Segment 4 Of 4 Previous Hearing Segment(3)
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HOUSING AND AFFORDABILITY ISSUES
TUESDAY, JULY 17, 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 Miller, Grucci, Frank, Carson, Lee, Schakowsky, Jones, Watt, and Israel.
Also present: Rep. Jim McDermott.
Chairwoman ROUKEMA. Good morning. I will officially call this hearing to order. I'm Congresswoman Marge Roukema, the Chairwoman of this subcommittee. And I must acknowledge the fact that scheduling it so early on a Tuesday when we haven't had any votes as yet has diminished the number of Members here at the hearing. But I do want you to know that all the statements will be made part of the record and certainly will be widely distributed to Members.
I am sure that they will, because they are Members of the sibcommittee and have an intense interest in senior issues, they will brief themselves and become familiar with the record, and we will not diminish in any way the importance and the significance and the contribution of those who are here today.
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But in any case, I will make an opening statement and we will hear from other subcommittee Members. And without objection, all Members, either present or those that are not yet present, all Members will have their opening statements made as part of the record of this hearing, without objection.
Now I thank everyone for coming this morning, and certainly my colleague Mr. Frank and our colleague, Congressman McDermott, from whom we'll hear very shortly. But in any case, this is a panel, a fourth in a series of hearings that this panel is scheduled on the subject of affordable housing and a whole panoply of issues related to housing.
At the first hearing which we held which was in May, early May, May 3rd, witnesses defined the parameters and the complexities of the problem and outlined a wide range of potential or possible solutions. At the second hearing in the latter part of May, the 22nd, witnesses testified regarding—and I thought this was especially close to my interest level—regarding public-private initiatives that address affordable housing and community development block grants in the HOME investment—HOME the acronym—investment partnership programs. They I believe are particularly constructive in leading us into the future here, and I would hope that we would have more emphasis on public-private initiatives.
The third hearing focused on the underutilization of Section 8 vouchers as well as the specific problems faced by the homeless and the disabled populations in fighting affordable housing.
I might also interject here that the first hearing that we held really in the committee was with Secretary Martinez where we discussed the budget questions that are connected with the housing issues, and Secretary of HUD Martinez did stress some of his priorities in the context of the budget hearings, and so we will continue to keep in close communication with him.
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Now today's hearing is, as you know, focusing on elderly housing and the difficult problems faced not only in finding suitable, affordable housing, but also coordinating with the services that are so urgently needed. According to the Department of Commerce and the Bureau of the Census, the statistics document what we all know through our own family and community experiences, and that is that the aging population, that is, the number of 65 and over, is growing exponentially. And although it's 35.5 million now, we fully expect it to be at least, in the next 30 years, well over 70 million. People are living longer and really healthier than ever before in history, but that gives us an added responsibility here.
The HUD statistics also indicate that only one-third of the low-income citizens who are in need of affordable housing actually receive it. Furthermore, the high cost of housing is the most widespread housing problem for older Americans.
Now we talk loosely about partaking in the American Dream. Well, that is not only for young families, but it is also, in my opinion, the American Dream of affordable housing for senior citizens as well, and all Americans. But along with decent housing, seniors need the supportive services and the lack of options such as assisted living for low-income seniors who want to age in place in their communities, which I think is a positive goal for all of us, but this is a real and obvious problem and one that we want to focus on today and in the near future.
Clearly, legislation in this area is inadequate, although over the years non-profits and faith-based organizations have worked with HUD to develop creative ways to meet the needs of the vulnerable in our society.
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But our population continues to age exponentially as we said, and we need to develop new ways of meeting those needs.
There's no doubt that we must do more to increase production and to preserve existing elderly housing stock, renovation, and so forth. But the solution to this fundamental goal will not be easy, and it deserves our deliberate consideration. It's not only cost, it's a number of policy questions that we have to deal with, the whole range.
First, we must look at the existing HUD programs, as is very obvious, and this panel today will help us with that. And I believe we need to have greater flexibility in the programs in order to maximize their utilization. We'll ask our people here today for some advice and counsel based on their own experience in that regard.
We need to make sure that HUD has the trained staff and tools to properly administer the programs. I'm going to repeat something here that has been talked about a lot, particularly by Members on my side of the aisle, and that is the question of bureaucratic red tape that often slows the process and frustrates the recipients. And I know that Secretary Martinez, because we have discussed this, is committed to this goal, and certainly we here stand ready to work with him and really inspire him and give him incentive to accelerate the process of reducing the bureaucracy and red tape.
We know that it's more cost effective to provide services such as meals, transportation, personal care and health care to the elderly in their homes rather than moving them into costly nursing facilities. So it's not only good for them mentally, but it's good for them physically as well as being economically sound.
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Now, last year, the committee recognized the need to address the crisis and it created—and I want to stress here—it created the Commission on Affordable Housing and Health Care Facility Needs in the 21st Century. This commission was very well devised for the purpose to provide an estimate of the need for affordable housing, assisted living facilities, and so forth, as I've already outlined, that whole range of issues. But it was also to identify methods of encouraging private sector participation and investment in affordable housing for the elderly.
Unfortunately, the commission, which was scheduled to submit a report to Congress on its findings this June I believe, unfortunately, the commission members were not appointed until just recently, and 2 weeks ago this committee approved legislation to extend the life of the commission so that they could complete their important work.
I know all of us look forward to receiving that report when it is completed, and I speaking for myself now and I'm sure other Members of this Subcommittee and full Committee will be doing everything we can to help them expedite an in-depth study and make that report to us.
Well, I don't know what happened to my friend, Mr. Frank, but—all right. Mr. Frank, the Ranking Minority Member, Democrat on the Committee I understand has yielded to Congressman McDermott, our colleague and friend who has a constituent of his from Washington—Seattle—here, and so I will yield to Mr. McDermott, Congressman McDermott.
Mr. MCDERMOTT. Thank you, Madam Chairwoman. I walked into this room today and felt reminiscent of when I used to sit down in that chair way down there in the third row.
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Chairwoman ROUKEMA. You remember that well.
Mr. MCDERMOTT. You are to be commended on having this hearing. I think it's an issue that's going to grow and grow and grow.
As members of the public look at this congressional panel up here, anybody who looks about my age has been struggling with this problem. It used to be that when you got to be 60 or 65 or something, you didn't have to worry about your parents. My mother and father—my father died just a year or so ago at 93, and my mother is 91. And I have been through the search in Seattle for housing. So the issue that you are raising here is extraordinarily important to Members of Congress as well as to everybody else. And I think you couldn't have anybody better here to talk about that than Harry Thomas.
Harry has been—I was one of many who suggested that he be the head of—the Executive Director of the Seattle Housing Authority back in 1987. And with the exception of 4 years that he spent in the Governor's office, when Mike Lowry was Governor, as the housing expert, he has been the Director of the Seattle Housing Authority. At the same time, he has also been on the Board of the Federal Home Loan Bank, was Chairman from' 95 to' 99, and still is on the Board.
He has been the recipient of the 1995 Distinguished Alumnus Award from the University of Washington and the 1999 National Institute of Senior Housing Sidney Spector Award. So he has been recognized nationally for what he is, which is a strong and very powerful advocate for senior citizens. And if the rest of your panel is up to that level, you've got a really strong panel here, and it is my great pleasure to introduce Harry to the subcommittee. Thank you.
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Chairwoman ROUKEMA. Yes. It is my understanding that you couldn't remain for the second panel, Congressman McDermott, but we do appreciate your introduction and appreciate the fact that you have helped us get this kind of informed witness here today.
Yes, Mr. Frank.
Mr. FRANK. Mr. McDermott has to leave to get back to Ways and Means in the hopes of trying to retain some money in the Federal Treasury so that we can build housing, although the odds are against him in that regard in the current context.
I thank you, Madam Chairwoman, for convening this latest series. I think what we have had under your direction is a very important series of hearings that are I think constructing a very useful record. I have been struck time and again by the great degree of agreement among the witnesses; namely that increased production efforts must be a part of an effort to deal with the housing crisis.
There has been an acknowledgement that the very prosperity which has been of such great benefit to the country as a whole and to so many individuals has exacerbated the housing crisis in many ways, because it has driven up the price. And second, that a production program is an important part of it. So I look forward to hearing further testimony along these lines, and I look forward to our then working together to come up with a program.
And I do have to say, I was particularly pleased to note that testifying on behalf of the Association of Homes and Services for the Aging, a very important group, and as Mr. McDermott pointed out, one of the things we need to do is to develop a better range of services for people who are somewhere between a nursing home and complete independence. But I was very pleased to see that the spokesperson for that is the president of the National Church Residences. Because there are people who have argued that until and unless we pass the faith-based initiative, churches wouldn't be able to participate in social services. And I'm glad to have strong evidence that under existing law and existing practices, there is a very vital role for faith-based institutions. And I'm delighted that a representative of a faith-based institution association is here speaking before us today. Thank you.
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Chairwoman ROUKEMA. Thank you. I'm glad you made that point, because I am one of those who do not—because of the experience we've already had with faith-based organizations in a whole range of issues, particularly in housing—do not understand why the question is now being raised as to whether or not this is Constitutional. But we won't go into that now.
Mr. FRANK. Well, not Constitutional, but you just did raise it, and I do have to respond. And the answer is, what we object to is not funding faith-based institutions, which is being faced, but empowering them to ignore anti-discrimination policies. And if that can be resolved, then this is a non-controversial issue.
Chairwoman ROUKEMA. I don't think—well, that's the point. But that was not raised initially. It was a comprehensive.
Mr. FRANK. Well, no, excuse me, Madam Chairwoman. No, excuse me. I have a procedural——
Chairwoman ROUKEMA. I'm sorry. Excuse me——
Mr. FRANK. No, I'm sorry, Madam Chairwoman. I am sorry. You cannot use the privilege of the Chair to raise a debating point and then shut off debate. There's nothing in the rules that allows you to do that. You can't make unilateral interventions and then announce that they're not to be discussed further. The fact is that the bill introduced does empower people to discriminate, and that's what we're going to be debating.
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Chairwoman ROUKEMA. Mr. Miller, please.
Mr. MILLER. Thank you, Madam Chairwoman. I'm glad to see my good friend Mr. Frank is just as calm as ever, and not passionate about any of these issues. He talked about increasing production efforts, and I absolutely agree with him. I think many of the problems we face today in production of housing units are directly associated with the Government. In fact, I am firmly convinced that the problems today we have with production are Government.
And we need to be more creative. The creative use of Section 8 vouchers is a great opportunity for us. There are people who qualify for Section 8 vouchers and who are going to use Section 8 vouchers, yet we limit those to rental housing. And I think we need to be broader in concept. Why shouldn't such people be able to use a Section 8 voucher to buy a home? We have, for some reason, determined that we are going to lock people into the rental housing market when there should be more creativity on Section 8 vouchers that are used so that in 3 to 5 years an individual or family will become an active participant in the housing market and become empowered by that involvement.
I know in the 1980s in the early stages of the congregate care concept, I was doing a lot of work in that area and I developed for over 30 years. And the thing I found in housing that most merchant builders, as you would call them, have is entitlement. And I seem to be very good at entitlement working with Government agencies. So most of my work through the 1980s and 1990s was basically getting entitlements on projects so merchant builders could go out and build affordable housing.
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But senior housing has changed dramatically from when I was a child. When I was a kid, you thought of people in their sixties as old. I'm 52. People in their 60s today are not old, and when I was involved in congregate care in the 1980s, you had to design a product for individuals who did not necessarily want to own their own home anymore, but were very mobile. And basically, we were designing cruise ships on the land that provided all the services that people would receive on a cruise ship, but they received such services as part of their lifestyle. They were active, yet they did not want to live independently, but they were completely ambulatory.
And we have a huge growing crisis, I believe, in the housing market. There is a huge crisis in affordability, and much of that crisis is directly due to the impact Government places on property owners wanting to develop their property, such as habitat set-asides. I have some friends in Southern California that want to develop 640 acres in an area that should result in affordable housing, but for them to develop the acres, they have to set aside 5,000 acres in some other location as habitat.
It's very difficult to go out and purchase 5,000 acres to develop 640 acres and then at the same time produce affordable housing. And that's something we're going to have to deal with. And with an aging senior population, the demands are growing, and we're going to have to be able to address that proactively, and we're doing a very poor job being reactive to the crisis I believe Government has caused and allowed to exacerbate over the years. And I'm encouraged by some of my friends and colleagues on the other side of the aisle, on the other side of the Chairwoman here. Is my time up, Madam Chairwoman?
Chairwoman ROUKEMA. Yes. I'm afraid it is.
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Mr. MILLER. You are so patient with me, but I thank you very much for that patience.
Chairwoman ROUKEMA. Thank you. And by the way, I will simply repeat that for those that weren't here at the beginning that I have unanimous consent that the opening statements of all Members will be included in the record.
In order of your appearance, Congresswoman Schakowsky is next.
Ms. SCHAKOWSKY. Thank you, Madam Chairwoman. First I would like to associate myself with the remarks of Ranking Member, Mr. Frank, particularly in regard to the need for production of affordable housing. Production, production, production.
And Madam Chairwoman, I would like to say to you that I would very much like to work with you on the issue of bureaucracy. Many of the developers that I talk to, people in the private sector, are very concerned about this, and I've been promising them and would like to fulfill that promise to work on the issue of reducing some of the paperwork involved. So I hope I can participate with you on that.
A couple of things I wanted to say. Seniors all across the country and in my district too are asking the very same questions: Will I able to stay in my home? In my district we have the expiration of project-based Section 8 contracts, and people are wondering where they're going to go, will there be affordable and safe housing in my community? Will I be able to get the services I need to remain independent? Will I be able to get home-based services or access to a quality assisted living facility if necessary?
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For senior citizens and their families, these are not problems to be solved in the future. They are today's problems and they need immediate and effective answers.
I hope this hearing and the activities of the Subcommittee and the dedication of housing advocates around the country will help us get to those answers.
As the Chairwoman has already pointed out, today more than one in four households that receive Federal housing assistance is headed by an older person, yet only one in three low-income seniors in need of affordable housing is getting assistance. Older women are particularly hard hit, not only because they live longer, but because their median income continues to lag behind that of older men and the rest of the population. Even those older women who own their own homes face enormous challenges just to hang onto those homes, to avoid the trap of scam artists and predatory lenders, to cover expenses such as maintenance, property taxes, and any physical modifications they need as they age in place.
As the older population grows, in particular the number of persons over 85 years of age, this problem will only get worse. We need to recognize that the older population is not monolithic. That a healthy 65-year-old has different housing and support needs than a frail 90-year-old. That's why I'm glad that we're looking at a continuum of housing and support needs today. We need to make sure that financial assistance, services and protections are in place to allow senior citizens to remain in their homes and in their communities. As we move toward greater emphasis in naturally occurring retirement communities and assisted living, we need to promote resident rights and guard against potential abuses.
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Meeting the housing needs of older Americans is a multi-level challenge that starts, but clearly does not end with the need for creating additional housing stock that is affordable, safe and accessible. Expanded information and financial counseling, transportation, housing, nutrition and other needs must be part of the mix. We need a national commitment to implement an affordable housing policy, and I look forward to hearing from the witnesses on how to meet that goal.
Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. All right. I thank you.
Now Congresswoman Carson, please.
Ms. CARSON. Thank you very much, Madam Chairwoman. I would like to thank you for convening the hearing today. I would like to thank all the witnesses and welcome them for their input.
Since we began this series of hearings earlier this year, virtually everyone agrees that we face an affordable housing crisis nationally in every region of the country. Similarly, we are aware of HUD's annual reports that have shown a steady rise in worst-case housing needs.
While Social Security and other programs have done a great deal to alleviate poverty among the elderly, the elderly remain more likely than any other adults to be poor or near poor. In addition, the proportion of the elderly in the population is increasing, creating a need for a more comprehensive approach to housing and caring for the elderly. We need to focus on affordable options to keep seniors in their own homes or in enriched housing such as in assisted living. This helps seniors maintain independence and avoid the lower quality of life and higher costs that are often associated with nursing home care.
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For seniors, housing is much more than just a roof over their head. It allows them the dignity and respect that they deserve.
Perhaps the most powerful lesson I learned, Madam Chairwoman and Members of the subcommittee, was before I was elected to Congress is I served in the Office of Senate Housing Trustee in Indianapolis, which handled poverty for that particular township. We learned poverty can truly happen to anyone. One person in particular comes to mind, an elderly person now, well educated, white, male, once rich and very powerful lobbyist. I remember him giving lavish parties that impressed even the leaders of the community's political and financial institutions. But tragically, this young man had a stroke, lost his job, his house, his cars, and all of his fancy friends left as a result. He now lives in Government-subsidized housing which I acquired for him, and on occasion he still calls me and asks for money to enable him to survive for another few weeks because he is too embarrassed to ask anyone else.
If the people who feel that poverty only happens to unwed mothers could have seen the embarrassment in his face or heard the humiliation in his voice as he asked for a few dollars to help him get through the month, they wold have realized that a social safety net is important for all members of our society. We never know when we ourselves may become the least of these.
It is for this reason that I have fought and will continue to fight to ensure that affordable housing is available to all, especially the elderly And as my dear friend Jan Schakowsky pointed out earlier, women, and particularly minority women, face a crucial situation in terms of their poverty levels and their lack of affordable housing accommodations.
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Last year we passed a number of innovative policy provisions to give us more tools to meet the growing challenge. Yet the proposed Administration funding level for elderly housing is apparently static. With the rising costs of construction, this means fewer affordable housing units will be built under Section 202, with the same being true for Section 811 disabled housing programs. As rental prices increase, Madam Chairwoman, as our elderly population grows, we should be expanding not contracting our efforts.
I appreciate again, Madam Chairwoman, the time that you are taking today, the interest that you have demonstrated in this very crucial issue that faces our Nation's elderly, and trust that we as a committee and as a Congress will be able to counteract the growing shortage of affordable housing for our elderly.
Thank you very much, Madam Chairwoman. I yield back the balance of my time.
Chairwoman ROUKEMA. Thank you very much.
Congressman Watt.
Mr. WATT. Thank you, Madam Chairwoman. I will be very brief. I really hadn't intended to make an opening statement on the issues before us. I did, however, walk into the middle of your discussion with Ranking Member Frank about the faith-based initiative. And I hope that the Chairman will aggressively look at the proposal that is being advanced I think this week on the floor. The faith-based initiative debate is not about whether the Government will be involved in or whether religious institutions will be involved in providing services that the Government provides. Religious institutions do that now, and they do it without impediment, other than having to set up a 501(c)(3).
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This debate is not about that. If that were what the debate was about, there wouldn't be a debate. There would be a 435-to-0 slam dunk. This debate is solely about whether religious institutions will be allowed to discriminate in employment in the delivery of the Government services. And there are some of us who feel strongly that we should not be called upon to vote to allow religious institutions or anybody, any institution, to use Government funds to discriminate in employment.
And so I hope the Chairlady will look very carefully at the proposal that is being advanced and look beyond the rhetoric. The rhetoric is where you and Mr. Frank were engaged in the debate. But the substance of the bill is not about whether religious institutions deliver services. They already do that. The substance of the bill is about whether religious institutions will be allowed to discriminate in the delivery of those services in their employment practices.
I yield back the balance of my time.
Chairwoman ROUKEMA. That debate will take place at the appropriate time in the appropriate venue. Congresswoman Barbara Lee.
Ms. LEE. Good morning. Thank you, Madam Chairwoman. And I would like to welcome our panelists today. The problem that we are discussing is very, very critical. The fastest-growing segment of our population, the elderly, actually pitted against a severe housing crisis throughout the country, and particularly in urban areas like for instance in my district, the City of Oakland and Berkeley in California.
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From the testimony submitted, I understand that one-third of the 1.3 million people living in public housing are elderly or disabled. This is another reason why of course some of us were outraged when the Administration cut funding for the Public Housing Drug Elimination Program, which really does directly impact the safety of our elderly and the disabled.
The housing crisis is terrible for everyone in my district in the Bay Area, and it is more devastating for the elderly who are on fixed incomes, burdened with of course as you know increased energy costs, and are really less able to move about and deal with transient housing options.
So I look forward to your testimony today so that we can hear what your opinion is on how effectively our Federal housing programs are working for the elderly and how we can improve them.
Now I know that there are many model communities around here with regard to affordable housing for our senior citizens. One community, for example, which I have the privilege to visit quite often is Sun City, Arizona. But in Sun City, Arizona, of course, there are many—or the majority of senior citizens, they can afford to live there, and so they have these options. But they do have wonderful affordable housing actually in that area. Some of the housing is intergenerational, which I think makes a heck of a lot of sense as we look at how we develop affordable housing for senior citizens.
One thing actually rings clear from every one of our hearings on affordable housing, and that is the need for subsidized programs of housing production. Now funding of course is critical for housing production. So I support using the excess FHA and Ginnie Mae funds as well as increased appropriations to address this issue which is really crippling our communities.
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I urge this Subcommittee to really look at viable and well-funded housing production plans that are very creative, as I mentioned earlier, some that we know that are working in our country, as we move forward to ensure that our elderly have decent and affordable housing.
I thank the Chair for conducting this hearing, and I look forward to the testimony.
Chairwoman ROUKEMA. I thank you.
Now it is my understanding there are no other Members who wish to be heard. And with that, we will welcome our first panel, and they are at the table. But first I would like unanimous consent to insert into the record written statements submitted to us by the Health Care Financing Study Group who are not here today to testify, but they have submitted a statement, as well as the National Association of Housing Cooperatives. Without objection, their testimony will be submitted to the record.
I welcome the panelists here today. I will not spend the time giving lengthy introductions. But I do want to acknowledge that in each case we have members—panelists here who are experienced and highly knowledgeable on these subjects from a very practical, in-the-field experience.
Mr. Thomas Slemmer has been with the National Church Residences for the past 25 years, a long experience, and served as its President and Chief Executive Officer and has been the Chief Executive Officer since 1989, as I understand. He s a member of the Board of Trustees of the National Affordable Housing Trust and is very active with the American Association of Homes and Services. And you are testifying for them today.
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Mr. Slemmer, will you please continue, and understand that the full text of your testimony will be in the record. However, if you can, please limit your oral statement to 5 minutes. Thank you.
STATEMENT OF THOMAS SLEMMER, PRESIDENT, NATIONAL CHURCH RESIDENCES; ON BEHALF OF THE AMERICAN ASSOCIATION OF HOMES AND SERVICES FOR THE AGING
Mr. SLEMMER. Madam Chairwoman, Members of the subcommittee, thank you very much for inviting us. I am here today representing the American Association of Homes and Services for the Aging. I might say that I am on the Board of Trustees and Chair of the Housing committee this year.
Mr. WATT. Madam Chairwoman, could you get him to pull the mike a little bit closer to him?
Mr. SLEMMER. AAHSA's members, as you may know, operate 300,000 units of housing, mostly federally assisted. Over 50 percent of our members are faith-based, and we're proud of the record that we have of basically being the organization that serves most of the Section 202 sponsors in this country. It has been a very successful program working with AAHSA members. We think not-for-profit housing sponsorship really makes a difference.
We represent members that represent seniors in their communities and are really an enduring presence in their communities for housing needs.
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We have a lengthy written testimony that I'll just refer to. But after listening to the opening remarks, I think the mathematics are simple. There is doubling of the senior population that's going to happen in the next 30 years. There is low production. The Section 202 program is only funded at around 5,000 units a year. We're really disappointed in last week's mark of the appropriations bill where they kind of leveled the funding for Section 202 again next year. We're concerned about that.
But more importantly, there's a loss of senior housing units going out of the system. We don't have exact breakdown on this, but there are estimated to be about 300,000 affordable housing units that have been lost in the last 2 or 3 years due to opt-outs and cancellations of contracts.
This is a crisis. You talk about production. I'm not sure production is the biggest issue. The loss of this kind of housing is very, very significant and very discouraging. If you think about what's going to happen in the next 30 years in this country where we've talked about the largest demographic shift in any country in history.
The AARP has just conducted a study about the Section 202 program alone, and I believe that they are showing nine people on the waiting list for every Section 202 unit. I can tell you from my 25 years' history, that's the largest waiting list that we've ever seen. It's getting worse, and we really urge your attention to that.
So the solutions? Well, again, we're disappointed with the appropriation levels on Section 202. We really encourage you to look at that. How can we double the population of seniors and not do something about production?
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In 1995, there was $1.2 billion allocated for Section 202, and it's down now, I think down to 679. We're really encouraging you to consider a 10 percent increase. Let's get on with more housing production. And also redoing all the Section 8 contracts. That's been something that you've been doing. We certainly need to not take our eyes off that very important piece of legislation.
Not only production, but the modernization is really important. Think of the number of housing facility units out there for seniors that are getting older. You expand that out for the next 30 years and you've got some really serious situation. The low income elderly 236 portfolio is in dire need of renovation and retrofit and rehab. AAHSA is recommending let's get started with this. Let's recognize this is a problem, and let's allocate at least $250 million this year toward that effort.
I think one of the most critical issues, however, and perhaps maybe the quiet issue facing us is preservation of affordable housing. There are again a loss of significant number of affordable housing. We worked in California last year, Congresswoman Lee and Congressman Miller. The city of Pacifica, California, City Manager Dave Carmody came to us and asked whether we would participate in trying to preserve his senior housing facility that was built in a prominent location in Pacifica that has been serving low income seniors for 20 years. That community experienced a new owner buying that facility, issuing eviction notices at 3:00 a.m. in the morning to the senior residents there. And that city, to their credit, decided to really fight that. They took the property through eminent domain, spent over $300,000 in legal fees, and we were able to participate with the county and the city and the State to preserve that as affordable housing for seniors. Where would those seniors have gone? In California, it could be 60, 100 miles away before you could find other affordable housing.
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So the preservation is a really important issue that's affecting senior housing right now. We have to get HUD concentrating on preservation. We've got to make sure our legislation focuses on preservation. In many ways, it may be the bigger issue than production even this year.
We also worked with the city of Manhattan, Kansas on a similar project. Twenty-year-old senior citizen building downtown Manhattan, Kansas, owner opting out. And the city is really concerned about the loss of that housing.
We heard a disturbing report out of Michigan 3 days ago that in the midst of all of the housing production issues, there are over 500 units of affordable senior housing that were just foreclosed on by HUD, lost forever to the low-income portfolio.
We urge you to consider production, modernization, preservation as well as the social service coordination. We think those four components really make a big difference in doing what we need to do to provide quality housing for our seniors in the next 30 years.
Thank you.
Chairwoman ROUKEMA. Thank you.
Now we have Ms. Jane O'Dell Baumgarten. Ms. Baumgarten is here from North Bend, Oregon and is a member of the Board of Directors of the AARP, for whom she is testifying today. She has also formerly served on the Governor's Commission for Senior Services and was a delegate in 1995 to the White House conference on aging. We do appreciate your being here today and look forward to your testimony.
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STATEMENT OF JANE O'DELL BAUMGARTEN, MEMBER, BOARD OF DIRECTORS, AARP
Ms. BAUMGARTEN. Good morning, Chairwoman Roukema, Ranking Member Frank and Members of the Subcommittee on Housing and Community Opportunity.
In addition to serving on AARP's Board, I am also privileged to serve on the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century.
Today, my remarks will represent only the views of AARP. AARP appreciates the tradition of strong, bipartisan support for housing programs serving older Americans that has characterized this Subcommittee's work. We hope that the same bipartisan spirit will extend into the future as the Subcommittee examines and prepares to address issues associated with housing affordability and availability.
There are powerful demographic forces at work in our Nation. Projections by the U.S. Census Bureau estimate that by the year 2020, the number of persons aged 65 and older will grow to over 53 million people, up from 34 million estimated for 1998. Changes in the age distribution of the Nation's older population are also occurring. Presently, the age of the older population is driven by large increases in the number of persons age 75 and older.
Housing affordability and availability are major problems for many older Americans, and especially for those who rent. AARP's analysis of the 1999 American Housing Survey indicates that approximately 25 million households were headed by a person age 62 or older. Of these, nearly 5 million or 20 percent were renters. The same survey analysis indicates that 57 percent of the older rental households paid 30 percent or more of their income on housing, compared to 39 percent of younger renter households who paid 30 percent or more on their housing.
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And many of these older persons, especially those who live alone, eventually will need some supportive services to remain independent in their homes. The availability of these services varies widely due to the residential distribution patterns of older Americans. Such dispersion presents formidable challenges to the efficient delivery of services such as transportation, in-home health care, home-delivered meals, and other necessary services.
It is especially relevant for the purposes of today's hearing to recognize that as the elder population increases, the proportion who have difficulty performing one or more basic activities of daily living, such as bathing, dressing or eating, will also be increasing. The Census Bureau's 1995 Survey of Income and Program Participation indicates that approximately 40 percent of persons age 62 or older live in subsidized rental housing units and have at least one activity of daily living limitation, such as moving around the room, transferring from a bed or chair, bathing, eating, dressing, and using the toilet. Or they have one instrumental activity of daily living limitation such as telephone, using the telephone, keeping track of bills, preparing meals, taking medicine, and getting outside the home. This compares with 28 percent of older persons in unsubsidized rental property and 19 percent of older persons in owned homes.
These figures capture the essence of the challenge before us. The experience of the Section 202 supportive housing program for the elderly helps to illuminate issues, challenges, and most importantly, the need for supportive services. It also helps to demonstrate the importance of viewing housing as the effective point-of-service delivery.
I would like to briefly summarize several key findings from a recently released extensive AARP-sponsored study of the Section 202 program. Comparisons of the 1998 Section 202 survey findings with those of the 1988 survey document that:
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Section 202 units for older persons continue to be in high demand, as suggested by low vacancy rates—1 percent for one-bedroom units—and have long waiting lists—9 applicants waiting for each vacancy that occurs in a given year.
Residents are older and frailer than was indicated in the earlier research. The average resident age increased from 72 in 1983 to 75 in 1999. And 39 percent of those residents were over the age of 80.
Capital reserves were generally viewed by managers as inadequate——
Chairwoman ROUKEMA. Ms. Baumgarten, can you summarize your remarks?
Ms. BAUMGARTEN. I'm going to.
Chairwoman ROUKEMA. Yes. Thank you.
Ms. BAUMGARTEN. If you would just let me finish this one, two sentences?
Capital reserves are generally viewed by managers as inadequate for retrofitting projects to meet the changing needs of aging residents.
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Section 202 housing needs to meet the changing needs of residents, because for them, the critical difference is remaining in their apartment, in a supportive community, with their belongings or admission to more expensive nursing home care.
And I thank you for this opportunity to testify, and we look forward to working with the subcommittee.
Chairwoman ROUKEMA. Thank you, Ms. Baumgarten. May I just ask you, you held up that report. Do you want that submitted for the record?
Ms. BAUMGARTEN. I believe we have submitted this.
Chairwoman ROUKEMA. All right.
Ms. BAUMGARTEN. And if not, we will see that it is submitted.
Chairwoman ROUKEMA. With unanimous consent, that will be included in the record.
Mr. Robert Yoder is with us today, and he has had extensive experience for the Warrior Run Development Corporation, right? Where you have developed and managed more than 1,400 low- and moderate-income rental housing units in Pennsylvania.
You are testifying here today as a representative of the Council for Affordable and Rural Housing. And I believe you were Past President of the Council for Affordable and Rural Housing, and that's a component of this discussion that we must hear from. Thank you very much, and we yield.
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STATEMENT OF ROBERT P. YODER, SR., VICE PRESIDENT OF YODER BUILDERS AND WARRIOR RUN DEVELOPMENT ON BEHALF OF THE COUNCIL FOR AFFORDABLE AND RURAL HOUSING
Mr. YODER. Madam Chairwoman and Members of the subcommittee, the Council for Affordable and Rural Housing, CARH, C-A-R-H, and I thank you for the opportunity to speak and for the subcommittee's interest in the needs of rural America and our elderly citizens.
The real issue that faces America is how to facilitate efforts to provide decent, safe and affordable housing. We believe that this an ongoing process that requires us to adequately maintain the existing affordable housing stock, provide for development of new housing in areas that need it, and provide services for elderly people typically in need.
As a rural developer myself, a lot of my portfolio has in the past been financed by the Rural Housing Service or the U.S. Department of Agriculture, the past Farmer's Home Administration.
First of all, the Rural Housing Service in the early 1990s, had a budget of $972 million, to this year which has declined to $114 million. And what that relates to in what housing can be produced is that in 1990, that money produced about 16 projects in Pennsylvania for housing for both low-income families and elderly. Today it produces less than one.
The problem is—and as a matter of fact, this year it produced zero in Pennsylvania. The competition—there will be no Rural Housing Service projects in Pennsylvania. One of our concerns is is that the money be, at least some of the money be restored to the rural areas. Because the Rural Housing Service is the entity that finances projects in areas that are below 20,000 population.
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Second, in light of the shortage of funding, we have analyzed ways to utilize Federal funds to achieve maximum financial leverage. Our best suggestion, outside of restoring the budget funds, is to leverage Federal appropriations through new programs under the Federal Home Loan Bank System.
The banks and their members are an appealing source for financing, because members are largely located in or near rural areas. In our experience, members also tend to be familiar with the development of rural housing.
Third, making the tax credit program more compatible with the Rural Housing Service program and more flexible to meet rural housing needs.
Fourth, provide targeted Section 8 vouchers to rural areas to actually produce housing.
Number five, restore unified standards to the Rural Housing Service. Today the Rural Housing Service States operate as a separate entity. The State directors answer to the Undersecretary and not to the Administrator. We are asking that at least it be looked at as HUD does as it has a chain of command where the Administrator actually can be Administrator to the States rather than the Undersecretary, which we lose communications in that chain.
And remove the financial barriers such as exist today, as you heard other panelists talk about, the transfer, which is the exit taxes from private investors under the IRS Code. Exit taxes are extremely high. And also the prepayment restriction that was levied in the early 1980s for owners that are seeking to continue affordability. Those two really go together, because if you can't refinance it to take out the people that are there, the problem is is that we end up with a project that keeps going downhill.
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I appreciate the opportunity to present our concerns, and I would be happy to answer any questions. Thank you.
Chairwoman ROUKEMA. I thank you, Mr. Yoder. I don't have a specific question, but I do want to make an observation here. Certainly you've made a case on the rural housing, something we will have to look into. And I will personally be looking into what the implications are of your recommendation with respect to the Federal Home Loan Bank Board. I will observe that and look into it and see about those regulations that were changed during the Clinton Administration, as you have identified them in the last year or two.
But I would also like to point out that in any way we cannot look forward to a huge burst in spending, but we've obviously have got to recognize the cost effective case that has been made very definitively here, and that it is very cost effective if we are to meet the housing needs of the elderly as well as the incentives for not only production and modernization, but also for treatment in the homes and living assistance that is highly cost effective. There's no question about that.
So I will simply observe that I'll be more than happy to work with you. I don't know how we make the case in terms of not only the authorizing of new programs, but also the appropriation of money to—the funding of that money. But we'll try. The case is there, and our hearts and souls are with you. Now we have to put our minds to work on getting the money and proving the cost effectiveness of the programs. And with that I'll yield to Mr. Frank.
Mr. FRANK. Thank you, Madam Chairwoman. And let me pick up where you left off, because I agree we have an obligation, all of us, to do the best we can within the current budget. And I salute the ingenuity and determination of the people who are represented here to do that.
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But it is also clear from this hearing as in the previous ones that we achieved what we called a surplus to be able to afford a tax cut that we put through in part by squeezing housing programs. We've heard this kind of testimony about the reductions, rural housing down from, what, 600 million to 100 million at a time when inflation alone would have sent you in the other direction. Section 202 being cut back.
The preservation program. Mr. Slemmer correctly pointed out that one of the problems has been that we've been losing affordable housing, and we've been losing it partly because of budget constraints that were imposed on the preservation program. I wish they hadn't designed those programs the way they did years ago that allowed developers to opt out.
The courts have made it very clear that the rights that developers acquired to opt out and to change were basic legal rights that couldn't be simply abrogated, they had to be paid for if we were going to get them to change them. And this Congress did, and this Subcommittee took the lead in putting into place programs that would have minimized displacement and prepayment, and then those were changed when control of Congress changed, and money was withheld.
So I think we should be very clear. Yes, we want to spend this money thoughtfully. But the single biggest problem we face here is a national decision to withdraw resources from the production and rehabilitation and preservation of housing for the elderly, and that's what has exacerbated this crisis.
Now it's fashionable for some people to blame the Federal Government and say, ''Well, what we need to do is let's just cut back and free up the resources.'' In some cases, that works well. In the area of housing production for older people, I think it has not worked well. And that doesn't mean everything should be 100 percent Government. It means the private-public cooperation. But you can't have private-public cooperation if there is not on the part of the public sector some money brought to the table.
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And housing for older people is an especially important point in the debate we have philosophically over the role of the Federal Government. Those who talk about the Federal Government is always making things worse. People who believe, as Ronald Reagan said in his first Inaugural, that Government was not the answer to our problem, but the problem. People who like to point to Government's failures have a real problem when it comes to housing for older people. Because the Government has, the Federal Government has helped build a good deal of housing for older people over the years, some directly through public housing, through Government, Federal-local. Some through Federal-private. A whole range of things.
And judging by consumer satisfaction, the Federal Government's efforts in the field of housing for older people are one of the most successful things in our society. Someone gave the figure out, nine people on the waiting list for every unit. Who gave that? Somebody had that figure. Who had that? Ms. Baumgarten, you had that figure? Would you repeat that?
Ms. BAUMGARTEN. Which figure are you talking about, Senator?
Mr. FRANK. There was a figure about 9 people on the waiting list for every unit.
Ms. BAUMGARTEN. Yes.
Mr. FRANK. Would you repeat that for me?
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Ms. BAUMGARTEN. Yes, of course. It was in the summary. I'll read the statement again if it's OK with you.
Mr. FRANK. Fine.
Chairwoman ROUKEMA. Could you speak into the microphone, please?
Ms. BAUMGARTEN. Oh, yes. I'm sorry.
Chairwoman ROUKEMA. We're running out of time here, so go ahead.
Mr. FRANK. The one thing you never have to apologize for in these halls is repetition. Please go ahead.
[Laughter.]
Ms. BAUMGARTEN. The Section 202 units for older persons continue to be in high demand, as suggested by low vacancy rates, and that was 1 percent for one-bedroom units, and long waiting lists. Nine applicants waiting for every vacancy that occurs in a given year.
Mr. FRANK. Thank you. That's all I needed. Because remember, we are talking now about a Federal program funded with Federal dollars. And I think that is the most direct repudiation of people who assume that the Federal Government can't be helpful, that it is possible to get—consumer demand tells us that there is a great deal of satisfaction with this program.
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So we have a need, a need that's going to get worse with the demographics. We have the resources in this wealthy Nation to do it. We have a track record of the Federal Government doing it well. And the only thing that stands in the way is the political refusal of the executive branch and the legislative branch to make the resources available, and I hope that people will continue to insist that we reverse this policy and in fact make the resources available with great success. Thanks to the panel.
Chairwoman ROUKEMA. Congressman Miller please.
Mr. MILLER. Thank you, Madam Chairwoman.
I think some of the Government programs we are implementing currently are working because we are absolutely unwilling, as a Government, to deal with the problem. So when we're talking about placing a bandaid over a sore rather than addressing the problem that caused the sore. Yes, you can say that some Government programs are certainly very successful and Government can continue to subsidize housing programs, thereby creating more affordability. And in essence, you can say that Government is successful in what it is doing. But we are unwilling and have been unwilling to deal with the source of the problem.
You, Ms. Baumgarten, talked about housing affordability and the problems we face with that. One of the speakers talked about the City of Oakland getting involved in a project to guarantee affordable housing.
Mr. Slemmer, were you the one that we talked about it?
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Mr. SLEMMER. Pacifica.
Mr. MILLER. I've done projects in the San Francisco Bay Area and the fees are the most outrageous and the costs are the most outrageous in the State of California. And you cannot go out as an independent builder and build affordable housing in the San Francisco Bay Area, because it's impossible based on the fees they charge you to build in those areas.
So, yes, you can come in and we can say, Government can subsidize and Government can help create affordable housing, and that will create affordable housing for people, and I'm not arguing that Government has to do it, because Government has created such a disproportionate field for the building industry to work within that they cannot produce affordable housing.
Now, Mr. Yoder, you said targeted Section 8 vouchers are necessary to produce housing. You don't produce housing with Section 8 vouchers, you create demand with Section 8 vouchers. Not a dime of Section 8 vouchers goes to produce housing, so your verbal statement was incorrect and I think you made a mistake that Section 8 vouchers are necessary to be able to put people into affordable housing.
But it takes Government subsidies to rectify the problem created by Government. For example, I had a 500-unit apartment project in the San Bernadino County area. I wanted to build low- to moderate housing units for people. I could not do it, because the local government there charges the same fee for an apartment as they did for a single family residential home.
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I could not build 500 affordable housing units in a community that needed those housing units, because Government fees were so outlandish that you could not afford to build them. Yet, we continue to put a bandaid over the problem.
I support the Section 8 voucher program, because there's no resolution to the current housing availability crisis until we deal with the problem, and that is the unreasonable demand placed on property owners by Government, such as the Endangered Species Act—you see what it's done to California and many other States.
You can't build on your property, because in order to develop 600 hundred acres, they want you to buy 5,000 acres somewhere else to set aside for habitat. You cannot purchase 5,000 acres for habitat and build on 640 acres, and then create affordable housing. It's impossible.
Yet, through Government enforcement of the Endangered Species Act, we've eliminated a huge sector of property out there that we could use for affordable housing. I support programs we have today to help people who cannot help themselves, but the problem we have is that Government has created the demand and the need in the affordable housing sector, because they place such outrageous regulation on property owners who cannot create affordable housing.
Until we are willing to look at the causes of the problem, and understand that the cause of the problem is Government—and I will sit with any Member of this subcommittee with a group of property owners and developers and show them exactly what Government has done to create the problem.
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Until we are willing to address that, yes, we have to move forward with the Section 8 vouchers, but we need to be creative with those vouchers so people can use vouchers as an incentive to buy houses. But the problem needs to be addressed in this Nation, and part of the problem is that builders and property owners have become cash cows for Government, like it or not.
In many cases, there's no nexus between the fee charged to the builder and what the builder is doing. Until we are willing to face the fact that property rights no longer exist, because you can't prove a taking in Federal court, if you leave any value to the property, and you, as a property owner, know that Government can say, ''Well, you can graze cattle on your property, so your property's still worth something even though you can't build on your property.'' That's outrageous, it's criminal, and we need to resolve the problem we have allowed to occur. And until Government's willing to do that, we are going to sit here year after year and listen to the needs of people who need help, and we need to help, but we are unwilling to be proactive and deal with the causes of the problem. We're just being reactive to a situation we have allowed to occur.
And God bless each of you who are trying to create affordable housing for people who need it, because seniors and young people are facing a crisis today, and that is, where do they live?
Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Thank you.
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Mr. Slemmer, did you want to react or comment on the specific concern expressed by Mr. Miller, and keep it brief.
Mr. SLEMMER. Yes, I wouldn't mind saying a few words. There are several concerns there. Part of it is bad Government can escalate the cost of housing, but good Government can do a lot to solve it.
The City of Pacifica, for example, saw the need. Developing Pacifica is not a matter of governmental problems, it's a matter of the really high price of real estate. High-priced real estate drives out low income folks. That happens not only in California, but along both coasts. That's the reason good Government needs to step in and really help out.
Madam Chairwoman, you talked about the cost problems, that you couldn't spend money, a lot of money on this. And I would suggest that it doesn't cost a lot of money to direct HUD to really participate in this preservation effort. It doesn't cost a lot of money to modernize your existing housing stock. It's a lot less expensive than new production. I'd really encourage you to look there.
Chairwoman ROUKEMA. I want to explain the only reason I called on Mr. Slemmer in reaction to Mr. Miller, who took his full 5 minutes and more, was the fact that Mr. Slemmer was addressed by name.
Mr. MILLER. I had a lot of questions, but I ran out of time, Madam Chairwoman.
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Chairwoman ROUKEMA. I know, and isn't that too bad. Five minutes goes awfully fast when you're having fun.
Thank you.
Now, Congresswoman Schakowsky.
Mr. FRANK. Would the gentlewoman yield to me for just ten seconds? I just want to say with regard to the gentleman from California, that the Endangered Species Act is, of course, a Federal program, but in order to be clear, as he talked about these problems, the fees, and I would assume zoning, most of the problems in the area I represent are local, not Federal. So the question then is, when we talk about intervention, is the Federal Government going to step in and further regulate local affairs.
I'm for it, but I'm not sure exactly how much support we're going to have because, as I said, while the Endangered Species Act can be a contributing factor in some cases, overwhelmingly, the problem I hear from developers has to do with local zoning and the question of fees. That's entirely local. So the problem as to what extent is the Federal Government going to step in and overrule some local activity, I'm not sure he and I are going to be the most popular people in the world when we propose that.
Chairwoman ROUKEMA. Reclaiming my time.
Ms. SCHAKOWSKY. I just wanted to comment on the surplus question. There's not an American family who would say they, in their family budget, have a surplus if their parents or grandparents have no place to live. Yet, as an American family we have said that. We haven't acknowledged this basic need before we've declared ourselves as having surplus money that we can return to people who need it, who need it least.
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The issue of preservation I would agree with you production and preservation are important. And in that regard, I wanted to ask both of you, Mr. Slemmer and Ms. Baumgarten, you talked about the study that for every available housing unit, there are nine people on the waiting list.
Mr. Slemmer, you advocated a $760 million increase in Section 202. Would that reduce the waiting list, or would it merely help us keep pace and maintain it, or how much would it reduce the number of people that are waiting for that affordable housing?
Mr. SLEMMER. What we're recommending I believe is a ten percent increase in the Section 202 production to get started with what we see as a tremendous problem that's going to be facing this country as we look out 30 years with housing stock coming out of production and with the escalation in the senior housing population.
So it would increase production, but frankly it's a drop in the bucket. It's the right drop to get started in this problem.
Ms. SCHAKOWSKY. So there might be a ten percent reduction in the number of people on waiting lists. Is that what you're saying?
Mr. SLEMMER. No, it would be much, much less than that. That would produce a few more units and——
Ms. SCHAKOWSKY. What would it take to eliminate that waiting list?
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Mr. SLEMMER. I guess if you multiplied nine times the Section 202 portfolio, which is about 300,000 units, you would get a couple of million housing units. Obviously, that's not going to happen in the near future. That's why we're suggesting that we really increase incrementally, that we look at keeping a good, solid production program going; at the same time really looking at preserving this housing stock so we don't lose it. You can lose it a lot faster than you're building it, and you can preserve it at a lot less cost than it costs to produce new.
Ms. SCHAKOWSKY. One other question about preservation. I've been very involved in the issue of predatory lending and I'm wondering if AARP has looked into this issue on how the elderly are impacted by this growing problem, really exploding problem, of predatory lenders that are forcing some people, particularly older, more low income people, into foreclosure.
Ms. BAUMGARTEN. AARP has done quite a bit of work on predatory lending. And we are very, very concerned about consumer protections in that area. If you wish, I can have the people on our staff who work directly with that issue contact you and fill you in.
Ms. SCHAKOWSKY. I would appreciate it. Today, I'm going to introduce the Save Our Homes Act that deals with predatory lenders. I would appreciate it if you would do that so we perhaps could work together on that.
And finally, the Older Women's League, we're talking about regulations that Mr. Miller and Mr. Frank were talking about. The Older Women's League has identified local zoning laws as possible obstacles for innovative approaches, such as manufactured housing, and so forth. Have you found—looked at that at all and found that some of the zoning laws themselves are a problem and have any recommendations on how to deal with that?
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Ms. BAUMGARTEN. At this point, AARP is not making any recommendations, because you have several things happening at the same time. You have two housing commissions, the Senior Housing Commission and the Millennium Commission, you have this subcommittee that's working, and this is the time to look at all of the issues and with the task force hearings that will be going on with the Senior Housing Commission, to find out what's happening out there and get the issues and the ideas and look at everything that's possible.
It's rather premature at this point to say one thing or another thing would be the solution to the problem, because many of these things are interrelated—and certainly, manufactured housing is something that would need to be looked into also.
Ms. SCHAKOWSKY. Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Thank you.
Congressman Grucci.
Mr. MILLER. Would the gentleman yield, please?
Mr. GRUCCI. Yes, I would. I have no questions, Madam Chairwoman. I yield to Congressman Miller.
Mr. MILLER. Mr. Frank and I agree on I think the concept of property rights, and I want to be more specific on what I was talking about relating to the Endangered Species Act.
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In California, specifically, we used to have the Subdivision Map Act, which gave you 50 days to respond to an application for a tract map. Then, because the State decided that Government needed oversight, just as the private sector needs oversight, they created CEQA, which is the California Environmental Quality Act.
Then the Sierra Club sued in court, with the position that if it's good for Government, it should apply to the private sector too. And now in California, because of the EIR process and CEQA, an application process can last 12, 15, 20 years on a piece of property for development, and the applicant can do nothing except wait for Government to act.
That's causing a huge crisis in California. I was a developer for 30 years. I know most of the major builders in this country, and specifically in California. The problem they are having, if they make application for a project, when they get through with the EIR application process, and they finish with Fish and Wildlife, and finish with all the locals, if they get that approved, then the Sierra Club or some other environmental group is going to challenge them in court, and they do it repeatedly. In fact, they all know it's going to happen.
All of these things are adding to the cost and affordability and availability of housing.
As a developer, I recently hired a zoologist, a person who majored in zoology. Why would you do that? Because he wrote his thesis on the gnat catcher. The gnat catcher is a huge problem in California. Yet, if you go down to South America, there's countless millions of these critters, but the environmentalists say, ''Well, those are only cousins to the California gnat catcher.''
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Well, my cousin's still a human being. And I think the gnat catchers are lost in California. We need to put them in little cages and ship them back where they came from in South America and preserve those puppies.
But, if you look at last year's Fish and Wildlife proposal for habitat preservation for three species, a rat, a fly, and a longhorn sheep, it's 2.9 million acres in California. That does not mean that the species are on the property. It only means that the habitat on the property could sustain that species. And it looked like a checkerboard. And if you didn't own habitat, you owned associated habitat, and does that have an impact in housing in California and this Nation? Absolutely. And anybody who's unwilling to address this issue is being unreasonable if they are serious about doing something about the current crisis in housing availability and affordability.
I have two specific plans I've been working on for 12 years. I have no habitat for endangered species, I have no endangered species, I have no endangered flora and fauna on the property.
Yet, because of the process one must go through, and the EIR process, the city never has to address a project. One continues day after day, and the costs increase day after day, and a developer cannot produce affordable housing. We have to address this, and we have to stop blaming local government and we have to enact laws that guarantee individuals the right to due process on an application whereby the burden is taken off the locals.
Local officials should not have to worry about being recalled for approving a few houses in the community or being voted out of office, because a bunch of radical environmentalists go out and tell all these terrible stories about them.
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Until we remove that burden from local elected officials, they're going to be forced to do the wrong thing time and time and time again, because of pressure from a few people that do not understand the needs of people to have a place to live.
Mr. FRANK. Would the gentleman yield, from New York yield?
Mr. GRUCCI. Yes, I'll yield.
Mr. FRANK. I'd like to ask my friend from California—that's very interesting—is he proposing then, he says that the problem is the local governments exercising their current authority are too pressured and we need to pass a law to take the burden from them.
Is he proposing a Federal law that then regulates what the local zoning people do and take some authority away from the local zoning people so they don't have to face local political pressures?
Is that a Federal law he's calling for.
Chairwoman ROUKEMA. Excuse me, you have 43 more seconds.
Mr. MILLER. James Madison, in the Bill of Rights, said that individuals should have the right to own and exercise the use and benefit from their property.
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Mr. FRANK. So it's a Federal law overriding local zoning.
Mr. MILLER. We have allowed the rights of property rights to be diminished——
Mr. FRANK. Answer the question, Gary. A Federal law to override local zoning?
Mr. MILLER. A Federal law guaranteeing the rights of property owners to the use of their property, yes.
Mr. FRANK. Overriding local zoning?
Mr. MILLER. No, it doesn't override local zoning.
Chairwoman ROUKEMA. All right. Now Congresswoman Julia Carson.
Ms. CARSON. I need to know whether, I'm still concerned about these Section 8 vouchers. Is there a reticence among landlords to even accept them for fear that they'll be left holding the monetary responsibility of the unit? Do you know what I'm saying?
Mr. SLEMMER. I've heard that. I'm not sure how true it is, but I certainly have heard that. I think the bigger issue with landlords is that they don't get as much rent out of the Section 8 vouchers as they can get in the open marketplace.
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Ms. CARSON. They don't get as much rent?
Mr. SLEMMER. Right. More red tape, less rent. Why bother?
Ms. CARSON. Guaranteed money. Thank you.
Chairwoman ROUKEMA. I believe now Congresswoman Lee is next.
Ms. LEE. Thank you, Madam Chair.
First let me just say, in response to my colleague from California, I personally believe that the Federal Government should be the safety net for the most vulnerable in our country. And yes, I believe we should look at some kind of law that guarantees the fact that vulnerable individuals, especially low income and the elderly, have a right to affordable and decent housing, whatever that means.
If that means looking at local ordinances and fees that prohibit that, then maybe we ought to do that. I also want to say that in my area, in the Bay Area, the problem with the cost of housing is quite frankly the high priced real estate and the fact that in the last few years, private property owners have been able to make huge profits as a result of either selling their property at huge enormous rates of return, or increasing the rental because of the fact that there is a tight market and not enough production.
Where we have our non-profits in partnership with developers we're able to build affordable and decent housing, and keep the rents at a reasonable level or the purchase prices at a reasonable sales price, but that's because quite frankly huge profits aren't being made. Reasonable rates of returns are being made, but not huge profits for private property owners.
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So there are strategies that can be used, I think, and I've seen this occurring in the Bay Area where senior citizen housing is developed and remains affordable.
I wanted to just ask one of our witnesses, I guess Mr. Slemmer, what you think in terms of strategies we should look to with regard to Section 8 housing once landlords decide to convert Section 8 housing for the elderly to market rate housing, because you noted that in your testimony.
I have seen senior citizens being forced out of their rentals because the rent quite frankly has doubled because the market dictates that the rent can be doubled, and there are individuals with money who can pay that rent.
The basic bottom line is what do we need to do to ensure that if in fact landlords do double the rent, which they have a right to do I guess, given the nature of property ownership in this country, how do we ensure that elderly aren't kicked out of their places.
Mr. SLEMMER. I think there are several things that you can do. First of all, to encourage transfer to stable not-for-profit environments is what you want to do. I'm not sure it costs a lot of money. We are recommending that you look at eliminating the exit tax so that when a for-profit decides to transfer to a not-for-profit, they don't have the exit tax problems which is really often time the barrier to that transfer.
The other thing is HR 425 establishes a matching grant program that helps encourage that transfer into a stable environment. So you incentivize the for-profit owner to transfer. That can be helpful.
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The other thing you certainly have to do is we have to keep pace with the vouchers so that when somebody does double the rent that there are vouchers in place that will help at least on a temporary basis.
In Pacifica, that was the enormous problem. The voucher-holders could not pay the rents that were going to be charged, so they really would have been displaced. And as you know, in the Bay Area, there's tremendous demand for affordable housing. You could be displaced for ten, 20, 50 miles before you could find other affordable housing. So HR 425 and that exit tax strategy really helps to stabilize that.
I really encourage a proactive stance from HUD to really get behind preservation efforts with all the vehicles they have available to them, because I think that's a lot less expensive than new production, especially in the high-priced areas like California.
Chairwoman ROUKEMA. Thank you, I appreciate that.
Now we have Congresswoman Tubbs Jones.
Ms. TUBBS JONES. Madam Chairwoman, good morning. I come from the City of Cleveland where we have what we believe is one of the greatest community development corporation networks going on for housing, and we build a lot of housing, but we still need a lot of housing, particularly affordable housing for seniors.
There's an organization in the City of Cleveland called the First Suburbs Consortium, and it's made up of all the entering suburbs, the older suburbs with the older housing. And one of the things that they recently did was to hire a consultant to see if they could retrofit some of—Cleveland has much more housing than apartments, as compared to New York or Chicago—but, retrofit some of these small bungalows that were built back in the 1930s and 1940s for senior citizen housing because they are no longer large enough for families with small children.
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So they've hired a consultant to see, one of two reasons, to try and keep people living in the first suburbs or the entering suburbs, but second also to hopefully provide for affordable housing for senior citizens. So I'm hoping that works out to be able help us deal with the shortage of housing, affordable housing for senior citizens in my congressional district.
The second thing that I wanted to raise, in conjunction from AARP, I'm sorry, Ms. Baumgarten, in my community, as well, I had a discussion with someone from the Jewish Family Services who has submitted an application for rent that had been funded to provide for a social service person to come into this apartment dwelling to assist senior citizens to stay independent. If someone maybe comes in and coordinates their doctors visits, coordinates the food services and the like.
And what she said was that the owners of the building were happy to have someone who came in to assist them because it took away from the responsibility of the landlord to try and assist seniors in being involved in independent living.
Is that some of the dollars that might well come from the Section 202 dollars that you were speaking about earlier for elderly housing or not?
Are you familiar with that program at all?
Ms. BAUMGARTEN. What I was going to say was, in 1990 and 1992, legislation, payment for service coordinators, was possible for housing, and now I think you have about 37 percent of the units that have service coordinators. That was a step that was made earlier that has really helped, because service coordination is extremely important.
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Sometimes it's done with the service coordinator there in the complex; sometimes it's done by utilizing the services that are in the community, but either way, putting the residents in touch with it.
There's a variety of ways it can be done, but the recognized need is that services need to be coordinated. You need to provide services. Housing, as a part of those services, is important because your citizens are older, more frail, and they're going to get older and they want to age in place.
Ms. TUBBS JONES. Thank you very much.
Mr. Yoder, any comments on what I raised or anything else you would like to say? I don't think I heard you say anything other than your opening statement since I came in the room.
Mr. YODER. Thank you. One of the issues that you just raised about the supportive services under the Rural Housing Service, which takes care of a lot of the very rural areas, small towns with less than 20,000, the Rural Housing Service, in their budget, will not allow for supportive services.
They tell us it's against the regulations to spend money out of the operating budget to either hire supportive services or even to use it to coordinate supportive services which, in rural areas, we have found in larger cities that there is the ability to hire a service group that will provide the services. In rural areas the services are there, but they are scattered and you need to have somebody to coordinate the services, not to actually supply them, but to coordinate them.
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Ms. TUBBS JONES. So you're suggesting that there needs to be some amendment to whatever legislation or regulation that exists to allow them to be able to do that type of thing?
Mr. YODER. Yes. In my written testimony, that's one of the things that we talked about under rural housing services amendments.
Ms. TUBBS JONES. I would be supportive of that. There's no much rural stuff in Cleveland, but I would be supportive because it's important for all the elderly to be able to access services.
I see my time is up, Madam Chairwoman. Thank you very much.
Chairwoman ROUKEMA. Thank you.
I would just observe that I'm going to be looking into that certainly with a number of us, but I don't know whether that's a discretionary decision that's been made within the department, or whether that's compelling by the legislation.
You were not clear on that, or did I not hear you?
Mr. YODER. We are being told that it's legislative.
Chairwoman ROUKEMA. Is that right? We'll look into that, thank you.
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I believe that concludes the questioning for this panel. We appreciate your patience and your forthcoming and beneficial testimony. We shall take it under advisement and get back to you if there are further questions.
Thank you very much.
Now, if the next panel will come forward. Hopefully, we'll be successful enough—if the next panel will come forward, I'll be here to call us to order in 2 minutes.
[Recess.]
Chairwoman ROUKEMA. Thank you, I appreciate your patience.
It is my understanding that Congressman Frank will be back within a short while, and we will continue with this hearing.
I appreciate the second panel being here. I'll introduce you as you are ready to testify.
Mr. Harry Thomas here is currently the Executive Director of the Seattle Housing Authority, which we heard about earlier with Congressman McDermott giving you a warm welcome, and of course he has served as the Executive Director of the Neighborhood Housing Incorporated, which is a non-profit social service agency.
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Actually, you have a lot of experience with Seattle garden communities through the HOPE program, as I understand it. Mr. Thomas is currently serving as a member of the Commission on Affordable Housing and Health Care Facility Needs of Senior Citizens in the 21st Century, the Commission that I originally referred to.
Unfortunately, I'm sorry that you're not going to be giving a report to us sooner than December 2002. Hopefully, Mr. Thomas, with your help, we can expedite that Commission report.
Thank you. We appreciate your being here.
If you'll take your 5 minutes, please be sensitive to the time commitments.
STATEMENT OF HARRY THOMAS, EXECUTIVE DIRECTOR, HOUSING AUTHORITY, CITY OF SEATTLE, WA
Mr. THOMAS. Thank you Madam Chairwoman, Members of the subcommittee. I really thank you for inviting me to share some of my experiences.
I offer my thoughts today around two main issues:
The importance of maintaining public housing as a part of the existing supply of housing for the elderly and strategies for meeting the special needs of elderly residents so they can remain in their housing as they get older, as it outlined in the ''Elderly Plus'' plan.
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The Federal Government plays an important role in housing low income older Americans. Nearly 3.7 million Americans, aged 62 and older, receive some form of housing assistance.
You're quite familiar with the Section 202 program, but what we sometimes overlook is that about one-third of the 1.3 million public housing units in the country house elderly or disabled people.
Unfortunately, the need for elderly housing has grown rapidly while the resources for modernizing and maintaining this housing stock are really shrinking. You know about the needs and the increasing population of elderly people. We've talked to that.
So in the face of this, Madam Chairwoman, we must be good stewards of our existing public housing stock, which you may know is now valued at over $90 billion. We must continue to invest in the long-term maintenance and the capital needs of this valuable asset.
I know that many of you have heard this theme recently in discussions on the VA/HUD Appropriations Bill. However, I must still call attention to its importance.
For so many of our seniors, capital improvements are not about fresh paint. Let me try to give you one real life example from the City of Seattle.
Mr. Don Williams is an elderly resident of Jefferson Terrace. This is a 34-year-old building. He uses a wheelchair and he lives on the seventh floor. When the building's outdated elevators were broken recently, the fire department had to come every day and carry him down and then back up the stairs, because he had to go to ElderHealth. This is the adult day program in the building where he eats his daily meals, so it is essential for his well being.
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Due to limited mobility, the elevators in our buildings are really his lifeline. Elevator repair and replacement is a key item in our capital budget. And that may have to be postponed if the Public Housing Capital Fund is actually cut, as is recommended by the White House.
Approximately 70 percent of the elderly residents in public housing live in buildings that are between 30 and 50 years old. Many buildings do not conform to ADA standards, so we must preserve the existing stock of low income housing and modernize it to better meet the needs of seniors and the disabled.
The Elderly Plus program can do this. We want to keep our older residents living independently as long as possible. A minor injury which sends a resident to the emergency room may eventually land them in a nursing home because of the lack of in-home services available in public housing.
Subsidizing low-income residents in a nursing home is much more costly than bringing needed services to them in public housing.
A number of housing authorities are pioneering innovative models to serve the needs of the elderly in our developments. The most successful of these combine resources across Federal programs. They bring in local resources and assemble a patchwork of services to create the wraparound care that is necessary.
I'd like to tell you about one program in Seattle. As a part of our HOPE VI redevelopment, we are building the Elder Village. This is a 318-unit campus that's being built in partnership with Providence Health Systems and the Retirement Housing Foundation. These are well-known, non-profit agencies that specialize in housing and care for the elderly.
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The facility will be close to services, it will consist of three apartment buildings plus a common area which will feature a large dining room, community facilities, and offices, all centered around an atrium with a skylight.
How do we achieve this kind of integrated model nationwide? With continued imagination and flexibility and with a commitment from the Federal Government to explore ways of facilitating innovation as outlined in the Elderly Plus proposal.
Last year, the House considered HR 4664. That's a bill to implement Elderly Plus. It combines the upgrading of existing buildings with health-related and congregate care services that address the needs of the elderly.
In closing, I do want to stress that public housing has played an important role in housing our low income residents. We need to continue to support those successes. Our inventory is a very valuable asset which we cannot afford to neglect or abandon. I think if we do this, we'll be much better off and our people will be much better off, so I thank you.
Chairwoman ROUKEMA. Thank you very much for that articulate and concise statement.
Now we have Ms. Janice Monks, who is founder and Executive Director of the American Association of Service Coordinators.
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I'm most anxious to hear from you, Ms. Monks. You have had extensive experience in designing coordinated service programs, and that is our focus not only on this panel, but integrated, as you've already heard, with the physical needs of housing projects, so we're most anxious to hear from you and your experience.
Thank you very much.
STATEMENT OF JANICE MONKS, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION OF SERVICE COORDINATORS, (AASC), COLUMBUS, OH
Ms. MONKS. Thank you very much, Madam Chairwoman, and Members of the subcommittee. It's quite an honor to be here and to represent our more than 700 members.
Before I get started, I want to mention the fact that service coordination provides much more than a quality of life issue, it's an economic issue. I am very pleased that this subcommittee is interested in investigating other areas in addition to the quality of life areas of service.
Every day AASC members serve literally hundreds of thousands of low-income residents. Our members represent not only Section 8 housing, but also public housing and tax credit funded developments. More than 20 percent of our members come from the private market housing industry, and recognize that service coordination is part of doing good business, and that it saves money for the owners as well as provide residents with a longer stay in their apartments.
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While service coordinators shoulder a wide variety of responsibilities and duties, their work mainly is focused on helping our most vulnerable Americans, maintaining their independence. They also assist them in avoiding costly and often premature higher levels of care, linking them with appropriate and sometimes lifesaving health, social and other services, locating child and adult care, and other family and intergenerational services, as well as cross generational services, implementing job training, employment, and transportation programs, and developing a wide range of educational opportunities for residents' families and staff.
Service coordination goes beyond assisting elderls, which we believe is also part of the future we should consider supporting, such as intergenerational as well as cross-generational programs that provide people the opportunity to stay longer in their homes.
Service coordinators do much, much more than was originally anticipated. We thank you, Congress, for your wisdom in passing the Cranston-Gonzalez Act of 1990 which initiated this vitally important program.
It is estimated that there are as many as 4,000 service coordinators in the country today. It is a consumer interest to remain independent for as long as possible.
I think everybody here would probably agree to that. But also, service coordination is about doing good business in that it reduces tenant turnover, it reduces damage to apartments, it reduces evictions, it lessens the amount of stress on staff, and provides training to staff which can reduce the cost of staff turnover. It also reduces the number of off-hour emergency room and paramedic runs, and could influence lowering the number of hospital stays of elders.
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There is no national study that identifies these issues, but we do have anecdotal information to assist us in showing that this is the case. Overall, management is pleased to have a service coordinator on staff, and if we are going to continue to assist residents to maintain independence, self-sufficiency and empowerment, because we must consider that service coordination is about helping people serve themselves.
In order to maintain the integrity and affordability of Section 8 housing, public housing, and tax credit housing, then we must invest our time and efforts into providing more service coordination in order to keep people more independent and to keep them out of costly, premature institutionalization.
We recommend that the cost of service coordination, or I should say, the funding for service coordination, be increased to allow owners to apply for grants, and reduce the regulatory concerns or issues that limit owners from being able to put the position in the operational budget.
We request the 120 percent FMR requirement be eliminated and allow service coordination to be put into the older facilities.
Also, to provice a set-aside within public housing funding specifically for service coordination that is not linked with the FSS program or the Ross program.
It would be best to appropriate funds in the amount of anywhere from $50 to $75 million to increase the number of service coordinators overall. Also to allow the tax credit programs to apply for service coordinator grants.
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One of the problems for the tax credit-funded facilities is that in the first 3 years, the operational OPM budget of tax credit programs is that they do not have the money to provide services. But you could have owners provide in-kind resources to contribute to the implementation of the program.
Chairwoman ROUKEMA. Ms. Monks, can you summarize, please. Thank you.
Ms. MONKS. Finally, we ask that the Section 811 program be included in applying for service coordinator grants.
In conclusion, AASC urges Congress to seriously consider these very few cost-effective, but vital steps that can be taken now to improve our Nation's service enhanced housing efforts. We're asking that the same investments you made in 1990 be extended with the Cranston-Gonzalez Act to provide additional funds to make this a viable and growing program for the future of elderly housing as well as family housing.
Thank you.
Chairwoman ROUKEMA. Thank you very much. We will go over in detail your extensive testimony that you submitted here with recommendations.
The next panelist, Mr. Felgar, we welcome you here today, as the representative from the Volunteers of America National Services. As Senior Vice President, you have been responsible for an extensive quantity and quality of activities in housing facilities, multi-family housing, senior and long-term care facilities, and we appreciate all that you've done extensively across the country with 220 housing facilities which that's extensive. So we appreciate your experience here and look forward to your advice and counsel.
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STATEMENT OF LEE J. FELGAR, SENIOR VICE PRESIDENT, DEVELOPMENT AND ACQUISITIONS, VOLUNTEERS OF AMERICA NATIONAL SERVICES
Mr. FELGAR. Thank you very much, Madam Chairwoman, Members of the subcommittee. I'm Lee Felgar, Senior Vice President of Development and Acquisitions for Volunteers of America National Services.
The Chair has mentioned that we do have 220 health care senior housing and family facilities across the United States. We've been in that particular sector since 1968.
Clearly, as a Nation we have a problem here of extraordinary scale and urgency as the housing programs and social service programs we have in place today will not keep pace with the situation. Somehow this elder housing and long-term care crisis must come from a comprehensive policy that cost-effectively integrates programs, then calls for some reasonable programs for the sharing of costs from the individual adult children, along with State and national governments.
The needs of elders are many and persons of lower income have an even more challenging environment. We at Volunteers of America sponsor an elderly housing development. We must not only build the structure, we must find a way to create or bring social service support programs to our developments.
Our typical resident of a HUD Section 202 property is a 75-year-old female living on some very modest savings and Social Security income. For this person, a $20 emergency is problematic. These elders are living at the economic edge, even with the HUD Section 202 housing assistance. Accordingly, they simply cannot afford any type of assistance with their daily living as they age in place.
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Accordingly, we've worked to find no cost or very low cost programs to provide meals, transportation, medical screening and the like. Each development is unique as each town or city has its own resources and programs.
Typically, our residents fare better in larger cities that have economic power and commitment to helping others. However, most of the communities we serve do not have these programs in place, and we try our best with our limited resources that we have to make some programs a reality.
Elders in rural communities face even more challenging circumstances. We at Volunteers of America encourage this subcommittee to consider the following issues that we've laid out in our testimony with a series of recommendations to help solve this problem.
We start out by fully endorsing the HUD Section 202 program. It's one of the finest programs we've seen developed by Government. It is fair, it's administered well. We think that the number of housing units should be doubled and soon.
Our second recommendation to the subcommittee is that we believe that within the existing stock of HUD Section 202s, there are many that have the capacity to provide some measure of assisted living services.
Congress and HUD have previously provided some demonstration of program funds for the physical conversion of some of the units for physical asset changes only. We appreciate that effort and would ask the subcommittee to seek to expand the funding for both physical asset conversion and for services, as the residents simply cannot pay for them themselves.
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Our third recommendation, we continue to ask your support for those programs and initiatives that preserve project-based rental assistance for affordable housing and low and moderate income persons.
Recommendation number four. We at Volunteers of America recommend and thank you for your support of the increase in the amount of tax credits. We applaud this subcommittee's work as it relates to mixing tax credits with Section 202s, but there are some things in the capital markets that we need to let you know of that are working against further production.
We are now seeing the capital markets come to non-profit sponsors asking for significant guarantees for the completion of the construction, and also for financial guarantees for the life of the project.
In my testimony, I state an example of what we're doing in St. Louis with the HOPE VI property developing only 40 units. That one 40-unit project requires Volunteers of America to place up to $600,000 guarantees for its life.
We feel that we can handle that as a sizable, non-profit, but we can't continue to have those kinds of guarantees imposed on us. So we want you to be mindful that the capital markets are asking for those kinds of guarantees, and although there are more tax credits available, those guarantees work against further production.
Across the country also we see qualified allocation plans that allocate tax credits on a state-by-state basis have a real bias against elderly housing. Few really endorse and promote elderly housing. Most of them are geared toward multi-family. We'd like to see that changed.
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We also see a narrowing number of tax credit investors and we see a demand for higher investment yields. Again, this works against more production of elderly housing.
Our fifth recommendation. We believe that HUD should consider the merits of allowing project-based social service programs to be an allowable project expense, particularly as it reviews rent and debt levels and the portfolio re-engineering and refinancing programs.
Recommendation number six. We believe the subcommittee should create a new set of Government agency expectations and directives that require agencies to work collaboratively to develop arrangements to provide resources for protective and supportive services.
Recommendation number seven. We ask the subcommittee to support personal incentives for the purchase of long-term care insurance and that includes assisted living as part of its coverage.
Our eighth recommendation to you is that we would like to see greatly improved coordination between Medicare and Medicaid with a blanket allowance for use of Medicaid funds in homebound and assisted living settings.
Recommendation number nine. We see a need for better enforcement of laws that protect consumers against housing discrimination such as the Fair Housing Act and the Americans With Disabilities Act.
Recommendation number ten. We would also ask this subcommittee to ask HUD and the USDA to find ways to greatly simplify the process whereby non-profits make application for the transfer of ownership of housing developments from for-profit owners to non-profit owners.
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Right now, it is an overly administratively challenging process.
In summary, let me state that America's non-profits cannot meet these demographic changes with the resources and programs that are in place today. Today's funding levels, capital market conditions and program parameters are inadequate to the task we face as a Nation in providing affordable housing and social services for our aging population.
We'd encourage this subcommittee to examine the scope of the elder housing and social support situation in its entirety and that it direct Government agencies to work collaboratively to create simplified and standardized housing and health care programs that can be implemented successfully in all States and all locations whereby non-profit housing and service providers can develop housing and provide the services without undue administrative and financial hardship.
Thank you.
Chairwoman ROUKEMA. Thank you. I appreciate this panel's contribution to our understanding of the complexities of the problems that we're facing here. Obviously it's been apparent to all of us, with the testimony here today and what we've seen leading up to this, that we have to do a lot of catching up. If we can't catch up quickly, we're going to have an enormous expansion problem that would be a disgrace for our American democracy and a country as rich and diverse as we are here.
So I want to pledge my intention—not that I can wave a magic wand here and find all the answers or all the money that we need—but I particularly appreciate your contribution, and I have no specific questions for any of you, but I do want to especially thank Mr. Felgar for the fact that he has opened up the question of the financial concerns, particularly tax credits, and whether or not there should be other investment incentives and the capital markets guarantees that you alluded to.
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Obviously, I think we should be reaching out to some people on the Ways and Means Committee and integrating our thinking with theirs as far as investment concerns and investment incentives, and to integrate them into our own approach. Obviously, they've been neglected.
I particularly paid attention, aside from the capital markets question and the investment incentives and tax credits, I particularly observed your comment regarding long-term care insurance.
Now I'm not too familiar with that, but it's something we definitely should integrate into our whole study of the question. I thank you.
Any comments?
Mr. Frank.
Mr. FRANK. Thank you, Madam Chair. I apologize that a conference called me away briefly, but I had a chance to review the testimony.
Mr. Thomas, I'm particularly indebted to you. I hadn't really known for sure that more older people are housed in public housing than in any other housing program. That's important, not to the denigration of the other programs, but because one of the great myths that we face is this notion that public housing is all Cabrini Green and it's all unattractive and dangerous.
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And in fact, it's certainly been my experience that public housing for the elderly is a highly prized resource for the people who live there and for the people who would like to live there, and this is very important.
In that regard, let me ask you, there's reference in your testimony to the Public Housing Capital Fund. The budget that has been proposed for this year, that was unfortunately just voted out of the Appropriations Subcommittee, reduces that.
Could you comment a little bit about the effect that will have on public housing?
Mr. THOMAS. Thank you very much, Congressman Frank.
The proposed reduction in the Public Housing Capital Fund would really be disastrous for us. As you correctly point out, there are over 3400 housing authorities in the country. Yet, when the Administration cut back the Public Housing Capital Program, it used a series of unfortunate examples and described what they felt were delays in actually using those funds and contracting for those funds.
There may be a handful of authorities who have that difficulty, but the vast majority of housing authorities are very well run. They serve large cities, small cities, and rural areas. And to take a 30 percent cut in our capital budget against already known and well-known backlog of several billion dollars is really going to be disastrous.
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I understand that the Secretary feels that, in fact, he may have said that not a roof will go unrepaired, and so forth. But, we plan several years in advance. All of our buildings have life cycles. We plan very carefully and we would suffer dramatically.
Mr. FRANK. I think this is a case of victimizing the victim, and then blaming the victim, because when you put that kind of a shortfall and you make planning very difficult, then you blame people for its absence.
Again, it's very clear as I read this that the biggest problem is that this very rich country has decided not to spend the money that we can well afford here, and the question is, where are the resources?
Well, we know where they are, they're in the tax cut. They're in parts of the tax cut unfortunately that haven't yet taken effect. They're in the parts of the tax cut that will be very helpful to very wealthy people, and I think will exacerbate our ability to do something about this situation.
Mr. Thomas, I'm not sure this is one of your subjects, but you come so highly regarded by Mr. McDermott that I'm figuring that you'll be able to tell me this.
One of the big issues we've had is Section 8 not just for the elderly, but Section 8 in general. One of the arguments we've had is that some of us have felt that the Section 8 rents have been too low in certain areas where housing costs have spiked upward. The response from HUD has been, no, the only problem with Section 8s is the poor administration by many housing authorities.
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I wonder if you would like to address that issue?
Mr. THOMAS. Yes, thank you very much.
The effectiveness of the Section 8 program is highly local; that is to say, in areas where there are relatively few units available in a market place, it makes it even more difficult. But again our experience, particularly in Seattle, is that even with a low vacancy rate, we've been quite successful in being able to utilize those. But our biggest burden again comes in the payment standards.
I think other people have addressed that as well. We are simply trying to find available units in a very hot marketplace in many areas of the country. And the payment standards and the way that HUD calculates them and the speed with which HUD gets around to making those adjustments really keeps us three or 4 or 5 years behind.
Mr. FRANK. One of my colleagues suggested that the real problem is not a lack of Federal funding, but the Endangered Species Act and other things.
I'm just wondering if we were in fact to increase Section 202 funds and made some public housing construction funds available, would the Endangered Species Act keep you from being able to use them, Mr. Felgar?
Mr. FELGAR. I think in isolated areas, but not nationally.
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Mr. FRANK. In general, you'd be able to put the money to use?
Mr. FELGAR. Yes.
Mr. FRANK. Mr. Thomas, do you have endangered species problems in Seattle?
Mr. THOMAS. The most endangered species we deal with are the elderly people struggling to find a place to live. We in fact own all of our properties so we don't have to—we would like to redevelop them or expand them, we don't have to acquire new sites. So we would go a long way before we were impacted by the Endangered Species Act.
Mr. FRANK. Thank you. I am pleased, though not surprised, by your responses.
Thank you, Madam Chairwoman.
Chairwoman ROUKEMA. Thank you. I don't know whether that was planned——
Mr. FRANK. It's serendipitous.
[Laughter.]
Chairwoman ROUKEMA. Thank you.
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Yes, Congresswoman Schakowsky.
Ms. SCHAKOWSKY. Thank you, Madam Chairwoman.
I really appreciate very much the testimony, particularly the detailed recommendations, all of which we will carefully scrutinize.
Mr. Thomas, we just had a discussion. It would seem to me that first our mission ought to be to do no harm, and as you've just talked about, the proposed budget actually makes the situation worse and not better. So even as we look to correcting some of the problems, I hope that we could also look at making sure that we aren't exacerbating it by short-changing the programs that we now have.
And I thought that this example of this elderly resident Don Williams and his inability, I mean, the fact that he has to be carried up and down seven flights, is so unacceptable that we have to address this kind of crisis.
I wanted to tell you, one of the bills I introduced when I was in the State legislature, we keep coming back to the issue of having to retrofit housing so that people can age in place. And I think there's a program in Atlanta. And I had introduced legislation in Illinois that got out of committee, but that's as far as it went, that said that new spec housing had to have some accessibility features built in.
There's no magic to the size of a doorway right now, a door frame, you know. Why it's smaller, rather than larger, as we build housing, but we could make grab bars or at least the possibility of grab bars reinforcing walls so that they could be there if they were needed.
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There's no magic about the place that light switches are put. They could be lowered easily when we build in public housing and in affordable housing. As we build it, are there requirements now to have these accessibility features? If not, wouldn't that be an obvious thing to do so we don't have to go back and spend money later on? Question to anybody.
Mr. THOMAS. Yes. I need to jump in because I represent public housing in the areas where we are redeveloping, and HOPE VI is a good example of that. Yes, ma'am, we do. Where we build new units, we find that it's only marginally more expensive to bring those units to the contemporary standards.
So if you're building a new house, putting a grab bar in only costs the cost of the material. But if you have to go back and retrofit, then you have to tear out work. Yes, we do that now.
Having said that, there are not that many public housing authorities around the country that are actually participating in the HOPE VI program because of the limitations. So wherever we have those capital dollars, we can make those investments. And they are, in my judgment, ma'am, sound investments.
Ms. SCHAKOWSKY. Is it required, when you build new, to have those accessibility features?
Mr. THOMAS. We do have local building codes. The State building code applies to us as well, but we find it advisable.
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Ms. SCHAKOWSKY. What about the ADA?
Mr. THOMAS. Our units that have family housing, we try to go to what we call visitable standards. Even though there might not be a person using a wheelchair in that immediate family, we try to build our rental housing for the long term, so sometime over the next 30, 40, 50 years, there's likely to be a family that will need a wheelchair. So we make sure our doorways are accessible, the bathrooms are accessible, all of that of course in our new construction.
So if we're talking about a production program, then we can build those things in. It is more difficult to go back and retrofit.
Mr. FELGAR. All of our new Section 202s are accessible and complying with ADA. The problem that the new construction of Section 202s represents is that there is no allowance there for features that are more closely aligned to assisted living. There's no commercial kitchen allowed in a Section 202 building, or we think that makes a lot of sense to put in some kind of kitchen facility that could prepare meals there over time.
We don't think it's a huge design change or a huge cost increment, but we really believe the Section 202s should be built with this assisted living option available to them downstream, because we think that makes the most economic sense.
Ms. SCHAKOWSKY. With the demographic changes, it just makes sense for us to be thinking ahead as we get into production or even retrofitting, that we make these changes now rather than have to spend even more money down the road.
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Mr. FELGAR. The Section 202 paradigm has been independent living with a modest amount of services. And what we are suggesting to the subcommittee is that that vision has to be broadened to include the possibility of doing more in that setting than has historically been done.
Ms. SCHAKOWSKY. Thank you very much, all of you, for your recommendations. I look forward to working with you to implement them.
Chairwoman ROUKEMA. I thank you. Unless the members of the panel—do you have any summary statements that you want to leave us with?
Ms. MONKS. I'd just like to mention the fact that if you look at service coordination, there's been questions about HUD being a bricks-and-mortar department of Government, and if you would consider that the service coordinator is the mortar that holds the bricks and sticks together.
Chairwoman ROUKEMA. A very good point. I appreciate that. This has been very helpful today. I think that we have a bipartisan intention here of moving ahead aggressively. We may not agree on all the elements of the program, but we certainly agree with the fact that both panels have more than adequately outlined the intense need that's a growing need and it will be getting if not fast out-of-hand already, it will be growing and intensively necessary for us to act now in a realistic way.
By realistic, I mean, understanding that there are certain financial limitations, but at least we can get our priorities set up and move in the right direction, whether it's through the actual housing authorities and the HOPE program, the existing programs or through creation of new programs and financing.
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Particularly, I'm going to be interested in looking at creative financing through tax credits, and so forth. So we thank you very much. Again, please feel free to contact us and give us again the benefit of your advice and counsel.
With that, the hearing is adjourned.
[Whereupon, at 11:45 a.m., the hearing was adjourned.]