was to thank the chairman for providing this forum in which a discussion and evaluation of a valuable program can be made, and we can discuss and evaluate how to make it even better. I thank the chairman and yield back.
Chairman NEY. Thank you.
Our ranking member, Ms. Waters?
Ms. WATERS. Thank you very much, Mr. Chairman and members. I have a statement that I am going to submit for the record, but I am going to condense my comments by simply saying that many of us were alarmed when we learned that the Administration was not desirous of reauthorizing HOPE VI. As you know, we all have concerns about public housingthe funding for public housing, section 8, making more units available, rehaball of that. But HOPE VI has taken on quite a significant meaning for distressed housing in this country. While the Administration makes the argument that not all of the dollars allocated to HOPE VI have been spent, our examination of this issue does not lead us to conclude that this is a good reason why HOPE VI should not be reauthorized.
We have learned that the number of applications for it outweigh any concerns about whether it is needed. As a matter of fact, we believe that if we simply fund it at about 50 percent of those applications that have been put in, we would be going a long way toward providing safe affordable housing for so many of our citizens who are in desperate need. Not only are we concerned about the lack of reauthorization, we think this sends a message. We do not know why, even if you did not want to put the dollars into it, if the Administration did not want to put the dollars into it, we do not know why you would not simply support reauthorization. That is a signal that says, we think this program has value. We think that despite the fact that all of the dollars have not been spent, we do see progress being made.
We have discovered in our examination of the issue that increasingly the housing authorities have reduced the number of days that it has taken them to get up to speed, and we think it gets even better. We think with the more involvement of the private sector and all of that, that these grants can be expedited in ways that can put the rehabilitation of housing units on line in ways, again, that would make them available to people who so desperately need it.
Page 7 PREV PAGE TOP OF DOC So what I would like to hear in addition to whether or not you understand the request and the needs and the applications and what you think about all of that, I need to understand how the projects are chosen. My staff has walked through this with me, I guess, 100 times now, or many times now, and I do not understand how the criteria is evaluated and how you can score high and not get selected to be supported for a HOPE VI grant. I want to trace the dollars. I am from Los Angeles and our needs are great. I want to see what is it going to take for me to be competitive with Texas and Florida, for example. I think there is something I do not know, I do not understand, about how the decisions are made. So I am hopeful that in your testimony today you will help me to understand that.
Also, my staff has brought to my attention that in the evaluation, in this criteria and the way that it is evaluated, the dollars are directed toward the unitrehab of units. And they have pointed out to me that you have units that are located in communities that are in great disrepair and there is a need for support for infrastructure and things that do not meet the strict criteria for the rehab of units et cetera. So I would like some comments about whether or not we can take a look at that so that we can factor that in to these applications and requests, and this can be given some consideration.
Having said all of that, HOPE VI has a following, not just among members of Congress on both sides of the aisle, but throughout our communities. People who work on housing issues and consumer issues are now in support. We think the relocation problems are being worked on. We all are concerned that people have options and that they can get back into some of these rehabilitated units. We do not want folks to be displaced and just disappear, and we not know what happened to them. But we support HOPE VI and we would like to see it reauthorized, and we would like to see it funded. But even if it is not funded, we want to see it reauthorized, and hopefully we can hear something about those issues.
Thank you, Mr. Chairman. I yield back the balance of my time.
Page 8 PREV PAGE TOP OF DOC Chairman NEY. Thank you.
The gentlelady from Indiana?
Ms. CARSON. Thank you very much, Mr. Chairman, and certainly thank you to the Honorable Michael Liu for being here this afternoon. I hope I have pronounced your name correctly. If I did not, I apologize, but I appreciate the distinguished panel who have gathered here today to present your views in terms of the subject matter before this housing subcommittee.
It seems as though nearly every time this committee hears from HUD, one area of another is on the chopping block. The public housing drug elimination program is gone, and it served very well in my community in terms of a major decline in drug activity in the public housing projects, and the budget is proposing to knock out brownfield programs, even though this committee labored long and hard on it just last year. Section 8 vouchers will not be funded at the 100 percent level, and we are supposed to somehow be pleased with the fact that it might be as low as 70 percent after all.
Now, we are here to hear why we no longer hear HOPE VI. I would simply implore the Administration now more than ever not to eliminate, not to reduce, not to get rid of so many of these vital housing assistance programs that have worked well for so long. When I read your advance copy, sir, of your Administration's position to eliminate HOPE VI altogether, it implied that it had essentially served its purpose, or that there were areas where resources had not been utilized, and the consequence of that was is that you felt maybe that we do not need it at all. As I read your very eloquent statement, it reminded me of a man being with a woman for several years, having had children and grandchildren, and then decided that because she began to move slowly and was not meeting up to capacity, that he no longer needed her; that he kicked her out in favor of something that may be more energetic, and more that would be more palatable to his thinking. While I would be opposed to that kind of strategy in terms of eliminating domestic tranquility, I would also be opposed to eliminating HOPE VI, that has in fact worked well for several communities, including my own of Indianapolis, Indiana. We were having plans to use further resources from HOPE VI so that we could enhance domestic tranquility for lower income people.
Page 9 PREV PAGE TOP OF DOC I realize in your statement that you say, well, it was not all used, it was used up as fast as it ought to have been, but I would suggest to you very respectfully that sometimes when things become a little aged, they do not move as fast as they used to move, but they still serve their purpose.
I would respectfully ask for some reconsideration on the part of this Administration. I do not want to sound political, but I do favor the HOPE VI, as I did section 8, as I did brownfields, and as I did the drug elimination program. Even though I am becoming an old member of the United States Congress and do not move as fast, I would like to assure you that all those programs worked extremely well. Inevitably, some have a little flaw here and there, a little arthritis and osteoporosis, but they still work well. If you would be kind enough to take back to the Administration our desire collectively, especially on this side of the aisle, to reconsider totally throwing the wife out with the bathwater and bring her back in and kind of patch her up a little bit and see if we cannot move forward with HOPE VI.
Mr. Chairman, I yield back the balance of my time.
Chairman NEY. I thank the gentlelady from Indiana.
Mr. Tiberi, do you have anything? I want to thank the gentleman from Ohio for joining us. With that, we will begin with panel one, and as is procedure, without objection your written statements will be made part of the record and you will have five minutes to summarize your testimony.
Michael Liu is the Assistant Secretary for Public and Indian Housing at HUD. He oversees the Administration of all public housing section 8 rental assistance and Native American programs at HUDprograms that comprise more than 50 percent of HUD's operating budget of approximately $30 billion. Prior to assuming his position at HUD, Mr. Liu served as Managing Committee Member for the Federal Home Loan Bank of Chicago.
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STATEMENT OF HONORABLE MICHAEL LIU, ASSISTANT SECRETARY, PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, WASHINGTON, DC
Mr. LIU. Thank you very much, Mr. Chairman. As you said, my testimony is in for the record; Michael Liu, Assistant Secretary for Public and Indian Housing at HUD. I will summarize. I think in the interest of time I will specifically direct my verbal comments to the questions presented to us in your invitation to come before you this afternoon, Mr. Chairman.
The first question has to do with the Administration has not included additional funding for HOPE VI in fiscal year 2004; would you please explain why you believe HOPE VI should not receive future funding. To go over the reasons very quickly and in general at this point, and of course be open for questions later, first of all, as we all know, as you described, the program was authorized for a 10-year period which expired in 2002. The Administration did request an authorization for fiscal year 2003 and the Congress agreed with that. There will be funding for fiscal year 2003. However, we have found a number of fundamental issues and fundamental design flaws with the program. Over time, we have now come to understand that now that we have dealt with much of what was originally considered the most severely distressed public housing in America, there is some very serious questions as to what that really means today. I think there are some attempts through legislation to address that question, but there is a lot of debate in academia, among practitioners, among public housing authorities as to what type of revitalization, what type of housing we need to address, something which does deserve very close examination and something which should be very considered and measured as we move forward.
Secondly, one of the major purposes of HOPE VI as originally designed was to eliminate most of the severely distressed housing in America86,000 units. In fact, in combination with HOPE VI and other demolition programs within HUD, we have to date actually demolished over 100,000 units, with another 40,000 units plus or minus a few, approved, upwards to 140,000 within the next year. The cost per unit we have found to be extremely high under the HOPE VI program as compared to the HOME program. It is 120,000 in the aggregate nationwide, which is considerably more than what we have found for similar type units in the HOME program.
Page 11 PREV PAGE TOP OF DOC There has been concern about time frames in which these programs in which the grants are actually implemented. We see successes such as in Denver, Milwaukee and Seattle, a very minority, 15 out of the 165 grants through 2001, only 15 have been completed. Whereas programs across the countryNew Orleans, Cleveland, Gary, Indianawe see projects struggling to stay on schedule.
A perverse incentive exists in the current program. That is, if we intend to address the most distressed housing, many times that is in part related to the capacity of the housing agency to maintain that property. Yet, we want to work with housing authorities that know how to spend this money and how to move in the development world. So we see a very fundamental tension in this program that we need to pause and look at and to work out as we move forward. This is one of the major reasons why we have found that the program has moved much slower than all of us would like to see.
The second issue that was posed to us was to address our public housing reinvestment initiative. In a nutshell, the public housing reinvestment initiative is a proposal which has been put forward by the Administration to further provide a tool to public housing authorities to access private sector capital for the purposes of rehabilitation and revitalization of public housing; $131 million has been put aside to support the credit subsidy involved, which is linked to up to an 80 percent guarantee of the program. This proposal is separate and apart from our HOPE VI initiative. It is one more in a line a other tools which we have developed over the last five or six years to assist public housing authorities going to Wall Street, going to the markets. We have approximately 50 housing authorities today that have either completed or are in the pipeline to get bond financing and debt deals which will allow them to access literally billions of dollars of private sector capital to assist their needs in dealing with backlogged capital needs. The public housing reinvestment initiative is one more tool, in addition to those which already exist today, to assist public housing authorities and agencies to move in this direction. These are tools which were not in existence 12, 13 years ago when the original National Commission on Severely Distressed Public Housing was in existence, or when they completed their report.
Page 12 PREV PAGE TOP OF DOC We are also asked to address the specific proposal, H.R. 1614, introduced by Congressman Leach. While we think that there are some very good ideas in that legislation, the specific targeting of small communities tied to we believe the Mainstreet program, and as defined in the bill itself, clearly is not linked to public housing. In fact, there is language there that specifically de-links it from the most severely distressed public housing, which I think is indicative of our position, which is that there is need to reexamine some of the underlying fundamental issues before we move on.
The next question that we were asked to address
Chairman NEY. I would note, not to interrupt, but the time has expired. If you would like to summarize?
Mr. LIU. In the end, Mr. Chairman, we think that the program has met its primary goal, the initial goal of eliminating the most severely distressed public housing. It has some inherent conflicts which we need to review, and it is time that we do so.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Michael Liu can be found on page 49 in the appendix.]
Chairman NEY. Thank you. And also some questions may arise on the remaining issues that you had, or if you want to work them into the conversation, we can also do that.
With that, I did want to ask you, since you mention in the testimony about HOME units and also HOPE VI, and you show that there has been a big difference in being able to do those, why do you think there is such a big difference? Is it the Administration within HUD, or is it some difference of rules or regulations? Why would there be such a big difference in administering the two programs?
Page 13 PREV PAGE TOP OF DOC Mr. LIU. Those are one of the issues that we think is a valid issue for us to review and look at during this period, as we look forward as to what should be the next iteration of how we address the backlog needs. The fact that the HOME program has shown to be a much more cost-effective program, we have to do a better analysis to see exactly why. Flexibility may be one issuethe flexibility on the part of the entities involved in the development; the fact that the HOME program is not necessarily tied to use by public housing agencies, which in many instances may not be the best entities across the country to be involved in complex real estate-type of development.
Chairman NEY. Because both programs are leveraging low income tax credits and private funds, so they are both doing that. Both are administered under HUD. But has there ever been a comprehensive look at why one was working better than the other? You were talking about the housing authorities, maybe that is one part of it.
Mr. LIU. There has not been a direct comparison to the degree of analysis which would allow us to actually come forward with a more comprehensive answer at this time.
Chairman NEY. The other question I had, HOPE VI funds are distributed by way of the notice of funding availability, NOFA, which is published by HUD each year. The fiscal year 2002 revitalization notice of funds availability on July 31, 2002, for which applications were due by November 29, 2002, and the awards were announced March 5, 2003. The fiscal year 2002 NOFA, demolition NOFA, was published on April 4, 2003, with the applications due by June 3, 2003. Can you explain what takes it so longwhat is the delay time in there to be able to publish the NOFA?
Mr. LIU. For fiscal year 2002, we went to considerable lengths to adjust the program to deal with some of the concerns that we had; to streamline the process for public housing agencies once they did receive their grants, so that we could mitigate the concerns that we saw of grants made prior to that point in time. So from the standpoint of that work, to review what we thought would work, to get views from those involved in development and with the housing agencies, that is what took us the time in order to get our NOFA out in the time frame that we did.
Page 14 PREV PAGE TOP OF DOC Chairman NEY. Because on the other hand, you hear housing authorities who people will say, well, they have a delay there, but they might come back and say, well, the delay is actually here in Washington; $500 million is in the pipeline, but it is sitting here because it takes a year to get the NOFA out. That is the other side of the argument.
Mr. LIU. Well, the time frame that we are talking about here, Mr. Chairman, just deals basically withwe are not counting any time in which it takes them to apply and in which the award is granted in order to, in terms of our global view of what is at issue and what is a problem here. I think even if you discounted the grants made in 2001, there were 16 made in that year. The remaining 149 of those we only had fewer than 14 which were completed by the end of fiscal year 2002.
Chairman NEY. So for this year the grants will come out quicker?
Mr. LIU. We believe that we will need less adjustment so that we certainly anticipate that we will be able to get a NOFA out a few months earlier, and that the process will probably be accelerated.
Chairman NEY. And one note, agencies will run into this all over the government. I just wondered if internally there has been any type of look or consideration of how possibly to streamline it or if anything has been discussed?
Mr. LIU. Absolutely. In terms of, we have cut our review process, which used to take upwards of four months, of five months, because we have changed the application process where housing agencies have to be much more project-ready. The actual review process is much shorter. I think we took approximately six weeks instead of the normal three to four months that it would take once the applications came in.
Chairman NEY. The final question I hadyou mentioned several alternative methods for revitalizing distressed public housing, such as bond financing and property-based initiatives. Today, not all the public housing agencies have the expertise to use the alternative methods that you do discuss in your testimony. How do you propose that the smaller, more rural communities address the revitalization and redevelopment needs?
Page 15 PREV PAGE TOP OF DOC Mr. LIU. Actually, we find a tremendous number of the smaller and modest-sized housing agencies around the country are able to access capable advice and guidance from either consultants or people associated with local and state organizations to assist them. I can rattle off a few names of cities now which would give you an example. We have Marquette, Milwaukee, Suffolk
Chairman NEY. Not to interrupt, but I have been told there is a total of about 50.
Mr. LIU. Approximately 50 that are right now in the queue, but there are more every day. We get calls every day, and we have done, again, these account for close to probably $2 billion or $3 billion.
Chairman NEY. I appreciate the effort, but it is 50 out of 2,600, we have got to somehow work together to get the curve up.
Mr. LIU. Understood.
Chairman NEY. Thank you.
The gentlelady from California?
Ms. WATERS. Thank you very much.
I don't know if I have a question as much as I have a statement. I am struck by how dispassionately we are discussing this issue, when in fact there is a housing crisis in America, and certainly a housing crisis among poor people and working people. As I understand it, most Housing Authority Directors were never considered to be experts as developers and contractors. They took the jobs basically described as jobs that would manage public housing under the public housing authority. So if we know that, what then is HUD's responsibility to help develop that capability, rather than sitting back and saying, oh, we gave you some money and you didn't get it done; you are too slow; you don't really know what you are doing.
What is HUD's responsibility in helping with this new mission that is now on this public housing authority to eliminate distressed housing, and I guess build more units. What is your role? What do you do to assist them?
Page 16 PREV PAGE TOP OF DOC Mr. LIU. Congresswoman, since the start of the program, it is my understanding, and we certainly have staff which have been with the program for the time frame that it has been in existence, we get nothing but compliments from the industry organizations on the professionalism and the outreach and the efforts made by our staff to work with those housing agencies that not only receive grants, but those who have attempted to get grants and are interested in the program. We currently are very active in working with NAHRO and FATA and CLAFIN and the various organizations in permitting staff to be out at their conferences to provide information and background on the programs.
Ms. WATERS. If I can take back my time, I hate to interrupt you, but we only have so much time. Really, the proof of the pudding is in the eating. You get all these complimentswhat are they saying now that you are not reauthorizing the program? You do not want to put in any more money, and the compliments do not mean anything. The whole idea was to do something about this distressed housing, and I suppose provide some safe and secure situations for people to live in. So I guess what I am saying is, I guess what you are telling me is you think you have done a good job.
Mr. LIU. Congresswoman Waters, I think we have done what the program initiated in regards to both the demolition, but we would all agree, I think there is a consensus that a lot more has to be done to focus our energies in ensuring that the units that were promised need to be built. Less than 25,000 of the promised 85,000 units that were projected to be built under the program have been completed.
Ms. WATERS. So what are you being complimented on if your assistance has not resulted in the building of those units?
Mr. LIU. We have been complimented on the fact that we have tried mightily, working with many entities, that as you have pointed out, were not initially capable. These are one of the fundamental issues.
Page 17 PREV PAGE TOP OF DOC Ms. WATERS. Are you saying then that you have failed? That despite all your hard work and everything that you have done, you have just failed to be able to help the housing authorities get the job done?
Mr. LIU. One of the fundamental issues that we do have to examine here and which was I think raised by Chairman Ney, is whether or not public housing agencies are the only entity that should be involved in developing housing; whether or not in terms of HOPE VI, whether or not they are the only entity that should be considered to be grant recipients. Right now, many of them work with private developers under contract, but there are some opinions out there that perhaps a redevelopment program might work better working directly with other entities.
Ms. WATERS. Let me just say this, I think it has taken HUD too long, and I am not accusing any one Administration, because this crosses Administrations, has taken too long to come to the realization that, hey, something is wrong here. I mean, given the fact that you are now coming to that conclusion and you are moving in some ways to privatize and make sure that you have some loan guarantees by which to get some companies in there I guess who want to do this work and all of thatlet's agree that we can chew gum and walk at the same time. We do not have to stop and say, well, we just discovered we have not been doing such a good job; let's take another few years and do a study. Let's authorize this program, reauthorize it. Let's keep the money flowing. Get the private sector in there. I do not care. I understand what some of this is about. I do not necessarily agree with it all the time, but I get it. Let's get the private sector in there and let's keep moving so that we can do the demolition and we can do the building and the rehab or whatever it is it takes to get it done. That is not a question. That is just my opinion.
Thank you, Mr. Chairman.
Chairman NEY. The gentleman from Ohio, Mr. Tiberi?
Page 18 PREV PAGE TOP OF DOC Mr. TIBERI. Thank you for coming, Assistant Secretary Liu.
Back in 1989, I was volunteering in a project in what is currently my districtit was not my district at the timeand ended up actually starting a learning center with a teacher from the Columbus city schools. That project was a pretty horrible project. It was unbelievable in terms of, it would not have met building code at the time. That is how poor it was in terms of its shape. That was one of your HOPE VI projects that I would like to tell you is now done and completed and quite nice.
Having said that, however, and that would probably be consideredand there were three in the district that I represent that have been successfulat the time, that particular project when it was built was criticized by many in the community, and watch dogs around central Ohio, because of the cost of that particular project. In fact, an argument was made at the time, and off the top of my head I cannot remember the actual number, that you could have taken every resident that was being displaced and replaced back into the new facility, you could have taken each one of them and built a house for them at the cost under the HOPE VI program that it cost to rebuild this new facility, that was once called Windsor Terrace and then was renamed Rosewynne; again, very nice.
My question to you is with respect to the HOPE VI projects, because I certainly do not have the understanding that you have across the country with respect to HOPE VI, is there any concern internally that the criticism was somewhat legitimate? That you could have provided maybe homeownership to some folks, rather than rebuilding the unit in terms of these costs that were incurred to replace what was therewhich by the way, absolutely needed replaced?
Mr. LIU. Congressman, that is a very insightful question. The question of providing other opportunities in addition to rental housing as part of the concept of HOPE in housing is certainly one which in fact was envisioned by the original writers of the final report on the National Commission on Severely Distressed Public Housing. Until recently, we have not really seen more developments, more plans under HOPE VI which provides homeownership as a key component part of the HOPE VI plan. They have been more in a very smaller supportive role, and unfortunately many times to a great degree in market rate versus designed to work with various other subsidy programs and supportive programs to provide public housing residents with the opportunity or the chance to perhaps qualify. That is changing a bit around the country, but definitely it has been a concern of this Administration.
Page 19 PREV PAGE TOP OF DOC Mr. TIBERI. That the cost of these units just not only in Columbus but also throughout the country exceeded maybe expectations at the time, and that other opportunities to provide maybe even better housing, at what it was costing to provide this type of housing could have been done for the best interests of the residents?
Mr. LIU. One of the fundamental problems that has dogged the program has been the difficulty on the part of the applicants to project costs in a much more accurate fashion. Total development cost has been one of those.
Mr. TIBERI. I know the Housing Authority Director in Columbus believed it was a good program for Columbus, but there was criticism from the outside in terms of what the costs were. I have a little bit more time. I wanted to just touch on one other thing. Low-income tax credits has been in the news lately with respect to the issue of the dividend tax cut, what impact it would have on low-income tax credits; the impact of proposing this elimination. What would it mean to housing, in your opinion?
Mr. LIU. Congressman, we certainly will defer to Treasury for the Administration's formal statement on this issue, but I will point out from a personal standpoint, from history, at the outset the low-income housing tax credit program in fact was a program that was invested in mainly by small investors. It was only after some time evolved in the program did the large corporate investors get into the picture. So perhaps we are just at another point in evolution.
Mr. TIBERI. Well, I certainly thank you. It has certainly been a success in central Ohio.
Thank you, Mr. Chairman.
Chairman NEY. Thank you.
Mr. Scott from Georgia?
Mr. SCOTT. Thank you very much, Mr. Chairman, and Assistant Secretary Liu, thank you very much for coming.
Page 20 PREV PAGE TOP OF DOC I guess the nature of my question is sort of, where do we go from here? You have mentioned the issue of need, today's need in terms of an issue of whether we continue this. When Secretary Martinez was before the committee, I put some questions to him, and I was left with the impression that all hope is not lost to revitalize this whole program. On a visit that I had to the White House some time ago, I mentioned the question to President Bush. He said that discussions can still be forthcoming, but there are major, major concerns.
I would like us to start off from the premise that why we need to save this program; why we need to do it. I was very interested in the responses that you gave as to some of the reasons why you think it needs to go out. When you do a cost-benefit analysis, in this case I think we can safely say that the benefits of keeping the HOPE VI program intact and moving it with some changes, with some clarifications, I think we do need to address the issue that you raise of how we can move more quickly in the process.
I think also the issue of some of the displacement of some of the peopleare we creating more of a problemcan be addressed. But when you look at my city of Atlanta and you look at what has been done there, I would like for us to look at the success of what we have done therenot just Atlanta, but I represent Atlanta. There are some other placesBoston, Seattle, some of the other communitieswho I am sure have done equally well. Given the major need that we still have, wouldn't the more responsive thing to do, given the need for housing, given the success of this program, and as I pointed out to the President and to Secretary Martinez, this is indeed a Republican initiative. That is to be applauded, and we applaud it. It does all of those things. It brings about responsibility. It takes people from living in a mound of public dependency. It takes people who were once living that way and tearing down and demolishing those units that were basically for welfare recipients, and turning them into where people of mixed income can live and grow together. But the most important thing that it has done is it has stimulated those communities all around it.
Page 21 PREV PAGE TOP OF DOC In Atlanta, all around the Carver Village, which is in my community in my district, we have taken $44 million of federal tax dollars and we have converted that into almost $200 million by building shopping areas and revitalizing those communities. So I am not clear on the evidence, that we have enough evidence to justify doing away with this program. It seems to me that I think your biggest leg that you are standing on here is one which you mentioned, the cost per unit in comparison to your HOME block grant program; that it costsdid you say?about 33 percent more to build one of these units than that. Can we not try to find out why that is happening, and maybe address the specific issues within this program, and put things in the bill that would address those and not turn this program out? What is that difference, the 33 percent? Why does it cost that?
Mr. LIU. Congressman, some of the issues that you raise and which you pinpoint, and some of the issues related to cost, some of the issues related to timing and timeliness of these projects, go to some of the very premises of the HOPE VI program, which will require lots of debate. I have already mentioned one in regards to what are the proper entities in the community. In Atlanta, certainly the public housing agency appears to have been extremely successful. I have been there. I know Ms. Glover and I think there has been a lot of accolades rightfully so provided to your city and to your Administration there. But by far, Atlanta is the exception rather than the rulethe very rare exception. So I think a healthy debate on what entity should be involved in development has to take place, and that is a tremendously controversial subject. I would be the first to indicate that.
Whether or not we are in fact providing options to people, or the belief that they can move on beyond public housing, the jury is still out. The mixed income model works to the extent that we have dealt with where we have been able to build the units to provide better housing. But having we in fact provided people the encouragement to move beyond public housing once they have received those wonderful units? We do not know as yet.
Page 22 PREV PAGE TOP OF DOC Chairman NEY. The time has expired.
Mr. SCOTT. Alright, thank you.
Chairman NEY. Mr. Watt of North Carolina?
Mr. WATT. Thank you, Mr. Chairman.
You have indicated in your testimony that you think HOPE VI has served its purpose. I am wondering whether that means that there are no more severely distressed housing units throughout the country. Is that what that means?
Mr. LIU. Congressman, from the standpoint of what was identified in the national commission's report on severely distressed public housing, where they estimated 86,000 units, the fact that we have moved forward in a very deliberate process to review severely distressed housing over the past 10 years and we now are in the situation where I can state that we have demolished over 100,000 units
Mr. WATT. I know the numbers game. I guess the question I am asking is, are there still severely distressed public housing units in America? I cannot believe that HUD is saying that there are not any, if that is what you are saying, because I know in my own community there are public housing units that are boarded up. They cannot be lived in because they are so severely distressed. So I just cannot imagine that HUD is telling this committee that there are no severely distressed public housing units left in America.
Mr. LIU. As I mentioned, congressman, I think the definition, which I think your legislation and Congressman Leach's legislation attempts to deal with, and which others have commented on, is one of the fundamental issues that we have to ask ourselves.
Mr. WATT. There is really nothing in my legislation that deals with the issue of severely distressed public housing. My bill and Mr. Leach's bill address some of the concerns that have been raised about the Administrationfirst of all, the displacement of residents which we think ought to be made a high priority in the consideration of applications, the delays that have occurred in commencing and completing projects which we think should be addressed in the reauthorization of HOPE VI. I mean, we start from the presumption that there continue to be severely distressed public housing units. I guess the thing that I am a little distressed about is that HUD seems to now be saying that that is not the case. We can pursue that discussion.
Page 23 PREV PAGE TOP OF DOC Let me just talk about a couple of other things that you mentioned, and give you my perspective on them because I thinkand maybe we will get more information about these things. You talked about the time frames for completing these projects. My perception was always that it would take longer to build a community, which is what most of these HOPE VI projects have been about, than it takes to build a house, or it takes to build an apartment. If you were just going to tear down the existing distressed public housing and build back on the existing footprint, you could do that fairly quickly. But all of these things, it seems to me, take longer because you are buildingthe whole process of HOPE VI was to build community, not just housing, not low-income public housing. You were trying to build a community through HOPE VI.
The cost per unit, it seems to me, is just aunless you define it in some other wayif you take the cost of all that was done in Atlanta around rebuilding that community and you divided by the number of housing units, you are absolutely rightit is going to come out to something that is higher than building the public housing back there. The cost of building a community is higher than the cost of building a public housing unit, but that was the whole philosophy of HOPE VI in the first placenot to just build concentrations of blocks of housing that there that reallyyou know. So what I hear you saying is that HOPE VI has been maybe a victim of its own success. I thought some of the things that you are now describing as problems with HOPE VI were the very things that we set out to try to accomplish through HOPE VI.
So I know my time is up, but let me just make this point. I guess I am disappointed that today your position seems to be substantially different than the one Secretary Martinez was expressing. We now have had three different positions on this. We got the budget that says we are putting nothing in it for HOPE VI. Secretary Martinez came a couple of weeks later after that and said, well, we do not really intend to terminate HOPE VI; we just want to improve it. I said, well, okay, give us what you want to improve it with so we can start talking about it. And now today, I am hearing there are no more distressed housing units in America. We don't need the program. So you have got to figure out what it is you are saying at HUD and in this Administration before we can move forward, because those are three entirely different positions that we have heard.
Page 24 PREV PAGE TOP OF DOC Mr. TIBERI. The gentleman's time has expired.
Mr. WATT. Thank you, Mr. Chairman.
Mr. TIBERI. I would like to recognize Ms. Carson from Indiana.
Ms. CARSON. Thank you very much.
I do not want to be problematic because I realize you have very tough choices here. Understand that I come from Indianapolis, Indiana where we have the highest rate of home foreclosures in the country, the highest rate of bankruptcies in the country, and borders on the highest rates of unemployment. So I am up here trying to squeeze anything out of a bloodless turnip that I can, so I am sure you would respect that.
My question is, you want to move toward a more cost-effective process for HUD and public housing, so eliminating HOPE VI, eliminating the baby in the bathwater and the wife is one way you want to be more cost-effective. Does the Administration have its level of cost-effectiveness resources in the budget on the way to approval, and if so, at what amount? That is a difficult question, but I am not well today. I just cannot get this in my head.
Mr. LIU. Congresswoman Carson, I will point to the various tools, many of them which are not in the budget today because they do not have to be in the budget. We have our bond and debt financing tools which work with the capital fund in moving to work with cities, they work with the capital fund and our operating subsidies where we can leverage these dollars to produce bondsin Chicago, a $300 million bond last year alone. We have bonds in the pipelines, bond deals for one entity for $700 million. We have interesting loan proposals.
Ms. CARSON. Excuse my interruptionare you backing those bonds? Are we in some kind of crap game or what? Are you putting the resources behind the bonds that you are getting?
Mr. LIU. Yes, we are; yes, we are. Through our capital subsidy program, we are putting togetherwe have the resources needed and there is a process in place where we provide, with the housing agency, working with them, the debt service dollars which provide the comfort for Wall Street to issue these bonds.
Page 25 PREV PAGE TOP OF DOC Ms. CARSON. So instead of HOPE VI, you spend around behind the bonds, guarantee the bonds, work with the housing authorities who in turn will replace this in a way that you find feasible and appropriate?
Mr. LIU. Exactly.
Ms. CARSON. You see, I am easy to get along with, even though I do not agree with you. You know what I mean?
Mr. LIU. Understood.
Ms. CARSON. But I respect your position on this.
Thank you, Mr. Chairman. I yield backI am sure he is happythe rest of my time.
Mr. TIBERI. Thank you.
I would like to recognize Mr. Clay from Missouri.
Mr. CLAY. Thank you, Mr. Chairman. Let me also thank Ranking Member Waters for holding this hearing also, and thank you, Assistant Secretary, for being here.
Let me say that HOPE VI is a vital program of the housing umbrella that has the unique mandate of placing people of varying economic levels in the same community. I represent St. Louis, Missouri. We have a very successful HOPE VI project going there. I noted that you came down pretty hard in your testimony on public housing authorities. I assume that you intend to turn over their authority to the states through grants or block grants. Is that the way that HUD is going?
Mr. LIU. That is for the section 8 program, and our proposal on HANF, Congressman Clay, but that does not affect the public housing program. We are not proposing a block grant for the public housing program.
Mr. CLAY. How does HUD plan to replace demolished units?
Mr. LIU. Currently, for those housing agencies that have not been able to participate in the HOPE VI program, they get their capital fund subsidy on an annual basis. Through that capital fund subsidy, housing agencies today, whether or not they are part of the HOPE VI program, have some means to deal with the capital needs, backlog needs, revitalization needs in their public housing units.
Page 26 PREV PAGE TOP OF DOC Mr. CLAY. How well is that going as far as people that are displaced? Are there plans that will return them to the developed properties? If there are, how well is that going as far as placement?
Mr. LIU. Well, back to the HOPE VI program specifically, that has been one of the major criticisms which we recognize of the programthat there is displacement or there is concern about being able to be relocated back into those units. Let me clarify. The program does require today that the housing agencies provide a relocation plan, and every family is promised a voucher that they, working with the housing agency, can use in the interim while units are being built. Not all families take advantage of that, and there have been criticisms that not enough units have been built back on the footprint or on the sites that we are talking about. Of course, a number of years ago a federal law was passed which did away with the one-for-one replacement requirement, so that housing agencies and HUD and the states and the counties and the cities no longer have a requirement to replace one-for-one every single public housing unit which is demolished and planned for redevelopment.
Mr. CLAY. Wait a minute. Now, we are getting into philosophy here. Do you feel as though HUD has a responsibility to actually provide housing or decent affordable housing for those who are in need of housing?
Mr. LIU. Absolutely. That is HUD's mission.
Mr. CLAY. You still have that mission?
Mr. LIU. Absolutely.
Mr. CLAY. Okay. Let me ask you about the application process. You kind of talked about that in your testimony, about the PHAs having problems with that. We have many more applications than are processed each year. What do we do with the applications from the previous years?
Mr. LIU. Those applications which have been submitted and which have not been successful are considered unsuccessful applications and we have a level playing field each and every year as we move forward. The work they have done may be very good in terms of their experience for another application, or as a framework for them to proceed on their own redevelopment without the HOPE VI dollars in place.
Page 27 PREV PAGE TOP OF DOC Mr. CLAY. Okay. Thank you, Mr. Secretary. Let me say that since I have heard the criticism that there is a lack of resources, why wouldn't we stay with HOPE VI?
Mr. LIU. Congressman, as I have pointed out, when you step back from the minority of cases when there have been successes, the overwhelming majority of grants have not been completed. We still need to focus in HUD and the housing agencies which have that moneyit is going to be $3.5 billion by the end of fiscal year 2003to make sure that the promises made in those applications will come to fruition for the betterment of those communities, as well as the residents involved.
Mr. CLAY. Okay. So what happens in a community like St. Louis? Do we just nowdo we aggressively pursue high-density communities and make them all section 8 public housing? Is that where we are going with this?
Mr. LIU. Not at all. As I indicated, today separate and apart from HOPE VI there are many communities that are embarking on very aggressive revitalization of the public housing in surrounding communities, using the resources that they have not, without HOPE VI.
Mr. CLAY. How do we get the mixed income?
Mr. LIU. They are making them mixed-income. You can make them mixed-income.
Mr. CLAY. Is it working, do you think?
Mr. LIU. The jury is still out.
Mr. CLAY. Thank you, Mr. Chairman.
Mr. TIBERI. The gentleman's time has expired. Thank you.
Ms. Lee is up next.
Ms. LEE. Thank you, Mr. Chairman. I want to thank you and our ranking member and our Assistant Secretary for this hearing. Forgive me for being late. If I ask a question that has already been answered, I apologize. I will take your testimony, however, and read it very carefully.
Page 28 PREV PAGE TOP OF DOC I want to ask a couple of things. Well, all of us of course have benefitedour districts have benefited from HOPE VI. Just in my own area, I believe we have about $12.7 million in HOPE VI grants. But one thing that some of us are noticing is the Administration's focus more on homeownership as a priority. We all support homeownership and believe that that is the American way, but in doing that tend to undervalue and under-fund public housing. For example, there is no request, again, for HOPE VI in the budget. The drug elimination program has been completely forgotten, I guess, and we are trying to see how we can restore that. But the section 8 vouchers, you are going to block grant it, or are trying to block grant it to the States. With the desperate need of housing in this country, I would think that HOPE VI and the drug elimination program, section 8 should be increased and accelerated, and even presented to our constituents in the country as a priority, when really it looks like there is a retrenchment on public housing. Could you comment on that just in the context of HOPE VI and what you just said about the funding? If I heard you correctly, you are saying that the grants have not all been executed. I would think that you want to make it work, the community groups want to make it work, public housing authorities in cities and counties and this committeeeveryone wants to make it work. So why isn't there more focused effort to make it work, rather than say it is not working, so we are not going to fund anymore?
Mr. LIU. Well, congresswoman, I think you have actually placed the emphasis exactly where we want to go, which is to use our resources over the next few years to ensure that the $3.5 billion for revitalization, which will be in the pipeline by the end of fiscal year 2003 or at least by the end of the calendar year 2003, be used, be managed, be leveraged, so that we can build those units; so that we can provide the supportive services; so that we can provide an array of options for public housing residents, rather than adding to the pipeline; adding to a program that still needs to meet all of its goals in every city across Americanot just in some cities, but in all of the cities where the actual dollars exist right now.
Page 29 PREV PAGE TOP OF DOC Ms. LEE. But you are saying $3.5 billion has not been spent?
Mr. LIU. By the end of this calendar year 2003, there will have been $3.5 billion not spent. As we speak right now, there is $3 billion in the pipeline.
Ms. LEE. Okay. Does that $3.5 billion, even if it is spent, meet the need in terms of affordable housing and in terms of those individuals and families that need this type of housing and public housing specifically?
Mr. LIU. Well, for HOPE VI, for the particular communities that are receiving the grants, we think that, and we hope that based on what has been provided to us in terms of the need, that yes, the dollars are there to provide what is planned by that housing agency in that city. Understand that it is hoped that this $3.5 billion will also leverage many more dollars of the private sector and other resources from other parts of government so that we are really talking literally in some instances, well as a whole we are probably talking hundreds of millions of dollars that will be flowed toward these various HOPE VI projects, without reauthorization in 2004.
Ms. LEE. So there is a loss ofwhat?$574 million from the program for this year, for 2004?
Mr. LIU. For 2003, it is $574 million for the overall program, and of course we are not proposing that the program be funded in 2004.
Ms. LEE. Okay. Why wouldn't you want it funded? Why wouldn't you want more communities to benefit from HOPE VI?
Mr. LIU. We believe that there are some fundamental issues as to, one, the definition of what is most severely distressed public housing. We have been criticized. The program has been criticized by advocates of the program, by resident groups, as well as those who oppose the program generally that today, versus 10 or 12 years ago, there is a difference as to what might be considered severely distressed housing, and that it should not be in the eye of the beholder. There should be clearer definitions. There should be a clearer consensus understanding. We agree that there needs to be debate on this fundamental issue.
Page 30 PREV PAGE TOP OF DOC Mr. TIBERI. The gentlelady's time has expired. I would like to remind all the panelists that they can submit written questions to HUD for responses, and I am sure you will respond and it will be reflected in the record as well.
I would like to thank Mr. Liu for taking time to testify today. I would like to remind everybody that we have a second panel that we are going to have seated. Again, thank you, Mr. Liu, for coming today. I will ask the second panel to make their way up to the table and I will introduce the second panel, and give everybody an opportunity to
Mr. WATT. Mr. Chairman, did Mr. Leach not have any questions?
Mr. TIBERI. Mr. Leach did not have any questions, but thank you for bringing that up. You have supporters out there, Mr. Leach. I am going to allow Mr. Leach also to introduce one of the panel members who is from the Hawkeye state.
Mr. LEACH. Would you like me to do that now, sir?
Mr. TIBERI. Sure.
Mr. LEACH. Mr. Chairman, first let me thank Mr. Liu for appearing, and simply, Mr. Secretary, to indicate that you are going to be followed by a State official from Iowa. So as distinguished as you are, you are going to be over-shadowed.
In any regard, Mr. Chairman, I would like to indicate that one of our next panelists is Mr. Tom Guzman from the State of Iowa. Tom represents the Iowa Department of Economic Development's Main Street Program. Tom is one of the leading experts in the country on Main Street-types of economic development. He has consulted on programs in Arkansas, California, Colorado, Connecticut, Illinois, Maine, Michigan, Mississippi, Missouri, New Mexico, New Hampshire, Ohio, Oklahoma, Oregon, South Dakota, Washington, and Wisconsin. I only stress this to note that rural America faces severe housing and economic development challenges, as well as urban; and secondly that Mr. Guzman is, from my perspective, the second leading authority in the world on this subject. I stress second, Tom, because 28 years ago when I was a young candidate for the Congress, I attended a series of meetings throughout my district seeking office, and there was a lady that often attended, similar Rotary's and Kiwanis', talking about Main Street as it was originally put together. My talking about a balanced budget did not seem to get anywhere. Her talking about Main Street did. So I promptly asked her to marry me, and I have become a long-term advocate of the Main Street program. I would hope that as this bill goes forward, people would recognize that there are parts and parcels of housing that do apply, and economic development that apply to communities under 30,000. The Iowa model, I think, is an impressive one.
Page 31 PREV PAGE TOP OF DOC Thank you for allowing me to introduce Mr. Guzmana first class individual and an expert on the particular subject.
Chairman NEY. I want to thank you.
The next panelistMr. Scott, do you have any additional comments about Rene Glover? Mr. Scott has made an introduction of the Executive Director of Atlanta Public Housing. We move on to Mr. Howard Husock. He is a research fellow at the Taubman Center for State and Local Government. He is also the director of the Case Program at the John F. Kennedy School of Government at Harvard University. He has published numerous articles, as well as books on housing and entrepreneurship.
Next is Kevin Marchman. He is the Executive Director of the National Organization of African Americans in Housing, a nonprofit organization here in Washington, D.C. He has over 24 years of experience in the public housing field, having served first as director of the HOPE VI program at HUD, and then as Assistant Secretary for the Office of Public and Indian Housing at HUD. Previously, Mr. Marchman was the Executive Director of the Denver Housing Authority. I want to welcome you to the committee.
Susan Popkin is a nationally recognized expert on public and assisted housing, with more than 15 years experience in researching issues related to housing in neighborhoods. Her work focuses on a wide range of issues related to housing and neighborhoods. Brian Tracey is a Senior Vice President and Community Development Market Executive for Bank of America here in Washington, D.C. Joan Walker Frasier is the chairperson of the Atlantic City Resident Advisory Board. She also serves as a State Delegate for the National Organization of Public Housing Residents, ENPHRONT. Ms. Frasier has been a resident of public housing for over 10 years. She is currently a resident at the Jeffries Towers, a public housing development in Atlantic City.
Last is Lisa Zukoff, who has been the Executive Director of the Wheeling West Virginia Housing Authority, my birthplace by the way, since 1997. Previously, she headed two other housing authorities. Ms. Zukoff has construction experience with rural rental housing projects and section 8 new construction projects.
Page 32 PREV PAGE TOP OF DOC Welcome. With that, we will begin with Joan Walker Frasier.
STATEMENT OF JOAN WALKER FRASIER, EXECUTIVE COMMITTEE MEMBER, JEFFRIES TOWER RESIDENTS ORGANIZATION, ATLANTIC CITY, NJ, AND ON BEHALF OF EVERYWHERE AND NOW PUBLIC HOUSING RESIDENTS ORGANIZING NATIONALLY TOGETHER (ENPHRONT)
Ms. FRASIER. Good afternoon. I am Joan Walker Frasier, State Delegate of the National Organization of Public Housing Residents, ENPHRONT. I am a public housing resident in Atlantic City, New Jersey, and an executive board member of the Jeffries Tower resident organization, and also an ENPHRONT State Delegate.
I want to first express ENPHRONT's strong position that there should not be any further reduction in the overall public housing appropriations account. Second, the HOME VI program should be re-funded and reauthorized. However, an authorized program can only be effective if comprehensive reforms are made. In lieu of a re-funded HOPE VI, appropriators should be urged to shift to the public housing capital fund any amount equal to the fiscal year 2003 HOPE VI appropriations. Furthermore, it is important to understand that a reformed HOPE VI can only work if Congress adequately funds the public housing capital and operating funds in order to prevent further deterioration of public housing stock. In reauthorizing HOPE VI, it is important that Congress align the program with the original goals and recommendations developed by the National Commission on Severely Distressed Public Housing. The commission's final report, among other things, emphasized that developments were to be revitalized and preserved through rehabilitation and replacement housing. The commission did not place heavy emphasis on demolition as a necessary activity to treat distressed properties. The commission also expressed support for replacing distressed public housing units with hard units that would be deeply subsidized.
Page 33 PREV PAGE TOP OF DOC ENPHRONT believes that another important step in reforming HOPE VI is to define concretely the terms ''severely distressed.'' The looseness and lack of consistency of the definition, along with the lack of reliable data on the condition of properties, has made it nearly impossible to identify with any certainty the number of properties that are truly distressed. We recommend that HUD be required to develop a clear definition of ''severely distressed'' that reflects the opinion of residents, activists, public housing agencies, and housing experts. The agency should also be required to create and maintain a list identifying properties that are severely distressed based upon the new definition.
The loss of public housing units under HOPE VI is another major area of concern. ENPHRONT strongly believes that the program should not result in the loss of hard units that are affordable and targeted to extremely low-income households. There are several ways to reform HOPE VI in order to address this. For instance, a reformed program should allow HOPE VI funds to be used in conjunction with project-based vouchers in order to facilitate the production of more hard replacement units. In addition, reform should remove all barriers to combining HUD funds.
ENPHRONT is also concerned about the large number of residents who do not return to revitalized communities. We believe that residents living in a property anytime in the one year period preceding submission of the HOPE VI application and who remain public housing residents or receive voucher assistance should have the right to live in units developed under HOPE VI. H.R. 1614 can address this concern by adding to the selection criteria and element that looks at the extent to which the plan demonstrates that all reasonable steps will be taken to ensure that the maximum number of existing residents will be offered a priority for and are encouraged to reoccupy dwelling units in the revitalized community.
Resident participation is another area where reform is needed. Existing HOPE VI requirements fail to ensure that residents are engaged in the HOPE VI process in any meaningful way. H.R. 1614 attempts to address this concern by requiring ongoing participation in the redevelopment process. However, other reforms are needed if resident participation is truly to be meaningful. First, the selection criteria section of H.R. 1614 should be amended to require that HUD evaluate the applications based on the extent of early and sustained involvement in the application process. Second, housing agencies should be required to provide to resident organizations funds to enable them to retain independent technical assistance.
Page 34 PREV PAGE TOP OF DOC I thank you for this opportunity to testify and I urge you to review my full written comments, and look forward to working with you in the near future. Thank you.
[The prepared statement of Joan Walker Frasier can be found on page 55 in the appendix.]
Chairman NEY. I want to thank you, Ms. Frasier, for your thoughtful testimony. We will review the entire piece of legislation. Thank you for coming to the U.S. Capitol.
Next, Ms. Renee Glover.
STATEMENT OF RENEE GLOVER, CHIEF EXECUTIVE OFFICER, ATLANTA PUBLIC HOUSING, AND PRESIDENT, COUNCIL OF LARGE PUBLIC HOUSING AUTHORITIES, WASHINGTON, DC
Ms. GLOVER. Thank you, Mr. Chairman, and Ranking Member Waters, and the outstanding congressman from Georgia, David Scott.
I want to put a little bit of perspective around this discussion, because quite frankly I think we are talking about some very, very serious issues. I believe, based on our experience in Atlanta, that the HOPE VI program is probably the most significant economic development program that has ever been done in this country. When I say that, you only have to look at the results, because we have a serious problem that is brewing in this country. We have inadvertently locked out too many Americans from the American dream. I will tell you in terms of getting to a description or definition of distressed public housing, you only need to look at the people. In Atlanta, in the large communities where we have not treated the communities with HOPE VI, we have familiesand this is the average incomeof $7,300 a year. That is not $17,000 that is not $70,000that is $7,300. In all of the public housing communities, there is a captive elementary school. Those schools are at the flat bottom of the state. Even in the Appalachian areas, these schools are terrible performers and we have a very high rate of truancy. So people are not being provided an opportunity to pursue the American dream. We have a disproportionate rate of crime because, quite frankly, people prey on a sense of hopelessness.
Page 35 PREV PAGE TOP OF DOC The question is, and I think this is what the Congress should look at, is if there are thoughtful solutions that can solve these problems and reconnect the families to the mainstream of America, because I think a fatal flaw that evolved over the years with the public housing program was taking the people out of the mainstream, because the biggest cost is re-integrating families into the mainstream. We have developed 11 mixed-income communities. What is a mixed-income community? A mixed-income community is a market-rate community that has an affordable resource seamlessly inside of it. If the affordable component is not seamless, then you end up with the NIMBY-ism and the other types of resistance that you have in the programs. But guess what? It is working. The most frequently asked question that we got back in 1996 after we developed the first community is, who is going to want to live next door to those people? Well, shame on us as a society for coming up with a policy that creates a people called ''those'' people. Those people are you and I, and but for the grace of God could we be living in the communities.
So if we can, with the same dollars, leverage those resources, leverage the know-how in the private sector, and create healthy communities with great schools, because I also want to let you know that we are working with the school system. Schools that were at the flat bottom are now exceeding performance in the state. What that all means is that environment matters. We do not want to leave any children behind, but if we have children living in horrible conditions, then I believe we can do better than that. I think that we absolutely must reauthorize the HOPE VI program. There is a lot of focus on it takes too long. Well, it took us 60 years to develop a policy over time that ended up isolating families. Segregation around income is just bad public policy.
So I want to come back to you with a few thoughts in terms of reauthorizing the program. We have got 60 years of evidence that proves without any debate or discussion that concentrating poverty is bad public policy. We want to blame the families who grow up in these situations that often attract preying individuals and poor schools and poor social services and what have you, and then we want to say, why aren't those families more successful? Well, those families are not more successful because they have been cut off from the American dream. I believe we are better than that. So let's stop concentrating poverty. But you cannot stop the concentration of poverty if the country is not prepared to make an investment in this program. That is what HOPE VI is. It is a thoughtful strategic investment that leverages private resources and that in fact creates a community of hope and excellence and most importantly, providing resources so families can be in the mainstream.
Page 36 PREV PAGE TOP OF DOC Secondly, we should leverage and work with the private sector and apply market principles. In every one of the distress public housing communities in a one-mile radius, there is total disinvestment around public housing communities. In fact, we use the term in Atlanta that these communities have become residential brownfields. Well, just like you have to make an investment to eliminate the brownfields effect of real estate, we have got to make an investment in terms of residential brownfields, because again as a country, we are better than that.
Chairman NEY. I don't want to cut you off, but the time has expired and we are trying to keep to the five minutes. I will let you summarize. It is very compelling testimony.
Ms. GLOVER. Thank you. A third recommendationthis needs to be comprehensive community building, and not re-building a program that was based on failed policy. The true weapons of mass destruction are hopelessness, a lack of strategic investment, leaving children and families behind, and locking them permanently out of the American dream. I believe that in the country, we have the political will and the corporate will to solve these problems. It works. We have proof that it works, and I urge this committee to be thoughtful about reauthorizing the Hope VI program.
[The prepared statement of Renee Glover can be found on page 61 in the appendix.]
Chairman NEY. Thank you for your testimony.
Page 37 PREV PAGE TOP OF DOCSTATEMENT OF THOMAS D. GUZMAN, DIRECTOR, IOWA DOWNTOWN RESOURCE CENTER, DES MOINES, IA
Mr. GUZMAN. Chairman Ney, thank you for the opportunity to visit with you. I would especially like to thank Congressman Leach for his invitation to have us come and talk, perhaps from a different angle on the HOPE VI initiative. I would again like to thank you for the opportunity for me to share some of my thoughts concerning the HOPE VI program, and the reauthorizing including the Small Community Mainstreet Rejuvenation and Housing Act of 2003.
Main Street Iowa is in its 18th year of providing technical assistance and capacity-building services to Iowa communities committed to improving the social, physical, economic and political values of their city centers. Through a lot of hard work from hundreds of community leaders across our State, Main Street Iowa today is recognized nationally as one of the most successful Main street models in the country. Because of their efforts, Iowa Main Street communities have received the Great American Main Street Award six times. It has only been awarded 40 times in the country, and six of those are within our great state of Iowa.
Iowa is a state of low population growth. Most of our counties and most of our communities actually experience population loss. Despite this trend, the 2000 census revealed that 74 percent of Iowa's Main Street communities, regardless of where they were located in the state, experienced population gains, which means that they are being allowed to thrive, not just survive, as many other small towns are in our country. The Main Street Approach (R) is a copyrighted and trademarked program of the National Trust for Historic Preservation. It is an economic development program within the context of historic preservation. Since the early 1980s, almost 2,000 communities nationally have utilized the Main Street Approach (R). It is successful because it sets high standards for communities to aspire to. Communities that consistently meet these standards are recognized as nationally certified Main Street communities. In Iowa, about 75 percent of our communities achieve this designation annually.
Page 38 PREV PAGE TOP OF DOC As part of the program, Main Street communities are required to track their incremental economic impact. Since 1986, Main Street Iowa communities have recorded the following impactsand you need to recall, this is a state with small communities and small populations. We have a net gain of over 2,300 business starts, expansion and relocations in our Main Street communities that employ over 6,500 people full time. Thousands of local citizens have invested over $363 million into downtown building rehabs, purchases and construction. What is really amazing is the private sector ratio, when you compare that to the state investment in operating the state Main Street program. Last fiscal year, for every dollar that the state invested in the state Main Street program, the private sector invested $131. Since we started the program in 1986, it is a 51 to 1 return. I am willing to bet that there are very few state or federal programs that can match that kind of excellent return.
In 2001, we built a partnership with the Federal Home Loan Bank and with the Iowa Finance Authority to create a new loan pool offering low-interest commercial loans to rehab upper floors, renovate old downtown buildings, and for new construction. Last month, we are pleased to say that we celebrated our first $1 million milestone. That may seem small to an awful lot of people, but all of these but one project that we funded were in towns under 12,000 in populationtruly small towns. However, access to capital for downtown development projects like upper-floor housing is always scarce. Federal programs do not seem to fit the needs of Iowa communities because they do not fit the criteria for eligible projects or the project minimums are just way too large. Talking about HOPE VI today just astounds me, at the amount of dollars that we are investing and what I could just think what those could do in smaller communities. Most of the federal programs are targeted for larger urban areas and offer little opportunity for utilization by rural America. We understand that the need is great in urban America. However, the needs of rural America are also great and should be addressed as well.
We must invest in the revitalization and rejuvenation of our smaller communities who have made the commitment to invest in themselves, Main Street communities. They have the organizational capacity necessary to efficiently utilize development tools. Making these tools available for Main Street communities under 30,000 just is smart business.
Page 39 PREV PAGE TOP OF DOC HOPE VI reauthorization is an excellent example of how we can fine-tune an existing legislative authorization and make it relevant and useable for America's smaller communities to address affordable housing. This reauthorization does not authorize new money for this partnership. It merely takes advantage of existing monies that could already be authorized. By including criteria, this could allow America's smaller communities to participate in providing affordable housing.
I want to admit that I am not an expert on HOPE VI. That is because it, as currently authorized, there is no opportunity for us to use it in our State. However, we need HOPE VI to be reauthorized. We need it to include language allowing small states like Iowa the opportunity to develop affordable housing for low-income families. I can truly visualize hotels, upper-floor apartments and economic vitality to communities as a result of this.
The signature of America is embedded in its smaller communities. Developing tools which assist in making them stronger, more livable communities is good for every state in our nation. By doing so, we strengthen the economic, physical, political and social health of our country, and that is a very good thing.
[The prepared statement of Thomas D. Guzman can be found on page 78 in the appendix.]
Ms. HARRIS. [Presiding.] Mr. Guzman, thanks so much for your testimony. The Main Street Programyou bring a whole different orientation to this. I had the opportunity to oversee those in Florida. They were extraordinary, so I thank you for your testimony and your quick summation.
Mr. Husock, thank you for being here. Welcome, from Harvard Kennedy School.
Page 40 PREV PAGE TOP OF DOC Mr. HUSOCK. I believe that the chairwoman is in fact an alumna of the Kennedy School.
Ms. HARRIS. Yes, I am an alumna.
STATEMENT OF 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. I am Howard Husock. I am Director of public policy case studies at the Kennedy School and I am a contributing editor to City Journal magazine, published by the Manhattan Institute of Policy Research, where most of my writing on housing issues has appeared.
I am testifying in favor of the Department of Housing and Urban Development's budget proposal for the HOPE VI program. I am not sureI might be the only one on this panel. There is no doubt that HOPE VI developments have replaced severely distressed housing and there is no doubt that they have provided homes which are better than their residents could otherwise have afforded. But beyond this superficial attractiveness, there are significant questions about HOPE VI which, especially at a time of budget constraint, ought to be taken seriously. I would like to frame some questions for the committee that I hope you will take seriously.
Question one, are we confident that over time HOPE VI projects will be well maintained? It is important to keep in mind that the developments which previously stood on HOPE VI sites, were also hailed when they were built as a great step forward. This was even true of the public housing high-rises now so thoroughly discredited. It is a lot easier to cut ribbons on new projects than to maintain those projects over time. Like other public housing before it, HOPE VI faces fundamental challenges because by design, many of its residents have low incomes and thus pay low rents. These developments will depend on a combination of market rents and public subsidies. Neither of these is an assured income stream. We must always wonder whether those managing subsidized housing in addition have the capacity and the competence to maintain it over time. Their track record in the mainnot every housing authority to be surebut in the main has not been reassuring. So before we spend millions more on additional HOPE VI developments, it is far from inappropriate to pause to see whether those built to date can indeed be well maintained.
Page 41 PREV PAGE TOP OF DOC Question two, will middle-income tenants choose to live and remain in HOPE VI developments? Just because a development has designated a number of units for middle-income tenants or owners is no assurance, especially in a period of declining rents and real estate prices when other options may be affordable, that they will move in. I have already been told by a HOPE VI developer in Chicago he doubts he can attract the requisite number of middle-income tenants for a planned development in the city's State Street corridor. This is a crucial question for a couple of reasons. Not only will the developments need income to ensure proper maintenance, but income mixture, as has been alluded to before, is a key part of the theory of HOPE VI. It is based on the belief that higher-income households will set good examples for those of lower income. If it proves difficult to attract or to retain higher-income households, the developments could quickly become new versions of the housing they replaced.
Question three, can we be sure that that HOPE VI social experiment will work? We have proceeded on the supposition that the presence of middle-income households will provide positive role models and generally improve the social fabric in HOPE VI projects, but we should keep in mind, this is a hypothesis. It is not a proven approach. Sociologists have long recognized that it is difficult for households of significantly divergent incomes to establish deep relationships. We cannot rule out the possibility that instead of higher income households serving as role models for those of lower income, that instead there will be friction between the two groups. We have already seen this happen when section 8 rent voucher households have moved into higher-income neighborhoods, most famously in the south suburbs of Chicago.
Question four, is new housing designated for those of very low income in keeping with our larger goals for American family structure? By designating significant number of HOPE VI units for those of very low income, we cannot flinch. We must acknowledge the fact that it is highly likely that many, many of these households will be single-parent households. Such households, after all, dominate existing public and otherwise subsidized housing. HUD figures show today 6 percent of public housing households have two parents and children as residents. Among public housing families with children in which the head of the household is not elderly, not disabled, take the out of the mix, 88 percent are headed by single parents. HOPE VI risks providing new units for single-parent households, which in contrast to our overall public assistance policy, will come with no time limit. We have to ask whether we are providing better housing for single-parent families than that which lower-income two-parent families can themselves afford, and are thereby sending a message inconsistent with our broader efforts to encourage the social stability and effective child-rearing which two-parent families in the aggregate provide.
Page 42 PREV PAGE TOP OF DOC Question five, is HOPE VI making the best use of the land on which the developments have or will be built? Engaging the cost, we should not confine ourselves to the cost of construction and Administration. We have to keep in mind there are other things you could do with that land. In Boston, for instance, the HOPE VI development in the city's Mission Hill section occupies a site adjacent to some of the best hospital and medical education facilities in the world. It is quite possible that had that land been put up for public bid, that other private or nonprofit use might have been made of it, boosting the city's economy and providing jobs for poor people and middle-class people alike. Should we assume that simply because public housing has occupied a particular site, that subsidized housing of some kind must always occupy that site in perpetuity. If we do so, we risk creating what I call a frozen city, one in which economic growth is more difficult to attain. Keep in mind, the public housing in New York City today occupies and acreage equivalent to 156 World Trade Center sites.
I would be less than candid were I not to concede I am skeptical, it is pretty clear, about the wisdom of the HOPE VI program. Still, I hope that those committed to improving our cities, and especially committed to improving the prospects for the poor, will understand the sincerity of the questions that I have tried to raise here. The fact that in my view the answers to all are very much in doubt makes the proposal to pause, at this point and take stock of the program, the right policy choice.
Thank you very much.
[The prepared statement of Howard Husock can be found on page 83 in the appendix.]
Ms. HARRIS. Thank you, Mr. Husock.
Our next speaker is Mr. Kevin Marchman. Welcome.
Page 43 PREV PAGE TOP OF DOC
STATEMENT OF KEVIN E. MARCHMAN, EXECUTIVE DIRECTOR, NATIONAL ORGANIZATION OF AFRICAN AMERICANS IN HOUSING, WASHINGTON, DC
Mr. MARCHMAN. Thank you. I am going to limit my remarks to just two issues this afternoon.
First, I want to review something that was said earlier today, and talk a little bit about the history of the HOPE VI office. I was fortunate enough to be recruited to HUD in 1994 to open up the HOPE VI office. Many people did not know it at the time, but we worked on two tracks. It was the HOPE VI office and also the office dealing with troubled housing agencies. In the first two years of HOPE VI, many of those grants went to housing authorities who had issues. It was our responsibility to work with those housing authorities as they began to run the grants.
In 1996, the HUD inspector general released a report saying that the HOPE VI office simply did not have enough controls, and that we should add controls to the program. We started the office with two people. I believe now there are up to 50. I mention all that in terms of the time that it takes in order to do these HOPE VI programs. It has expanded, there is no question about it, but expanded for one real good reason. When we opened up the office, in agreement with Congress, we wanted to go through the total transformation of public housing in this country. We were not interested in simply replacing projects. We were looking at communities. We were looking at homes, and not projects and not units.
The fact is, yes, the HOPE VI office and the HOPE VI program is perhaps the best program that HUD has had in the last 25 years to work with public housing. There is no question that what it replaced is farthe HOPE VI replaced a program that needed terrible, terrible changing. The fact is that the HOPE VI program looked at families, looked at communities, looked at economic development. And the fact is, if you look city from cityand I probably could name you 25HOPE VI has been a success in these cities. The cities that have issues have had issues in their Administration in any case, but even those are changing. I needed to make that clear.
Page 44 PREV PAGE TOP OF DOC I have had the opportunity to testify in front of the commission that set up the HOPE VI program some 10 years ago. We simply said, nothing less than total transformation is needed. It was not just about demolition of units. I have had the great fortune to run housing authorities throughout the country, in Denver and San Francisco and Chicago, New Orleans and Camden. When I was at HUD, I ran the program for four years and am now working with NOAAH, the National Organization of African Americans in Housingwe work with HUD in expanding opportunities for MBEs and WEs in the HOPE VI program. Flat-out experience tells me and it should tell you that the HOPE VI works and it needs to be reauthorized.
Thank you very much.
[The prepared statement of Kevin E. Marchman can be found on page 103 in the appendix.]
Ms. HARRIS. Thank you very much, Mr. Marchman.
Dr. Popkin, thank you for coming today to testify on the panel.
STATEMENT OF SUSAN J. POPKIN, URBAN INSTITUTE, WASHINGTON, DC
Ms. POPKIN. Thank you for inviting me to testify today on behalf of the reauthorization of the HOPE VI program.
The goals of HOPE VI are ambitious, seeking to address the physical problems of distressed public housing, while also improving the overall well-being of residents and promoting self-sufficiency. HOPE VI targeted some of the most beleaguered housing in this countrydilapidated public housing developments that had failed to deliver on the promise of decent housing for the poor. The problems HOPE VI seeks to address are among the most complex and difficult to solve.
Page 45 PREV PAGE TOP OF DOC My remarks today are based on findings from the Urban Institute's research on the impact of HOPE VI on original residents. Our findings indicate that the effects of the program on original residents have been mixed, but on balance the story is generally positive. Where HOPE VI has been implemented effectively, most former residents have clearly benefited. In these cases, residents have moved to lower-poverty neighborhoods and reported real differences in housing quality, safety and improvements in mental health and outlook. However, there are still concerns and evidence that some former residents are struggling in the private market, that relatively few have returned to the new developments, and that large numbers face barriers to making the transition out of dilapidated public housing and to self-sufficiency.
In my full testimony submitted today, I highlight three findings from our research. First, and most significant, many former residents moved and made significant improvements in their living conditions. These families are living in better housing and less-poor neighborhoods than their original HOPE VI developments. Second, residents are facing challenges. A substantial proportion of families are struggling to find and keep housing in the private market. Many face challenges in facing higher utility costs and dealing with individual landlords. In sites with tight rental markets or where demolition far outpaces the production of new units, many former residents have ended up in other distressed communities. Finally, a large number of households face serious challenges, including disability and mental health problems, which threaten their ability to make a successful transition to either new mixed-income housing developments or the private market.
These findings support the continuation of HOPE VI, but also highlight the need for reallocation plans that reflect local rental market realities, offer better relocation services that provide housing search assistance to encourage residents to consider moving to lower-poverty neighborhoods, address the needs of hard-to-house residents such as the disabled, large families, households with members with criminal records, and those with complex personal situations, provide enhanced community and supportive services that offer residents both pre-and post-move services and include tracking and monitoring of residents.
Page 46 PREV PAGE TOP OF DOC Adopting these guidelines has the potential to improve outcomes for the original residents of HOPE VI developments by offering the opportunity for public housing families to move to better housing and safer communitiesenvironments that can better serve the needs of these low-income families and help them to improve their life circumstances.
[The prepared statement of Susan J. Popkin can be found on page 108 in the appendix.]
Chairman NEY. [Presiding.] I want to thank the witness for her testimony.
STATEMENT OF BRIAN TRACEY, MARKET EXECUTIVE, BANK OF AMERICA ON BEHALF OF THE NATIONAL ASSOCIATION OF AFFORDABLE HOUSING LENDERS, WASHINGTON, DC
Mr. TRACEY. Yes, good afternoon Chairman Ney, Ranking Member Waters, members of the subcommittee. Thank you for this opportunity to testify both on behalf of Bank of America, as well as the National Association of Affordable Housing Lenders.
Community development at Bank of America works to help build stronger and healthier neighborhoods throughout this country. Our associates at Bank of America do that by developing real estate, providing financing, and making equity investments all in low-and moderate-income communities, using a variety of financial tools and programs and working with individuals, government, nonprofit organizations and businesses in these neighborhoods. One of those tools is the HOPE VI program.
Page 47 PREV PAGE TOP OF DOC Community development at Bank of America has been involved as a lender, investor, or developer in more than two dozen HOPE VI projects in such cities as Atlanta, Charlotte, Los Angeles, Nashville, Baltimore, Seattle, Chicago and Houston. Public grant funds largely to HOPE VI resources have been used to leverage private debt and equity capital, often in the form of low-income housing tax credits to transform existing public housing sites, revitalize the surrounding community, and importantly, improve the lives of public housing residents.
Bank of America's first HOPE VI project provides an overview of how we view the program. First Ward Place in Charlotte involved the comprehensive redevelopment of an uptown city neighborhood. More than 30 government agencies, community groups and private businesses came together to transform the former Earle Village, a crime-ridden, badly deteriorated public housing complex, into a mixed-income urban neighborhood containing public housing units, affordable and market-rate apartments, townhouses and for-sale single-family homes. First Ward Place now has important community services previously nonexistent in this community.
Funding for First Ward Place came from a broad base of local support, not only Bank of America and the housing authority, but also nonprofit organizations, as well as the city itself. Our goal, and importantly the community's goal, for First Ward Place was to create a strong neighborhood of skilled, employable and economically independent residents living in a safe, comfortable homes with room for people from all income levelshomes where all of us in this room would be comfortable. Importantly, the transformation of First Ward Place, made possible by the HOPE VI funding, has resulted in private capital flowing to areas adjacent to the community, creating a multiplier effect often overlooked in judging the success of HOPE VI developments.
While HOPE VI has been an invaluable tool for neighborhood redevelopment and affordable housing, additional resources are needed. The proposal to assist public housing authorities to take advantage of established private capital markets, moving certain public housing developments to project-based section 8 and making more effective use of other mainstream affordable housing and community development financing tools would seem to be a compelling new resource for sustainable preservation of affordable housing, but this should be viewed as a new resource, and not a replacement for the HOPE VI program. Bank of America and the other members of the National Association of Affordable Housing Lenders would welcome the opportunity to expand and deepen our role in the redevelopment of public housing in severely disinvested communities.
Page 48 PREV PAGE TOP OF DOC The implementation of any such proposal, such as the public housing reinvestment initiative, should build on existing established practice. Many lenders, including Bank of America, have significant experience in providing financing for properties with project-based section 8 vouchers. This experience can provide models for the implementation of any such new proposal.
Now, I touched in my written testimony on certain criticisms of the HOPE VI program, that being that progress is slow and is costly. While some of this criticism is valid, some is not. Initially, some public housing authorities may lack the experience to undertake real estate development work with private lenders, but one benefit of the HOPE VI program is the public-private partnership that is created by this program, which should ultimately result in the housing authority gaining real estate development skills. That is a benefit of this program. Also, many HOPE VI developments are complex by the very nature of the real estate itself, and would be slow to progress and expensive to develop regardless of the funding source. I think it is important that we distinguish the actual cause and effect for the cost and the degree of delay for these projects.
Finally, let me comment on just one other issuemanaging change in a HOPE VI neighborhood. Importantly, neighborhood goals are identified early in the HOPE VI process, with government and the community given a great amount of input and influence over the outcomes of the effort. While there may be some displacement, we view revitalization that leads to economically and ethnically diverse communities with a range of incomes as a favorable outcome, as long as safe and decent housing is available for those displaced. There must be room for everyone in the changed neighborhoods.
In summation, Bank of America and the National Association of Affordable Housing Lenders believe that HOPE VI is a valuable and effective tool for revitalization of low-and moderate-income neighborhoods, while improving the lives of public housing residents. Private capital will play a role in improving public housing, and those of us at Bank of America and the National Association of Affordable Housing Lenders do not stand dispassionately on the sidelines on these issues. Rather, we stand ready to bring the financial resources of our members to bear in these communities, but we need help. The poorest of the poor is such the government is still needed as a catalyst, helping to spark private investment. We believe that HOPE VI should continue to be one such spark.
Page 49 PREV PAGE TOP OF DOC Thank you for the opportunity to participate in this hearing and I would be glad to answer any questions at the conclusion of our panel. Thank you very much.
[The prepared statement of Brian Tracey can be found on page 120 in the appendix.]
Chairman NEY. I thank the gentleman for his testimony.
STATEMENT OF LISA B. ZUKOFF, EXECUTIVE DIRECTOR, WHEELING WEST VIRGINIA PUBLIC HOUSING AUTHORITY, ON BEHALF OF NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS, WASHINGTON, DC
Ms. ZUKOFF. Thank you, congressman. It is always nice to see a neighbor, Congressman Ney. Thanks, committee.
My name is Lisa Zukoff, and I represent a small housing authority in West Virginia. We have 600 public housing units and 400 vouchers. We undertook a grant application in 1998. We were not awarded the first year, and went back in 1999 and were awarded $17.1 million to renovate Grandview Manor and Lincoln Homes public housing developments, which totaled 328 units. To date as a 1999 grantee, we have completed phase one, 39 rental units, and are currently under construction with 23 homeownership units. I would like to mention that the three market-rate units in the homeownership phase have sold first.
I urge you to reauthorize the HOPE VI program. HOPE VI has undeniably and positively changed the face of Wheeling's public housing and the way our agency does business. It provides residents with housing choice and economic opportunity and helps stimulate the depressed economy of Wheeling. Managing the grant motivated my agency to reexamine its priorities and organization, and we established a new department in relocation and expanded our supportive service program, which also benefits our general public housing and housing voucher programs. We are now poised to become the affordable housing developer in our city. We also offer assistance to other agencies in our areas attempting to obtain HOPE VI grants.
Page 50 PREV PAGE TOP OF DOC Regarding the statutory changes in H.R. 1614, NAHRO believes that the statutory changes can be further enhanced, as noted in my written testimony. Along with a commitment to reauthorize the HOPE VI program must come a commitment to adequately fund the capital, operating and housing choice voucher programs that support HOPE VI and the residents served by public housing. NAHRO, which represents both public housing and community development interests, has considered the proposal thoughtfully, but we must point out that there are other funding sources available that small community have access to, and we cannot recommend using scarce public housing resources for non-public housing programs.
Relocation and resident choice in housing has become a big issue in HOPE VI. First, HUD applications require that residents that live in the complexes that are going to be revitalized through the HOPE VI program approve of the applications. Moving is difficult and creates anxiety in the community, and change is difficult for all of us. A major goal of the HOPE VI program is the de-concentration of poverty. This means that not everyone can come back, however all the residents are housed with a voucher or in other assisted housing units.
In relocation summary, the lack of affordable housing in this country is an issue which is greater in scope than the HOPE VI program. One can debate whether the units demolished under HOPE VI were viable or not, but the fact remains that there is an affordable housing crisis in America that affects renters, prospective homebuyers and homeowners alike. HOPE VI assists in providing quality affordable rental and homeownership housing, and the program should be continued.
Progress of Hope VII brought one of four volumes of our closing documents for phase one of our HOPE VI project. These properties have a lot of federal dollars and require due diligence. To give you an example, our tax credit closing required 170 documents just to close that phase of the mixed finance deal. So when you talk about taking a long time, this one book of four helps explain what it takes to close a mixed-finance deal. It is very complicated work. HUD has also dealt with this problem through their NOFA process by demanding readiness by those receiving their grant awards over the last several years in their NOFA process.
Page 51 PREV PAGE TOP OF DOC Leveraging private funds in the process of assembling an applicationthis is a timely effort. It took us over a year in advance to plan the application. Probably a minimum lead-time is needed for any city that has not been involved in development to get that work, just to meet with all the players involved. Also, we really would like the committee to look at planning grants that used to be involved in the HOPE VI process, for smaller agencies in communities that do not have the resources, to put the applications together. An average cost of putting a HOPE VI application together is about $200,000.
The public housing reinvestment initiative that was spoken of earlier and is part of the reauthorization billthis is a good tool for agencies that can make it work, but this does not provide the large infusion of cash needed to attract investments in public housing, nor is it financially feasible to use this approach for severely distressed public housing.
In conclusion, we would like you to please consider reauthorizing the program at a level of $625 million. Thank you very much for the opportunity to speak before the subcommittee today. My full written testimony is submitted for the record.
[The prepared statement of Lisa B. Zukoff can be found on page 125 in the appendix.]
Chairman NEY. I want to thank everyone for their testimony.
I just wanted to follow up, Lisa, with the $200,000 that it costs to get an award of
Ms. ZUKOFF. $17.1 million. The first application, it cost us $180,000.
Chairman NEY. Can you just elaborate a little bit? I am taking it from the angle because I am familiar with you, obviously, we know each other, and as a small public housing authority in a small community.
Page 52 PREV PAGE TOP OF DOC Ms. ZUKOFF. We actually had to use our operating reserves to actually help pay for that application, but our board felt very strongly that it was needed. You have to pay for an extensive market study. Usually if you do not have a development background, we had to hire a consultant to assist us. We had to hire urban planners. Your construction costs have to be cost-certified by accounting folks who deal with construction. It is very expensive.
The second year, we gleaned a lot of experience from the first year and we only had about $60,000 in the application. We wrote the application ourselves, but we did indeed have to update our market study, have our urban planners involved, and have the cost certifications. So that was bare-bones with $60,000.
Chairman NEY. Do you utilize Bel-o-mar at all in this?
Ms. ZUKOFF. Yes.
Chairman NEY. You do. The other question I want to ask you, then, knowing the cost, should it just be public housing authorities that are involved with the HOPE VI or should we find a way that other entities can be involved to help complement or to help public housing authorities?
Ms. ZUKOFF. Well, I think it is a partnership. There are obviously other entities involved with our agencythe city and different organizationswe have 30 memorandums of agreement with other service agencies within our city that help with our HOPE VI grant. I think there needs to be a way for smaller communities. Our city population is 30,000. Obviously, there are much more rural and smaller communities that can benefit by such a program. But I really would hate to see public housing funds go out of the public housing program. So I think, yes, there is a need, and should we find a way to work them inabsolutely.
Chairman NEY. Which gets to the other point of my question, which would be, should we attempt to changeand I stress the word ''partnership''attempt to change the partnerships with the public housing authorities? In other words, if it is tough for the especially smaller public housing authorities, should there be any type of change where we create new partners to work with public housing authorities? Is there something we can do to help the public housing authorities that would stay strictly within their domain?
Page 53 PREV PAGE TOP OF DOC Ms. ZUKOFF. I think we have been able to really grow as an agency as a result of HOPE VIlearning the process. It has been a partnership with state housing finance agencies. I think that we really just need to look for ways and avenues to train public housing folks to work with others. This is not a grant that was done strictly by the housing authority. We have many, many partners.
Chairman NEY. Okay, well then what is the advantage to continuing to use just public housing authorities?
Ms. ZUKOFF. It is the public housing resourcesthe dollars that we feel at this point they keep dwindling away, a little bit every year. Drug eliminationthe operating fund gets cut, we get less money because there was a mistake at HUD last year. I mean, we are dealing with all of these efforts. This money needs to stay within the public housing authorization side of the bill. I feel very strongly about that. So while I agree that there are other avenues for other folks to be involved in this partnership, let's find some other pot of money to do that work with.
Chairman NEY. Thank you.
The question I have for Susan Popkinyou state that many former residents made significant improvements in their living conditions. Was this success made independently or did the housing authority help to do the bridge in this transition?
Ms. POPKIN. It is a result of where they have ended up moving. Whether they have moved to a section 8 unit or a new development, this is residents' perceptions. They perceive that they are living in better housing. They particularly perceive that their new neighborhoods are much safer than where they started. That has had a clear impact on people's mental health and their overall outlook.
Chairman NEY. Would that be independent from the public housing authority?
Page 54 PREV PAGE TOP OF DOC Ms. POPKIN. This is where they were placed when they were relocated.
Chairman NEY. I want to thank you.
Our ranking member, Ms. Waters?
Ms. WATERS. Thank you very much.
Ms. Glover, I want to thank you for your very articulate and thoughtful testimony. I do not think that Mr. Husock heard you because he asked some questions that I think you had already addressed when you described that decent, safe housing and environments help to promote a lot of other good thingsa lot of hope and a lot of possibilities. But since he did not appear to hear you, I would like to just phrase the question so that you can help me with a response to him.
Do you believe, first of all, that HOPE VI is but a social experiment that provides housing for single parents on land that could better be utilized for other purposes? And that it will be housing that will be maintained anyway because the housing that would have been torn down was not well maintained and everybody knows it is going to go back the same way, and that it will not be housing that will attract mixed-income residents anyway because they do not really want to stay there. If they do, it will only be friction between the two groups. And won't we be sending a bad message to two-parent households that we are doing all of these things for single parents, and what does that say about our values? And in the final analysis, this won't be managed well, and perhaps there is a better way to think about doing this. Maybe we should not be doing this at all.
Could you help him respond in some way?
Ms. GLOVER. I would be delighted. First of all, going back to actual experience. It is interesting, when we first got started one of the most frequently asked questions was, who is going to want to live next door to those people? So the key and the success is creating true market-rate housing with an affordable component seamlessly inside of it, so that the affordable component does not overwhelm the market rate nature and quality of the community. Temporary poverty does not mean a lack of values. It is really creating a community of opportunity. The mixed income communities have maintained on average a 95 percent occupancy across the market-rate units, the tax credit assisted units, and the public housing units, in all of the 11 communities and by the way, even during the downturn in the economy. The great thing about it is that all of the families take great pride in these communities. Everyone is thrilled with the elimination of the public housing stigma.
Page 55 PREV PAGE TOP OF DOC Too often, we punish the assisted families for bad outcomes. Bad policy creates bad and unacceptable results. So what I am saying to the critics of the Hope VI program is that you really have to be on the ground to see what is going on, because we have seen some extraordinarily positive results coming out of the program. I would urge this committee that no federal dollars should be spent expecting positive outcomes and great expectations. The worst thing that you can do with any program is lower the expectations such that you expect no one to be successful. In our new mixed income coummunities the employment has increased by 400 percent. That is tangible. We have seen the incomes increase substantially and we are not talking about just running out the old crowd and bringing in a new crowd. We are talking about working with the families, but in a positive environment.
By the way, mixed-income communities is going back to some basics. I grew up in Jacksonville, Florida, and the communities were mixed-income communities at that point. I think it happened only in the late 1980s and 1990s that we started running to the suburbs to have houses line up with our perception of ourselves based on the incomes that we were earning. Mixed income communities have strengthened public schools, which are performing off the charts. We have had such tremendous results. I really urge this Committee to look at the testimony and also the supplement to the testimony which shows, by the way, that we have moved the real estate to an improved use by following market principles, and not creating a concentrated poverty situation which in fact devalued not only that piece of property, but the surrounding neighborhoods.
Ms. WATERS. I would like to ask Mr. Howard Husock, does that answer some of the questions that you raised with us? Does that help you at all?
Mr. HUSOCK. The question is going to be answered over time. Whether mixed-income developments are going to be sustainable as mixed-income developments, we do not know whether that is going to be proven over time. As for whether the impact on the surrounding areasdo we know that if a private commercial development had built it on that same site we would not have had similar positive effects on the surrounding areas? It is quite possible.
Page 56 PREV PAGE TOP OF DOC As far as the mixed-income question specifically, as I said, I have visited with developers of HOPE VI in Chicago who are concerned, doubtful that they will be able to attract higher income households to those new developments in the State Street corridor of Chicago. We do not know whether that is going to work out in the long run. And remember, if you go to somebody and you say, look, I am going to give you a new house. It is a better house than you could afford on the private market. It is a brand new development. It is kind of like, I am going to give you hamburger for 59 cents a pound. You are going to get a long line of people at first. Let's see how those developments stand up over time, and whether those households will remain. Sure, they will come for the good deal. Will they stay? Because communities maintain themselves over time.
Ms. WATERS. What would your alternative be for helping to revive safe, secure housing and environments for poor people? How would you do it?
Mr. HUSOCK. I think we need to take advantage of the existing stock of public housing, and to deploy it in a different way. This really diverges from the theme of this panel, so I don't know if you want me to go off that way.
Ms. WATERS. Yes, I am asking you. I want you to go off.
Mr. HUSOCK. We have a large number of public housing units already in this country. I think we ought to make use of that resource as a time-limited resource. In other words, as people move in, say this is temporary assistance to needy families, just as we do with public assistance.
Ms. WATERS. Say, give them a year or two, and then say you are out of here, you have to get out?
Mr. HUSOCK. I believe the public welfare law is a longer period of time than that. I was suggesting it might be longer than that.
Page 57 PREV PAGE TOP OF DOC Ms. WATERS. Oh, three years, four years, five yearssomething like that?
Mr. HUSOCK. Five years might be
Ms. WATERS. Without regard to
Mr. HUSOCK. Since you suggested it, five years seems like a good figure.
Ms. WATERS. What if the income has not changed?
Mr. HUSOCK. Well, as you know, before the Welfare Reform Act of 1996, there was great concern that it was going to lead to homelessness, based on the premise that if everything stays the same, conditions are going to be terrible. Why do we want to be that pessimistic?
Ms. WATERS. No, that is not what I asked. I asked what was your alternative for providing housing for poor peoplesafe housing, better environments? And if you believe that you provide it for a limited period of time, be it two years or three years or four years, my follow up question was, what if the income has not changed? What if five years after or three years after they are into the housing that may be subsidized or public housing, they work every day, they do the very best they can, but not only did the income not change, but they lost their health benefits and on and on and on. What would you do for that family?
Mr. HUSOCK. I think the emphasis ought to be on encouraging the path towards self-sufficiency during that interim. I do not really want to speculate about a pessimistic scenario in which people are not going to, and in which we will not trust people to improve their prospects.
Ms. WATERS. You don't want to talk about pessimism?
Mr. HUSOCK. I believe in their capacity to make life changes that will improve their prospects and I hope that that would be the outcome. I would be interested in knowing, for instance, in the Atlanta situation how many of the HOPE VI tenants have graduated from HOPE VI? How many of them said, well, this is a great apartment; I would like to stay here. Or how many have graduated and moved out? Is that a goal, to move them out? If not, why not?
Page 58 PREV PAGE TOP OF DOC Ms. WATERS. The chairman has been very, very generous in the amount of time he has given us, and I would love for this discussion to go on, but we cannot do that. Let me just wrap it up by saying that my family lived in public housing for many years. I know this subject very, very wellnot from a theoretical Harvard point of view, but from a very personal point of view. I am a great defender of public housing and HOPE VI falls right in that category. So I am pleased that you are here today. I am not so sure what you came here to say. You raised some questions. I asked someone with great experience and knowledge to help you, but of course you dismiss the information that she shared with you, and began to wonder about what would happen 20 or 30 years from now. But I am glad that you are here. It keeps me focused. Thank you very much.
Chairman NEY. I want to thank the gentlelady.
I just want to make a point of observation, because I think this is very interesting. I think that you can have low-income individuals who have just as good focus and family values and are very good people, and maybe you are living next to somebody of a middle income that does not have the same good values. However, I think you have to realize the fact that if somebody is in a middle-income community, they are going to tend to have better services, better opportunity. So I am not sure that some of the middle income can learn some family values from some of the low income, but I think it is just a fact of life that if you are in a middle-income community, that middle-income community is going to tend to have better services, more access. I just think that is just a way of life. That is a personal observation.
Mr. SCOTT. Yes, thank you very much, Mr. Chairman.
I would like to ask a two-part question and stay on this for a moment. First of all, I just think it is very important, as Mr. Husock saidyou raise some points that we have to refute. The purpose of this hearing is of course to get and glean information. The other part of it is particularly for those of us who are sponsoring legislation to save HOPE VI. So when you come with your statements that ask hypothetical questions, they have to be answered, they have to be responded to.
Page 59 PREV PAGE TOP OF DOC I want to take your points, for example, over time. Over time means that within an amount of time we will come to a conclusion. What we are asking for in this extension of HOPE VI is to get the time to make those conclusions. In Atlanta, for example, we have had enough money to deal with maybe 13 projects in one phase or another, but there are 33 on the drawing boards. Each one of these cases have proven your point on a point-by-point basis. Will they be well-maintained? In Atlanta, we have one of our projects in a place called Eastlake Meadows. Eastlake Meadows was the site two years ago of the United States PGA Golf Classic, which was won by Tiger Woods. Because of where it was, it attracted international attention and comments on television about how well the project was maintained; how well it looked; the attractiveness of it.
Centennial Placeright in Centennial Center, right in the heart of where we had the Olympics; right next door to the headquarters of the Coca-Cola Company, the most famous image in the worldmixed income, being successful. And then you get to the point of the single-headed households of females, who are single-family heads. A part of the major purpose of this program is to take that very targeted group and give them hope, to sustain them. The program is doing its duty and its good.
Your other pointbest use of the land. Not only is it the best use of the land, but the land surrounding that area has increased in Atlanta to a value of over $2 billion in the worth of the land surrounding it, and has proven to be the most effective, valuable economic generators in the Atlanta community, and in some measures in the state.
The point that I am trying to make here is that we have got to discount every point that you have made. Ms. Glover from Atlanta has done an excellent job of that. That is not to be in any way disrespectful to you. I believe that your comments were probably made and certainly in fair interest, your points certainly needed to be raised, because it gives us a change to refute them point by point and build the case for this program.
Page 60 PREV PAGE TOP OF DOC So I wanted to do that, because we could not let those points go unanswered as we move. As you can see, from my distinguished colleague Mr. Watt's questions, we are getting mixed signals from the Administration. To me, when we get mixed signals from the Administration, that gives us hope, because they are not fixed in their position on this issue. So we are scrapping here to save a program, and we need the help to do that.
In that regard, let me go to you, Ms. Glover, if I may. We have legislation that as you can see from this committee has great broad bipartisan support. We feel very confident we can get that bill. Hopefully we can get it passed, hopefully we can turn the Administration around in its desire. We do feel confident, but there are some very serious issues that need to be corrected. We could use, and will be using the Atlanta situation as a model. The two primary concerns it appears to me that we have got to correct to build the momentum to revitalize HOPE VI is in the area of timeliness, the slowness with the process of trying to get these projects up and running, and the accountability of the money. The other area is in the cost, particularly comparative cost.
What suggestions would you give us, one, that would help our legislation to be responsive to this, and how would we deal with these two areas specifically?
Ms. GLOVER. Thank you for the question. In terms of timeliness of expenditure, we have to put this in context. The mixed-income model was not developed until 1996 when the first financial closing for the revitalization of Techwood/Clare Howell was approved by HUD. The grant was originally authorized and funded in 1992, so there was no legal, regulatory or financial ability to do mixed-income development until 1996. If you took a measurement of how long it has taken to redevelop the properties since 1996, you really are not talking about a long time frame. What HUD unfortunately has done is they are applying modernization timetables to a development process. We are not just going out to bid for new roofs and new building envelope systems. We are talking about, and the young lady has her huge bound volume, we are in fact engaged in a community-building process. There are tax credit schedules every year. For example, in the State of Georgia they come out once a year with an offering of low-income housing tax credits. There are no set-asides for public housing development, but the policy certainly supports it, but there are also limits on how many tax credits get awarded to any one deal.
Page 61 PREV PAGE TOP OF DOC Because we are doing market-rate development, there also is the question of absorption of units into the marketplace. You never want to flood the marketplace with too many units, because indeed you will not have the market-rate families. So I think if we can present to this committee a thoughtful analysis about the timeliness of obligation and expenditure, I think you will find that what is happening is that we are measuring it against the wrong benchmarks. Real estate development is fundamentally different than a modernization program I think if there are capacity issues, I think we need to be addressing those specifically, but we should not create the impression that there is a crisis here.
By the way, the pipeline issuethese dollars have already been committed to specific projects. So that is dealing with what is on the table, but it does not deal with all of the literally hundreds of projects that need funding to do a better job and to have a more positive impact on the families and the communities.
Chairman NEY. If I could, the time has expired. Let me get to Mr. Watt, and then if you want to come back.
Mr. WATT. Thank you, Mr. Chairman.
Let me just do several things. First of all, I think we would be remiss if we did not thank the chair for convening this hearing today. It has been an exceptionally good hearing. This panel in particular I think has shown us the wealth and breadth of opinions, problems, challenges and opportunities that are in front of us. I want to say to Ms. Frasier and Ms. Glover, despite the fact that I was out of the room when you testified, I was watching you in the back room. I just had to get something to eat, so I apologize to you. I thought both of your testimonies were outstanding. Ms. Frasier, you brought some very thoughtful things that a number of us have been exploring, of trying to figure out ways to make the HOPE VI program, if it does continue, a more effective program that does not end up displacing disproportionately or even displacing at all. I think there are communities in which a better job has been done on displacement and readiness and moving forward than other communities. We have seen that from this testimony.
Page 62 PREV PAGE TOP OF DOC This has just been a great panel, including Mr. Husock. I am not going to beat up on him, because I really think he raised some questions that need to be raised. They need to be raised in academia, where he sits, and he needs to keep raising these questions with the students, and we need to raise them here, but he needs to understand that these were the same questions that were raised 10 years ago at the inception of HOPE VI. We have been answering these questions over and over and over again throughout this process. His notion that they will be answered over time I think is a sound notion, because we are answering them over time.
Ms. Glover certainly has answered them in a comprehensive way in Atlanta. I hope that my friend Mr. Tracey will invite you to Charlotte to see the First Ward Place development so that you can see how the questions that you legitimately raised, that you ought to be raising in academia, have been anticipated and addressed in a real community. I was thinking about, one, you talked about these stresses that exist between low-income and higher-income people when you put them in the same community. We are answering that question, too. I remember, and Mr. Tracey probably can remember this, as soon as we got this wonderful community up and running, some of the upper-income residents wanted to close a sidewalk that ran through the community because the sidewalk went through this revitalized community over to the next, what I hope will be the next HOPE VI revitalization community. They did not want those people. Those people, they say, are walking through our neighborhood.
So there was a stress between the higher-income people in that community and the lower-income people in that community who had to do a reality check with those folks. They set them down in a meeting. It was a classic meeting, and they said, well, you know, this was our community before you all ever got here, first of all. But second of all, those people that you are talking about are us. We just happen to be your neighbors now. They are not bad people; they just happen to live in a public housing complex over here, just like we did before this HOPE VI revitalization.
Page 63 PREV PAGE TOP OF DOC Now, that is a creative tension that took place in that community. So I am not minimizing even your testimony, Mr. Husock. This has been a great panel to demonstrate how vital this program has been and how it has been used. I just wanted to finally, because I know the red light is on, I want to quote from HUD's February, 2000 report, since this is educating Mr. Husock day, in which HUD in February of 2000 found that the HOPE VI program represents the most dramatic change in public housing in the last 60 years and is transforming the nation's most distressed public housing projects. The report found, one, that HOPE VI is achieving its goals of community buildingnot just putting some houses therecommunity building. Two, HOPE VI is showing impressive results in helping residents move from welfare to work. Three, HOPE VI is helping residents move into the economic mainstream. Four, HOPE VI is dramatically reducing crime and violence in public housing. Five, HOPE VI is reducing the isolation of public housing residents. And six, HOPE VI is leveraging significant investments in community improvements.
Those are some of the questions that you asked that we have been addressing over the last 10 years under HOPE VI. It was not because we ignored the question you asked, they are important questions. We have tried to address them, but this notion that we should take a breatherthis ain't no breather that the president is talking about. This is a termination. It is an assassination of the program. It is not a breather. You will never resuscitate this program if you do not reauthorize it this time, because if it is ever terminated, it will not ever come back. So if you think this was about taking a breather, you obviously did not hear the first panel today. This is a termination of the programa program which coincidentally was a Republican program that was based on assumptions to every question that you raised which we have been answering for the last 10, now 11 years, and getting good positive answers to.
So I will leave that alone. I want to thank Mr. Guzman for being here. I think HUD was right. Mainstreet ain't got much to do with the original purpose of HOPE VI, but I am a big supporter of Mr. Leach and I am on his bill. If that is the price we have got to pay to keep HOPE VI going, I am all for it.
Page 64 PREV PAGE TOP OF DOC And then, I want to thank Ms. Waters and Mr. Leach and all the other members who have made this a truly bipartisan effort because this should not be partisan. This should be about building America's communities and building the hope of America. One of my colleagues said this is about keeping HOPE VI alive, not keeping hope alivekeep HOPE VI alive. So if we end this hearing today, we can just chant, ''Keep HOPE VI alive, keep HOPE VI alive.''
I yield back.
Chairman NEY. Thank you.
The gentlelady from California?
Ms. WATERS. Mr. Chairman, I just wanted to thank you, because I do not think the people out there realize that as the chair of this subcommittee, you did not have to hold this hearing, particularly when the Administration is sending you another kind of signal. So I am very pleased that you have held this meeting today and given all of these fine people an opportunity to come here and share with us their experiences, and to raise questions.
Mr. Watt is a little bit more generous in his praise than I tend to be, however, I am appreciative not aboutnot more generous in his praise about holding the hearing, but about some of the directions of some of our panelists. But I am very, very pleased that we have done this, despite the fact that the Administration has sent the signal of discontinuing the program.
I do believe there is hope for HOPE VI, and I do think that we need to do a little bit more research to help our position. For example, I really do want to know how much of that money is committed and in the pipeline, and whether or not money that is in the pipeline is being considered unspent as the case is being made for not reauthorizing this program. So I think following this hearing, we have the opportunity for our staffs to answer some of these questions through a little bit more work, and then we need to everything that we can to try and keep this program going.
Page 65 PREV PAGE TOP OF DOC Let me just say to Mr. Guzman that I have been talking with the chairman part of today about the need for rural housing, and I believe that we can have a great bipartisan effort with a real rural-urban renaissance, as I call it. I do think that many of the needs of the rural community have been unmet, un-thought about. There is a reason for that. Some of us come here knowing and understanding what our jobs are. We get called tax and spend liberals, whatever you want to call it, because we understand what the needs are and we have a lot of rural communities that are just not properly represented in terms of the poverty that those communities experience. I am hoping to develop a relationship with legislators who represent rural poverty who have not seen a need to really work and speak up on behalf of those communities. I think together we can do an awful lot.
Again, I want to thank the chairman because he has done a yeoman's job in helping to eliminate some of the issues related to HOPE VI. I am very pleased that you all came, and I thank you for your time and your effort.
Chairman NEY. I thank the gentlelady from California for her remarks.
The gentleman has a closing comment?
Mr. SCOTT. Yes, thank you very much.
I, too, would like to echo the words of compliments that were offered by my colleagues, especially for taking the time and coming up. It has been very, very helpful. This has been a very, very worthwhile meeting, and it has opened my eyes up to the enormity of the problem we are facing and the challenge ahead. I think those of you here realize that we do have this challenge ahead. We have got to save this program. Hundreds of thousands of people all across this country are counting on us to save this very worthwhile program. It is my hope that as the president and the Administration turns a great deal of its attention to domestic issues and what is happening here in this country, that they will begin to really focus on this program as one of the cornerstones of what we have got to do in the future to make this country what we want it to be.
Page 66 PREV PAGE TOP OF DOC There is nothing greater that we can do than to provide people with housing, a home. This is a process that we start. It is very important that we keep the trend moving of mixed income. It is very important that we build upon the successes that we have had. Certainly, Ms. Glover, you have certainly as all of you have done, but as we point to you, Ms. Glover, and we look at the success, let us hope that the Administration will look at the success of what we have done in Atlanta and other citiesin Los Angeles and North Carolina, in Miami, Pittsburgh. There are cities all across this country with sterling success stories, and let the successes rule the daynot the one or two areas of failure. You are going to have those areas, but we have got to build this country on success, not on failures.
Let us give it time to work, and let us put the measurements and the internal controls in to fix the problem. If the timeliness and the costliness is a problem, we can look to Atlanta to see how they did it and other cities, and make sure that we have this in this program. I am just delighted to be a part of working with both my colleagues Mr. Watt and Mr. Leach on their bills. I appreciate them giving me the opportunity to work on it. It is a very, very high priority with me, in no small measure because I know the economic, social and cultural impact and the positive thrust it has done in my home state of Georgia. Just as surely as it has done that in Georgia, done the right way, it can be that kind of success all across the nation. It has been said before, but there is no better way of saying it, let us not throw the baby out with the bath water. And as I said before, let's not cut somebody's legs off at the knees, and then condemn them for being a cripple. Let us save this program and let us let it be the shining light that this country is looking for.
Thank you, Mr. Ney. I appreciate this opportunity, and thank you all for coming and sharing with us.
Chairman NEY. I thank the members for their indulgence today and their time, and I want to thank all the witnesses for being here today. The chair notes that some members have additional questions for the panel which they can submit in writing. Without objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses and to place the response in the record.
Page 67 PREV PAGE TOP OF DOC Thank you.
[Whereupon, at 4:56 p.m., the subcommittee was adjourned.]