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HOUSING AFFORDABILITY
THURSDAY, JUNE 21, 2001
U.S. House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Financial Services,
Washington, DC.
The subcommittee met, pursuant to call, at 9:35 a.m. in room 2128, Rayburn House Office Building, Hon. Marge Roukema, [chairwoman of the subcommittee], presiding.
Present: Chairwoman Roukema; Representatives Green, Barr, Kelly, Miller, Grucci, Tiberi, Frank, Carson, Schakowsky, Jones, Capuano, Waters, Watt and Israel.
Chairwoman ROUKEMA. Thank you. I believe we will get started. I am hopeful there will be more Members here shortly. But I will call this hearing to order. The Subcommittee on Housing and Community Opportunity. This discussion will of course be the third in a continuing series on housing affordability. I will read an opening statement and then see if we have other opening statements from Members of the subcommittee.
I certainly thank all of you for being here today. This is the third, particularly for those panel members and those who are listening today in the audience—this is the third in a series of hearings that this Subcommittee has scheduled.
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Our first hearing on May the 3rd witnesses defined the parameters and the complexities of the problem and outlined some potential solutions. At least they gave us some idea of the problems. At the second hearing on May 22nd, our witnesses testified regarding the public-private initiatives that address housing affordability, which of course I believe that there is a good constituency in this Congress for exploring further public-private initiatives.
But in any case, we also want to work with community development block grants and home investment partnership programs, the so-called acronym of HOME. And I think those have lots of possibilities in developing and expanding home ownership and rental opportunities.
Today's hearing will focus on the underutilization of Section 8 vouchers as well as the specific problems faced by the homeless and disabled populations in finding affordable housing. And here I'd like to acknowledge, and I think Mr. Barney Frank will acknowledge as well, the fact that we had worked for numbers of years and certainly I worked closely with our deceased colleague, Bruce Vento, who was such a wonderful leader in this area.
This country is obviously facing a growing affordable housing crisis for low- and moderate-income families and for those with special needs. Through these hearings, I hope to better define the problems that are faced by many of our families and to determine solutions, if not solutions, at least improvements directing us down the correct path to build a foundation for reaching those solutions.
I would hope—and we shall see how realistic it is—I would hope that we could come up with a bipartisan approach to this, not that we'll all agree on everything, but at least we sometimes can agree to disagree and in the end have a bipartisan solution which is somewhat of a compromise that complements each other.
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The Section 8 program, as we all know, provides direct financial—I'm sorry, Federal housing assistance to low-income Americans and it serves more than three million Americans. The program provides subsidies in two forms: Tenant-based assistance, which is the Section 8 vouchers, and assistance to owners to develop and maintain Section 8 projects, those so-called project-based assistance.
The Section 8 voucher program provides vouchers to families to rent a residence in the private rental market. In certain communities, voucher underutilization is a significant problem and seems to be growing. Underutilization of vouchers has been attributed to various causes, including the tight rental market, poor performance of public housing authorities, and the targeting of a large percentage of voucher to very-low-income individuals, low Fair Market Rents, and the rent caps of 40 percent of adjusted monthly income. I think we're going to have to go through those in detail with our panelists.
But in any case, we don't pretend to understand fully why this has been—well, we understand why it's been a growing problem, but how we can positively and constructively address these different components, we shall look forward to hearing from this panel, particularly our first panel, and trust that their experience in the field will be more than just theory, but will be actual proven understandings of what happens in the field.
And so we will look for your suggestions to help us determine, with specificity I hope, how we can improve the voucher program.
The witnesses on the second panel will share with us information on the problems faced by the homeless and disabled in our country. I know that we are keenly aware of the growing homeless crisis facing this country and it is interesting that in some areas of the country it hasn't seemed as though it's a growing problem, but without question, across the country it is a growing problem, although not quite as serious I don't believe as when we first started down this route in the mid-1980s to correcting the problem.
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It is astonishing to note that according to some estimates, between 2.3 and 3 million people are homeless, at least some part of the year. It seems that there are chronically homeless of probably 200,000. It seems as though the reasons for these are the demolition of existing units and the neglect of public housing authorities and there doesn't seem to be the kind of upkeep that is necessary and the high cost of housing. The effect of a relatively good economy has been that there has been acute shortage of moderate to low-income housing and the dramatic rise in expensive housing.
Now the individuals that need housing are not only poor, as we will hear from the second panel, but they also suffer from some of the chronic health problems such as mental illness, alcoholism, drug abuse and/or HIV/AIDS problems. Secretary Martinez has signaled an interest in shifting responsibility for the care of the homeless with mental health substance abuse problems to HHS.
I don't know how realistic that is, but it has been out there as an idea, and I look forward to working both with Secretary Martinez and Secretary Thompson. By the way, I haven't yet discussed this with Secretary Thompson, but I fully intend to. But we look forward to working with both of those cabinet members determining the appropriate way to deliver the services so desperately needed.
Finally, I would like to take a moment to recognize the leadership of our Vice Chairman here, Mr. Mark Green. Last year, Congressman Green authorized a provision that was passed by Congress as part of the Lazio bill that would expand the Section 8 home ownership rule to make the program more accessible to people with disabilities. His provision—I won't go into it. Maybe he'll want to make reference to it in his opening statement, but his provision provided a 3-year pilot program for disabled individuals to use Section 8 housing.
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And yesterday, the President announced that HUD would be moving forward to implement Congressman Green's provision, and we were very happy to hear that.
In any case, we look forward to this hearing. There are no easy answers, but we will be looking for your advice and counsel based on your experiences in the field. And with that, I will turn to our distinguished Ranking Member, Congressman Barney Frank.
Mr. FRANK. Thank you, Madam Chairwoman.
Let me point out to the witnesses and others who are interested that while I can't say that hearings focusing on poor people ever have the drawing power than fights between extremely rich people grouped in various competing businesses, we sometimes do better than this. The problem is that we're on a new schedule in Congress. We don't have votes before 6:00 on Tuesday and then we have no votes after 6:00 on Thursday, which means that the days on which Members can come together when we have to interact have now shrunk to two. And this has caused a severe—I think people haven't fully understood this. We used to have three and even 4-day weeks. We now have 2-day weeks in terms of our ability to schedule things. And I regret that for a number of reasons. But one of them is it means that Members are unduly squeezed, and that's why fewer Members are now at these kind of important hearings.
This is a particularly important hearing. I'm especially pleased that we have the people who have the commitment and willingness to actually administer these programs. I think that the people who serve the country by administering housing programs in various ways are heroic. They have been doing a very difficult job in this society with too little resources. The resources have been shrinking, and I am glad that they are having a chance to speak, particularly since—and my fundamental difference that's emerged so far with the Secretary of HUD is his insistence that the problems with the Section 8 program are virtually exclusively the fault of poor management. He has specifically said that he just believes that a good management can deal with it and rules out other factors. I think that's quite wrong for a couple of reasons, and I'm glad we have people who will be able to address that.
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There were two substantive points I want to add. I notice just leafing through some of the testimony, people quite correctly say, well, if you were to do X then you would, within the current context, reduce Y. And that is true. If you accept the current budgetary allocation for housing as something that we can't change. And I realize if you're out in the field, yes. That's given to you. Then it is true, increasing fair market rents could mean a decrease in the number of people who benefit, and so forth.
What I think this demonstrates is the economic and moral insufficiency of the current housing budget. We all agree that we have serous housing problems. The gentlewoman from New Jersey just talked about our increasing homeless problems. Money doesn't solve everything. I understand that. But what I've noticed is when people denigrate the notion that we should increase funding for a particular program with the cliche, you can't solve a problem by throwing money at it, they are almost always talking about a problem with which they are not too concerned. I have heard very few people in this institution say that we cannot make America stronger by throwing money at the Pentagon. Indeed, when the budget process starts, if you get between the Congress and the Pentagon, you are likely to be hit by projectiles as the amounts in large degree are thrown at them.
In fact, money means resources, and resources are a necessary but not sufficient condition. Certainly it is true that if you spend money unwisely, you may not help the program nearly as much, although I did note quite correctly I think, it was in Mr. Olsen's testimony, he said look, if you've got a problem of an insufficient utilization rate on vouchers, if you increase the number of vouchers, you're going to increase the number that are used. I mean, the fact is, money always helps. It helps much more if it is used well.
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And so in the richest country in the history of the world, a society which has created wealth fortunately through our free enterprise system which has worked so well at a greater pace than any of us thought possible, it is simply morally unacceptable that we do so little to help people who are in need of basic housing.
And when we talk about helping children and leaving no child behind, we should understand that when you insufficiently fund public housing and other housing programs, wholly innocent children are among the major victims. They are the ones who are forced to live in inadequate conditions, and living in inadequate conditions and the tensions that are thereby generated contribute to the problems that we face when they show up at school to be educated.
Secondly and correlated to this, I want to make things work better, but I object very much to the double standard that we have. People say well, you know, everything would be fine with the money we have for housing if every housing program were administered perfectly by paragons of absolute virtue. I will admit that people who run the housing programs are not perfect. Neither am I, so I don't condemn them for that. But we have this notion where we hold people in the business of trying to help the very poor to a very high standard. And if, in fact, they fall short of perfection we say, see? It's their problem. We don't apply that to NASA. We don't apply that to the Pentagon. We certainly don't apply that to agricultural programs. Yes, when complex human problems are being addressed, people will do them imperfectly. But to use that as an excuse to insufficiently fund the program is unacceptable.
And I will just add as I began, in my experience, the people who have volunteered to work in public housing authorities, to administer public housing, to administer the Section 8 program, to work with people who need housing, are dedicated and intelligent people who do a very good job. And the notion that, because given this very hard job to do, they aren't always able to do it perfectly, is somehow a justification for reducing or holding back on resources is one I reject.
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I would say I think that the hearings that we have held so far—and I thank the gentlewoman from New Jersey, the Chair, for doing this—I have been impressed by the wide variety of people from various points of view who have said that we need to get into a production program and increase the resources available for housing while at the same time making the voucher program work better.
So I am glad to have this chance to have this hearing, because I think those are the points that need to be emphasized.
Chairwoman ROUKEMA. I thank my Ranking Member. Now in order in which they have arrived, do any of my colleagues have opening statements?
Vice Chairman, Mr. Mark Green.
Mr. GREEN. Thank you, Madam Chairwoman. Let me begin by thanking you for your kind remarks in your opening statement. I appreciate it very much. Also I would like to commend you for holding these hearings on housing affordability. You've demonstrated once again your great interest in finding ways to make housing more affordable, more accessible to people across the spectrum.
I think the hearings that we have had on housing affordability to date have been very productive. And I think along with the hearing today they will provide us with some good ideas, a good map for the direction in which we can move.
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You were kind enough to make reference to legislation which we passed last year designed to help people with disabilities better use Section 8 dollars for housing affordability. And I was very proud to have President Bush reference that just recently along with his signing of the Olmsted Executive Order which I believe will go a long way to helping people with disabilities.
I appreciate the remarks of the gentleman from Massachusetts when he talks about how we do need more resources in order to meet our housing challenges. I agree with that. But I also believe it is not just the resources that we provide. It is making sure that how we provide them is done so in a flexible way, in a way that makes sense and can be tailor made to the particular problems of the people we're trying to help. And that's part of what we did last session with respect to people with disabilities in housing.
Right now in the general population, about 70 percent of the general population has home ownership. And yet, as we've all discovered, that among people with disabilities of working age, that home ownership rate hovers around 5 percent. And so we tried last session to look at what the barriers are that prevent them from having that chance at the American Dream of home ownership and tried to make slight changes to the Section 8 program to do so.
So what I'm looking forward to working on under the leadership of our good Chairwoman in these coming months is not just making sure that the resources are there, because they must be there if we're going to meet our challenges, but also making sure that we think in an innovative and creative manner and take some of the programs that we have and adjust them and make them flexible so they can meet local needs and the needs of particularized sectors of the population.
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I think that there are some great changes that we can make, and I'm excited again about these hearings, and I'm very excited about the great panels we have lined up today. I believe it'll be an informative, productive hearing. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Thank you.
I will remind our Subcommittee Members that we have a 3-minute rule for opening statements and you will see the yellow light kind of warn you at the speakers' table, the panelists' table that your time is almost up.
Thank you. Mr. Watt, do you have a 3-minute opening statement?
Mr. WATT. Thank you, Madam Chairwoman. And I'll try to take less than 3 minutes.
I think I have made to everybody on the Subcommittee, probably not the panelists, but everybody on the Subcommittee is aware of my concerns about some of the problems that Section 8s are having in my congressional district. And the unique thing is that in some parts of my congressional district, Section 8 vouchers are working as they were intended to work and serving a very, very important purpose.
The problem is that we tend to think of Section 8 vouchers as being the greatest thing since sliced bread, and that they will solve all problems. And in some parts of my congressional district, they simply are not working. They are not working because demand is so much higher than supply that rents have been driven up well beyond the Section 8 voucher limits, and there's just no space available to use the Section 8 vouchers.
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They're not working in those parts of my district because what tends to happen is the Section 8 vouchers are used primarily in vulnerable, primarily African-American neighborhoods that themselves are in transition and the people coming out of public housing using Section 8 vouchers make the communities more vulnerable. In some parts of my congressional district, you can't use a Section 8 voucher in what is a ''white neighborhood.'' So Section 8 vouchers tend to further segregate an already segregated housing situation in parts of my congressional district.
So I'm anxious to get some good ideas about how we solve some of these problems and retain the value that Section 8 vouchers are having in lower demand, lower cost sections of my congressional district, but also solve the problems that they are presenting in the higher cost, higher demand parts of my congressional district.
And with that, Madam Chairwoman, I'm sorry I did take 3 minutes, but not much more. I yield back.
Chairwoman ROUKEMA. Thank you. We'll forgive you for that. Let me now call on—I'm calling on Members in the order in which they've arrived. Congressman Grucci. But may I also say I neglected to say at the beginning that the record will be kept open for all Members' opening statements to be inserted into the record if you so choose.
Congressman Grucci.
Mr. GRUCCI. Thank you, Madam Chairwoman. It's a pleasure to be here again and to listen to this panel. It's going to be very enlightening. Certainly affordable housing and access to it, whether it's affordable housing or affordable rentals, is a very important issue for all of us throughout the country, and specifically in the region that I come from, where the cost of living is higher and therefore the access to affordable housing becomes even more difficult, because sometimes they don't meet the parameters that have been set out as far as accessibility to the program goes. And I'm hoping that we'll hear a little bit about that today.
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And one of the things about our Section 8 program that I remember from being a supervisor of a town that administers the program is simply the enormous waiting lists of people who need the help and the limited amount of help that's available to those Section 8 programs. And I'm encouraged by this panel, and I see some of them are prepared to talk about that today.
So I look forward to the discussion. I'm going to have to step out of the hearing for a short period of time. Unfortunately, there is a scheduled Science Committee hearing that I'm a Member of as well, and I'd like to hear the briefing from the Secretary of Energy on the energy problems, but I will be back, Madam Chairwoman, and I thank you for giving me this opportunity to speak this morning. And I yield back the remainder of my time.
Chairwoman ROUKEMA. Thank you very much.
Mr. Israel, Congressman.
Mr. ISRAEL. Thank you, Madam Chairwoman. I would like to submit into the record a series of Newsday articles that appeared this week on the issue of homelessness and children on Long Island.
Mr. ISRAEL. I'd like the subcommittee to note that there are nearly 1,500 homeless children in Nassau and Suffolk Counties, 1,100 in Suffolk County alone. Over the past 4 years, Nassau and Suffolk social services departments recorded a 93 percent increase in the number of homeless children.
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As we continue to look at housing affordability issues, we must look at the devastating impact that this crisis is having on our children and our families. Because fair market rent on Long Island for a two-bedroom apartment is $1,200 a month, a family would need to earn an annual income of $46,000 a year or more than four times the minimum wage to meet their rental costs. Many people just can't afford their rent, causing immediately homelessness with many living day-to-day out of motels.
I thank the subcommittee, the Chairwoman and the Ranking Member for exploring these issues, and I look forward to hearing today's testimony. And I yield back.
Chairwoman ROUKEMA. Thank you very much.
Congressman Miller.
Mr. MILLER. Thank you, Madam Chairwoman. I agree with Mr. Frank on one thing, that we are here a few days a week. But I'm also convinced that if we were here 7 days a week and just continued to talk about a problem rather than addressing the problem, it wouldn't make any difference at all, and all we tend to do is talk about the problem on the surface and yet never deal with the cause of the problem.
We talk about Section 8 vouchers, and that's good. There's a place for Section 8 vouchers. But many of the problems we have in housing are the result of Government red tape. Until we're willing to address that, nothing is going to change. Many problems in housing availability are related to the loss of property rights. I mean, courts have changed what the law really was intended to be on property rights where it's such that if a property owner is denied the use of his property, as long as there is some value left in the property, the court has ruled that that's not a taking. And if a property owner disagrees with that, it takes 8 years to get into Federal court for him to have his hearing, and most people can't even afford to get into Federal court.
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We need to consider issues of fish and wildlife that we've never addressed. We tend to focus on inner city housing and inner city housing is good and there is a need for it. But we also need to understand that property within inner cities is very expensive, and in most cases, to utilize property within inner cities takes redevelopment agencies to put tax dollars into it and Federal dollars also have to follow that in order to be able to build a product that individuals can live in within an inner city area that is affordable.
We have never attempted to address the concept—we've talked about it—that in order to have an affordable housing market, you have to have a move-up housing market. I mean, people have to have someplace to move to in order to be able to find housing that's affordable in some areas. And yet we have done nothing from the Federal perspective to reestablish the principles of property rights and enable builders who want to provide housing at affordable rates to be able to build those homes. But you can't have a situation where a property owner makes application with a tract map and he waits 8-, 10-, 12- or 15 years to get approval. And then we sit back and say ''why are houses so expensive to buy?''
And until we address the true cause of the lack of affordable housing and the crisis we face, we're never going to do anything except put Government bandaids over the problem and try to give Section 8 vouchers to put people in housing that they just can't afford without other than Federal help or local help from the redevelopment agencies. So Madam Chairwoman, I'm looking forward to getting to the day when we debate the real issues.
Mr. FRANK. Would the gentleman yield?
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Mr. MILLER. My time is up or I would.
Mr. FRANK. I doubt that.
Chairwoman ROUKEMA. That having been said, I think there will be a lot of time after the panel testifies for that continuing dialogue.
Mr. FRANK. The gentleman had 20 seconds left, I may note.
Chairwoman ROUKEMA. May I now call on Congresswoman Kelly.
Mrs. KELLY. Thank you very much. I appreciate the fact that we're holding the hearing today, and I appreciate the fact that the panel is willing to spend their time.
In my home county, the median price of a house is $412,000. That's up 32 percent from $313,000 in the first quarter of 1999. HUD has declared that a fair market rent in my home county for a two-bedroom apartment is $1,144. That's higher than New York City. As of February 8th, there are 13,207 people on the Section 8 waiting list, yet the county and communities aren't able to use all of their Section 8 vouchers because of a combination of a lack of available housing units and the inability of the Section 8 vouchers to cover the fair market rent for the area.
I can't help but feel frustrated when I think about that problem. We have a program in place with extra vouchers to assist families, and we have a very long list of families who have applied for the assistance, but they're not able to use it because they're priced out of the market. The dilemma poses a very real problem for the working poor and the businesses in my area.
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I have an article here from one of my local papers, the Journal News, from May 25th. I'm going to ask unanimous consent to have this made part of the record.
Mrs. KELLY. The headline of this article is, and I'm quoting: ''Housing Challenges Businesses.'' In the article, it quotes a real estate person as saying that housing prices deter some companies from even considering relocation in this county. The article goes into detail about the lack of affordable housing.
One of my foci today is to look at what else Congress could be able to do to strengthen existing programs that are having positive results in addressing the need for affordable housing and especially the need for veterans' affordable housing. With most legislation, I believe a balanced approach is necessary. I think we've got to continue to ensure that effective programs receive all the support they deserve. But I really do think we've got to make sure that those programs are focused in a more regional way.
I thank you very much, Madam Chairwoman, for holding this hearing and I yield back the balance of my time.
Chairwoman ROUKEMA. Thank you. I appreciate everyone has been quite cognizant of our time limitations here.
And now we are ready to hear from our first panel. I am going to introduce you each individually as it is your turn to testify, but I would like to remind you of the rules of engagement here. Your written statements will be made part of the record, your full written statements. But you will be recognized for a 5-minute summary of your testimony. And then of course there will be questions from our Members to the total panel after each one of you has testified.
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And with that as introduction, I would like to recognize Barbara Sard who has requested that she be the first to testify because she has another engagement. Barbara Sard is the Director of Housing Policy for the Center of Budget and Policy Priorities. The Center's housing work focuses primarily on the intersection of housing and welfare reform and the voucher program. Ms. Sard, you are an attorney, as I understand, and represent Greater Boston Legal Services.
Ms. SARD. That was my prior job.
Chairwoman ROUKEMA. So maybe you're acquainted with Mr. Frank here. All right.
Ms. SARD. He's my Congressman.
Chairwoman ROUKEMA. Thank you. Ms. Sard, you have the floor for 5 minutes.
STATEMENT OF BARBARA SARD, DIRECTOR, HOUSING POLICY, CENTER ON BUDGET AND POLICY PRIORITIES
Ms. SARD. Thank you very much. And thank you very much for holding this hearing. I think it is remarkable and encouraging that this subcommittee is looking into what can actually be done to improve the effectiveness of the voucher program rather than everyone just complaining about it.
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It is important to recognize that the increased difficulties that families are having in some areas, as many of you have addressed, in using vouchers, particularly in better neighborhoods, as Representative Watt mentioned, have a number of different causes that require a range of solutions. This is not a one-size-fits-all kind of problem or solution.
In some areas if one looked at the data, it looks like there are enough units that people with vouchers could afford so that vouchers should be able to be more effective. But the problem is that families are not able to find efficiently the units that are available or there are not enough owners who are willing to participate in the program. Owners in certain neighborhoods may hold their units out of the program for reasons that may have to do with how they think the program operates and in some cases for reasons that really may be a cover for racial or other discrimination.
In other areas, again, there are units, but they're too expensive. Many of you mentioned that there have been escalating prices, and the voucher program has not kept pace. And I will talk a little about what some of those rules are and what some of the solutions might be.
And in still other areas where there are such low vacancy rates that paying any amount for a voucher is not going to get someone a unit, we simply need to produce more housing, as some of you have mentioned.
My written testimony contains a wide range of proposals designed to address these four really quite different situations and many things HUD could do within the existing statutory framework. HUD may need a prod from this subcommittee. It may be important for the subcommittee to encourage HUD to take certain steps or to require them. Other measures can only be accomplished by some statutory changes.
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What I'd like to focus on in my few minutes remaining is to illustrate that the problems can be solved by making more housing available to poor families. It is not necessary to try to solve the problem by making families pay more when they use a voucher or by redirecting the program to serve higher income families. And I'm afraid that we didn't quite blow this chart up enough, but we've given each of you copies.
Chairwoman ROUKEMA. Yes. We each have them. Go ahead. Continue.
Ms. SARD. What I've done is develop an example based on the Trenton metropolitan area in New Jersey, which is the median cost area in terms of rents under HUD data for New Jersey. It has the fair market rent set at the 40th percentile. You'll hear some of my colleagues address that. For a two-bedroom unit, that fair market rent is $862 a month. You can see that a family making $13,000 a year—that is an extremely-low-income family—can rent a $900 unit under the program, though they have to pay a little more out-of-pocket than the standard 30 percent. They have to pay 34 percent of their income. But they are not allowed to rent the $1,000 unit because of the effect of what's called the 40 percent cap: that a family is not allowed to pay more when they first rent a unit than 40 percent of their adjusted income.
Now if the word ''adjusted'' in the statute were just changed to ''gross'' so that that rent cap was measured by gross income rather than adjusted, this $1,000 unit would be within the family's reach. And in general, more of those $900 units even would become available to families if agencies were able to do more to help families search and to bring more owners into the program.
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But, if the agency raised its payment standard to 110 percent—which is allowed under current law, but only about a third of the agencies are at 110 percent or more—then the $1,000 unit would be available to them, and even the $1,100 unit would come within their reach if the 40 percent cap was changed from adjusted to gross income.
Most significantly, if the law were changed or HUD policies were changed so that the agency could set its payment standard at 120 percent of FMR, all of these units would be available to this poor family. I'm about to run out of time, so I won't take you through the example with the family with double the income.
But if you look at Chart B, if the family has $26,000 of income instead of $13,000, it can reach a few more units. But the important point is, you don't have to go there. You can keep the program targeted at the families with the greatest housing needs if you give agencies the ability to increase the amount that is paid by a voucher. Thank you.
Chairwoman ROUKEMA. Thank you. Thank you very much. You made your point very directly and within the 5-minute time limit.
Our next panelist is Steve Renahan. Mr. Renahan has worked for the Housing Authority of the City of Los Angeles and he is testifying before us today in his capacity as the Vice President for Housing for the National Association of Housing and Redevelopment Officials. He has extensive experience with the national low-income housing issues as a member of the Crisis Task Force and the Housing Coalition Section 8 Task Force. Mr. Renahan.
STATEMENT OF STEVE RENAHAN, SECTION 8 DIRECTOR, HOUSING AUTHORITY OF THE CITY OF LOS ANGELES ON BEHALF OF THE NATIONAL ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS
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Mr. RENAHAN. Thank you, Madam Chairwoman.
Good morning. My name is Steve Renahan and I administer the Section 8 program in Los Angeles, California.
Chairwoman ROUKEMA. Excuse me. Could you speak a little closer to the microphone?
Mr. RENAHAN. We administer over 40,000 Section 8 vouchers in Los Angeles, California. I am testifying today in my capacity as the NAHRO Vice President for Housing. NAHRO members administer over 93 percent of housing vouchers in the country.
Thank you for this opportunity to offer our remarks regarding Section 8 utilization. Section 8 is a market program, and it needs to respond to market changes.
And I'd like to focus on two initiatives that would go a long way to achieving full utilization of Section 8 in the country.
First of all, we've been through a major change in Los Angeles in the rental market in just the last 3 years. Three years ago we had a 10 percent vacancy rate and Section 8 was very popular with landlords. Now we're down to a 3 percent vacancy rate, which means there are fewer units available, and landlords have a lot of other choices. What that's meant for Section 8 voucher holders is that 3 years ago, 90 percent of the families we issued vouchers to successfully used them. Now only 45 percent of the families we issue vouchers are able to access units and get a Section 8 subsidy.
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What has changed is not a lot of program rules, not the Administration, not the need of the voucher holders. What's changed is the market. And the program needs to respond to those market changes. Now fortunately, we do have examples of efforts that work. We administer a lot of special-purpose versions of Section 8. Section 8 vouchers for homeless families, for families whose children are in the foster care system and can be reunited, an after care program for persons with disabilities. And what we do with those programs is partner with non-profits and other Government agencies who can provide supportive services to help the families who receive those vouchers overcome the barriers to using those vouchers.
What the families will need will vary, and often it is landlord outreach and negotiation with landlords. We may need to do some credit repair. May need to motivate the family to keep searching even though they have heard no over and over and over again. We may need to help with security deposits, with moving expenses, with transportation, with child care while the family is searching.
What's needed will vary family to family, but what is clear is that it works. While the success rate on our regular Section 8 program where families don't have access to those kind of services is down to 45 percent, in our special programs where the families have the toughest barriers to overcome, our success rate remains close to 90 percent. So it is clear that when those kind of services are provided, Section 8 utilization, high utilization results.
Now NAHRO recommends that you don't need a new appropriation to fund those kinds of services. In instances where housing authorities are underutilized, that means that housing authorities have housing assistance payments money that they're not using because they're not fully utilized. If housing authorities who are operating at less than 100 percent utilization were allowed to convert some of that housing assistance payments money into services money, whether provided directly by the authority or in partnership with non-profits and faith-based organizations, you will see a major dramatic increase in Section 8 utilization, even in tough markets.
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But tough markets and rising markets are the areas where Section 8 utilization is the most difficult. And the fair market rent is crucial in making the Section 8 program work. The fair market rent is supposed to in most areas calculate the 40th percentile for non-luxury housing. It is a difficult calculation for HUD to do. I believe that in general what it does is calculate the 40th percentile on average for rental units in the area.
But voucher holders are not looking for an average rented unit. They're looking for a unit that's available for rental today. And in up markets what that means is that what the landlords are demanding for a unit will be far above what the average is for units in the market. And we've seen historically that the fair market rent changes that HUD publishes lag behind increasing markets.
So a simple, straightforward fix for this that NAHRO recommends is changing nationwide the calculation from the 40th percentile to the 50th percentile. That does not mean that the cost of every Section 8 voucher will go up. Housing authorities do a rent reasonableness test, a comparability test for every voucher contract we do so that we are not paying the landlord more than the landlord could get in the open market, and we will continue to do that. What that increase will do is allow voucher holders access to more units and allow the program to work better in changing markets.
Thank you for the opportunity to testify, and I welcome any questions.
Chairwoman ROUKEMA. Thank you very much, Mr. Renahan. I appreciate your compliance with the time limitations, and you've given us a number of things to think about.
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Now we have Mr. Roy Ziegler. As a Member from the State of New Jersey, since Mr. Ziegler is from the New Jersey Department of Community Affairs, I want to welcome him particularly here today.
Mr. Ziegler is the Assistant Director of the Division of Housing and Community Resources in the New Jersey Department of Community Affairs, and certainly he has a wealth of knowledge. With my own experience in the State of New Jersey, I know of his wealth of knowledge on this subject of Section 8 vouchers. Welcome, Mr. Ziegler.
STATEMENT OF ROY ZIEGLER, ASSISTANT DIRECTOR, NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, DIVISION OF HOUSING AND COMMUNITY RESOURCES ON BEHALF OF THE NATIONAL LEASED HOUSING ASSOCIATION
Mr. ZIEGLER. Thank you, Chairwoman Roukema. And good morning Ranking Member Frank and distinguished Members of the subcommittee. I really appreciate this opportunity to speak with you on behalf of the National Leased Housing Association today about the Section 8 housing voucher program.
My name is Roy Ziegler, and I am Vice President of the National Leased Housing Association and presently Assistant Director of the Division of Housing and Community Resources at the New Jersey Department of Community Affairs. I am accompanied today by NLHA counsel Charles Edson who is behind me.
The Section 8 voucher program is really a critical part of our overall housing policy for the country, and it allows low-income families the opportunity to use a portable subsidy to rent decent, safe and sanitary housing, either an apartment or a single-family home. And nationally over 1.5 million families are currently benefiting from this participation in the program.
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In New Jersey, our Department of Community Affairs administers 18,000 housing vouchers. Over the years, the Section 8 tenant-based programs have improved dramatically. We have had your assistance in consolidating regulations, removing barriers to landlord participation, and also adding flexibility to enable voucher holders to find apartments with the aid of the program, and also to use family self-sufficiency programs and home ownership opportunities recently to provide additional housing for families.
For example, in New Jersey, the Department of Community Affairs currently has 1,200 families in our family self-sufficiency program. Over half of those families have already obtained employment and have established escrow savings accounts totaling $3.2 million. An additional 150 families have already successfully completed that program, and astonishingly, 90 of those families have purchased their first time home buyer situations. They are currently owners of their own homes for the first time. What is remarkable about this is that with the aid of the self-sufficiency program, the Section 8 program and network agencies, half of those families were homeless when they entered the Section 8 program and are now homeowners.
NLHA's members really appreciate your interest, the interest in this Subcommittee in helping us to sustain and improve this voucher program. And we really are seeking high utilization rates and top rate efficient programs. But as has been mentioned earlier, there continue to be a number of barriers which we hope you can help us with.
PHAs and other administering agencies in many communities are faced with outpaced rents that Steve Renahan had mentioned earlier. As a result, there are more vouchers out there in some cases than there are landlords who are interested in accepting those vouchers. And consequently, many agencies have had to issue three or four vouchers to get one successful family placed in a Section 8 program anticipating turnbacks.
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Theoretically in reality, you can have 95 percent success rate in Section 8 as a program of utilization, but still have a 75 percent success rate overall in your program. And this is frustrating to families who are waiting for assistance. Not only frustrating for families, but it raises the cost of this program because it creates additional burdens and workload for PHA administrators.
You have already taken the important step of raising some of the rents in the country to the 50th percentile. What we are asking you to do is to really urge HUD to expand its 50th percentile authority to all the PMSAs in the Nation.
And Congress can also take steps to improve the ability of families to successfully use their vouchers by amending the statutory provisions of the payment standard.
Generally, PHAs set the payment standard at anywhere from 90 to 110 percent of the FMR. And we can go up to 110 percent of the FMR without HUD approval. What we are asking is the additional flexibility to do a statutory amendment here to allow administering PHAs to increase that 110 percent to 120 percent of the FMR that we currently have. This would significantly increase the number of units available in our communities.
Also the 40 percent cap has been mentioned, and I believe the 40 percent cap is another barrier to families in this Section 8 program. Take, for example, an elderly couple where one of them is deceased and the other remaining member suddenly has an incredible decrease in their annual income. That particular person would qualify for the Section 8 voucher, but under the 40 percent cap, if they are paying 41 percent of their income for rent. And after that income decreases, that family would not be eligible for Section 8.
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And as a result, try to explain to somebody who has been living in an apartment for many years that they can't afford this apartment because they are paying 41 or 42 percent of their income for rent with a voucher, then they lose their voucher and wind up paying 60 to 70 percent of their income for rent. Now this is really a barrier to many families in the program.
Also the 40 percent has been mentioned as far as the income. And our solution is to calculate the 40 percent using gross income instead of adjusted income, as Barbara Sard had said. This would also open a number of opportunities for families who cannot afford the program at the 40th percent rate.
The current fee structure for administering the agencies is often inadequate to allow intensive tenant counseling, landlord outreach, addressing special populations. All these things that could be done with the current administrative fees. Formerly HUD had allowed us a preliminary fee. And we are asking that HUD restore this preliminary fee to allow us to do counseling and referral to get families into a better market and to expand the landlord base.
This has been proven with the Regional Opportunity Counseling Program in New Jersey which with this counseling under the Regional Opportunity Counseling Program, our success rate has increased to 95 percent.
Thank you very much.
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Chairwoman BAKER. Thank you, Mr. Ziegler.
Now we have Mr. Michael Johnston, who is today testifying on behalf of the Council of Large Public Housing Authorities and is Director of the Cambridge Housing Authority Office of Leasing and Occupancy. He is an attorney and former CEO of a property management and real estate development company, and so you bring to this panel a little private sector understanding of the problems. I thank you very much for being here, and please adhere to the time limits. We are most anxious to hear you.
STATEMENT OF MICHAEL JOHNSTON, DIRECTOR OF LEASING AND OCCUPANCY, CAMBRIDGE, MASSACHUSETTS HOUSING AUTHORITY ON BEHALF OF THE COUNCIL OF LARGE PUBLIC HOUSING AUTHORITIES
Mr. JOHNSTON. Thank you, Madam Chairwoman, and I would like to thank the panel for having these hearings on behalf of us in the industry. I would like to thank also Congressman Frank for his remarks regarding public housing authorities in general and the support of our programs. It is much appreciated.
We, just like my colleagues here on this panel, are faced with the same problems. We have escalating rents. We have kind of a unique situation in the fact that we've recently lost rent control approximately 5 years ago. And our vacancy rate right now is about 2 percent. Individuals receiving Section 8 vouchers from our agency face the task of going out and trying to find units in a market where market rents right now average for a two-bedroom apartment approximately $1,800 a month.
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HUD defines in our area, as far as what they consider the Fair Market Rent, they define it in our area at $979. We have an exception rent from HUD. We can actually go to $1,175 for a two-bedroom apartment in the city of Cambridge. But obviously, $1,175 does not make to the $1,800 level. Our contention is that the 40th percentile, the numbers that HUD is currently using, are not real. Certainly 40 percent of the units that come on the market are not available to individuals at a rent of $979. We would agree that a move to the 50th percentile would be certainly needed. But beyond that, there needs to be a look at how these numbers are calculated. How is HUD coming up with the numbers, the actual number of the 40th percentile, the 50th percentile? Why is there a necessity to go to 110 or 120 percent? There needs to be some thought in how to come up with these numbers.
In the fall we have actually seen proposed new FMRs for this coming fall. In our area we are seeing about a 7 percent jump in Fair Market Rents. But when you factor in the fact that rising utility costs are going to eat up about half of that increase, we're really only going to see about a 3 percent increase in Fair Market Rents. And it's certainly not going to be enough to cover what we need in our area.
We are, as a high-performing housing authority, we're actually a participant in what's called the MTW deregulation demonstration program with HUD. And in this program, we're actually allowed to kind of redesign the program to try to make it work, to make it more flexible for our area to meet our local needs. We have worked very hard in the past couple of years to try to find out how to make this program work in our area.
We've actually surveyed landlords, we've surveyed participants. We've asked them, why did you find a unit? Why did you not find a unit? And the bottom line is, whether it's a landlord, whether it's a participant, the bottom line is Fair Market Rents. You're not paying enough for the units in todays' market. Flexibility, you need to be more flexible. You need to be less burdened with regulations and bureaucracy.
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We've tried to develop our program to rebuild our program to kind of cover some of this. In my written testimony we've covered some of these issues. But we actually have the ability to go over 120 percent of FMR when we need to. We still need to do rent reasonableness calculations, and we use this ability very sparingly. We do allow tenants to pay more than 40 percent of their income toward rent. And the rationale behind that is so that a family can preserve their current housing. We actually have situations where, because of the loss of rent control, families come to us paying 60 or 70 percent of their income to rent and after getting a voucher, it actually drops to 45 percent of their income to rent. But they can stay in their home. They can stay in their home where they've been for many years.
Just to sum up, as a Moving to Work authority, we found that the flexibility under that particular program has been very beneficial to us. In the past year we've actually added 108 new units onto our program through landlord retention and basically landlord outreach.
Thank you.
Chairwoman ROUKEMA. Thank you. Thank you very much.
Mr. Ed Olsen is the final panelist here today. Mr. Olsen is a Professor of Economics at the University of Virginia, but has an extensive background, bipartisan background I might note, in housing policy. During the Nixon Administration, Professor Olsen was an analyst at the Housing Policy Review Task Force, as I understand it, and led an investigation into Section 8 certificate program. But he also worked as a visiting scholar at HUD during the Carter Administration, and he helped to evaluate and review the Section 8 program.
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We welcome you, Mr. Olsen.
STATEMENT OF EDGAR OLSEN, PROFESSOR OF ECONOMICS, UNIVERSITY OF VIRGINIA, CHARLOTTESVILLE, VA
Mr. OLSEN. Thank you, Madam Chairwoman. I welcome this opportunity to talk with you and Members of your Subcommittee about housing voucher policy. I speak from the perspective of a taxpayer who wants to help low-income households, albeit a taxpayer who has spent the last 30 years studying the effects of low-income housing programs.
My oral testimony will focus on three questions: Should the policies for determining Fair Market Rents be changed? Should the current targeting of assistance to extremely-low-income households be modified? And what role should housing vouchers play in the system of housing subsidies?
Changing the policies for determining Fair Market Rents requiring 75 percent of vouchers to be targeted to households with extremely-low-income and limiting tenants to paying no more than 40 percent of their income on rent will affect voucher success rates and hence the workload of housing authorities. This may justify a change in the level of administrative fees.
However, if housing authorities respond appropriately to changes in the program's regulations by altering the extent to which they overissue vouchers, the changes will have no effect on voucher usage rates. The changes in regulations will also affect other important aspects of program performance, and these effects should be the primary bases for judging the desirability of changes.
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For example, increasing Fair Market Rents would reduce the number of households that could be served with a given budget. Since the available evidence indicates that Fair Market Rents are considerably higher than necessary to rent units meeting the program's standards, and 70 percent of households below the poverty line are not currently offered housing assistance, and more than a million of our poorest households are in seriously inadequate housing, homeless shelters or on the streets, we should not be considering changes in the Section 8 voucher program that reduce the number of recipients. Indeed, we should move in the opposite direction, namely, decrease Fair Market Rents and use the money saved to serve the poorest unassisted households.
If Congress decides to make more money available for housing assistance, and I am not at all averse to that, it should be used to provide additional vouchers rather than larger subsidies to current recipients.
In 1998, Congress required housing authorities to target 75 percent of vouchers to households with extremely-low-income. The available evidence suggests that this rule will increase the program's success rate. But even if this is not true in every locality, it will have no effect on the voucher usage rate if housing authorities respond appropriately. Since I favor focusing limited housing assistance on the poorest of the poor, I urge you to retain this provision or even strengthen it.
The most important evidence concerning housing vouchers relates to their role in a system of housing subsidies. Many argue that we should use a mix of vouchers and production programs to deliver housing subsidies to low-income households. Currently there are calls for a new HUD production program. The systematic evidence comparing the effects of different housing programs lends no support to this view or this proposal.
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Five major studies have estimated the cost-per-unit and the mean market rent of units provided by housing vouchers and certificates and important production programs, namely public housing, Section 236 and Section 8 new construction. They are unanimous in finding that housing certificates and vouchers provide equally desirable housing at a much lower total cost than any project-based assistance that has been studied.
We do not need production programs to increase the supply of units meeting minimum housing standards. The Experimental Housing Allowance Program demonstrated without any doubt that the supply of units meeting minimum housing standards can be increased rapidly by upgrading the existing stock even in tight markets. This happened without any rehabilitation grants to suppliers. It happened entirely in response to tenant-based assistance that required households to live in units meeting the program standards in order to receive the subsidy.
The available evidence also shows that housing vouchers enable us to move eligible households into adequate housing faster than any construction program under any market conditions. The consequences of using costly construction and substantial rehab programs has been that several million of the poorest households who could have been provided with adequate housing at an affordable rent with the money appropriated for housing assistance have continued to live in deplorable housing. We should learn from our past mistakes and not heed the call for a new HUD production program.
I appreciate the willingness of Members of the subcommittee to listen to the views of an ordinary taxpayer whose only interest in these matters is to see the tax revenues are effectively and efficiently used to help low-income households.
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Chairwoman ROUKEMA. All right. Thank you. Thank you, Mr. Olsen. You went to the subject that I had in mind, and I'm not quite sure whether or not we can get anyone else on the panel to either agree or disagree with what has been said here. But my point to the other panelists before you made the explicit assertion was how are we going to pay for this?
Now your assertion is that we really don't have to do this, raise these FMRs. You are stating that the units are there. I don't know where they would come from, but your implication is that if you upgrade existing stock. So I hear you. I don't know if you want to talk more about the production side of it or the existing stock for just a moment, and then I'll go on and ask our other panelists related questions.
Mr. OLSEN. One thing I can say about that relates to experience from the housing allowance experiment.
Chairwoman ROUKEMA. Excuse me. The what?
Mr. OLSEN. The Experimental Housing Allowance Program was conducted from the early 1970s to 1981. In current dollars, it cost a half a billion dollars. About 40 percent of that was for research. The program was an entitlement housing program operated in two moderate size metropolitan areas, the Green Bay area and the South Bend area. About 20 percent of the population in each of those areas was made eligible for the program and any eligible person who came in would get the subsidy. It was just like food stamps.
One of the reasons that we had these full-scale programs operating in two markets was to determine whether there would be a rent inflation from them. The answer is definitive: No. What did happen was that many units which were slightly below the standards were very rapidly upgraded to meet the standards. That's why even with low vacancy rate it works. You can get these units upgraded. Even under the current Section 8 program, about 30 percent of the people qualify in place, many of them by upgrading the units.
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Chairwoman ROUKEMA. Let me give you the opportunity for the permanent record to respond to my observation. You're referencing a time and place and a housing market that is very different from the existing housing market. But if you can substantiate that. We don't have any more time now. But please substantiate it and direct your data response to me.
Mr. OLSEN. Fine.
Chairwoman ROUKEMA. Will you do that?
Mr. OLSEN. You mean not now verbally, but in writing?
Chairwoman ROUKEMA. In writing, yes. Yes. Not only for my own information, but I will include it in the permanent record.
Mr. OLSEN. These two places were chosen to have different vacancy rates. One was 4 percent and one was 7 percent. So 4 percent is pretty low, but I'll do that.
Chairwoman ROUKEMA. All right.
Now I have questions for Mr. Renahan. I was very interested in your testimony, and certainly Mr. Ziegler. I don't know how you necessarily can substantiate your statements, but I hope you're right.
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What can we do or how do we get Mr. Martinez and our own budgeting process to give us the new appropriations which I believe would be necessary, Mr. Renahan? Or are you denying that there would be new appropriations necessary in order to meet the vacancy rate requirements under your testimony? I didn't hear any reference to the new costs involved.
Mr. RENAHAN. Madam Chairwoman, clearly there would be an increased cost when the Fair Market Rents are increased or if you use the approach that Barbara Sard proposed and giving housing authorities more flexibility to go to 120 percent of the 40th percentile. There would be a cost associated with that.
What I am suggesting is that the way to calculate that cost is not to take the percentage increase and multiply it by every Section 8 voucher in the country. Because that cost would occur only in those areas where the housing authority and tenants need access to those higher amounts in order to be able to successfully use their vouchers.
Even within the city of Los Angeles, that's not all of my voucher holders, it wouldn't even be most of my voucher holders. Because housing authorities do a rent reasonableness test, a comparability test before we enter into Section 8 contracts with landlords. And most of the contracts that we do on behalf of Section 8 voucher holders come in below the current payment standard. We need the increase to make it possible for more of our voucher holders to be able to move to lower poverty neighborhoods, to access units with a larger number of bedrooms and so forth.
Chairwoman ROUKEMA. Can you document that for the record? I mean in actual numbers and not just generalities, but with specificity.
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Mr. RENAHAN. I would be happy to document that.
Chairwoman ROUKEMA. And also you made a reference—and I guess my time is up, but you did make a reference and I want to acknowledge it if you have just a brief response—about how we can control these costs with partnerships with non-profits and faith-based. I don't think we've explored that nearly enough, and I would appreciate your experience in this and your recommendations in that regard.
Mr. RENAHAN. Well, what we've been able to do in Los Angeles is with limited numbers, been able to partner with non-profits that have other funding sources and are helping families with an array of needs and issues to use vouchers successfully. And it works. What we're suggesting is that without an additional appropriation, if housing authorities that are underutilized, which means they're not spending all the money they've been appropriated and are under contract with HUD to spend, to use a portion of the unused money to provide those kinds of services that are proven to work. And that alone without an additional appropriation——
Chairwoman ROUKEMA. Through the non-profits and the faith-based organizations?
Mr. RENAHAN. In Los Angeles we do it partly with non-profit and faith-based and partly directly with housing authority staff. So you would want to provide the flexibility for the local needs.
Chairwoman ROUKEMA. Any further information you can give us on that for the permanent record, please direct it to me and we will see to it that it gets in the record. Thank you very much.
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Mr. Frank.
Mr. FRANK. Mr. Olsen, you were talking about your opposition to production programs. I would assume that logic would lead us also then to end existing production programs?
Mr. OLSEN. Existing production programs?
Mr. FRANK. Yes. Should we stop funding Section 202 and repeal the Low Income Housing Tax Credit?
Mr. OLSEN. I think you should—when the term of the use agreement comes to an end on these various projects.
Mr. FRANK. No, I'm talking about building new ones.
Mr. OLSEN. Yes, we should stop funding them.
Mr. FRANK. So you would no longer fund the Section 202 housing for the elderly?
Mr. OLSEN. I don't think I've given that enough thought.
Mr. FRANK. Well, it seems to me you have.
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Mr. OLSEN. I'm not sure. It hasn't been studied carefully. That's what I'm telling you.
Mr. FRANK. But Mr. Olsen, here's the point. I mean, if production is not the answer, it just does not seem to me intellectually valid to say well, we shouldn't increase it. I mean, I don't understand where the logic is. We just happened by luck I guess to pick the right number. I mean, given your argument that it's much more expensive per unit to do production, it doesn't seem to me—it seems to me you have given that a lot of thought and that your conclusion has to be get rid of the Low Income Housing Tax Credit and stop the Section 202 production program. I mean, how can that not be the case?
Mr. OLSEN. Certainly, I agree that we should get rid of the Low Income Housing Tax Credit. Absolutely.
Mr. FRANK. I wasn't just asking you if you agree with me. I was asking you if you agree with you.
Mr. OLSEN. What?
Mr. FRANK. I was suggesting that you agree with you in being against the program. I'm not for that.
[Laughter.]
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Mr. OLSEN. Oh, OK.
Mr. FRANK. But you would abolish the Low Income Housing Tax Credit?
Mr. OLSEN. I would.
Mr. FRANK. OK. Now what about Section 202? How do you justify supporting an existing Section 202, which is a housing production program?
Mr. OLSEN. I'm just not quite sure how well the private sector would respond to housing disabled people.
Mr. FRANK. Oh, I'm sorry. So Section 202 is for the elderly, not disabled. You would abolish the Section 202 housing program?
Mr. OLSEN. No.
Mr. FRANK. OK, the disabled, I understand. All right.
Mr. OLSEN. The program for the elderly is now called 811.
Mr. FRANK. All right. Thank you. Last question. You mentioned the programs in South Bend and Green Bay. And you said the current cost would be half a billion. Would that be if you nationalized this and made it a national entitlement? I mean, I gather from what you said——
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Mr. OLSEN. I'm telling you if you take the cost of the experiment at the time and you increased it by the inflation that has occurred since——
Mr. FRANK. All right. That would be just for Green Bay and South Bend?
Mr. OLSEN. For those two cities.
Mr. FRANK. So it would cost a half-a-billion dollars a year for Green Bay and South Bend. If we, in fact, used that as the model for a national housing program and made it I gather an entitlement. You told me it was an entitlement if you lived in Green Bay or South Bend.
Mr. OLSEN. It was an entitlement, but for a much lower fraction of the population that are currently eligible for HUD assistance.
Mr. FRANK. But I thought you were saying——
Mr. OLSEN. It's the poorest 20 percent. Whereas, almost 40 percent of the population are currently eligible for HUD assistance.
Mr. FRANK. Your proposal is that housing policy, we get rid of the Low Income Housing Tax Credit, we get rid of housing for the elderly production, and we take this and make it an entitlement to that kind of help for the lowest 20 percent of the population. What would that cost roughly nationally right now? I might be for that.
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Mr. OLSEN. I don't know the answer to that.
Mr. FRANK. But it would cost a half a billion if you did it just in Green Bay and South Bend.
Mr. OLSEN. Well, 40 percent of that was for research. The rest of it was for allowance payments.
Mr. FRANK. So $300 million, it would cost us $300 million to do it for South Bend. It sounds like a great idea, but I——
[Further clarification on this matter from Mr. Olsen can be found on page xx in the appendix.]
Mr. FRANK. That's enough. I have to get to some other questions. But I am skeptical about its economic feasibility. Let me go now to the others. Secretary Martinez has been very clear that the problem with low utilization rate in Section 8 is you guys. What's your answer? I mean, he says it's not affordability, it's not the market situation. He said explicitly, a good housing authority can use all the Section 8's. He said that on the record. So are you guys not good housing authorities? What's your problem?
Mr. RENAHAN. The vast majority of housing authorities are well managed and well run. There are of course exceptions. There are a lot of housing authorities around the country, and there are some that need to do a little bit better administering their programs.
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I think the response that I would give is the Los Angeles experience that we've had in the last 3 years. The market has gone from a 10 percent vacancy rate to a 3 percent vacancy rate. That's had a devastating impact on the success rate of Section 8 voucher holders. We're the same administrators. I'm the same guy. The rules are essentially the same. What's changed is the market.
Mr. FRANK. That's a very good point. Let me ask Mr. Johnston now. You heard Mr. Olsen suggested the voucher program by itself without any production program will be not only able to house people, but will be an incentive for a significant upgrade in the quality of the housing stock. What's your experience in Cambridge, a pretty tight housing market, in terms of the incentive effect of offering people Section 8's?
Mr. JOHNSTON. Someone with a Section 8, they have a very difficult time in Cambridge obviously finding units.
Mr. FRANK. I'm talking about the owners. Have you found—because what Mr. Olsen said was that these Section 8s, properly administered, are a great incentive for improving the property.
Mr. JOHNSTON. It's a disincentive. I mean, the bottom line is that the Section 8 program is a regulated program. It requires things that are much different than a market rate tenant. If I went to a landlord and a Section 8 tenant went to a landlord, there's more of a disincentive to rent to the Section 8 tenant, simply because——
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Mr. FRANK. Should we do away with those things that are disincentives?
Mr. JOHNSTON. We're doing that in Cambridge. To answer your prior question, we are a high rated housing authority. Because of our rating, we actually became an MTW participant.
Mr. FRANK. Let me ask a question. Do you see a way that we could administer the Section 8 program? My problem is the Section 8 program is a year-by-year program. We don't have this kind of entitlement that we had in the thriving, teeming metropoli of South Bend and Green Bay, but we were in Boston and New York and Chicago and these similar municipalities. Would it be an incentive for people to upgrade their property if we gave them an annual contract for Section 8?
Mr. JOHNSTON. No.
Mr. FRANK. Thank you.
Chairwoman ROUKEMA. All right. Thank you. Mr. Little. I'm sorry. I'm sorry. Mr. Miller.
Mr. MILLER. I'll change my name, Madam Chairwoman. Thank you very much.
Chairwoman ROUKEMA. Sorry about that.
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Mr. MILLER. I want to clearly state that I am not opposed to the concept of Section 8 vouchers. I'm not opposed to the concept that some people need help in life, but we have a welfare system that deals with that. But I am absolutely opposed to creating any system that creates a situation where people have to rely on Government day after day, year after year, decade after decade to exist in this country. And that's the problem we have.
Ms. Sard, you stated that voucher assistance has not kept pace with housing costs. And then you said we need to produce more housing for poor families. And I'm going to come back to that. I want you to think about who ''we'' is and how production occurs.
Mr. Renahan, you talked of providing various expenses, moving expenses and many other options for people to help them to get into houses. And you stated that landlords demand more for rent than renters can afford, and you said that vouchers should be increased and you said that we are down to 3 percent vacancy in apartments in the L.A. Basin, which means we're 100 percent rented out, because 3 percent of 100 units is going to be recarpeted or refinished or painted or under repairs waiting for somebody else to move in while somebody moves out.
And Mr. Ziegler, you mentioned that there are more vouchers than landlords are accepting.
And my concern here is in the Los Angeles Basin area. We have created an environment in local government where we have allowed the concept of property rights to be usurped, allowed radical environmentalists to put pressure on local city council members by threatening them with recall, threatening to oppose them in their next election. Many city council members—and I have a lot of good friends who are on city councils—are afraid to approve housing projects in the community, because they're afraid they're going to be thrown out of office by a few people who create rumors and stories that are untrue about them in order to get them thrown out of office.
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We need to reinforce the principles of property rights in this Nation to generate new housing construction for people, and remove the pressure applied by radical environmentalists on people who are trying to address local needs by serving on city councils. Barney Frank and I agree on many things. I think he has the historical perspective that it's been tried in the past and he supported it in the past to enforce zoning rules and regulations and there wasn't support here in Congress to deal with it. And my frustration is more directed at us in our inability and unwillingness to do what's right to resolve this problem. And instead of doing that, we just increase Section 8 vouchers and try to get people by from day-to-day, rather than addressing the cause of the problem.
But Ms. Sard, you said we need to produce more housing. Who are ''we'' and who is doing the production?
Chairwoman ROUKEMA. Excuse me.
Mr. MILLER. Oh, she's gone now?
Chairwoman ROUKEMA. Yes.
Mr. MILLER. Mr. Renahan, you talked about the 3 percent vacancies and landlords demanding more rent than people can afford. What do you propose doing about it?
Mr. RENAHAN. Well, NAHRO does support a production program, because clearly there are markets in the country where there just aren't enough available units.
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Mr. MILLER. Do you not agree with the idea that the private sector is far more capable of producing reasonable, low-rent units than the Government is without subsidies?
Mr. RENAHAN. I believe the problem in high-cost areas is that it just doesn't pencil out for a private-sector developer to produce housing that's affordable for families working at or above minimum wage.
In Los Angeles, the wage that would be needed by a family to afford decent housing that's not overcrowded is $17 an hour. So that means that that family would need at least three full-time minimum wage earners in order to be able to afford an apartment without a subsidy.
Mr. MILLER. You're right. But I'll give you an example. I live in the city of Diamond Bar, California, and you know where that's at. People at church last Sunday came up to me and said they lived in the Daisy Apartments on Grand Avenue right up the street from the church and their rent is being increased to $1,200, and just a few years ago it was $800. And the reason for the increase in their rent is there is not an apartment being built in our area, because nobody will approve the construction of new rental units.
And no matter what we do, no matter how we increase the Section 8 vouchers, no matter how much we make people more reliant on Government to have a place to live, until we address the core problem that we're facing, and that's reasonable use of their property by property owners and a reasonable timeframe in which the process must occur for approvals, we are never ever going to solve the problem of housing affordability and availability. All we're going to do is charge taxpayers taxes who work very hard so that Government can give it to people who need it, and that's socialism, and I'm absolutely opposed to it.
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We need to address the needs of communities by addressing issues that will lead to the production of new housing for the people you are trying to help. And until we do our job here in Congress and we're willing to take the burden and the onslaught that we're going to receive by doing our job, this Nation is never going to help low-income people get into affordable housing, because the requisite housing units will never be built. And my time is up, Madam Chairwoman, I believe. Thank you very much for your patience, because you are a most patient Chairwoman.
Chairwoman ROUKEMA. I'll give you 20 more seconds if you'd like.
Mr. MILLER. There are so many things we're not addressing here. Mr. Olsen, you were exactly correct in many things you stated. We Representatives considered and acted upon the intent of the Founding Fathers for this Nation and for Government, we would not have this problem. And if we could get the California Department of Fish and Game to read an EIR in California, rather than drafting letters that say that you did not address this issue, which is in part clearly laid out in the EIR—if we could get them to do their job—we could produce much more housing in California. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. All right. Thank you.
Congressman Watt.
Mr. WATT. Thank you, Madam Chairwoman.
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Members of the panel, I regret that Ms. Sard left, because I had some questions for her. She seems to think that—in her testimony she says, in fact, I agree with Secretary Martinez' statement that a central cause of the current underutilization of vouchers is inadequate administration of the program by some PHAs.
I'm not going to get you to comment on that part, but I do want the two gentlemen, Mr. Johnston and Mr. Renahan, who are actively directly involved with administering these programs to get your comments on some of what she has suggested.
One thing she suggests is that the number of administrative agencies is too high so that you have an average of more than 50 administering agencies per state. Texas has more than 400 according to her. The number of administrators who need to learn complex program rules and policy interactions is multiplied, economies of scale are not obtained, dah, dah, dah, dah, dah. And then in her recommendations she said program reforms should be designed to reduce the number of administering agencies. Can we do that at the Federal level? If local communities have housing authorities, does HUD now or should HUD have the authority to say we're going to contract—we're going to deal only with a regional concept as opposed to a city-by-city or housing authority-by-housing authority process? Does HUD have that authority now?
Mr. RENAHAN. Congressman, I believe HUD has that authority when housing authorities are not performing to standard. I agree with Barbara Sard and NAHRO agrees with Barbara Sard on much of her analysis, but on this one she's a little bit off.
There are a lot of advantages to having locally based housing authorities administering the Section 8 program. The Section 8 program enjoys local support throughout the country in large measure because it is administered locally. And the statute does allow some flexibility in the local administration of the program. It makes it possible for us to make the kinds of partnerships I described earlier with non-profits and other organizations to address the special needs of Section 8 voucher holders. In particular, it's made it possible for housing authorities across the country to administer successful family self-sufficiency programs.
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Mr. WATT. Sir, I understand you're talking about the advantages of local. She's talking about the disadvantages of this localized system. I'm talking about something between those two things, and that's the practicality of it. Can we, should we as a Federal Government be saying to local communities, we won't allow Section 8 vouchers to be administered by small housing authorities because we don't think you have the expertise? Maybe we should set up one per state, an administering body state-by-state or one for each SMSA. I don't know. Is that practical? I'm not criticizing what she's saying. I'm trying to decide whether this something that we ought to be looking at as a practical possibility in this subcommittee.
Mr. JOHNSTON. Congressman, I guess my response to that would be in our area we actually have various regional housing authorities in addition to the PHAs, the public housing agencies. And we actually—you run into problems when you start having large regional housing authorities because you're dealing with a much larger bureaucracy.
Individuals coming up on the waiting lists. It's harder for them to get through the system. It's harder for them to get access to the services which they're supposed to get. It's harder for them to be mobile. I mean, if you're dealing with a regional housing authority that's located, for instance, in our State in Boston, and someone is coming from North Adams which is completely on the other side of the state, you would run into problems.
The Section 8 program works well because it does meet the local needs of the community. It houses the people that are in that community that need the services from the housing authority, and that housing authority builds a rapport with the community. We've built a rapport with our landlords. We've done outreach. We know our community.
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Chairwoman ROUKEMA. All right.
Mr. WATT. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. I believe that Congressman Frank has a comment in this context.
Mr. FRANK. Yes. I think that's a very important line of questioning. And one thing I've found because I have—I don't represent the city of Boston. I represent a number of communities. And we know we have difficulty sometimes in getting landlords to participate. The local housing authorities are often better at getting local landlords who after all can say yes or no to participate. There would be a reluctance to deal with a large metropolitan authority. And you've got some very good local housing authorities that are local people. And I have found that that's a help in trying to get the voluntary participation we need.
Chairwoman ROUKEMA. I might also comment that I'm sure New Jersey is not alone in this respect, but in New Jersey, for example, local control, zoning ordinance control, is extraordinarily important. And if we took that away, I believe that we'd eliminate—I mean, it would be a minus for any public housing or any voucher program. So it would have a reverse effect, an unintended consequence.
Mr. WATT. Madam Chairwoman, I just wanted to make clear that I'm——
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Chairwoman ROUKEMA. But it's an important issue to be raised.
Mr. WATT. I wasn't being critical of any of this. I think the reason we have these hearings is to try to figure out whether there is some approach that can be a better approach.
Chairwoman ROUKEMA. Exactly.
Mr. WATT. But when somebody just represents that you can——
Chairwoman ROUKEMA. It was a very important question to ask. And if there's an ambiguity in the statute, we should address that. But I don't believe there is. But it is something we should investigate. Thank you very much, Mr. Watt. Mr. Barr?
Mr. BARR. Thank you, Madam Chairwoman.
Mr. Johnston, I apologize. I got in here late because of some other hearings. And I didn't get to hear your testimony, your initial testimony. But I was looking through your testimony. Your written testimony happened to be the first one I picked up here. And I'm just leafing through it. I have to tell you, it's right on point on a number of areas. When I meet with public housing officials in the 7th District of Georgia, the points that you mention in here are those that I hear from them and they're the same points that I hear not just from the public housing authority officials, but also from local investors who want to participate in the program, but the oppressive paperwork and regulations drives them away.
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So even though there are a lot of landlords out there that would like to—or investors out there that would like to invest in housing and make them available for Section 8, they can't. We had a series of meetings just a couple of weeks ago in our District, and the one specific aspect of all this regulation and the lack of flexibility that I heard about more than any other was the lead-based paint regulations. If you could—and I apologize if this is repetitive. Could you just talk a little bit—I don't know how much detail you went into in your prepared remarks—about some of the regulations that we could be looking at to provide a little more of the flexibility? Or is there any way of doing this short of, as you say, is necessary, a complete overhaul of the program?
Mr. JOHNSTON. Well, thank you for your comments, Congressman. But I guess to answer your question, we have redesigned the program in our housing authority. Because we've been given the flexibility by HUD under this demonstration program in which we participate. And the flexibility allows us to alter the length of time of our leases. It allows us to pay over 120 percent if absolutely necessary to save a unit. Typically we tie that into a longer lease.
What we do is we actually front-end load annual adjustment factors to give a landlord more of an incentive to basically take a Section 8 participant. We've shortened the amount of time that it takes to get inspections done. We have reduced the amount of paperwork for owners. We've actually redrafted leases. We've made the whole process much easier.
I mean, the lead paint issue is a touchy issue, because I think everyone agrees that lead paint is a very serious concern, and we certainly don't want to get back into the problems we've had with lead paint in the past. But I guess my problem——
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Mr. BARR. The context that I heard about it on the latest round of meetings that we had is with regard to senior housing, affordable housing for seniors. That's a serious problem in many of our communities and probably in other parts of the country as well. The presence of some lead-based paint in some of these older homes would not seem to present the same safety hazard to senior citizens who need those affordable housing as it would to affordable housing that's made available with children. Yet there doesn't seem to be any flexibility that would allow for a different standard based on the circumstances that don't present the same sort of danger. Is that something that could be looked at or should be looked at?
Mr. JOHNSTON. It should be looked at. I guess in general, for instance, the State of Massachusetts has a very stringent lead paint law. And our real concern is that we're now putting owners through an additional burden to go with Section 8 that they don't have taking a market rate person, whether it's an elder or a family. And it's only going to hurt utilization. Utilization will be impacted. You know, other states may not have as stringent lead paint laws as we do. And I think it's a State issue. I think it's an issue that needs to be looked at by each individual State versus the Government in general.
Mr. BARR. What I'd like to do, if you don't mind, is correspond with you, write you. And I'd like to get if you have some additional material with some additional details on what you've done within the framework of the existing restrictions to make a program work a lot better than it has been, if you have some material. I'd like to receive that so I could look at it and also share it with some of our folks down in Georgia.
Mr. JOHNSTON. I'd like to share that with you.
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Mr. BARR. Thank you. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Thank you.
Next Mr. Capuano.
Mr. CAPUANO. Thank you, Madam Chairwoman. I guess I'd like to just start off by first of all thanking the panel for coming today. But at least three of you I think will go away unhappy, because I can pretty much guarantee you there will be no housing production program this year.
Just yesterday, this House decided to rescind authorization for over $100 million worth of Section 8 certificates. So that's not a great record to begin on. But, Mr. Olsen, you will go home happy. You're getting what you want.
I guess some of the questions that have been asked—I mean, I got here late because on many of these issues, I was the mayor of my city beforehand, and I have pretty firm opinions on these things, though I respect your opinions, you're probably not going to change mine too much just because I've lived through it. But I do want to ask a few questions as a follow-up to what Mr. Miller asked.
Mr. Johnston, I live in the next town to where you work. You know that. Cambridge has produced an awful lot of housing in the last 20 years. They have produced thousands of units at North Point—hundreds of units at North Point, thousands of units in East Cambridge, a couple of thousand units around Harvard Square. During any of that construction, have rents gone down?
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Mr. JOHNSTON. No.
Mr. CAPUANO. I knew that answer, but I just thought I'd ask. Have housing prices gone down?
Mr. JOHNSTON. No.
Mr. CAPUANO. I'm not going to ask, because I'm not going to put you on the spot. But I know the answer. I don't know if you realize that Cambridge and its surrounding area is probably one of the most densely populated areas in the country. Right now Cambridge is around 14,000 people per square mile. Somerville was about 18,000. Boston is around 14,000. Belmont, right next to the west of you, is about 10,000 people per square mile. Are there are lots of open tracts of land somewhere in the Greater Boston area that I've missed?
Mr. JOHNSTON. No.
Mr. CAPUANO. Do we have an opportunity to build a whole lot of new housing, though we'd like to? I mean, where are we going to put it?
Mr. JOHNSTON. No, we don't.
Mr. CAPUANO. Except to build high rises. And there are those people in the world, a few of us, who may not want to live in high rises. We don't mind two- and three-family homes, which is by far the bulk of our housing stock, but there's certain limits to what we want, and it goes back to what the Chairwoman said earlier, that some people want some control over what happens next door to them. I think that's fair.
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So I don't buy all this nonsense in some areas. And again, I don't speak to every neighborhood. And I actually think that the argument that we need to break this down, these rules and these regulations down on a much more localized level, because even with the SMSA, our housing issues in the Greater Boston area are not the same as some of the areas just outside of Boston, 20 miles out. The SMSA is pretty big.
So it's not the same. And it should be different. And in some levels, HUD has started to go in that direction. But I was actually most interested in some of your written testimony—I don't know if you did it verbally—on the actual rents. Even with HUD bending over backward and giving Cambridge and a couple of the other communities in that area the opportunity to go above the Fair Market Rent numbers to the tune of 20 percent above, we're still $700 a month below what an average two-bedroom apartment is.
Now I don't know why the rents are all that high. It's actually kind of nice on one level that everybody seems to want to live in my District.
[Laughter.]
Mr. CAPUANO. That's great. But that drives housing prices up. And I guess, you know, Professor Olsen, it's nice to hear you say that you're an average American, but though I come from a place that has 31 degree-granting colleges and universities, still my average constituent is not a professor of economics. So I don't mean to be disrespectful, but you're not the average taxpayer. The average taxpayer is a truck driver or a bus driver or a cop or a firefighter or a teacher or a tenant in public housing, not a professor of economics at a university.
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And I guess—I'll put a little challenge out to you and to any one of your professors—full blown, I don't know—I assume you're a full blown professor, a tenured professor at the University of Virginia. I would ask that on your—whatever it is you get paid, I'm sure it's above the average pay of my constituent, I would ask you, I would challenge you to come to my District and whatever house you're living in, whatever apartment you're renting in Charlottesville or its neighborhood, to come to my district and find anything near comparable for whatever it is you're paying. And if you can do that, you might change my opinion. Until that time, the rents in the real world are a lot different than in the ivory tower. And I strongly challenge you to get out of it and go see the people that these people service. Go talk to my mother, who lives in subsidized housing. And you explain to her and to the seniors across this country why they haven't deserved the opportunity to live in decent, affordable housing when they did everything they were asked to do by society. To say that to me is—and I know you don't mean to be—but it's very offensive to me.
I think this Congress has not paid enough attention to the needs for affordable housing. I think we need to make the right to decent, affordable housing a top priority in this country. We haven't done it. And to say anything less than that I find offensive to most of my constituents and to the people who care about their well being and the well being of their children and their mothers. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Congressman Capuano, I see that you understand you time is up. You do not have a specific response in mind here. Is that correct?
Mr. OLSEN. Was that a question?
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Mr. FRANK. But don't register to vote there.
[Laughter.]
Chairwoman ROUKEMA. I didn't hear that, but——
Mr. OLSEN. I favor serving more low-income people.
Chairwoman ROUKEMA. We've opened the record for any specific response that any of the panel members would like to make for the written record. But I would like to point out to all those who have just recently arrived and did not hear the rules that I outlined at the beginning of the hearing that we'll try very desperately to limit our questioning period to 5 minutes apiece, and I've been trying to enforce that regulation, especially since we hope to be able to conclude this hearing today before we are interrupted on a regular basis with votes on the floor. So let's try to get not only through this panel, but the next panel that is waiting to be heard.
And with that having been said, Congresswoman Schakowsky is the next.
Ms. SCHAKOWSKY. Thank you, Madam Chairwoman.
I'd like to associate myself with the comments made by Congressman Capuano and feel also very strongly that the United States Government does have an important role to play. And I think that there is not a family in the United States that would declare themselves to have a surplus if they didn't have a good roof over their head. And this American family has done just that and has not made providing or even helping in a public-private partnership sufficient housing for millions of Americans. Many of those Americans live in Chicago.
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We have a 4.2 percent vacancy rate in Chicago below HUD's 6 percent vacancy tight housing market definition. And in my district we face rising real estate prices, as many communities do, and you've talked about that in your testimony. And a number of project-based Section 8 units that are talking about opting out right now.
I wanted to ask you about a specific proposal. When a building opts out, the tenants receive vouchers. And as long as the building stays a rental unit, we now have enhanced vouchers in parts of our community. But if the building goes condo, the tenant will still get the voucher, but it won't maintain its enhanced status. So they have to often be looking for places outside the community. And let me just put as a footnote, we're short about 150,000 affordable housing units in the Chicago area. And it is really a crisis.
I wanted your reaction to a proposal that these enhanced vouchers be extended to the wider community so that a person in that building that goes condo would be able to take an enhanced voucher in a broader area to shop around for housing. Anyone?
Mr. RENAHAN. That is a big issue for housing authorities across the country. In Los Angeles we've assisted over 1,000 families who've been in the situation where the owner prepays or otherwise opts out and we administer then the tenant-based Section 8 voucher. It works when the building owner or new building owner wants to continue in the rental business. The enhancement has been crucial because the buildings where owners opt out are the ones that are in appreciating markets that are normally beyond the reach of Section 8.
And what that means for tenants who have to move, either because the building has gone condo or for any other reason is that even though they've gotten a voucher, they will be moving to a higher poverty neighborhood in all likelihood. Their accommodations will not be the same as what they had before the owner opted out or prepaid. And that's just the economics of it. Because owners of buildings that aren't in such good shape that are in lower income neighborhoods don't opt out. They don't prepay. It's only the properties that will do better on the open market.
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So in those cases where tenants are forced to move, it's very, very difficult. And I should point out that a majority of the tenants that we've dealt with in this situation are senior citizens. And it's a very traumatic experience for them.
So allowing the enhancement to be used outside of the subject building makes a lot of sense to me as a human gesture to the families who thought their affordable housing situation had been remedied for life, particularly the senior citizens thought that they—one aspect of their life they didn't have to worry about was their affordable housing. And then they go through this upheaval.
Ms. SCHAKOWSKY. I am going to propose legislation to that effect. I know that this has been——
Chairwoman ROUKEMA. Excuse me.
Ms. SCHAKOWSKY. Oh, am I done? I'm sorry.
Chairwoman ROUKEMA. Go ahead. You have a few more seconds.
Ms. SCHAKOWSKY. OK. Well, one of the things that I'd also like to explore, in Chicago we have the Chicago Affordable Housing Trust Fund. We just this week had the 11th annual meeting of that. And one of the comments made by landlords, by tenants, by lenders, is that it's so easy to access. That there's none of the bureaucratic hurdles. And it seems to me that what I hear from landlords—it's just that it's not—that it's so hard to deal with HUD. That it's just a hassle. That even, all other things being equal, that they might consider opting out because they've done their 20 years and they have had it already. And it seems to me that if we could sit down and figure out and I think that others on the panel have been asked—and Members, if we could figure out ways to at least diminish if not eliminate those bureaucratic hurdles that we'd step forward.
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I guess that's a comment. I'm done.
Chairwoman ROUKEMA. Perhaps the panel could feel free to address that particular question and submit it in writing for the record, please, not only for Ms. Schakowsky, but certainly to my attention as well.
Chairwoman ROUKEMA. Congresswoman Kelly.
Mrs. KELLY. Thank you, Madam Chairwoman.
I'd like to ask this panel what suggestions they have for increasing the number of property owners that will accept Section 8 in their housing, particularly in a really tight market like Westchester County. When landlords really are able to find tenants easily, they are not—they are seemingly unwilling to open some of those units. I'd like to ask what your suggestions would be to get those units open.
Mr. RENAHAN. Well, Congresswoman, one thing that has to be there is an adequate Fair Market Rent that will allow us to pay a fair amount to the landlord so they don't take a financial loss for participating in the program.
Mrs. KELLY. Excuse me, sir. But having been very familiar with the rental market in that county that I'm referring to, I also know that in some areas Section 8 drove up the cost of housing when it went in, and it can still occur. So I'm not so sure that we're talking Fair Market Value here. So can you—every single person that I heard on this panel simply said the answer is more money. I'm wanting something beyond asking for money.
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Mr. RENAHAN. What also is necessary and works is the kinds of creative approaches that I had described that we used with our special needs households. An important component of that is outreach to landlords. There are landlords in Los Angeles who are wiling to participate in Section 8 for a family for a family with a person with a disability. There are other landlords who participate in the Housing Opportunity for Persons with AIDS Program. There are others who have helped when we administered the welfare-to-work program.
Landlords can respond to a human approach, to a request that they offer one unit or two units in a large apartment complex for a family that strikes a chord.
Mrs. KELLY. So you feel that outreach is going to answer—I don't mean to interrupt you, sir, but I don't have a whole lot of time and I need to get to the meat of this. In other words, you feel that landlord outreach is going to resolve this problem?
Mr. RENAHAN. It's part of the solution. It's part of the solution.
Mrs. KELLY. Mr. Ziegler, do you have anything you want to say to that?
Mr. ZIEGLER. Yes. I think the answer is to treat the landlord in a Section 8 program like the landlord would be treated by anybody else who is not in a Section 8 program, which means you need to look at the rent structure, but you also need to look at service to landlord. In New Jersey, for example, we established a Landlord Liaison Office that will troubleshoot problems with landlords with regard to paperwork, inspections, and so forth.
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I think when you do this kind of thing the owners understand that you're working with them, not against them. I think that's a real important part of this. And it's increased the number of—we have 17,000 families in our Section 8 and 14,000 landlords. And with the Regional Opportunity Counseling Program that I mentioned earlier with even educating landlords as to what kind of assistance is available to them.
We have tons of mom-and-pop owners in New Jersey who have two-family houses and rent one of the units out. And a lot of them don't even understand landlord-tenant law. So getting education to landlords with regard to State services, landlord-tenant issues, lead-based paint. The New Jersey Supreme Court, for example, has ruled that it's illegal in New Jersey to refuse a Section 8 voucher. And working with the New Jersey Apartment Association has been very important in showing them that we are there working with them, and it has produced a tremendous amount of benefits and increased the numbers of landlords in the program.
Mrs. KELLY. What about building? I mean, is there any impetus to try to get landlords to when they build new apartment buildings to include with the idea of having mixed housing so we have some Section 8 people mixed in with other people that are paying full rent? Is there any kind of an outreach in that direction?
Mr. RENAHAN. There is a statutory provision that allows a portion of Section 8 vouchers to be project-based. And HUD right now is working on a new rule that will make that a little more flexible and make it possible for localities to do exactly what you're describing.
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Mr. ZIEGLER. And on the project-based issue, if I may add, there's a large number of non-profit organizations who are very interested in working with the project-based program. They have services, they provide services. But they need operating costs. And the assurance of Section 8 voucher for their particular buildings will increase the number of families they can serve. And they're serving essentially the homeless and very-low-income families.
Mrs. KELLY. I would also like to ask what extent the current regulatory scheme contributes to the housing affordability and availability. Do you feel that the regulations are actually a chill factor?
Mr. ZIEGLER. I don't understand the question. I'm sorry.
Mrs. KELLY. There are regulations controlling what you do with Section 8. Are the regulations a chill factor in your ability to deliver Section 8 housing to the people who need it?
Mr. ZIEGLER. Yes, in some situations they are. And I think we mentioned them earlier. Certainly the ability to address the rent structure that's set in the community and to deal with owners on a one-to-one basis, to do inspections in the units carefully, to allow some flexibility in repairs with the units, if we're in the 30-day period of time. To make the Section 8 program essentially work like the other non-Section 8 rental units in the community. Those regulations that we can strip away that would do that would certainly help the program work better.
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Mrs. KELLY. Thank you very much. I'm out of time. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. I thank you.
Now we have Congresswoman Carson.
Ms. CARSON. Thank you very much. A lot of the Members of Congress have already raised some of the issues that I have. In my particular city of Indianapolis, Indiana, we find myriad problems with persons who are Section 8 eligible getting placed. And I think a lot of it is perception. Landlords don't want Section 8 people, because there is some perception that they're criminals, that they will destroy your property and all of that.
And I was wondering if any of you have some process in your communities that sort of allay some of those fears that would enhance the possibilities of persons with Section 8 being placed, and whether you know of any creative kinds of things that are underway in your community that will elevate the opportunities for low- and middle-income people in terms of getting placed in housing that they can afford.
In Indianapolis we went to a major historic preservation kind of effort. And the consequence of that was devastating for low-income people. People that had been living in low-income communities woke up and found that their blocks had been put on the landmark and historic places, and the consequence of that was devastating for low-income people. I mean, they couldn't afford the right paint. They couldn't afford the right design on a new door that they needed on their house, and the tax rate just skyrocketed. And it caused all kinds of problems just overnight. And these people were here minding their own business.
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But in my neighborhood, which, you know, I always declare that the only historic part about my neighborhood is me, and I don't want to be on the landmark and historic places.
[Laughter.]
Ms. CARSON. In deference to the neighbors in my particular neighborhood, the home that I live in—I've been there 35 years. I bought it for $6,000. And over the years, we fixed it up and painted it and my house, the one that I bought for $6,000 35 years ago, is now appraised at $300,000. And the tax rates, of course, skyrocketed as a result of it. That's why I hang around Congress so I can afford it. Since there are only 435 of us, not everybody can come to Congress to afford to live in most neighborhoods around this country.
Do you know of any creative efforts in your local communities that accommodate—that have been started up that accommodate the people with this kind of need in terms of—well, they've already talked about living in a place that turned into a condominium. But in neighborhoods where you can enhance the supply of affordable housing. What do you do to reach that mark?
Mr. ZIEGLER. What has really worked for us in our State is openness to the community, openness to landlords. Just about every complaint that we get about a Section 8 situation, when we investigate it, it turns out to be not a Section 8 family. Section 8 families are painted with a very wide brush. And we are open to community organizations, homeowners associations who question, who criticize and say your Section 8 families are the worst families in our development. And when we go out and actually look at the address they give us, they're not Section 8 families in more than 95 percent of the time.
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I think when owners understand how the program works and how the families are selected for the program. For example, we prioritize persons with disabilities for our program, persons who have $6,000 income, for example, at a maximum, and will have that probably for life, because they have severe disabilities or chronic mental illness. These are people who will never be able to live without some kind of support. We also prioritize families in self-sufficiency programs.
So if you look at the overall scope of 18,000 families, roughly about 20, a little less than 20 percent of those families are families who have welfare or tenant's assistance. The rest are disabled persons. The rest are working poor families. Some who are working their way out of the program with self-sufficiency benefits, and some who will need the services on an ongoing basis. And when owners understand the kind of families that we're assisting, they're much more acceptable to working with the program. When the understand the entire picture.
We have monthly meetings in our offices with landlords. We bring the landlords in and answer any questions and resolve any problems. And with an ongoing to liaison to work just with landlord issues that arise, we have been able to develop the number of owners that we have in the program, which now exceeds 14,000 landlords.
This is something that I'm seeing other housing authorities duplicate, and I think as that happens, we're going to get much more acceptance of the program.
Mr. JOHNSTON. If I could continue. I agree with the landlord side of outreach, because we certainly do the same thing. But at the same time, you need to look at how is the participant marketing themselves? How are they going out and portraying themselves to the landlords?
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We found that we actually have an allocation of vouchers strictly for individuals with disabilities. And for those individuals we actually supply housing search services. We've contracted with a non-profit to assist those individuals in going out and finding units. And the success rate for those individuals—and these are individuals with some type of a disability and low-income—the success rate is actually higher for these individuals than it is for our family participants that are going out without any assistance.
So it has to do not only with how you're approaching your landlords as an agency and how you're selling the program as an agency, but it really has to do with how is the participant approaching the landlord? How is the participant selling the program? And I think that's where housing search services are important.
Ms. CARSON. Yes, but I think there's just such a bad image of Section 8 because people misunderstand who it is that's causing the problem. They're not Section 8 recipients. My aunt is 85 years old. She still sings in the choir. I don't know how well, but she still sings in the choir. She can't get any housing in Indianapolis with a Section 8 voucher and she's 85 years old, because people don't want Section 8.
Mrs. KELLY. [Presiding.] Thank you very much, Ms. Carson.
Next we have Ms. Jones.
Ms. JONES. Thank you, Madam Chairwoman.
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To the panel, I was talking to State legislators and mayors before at a session this morning and I missed what you all had to say, but we were talking about housing and affordable housing at the session we were in as well.
My first question is to Mr. Johnston. How are you, sir?
Mr. JOHNSTON. Good.
Ms. JONES. Good. Totally different subject, but has to do with housing. I'm just curious. What impact did the reduction of or elimination or what impact will the elimination of the drug elimination program have on your housing authority? Is that something over which you have some jurisdiction?
Mr. JOHNSTON. Yes. It's more going to impact public housing.
Ms. JONES. You don't do public housing, sir?
Mr. JOHNSTON. Well, I do. I do tenant selection for public housing.
Ms. JONES. OK.
Mr. JOHNSTON. And certainly I think our agency has worked very close with the local police department in putting together police details. We actually have a security force that handles complaints and issues that happen in public housing. And the elimination will certainly have an impact on the housing authority in how we can protect the residents and of our developments.
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Ms. JONES. Thank you. I don't know what I did I with my list of where you guys come from. I apologize. What about the impact on New Jersey, Mr. Ziegler? If you're familiar. If you're not, you can say no.
Mr. ZIEGLER. We operate only a Section 8 program, so it doesn't have any direct impact.
Ms. JONES. OK. Great.
Was it you, Mr. Ziegler, that said that the New Jersey or some court just found it to be illegal to refuse a Section 8 voucher?
Mr. ZIEGLER. Yes. In New Jersey, like Massachusetts, the Supreme Court has ruled that it's contrary to the Fair Housing Act for a landlord to refuse to accept a Section 8 voucher solely because it's a Section 8 voucher. I mean, the owners are still able to refuse families if they don't pass the regular application standards that owners normally accept. But in cases where it's just that I don't accept Section 8, it is illegal for most owners in the State to do that.
Ms. JONES. Do you remember what the facts were in that particular case?
Mr. ZIEGLER. It's a source of income act, Chuck tells me.
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Mrs. KELLY. Excuse me, could you speak up a little louder on the last point that you made? I didn't quite hear that.
Mr. ZIEGLER. Yes. The Supreme Court ruled that it's contrary to the source of income, discrimination as a result of a source of income whereby the owner cannot refuse a Section 8 voucher.
Ms. JONES. OK. Thank you.
Mr. EDSON. I would like to add something.
Mrs. KELLY. Excuse me, yes.
Ms. JONES. I don't mind.
Mrs. KELLY. Excuse me. I think in response to your question there is another point to be made here.
Ms. JONES. Please come forward and tell us your name.
Mr. EDSON. Madam Chairwoman, I'm Charles Edson, counsel to Leased Housing Association, and I did participate in that New Jersey case so I'm quite familiar with it. Many states have what is called a source of income law which says you cannot discriminate against a potential tenant because of the source of income. New Jersey had such a law. There was a real question of interpretation of whether it also meant to include Section 8 vouchers. It originally was intended to deal with alimony payments, welfare payments and the like. The New Jersey Supreme Court extended that to Section 8 payments. So in New Jersey, you in effect have a take none/take all. In other words, every owner in effect is obligated to accept vouchers. I believe several other states have reached that conclusion. Some courts have taken an opposite view.
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Chairwoman ROUKEMA. Ms. Jones, I'm very glad that you asked that question. I feel as though I was derelict in my own responsibility being from New Jersey that we didn't observe that earlier. So I appreciate your questioning.
Ms. JONES. Not a problem, Madam Chairwoman. The only further thing I would say is I don't want to be repetitive in the responses or in my questions that my other colleagues haven't asked, but I am a supporter of affordable housing. I come from the city of Cleveland, Ohio. We've done a pretty good job with our community development corporations developing housing, but we need a lot more.
And I just would thank you for coming, encourage you to continue to work on providing affordable housing, because I believe that having a safe house and a decent house is the beginning of having a decent lifestyle and making a decent living. And I would just encourage you to continue to do the work that you do. And on another occasion I might ask you some more questions. Thank you. I yield the balance of my time, Madam.
Chairwoman ROUKEMA. I thank you.
Congresswoman Waters, I believe you were next.
Mr. Tiberi does not have a question.
Ms. WATERS. Thank you very much, Madam Chairwoman. I don't know what else can be said. The fact of the matter is, this budget eliminated the drug elimination program, cut the capital fund, cut the HOME program, cut CDBG and reduced Section 8 reserves from 2 months to 1 month. Everybody knows that.
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We also know there is a housing crunch. We also know that the vouchers are buying less and less. The message is clear. We could have 100 more hearings. It's documented that we have a real crisis, and this budget exacerbates that crisis, and we need to get on with the business of trying to do something about this problem and this housing crisis.
Let me just ask about the reduction of Section 8 reserve from 2 months to 1 month. Can somebody tell me what that means?
Mr. RENAHAN. What that means is that housing authorities who are trying to lease to 100 percent to assist as many families as possible who are faced with changes in their average housing assistance payment, which can occur because rents are going up in their area so that their contract rents are coming in higher, or if the family incomes are decreasing so the family portion gets smaller and the housing assistance payment gets higher, will have to be more concerned that if they aim for 100 percent lease up that they will run out of money at the end of the year and not be able to make payments to landlord and be in violation of their contract with HUD.
So what it will mean is that the utilization rate across the country will be adversely affected by a cut and the program will work less well and serve fewer families in precisely the housing markets where families need it the most, the housing markets where rents are accelerating and it's tougher to use Section 8 vouchers.
Ms. WATERS. So in addition to all of the other problems that you have, this reserve, as you are describing it, significantly impacts your ability to utilize what you already have? You have to live in fear that if you utilize your Section 8 to the max that you could run into trouble and not be able to pay the landlord?
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Mr. RENAHAN. That's precisely it, Congresswoman. And the 2-month figure was arrived at under a negotiated rulemaking which involved HUD and housing authorities and advocates and others interested in the program. And initially going into that, to be frank, I was arguing for a 6-month reserve. But HUD hired an accounting firm. They went through the numbers nationwide looking at the possible impacts on urban authorities, suburban/rural authorities, big authorities, small authorities, and it turns out that 2 months is adequate to make it possible for housing authorities to shoot for 100 percent utilization without living in fear that they're going to be in violation of their HUD contract and we really didn't need more than a 2-month reserve. But less than a 2-month reserve will result in a lot of housing authorities either getting in trouble or not utilizing as much money as they could and not assisting as many families as they could to avoid getting in trouble.
Ms. WATERS. Thank you very much. Let me just say that to those of you who are managing these large public housing authorities, I salute you. You have a lot of problems, and many of you are doing a very good job despite the fact that the resources are not there. Someone asked today how can we solve these problems without money? You can't. It costs money to manage these housing authorities and deal with all of the problems.
I am still of the opinion that we need to have social service agencies inside all of these large public housing authorities that deal with not only people representing public welfare and probation, parole, health, all of that. Some of these large public housing developments are like little cities. And all of the problems that any city would have that is basically a city of poor people of limited income folks, and you're expected to manage them, keep them going, keep down the crime, keep the renovations up, keep the place looking decent when you're faced with all these cuts and all of these problems, I don't know when we're going come to grips with what it takes to provide housing and to deal with this crisis.
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I salute you. And we're going to do everything that we can to help you. We don't think we have an ear in the White House. We think that some of the Members on the other side of the aisle are sympathetic and they would like to do something. We want to work with them to try and get something done. But just keep championing the cause and keep your voices out there. Hopefully, we'll be able to undo some of the cuts that have been wreaked upon you with this wrongheaded policy. Thank you.
Chairwoman ROUKEMA. [Presiding.] Thank you. I do want to express my appreciation for this panel. And not that we're trying to get rid of you quickly, not at all. However, I'm looking at the clock and I've been advised that there will be a series of votes up in the near future and hopefully we can get to the second panel.
But again, I ask that you submit in writing your additional responses if you haven't had a chance to elucidate and amplify on your answers. And obviously we're going to be going through these issues again as we go through the appropriations process this year I'm quite confident.
Again, I'd like to have our member of the panel who is very sensitive to the cost effectiveness and to the budget priorities as well as those here on the panel who are concerned about the implementation, the proper implementation of the law under existing financial circumstances and whatever improvements we can make for greater functioning, greater efficient functioning in the future.
I thank you very much. We'll stay in close dialogue and communication.
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The next panel, please. I will take the opportunity to introduce each of the panel members as I did on the previous panel individually when it is your turn to testify. I would also like to remind you I believe you were here when we opened the hearing, but remind you that we'll try to limit each introductory statement to 5 minutes The Members then will have 5 minutes in which to question you. And hopefully, we'll complete this before there are any interruptions from the floor.
Now this panel is representative of a good number of consumer groups and public interest groups, and we're happy to have you today. Nan Roman is the President and CEO of the National Alliance to End Homelessness and a leading national voice on the issues connected with homelessness. Certainly the Alliance, as I understand it, the National Alliance is the country's largest non-profit, non-partisan membership organization. And so we're very anxious to hear from you, particularly with charitable work that you're doing, as well as your on-the-ground, in-the-field operations. Thank you very much.
STATEMENT OF NAN P. ROMAN, PRESIDENT, NATIONAL ALLIANCE TO END HOMELESSNESS
Ms. ROMAN. Thank you so much, Madam Chairwoman. I want to thank you for your concern about housing affordability and for holding these hearings and also I want to thank you for the subcommittee's past leadership on the issue of homelessness.
I've been asked today to address the extent to which homelessness is a housing issue. And the answer there is simple. Homelessness is caused by the lack of affordable housing, notwithstanding all of the other problems or illnesses or disadvantages that homeless people might have. They are homeless because they can't afford a place to live. If there was housing that they could afford, there wouldn't be widespread homelessness.
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Is there some special type of housing homeless people require? The answer to that question is yes and no. There are two major groups of homeless people, and I think it's important to recognize that when we're assessing the impact of housing affordability on homelessness. Eighty percent of people who become homeless enter and exit the homeless assistance system relatively quickly and don't come back. These are people who are having a housing crisis.
It can be said that the homeless assistance system in one way is managing the churn in the bottom of the housing market. This 80 percent of people are largely indistinguishable from other poor housed households in terms of their mental health, their substance abuse, their education levels, numbers of children and so forth. But they are families and individuals who have had a housing crisis, and they need somewhere to go while they are resolving that crisis.
The homeless assistance system is providing such a place. Taken as a whole, this group, 80 percent of the homeless population, does not need any special type of housing. They just need housing that's affordable. The remaining 20 percent of people who become homeless in the course of a year—and I should say about 3.5 million people become homeless in the course of a year—have a different experience and have different needs. This group tends to be homeless for a much longer period of time, living in the homeless assistance system, sometimes interspersed with stays in hospitals, jails, prisons or on the streets. They virtually all have chronic disabilities: mental illness, chronic substance abuse disorders, physical ailments or HIV and AIDs are the predominant ones. Because of their illnesses, permanent supportive housing, housing that is affordable and also linked with services, is the most cost-effective and successful housing model for them. And as you mentioned in your opening statement, we estimate that there are 200,000 to 250,000 units of such housing needed to essentially end chronic homelessness.
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In summary homelessness is a housing affordability issue and notwithstanding all of the other problems that homeless people might have if there were an adequate supply of appropriate affordable housing, there would not be widespread homelessness.
Based on this, the following are our recommendations. First we recommend that we need a housing production program that will significantly address local shortages of affordable housing units.
Second, if there are not enough resources to meet the housing needs of all people up to 120 percent of area median income, as has been recommended by many previous witnesses in your housing affordability hearings, we must respectfully request that there be substantial targeting of housing assistance to meet the needs of people who are most severely impacted by this affordability crisis, even to the point of becoming homeless.
Third, we believe that 200,000 units of permanent supportive housing could end chronic homelessness. Resources are available to provide this housing via the HUD Homeless Assistance Grant Program, but only if two things are done. The first is to ensure that 30 percent of these funds are spent on permanent supportive housing for chronically homeless people. The second is to renew such housing from a source other than the Homeless Assistance programs.
This subcommittee has in various ways and on a bipartisan basis, over the past few years recommended these steps. Based on your approach, the appropriators have included provisions that address these issues in the last several appropriations bills. But it would be preferable to have these provisions authorized.
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Finally, much media attention has been given recently to Secretary Martinez's suggestion that homeless people are the responsibility of HHS. We concur that, for the disabled group in particular and for other homeless and very poor people, services are best delivered by HHS using HHS resources. Housing, however, is the root of the problem for homeless people, and housing is best delivered by HUD. We support getting HHS to assume its proper responsibility to pay for services with its funding, freeing up the Homeless Assistance Grant Program money to pay for housing for the 3.5 million people who have become homeless because they don't have it.
We do not support transferring the HUD money to HHS to pay for services. HHS is not the only agency responsible for homeless people.
Madam Chairwoman and Members of the subcommittee, we are grateful for your concern and your leadership and we are anxious to work with you to make progress on this issue.
Chairwoman ROUKEMA. Thank you very much.
The next panelist is Barbara Poppe. Ms. Poppe has been the Executive Director of the Community Shelter Board in Columbus, Ohio since 1995. That gives you considerable experience. The Community Shelter Board is a nationally-recognized non-profit organization charged with funding and planning coordinated access to shelter and essential services. And evidently you have been an advocate for the homeless since 1985. So you have some experience up and down and up again. Thank you very much, Ms. Poppe.
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STATEMENT OF BARBARA POPPE, EXECUTIVE DIRECTOR, COMMUNITY SHELTER BOARD, COLUMBUS, OHIO
Ms. POPPE. Thank you, Madam Chairwoman, Members of the subcommittee. I am pleased to be here today. I wanted to let you know about our experience in Columbus and Franklin County, Ohio where we operate as a true public-private partnership to provide a collaboration of funding, services and coordination to assist anyone who has a housing crisis resolve that.
We are the Community Shelter Board committed to ending homelessness in our community, and we work toward that end. My Board of Trustees includes corporate executives from banking, insurance, retail, manufacturing and the home building industry. So we have a strong business presence.
Along with our partner agencies and our public funders we have created an infrastructure in Columbus and Franklin County that meets the immediate needs of homeless people, providing a roof over their head, food and health care. Our efforts have been successful. We do believe it is unacceptable to turn any family or single adult away from our sheltering system, and we continue to work toward that end each day.
But unfortunately, as hard as we have worked, the Franklin County homeless system cannot end homelessness. Why? Well, the system doesn't control the number of people who become homeless. And second, while most people exit the homeless system quickly, others virtually live in it. And for people who are chronically disabled and very poor, emergency shelters have unfortunately become their home. We concur with the assessment of the National Alliance to End Homelessness that so far we have accomplished much, but the end is not yet in sight.
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Homelessness is a major problem in Columbus and Franklin County. I want to report to you that since 1990, more than 100,000 different households have been homeless in our community. We did a random telephone survey and we found that 10 percent of all people in Franklin County had experienced homelessness. Another 18 percent had a family member who had experienced homelessness. The annual number that we've sheltered in the last 5 years I am happy to report is finally on the decline. Since 1995 to 1999, we decreased family homelessness by 50 percent. That decrease was possible, though, because we put substantial resources into our Homeless Prevention Initiative.
The number of single homeless women has remained relatively constant, and we've been able to decrease the number of single homeless men by about 3.5 percent in our community. However, there is still much to be done. Our system works well for those 85 percent who have a short-term homeless problem, but there are 15 percent of our homeless people who have chronic entrenched problems that our system is simply not resolving.
Toward that end, we have committed that our community will be targeting for priority expansion, the strengthening of permanent housing options with services for the hardest to service populations in our community, those persons with chronic disabilities.
Some of the innovative features in our Franklin County community are, as I mentioned, our Comprehensive Homeless Prevention Program which annually serves 1,100 households preventing them from becoming homeless. We also have worked to improve our emergency shelter safety net so that people who have short-term needs can get back on their feet and out of it. What we've done is to disperse our facilities throughout the community. Not all are located concentrated downtown. We've put in place rigorous shelter certification standards and a requirement for good neighbor agreements. We also are providing on-site employment resource centers.
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As part of a new initiative, we are developing 800 new units of permanent supportive housing for long-term homeless people. And finally for families, we're focusing on a direct housing initiative that quickly moves families out of shelter into permanent housing but provides transitional services. That program has been 95 percent successful in working with all families, and none of the families in our 2-year operation have ever returned to shelter.
But despite this impressive and innovative continuum of services, we still lack the most important component to end homelessness. That is accessible and affordable housing. Homeless families and individuals are a subset of very poor households in Franklin County who cannot afford decent, safe housing. A typical homeless family, while more are working than ever before, still has an average income of only $630 a month. They need an apartment that rents for less than $200 a month, and that does not exist in our community.
We are a model community in terms of the level of cooperation and coordination among providers and funders both public and private. We know what works. We can document success. We are committed to ending, not just managing homelessness. But we really do need a strong Federal partnership so that we can be successful.
We believe that what we need is affordable housing production. We also need subsidies. This is not an either/or circumstance for Franklin County. We need to both produce affordable housing and to have the subsidies to make it possible. Homeless people are earning around 15 percent of the area median income in our community. So without the type of operating support available through the Section 8 program, we simply won't be able to move forward.
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We do believe strongly in these public-private partnerships. There's no deal in Columbus that gets done without investment from our private community as well as the Federal, the State and the local governments being partners. We would like to work with you in any way that we can to solve homelessness across the Nation and also in our community in Ohio. Thank you.
Chairwoman ROUKEMA. Thank you very much.
Now, Ms. Ann O'Hara, a co-founder and now the Associate Director of the Technical Assistance Collaborative, Inc. She has over 23 years of experience in the development and administration of affordable housing programs at both the national, State and local level.
I believe also, Ms. O'Hara that you have a national reputation for working with affordable housing opportunities for those people with disabilities, whether physical or mental disabilities if I understand it. We're very interested in hearing of your experience and your recommendations for us. Thank you.
STATEMENT OF ANN O'HARA, ASSOCIATE DIRECTOR, TECHNICAL ASSISTANCE COLLABORATIVE, BOSTON, MA; ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH DISABILITIES HOUSING TASK FORCE
Ms. O'HARA. Thank you, Madam Chairwoman and Members of the subcommittee. I would also like to thank you very much for holding this very important hearing on the critical housing affordability problems that people with disabilities, including homeless people with disabilities, face today in the United States.
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I'm here today to testify on behalf of the Consortium for Citizens with Disabilities Housing Task Force. They are a Washington-based coalition of over 100 consumer advocacy provider and professional organizations who work for and on behalf of people with disabilities of all ages and their families. The CCD Housing Task Force includes the Alliance for the Mentally Ill, Paralyzed Veterans of America, Easter Seals and many other groups.
I want to mention a few key points from my written testimony, including data on housing affordability that we are just coincidentally publishing today, some discussion of the need, and then some critical housing policy issues.
Today the Technical Assistance Collaborative, and the CCD Housing Task Force are releasing findings from a new study entitled ''Priced Out in 2000.'' It's a comprehensive analysis of housing affordability for the poorest of our Nation's citizens, those people with severe disabilities who are receiving SSI benefits. In 2000, these Federal benefits were equal to $512 a month. Today, over 3 million adults with disabilities are receiving SSI benefits.
This study compares SSI to HUD's Fair Market Rents in all housing markets of the United States and shows that the housing problems, the affordability problems of people with disabilities have never been worse than they are today. People with disabilities receiving SSI benefits continue to be the poorest people in the Nation and on average across the country have an income equal to only 18.5 percent of the one-person median household income.
As a national average, people with disabilities receiving SSI have to pay 98 percent of their monthly SSI benefit in order to rent a modest one bedroom apartment which is priced at the HUD Fair Market Rent. That leaves $11 a month left for all other essentials like food, clothing, transportation and over-the-counter medications.
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In the year 2000 there was not one single housing market area in the United States where a person with a disability receiving SSI could afford to rent a modest studio or one bedroom apartment and pay 30 percent of their income toward that rent.
So I will echo the comments of my two colleagues here to say that it is absolutely essential that for the poorest people, people with incomes below 30 percent and particularly below 20 percent of median that we need operating subsidy funds or project-based assistance or vouchers in order to make the housing affordable.
Just before Secretary Cuomo left office, he released the latest worst-case housing needs report. That housing needs report showed that while housing needs had declined by 8 percent from 1997 to 1999, that decline occurred in elderly and family households. It did not occur in households representing people with disabilities. HUD's data show that housing need among people with disabilities actually went up between 1997 and 1999.
So in line with those needs figures, what we need to do is look at what the critical policy issues are and make recommendations. One problem we have is that the supply of subsidized housing, housing with an operating subsidy or a project-based subsidy for people with disabilities continues to decline. That decline began in 1994 with elderly only policies and continues to this day. Each year housing authorities designate thousands of units for elders, and that means that people with disabilities no longer can access that housing.
We estimate that as many as 200,000 units have been lost and only 40,000 Section 8 vouchers have been created to make up that loss.
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Another problem we have is the public housing authorities, not all, but many public housing authorities are not applying for new Section 8 vouchers to help people with disabilities get into housing. PHAs also have difficulty knowing how to modify their programs and their policies so that the Section 8 program can be effective for people with disabilities.
It's difficult to use Section 8 to find accessible units. It's also difficult to get exceptions from HUD on these policies. There are some housing authorities doing a good job. We need to export their practices, such as the State housing authority in New Jersey, and the housing authority in Cambridge, Massachusetts. We need to take what they have done for people with disabilities and make that information available to other housing authorities.
I want to speak also just briefly about the Section 811 program. As the need for housing for people with disabilities has increased, the appropriations for Section 811 have gone down by almost 50 percent. The program also needs reform so that lower density and more integrated housing can be developed. Currently, the Section 811 program is full of red tape and bureaucracy. It has components such as the single-purpose corporation requirement that really are a disincentive for non-profit organizations to work with the program.
I also want to mention briefly that the HOME and CDBG programs typically do not target people with disabilities. Again, that's because neither of those programs is used in connection with an operating subsidy or project-based subsidy in most cases.
We support the National Low Income Housing Coalition's production program with very-low-income targeting. We also support the National Alliance to End Homelessness recommendations to put at least 30 percent—and ideally much more than 30 percent, of the McKinney Homeless Assistance funding at HUD into permanent supportive housing to resolve homelessness for people with disabilities.
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Chairwoman ROUKEMA. All right. I thank you very much. I don't quite know how to begin this except to make an observation, and you do not have to be compelled to answer me. But we'll have to work on this together because I have a background where I've worked directly not only on homelessness, but also on all kinds of disabilities, particularly mental health disabilities, alcohol and drug abuse disabilities. And it seems to me as though you're all pointing in the direction as though there's no difference in needs here. In fact, I believe Ms. Roman said we do not need special housing.
And then of course you reference, Ms. O'Hara, the 811 and I'm not quite sure exactly how that gets defined in the real world of the local community. But I'm just saying that I believe it is much more, much different from low-income housing needs, much different. Because if these people were able to deal with their disabilities—I'm not talking about the physical disabilities. I'm talking about drug abuse, alcohol abuse and mental health problems. They wouldn't be in such dire financial straits, of course. So I think it's a combination of things. But I also believe that there's a requirement here to, as I said in my opening statement, to work with HHS as well as HUD to get the kinds of service needs and the treatment needs that are necessary. We can't ignore it. And that's where I want to direct my attention in terms of this component of our problem. If you have a quick response, particularly Ms. Roman, since I used your name, we shall do that. But then we'll turn to our Ranking Member here. Yes, Ms. Roman?
Ms. ROMAN. I just wanted to clarify that I said that 80 percent of people who become homeless essentially are just poor people who are having housing crisis. But 20 percent of the homeless population is disabled with mental health and substance abuse disorders for example, and is chronically homeless. They do need a special kind of housing, and that is supportive housing that's connected with services.
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Chairwoman ROUKEMA. Then I totally misunderstood you.
Ms. ROMAN. I'm sorry.
Chairwoman ROUKEMA. I took your statement out of context evidently. Go ahead. Continue.
Ms. ROMAN. And they also need low threshold entry points into that system because most people are not going to go from the street into housing, so there have to be low threshold shelters or safe haven models where people can enter into the system.
Chairwoman ROUKEMA. Thank you. I appreciate that.
Ms. O'Hara, very briefly.
Ms. O'HARA. I think we're all starting from the same point in terms of how the housing resources work. And the issue of how you link services I think is very different depending on the extent of the disability as well as the nature of the disability. But service provision is an overlay to the basic issue of can you afford the housing. And I think that's where we're having the difficulty. The services are actually easier to—well, some people may disagree with that.
Chairwoman ROUKEMA. And I note that Ms. Poppe has nodded her head in agreement. All right. Thank you very much.
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Our Ranking Member, Mr. Frank.
Mr. FRANK. Thank you. I apologize for my absence. I had a previously scheduled commitment to address the constituents of our colleague, Ms. Capps, on housing issues. This is very useful testimony.
First of all, I welcome what seems to me the unanimity that one of the things we have to do, by no means the only, though, but one of the most important things is simply to increase housing production programs for low-income people. And as you know, there have been people who have argued that the voucher program will take care of it, and I think you helped make the point the voucher program is almost irrelevant for many of the people you're here worried about. And, yes, we clearly have to increase the production program, and this very wealthy country has the resources to do it.
I do have some specific issues, though. Intellectually that's an easy one. Politically it's harder. So I do want to talk, and I appreciated, Ms. O'Hara, the question of disability. And I was very concerned. There was an unstoppable tide for taking people with disabilities out of elderly housing. And frankly I think, yes, it is hard to justify that people who have got emotional or other kinds of problems should be housed among part of the population probably least able to cope. That's why we created at that time that separate program for the Section 8 disabilities. Now I am hoping that Secretary Martinez is going to reconsider the zero funding of that. And that's of course a minimum.
But I appreciate your pointing out some problems with that. And I hadn't fully realized this. One of the things it seems to me you were suggesting on page 6 is some PHAs don't take advantage of it. Have we not made it, or if we haven't it seems to me we should, make it a condition that if you, in fact, are going to designate some of your elderly housing to exclude the disabled, then you must as a condition of that be willing to apply for and administer the Section 8's. Is that not the case?
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Ms. O'HARA. No, it's not the case at the moment. It's an option, but it's not a requirement.
Mr. FRANK. Well, I am prepared to insist. And I will try to do that legislatively. That's an oversight on our part. We should have done that. Maybe I thought we were doing it. I don't remember. But yes, I do think that ought to be a condition of a housing authority designating units as elderly only. They then have to agree to provide this.
I also was impressed with your argument, and presume the others agree, that the 811 program ought to be pumped up. And I was struck when you note that in the CDGB and HOME and other programs, people don't do enough for the disabled. And I'm wondering, you know, there is this tendency to want to get the biggest bang for your buck. Doing the disabled programs right, as you point out, might be more expensive per unit. For example, the elderly like living together, the disabled don't. One of the legislative ways to deal with that might be to give a bonus so that in effect there is now a disincentive to use some of these programs for the disabled because the per unit cost is higher and you would at a given level have fewer units.
And I am prepared if you'd like to work with us to suggest some—I don't know whether we're going to get this done right away or what the situation is—but I would be prepared to offer a bonus to communities who incurred a higher per cost unit program to the extent that they had a higher per cost unit program because they were adequately housing disabled people that they be held harmless against that in their allocation. Does that seem to you?
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Ms. O'HARA. Yes. I think that's an excellent suggestion. And I also think that communities that have agreed to target the lowest income people, including homeless people, like Boston, they've created set-asides in their HOME programs, and they find developers are very willing.
Mr. FRANK. And I guess they ought to be doing that for the homeless in general. But as I think you've all pointed out, there's a subset of the homeless population that is the disabled homeless population. The general homeless population should be taken care of by appropriate targeting and proper funding of a production program. The disabled population has special needs in this case, literally. There is where I thought you might want to give some kind of incentive.
Let me just ask in terms of the people who have been homeless, one of the things we changed a few years, and I'm wondering how well this has worked and whether they have to do more, it turned out that you couldn't get into family public housing unless you were more than one person as a family. And I do remember that we changed that, I mean in the bizarre way in which legislative counsel referred to it, we decided that one person was a family.
Because obviously one of the real problems for those who think that economic progress in the gross domestic product is an undifferentiated blessing for all, I started my political career representing the Back Bay and Beacon Hill of Boston in 1972 and my staff director for us on this side, Kay Gibbs, was in the South End, and we have seen in those neighborhoods economic progress drive out what was a very important housing source for people who are now homeless in many ways, the single room occupancies, a very appropriate form of housing for some people who weren't either ready or willing or able to live in more than that. The single room occupancy. The loss of that has been a terrible downside of progress.
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Now one of the things we then found was that these people were excluded from public housing if they lived alone, and we did change the law so they would be eligible for family public housing. I'm wondering if that's something that was worth doing? Is it something we should be improving on? In some cases you have some waiting lists. In some cases we had vacancies in the family public housing. Let me just ask for a response to that last question if I could.
Ms. O'HARA. Briefly, Congressman Frank, the biggest problem——
Chairwoman ROUKEMA. There is a vote on the floor, so we'll quickly get this response.
Ms. O'HARA. The biggest problem is that most of the units in family public housing are two-bedroom and three-bedroom units. So that to have one person——
Mr. FRANK. And you can't deny that to a family, I agree.
Ms. O'HARA. That's a problem.
Ms. POPPE. Our experience in Columbus was that was a very positive change because we had senior high rise public housing that was not being fully utilized. We've now been able to convert some of that into mixed population housing that has both working households as well as disabled folks living together under a good rent structure.
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Mr. FRANK. Well, I thank you. Let's work on those other issues. I would be glad to do that, particularly, and I would welcome your support in changing the law so that you have to apply for those disabled Section 8's, if we can get the Secretary to reinstate them, if you're going to segregate the housing.
Chairwoman ROUKEMA. All right. Now let me ask Mr. Frank and your colleagues on your side of the aisle here. We have no more questions on this side. Do you want to return after this vote?
Mr. WATT. Madam Chairwoman, I'm perfectly willing to pass in the interest of allowing our witnesses not to have to sit here and wait on us.
Chairwoman ROUKEMA. All right. Thank you. Yes?
Ms. JONES. Just for the record, Madam Chairwoman, I'd like to welcome Ms. Barbara Poppe to the Hill. We were scheduled to have a meeting after this. And unfortunately, I'm not going to be able to do that. But my staffer is here and this is the area that I'm particularly interested in. Angela over here will be talking with you. And thank you so much for coming up. It's an important issue for Cleveland as well. Thanks.
Chairwoman ROUKEMA. Thank you. I think you can tell by the level of questioning we have here that you have met with a lot of approval and a lot of sympathy and understanding and empathy for what you have to deal with and what we'll all have to deal with in trying to improve this program, so that we will conclude this hearing, but also invite you if you have subsequent additions to make based on any of these questions or perhaps any misunderstandings you think there have been or additional recommendations, please direct them to Mr. Frank and myself and we'll include them in the record for all the Members. We greatly appreciate it. We're not dismissing you, but this happens all the time in the Congress and we're just fortunate that we were able to hear you in full before the bell rang. Thank you very much.
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[Whereupon, at 12:15 p.m., the hearing was adjourned.]
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