[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES APPROPRIATIONS FOR 2019
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
URBAN DEVELOPMENT, AND RELATED AGENCIES
MARIO DIAZ-BALART, Florida, Chairman
CHARLES W. DENT, Pennsylvania DAVID E. PRICE, North Carolina
DAVID P. JOYCE, Ohio MIKE QUIGLEY, Illinois
JOHN ABNEY CULBERSON, Texas KATHERINE CLARK, Massachusetts
DAVID YOUNG, Iowa PETE AGUILAR, California
DAVID G. VALADAO, California
TOM GRAVES, Georgia
NOTE: Under committee rules, Mr. Frelinghuysen, as chairman of the
full committee, and Mrs. Lowey, as ranking minority member of the full
committee, are authorized to sit as members of all subcommittees.
Doug Disrud, Cheryle Tucker, Carl Barrick,
Jennifer Hollrah, and Matthew Anderson
Subcommittee Staff
__________
PART 5
Page
Department of Housing and Urban Development.................. 1
Rail Stakeholders............................................ 109
Department of Transportation................................. 187
Office of Public and Indian Housing.......................... 331
Members' Day................................................. 369
Office of Housing............................................ 415
Federal Highway Administration, Federal Transit
Administration, and U.S. Maritime Administration........... 479
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U.S. GOVERNMENT PUBLISHING OFFICE
31-244 WASHINGTON : 2018
COMMITTEE ON APPROPRIATIONS
----------
RODNEY P. FRELINGHUYSEN, New Jersey, Chairman
HAROLD ROGERS, Kentucky \1\ NITA M. LOWEY, New York
ROBERT B. ADERHOLT, Alabama MARCY KAPTUR, Ohio
KAY GRANGER, Texas PETER J. VISCLOSKY, Indiana
MICHAEL K. SIMPSON, Idaho JOSE E. SERRANO, New York
JOHN ABNEY CULBERSON, Texas ROSA L. DeLAURO, Connecticut
JOHN R. CARTER, Texas DAVID E. PRICE, North Carolina
KEN CALVERT, California LUCILLE ROYBAL-ALLARD, California
TOM COLE, Oklahoma SANFORD D. BISHOP, Jr., Georgia
MARIO DIAZ-BALART, Florida BARBARA LEE, California
CHARLES W. DENT, Pennsylvania BETTY McCOLLUM, Minnesota
TOM GRAVES, Georgia TIM RYAN, Ohio
KEVIN YODER, Kansas C.A. DUTCH RUPPERSBERGER, Maryland
STEVE WOMACK, Arkansas DEBBIE WASSERMAN SCHULTZ, Florida
JEFF FORTENBERRY, Nebraska HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida CHELLIE PINGREE, Maine
CHARLES J. FLEISCHMANN, Tennessee MIKE QUIGLEY, Illinois
JAIME HERRERA BEUTLER, Washington DEREK KILMER, Washington
DAVID P. JOYCE, Ohio MATT CARTWRIGHT, Pennsylvania
DAVID G. VALADAO, California GRACE MENG, New York
ANDY HARRIS, Maryland MARK POCAN, Wisconsin
MARTHA ROBY, Alabama KATHERINE M. CLARK, Massachusetts
MARK E. AMODEI, Nevada PETE AGUILAR, California
CHRIS STEWART, Utah
DAVID YOUNG, Iowa
EVAN H. JENKINS, West Virginia
STEVEN M. PALAZZO, Mississippi
DAN NEWHOUSE, Washington
JOHN R. MOOLENAAR, Michigan
SCOTT TAYLOR, Virginia
----------
\1\ Chairman Emeritus
Nancy Fox, Clerk and Staff Director
(ii)
DEPARTMENTS OF TRANSPORTATION, HUD, AND RELATED AGENCIES APPROPRIATIONS
FOR 2019
----------
Tuesday, March 20, 2018.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WITNESS
HON. BENJAMIN S. CARSON, SR., SECRETARY, UNITED STATES DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
Mr. Diaz-Balart. The subcommittee will come to order.
Good morning, everyone. Today, we welcome Secretary Ben
Carson from the Department of Housing and Urban Development to
discuss the fiscal year 2019 budget. It is hard to believe that
we are discussing 2019 when we haven't quite finalized 2018.
As I have stated in the past, Mr. Secretary, you have one
of the most difficult and one of the most important jobs in the
country. I think our country is blessed and fortunate to have
somebody with your level of commitment. And so we are grateful
for what you are willing to do for our country, and we want to
thank you.
HUD's mission is to create strong, sustainable inclusive
communities and quality affordable homes for the American
people. Achieving this mission is by no means an easy task.
HUD administers many housing and community development
programs that millions of citizens rely on. And HUD also
receives billions of dollars in disaster recovery grant funds
that are critical to helping communities recover after a
disaster. And Mr. Secretary, I want to thank you for always
being accessible and always being willing to work with this
chairman and the members of the subcommittee and the Members of
Congress. So thank you for that.
Additionally, Ginnie Mae and the Federal Housing
Administration together hold a large, a very large portfolio,
and are critical to the stability and growth of the housing
market, and, obviously, the economic health of our Nation.
HUD is requesting a total of $41.24 billion in new budget
resources for fiscal year 2019, and that is below the fiscal
2017 enacting level.
Now, I would note that this budget request was developed
prior to the recent bipartisan budget deal that lifted the
sequester for 2 years and raised the cap on both defense and
nondefense discretionary spending. So we all need to keep that
in mind, that that was before we had the new numbers that we
are all dealing with now.
I think this significant bipartisan breakthrough sets the
stage for us to take really immediate action to deal with and
invest in our Nation's future.
Much of this additional nondefense discretionary spending
will be targeted towards addressing the needs of our Nation's
infrastructure, something that the White House has been very
emphatic about, and I think a lot of us support.
I want to emphasize that this subcommittee considers
housing to be a critical part of infrastructure. For that
reason, we will be investing in the housing priorities under
the jurisdiction of this subcommittee.
In some respects the administration's budget request for
all agencies and departments has really been overcome by events
due to this budget caps deal. But obviously, we owe a fair
hearing on the budget proposal before us today, understanding
that it will change.
Once again, this year the budget request proposes to
eliminate a number of programs that are important to some of
our mayors and cities and small towns. Mr. Secretary, we have
had conversations about the Community Development Block Grant
Program and the Home Program, in particular.
We have had very strong bipartisan support for these
programs over the years, as you know, and we continued funding
them last year. I assume, I think we can all assume that some
of those decisions will be reflected in the 2019 budget year as
well.
We greatly appreciate your concerns, however, and look
forward to continuing to work together to make sure that these
programs remain as efficient and as cost effective as can
possibly happen.
We also understand that the Department has been developing
a rent reform program. These reforms will make changes to
existing rent rules across HUDs Rental Assistance Programs and
introduce other requirements.
As you know, these reforms are outside of this committee's
jurisdiction and must be addressed first by the authorizing
committee.
Now, I will tell you, while the previous administration did
not always submit its specific legislative proposals to the
authorizers, it is my understanding, Mr. Secretary, that you do
intend to do so. That would be a major step in the right
direction, and we thank you for that.
I think it is important to consider all new ideas and
proposals that make our limited dollars go farther, as far as
possible, and we look forward to seeing the details of these
rent reform proposals when they are finalized. So, again, we
look forward to that, Mr. Secretary.
Mr. Secretary, again, thank you for your service to the
country. I look forward to continuing to work with you. We have
a very good relationship, and I think that is helpful to make
sure that together we can address our Nation's housing and
economic development needs, all while, obviously, being
accountable to the taxpayer.
Let me yield to my friend, the ranking member, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I am happy to join you
in welcoming the Secretary of the Department of Housing and
Urban Development, Dr. Ben Carson. We welcome you to your
second appearance now before this subcommittee.
HUD's mission is to provide affordable housing, to foster
community development, and to protect both renters and
homeowners from discrimination, and these missions are as
important, possibly more important than they have ever been.
Access to stable and affordable housing has broad positive
impacts. It leads to better health, better education outcomes,
higher lifetime earnings, especially for children. Providing
families with affordable housing improves lives. It can lift
entire communities. Without safe housing, how can we expect
people to find and maintain employment, to go to school or to
raise a family.
Yet today, in no state in this country, can a person
working full-time at the Federal minimum wage afford a two-
bedroom apartment at the fair market rent. In addition, just
one in four families eligible for Federal housing assistance
gets the help they need. That is 25 percent. What does that say
about our national priorities?
For years nearly all of HUD's affordable housing and
community development programs have been underfunded compared
to demonstrated need. These programs serve some of the most
vulnerable people in our society: The elderly, the disabled,
children, veterans, single parents trying to make ends meet. It
is not an exaggeration to say that America, the most prosperous
Nation in the world is in the midst of a housing crisis.
Unfortunately, the Department's fiscal 2019 budget request
doubles down on last year's request, which was roundly rejected
on a bipartisan, bicameral basis. Apparently very few cues have
been taken from the discussion last year of that first Trump
administration budget.
So it is doubling down this year. This year's request,
$41.2 billion, offset by $10 billion in receipts, total budget
authority would be lower than the fiscal 2017 enacted level by
approximately $7 billion. That is 15 percent.
Since more than three-quarters of HUDs budget is devoted to
simply maintaining current residence in housing, cuts of this
magnitude would disproportionately impact community development
and other grant programs. For example, community development
block grants, a flexible source of funding for hundreds of
urban and rural communities to help meet the needs of low and
moderate income people will be totally eliminated.
The Home Program, the largest Federal block grant of State
and local governments designed exclusively, to produce
affordable housing for low income families, the most flexible
money we have in the HUD budget. Eliminated.
Even the SHOP program, the SHOP program is best known
because of the use Habitat for Humanity makes of it. Other
reputable nonprofits engaged in the Sweat Equity Homeownership
model. SHOP, eliminated.
Now, my colleagues and I have heard from hundreds of local
elected officials and housing leaders in our districts. Their
message is very, very clear. These programs play a critical
role in the creation and preservation of affordable housing and
community facilities.
Unfortunately, there is even more. Yet again, the budget
request proposes eliminating the Choice Neighborhoods
initiative, a highly-successful program that leverages outside
investments to transform and revitalize whole neighborhoods.
And in a new wrinkle the Department's request would eliminate
the Public Housing Capital Fund, despite a massive maintenance
backlog in our deteriorating public housing stock.
Finally, the Housing Trust Fund, which doesn't even
constitute part of our discretionary budget authority, would
again be eliminated by this request. These mandatory funds are
derived from contributions by Fannie Mae and Freddie Mac. The
Housing Trust Fund has only recently been tapped by the States,
but it is already being used to finance the development,
rehabilitation and preservation of affordable housing for low
income people.
So, sweeping program eliminations, drastic cuts in what
remains. That is simply unrealistic. It is unacceptable. I
would say if the Department wanted to ensure that Congress
would not take a budget request seriously, then the mission has
been accomplished.
And I haven't even touched on the numerous reductions
proposed in the budget. When you look at core housing
assistance program, like Section 8 vouchers, it appears that
the Department's requests are inadequate. Current low income
housing could be at risk of losing assistance. In other words,
we actually lose ground on the subsidized housing front.
I always want to register my serious concern with the
Department's so-called rent reforms, which would essentially
shift HUD program costs on to residents. Raising minimum rents,
eliminating long-standing deductions for medical expenses and
other costs could have serious repercussions for the people who
rely on housing assistance.
And as the chairman just stated, if such changes are to be
considered, and they really don't seem like very good ideas to
me, but if they are to be considered, they are best left to the
authorizing committee.
Mr. Chairman, the current state of housing in America
should force us to ask tough questions about our national
party. What kind of country do we want to be? What kind of
community do we want to be? How do our inherited values
translate into our present hopes and aspirations and what we
make real through this appropriations process.
Looking at this budget proposal, I have to conclude that
Trump administration's priorities are elsewhere. It is a
heartless request. How else can you put it? It demonstrates a
pinched and narrow vision of our country.
Before I close, I want to register my frustration about
several major ethical lapses that have occurred at the
Department and that we will want to talk about. Failure to
control funds and provide legally-required notifications to
Congress is bad enough, but what is even more disturbing are,
apparently, false public statements that attempted to obscure
the truth about the Secretary's involvement in this matter as
well as the reassignment of a whistleblower who brought these
problems to the public's attention.
These mistakes are apparently compounded by roles that the
members of the Secretary's family have taken at the Department.
Public office is a public trust. Even the appearance of
impropriety can severely damage our institution, so I want to
give the Secretary the opportunity to address these issues and,
of course, encourage you to be as responsive and forthcoming as
possible.
So we do look forward to the testimony today. We look
forward to working with the Secretary and with colleagues on
the subcommittee to ensure that HUD has the resources that are
necessary to carry out its vital mission.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you very much, Mr. Price.
Mr. Secretary, your full written testimony will be
included, obviously, in the record. And you are recognized for
5 minutes, sir. Thank you very much.
Secretary Carson. Thank you, Chairman Diaz-Balart, Ranking
Member Price, and members of this subcommittee. Thank you for
inviting me here today to discuss the President's fiscal year
2019 budget request for the Department of Housing and Urban
Development.
The President's 2019 budget proposes more than 41 billion
for HUD, a 1.4 percent increase over last year's request. We
believe this is sufficient to effectively administer our core
programs, continuing need of assistance to those individuals
and families whom we currently serve, especially the most
vulnerable populations, the elderly and persons living with
disabilities.
In addition, the requested level of funding for the Housing
Choice Voucher Program will continue to support the same number
of households we currently serve and should not result in the
termination of any housing vouchers.
HUD's budget would also make a significant investment to
continue the fight to end homelessness. Our budget proposes a
record $2.4 billion to support thousands of local homeless
assistance programs across our country.
As a doctor for many years, I am all too familiar with the
effects of lead exposure on the developing brain. As a result,
we are requesting $145 million to ensure that homes are free of
lead-based paint hazards and other dangerous contaminants
especially for families with small children.
I also recognize that we, as a Department, need to do a
better job to ensure the funds we spend not only meet all legal
requirements, but that we respect these funds ultimately belong
to the public. Consequently, I have directed HUD's new Chief
Financial Officer, Irv Dennis to design and implement a
transformation plan and lead an internal task force within HUD
to combat financial mismanagement. Irv has more than 36 years
of private sector experience and is the perfect person to bring
that kind of business acumen to the task.
Mr. Chairman, in spite of the billions of dollars we have
spent as a Nation trying to keep pace with the capital needs of
our public housing stock, it simply hasn't worked. In fact, we
are falling further and further behind each day.
This budget recognizes that we need another way. HUD is
proposing to pivot from the current financially unsustainable
public housing model and working with public housing
authorities, seek a new way to produce and preserve the
affordable housing that so many families need.
We are asking for the authority to give local public
housing authorities the flexibility to use their operating
funds to support their capital needs, and we are proposing to
convert many more distressed public housing units to a project-
based Section 8 financing model through the Rental Assistance
Demonstration or RAD program.
To date, RAD has simulated more than $5 billion in private
investment to preserve this housing. Simply put, RAD is
working. The budget proposes to open the door wider and allow
more communities to participate in this innovative approach.
HUD is also supporting sustainable homeownership through
programs at the Federal Housing Administration. Building
household wealth through homeownership remains a keystone to
helping Americans climb the economic ladder of success. That is
why we have taken several steps to ensure FHA can continue to
be a reliable source of mortgage financing for years to come.
I am also here to today to repeat a request you have heard
from us for many years now from several administrations. We
absolutely need to invest in FHAs information systems. FHA is
built on a mainframe that is over four decades old. Staff at
our homeownership centers still work on paper case files
creating inefficiencies and posing numerous quality control
issues.
Mr. Chairman, I want to pivot to HUDs efforts to aid in
recovery from last year natural disasters when our Nation was
hit by three devastating hurricanes and destructive wildfires
and mudslides in California. HUD is supporting the long-term
recovery that is taking shape in Texas, Florida, Puerto Rico,
the U.S. Virgin Islands. Clearly, we have a lot of work ahead
of us.
Since last September, Congress has appropriated more than
$35 billion through HUDs Community Development Block Grant
Disaster Recovery Program. We have already allocated 7.4
billion appropriated in September and will be allocating
another 28 billion. Nearly every program office at HUD has
staff working on disaster recovery, many of whom have
volunteered to travel to disaster stricken areas and serve on
the front lines. My prayers are always with those who are still
struggling. We will continue to stand with them throughout the
recovery process.
Mr. Chairman, HUDs essential mission is to provide safe,
fair, and affordable housing for the American people. Our
mission also supports opportunity and self-sufficiency so that
families can move toward economic independence. I am eager to
work with Congress and all the members of this committee to
achieve what I believe are our common goals to better serve our
fellow Americans.
Thank you.
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Mr. Diaz-Balart. Mr. Secretary, thank you very much.
Members, we are going to proceed in the standard 5-minute
rounds, alternating sides. And obviously, recognizing members
in order of seniority as they were seated at the beginning of
the hearing with some caveats. So you are going to give me some
flexibility because we have other hearings taking place, so if
we have folks that chair other hearings and they do come by, we
may have to skip ahead of some of you all. So I apologize for
that.
FURNITURE
Mr. Secretary, there has been a great deal of news coverage
on the issue about the furniture, the dining room set.
Obviously, oversight and proper management of funding is
something that we take very seriously on the subcommittee. And
as you know, we sent a letter to the GAO and to the HUD
Inspector General to look into the alleged systematic misuse of
funds dating back to 2008.
I appreciate the efforts you initiated last week to
reassess the Department's internal financial controls, as you
mentioned, and I trust your new CFO will lead this task force
effectively. Will you please just take a minute to explain to
this subcommittee what happened, and also go into, if you can,
some of the more specifics about the new financial controls to
enhance the Department's fiscal strength and integrity.
Secretary Carson. Well, thank you for that opportunity.
First of all, when I assumed the position, I was told that
traditionally secretaries redecorate their office.
I came in, I looked at it. You know, I am not really big
into decorating. If it was up to me, my office would probably
look like a hospital waiting room. But at any rate, you know, I
invited my wife to come in and help me downstairs at the
subbasement. We have a bunch of used furniture. We went down,
made a couple of changes, had some drapes added, which were
down in the basement also, and some blinds for the window. The
total cost of renovation, $3,500.
A few months later, I was told that the dining room set
needed to be changed. I said, why. Because people are being
stuck by nails, a chair collapsed with somebody sitting in it.
It is 50 years old. I said, okay, we can potentially do that. I
asked my wife, also, to help me with that. They showed us some
catalogs, the prices were beyond what I wanted to pay. I made
it clear that just didn't seem right to me. And, you know, I
left it with my wife.
I said, you know, help choose something, but I said, the
money that is going to be used, we need to take care of the
deputy secretary's office and, you know, whatever is left over,
you know, take care of the dining room furniture.
It was very important to do that, and I realize that. But I
had so many other things to do at that point. You know, I had
no assistant secretaries. I had no deputy secretary. You know,
I was running from place to place dealing with a lot of
important issues, so I really wasn't that concerned about
furniture.
You know, the next thing that I, quite frankly heard about
it, was that this $31,000 table had been bought. I said, what
the heck is that all about. Investigated. Immediately had it
canceled. Not that we don't need the furniture, but I felt that
that was excessive.
There were reports that, you know, I said that I had no
involvement. I always said what my involvement was in it. You
know, it makes for a wonderful story. ``Carson wants to, you
know, take down the budget, but he wants to buy this expensive
furniture.'' But it bears no resemblance to the truth.
HUD INTERNAL CONTROLS
But we did use that opportunity to say what internal
controls allowed this to happen in the first place. Because we
have been spending a lot of time looking at what is going out
externally. And, you know, there are a lot of issues. And we
finally got a CFO in December, and we have been able to address
those, but now we have added, you know, things that are closer
to home to make sure that this kind of thing doesn't happen
again.
HOUSING FIRST
Mr. Diaz-Balart. Mr. Secretary, let me ask you, and we are
not going to have a lot of time so I may have to do it later as
well, talk to you a little bit about homelessness and Housing
First. I appreciate your working to prioritize assistance to
homeless assistance programs in your budget.
I have seen firsthand in places like Hialeah and Miami, as
you have, by the way, the effectiveness of these dollars on the
ground. Has the Housing First approach worked due to reduce
homelessness in communities? Does it really work? Is that a
model that works? Can you provide us with some success stories?
Secretary Carson. Sure. Through our Continuum of Care
program, for which we have asked $2.12 billion. You know, we
are able to aid 750,000 individuals through over 7,000
different programs.
Housing First works very well because it actually costs
more money to keep somebody on the street than it does to take
them off the street. Many studies have shown that. But we
believe in Housing First, second and third. Housing First means
you get them off the street. Housing second means you diagnose
the reason that they are on the street in the first place, and
housing third means you actually treat that. And, you know,
that, I believe is what real compassion is all about. And, you
know, homelessness is something that I believe we have the
ability to actually extinguish in our lifetime in this country.
Mr. Diaz-Balart. Thank you, Mr. Secretary. I, later, would
like to talk to you about how do we expand our efforts to reach
particularly challenging individuals like those suffering from
mental health. But we will continue those conversations.
Secretary Carson. Okay.
Mr. Diaz-Balart. Mr. Price.
Mr. Price. Thank you, Mr. Chairman.
FURNITURE
Mr. Secretary, let me pick up on the issue of the furniture
just to clear this up and make certain that we are clear on
what has transpired but also what kind of plans you have going
forward.
There appears to be some contradiction in the record about
your statements to the press indicating early on that you had
no knowledge of this purchase.
Secretary Carson. I never----
Mr. Price. That is not what you said today.
Secretary Carson. I never said that to the press.
Mr. Price. Well, your spokesman, HUD spokesman, Raphael
Williams, this is a CNN report, initially denied the Carsons
had any involvement in the dining set selection. Ms. Carson and
the Secretary had no awareness that the table was being
purchased, he told CNN last month. And then HUD's, the same HUD
spokesman went further and said, didn't order a new table and
so on.
A few days later, you personally addressed the issue saying
you were surprised by the price tag, was having the order
cancelled, and there were other reports having to do with some
ambiguity----
Secretary Carson. Sir, I would respectfully----
Mr. Price [continuing]. About your taking responsibility.
Secretary Carson. Yeah, I would respectfully say that I can
tell you what I said. I can tell you what I did. I do not
intend to be responsible for what anybody else said.
Mr. Price. And there is no problem with a much-cited
Facebook post either.
Secretary Carson. The Facebook post is quite accurate.
Mr. Price. All right. We will include that in the record
and other materials that we will document what I am talking
about.
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Mr. Price. And I take your answer that this is simply not
accurate, that you took responsibility, full responsibility
from the beginning.
Secretary Carson. Absolutely.
Mr. Price. All right. Then there is the matter of the
failure to notify Congress of the purchase. That, as you know,
is required by law. This was only a notification requirement.
Yet, your office was aware of it at the highest levels,
apparently, according to some email traffic that we have seen.
You didn't do that.
WHISTLEBLOWER
And then there is the whistleblower. Whistleblower made the
public aware of these issues, was reassigned, she said,
demoted. I would ask you to address that. Of course, the best
idea might have been to listen to her, but retaliating against
staff who were attempting to get high-ranking officials to obey
the law is inappropriate and possibly illegal.
Now, you have put out a statement announcing new internal
controls and management practices. That is a good thing. Of
course, these procedures are already in place. That is the
inconvenient fact. And as the whistleblower pointed out and the
internal emails demonstrate, you and your wife were involved in
the selection of the set, your senior staff knew about the
notification requirement.
So old procedures, new procedures. All the procedures in
the world are not going to help as long as they are not
followed. So I do hope you can give us your assurance here this
morning that the rules will be followed going forward. That you
will make sure this doesn't happen again, and that you will not
punish people in your organization who are trying to ensure
that the rules are being followed.
Secretary Carson. Well first of all, let me just say, I
don't know who this whistleblower is. You know, all of that is
news to me, quite frankly. And I would never be involved in,
you know, repercussions to people like that. That is not who I
am. I don't believe that that is an appropriate thing to do.
INTERNAL CONTROLS
And as far as, you know, the controls are concerned, I
think there are ways that they can be--ways that they can be
enforced so that you don't ignore them. And those are being put
into place. As far as the reporting is concerned, it is my
understanding that the facilities, people felt that the dining
room table was actually dangerous and it was a facilities issue
not a decorating issue.
Mr. Price. And the notification requirement, was there an
awareness of that?
Secretary Carson. I don't think there is a notification
requirement for facilities issues as there is with decorating
issues.
Mr. Price. Well, the internal email traffic does indicate
that your staff was aware of the notification requirements.
They clearly were not met.
Secretary Carson. It was never discussed with me. And as I
said, I was dealing with running an organization with virtually
no secretarial help.
Mr. Price. And you are denying that any kind of retaliation
occurred against the whistleblower?
Secretary Carson. Wouldn't even dream of such a thing. It
is totally absurd.
Mr. Price. All right. Hereto, we will furnish for the
record, the accounts of this and, of course, be happy to
receive any further response on your part as to how this has
been handled.
Secretary Carson. I did believe in the whistleblower
program. I endorsed it.
Mr. Price. That was my next question. Your testimony is
that you believe in the protection of whistleblowers.
Secretary Carson. Absolutely.
Mr. Price. And you intend to act on that.
Secretary Carson. No question.
Mr. Price. Going forward. All right. Thank you. Thank you,
Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir.
CDBG AND HOME
The gentleman from California, Mr. Valadao.
Mr. Valadao. Thank you, Mr. Chairman.
Thank you, Secretary Carson, for being here today. The
budget request proposes to eliminate funding for several HUD
block grant programs that provides funding directly to states
and local governments, mainly the Community Development Block
Grant, the Home Investment Partnerships Program and the Self-
Help Homeownership Opportunity Programs.
In proposing to eliminate these programs, the budget
request says that it devolves affordable housing activities to
state and local governments. A, does HUD have a role to play in
supporting local government's efforts related to affordable
housing and community development? If so, what would that role
look like in the absence of these programs?
And B, how would HUD expect state and local governments to
fill the gap left by these program eliminations? In particular,
how does HUD anticipate that less affluent communities would
address their affordable housing needs in the absence of funds
that they may have otherwise received through these programs?
Secretary Carson. Thank you for that question. Yes, HUD
does have a role to play. The Federal Government does have a
role to play. And I think it is a facilitating role.
Recognizing that, you know, these are very expensive
endeavors to deal with, and recognizing that the programs that
you mentioned, CDBG, Home, et cetera, have played very
important roles. We also recognize that sometimes the funding
has not been targeted appropriately to low income individuals.
It doesn't mean that we don't appreciate what has been
done, but we have a very good solution for that. And that is,
you may be aware of the Opportunity Zones Program, which allows
capital gains interest investment, to be put into the zones
that are designated by the governors. And you are able to
actually pool this capital. And that will work extremely well.
So in terms of, for instance, the gap funding that is
frequently provided by the Home program, you will have that on
steroids. And we will already be involved with HUD with many of
these redevelopment programs and will be able to guide that
funding.
HUMAN TRAFFICKING
Mr. Valadao. All right. Last month, I hosted a roundtable
in my district to discuss some of the challenges law
enforcement and community groups are facing.
One of the challenges they mentioned was a lack of
resources to get human trafficking victims away from their
abusers and place them in safe housing.
How is HUD working with local organizations to ensure that
they are given the vital tools necessary to give victims of
human trafficking the support they need, and how does this
budget request help strengthen capacity-building at the local
level, ensuring that rural communities to better assist this
vulnerable population?
Secretary Carson. Well, of course, we are very concerned
about human trafficking, about domestic abuse, about being able
to get these people into a safe zone, which is one of the
reasons that we requested $255 million for the Emergency
Solutions Grant Program and $40 million for Rapid Rehousing.
These are issues that, you know, concern our entire
society. And they will have our complete attention. You know,
as far as the rural areas are concerned, obviously some of the
solutions that work in densely populated areas don't work as
well there. And we are looking for solutions for them as well
through multiple of these programs. But also one of the things
to recognize is there is a tendency in rural communities to
want single-family housing, as opposed to multi-family housing,
for obvious reasons.
One of the things that has not been used to great effect
has been manufactured housing. A lot of times when people think
of that, they think of trailers and trailer parks. But in fact,
manufactured housing today looks just like site-on-site
housing. Beautifully done, much less expensive, rapidly put
together. But the reason that it hasn't expanded to the degree
that it can is because of the dense regulatory forest that
people have to go through in order to enact it.
We are looking at that because we recognize that with
single family housing, manufactured housing represents 10
percent of it, 22 million Americans.
So consequently, it is something that is vitally important,
that is why we are taking a top-to-bottom look at those
regulations that are preventing the use of it adequately in our
rural areas.
Mr. Valadao. On the victims of sex trafficking, that is
something that obviously law enforcement and some of these NGOs
in my communities are looking for ways to get people out of
those situations as quickly as possible, to help get them out
of that life and obviously keep them safe. So I hope that you
are really looking at the bureaucracy there and the process so
that we can speed that along and help these people as soon as
possible.
Secretary Carson. Thank you for your concern about that. It
has been a topic of much discussion in this administration.
Mr. Valadao. Thanks.
Mr. Diaz-Balart. Thank you, sir. The gentleman from
Illinois, Mr. Quigley.
WHISTLEBLOWER
Mr. Quigley. Thank you, Mr. Chairman.
Dr. Carson, you just said you don't know who the
whistleblower is?
Secretary Carson. I don't know this person.
Mr. Quigley. If not, she is hiding in plain sight. I mean,
Helen Foster has been on TV for some some time.
Secretary Carson. I still wouldn't recognize her if she
walked in here today.
Mr. Quigley. Okay. Well, it implies that you weren't aware
of what was going on in these situations as well as this--I
mean, if we have it, everybody else has it, and I assume you
did, the email chain beginning February 2nd of last year, going
up for an extended period of time, August 29, 2017, raising all
these issues in quite contradiction to what you have just
testified.
Is it just that you are not aware of those situations?
Secretary Carson. Tell me specifically what contradictory
statement there is?
Mr. Quigley. Well, in terms of your knowledge of this and
how this was purchased, whether it should have been reported to
Congress.
Secretary Carson. Everything that I have told you right now
is the truth.
Mr. Quigley. But you are aware that she is out there. You
are just saying you don't know who she is?
Secretary Carson. I don't know who she is----
Mr. Quigley. But you know----
Secretary Carson. I would have never gotten involved in any
kind of repercussions.
Mr. Quigley. Repercussions aside, you know who she is
because she has been on TV. You just don't know her personally,
which is a distinction without a difference.
Secretary Carson. Let me put it this way. Before this whole
thing became a newsworthy item, if it really is, I would not
have known who she was.
Mr. Quigley. But to be, just to be clear, you now know who
the whistleblower person is? That doesn't mean you know her.
Secretary Carson. I recognize the name, yes.
LGBTQ
Mr. Quigley. Okay. Last year when we were doing this, I
asked you questions about important training materials designed
to prevent discrimination against LGBTQ individuals that were
purged from the HUD website.
You assured me during that hearing that these documents
were taken down just to ensure that the policies in them were
effective and they would return to the website, quote, ``as
soon as possible.''
According to all published reports, they are not returned
to the website. There is a lawsuit now involving this and the
Department of Justice. This is, again, training materials made
in part to help homeless shelters make sure they were providing
equal access to transgender people.
So where are we from last year when you said they would be
returned to the website as soon as possible?
Secretary Carson. It is a very complex issue. We finally
got a general counsel in December. You know, this is March. So,
yes, it has been since we have gotten a general counsel,
something that we have been looking at.
Remember, it is complex. You are dealing--we obviously
believe in equal rights for everybody, including the LGBT
community, but we also believe in equal rights for the women in
the shelters and shelters where there are men and their equal
rights. So we want to look at things that really provide for
everybody and doesn't impede the rights of one for the sake of
the other. So it is a complex issue.
Mr. Quigley. How would----
Secretary Carson. And it has been on our agenda. We have
talked about it quite a bit since we have finally gotten a
general counsel.
Mr. Quigley. How would protecting the rights of transgender
homeless potentially impact the rights of, as you----
Secretary Carson. I will give you an example.
There are some women who said they were not comfortable
with the idea of being in a shelter, being in a shower and
somebody who had very different anatomy.
Mr. Quigley. So it is your intention that the general
counsel who came on, when?
Secretary Carson. December.
Mr. Quigley. December. Will spring into action and now 4
months later have an answer for us. It is now really a year
from last year by the time you are getting around to this----
Secretary Carson. I don't think you would have wanted us to
deal this without a general counsel, would you?
Mr. Quigley. Well, I would assume that there is somebody
involved with legal rights at an ongoing basis at HUD, dealing
with not just this issue, but a host of other issues that
involve legal matters that you claim to be concerned about, as
you just described.
Secretary Carson. I would like to work with you----
Mr. Quigley. Who has been doing this for the last year?
Secretary Carson. I would love to work with you on this.
And I would particularly be very interested in your ideas on
how we protect the rights of all the people involved. I would
be very interested, sir.
Mr. Quigley. And I would love for you to come to Chicago
and meet with the LGBTQ community as well as the transgender
community to help you, and whomever your general counsel is,
better understand the issues that they face and the
extraordinary concerns that we have already, that unfortunately
we haven't acted upon in the last year.
Secretary Carson. We are happy to hear from anybody who has
good solutions to how you protect everybody's rights.
Mr. Quigley. So you would agree to sit down with the LGBTQ
community, myself, and the transgender community to help you
understand this?
Secretary Carson. Absolutely.
Mr. Quigley. Thank you.
Mr. Diaz-Balart. Thank you, Mr. Quigley.
Mr. Graves has generously agreed to allow the ranking
member of the full committee who has a relatively busy schedule
these days, I am not quite sure why, but she does. So thank
you, Mr. Graves, for volunteering to do that.
Mrs. Lowey, it is a privilege to have you here.
Mrs. Lowey. And thank you, too, distinguished Chairman, and
thank you to the distinguished member, Mr. Graves, and welcome
to the committee.
Secretary Carson. Thank you.
HOPWA
Mrs. Lowey. Mr. Secretary, the request would reduce funding
by $26 million for housing opportunities for persons with AIDS
which enables communities to continue their efforts to prevent
homelessness and sustain housing stability for approximately
49,175 economically vulnerable households with individuals
living with AIDS/HIV.
Given the evidence that housing stability is one of the
strongest indicators of retaining HIV primary care and
preventing the spread of HIV, why would you reduce, rather than
increase, funding for this program?
And let me just say, in my interaction in my community,
there is more need for this program rather than less. And how
do you expect communities to make up for the lack of funding?
Secretary Carson. Well, first of all, I don't disagree with
you that more funding is better for that program. And for
virtually all the programs, quite frankly.
You know, last Friday, we crossed the threshold of a
national debt of $21 trillion. If we continue to accumulate----
Mrs. Lowey. Did you discuss that--excuse me. When you were
passing the tax cut, was that on the table? Did they talk about
that at all?
Secretary Carson. I wasn't at that table, but I will tell--
--
Mrs. Lowey. But your colleagues, I am sure, you were part
of an adviser to the President? Wouldn't you bring it up?
Secretary Carson. Here is the point: If we continue to
accumulate debt at this rate, by the year 2048, which is only
30 years from now, every penny that the government takes in
will be used to service the debt.
There will be no money for any programs, HOPWA, CDBG, or
any programs at all.
Mrs. Lowey. Except for the tax cut.
Secretary Carson. There won't be any money for any
programs. And that is what we need to start thinking about.
This really should not put us on opposite sides. We should be
figuring out how we can work together to take care of the
problem that you just mentioned, which is a very important
project.
And, you know, I have visited, you know, some of the
housing developments for people with AIDS. It is very
impressive some of the things that have been done. You know, I
have talked to the people in the communities who didn't want
them there at first, who now love them and support them very
much.
You know, this is something that is beneficial to our
society. I agree, and I wish we had money for everything. But
we have to make hard choices. But having said all that, you
know, the final budget authority comes from Congress. The
administration simply makes suggestions. And whatever monies
are provided, we will use them in a most efficient and
effective way to continue the progress we are making with
people with AIDS.
Mrs. Lowey. I wish I could have taped your comments because
I am in the middle of negotiating the omnibus. As you know, it
is not coming to the floor until Thursday now. And it seems to
me that there are people in the administration who have had
major input into some of these decisions. But I will move on.
CDBG
Mr. Secretary, as I previously mentioned, your budget
eliminates CDBG from 2005 to 2017. We know this program is so
important. It has helped over 1.435 million low and moderate
income persons. It is created or retained 401,992 jobs,
benefited over 139 million low and moderate income persons
through public services like job training, meals and other
services to the elderly, assistance to local food banks. Every
$1 that we spend on CDBG leverages an additionally $4.09 in
non-CDBG funding. And it affects every single district
represented in this room.
Could you tell me why you propose to eliminate this
program? It does so much good for our communities. And if your
budget request were to become reality, how do you plan to fill
the hole that this elimination would create?
Secretary Carson. Well, I don't disagree with you that it
has done some very good things. There is no question about
that. But, again, the same budgetary argument that I made
before still stands. You can change the name of the program. It
is all going to stand.
Nevertheless, we do have a way to take care of the good
things that CDBG does, and that, again, is through the
Opportunity Zones Program, which will bring in up to $2.2
trillion in money to substitute for that program and to provide
for infrastructure problems. You know, there is a lot--I
suspect we may be asking ourselves how can we use all this
money. We are going to be doing that. We are going to be
working with you to do that. We are going to make sure that the
good things that happen with these programs continue to happen.
Mrs. Lowey. The Chairman has been very generous with time,
so let me just say in conclusion, I really look forward to
working with you. And I am sure whether you are a Republican or
a Democrat, there will be many people, not just in my district,
who will say, what? The CDBG program is going down the tubes? I
think that is a real problem with it. Thank you.
Secretary Carson. Not the good things that happen with it.
Believe me.
Mrs. Lowey. Well, I look forward to having a conversation
with you.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, Mrs. Lowey. And let me again,
once again, thanks Mr. Graves for volunteering to let our
ranking member go ahead. Thank you for doing that.
Mr. Graves, you are recognized.
Mr. Graves. Thank you, Mr. Chairman. And always happy to
yield to the ranking member of the full committee in hopes that
it had might expedite these negotiations of getting the
government funding bill underway and resolved.
Mrs. Lowey. My goodness. I certainly hope in your role as a
very important Member of the majority, that we can expedite
these discussions that have been going on.
As you know, the omnibus now is not being introduced until
Thursday. We are supposed to leave on Friday. That sounds like
a miracle plus 10.
Mr. Graves. That is a day early, if I remember right.
Mrs. Lowey. That is pretty good.
Mr. Graves. Yeah.
Mrs. Lowey. Thank you. I look forward to working with you.
I appreciate it.
Mr. Diaz-Balart. Thank you again. Mr. Graves, you are
recognized for 5 minutes.
Mr. Graves. Dr. Carson, thank you again for joining us. And
let me thank you for your many decades of service and just
caring for people. You have a servant's heart, and we know
that. And I know that there are those here today that are a
little critical of some things that have been in the news, but
you were swift to respond, and I am grateful for that.
And so I would like to redirect back to the purpose of your
Department and what you do, and if you could help us just a
little bit more with some of your vision.
This committee also oversees transportation, and we have
had a lot of discussion in the Transportation Committee about
public and private partnerships. And my understanding, after
reading a little bit about one of your projects is that there
might be that opportunity as well in your Department.
And so I was hoping you might share with us a little bit
about the EnVision Center Demonstration project and your goals
there and what you hope to see?
ENVISION CENTERS
Secretary Carson. Well, thank you very much. You know,
there is a verse in the Bible that says without a vision, the
people perish. So initially we called them vision centers, and
then we figured people would think they were getting glasses,
so now we call then EnVision Centers. But, you know, the whole
idea is to really juxtapose the need with the resources.
You know, and traveling throughout this country, I have
discovered that we have an enormous number of people who
actually care. And who have resources. And who are willing to
use those in a philanthropic way. We also have an enormous
amount of need. But the two generally don't tend to meet each
other.
We want to provide an opportunity for that. A lot of times
we ask young people, What do you want to do? And you get a
blank stare. Oh, maybe they want to be a basketball player or
something, but you don't get a whole lot of choices. The fact
of the matter is, there are a thousand choices, and EnVision
Centers will expose them to what those choices are and how to
get there.
We will also be a site for mentorship. We have a lot of
people, millions of people who would be great mentors, but they
don't have a good mechanism for doing that. We will also help a
lot of the young women, for instance, who get pregnant early on
and, you know, go into a dependent situation to be able to
hookup with the resources that will take very good care of
those children and allow her to get her GED or her associates
or her bachelors. To become independent, more importantly, to
teach that to her children and break the cycles of dependency
which cause the roles to keep growing and cause the Federal
Government's expense to continue to go up.
You know, all the people are our resources. They are our
best resource. And we want to aim our efforts at actually
developing the people. Houses are nice, no question about that,
but they are only a part of what is needed to provide the
development of people. And that is what the EnVision Centers
are all about.
Mr. Graves. That is great. I agree with you that in our
communities we have so many people who want to give, they want
to help, and they want to take care of their community. And
that is really what community is all about.
Secretary Carson. Right.
Mr. Graves. And sometimes government gets in the way of
that. And so what I appreciate about your new demonstration
project here is that you are giving communities that
opportunity, once again, to invest and to take care of those
that are truly a part of them and help them get to a better
place in life where they all know they want to be.
Secretary Carson. Exactly.
FHA LENDERS
Mr. Graves. If I could just shift gears, and one final
question as it deals with FHA lenders. Early in your tenure,
you expressed an interest in curbing the use of false claims,
the False Claims Act to punish FHA lenders for some minor
errors and oversights.
Can you just give us an update on that and what steps have
you taken and such?
Secretary Carson. Yes. You know, the problem was that many
of the lenders were basically moving away from FHA because, you
know, a lot of immaterial mistakes were putting them in great
financial jeopardy.
Now, in no way do we condone those bad actors who, get in
and take advantage of people. Slam them as hard as you can, no
problem. And we are never going to cover for them. But we want
a system that makes it easier for our citizens to realize their
dreams. And FHA is particularly aimed at those first-time home
buyers, you know, minorities, people who frequently don't seem
to have the same advantages with the private lending market.
And we want to make sure that we enhance their chances of
realizing the American Dream.
We are working with the Department of Justice on the False
Claims Act, and I think some of the lending community is
recognizing that, and they are starting to come back. And all
of that is good for American consumers.
Mr. Graves. Right. You are absolutely right. Mr. Chairman,
thanks again for having us this morning. And Dr. Carson, thanks
again for your service.
Secretary Carson. Thank you.
Mr. Diaz-Balart. Mr. Graves, thank you very much. We are
honored to have the chairman of the full committee. I remember
James Brown used to be called the busiest man in show business.
This is the busiest man.
Mr. Frelinghuysen. Work horse, not show horse.
Mr. Diaz-Balart. Right. This is the busiest man in
Congress. So, again, Mr. Chairman, it is a privilege to have
you here.
Mr. Frelinghuysen. Well, thank you Chairman Diaz-Balart.
Let me thank Chairman Diaz-Balart and Dr. Price for their
leadership of the committee. And let me also recognize,
obviously, your very distinguished career as secretary and now
in a previous life as being a very well-known medical doctor of
high repute.
So let me just address this to your staff. You have been
Secretary for a year and you and I have really not become
acquainted. And may I say, I often say in my opening remarks,
the power of the purse resides here in the Appropriations
Committee.
I would like to be, better acquainted with you. I think the
staff needs to bring you up. As a chairman, I have keen
interest in a lot of your programs.
Secretary Carson. Well thank you. Maybe you can come over
for lunch if you don't mind falling out of a chair.
Mr. Frelinghuysen. I am not sure I need the lunch, but I
think it is important for us to talk about our priorities.
This is the one, two or three budgets which gets, it is
going to get a lot of money in this 2018 budget process. And I
want to thank, even though we haven't rolled out our budget,
you should be very grateful, as I am sure you have already
expressed or will shortly to the chairman, the way that he and
Dr. Price have put that money to use. But I would like,
obviously, to have some opportunities myself----
Secretary Carson. Sure.
VETERANS
Mr. Frelinghuysen [continuing]. To get to know you. I have
a keen interest in what we are doing on behalf of veterans. I
have a keen interest in what we are doing in terms of housing
with people with disabilities. So I would like to use this
opportunity as an offer to----
Secretary Carson. Okay.
Mr. Frelinghuysen [continuing]. Get together with you as
soon as possible.
Secretary Carson. Thank you.
Mr. Frelinghuysen. So we can work much more closely
together. Thank you, Mr. Chairman.
Secretary Carson. Thank you.
Mr. Diaz-Balart. Thank you, Mr. Chairman.
The gentlewoman from Massachusetts. You are recognized, Ms.
Clark.
FURNITURE
Ms. Clark. Thank you, Mr. Chairman. Thank you for being
here, Mr. Secretary. I want to go back to some of your
testimony around this dining room table and the purchase of
furniture.
There is a memo from your senior staff dated February 28,
2017, talking about this $5,000 threshold before you have to
notify the Appropriations Committee about spending on furniture
and having to do with the personal alarm system being installed
at your home.
Is it your testimony that you knew nothing of these
requirements?
ALARM SYSTEM
Secretary Carson. No one discussed that with me. An alarm
system at my home was discussed with me by security, and they
suggested that perhaps there was money to take care of that. I
decided that I did want an alarm system, but that I would pay
for it myself.
Ms. Clark. So you never saw this memo?
Secretary Carson. No, I never saw the memo.
Ms. Clark. And nobody ever mentioned these limits or
notification requirements?
Secretary Carson. I had no discussion about that.
Ms. Clark. Okay. These items that were purchased were from
an interior design firm in Baltimore, Maryland, by the name of
Sebree and Associates. Did you personally select that firm?
Secretary Carson. No, I didn't know about that firm.
Ms. Clark. Do you or your wife or any member of your family
have a relationship with that firm?
Secretary Carson. We do not. I will say, to their credit,
when we canceled the order, they didn't impose any penalty. So
all the money has been returned to the U.S. Treasury.
FURNITURE
Ms. Clark. Okay. And this furniture was selected by your
wife. Is that correct?
Secretary Carson. A style and a color were selected by her.
Ms. Clark. Fabrics, that sort of thing?
Secretary Carson. With the caveat that we were not happy
with the pricing and they needed to find something.
If anybody knew my wife, they would realize how ridiculous
this was. She is the most frugal person in the world.
Ms. Clark. So when did you become aware of the pricing?
Secretary Carson. When the article came out.
Ms. Clark. When the article came out?
Do you know Aida Rodriguez?
Secretary Carson. Yes.
Ms. Clark. And she certainly had the quote on the pricing.
That was just never shared with you before this?
Secretary Carson. Like I said, I dismissed myself from this
issue because I had many much more important things to deal
with.
Ms. Clark. Is your wife involved in any other decisions
regarding taxpayer money or funding or purchasing at HUD?
Secretary Carson. None whatsoever.
And her question about all this was: Can we buy used
furniture? Why can't we buy used furniture? And we found out
that we didn't have a way of doing that.
FAMILY INVOLVEMENT AND OGC
Ms. Clark. So lots of talk about the furniture and your
wife. Does your wife have any office space or a HUD email?
Secretary Carson. She does not. My wife comes to my office
when we have an engagement to go to, so that we can go to it
together. That averages out to about once a week.
My wife is a very friendly, gregarious person. She talks
with staff. But she has nothing to do with HUD policy and has
no desire to have anything to do with HUD policy.
Ms. Clark. So last summer you also allowed your son to help
organize an agency listening tour in Baltimore, against the
advice of HUD ethics lawyers. Following this listening tour,
did your son enter into any business relationships with any of
the attendees?
Secretary Carson. He did not. He makes 100 percent sure
that he stays arms length away from any such things.
I discussed the tour with him before. The reason he got
involved in the first place is because they were having some
difficulty discovering who the right people were to speak to in
Baltimore. I suggested that he knew just about everybody there
and they should talk to him.
Ms. Clark. Have there been any other incidents when you
have chosen to ignore the advice of HUD ethics counsel?
Secretary Carson. Well, HUD's ethics counsel suggested that
it might look funny for my son to be there. I discussed that
with him and left it up to him.
I am not a person who spends a lot of time thinking about
how something looks. I realize that that is not the way of
Washington, and that is a lesson that I have learned.
Ms. Clark. You have recently asked the HUD inspector
general to investigate your family's role and influence at HUD.
Can you tell us why you felt that was necessary?
Secretary Carson. Yes. Because I know that these things
just linger and linger, and I know that there is nothing there
to find. So why not just go ahead and get it dealt with?
MOVING TO WORK EXPANSION
Ms. Clark. Can you provide me a timeline on when HUD is
going to begin the Moving to Work expansion, specifically when
HUD will be accepting applications for the first cohort?
Secretary Carson. Well, the Moving to Work program has had
variable results. When it was put into place, metrics were not
put into place. And this is the reason that we need to add 100
more to it, with metrics in place, so that we can see what the
actual impact is.
Ms. Clark. What is the timeline for establishing this?
Secretary Carson. In terms of the timeline, I would be
happy to have someone give that to you. I do not know what the
timeline is.
Ms. Clark. Okay. It has been 2 years also since Congress
authorized regional MTWs. Have you made any progress on that?
Secretary Carson. Again, I would be very happy to have the
group that is working on that discuss that with you.
Ms. Clark. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Before I recognize Mr. Joyce, Mr.
Secretary, is it true that this whole thing ended up costing
$3,500?
Secretary Carson. $3,500 for the office decorations, that
is right--which is considerably less than the historical norm,
by the way.
Mr. Diaz-Balart. I just want to make sure that we kind of
put things in perspective.
Mr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman.
And, Dr. Carson, thank you for being here.
I was trying to compute on my phone what $31,000 amounted
to in a $41.244 billion, and it just doesn't go that high. I am
sure that has got to be less than 0.00001 of a percent of the
HUD's budget.
But, anyhow, before I start, I do want to touch base on
something that you had brought up earlier about the modular
home.
Secretary Carson. About the what?
MODULAR HOMES
Mr. Joyce. You were talking about modular homes and how
well they are constructed.
Secretary Carson. Oh, yes.
Mr. Joyce. And it is interesting, I happened to look at a
number of those factories, and they say those homes are much
better built than houses in the field, because, like any
factory, it is exact and the measurements are perfect and the
wood is cut to order versus trying to make do if you are out in
the middle of a field trying to make things happen.
Secretary Carson. It is very impressive.
Mr. Joyce. Yes. If there is a way we could do that, that
would be fantastic.
Last year you and I were just starting in, but we had an
opportunity to talk about blighted housing and the problems
that develop in larger inner-city tracts, where it appeared
that local governments end up owning a lot of the blighted or
dilapidated houses in order to try to clean up the blocks, if
you will.
As you are well aware, that is where, unfortunately,
activity for drug dealers takes place, crimes take place inside
those. But I have seen substantial progress, thanks to you, in
my district and the State. But, as you well know, there is
still work that can be done.
Can you speak to the challenges that continue to face
blight elimination and urban demolition?
BLIGHT REMOVAL
Secretary Carson. Well, you have accurately pointed out
that it is a significant problem. It drives down home values,
creates a nice habitat for criminal activity. That is one of
the reasons that we have allocated significant funding for
blight removal.
But also encourage the grantees in the various cities to
make that a priority. They have done a very good job of that,
for instance, in Detroit. I think they are having a sustained
revival now, for the first time.
For many decades it would start and then it sputters out,
but it is really working now. And I think one of the reasons is
because Mayor Duggan has recognized the terrible effect of that
blight.
Mr. Joyce. We are envious of that in Cleveland.
Can you explain to us, as appropriators, how we can
continue to reduce the red tape and guarantee the efficiency of
the funds that are given to you to reduce blight?
Secretary Carson. Well, the first thing we have to do is we
have to recognize it as a problem. The red tape issue is a very
difficult issue to get through, as you know. Bureaucracy and
red tape go together.
What we have to do is, when we are talking to the
applicants, make it very clear that that is a priority and that
preference is given in situations where they are paying
attention to that issue.
Mr. Joyce. I have heard from community developers and low-
income housing authorities in my district, as we continue to
make progress in the residential blight elimination, we should
begin assessing the need for commercial and industrial
demolition.
Large destructions, including abandoned hospitals,
factories, stadiums, and schools, are costly to tear down. The
properties pose a unique opportunity for public-private
partnerships to stimulate large-scale investment and community
development.
What type of role do you see HUD potentially playing in
commercial and industrial demolition?
Secretary Carson. Well, it doesn't all have to be
demolished, as you indicated. Some of it can be rehabilitated.
I was in South Carolina with Senator Scott, and one of the
textile mills had been converted to apartments--that were
beautiful, quite frankly, and were filling very quickly. And
that had encouraged the development of other commercial
activity around that site.
So I think there are some innovative ways that that
commercial blight can be converted, as well.
Mr. Joyce. And there are ways in which HUD is now working
with local developers, be it in South Carolina or other places,
to do that?
Secretary Carson. Absolutely.
Mr. Joyce. That is fantastic, sir.
And, also, as you rightly point out, the fact that we know
that crimes occur in these areas, they also help tear down
neighborhoods and a good neighborhood that goes sour because of
a few of these things. So the ability we have to go back there
and take those blighted buildings out, any help you could give
us at this time would be fantastic, sir. Thank you very much.
Secretary Carson. It will continue to be a high priority
for us. Thank you.
Mr. Joyce. Thank you for your time, Mr. Secretary.
I yield back, Mr. Chairman.
Mr. Diaz-Balart. Thank you, Mr. Joyce.
The gentleman from California, Mr. Aguilar.
Mr. Aguilar. Thank you, Mr. Chairman.
FURNITURE
Mr. Secretary, just for the benefit of my colleagues, too,
I mean, I hope you understand the importance that we feel our
role plays in providing input and oversight of your agency and
Department. So while I can appreciate that you have stayed
within the statutory cap that was set by Congress when it comes
to the furniture amount, I think some of the emails show at
least the intent to get beyond that initially.
And so I appreciate that once this became public, matters
were addressed. I think what some of us have concerns about is,
absent this being public, what would have happened, and would
we have remained at that cap.
So I think it is important that you understand we view our
role to be thoughtful in setting the budget for your Department
and making sure that individuals are treated correctly.
Secretary Carson. Much appreciated.
Mr. Aguilar. So it is in that intent that we ask these
questions.
Do you or your staff use personal email to communicate
about HUD policy? I can understand that as a result of this
individuals maybe on your team are upset that these became
public. Do you or your staff use personal email to communicate
about agency policy?
Secretary Carson. I do not, and I am not aware of my staff
doing that.
Mr. Aguilar. They have been counseled that that may not be
appropriate?
Secretary Carson. Correct.
Mr. Aguilar. Okay. Thank you.
FHA LOAN LIMITS
Mr. Secretary, I believe we also have a responsibility when
it comes to these programs to achieve the American Dream for
homeowners. And one of the policies that we have worked with
your staff on, and the committee on, is FHA loan limit policy
for consumers out of competitive loan programs, specifically
loan limits for MSAs that can be distorted because of the large
geographic area of those MSAs.
I represent San Bernardino County in California that has
the largest metropolitan statistical area, spanning 27,000
square miles. The housing market includes very rural and very
urban areas. And cities within that MSA have a median home
price ranging from $250,000 to $550,000.
Consequently, cities closer to Los Angeles have a higher
price, obviously, with respect to FHA loan limits, and some of
the cities in the district also have much lower median prices,
and this can lock out consumers for a chance to buy a home in
their desired location.
The fiscal year 2018 THUD appropriations report directed
your Department to study whether the geographic size distorts
FHA loan limit calculations for distinct subareas, such as
cities. My office sent along the report's language to your
staff, so, hopefully, you will have a chance to take a look at
it.
What steps has HUD taken to address the committee's request
for that language?
Secretary Carson. I suspect that you recognize that loan
limits are the purview of Congress, that we don't have the
ability to change those. But we are very happy to work with you
and provide technical assistance in whatever is needed.
We look forward to receiving those documents from you. I
think this is a very important issue. And geographic areas do,
in fact, impact it.
Mr. Aguilar. Okay. So you would be open to having a call or
a meeting in your office to chat about these issues?
Secretary Carson. Absolutely.
Mr. Aguilar. Okay. Because I think that HUD can do more in
this regard. I understand the statutory context that the
committee has, and we will work to address that. But I think
that there are some issues that we can work on together to help
resolve this.
Secretary Carson. Very happy to.
Mr. Aguilar. And I appreciate the Committee's willingness,
and yours, to do the same.
One more question, Mr. Secretary. I understand that HUD is
requesting an information technology fee that would be assessed
on FHA lenders. This concerns me because some of the largest
home lenders have been issuing fewer mortgages insured by FHA.
The FHA program is critical to many Americans, especially
Latino communities. In 2016, nearly 60 percent of mortgages
made by Latino families were insured by the Federal Government.
Passing along costs to lenders may further discourage the
largest lenders from issuing mortgages insured by FHA and
raising concerns about access that communities have for low-
and moderate-income families to have an affordable loan.
Why should IT upgrades come from lenders as opposed to
traditional processes?
Secretary Carson. Well, thank you for that question.
First of all, I appreciate the role of FHA, particularly
with first-time home buyers and minorities, and we want to
expand that as much as possible.
FHA SYSTEMS
Having said that, FHA has a portfolio approaching $1.3
trillion, and, yet, we have an archaic technology platform from
which we work, which puts people at risk. We need to update
that.
So you are looking at a $25 charge per loan, which is like
0.00000001 percent, and that even can be waived in any case of
extreme hardship. So I think you have to look at that
perspective.
I can't emphasis this more strongly than anything I am
talking about today: We have to get the IT systems at FHA up to
par. We are putting a lot of money and a lot of people in
jeopardy by continuing this.
By the way, this fee that we are talking about, this $25,
it has a 4-year sunset on it. And it will raise about $20
million a year, which is only a fraction of what is needed to
maintain the system.
Mr. Aguilar. Thank you, Mr. Secretary. I look forward to
seeing, if you move forward with this, a detailed plan on how
that would be spent, so we can have a conversation on that, as
well.
Secretary Carson. No problem.
Mr. Diaz-Balart. Thank you very much, Mr. Aguilar.
Chairman Culberson is running between hearings, so I want
to thank the committee for your flexibility.
Mr. Culberson.
Mr. Culberson. Thank you, Mr. Chairman. I appreciate you
recognizing me. I am chair on the Commerce, Justice, Science
hearing next door, so thank you very much for recognizing me.
Secretary Carson, you are well known for your compassionate
heart. And you are dear good friends with my pastor, Dr. Ed
Young. I know you know the Houston area well. You were so well
respected and loved there.
I wanted to urge you to keep us in the forefront of your
mind, the people of Florida and the people of Texas, who are
really suffering as a result of these terrible hurricanes that
hit Texas, with Harvey, 53 inches of rain in an area the size
of New Jersey the largest housing disaster in the history of
the country. The people of Florida.
Secretary Carson. Absolutely.
CDBG-DR
Mr. Culberson. But I have thousands of constituents, who
are still living on the second floor of their homes, with
either no sheetrock, or very little sheetrock, on the first
floor. My brother has been living in a trailer in his driveway
since the storm. My wife's sister's home was destroyed.
Everyone we know, either family members or people we know, have
suffered as a result of the storm.
I know you inherited a massive agency with a lot of
inertia. It has got to be frustrating, I know, for you, sir.
But if I could ask you to just keep those folks in the
forefront of your mind and how they are suffering and how this
cold winter has been no fun for a lot of them. It snowed a
little bit in Houston, and has been no fun. Really difficult.
And one of my greatest frustrations in dealing with the
Federal Government has been the slowness of the CDBG-DR program
administered by HUD. It is very frustrating to see the
slowness. I have discovered there is $500 million from
Hurricane Ike still stuck at GLO waiting to get out.
So I wanted to ask you a couple of things you could do
immediately, right away, that would help immensely the people
of Florida and Texas, and that is to waive the 70 percent
requirement on the CDBG-DR money. That is under your
discretion. The statute gives you the authority to waive that
70 percent of the money go to low- to moderate-income and go to
50-50.
It would make a huge difference for the people I represent,
who have sunk their entire life savings into their home, who
are living on the second floor, have exhausted their savings,
have drained, in many cases, taken money out of their 401(k)'s
to pay for the repairs. We really need your help.
What is the status of that? You have done it in other
disasters. You have waived it and gone to 50-50. That is
urgent.
Secretary Carson. I would say it is done on an as-needed
basis. In Texas, the first tranche of relief from Congress was
the $7.4 billion. Texas ended up with about $5 billion of that.
Utilizing the 70 percent LMI formula, that means 30 percent
could go outside of that. You would be talking $1.5 billion.
If, in fact, that turns out not to be adequate----
Mr. Culberson. It is not. It is not adequate.
Secretary Carson. [continuing]. Certainly we have formulas
and we will look at it.
Mr. Culberson. We made the request. This is really urgent,
that you waive. This has been done in other disasters, as you
say, on an as-needed basis.
You are very familiar with the city of Houston and the
people of west Houston, who have, again, sunk their entire life
savings into their home. They are not wealthy, but the formula
would treat them as wealthy, and it is just not appropriate. It
is urgently needed in this situation. And you would provide
immediate relief to those homeowners if you will waive the
rule.
Can you tell me when you expect that to happen? We made the
request many months ago. The storm hit at the beginning of
September, end of August.
Secretary Carson. I will talk to our CPD department and see
what the status of that is.
Mr. Culberson. It is really urgent.
I also wanted to ask, if I could, about the status of the
infrastructure unmet need. The Bipartisan Budget Act provided
an additional $28 billion for HUD CDBG-DR funding, but $16
billion was traditional funding in grants to States. There was
a $12 billion set-aside for mitigation projects, to help us
protect against the next storm, and that money for unmet needs
is still sitting there.
What is the status of allocating that infrastructure unmet
need money to the State of Texas?
Secretary Carson. Well, the moneys from the second tranche,
a third of them have to be allocated by April the 10th. So a
lot of that will be allocated by that time, within the next few
weeks.
Mr. Culberson. And the additional $28 billion of CDBG-DR
funding provided in the Budget Act in February, what is the
status of that, allocating those funds, to get them out the
door and in the hands of taxpayers who urgently needed?
Secretary Carson. A third of that will be allocated by
April the 10th. The rest of it has to be allocated before the
end of the year.
Mr. Culberson. Would you give this your personal attention?
Secretary Carson. Absolutely.
Mr. Culberson. It is urgent.
Thank you so very much.
Secretary Carson. No, I completely sympathize with
individuals, particularly in an area that was intentionally
flooded. I can't imagine what those people feel like.
Mr. Culberson. That has been the worst part, that the gates
were opened. The water had stopped, the rain had stopped, the
gates opened, and here comes the water. My brother was one of
those people.
Secretary Carson. I understand, absolutely.
Mr. Culberson. It is just near and dear to my heart.
Thank you very much.
Mr. Diaz-Balart. If I may, Mr. Culberson, let me personally
thank you, because, obviously, Florida was hit hard as well.
But everybody who has been hit hard owes you a great deal of
gratitude for your leadership and your aggressive insistence on
getting this done. So thank you for your leadership.
Mr. Culberson. Thank you, Mr. Chairman. The Florida and
Texas delegations worked together beautifully on this.
Mr. Diaz-Balart. Mr. Dent, you are recognized, sir.
Mr. Dent. Thank you, Mr. Chairman.
Good morning, Mr. Secretary.
Secretary Carson. Good morning.
HUD-VASH
Mr. Dent. As you know, it came to light last December that
the VA was going to reallocate funding from the HUD-VASH
program, which helps the most vulnerable veterans facing
homelessness, and, instead, spend this money on other VA
services. Only a day or so later, after receiving a great deal
of negative feedback, the VA reversed its decision and
announced there would be no changes to the HUD-VASH program.
I understand that this decision was made within the VA. But
given that there are both HUD and VA components to this
program, could you tell me if you or your Department had any
conversations with the VA prior to the decision being made,
and, if so, what was the feedback you provided?
Secretary Carson. Well, I certainly had an opportunity to
speak to the Secretary about this, because I heard the rumors
that they were going to reallocate the funds, and each time he
assured me that that was not going to happen. I had two or
three conversations with him about that, and that was always
the outcome of the conversation.
Mr. Dent. How will you ensure that your agency is in
communication with the VA, or other agencies, when there are
important decisions like this one in the future?
Secretary Carson. Well, we talk frequently. The Cabinet has
a very open conversation policy. So that is not going to be an
issue.
Mr. Dent. Okay. Thank you.
Next question, I want to turn to your budget request for
this year. And as was the case last year, the request does not
contain any funding for the HUD-VASH program.
Can you elaborate on your agency's rationale for this
request? And how do you envision this program working in the
future and, ultimately, working toward the goal of ending
veterans homelessness?
Secretary Carson. Well, first of all, I recognize that 1
percent of our population protects the other 99 percent, and we
owe a great deal to the veterans, no question about that.
The HUD-VASH program is responsible for the 47 percent
reduction in veteran homelessness. It is a tremendous program.
HUD provides the housing vouchers, and the VA provides the
wraparound services. It is a very good model of interagency
cooperation.
The reason that we didn't ask for more is because we have
adequate vouchers already. We have the ability to reissue
vouchers. And when we get to a point where we need more
vouchers, believe me, we will ask for more.
Mr. Dent. Thank you for that.
HOUSING COUNSELING
I would like to also now quickly move to housing
counseling.
Last year, in the fiscal year 2018 budget, you had
requested level funding for the Housing Counseling Assistance
Program. As you know, this program provides housing counseling
services to homeowners and tenants, both pre- and post-
purchase, and can help struggling homeowners prevent
foreclosure and assist in avoiding difficulties in the first
place. So, in fact, as time has gone on, more people are using
these services for pre-purchase counseling and fewer are using
it for delinquency issues.
In reviewing this year's fiscal year 2019 budget, your
request for this program is $10 million below the currently
enacted level, and it is even lower than the amount that you
had requested last year.
Given the continued demonstrated need for these services,
especially in light of the major hurricanes that have
devastated some of our housing markets, can you tell me a
little bit more about how you arrived at this year's funding
request for the Housing Counseling Assistance Program?
Secretary Carson. Again, it goes back to the concerns about
our national debt, our deficit. So we are looking to trim where
we need to.
That is not in any way to say that housing counseling is
not warranted. In fact, the statistics would show us that those
families that receive housing counseling default at a rate of
about 30 percent less than others.
So it is an important program, and whatever funding we have
for it, we will use it effectively to try to make sure as many
families as possible benefit from that.
Mr. Dent. I only point out that a couple of years ago, we
consolidated some of these housing counseling assistance
programs into this one line. So the program has taken a bit of
a hit in recent years, and so there has been a consolidation.
So I want you to be aware of this. This is really the only
substantive line right now to help those folks.
I found in my own district that a number of people who have
been involved with counseling have been able to prevent some
bad situations. And there are many others who wish they had
been in counseling prior to the 2008 crisis that could have
averted some bad situations.
Secretary Carson. No, you are right. We have about 2,100 of
them active around the country, and we want to use them to the
greatest effect.
Mr. Dent. Thank you, Mr. Secretary.
I yield back.
Mr. Diaz-Balart. Thank you, Mr. Dent.
Again, thank you also. I know you have been a great leader
on the issue of housing counseling, and you have talked to a
lot of us, including me, many times. So we will continue to
work with you. Thank you.
The gentleman from Iowa, Mr. Young.
Mr. Young. Thank you, Mr. Chairman.
Mr. Secretary, welcome. We have covered a lot of issues
today. Some issues that my colleagues have covered I was going
to cover, and I won't be repetitive. We have covered everything
from veterans housing programs to counseling to tables.
LACK OF TECHNOLOGY
I am going to go in a different direction. But I do want to
dovetail on what Mr. Aguilar was talking about. Just at the
very end, you were talking about the IT platforms, and how you
said that the technology, or lack thereof it, incompatibility
of it all maybe, is putting people at risk.
How many different systems are there at HUD that you have
to patch together and that you are dealing with? How subpar are
they? And how worried are you about this?
Secretary Carson. I am very worried about them. We are
trying to bring them now under a single umbrella so that we can
provide the appropriate oversight accountability.
I can't even begin to tell you how serious an issue it is
and how much at risk it puts us.
Mr. Young. When you say bring it under one umbrella, you
are talking about one pinpoint Chief Information Officer who is
overseeing everything----
Secretary Carson. Yes.
Mr. Young [continuing]. Or putting it under one umbrella of
one system that talks to each other?
Secretary Carson. Both. I want to have a principal person
who is responsible. And then, of course, he will have different
arms of responsibility going down to the different segments.
But we need to have a system whereby I can say: How much
money in this grant to Cincinnati has been spent and for what
purpose? I need to be able to find that out right away. It
shouldn't take me 3\1/2\ months to find that out.
Mr. Young. No, it shouldn't. Okay. Thank you for that.
And when you talk about putting people at risk, are you
talking about the integrity of the security of the system in
terms of cybersecurity----
Secretary Carson. Absolutely.
Mr. Young [continuing]. And people trying to hack and steal
people's identity or their personal or financial information?
Secretary Carson. We are getting 2,000 to 3,000 hack
attempts a week.
Mr. Young. Goodness. Okay.
Has that been consistent since you have been leading over
there at HUD?
Secretary Carson. We get about that many FOIAs also. But,
yes, it has been quite consistent.
Mr. Young. Yeah, the numbers, they correlate, I guess,
maybe.
RURAL HOUSING
Let me just pivot to something else: rural housing. I
represent a very rural district. It is a very unique district.
I have got the most populated county in the State of Iowa, Polk
County, in my district.
Secretary Carson. I have been there.
Mr. Young. I have seen you. We thought maybe you would buy
a house there.
And then we have the least populated county in the State,
Adams County, in southwest Iowa.
What are some of the actions HUD has taken to help
alleviate the lack of rural housing that we need? And where are
you going with this? What are your challenges? And what do you
see as solutions?
Secretary Carson. Well, as you probably know, there is a
multiagency council, led by agriculture, to deal with the
issues of housing, to deal with the issues of communication,
because, as you know, there is no broadband access in many of
those counties, which I think is inhibitory, to look at
education. So that, obviously, is going to continue.
But, as I mentioned before, I believe one of the biggest
things that we can do for rural housing is to eliminate the
huge regulatory burdens that we have on manufactured housing. I
think this is an area that has been underutilized and will
provide a tremendous advantage for us in the future.
Mr. Young. I would love to work with you on knowing what
some of those regulatory burdens are with manufactured housing.
Secretary Carson. Oh, believe me.
Mr. Young. I appreciate what you do. I appreciate the heart
that you have for people ultimately with what you do. And thank
you for being here today.
Secretary Carson. Thank you very much.
Mr. Young. Thank you, Mr. Chairman.
REVERSE MORTGAGES
Mr. Diaz-Balart. I want to thank the gentleman.
Mr. Secretary, I am going to throw two quick issues at you.
One of them is home equity conversion mortgage programs, or
reverse mortgages.
A November 2017 article stated that HUD's own data shows
that the default rates have increased 646 percent in 2016.
There are also studies, for example, that show default rates of
those mortgages were 10 percent following the housing crisis.
I am, frankly, a little concerned about that program, and I
want to work with you to kind of dive into it and make sure
that our seniors are protected. I am not sure if those default
rates are actually accurate or not. Supposedly, there are huge
numbers of seniors defaulting, which is, obviously, something
that is unacceptable. Those are folks that have to be
protected.
So not really a question, but just to let you know that
that is something that I want to, if we can, soon, let's get
together and let's figure out what we can do to make sure that
those senior citizens are protected.
Secretary Carson. Well, it is a huge issue, the ability of
seniors to age in place. The people who put the program
together had very good intentions, but they didn't put it
together very well. So we inherited a mess and had to take some
pretty severe, stern remedies. I think it has largely stemmed
the tide in terms of the disaster that was occurring there.
But we were draining from the MMIF $12.5 billion over a 9-
year period. That was ridiculous.
Mr. Diaz-Balart. That is a huge percentage, too, these
mortgages or these products.
Secretary Carson. Exactly. So we understand that problem
and are dealing with it very effectively.
Mr. Diaz-Balart. Good. And I look forward to it, because
that is an issue that we need to make sure is working for the
folks that it is supposed to be working for, which are our
seniors.
Secretary Carson. Absolutely.
Mr. Diaz-Balart. I think there is some question whether it
is doing that.
DISASTERS
Obviously, the State of Florida and other parts were hit
harder by the hurricanes. Actually, the district that I
represent was hit rather severely.
So there are areas, for example, like Everglades City and
Plantation Island and Chokoloskee and Immokalee, those are
folks that are just anxious to work with the State to get back
on their feet. So anything that you and your team can do to
help them prepare for a long-term recovery plan would be very
helpful.
Secretary Carson. Absolutely.
Mr. Diaz-Balart. And I look forward to continuing working
with you on that.
Any idea as to where the action plans--because, obviously,
the States and the territories have to come up with an action
plan--any idea where they are, Texas, Florida, Puerto Rico, et
cetera?
Secretary Carson. Well, we are in constant communication
with them.
One of the things that, hopefully, people have noticed is
that we have made an effort to work with the local agencies and
the State agencies, with FEMA, with SBA. We have made an
attempt to get rid of a lot of the regulatory burden so that we
could get money into people's hands much faster, and we will
continue to do that throughout the entire process.
Mr. Diaz-Balart. Mr. Secretary, part of that, which is kind
of new, right, which I am very proud of, is this mitigation
emphasis. About a minimum of $12 billion is appropriated to
deal with mitigation activities.
Secretary Carson. Absolutely.
MITIGATION
Mr. Diaz-Balart. It is one of the things that we have
talked about here all the time, about making sure that we don't
keep throwing good money after bad, right? We know these storms
are coming again.
Secretary Carson. I was thinking about, when the gentleman
was talking about his brother-in-law who was living on the
second floor, and one of the things that we are looking at is
what kind of materials can we use instead of traditional
drywall. There are a lot of things that are aquaphobic, they
push water away rather than soak it in, and we need to start
looking at some of those things.
Mr. Diaz-Balart. Well, I look forward to working with you.
And, also, if you have any specific plans to make sure that
States are prepared to spend those mitigation funds
effectively, again, so that we don't have to continue to have
these huge costs in both taxpayer money, but also, obviously,
suffering for the folks out there.
So I look forward to working with you. And I think we have
to be very aggressive to make sure that those funds are well
spent by the States.
Secretary Carson. Absolutely.
Mr. Diaz-Balart. Mr. Price.
Mr. Price. Thank you, Mr. Chairman.
PUBLIC HOUSING CAPITAL FUND
Mr. Secretary, I would like to turn to public housing, and,
in particular, the budget proposal for the Public Housing
Capital Fund.
Last year you proposed slashing that fund by 68 percent.
That is the principal source of Federal funds to preserve
affordable housing for more than 2 million citizens. You
proposed that in the face of a backlog now approaching $50
billion in public housing deferred maintenance.
Now, of the 1.1 million households who depend on Federal
public housing, due to the failures of the private housing
market, more than half include fixed-income seniors, people
with disabilities as heads of household.
So we opposed those proposed cuts, as you know, last year.
But instead of taking this lesson to heart, you are now
proposing to totally eliminate the Public Housing Capital Fund.
Now, I listened carefully to your testimony this morning as
to how you propose to deal with that. It appears you are
effectively merging the capital fund into the operating fund.
You just said that.
Secretary Carson. Yes.
Mr. Price. But then you proposed cutting the operating
fund. You are proposing cutting that by 25 percent from the
fiscal year 2017 enacted level.
And then you went one step further. I want to ask you if I
have this right. But you went one step further. You want to
eliminate a lot of public housing and move everyone into the
voucher program versus RAD conversions.
Now, RAD conversions are used in my district. They can work
well. But it appears you are looking at virtually a wholesale
conversion. But if that were the case, wouldn't we see some
increase in funding for that?
We need to see a corresponding increase in your request for
new Section 8 vouchers, but that is not in the budget either.
So what am I missing here? I am trying to follow the money.
But it appears that the funds are cut for one program, then you
move it into another program that is also cut, and then you
move it into another program that is also cut. What is going
on?
Secretary Carson. I appreciate the question, and I
understand your perspective.
The fact of the matter is what seem to work extremely well
are the RAD conversions, moving away from the whole concept of
public housing, quite frankly, and changing it to communities
that are holistic and well developed. And that is going to be
one of the primary purposes of the opportunity zones. That is
going to release an enormous amount of money to be able to do
just what you are talking about.
It is going to be a little bit of an adjustment to move
from the idea of public housing, because that is what we are
used to, but I think this is going to work much better.
Mr. Price. Opportunity zones? Okay. Does that somehow
compensate for everything I have said here this morning? You
are just defaulting on that billions, tens of billions of
dollars in public housing maintenance. Supposedly that is just
not going to be addressed.
And then, secondly, operating funds for public housing
slashed. I mean, that is not even adequate for operating, much
less absorbing capital expenses.
And then RAD. If we are going to go to RAD, we need some
additional Section 8 vouchers.
How do opportunity zones compensate for any of that? And
how does the money flow? That is what I am trying to do, follow
the money.
Secretary Carson. Well, if you have been following the
money, you know that capital neglect has continued to grow. You
say it is $50 billion now.
Mr. Price. That is, I think, a good estimate, yes.
Secretary Carson. When I came into this office, it was $26
billion. And it seems like, traditionally, over the last many
years it just continues to grow.
Mr. Price. $26 billion is a 2010 figure.
Secretary Carson. Yeah. So what that says to me is that
maybe we need to be looking for a different model. Maybe we
need to be thinking about a different way to do this, something
that actually works. That is why we are doing it this way.
Mr. Price. Could I ask you, Mr. Secretary, is the fact that
public housing needs maintenance, just as any facilities need
maintenance, why is that an indication this doesn't work? That
is the basic question.
And then, to the extent that we need both maintenance and
operating funds, how can you slash both?
Secretary Carson. But that maintenance cost continues to go
up.
Mr. Price. Of course. That is the way maintenance works.
That is the way maintenance of highways works, and that is the
way maintenance of many facilities work.
Secretary Carson. It doesn't have to work that way, because
when you look at a lot of the communities that have been
changed through public-private partnerships, the private sector
becomes very interested in that development and maintains that
development because their income stream is associated with the
viability of that.
Those are the models that work, and, particularly, when we
make them multi-income facilities. I think that is a much
better way to proceed than the way that we have been doing it
in the past.
Mr. Price. Well, I know my time has expired. I would say
that----
Mr. Diaz-Balart. Why don't you, if Mr. Dent doesn't have
any questions, why don't you proceed?
GENTRIFICATION
Mr. Price. All right. I do want to explore this. And I
would like to turn to the issue of gentrification, if we might,
just briefly.
I am just puzzled by this. I admit to being puzzled by
this. I have seen the RAD conversions work very well. I am not
disputing that this is a good solution for many communities,
for many housing authorities. It has worked very well in
Durham, North Carolina, for example.
But that begs the question of what happens to this public
housing stock. Is the implication just that we abandon public
housing, that we conclude it, quote, ``hasn't worked''?
Secretary Carson. We change it.
Mr. Price. Well, but in the meantime it is a very, very
messy prospect, isn't it, all this deteriorating housing stock
just deteriorating further, no funds to address that?
Secretary Carson. Well, you might be interested to know
that in their reserves Public Housing has over $4 billion.
Mr. Price. We are talking $50 billion. We are talking $50
billion in maintenance needs. And I just reiterate, this isn't
an indication of program failure, this is just how maintenance
works with any facilities.
Secretary Carson. Well, I agree with you that we need to do
things, but we need to be looking toward a different way, a
different solution.
And, again, you mentioned the opportunity zones.
Opportunity zones present a splendid opportunity to do the very
same thing that the RAD program does for these facilities that
you are talking about, and most of them will tend to be in the
opportunity zones of the States.
Mr. Price. Well, I think this subcommittee, in a bipartisan
fashion, has demonstrated an openness to innovation here, and,
in particular, to the RAD program.
What I think isn't credible is simply choking off the
funding for existing public housing, both operating and
capital, and then not putting additional voucher money into the
RAD program, assuming that is where we are going. That just
isn't credible as a budget proposition.
Secretary Carson. Well, actually, more money has been put
into our request for the RAD program.
Mr. Price. The money, as I understand it, the money in your
budget for increased vouchers has to do with holding present
Section 8 holders harmless, it does not make room for major new
RAD conversions.
Secretary Carson. Well, I will tell you this, because we
may not come to a complete agreement on this: Whatever the
final budget is, we are going to use that money very
effectively and very efficiently.
Mr. Price. We will certainly hope to collaborate with you
to make sure that is true.
If I may, Mr. Chairman, let me just raise a question. This
can be answered briefly, but it is mainly a signaling of a
concern. And it is not the first time you have heard that, it
is not the first time I have mentioned it, or other members.
Gentrification. We are grappling with this all over the
country, as you well know. Economic development is leading to
rising rents, rising property values, displacing long-term
residents and businesses. We know this new growth can bring a
lot of opportunity and improvements, but the benefits aren't
usually equally shared. Displacement disproportionately impacts
communities of color.
So every community in my district is dealing with this. It
is true across the country. There are lots of forces--market
forces, zoning laws, other factors--that contribute to
gentrification and displacement.
We need to make sure HUD is part of the broader
conversation and can play a constructive role in mitigating
these consequences.
I know you have thought about this. I know plenty of
communities are dealing with it. I wonder to what extent you
consider gentrification and related economic displacement as a
concern of Federal policy, and what your plans are going
forward to tailor HUD programs to more effectively address this
and give communities resources to address it.
Secretary Carson. Well, the key thing we want to do is make
sure that people have choice, people can go where they want to
go.
One of the things that I am sure you have discovered is
that when you are looking at urban areas and you say to people,
``I want you to move out here,'' they don't want to move out
there. They actually want to stay where they are. They just
want it to be the right kind of community.
And when we have taken some of the worst places, you look
at East Lake in the Atlanta area, I mean, it was like the
epicenter of crime and poverty. And through the public-private
partnerships it is now an ideal community. Their problem is now
everybody from the outside wants to move into there.
That is the kind of problem that we should have. We should
be making places so nice that everybody wants to move in there,
rather than worried about the other way around.
Mr. Price. Well, let me just say that we addressed this in
the fiscal year 2017 omnibus, as you know, asking for a more
formal report from HUD about strategies and best practices to
address displacement of lower-income families and longtime
residents from urban areas. This is a report that is past due.
I think it would be very helpful if you would finalize
those thoughts in a more formal way and give us a basis for
future collaboration.
Secretary Carson. Okay. Will do.
Mr. Price. Thank you.
Secretary Carson. Thank you.
Mr. Diaz-Balart. Thank you, Mr. Price.
Mr. Secretary, let me just hit you with one last issue. You
have been exceedingly forthright.
HUD IT
We talked earlier about HUD's information technology
system, and you mentioned your concerns. I think it is more
than valid.
Since 1991, the IG has reported that HUD lacks an
integrated financial management system. And since 2003 HUD has
been working to replace its current core financial management
system with, frankly, minimal, minimal success.
This subcommittee has tried countless times to help HUD
modernize its IT system, but projects always end up costing
much more than anticipated and the results do not measure up to
what was promised. And you mentioned your concern about why
that is so important.
GAO published a study last year on the cost estimates HUD
developed for four selected IT investments, and only one
project more than minimally met GAO's best practices on
comprehensive, well-documented, accurate, and credible cost
estimates.
So we know how desperately HUD needs to revitalize its IT
system--you have been, obviously, keen on that--invest in new
technology. But, we can't keep spending good money after bad
money.
Now, your new CIO brings a great deal of experience and
expertise in his new role. I commend, frankly, your decision to
conduct a top-to-bottom analysis on the IT system before
deciding where to target funding and where to target
investment.
This is something you have inherited, Mr. Secretary, much
of the IT issues. But now that you have had over a year, or
about a year, to assess HUD's information technology system, do
you have any plans to revitalize HUD's IT infrastructure? How
can we ensure that the implementation will actually be
successful and that the dollars that this committee provides
will be well spent?
Again, this is a frustration that we have had. It is an
issue that I know you are very concerned about. So I would like
to throw that at you.
Secretary Carson. Well, first of all, our legacy systems
require about $250 million a year just to patch and maintain.
So in 4 years you are talking a billion dollars just thrown
down the toilet.
We are in the process of moving to a cloud platform right
now. That process has already started.
But we actually are going to need a significant upfront
amount of money, like $500 million, to really convert ourselves
over to the modern technology platform. And we can keep
patching and throwing away money, or we can do what needs to be
done and fix it for good.
Mr. Diaz-Balart. Mr. Secretary, I want to thank you. Again,
I know that this is something you are really focused on. It has
been a huge, huge frustration, to say the least.
Secretary Carson. It is a linchpin.
Mr. Diaz-Balart. It is. And you mentioned that it, frankly,
gets to the point where it is risky not having an IT system
that is adequate and works.
So let me thank you, Mr. Secretary, and the HUD staff, for
your answers and for your participation, your willingness to
take on tough issues that have been lingering there for HUD, in
some cases, for decades, and including the issue of the
furniture, which you have been very, very aggressive about
dealing with.
The committee staff will be in contact with your budget
office regarding questions for the record. Mr. Secretary, I
know that we have a number of questions that may be submitted,
and I would imagine that a lot of members have questions, as
well.
If you would please ask and work with OMB to return the
information for the record to the subcommittee within 30 days
from Friday so we will be able to publish the transcripts of
today's hearing and make informed decisions when crafting the
fiscal year 2019 bill that is already well in progress.
Mr. Price, any final comments?
Mr. Price. No. Thank you.
Mr. Diaz-Balart. Mr. Secretary, the country is lucky to
have your willingness to serve, and we thank you for your
service. We look forward to continuing to work with you.
Secretary Carson. I appreciate the spirit of this
committee. You have been very, very respectful and kind. Thank
you.
Mr. Diaz-Balart. Thank you.
With that, the hearing is adjourned.
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Wednesday, April 11, 2018.
RAIL SAFETY AND INFRASTRUCTURE--STAKEHOLDER PERSPECTIVES
WITNESSES
STEPHEN GARDNER, EXECUTIVE VICE PRESIDENT, AMTRAK
ED HAMBERGER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASSOCIATION OF
AMERICAN RAILROADS
JOHN FRY, PRESIDENT, DREXEL UNIVERSITY
JAMES DERWINSKI, CEO/EXECUTIVE DIRECTOR, METRA COMMUTER RAILROAD
Mr. Diaz-Balart. We call the subcommittee to order today.
We have convened a panel of key rail stakeholders to hear your
perspectives on rail, and safety, and infrastructure, and so we
know that the rail network is obviously a critical component of
our transportation system and frankly of the national economy.
And it carries one-third of U.S. exports, and delivers 5
million tons of freight, and transports about 85,000 passengers
every day via intercity passenger rail. And obviously commuter
rail, as we know that number is even higher.
So, in today's hearing we are going to discuss the
significance of rail. Of rail to the country, to the nation,
its effect on our national economy, and consider obviously the
funding needs as we develop the '19 Bill, and the funding needs
for this critical mode of transportation.
And obviously, particularly as we turn our attention to
crafting our 2019 Bill, it is important to listen to the
stakeholders. And we want to thank you once again for your
involvement.
Our distinguished panel today consists of some of the key
players in this area. So, I would like to welcome you. Stephen
Gardner, Executive Vice President of Amtrak is here, there you,
good to see you. Ed Hamberger, President and Chief Executive
Officer of the Association of American Railroads; how are you,
sir? Good to see you. James Derwinski, CEO and Executive
Director of the Metra Commuter Rail; and Mr. John Fry, the
President of Drexel University. Thank you all for being here.
As you know recently there was a significant bipartisan
breakthrough in Congress which we are all happy about, that
sets the stage for us to be able to invest in our nation's
future, including the program under the jurisdiction--and the
programs under the jurisdiction of this Subcommittee. And that
is exactly what we do.
We passed the recent Omnibus 2018 Bill, and this
Subcommittee invested over 10 billion in new infrastructure.
Our Appropriations Bill was, in many respects, an
Infrastructure Bill, the Infrastructure Bill. There has been a
lot of speculation, a lot of talk about wanting to do things in
infrastructure, a lot of different ideas, but this is real, the
money is on the table, and we are very proud of that.
So, the Bill provides a total of 3.1 billion for the
Federal Railroad Administration which is an increase of more
than 1.2 billion over the 2017 enacted level.
We provided increases to every FRA account, again, ranging
from research and safety accounts, to Amtrak and to
infrastructure and safety grant programs. All of these programs
are vital. They are incredibly important for our nation's rail
system.
And the bill also provided substantial funding increases to
the Federal Transit Administration Programs, plus $1.5 billion
for TIGER Grants, a huge increase from the 2017 enacted level.
And again, these are infrastructure investment, these fund
levels will allow us to make critical investments in real
infrastructure, address the maintenance backlog, which is
something that we have been talking about, and have been
concerned about for so many years, to ensure the state of good
repair, and to increase the safety of our rail systems in 2018.
And we expect to continue, by the way, to make critical
investments in our nation's rail infrastructure in 2019. Again,
with all the talk of infrastructure, this Subcommittee's work,
in essence, is real. It is not theory, it is real money now,
which, again, I think is important.
So we would like to hear from our panel today, about
frankly your views; your views on rail infrastructure and
safety, the importance of the rail system to our communities,
and frankly to our national economy as a whole.
And what we in Congress can do to make sure that our nation
continues to move forward in that direction, continues to make
the right choices, we want to make sure that the taxpayer money
meets our common goals. To continue to improve safety, address
the state of good repair backlog, and to balance our economic
competitiveness.
And so you are here today as key partners and key leaders
in those efforts, and so, you know, I thank you for spending
your time with us here today.
And with that, I would like to yield to my dear friend, and
the Ranking Member Mr. Price. Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I am pleased to be here
this morning, and to welcome this diverse group of witnesses,
to talk about rail safety and infrastructure. So, thanks to all
of you for joining us.
I also want to congratulate our Chairman, and the entire
Subcommittee for our successful conclusion of the Fiscal 2018
Appropriations process. It was, admittedly, six months late,
but we got it done, and the end result was a bipartisan product
that fulfills key priorities for members on both sides of the
aisle.
I was getting, and over this break, I was getting a very
positive reaction from all around my district about this bill,
and told them I was reminded of Churchill's dictum that, of
course we did the right thing, we always do the right thing in
democracies, we just try everything else first. That is sort of
what one was reminded of the way this went.
But as the Chairman has stressed, the result was especially
positive for critical transportation and housing programs that
this Subcommittee oversees. So, it is a good investment, a good
set of investments, and this of course includes rail, the
largest rail investment in nearly a decade.
So this is a particularly appropriate panel to hear from
today, whether it is freight rail moving goods, or passenger
and commuter rail moving people, rail remains a critical mode
of transportation, a major economic engine for our country.
I am interested to hear about the challenges and
opportunities facing our rail stakeholders, the investment
priorities, positive training control implementation, the
future of commuter and intercity passenger rail.
The rail ecosystem is complex. The various industry and
government entities operating within the system simply have to
work together if it is to run smoothly.
So, I hope this hearing will continue to facilitate these
working relationships and help inform our Subcommittee as we
shift our attention to the Fiscal Year 2019 Appropriations
Bill. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Let me also, on the onset, say that I know
you are all aware there is a number of hearings going on at the
same time. And so, we will have people coming in and out, and
so, ahead of time I want to thank you for your understanding
and your patience for that.
So, we will proceed in the standard five-minute round, when
we get to the questions. But now, you know, obviously your full
testimony will be submitted for the record.
Let me just find my page here. So, Mr. Gardner, thank you
again, and as I said, your testimony will be submitted for the
record. And you are recognized.
Mr. Gardner. Good morning. Thank you, Mr. Chairman. And
thank you Ranking Member Price, and the whole Subcommittee, for
your time today in this hearing on rail safety and
infrastructure. My name is Stephen Gardner, I am Amtrak's
Executive Vice President and Chief Commercial Officer.
It is my pleasure to testify before you today. Before
beginning, on behalf of the entire company I want to thank all
the members of the Subcommittee and their staffs for the
impressive and urgently needed funding provided to Amtrak and
passenger rail this year.
And I particularly would like to note our sincere
appreciation in regard for Chairman Frelinghuysen, who has been
a longtime ally and passenger of ours during his 23 years
serving the district.
Second, I would like to thank my colleagues here at the
table, as well as Secretary Chao, and Administrator Batory in
the U.S. Department of Transportation, for their partnership
and support of Amtrak.
The FY'18 Appropriation Bill provides 1.94 billion for
Amtrak's Northeast Corridor and National Network, nearly $450
million more than last year's level; this much-needed funding
to support long-standing and critical infrastructural project
on the NEC, and allow Amtrak to continue to improve our assets,
and our operations across our national network.
This strong support moves us past maintaining the status
quo and into an era of addressing our twin challenges of old
and unreliable assets, and growing passenger demand. We look
forward to working the Subcommittee as we progress the
programming of these funds, and as you consider funding levels
for FY'19.
Equally important the Bill included several--funding for
several DFT programs, such as the Federal State Partnership
Program, CRISI, which also includes funding for important PTC
implementation, and FTA's Capital Investment Program.
We are pleased to see Congress provide DOT with these
critical tools to support rail, and we intend to work with our
various partners to pursue all appropriate grand opportunities
once the official funding notices are made available by DOT.
The Department is our closest partner, and we have a strong
working relationship with its leadership and staff. Together,
we will collaborate in FY'18 and beyond, on the best ways to
advance intercity passenger rail across the nation.
Taking together your Subcommittee and this Congress have
made historic investments in passenger rail that we believe
will serve as a foundation for a new era of modernization and
improvement.
We are confident of the increasing relevancy of intercity
passenger rail will make a big mark in the century ahead.
Population growth, greater organization and increasing air and
highway congestion and a generation shift--taken together,
these investments are going to be a huge boost of support for
Amtrak. We stand ready to work with our partners to advance
critical construction projects on the NEC, and launch a new
phase of improvements across the national network, which
includes the state supported of the long distance routes that
carried over 19 million of our 31 million riders last year.
We plan to invest in purchasing new locomotives and rolling
stock, making station improvements, strengthening safety,
building partnerships or service expansion and improvement with
our state, commuter partners and host railroads. Against these
investments we will continue to drive improved operating
performance and revenue growth as part of our efforts to reduce
our net loss while modernizing our services.
We have already begun analyzing our network structure and
fleet plan for opportunities to better match capacities to
demand, reducing efficiencies and bring innovation to our suite
of products and services.
The significant challenge we face in improving our products
is our on-time performance. As you know, Amtrak is dependent on
28 host railroads for the vast majority of our routes, and poor
OTP on these routes has reached crisis levels in many cases,
following 5 years of increasing delays.
The largest cause of delays is freight train interference
which is often caused as a result of host railroads failure to
provide Amtrak's trains preference over freight transportation
as required by law.
To address this growing problem, Amtrak is requesting
Congress to provide the Private Right of Action, so that Amtrak
can enforce its preference in court, just as any other company
would have the right to go to court if its rights were being
violated.
We look forward to working with Congress to find a solution
to what has become an existential crisis and challenge for our
national network services.
Finally, we remain diligently focused on working together
with our host and tenant railroads to implement PTC in
accordance with the 2018 deadline. And ultimately achieve PTC
levels of safety across our entire network.
Guiding this process is Amtrak's New Safety Management
System that is helping to drive a more proactive and
collaborative safety process, and the mitigating risk and
hazards before they turn into incidents.
As you begin your work in FY'19, we hope that the FY'18
enacted levels will serve as the new baseline for funding, for
passenger rail service, the service that is so critical to this
nation, and to your constituents.
We are confident in Amtrak's ability to become the safest
and most efficient passenger railroad in North America, but we
need your continued capital investment to address our many
challenges.
We owe our customers and your constituents nothing less.
Thanks so much for the opportunity to testify. And I look
forward to your questions.
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Mr. Diaz-Balart. Thank you, sir. Mr. Hamberger, over to
you, sir.
Mr. Hamberger. Good morning, sir. Thank you very much,
Chairman Diaz-Balart, Ranking Member Price, Members of
Subcommittee, thank you for being here today on such a busy
day. And thank you for the opportunity to testify.
And I am seated between two very important members of the
AAR, who I think will address the passenger issues, so I am
going to focus my comments on the freight side of the House, if
that is all right.
You have quite properly have been focused on Federal
funding opportunities and challenges over the past year,
congratulations on moving your bill. But I am here to repeat a
declaration that you have all heard before from the freight
rail industry. We spend private money so taxpayers don't have
to.
The privately-owned freight rail industry has spent an
average of $26 billion a year of its own funds in recent years,
more than 100 billion in the last four years alone. This
equates to roughly $74 million in private funds ploughed back
into our nation's freight rail networks every day of the week,
52 weeks of the year for the past four years.
In fact, less than 1 percent of freight rail transportation
investments involve public funds. And these investments have
resulted in dramatic safety improvements. A well-maintained
railroad is a safe railroad. The result is a record low train
accident rate that has fallen 80 percent since 1980, and 45
percent since 2000.
A large chunk of that private sector money has gone to
positive train control, about $10 billion by the end of this
year, and I am pleased to say that every class one railroad
will meet or exceed the statutory deadlines, and at the end of
this year, we expect to have over 80 percent of the 54,000
miles required by the statute in revenue service with PTC.
While railroads invest billions of dollars of their own
each year, they continue to face unnecessary hurdles and
regulatory and permitting processes. All too often our safety
regulatory structure is overly prescriptive with no specific
safety outcome in mind. On the contrary, regulation should be
based on a demonstrated need, and should be outcome-based.
Relatedly, infrastructure projects, including rail,
consistently face burdensome delays in getting permits at the
federal, state and local levels. Congress has acted in this
area, and I was pleased to see the MOU announced by the
administration earlier this week.
Turning to Federal funding issues, the rail industry does
apply the work of this Committee, and successfully completed
the FY'18 Funding Appropriations Bill. That included robust
funding across Federal transportation programs, including
passenger rail, Amtrak and commuter railroads.
Such funding helps these railroads achieve a state of good
repair, and I was particularly pleased to see that you provided
money in the Consolidated Rail infrastructure and Safety
Improvement Grant Program, to help in the first instance our
commuter rail partners move forward on implementing PTC. It is
not a lack of will, but there has been a resource challenge for
some of the commuter rail systems across the country.
Another area that you have funded is the TIGER Program. We
support funding for public-private partnerships, one of the
premiere public-private partnerships is the CREATE Program in
Chicago which Mr. Quigley is very much aware of, which has a
dramatically improved service through Chicago for both freight
and passenger, both Amtrak and Metra are members of that
program.
Another P3 Program, the Section 130 Federal Grade Crossing
Program, has also demonstrated great success. In 2016 grade
crossing collisions were down 42 percent from 2000, injuries 31
percent, and fatalities down 38 percent, but trespassing deaths
continue to be our biggest challenge in the safety arena and
more must be done there.
What is not included in an Appropriations Bill can be just
as important as what I included. Time and time again, advocates
for larger, heavier trucks have attempted to use the
appropriations process to insert legislation that would allow
for bigger and heavier trucks on our nation's roads, highways
and bridges.
Such riders have no place in the appropriations process,
and should be litigated in their respective committees of
jurisdiction. This is especially true given the consistent
underpayment by trucks into the Highway Trust Fund, and the
general insolvency of that fund.
The Trust Fund is structurally deficient, with over $143
billion in general fund transfers in the past 10 years just to
keep the fund solvent. And I draw your comparison to the $25,
$26 billion that the private rail industry spends each year to
compete with the trucks.
The policymakers should be focused on establishing a
sustainable trust fund that is fully supported by the users of
the nation's highway infrastructure. We would support a weight-
distance tax, much similar to one being used in the State of
Oregon.
The freight and rail industry applauds the hard work of
this Committee, and successful passage of the FY'18 Funding
Bill, and look forward to working with all of you on the
Committee, and the Committee turns to FY'19.
Thank you for your time. And happy to take any questions
you may have. Thank you.
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Mr. Diaz-Balart. Thank you. And now we are going to
recognize President Fry. By the way, you know, I saw you were
accompanied by a mutual friend of ours, Michael, who is out
there in the audience. If you haven't had an opportunity to
meet his mom, make that a priority. Anyways, Mr. President,
thanks for being here.
Mr. Fry. Thank you, Mr. Chairman. I am John Fry, the
President of Drexel University. We are located in University
City in West Philadelphia. This is home to one of the largest
concentrations of educational and medical research institutions
in the country. And I also serve as Chairman of the Chamber of
Commerce for Greater Philadelphia.
So, I am speaking today as a member and representative of
the Coalition of the Northeast Corridor, which is a group of
business and institutional leaders that advocates for
investments in the Northeast Corridor Rail system. Our
Coalition includes university presidents, like myself, as well
as national and international companies that rely on the
Corridor to conduct commerce and ensure that their employees
arrive reliably and safely to work each day.
On behalf of our Coalition I would like to take a moment to
thank the Committee, Mr. Chairman, your distinguished
colleagues for your public service.
In addition, I would like to recognize you for your
contributions to support additional funding for rail safety and
your investments in rail infrastructure improvements. Thank you
for the opportunity to testify regarding one of the most urgent
challenges facing the United States economy.
So, the Northeast Corridor collectively accounts for about
30 percent of all American jobs, and contributes approximately
3 trillion annually to the U.S. economy. If the Northeast
Corridor were its own country, it would have the world's fifth
largest GDP.
That productivity is driven by the Northeast Corridor,
approximately 7 million jobs, roughly a third of all jobs
across the region are located within 5 miles of a Northeast
Corridor rail station. The system carries more than 820,000
passengers every day.
A non-partisan Federal Commission found that if the
Corridor were to shut down, the American economy would lose
more than $100 million a day. These metrics are staggering, and
what I am about to say is therefore so alarming, that the
Northeast Corridor is simply crumbling and in its current
state, it is actually an economic crisis waiting to happen.
So, we know what needs to be fixed. We know how to fix it,
and we know how much it will cost to fix it. A non-partisan
Federal Commission found that more than 50 billion is needed to
repair and modernize the system, and the longer we wait, the
more expensive that fix will be.
So I would like to briefly mention several Northeast
Corridor cities with projects that are currently in need of
Federal support. The Baltimore and Potomac Tunnel,
Philadelphia's plans for overhauling 30th Street Station, the
Connecticut River Bridge, Boston's efforts to repair the
Ruggles Street Station, in Rhode Island officials want to
rebuild the old Pawtucket/Central Falls Station.
In New York and New Jersey it is no secret there is great
interest in advancing the Gateway Project, and right here in
D.C. Union Station simply cannot handle modern service demands.
When we talk first about rebuilding American
infrastructure, these are the projects that should be among the
first on the list. And none of these projects stands alone;
they are part of a larger network that services the national
economy.
Must we continue to gamble with our own citizens' safety,
and our own national economy, hoping with fingers crossed that
a tragic or catastrophic event will not occur on our watch?
This work must be done, or our nation will be irreparably
damaged.
Of course there have been many positive steps. Our
Coalition applauded Congress and the President for approving
the recent Federal spending package which includes more than
$21 billion for infrastructure grants, and additional funding
for Amtrak and railway projects.
But we have so much more to do, and the solution, like so
many large challenges, is to embrace the problem and commit to
a comprehensive solution.
The plan put forward by the non-partisan Northeast Corridor
Commission which prioritizes and addresses the Northeast
Corridor's crumbling infrastructure in order to avoid a
catastrophe.
So I would like to leave you with this thought. It would be
a grave mistake to think of the dire problems facing the
Northeast Corridor as just a regional challenge or an urban
problem. The economic consequences of continued inaction are a
problem for our entire nation.
On behalf of the thousands of American workers, students
and families represented by our Coalition, I urge you to
continue to invest in the Northeast Corridor. I don't really
see much of a choice here.
And once again, I am really grateful that I have been given
the opportunity to testify today. The Coalition for the
Northeast Corridor looks forward to working with you, and we
welcome any opportunity to meet with members of your Committee
to continue to discuss the issue.
Thanks for your time.
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Mr. Diaz-Balart. Thank you, sir. And finally, Mr.
Derwinski.
Mr. Derwinski. Thank you, Mr. Chairman; Ranking Member
Price, Members of the Subcommittee. I am pleased to be here
today to speak with you.
My name is Jim Derwinski, and I am the CEO and Executive
Director of Metra. A little background on Metra, it is a
suburban commuter rail system in Chicago covering Northeast
Illinois, a six-county area, 3,700 square miles.
We are a Legacy system, and Legacy systems have a knack of
picking up the pieces from the '70s when passenger service
really went into decline. And because of that we inherited,
basically, all of the infrastructure that we have to operate
on.
We provide 78 million trips a year, 288,000 trips a day,
and we do it on some of the oldest infrastructure in the
nation. We reduced congestion, as all commuter rails do, we
reduce emissions footprint as anybody would do when we put that
many people on the trains and take them off the roads.
It is estimated without Metra there, 27 more highway lanes
would actually have to be built. The infrastructure within
cities does not allow for any more highway building. Everything
has built up around them. We really are a large part of the
economic engine that drives Chicago, and just like many other
big agencies like ours.
We have two major goals. Our number one goal is, operate
safely. We operate on 11 different lines. We operate with two
PSA carriers, our freight partners at the BNSF, and the Union
Pacific who operate services for us with our name mark on it.
It is a complicated system. As we move 691 trains a day,
through those 11 lines, we are in a territory that operates
1,400 trains a day with the freight partners Amtrak, and then
some South Shore from Indiana.
It is a complicated territory, 13 different railroads have
to interact, which is why it is so important to create projects
to actually keep moving forward.
Being a Legacy system, and maintaining a Legacy system
gives us some marks, some marks that may not be the best things
to talk about, but it is what it is. Our locomotive fleet is
the oldest in the country at 29 years old, an average age. Our
oldest locomotors right now in service were built when
President Ford was in office.
Our commuter cars date back to 1953 when Eisenhower was in
office. 65 years old today and the average age of our commuter
car is 30 years old. And we have 1,100 pieces of equipment, 40
percent of which actually predate the existence of Metra.
So, we have been working toward this over the last 34 years
to replace that fleet, but we need a lot of help with that
infrastructure need. We have 822 bridges that we pass over
every day, combined with Metra's bridges and the freight
partners. Half of those bridges are over a century old. The
oldest bridges that we are currently working on right now,
actually date back to Grover Cleveland's second term, 1896. And
we continually have to work with aging infrastructure. And we
do that at 93 percent on time. Our state of good repair to
achieve that, they estimate we need to put a little over a
billion dollars a year into our infrastructure. Currently,
right now, with our federal formula funding, we're getting
about $174 million. So a little bit short.
We thank the Congress for passing the omnibus. It gave us
an extra $15 million. Certainly, we're going to put that to
good use, and we're going to put it to good use very quickly.
Metra historically receives from the State of Illinois
capital funds. Our last capital fund through from the State
came in 2009. So we're really now fallen behind the curve.
When PTC came around, we had to shift a whole bunch of our
capital money into PTC to get it up and running which made us
defer the actual rehabs and overhauls and purchases of the
rolling stock which puts us in the predicament that we're in
today. And we're also thankful for the inclusion in the
Consolidated Rail Infrastructure Safety Improvement Fund. We
look forward to tapping into that fund in the future as safety
on the railroads is our number one priority.
Our challenges even go farther because we're seeing a
decline in ridership. There's a little bit of a different
demographic. People may not be working 5 days a week downtown.
They have different modes of travel. And certainly, looking at
the millennials and the greener footprint that they want. They
want rail, but it's a different nature that we're seeing right
now. Because of that, we've seen operating costs rising and the
revenues going down. We literally, every year right now, have
to raise rates. This in fact probably is pushing some of our
riders away.
We thank Congressman Quigley and the Illinois Delegation
for giving us a $20.2 million grant to help us finish PTC. We
are on track to implement PTC, full compliance with the
Congressional mandate. The 75th Street Corridor CREATE Project,
that is what I would say is our number one priority to work
with the freight railroads. That particular corridor has been
identified as a pinch point and will actually benefit multiple
states around Illinois just to move that traffic through the
area.
Again, I would like to thank the Committee for the
opportunity to speak today. I thank Congress for its continued
support of commuter rail agencies like Metra and public
transportation as a whole. Metra is looking forward to working
with Congress to look at discretionary programs that would
dedicate monies toward commuter railroads. I would be happy to
answer any of your questions. Thank you.
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Mr. Diaz-Balart. Thank you, sir. We'll proceed in the
standard five-minute rounds, side by side, recognizing members
in order of seniority as they were seated at the beginning of
the hearing. And so as we all know, be mindful of the five-
minute rule.
I'll begin again on the issue of PTC and so we continue to
see some accidents taking place that potentially could have
been avoided with PTC. And so this Subcommittee tried to
address that in the 18 omni by increasing funding for the
Consolidated Rail Infrastructure and Safety Improvement Grant--
I love the catch name--program to $593 million. And again, also
specifically setting aside $250 million for PTC grants.
And so the bill also provides as some of you mentioned, $10
million for FRA contract support to analyze PTC plans that
railroads submit. We're hoping that--and that's the plan--that
this funding will minimize administrative delays and to ensure
that as many entities as possible can meet the deadline which
is December 31st, 2018.
Let me start with you Mr. Derwinski. Many community rails
are having difficulty achieving full PTC installation. How
helpful is this funding to commuter rail give that there are
other barriers, obviously, with full deployment? And do you
believe that this will have an impact?
Mr. Derwinski. Yes, I believe it'll have an impact. One of
the biggest problems with the PTC when it first came out was
the fact that this technology wasn't developed yet. So the
curve just to get the technology up and then of course the
manufacturers that needed to actually ramp up production to
such a level, some commuter rails that may not be behind the
curve right now, I think started a little bit too late. Here at
Metra, we are poised to have all of our equipment installed by
this October on the weigh side, on the rolling stock, and we'll
actually be in revenue service demonstration on one of our own
lines. So we'll be meeting that mandate and we'll be taking a
few years longer to be fully compliant with everything.
But I think the monies in some cases right now are going to
help offset, like what we had to do which is offset money in
the past. We had to shift, basically, capital dollars that
would have been for infrastructure and in our case, if we could
repurpose and move monies around, that would help us
tremendously right now.
Mr. Diaz-Balart. Well and we'd like to eventually hear some
other ways that we can help entities like yours and other
transit entities meet the deadline. I think it would be
important to hear from you all on that.
Mr. Hamberger, we know how much you all spend in general,
but how about in PTC? And what other barriers do folks in your
organization have to deal in the PTC?
Mr. Hamberger. By the end of this year, the freight
railroads will have spent $10 billion since 2008 in developing
the technology, testing it, and then deploying it. We will have
100 percent of the miles installed, all of the locomotives will
be outfitted, the spectrum will have been purchased, and the
employees will have been trained.
At the end of 2017, we had a little bit over 50 percent of
the 54,000 miles in revenue service demonstration. At the end
of this year, it'll be 80 percent. The one issue that we did
have some concern about is FRA resources to be able to approve
all of the safety plans. I think that you're funding that and
the 18 Bill will go a long way toward providing the resources
they need.
Mr. Diaz-Balart. Mr. Gardner, any comments on PTC?
Mr. Gardner. Thank you, Mr. Chairman. Amtrak is in a
slightly different position because we've long been a leader in
PTC implementation, had completed half of the northeast
corridor nearly two decades ago and the remainder of the main
segment here about 2015. We're making good progress to fill in
the few remaining gaps across our infrastructure, and making
good progress with Ed's members and with Metra and Mr.
Derwinski on making sure that over majority, certainly the vast
majority of our system and all the routes that are required
that PTC is installed or that carriers have met the
requirements for an extension.
So we are making good progress. For Amtrak, the critical
issue is not funding at this moment. We are fully funded to
complete our work in this year. But there is additional costs
that we expect to come to the company and essentially to our
state partners for installation of PTC on various host
railroads where the requirement for the installation is the
presence of Amtrak trains. So the funding you've provided could
be very important and helpful for this, and we appreciate it.
Mr. Diaz-Balart. Thank you. Seeing that I'm running out of
time, let me recognize a ranking member, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I'd like to address a
matter that is of particular importance to my state, but it has
national importance as well as we contemplate what it's going
to take to develop these regional rail networks that can offer
improved passenger service in a number of corridors. I must
say, President Fry, your cataloging of the needs of the
northeast corridor is very sobering. We know that we must
address those needs and that they're not going to get any less
expensive if we face delays.
We're interested in the southeast in passenger rail service
and we have plenty of indications that this is viable. North
Carolina has been a national leader on this. We have invested
in our passenger rail service. We utilized Recovery Act dollars
to the tune of $520 million to make critical upgrades from
Charlotte to Raleigh, and that service today is first rate
service and it's increasingly popular. And so we know that the
next step in that Washington to Atlanta service that we
envision, the next step is Raleigh to Richmond. And that is on
its way. We have the tier two environmental impact study
finalized. In December, we signed a memorandum of understanding
with the FRA about future development along the corridor and so
forth. So we're on our way.
Now we in this omnibus bill have included some additional
appropriations that are going to be helpful I think as we
piece-by-piece get these corridors in shape. Right now, we're
building a multi-modal union station in downtown Raleigh with
the help of TIGER funds. We have a nice increase in CRISSY
which of course, one grade crossing at a time, lets us improve
these routes.
So I mainly am addressing Mr. Hamberger and Mr. Gardner
here, but I wonder if you could comment on this prospect and in
particular, what it's going to take? What role Amtrak, the host
railroads play as we develop these corridors? What would the
next steps look like? Other than funding, what do you
anticipate being barriers that must be overcome?
Mr. Hamberger. Thanks, Steve. You've been a little bit more
involved in the day-to-day. I'll defer to you and then----
Mr. Gardner. Sure. Thanks, Ed. Congressman Price, we're
very supportive of expansion of service and, in general, we see
state corridors and short-distance corridors as the future of
intercity passenger rail across the country, and would concur
with you that the southeast is a place that we believe is ripe
for development of corridor expansions. We've got a number of
great city pairs and you've mentioned several here that we
think are excellent candidates for multi-frequency, reliable
passenger service, and really the contribution that can be made
here in reducing congestion and providing mobility.
So for these types of services, I think three things really
are required. Certainly as the Subcommittee has helped address,
we need a strong and stable partnership of funding between the
federal government, the states, and Amtrak. We need willing and
strong cooperation with host railroads where their
infrastructure is involved. Here you've got, obviously, a route
that formerly used by CSX and available hopefully as part of
this service.
And last but not least, you need strong service planning
and great multi-modal connections in the cities and communities
that you serve so that people can make use of these services
and get to their final destination. I think FRA has done an
excellent job leading the service development work there and as
a strong partner with us to look at service expansion. But we
believe it is the path to the future, and Amtrak is anxious to
focus our efforts and energy, including additional funding
we've received now, and hopefully receive in the future, to
build the kind of partnerships necessary to bring service to
these corridors and expand on the base we've got.
Mr. Hamberger. May I? Speaking on behalf of the host
railroads, they take it very seriously the role that they play.
And if you go back and take a look at the high-speed rail
grants, I think, what?--$10 billion of Recovery Act money--
every one of those projects did get to a contractual agreement
between Amtrak, the state, and the host railroad. I know that
Norfolk Southern was a good partner in the Raleigh, Durham, to
Charlotte, and I believe CSX is at the table with you now
getting into Richmond. And the big issue for them, you
mentioned permitting so I'll just emphasize that it is still an
issue for everybody. But the big issue is, will there be enough
capacity to provide the service that the passengers need, but
also the service that their customers need to compete not only
here but on world markets through exports off the east coast
port, for example, in your case.
So it really is a matter of having enough capacity which
comes back to resources--enough capacity to serve both the
passenger needs but also the customer base on the freight side.
Mr. Diaz-Balart. Thank you. Mr. Joyce.
Mr. Joyce. Thank you, very much. I wanted to discuss
Facebook with you since that seems to be sucking up all the
oxygen in this town.
Mr. Hamberger. I am not a member, sir. Sorry.
Mr. Joyce. Just kidding. I wanted to go back to something
we talked about when you were here in November of 2017. We
started to talk about safety.
Mr. Hamberger. Yes, sir.
Mr. Joyce. And obviously, you had cited some statistics
about safety early on here and how some of these things are
coming down. I was wondering what programs are you seeing as
being most effective so far? Because I know this is an issue
with my Chairman.
Mr. Hamberger. The Section 130 Grade Crossing Program has
been very effective, and it is important to keep that set aside
because otherwise I'm afraid those monies would oftentimes lose
out at the state level. And when I started this job a few years
ago, the statistics were about a thousand fatalities a year.
We're now down to under 300. It's still 300 too many, but it's
been a successful program.
As far as the spending goes, I think that would be the
number one. Other programs that are important of course is drug
testing. I know that's an interest of yours. The Transportation
and Infrastructure Minority Subcommittee just issued a report
that shows that in the rail industry, we have a very low random
drug testing positive rating. But I think having that program
out there is important. And the fact that it was expanded to
the Maintenance of Way employees we support. HHS just expanded
the panel of opioids to be tested for. They've come up with
four. I think they're a little bit behind the marketplace and
we would suggest, particularly given the crisis, you know,
we're not immune to that. We would like to see that panel
expanded by HHS.
Mr. Joyce. I certainly appreciate it, and you grabbed the
second part of my question was what the fine job that you had
been doing that. So let's jump even farther forward. What do
you see as problems going forward and where can we properly
help you with funding to make sure that we continue to run a
safe and effective railroad?
Mr. Hamberger. The one issue that we have in the drug
testing arena is that a lot of our Maintenance of Way work is
done by contractors. Many of them are small businesses,
minority owned businesses. And the current rule has the
responsibility for drug testing those employees of contractors
on the railroads, including Metra, I believe, and Amtrak, I
guess, as well. And so we have asked for FRA to figure out a
way--it's sort of awkward to go in and test someone else's
employees, and to figure out a way, and we'd be glad to work
with them. I think you provided some money to the FRA, in fact,
to set up a demonstration project. And we've been doing since
the 1980s, so we have a little experience. So I think, you
know, we'd be glad to work with FRA to figure out how to get
drug testing on those 30,000 employees.
We also have petitioned the FRA to expand to the one last
segment of the employee base that is not currently covered by
drug testing, and that is the mechanical departments, the folks
who work on the rolling stock.
Mr. Joyce. Is there something we can do as appropriators to
help incentivize safety and safety concerns going forward?
Mr. Hamberger. Let me get back to you on the record for
that. I don't have anything that springs to mind other than
making sure that the FRA has the resources to, you know, carry
forward on the drug testing.
Mr. Joyce. Well, certainly, I appreciate your time here
today and I apologize because we also have other hearings at
other committees, so if I get up and leave, I don't want you to
think it's because we're not deeply interested in the concerns
regarding your industry. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, Mr. Joyce.
Ms. Clark. Thank you, Mr. Chairman, and thank you to all
the panelists for being here today. And I too have to get up
and leave, so it is nothing that you said. But I want to go
back to the northeast corridor. And thank you, President Fry,
for pointing out 30 percent of all jobs and a key part of our
economic development as a region and as a country.
The northeast corridor commission, Mr. Gardner, estimates
there is a $38 billion backlog in state of good repair and
improvement projects. Does that estimate match Amtrak's
understanding of the scope?
Mr. Gardner. Yes, Congresswoman Clark. We've got a huge
backlog of expense here related to the state of good repair of
the infrastructure. That number's actually likely to climb this
year, as every year we defer those investments so the costs
push out and they grow. And the northeast corridor commission,
we are a member. We work collaboratively together with great
leadership from the Department of Transportation and the states
and many of our commuter partners on the northeast corridor. So
that is a number that is built between all of the owners of the
system which reflect Amtrak and three states. And that is an
accurate number and it's a huge requirement to keep this
incredible asset in service.
It's done so much, we've doubled the number of trains and
ridership since Amtrak took over the majority of the asset in
1976. The needs for greater service reliability and increased
capacity are readily apparent, yet we rely today on assets as
old as Canton Viaduct in Massachusetts is the 1830s. We've got
a tunnel between Baltimore and Washington that's 1873.
So these assets have done a fantastic job for the American
people. They've earned their retirement. It's time to replace
them with modern facilities that can last the next hundred
years. And that's where we are. We're making good progress on
that path, but funding like the funding that the Subcommittee's
provided this year is essential for us to really begin in
earnest this work.
Ms. Clark. Can you give us the sense with the new funding
that we know will not do everything that you want to do, what
projects you will be able to start on?
Mr. Gardner. Well we've got a whole series of projects that
are either in the design phase or nearing construction or ready
to construction. We've been working on programming those funds.
We've obviously just received the appropriations completion
here and will work with the Department of Transportation as we
get the funds to Amtrak and program them.
Some of the big priorities we have are pretty well know.
One is that Baltimore Potomac Tunnel that I mentioned in
Baltimore. There's the Susquehanna bridge which is similarly--
it's a little younger, but over a hundred years old.
Ms. Clark. 110, though.
Mr. Gardner. That's right. Yep, exactly.
Ms. Clark. That's pretty good.
Mr. Gardner. And we've got two other bridges in Maryland
that are close behind them, Gunpowder River and Bush River
bridge. Working up the corridor, we have of course our portal
bridge in New Jersey, our Hudson tunnel program. We've got East
River tunnel work that we need to do, ongoing work in Penn
Station today, Connecticut River bridge in Connecticut. There's
a long list of assets and we've been advancing them sort of as
far as we can with the dollars we have. And it's really these
next critical investments that will help bring us to
construction.
In order to do that, of course, we have to have strong
partnerships from our commuter railroads and our states and
from the federal government. And we're working to put together
those programs and plans so we've got solid financial plans and
can move forward through the grant process with the Department
of Transportation.
Ms. Clark. I wondered as you go forward with these
projects, in your testimony, you noted that east coast storms
have generated not only significant new repairs but also loss
in ridership. How does weather resiliency--how does that fit
into the projects that you're planning?
Mr. Gardner. Congresswoman, that's an excellent question.
We have faced four very significant events here in March that
have cost the company a significant amount of revenue and lost
ridership. Probably most damaging associated with these
incidents were the impacts to our electric traction systems, so
the overhead wires that supply both power to our trains and
also signal power. So we've both had to incur expense to clean
up, so to speak, and repair and lost revenue.
Now we feel confident in our ability to reduce expense and
continue to grow ridership here hopefully for the remainder of
the year and make that up, but we are undertaking a very
significant tree cutting program, currently, because what
happens is in the high winds and we have heavy snows, the trees
fall and they knock down our wires. And our catenary is
vintage--at least from the southern end of the corridor, is
vintage 1934, and is in need of significant replacement.
Thankfully, because of funds provided by Congress, we undertook
a complete renewal of a portion of catenary in New Jersey which
has allowed us to develop the prototype for additional
improvements on the whole south end. But we now need to pursue
the funding to do that.
Ms. Clark. Great. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Mr. Young.
Mr. Young. Thank you, Mr. Chairman. Mr. Hamberger, short
line and longer lines on PTC. Are both of them kind of on the
same track, no pun intended, to get to the deadline on this?
And are there different PTC systems? And if so, how do you
ensure interoperability?
Mr. Hamberger. Getting right to the heart of the matter,
sir. Let me take the second part and then I'll come back to the
short lines if I might.
The one remaining huge challenge is, in fact,
interoperability because each railroad has its own IT platform.
They have different locomotives made by different manufacturers
and then you have to make sure that the spectrum does not get
interfered with in, particularly, Chicago where 14 railroads
have--you know, a Amtrak train will operate over two or three
different pieces of track. And so that is the challenge. And so
what the experts have done, as I understand it, is they have
written a common code so that all of the back office servers as
they're called, the IT systems can talk to one another, that
they can talk on a bilateral basis to every locomotive. And
then you have to make sure that the employees are trained on
run-through service to be able to operate a locomotive that is
a foreign locomotive from another railroad.
Amtrak has a particular challenge because they have their
own system on the northeast corridor which is different than
the system in the rest of the country. So that is the technical
challenge to make sure that interoperability can occur. Using
Amtrak as an example, I know that they are currently in
laboratory testing with several class one railroads, have
finished that and are now in field testing to make sure that
the communication link actually works and that the right data
are coming through. So that is the challenge.
With respect to the short lines, they have a different
statutory deadline and at some point by the end of 2020, their
locomotives to operate on a fully implemented class one
railroad will have to be outfitted with PTC compliant equipment
so that that is probably their next deadline.
Mr. Young. Okay. Thank you for that. Mr. Gardner, funds can
be scarce and it's nice to try to find funds wherever you can
get them. I see recently that Amtrak put a notice out to
employees that they'll no longer operate charter services or
special trains effective immediately. Do you know what brought
about that decision? And weren't there some funds there that
could be very valuable to your system because funds being so
scarce, you try to get it wherever you can get it?
Mr. Gardner. Thank you, Congressman. So actually our policy
is not to stop running all charter or special moves, it's to
simply constrict the number of routes that we operate over and
the type of services we run so that we are gaining the kind of
additional revenue that we do need, and that is part of our
charge. But we're doing so with a minimum amount of disruption
and distraction away from our core business.
A number of the existing sort of charter moves that Amtrak
had undertaken in the past involved us running one-off routes
off our core network onto various host railroads, and frankly,
exposing the company to new operating challenges and safety
risks particularly in this era of our focus on PTC. So our goal
here is not to stop offering these types of services, but to
focus those services on the routes that we currently operate
over where we can use equipment that we are confident in and we
can do so where the requirements on our end are manageable, are
not a distraction, do not divert our core staff away from the
job of becoming fully PTC implemented, focusing on improving on
time performance and providing a great customer service for our
customers.
Mr. Young. I appreciate that. I would ask that you just
work with those non-profits and historical societies who many
times are full of passengers. Those groups that they love
trains and it brings a new generation of appreciation, those
who have appreciation for trains as well.
Really quick, Mr. Fry, thank you for that. I would just ask
that you work with those groups, Mr. Gardner.
Mr. Fry, do you think there should be just one PTC system,
kind of like air traffic control?
Mr. Fry. Yes. I think that makes sense. I'm not an expert
in PTC systems, but you know, you want to get everything tied
together for sure, given what's going on out there with
multiple rails using the same tracks.
Mr. Young. Okay. I'd like to have a further conversation
about that with you maybe in the office or offline here. I
yield my time. Thank you, gentlemen.
Mr. Fry. Mr. Chair, if I might be so bold to offer to come
in and see Mr. Young on that as well with some of our experts
on--I'm sure I did not do it justice on exactly how the----
Mr. Diaz-Balart. We only have so much time, so you did
fine. Thank you.
Mr. Aguilar.
Mr. Aguilar. Thank you, Mr. Chairman, Mr. Ranking Member.
Thank you, folks, for being here.
Mr. Gardner and Mr. Hamberger, in your written testimonies,
you both discuss the importance of the TIGER program. The
Chairman and the Ranking Member and Congress has gone to bat
for these programs and protected them the past two years. This
year, in the President's budget submittal, he once again
proposed to zero out that funding. Can you talk a little bit
about your thoughts on the TIGER program and where else we can
continue to grow investing in national infrastructure.
Mr. Hamberger. Let me jump in on this one first, Steve, if
that's all right. On the TIGER program, it took the freight
railroads a major leap of faith to agree that something called
a public railroad was a good idea quite frankly because there
was a fear that once public money came in, then public strings
would be attached and someone else would be running our
railroad. Early in this century, a decision was made that if we
could talk about a public, private partnership where public
money was spent to pay for public benefits but the private
sector stepped up and paid for the private benefits, then that
would be an arm's length transition. We could go forward and
projects would be built that independently would fall beneath
the hurdle.
And Chicago was a great example of that where working with
Cook County and the city and the state, Metra, Amtrak, we are
able to through modeling and some of those technical
discussions about where the benefits of fall are mind numbing
but at some point you come to an agreement on what the
allocation of the costs matching the benefits are and it has
paid great dividends for the city of Chicago for the freight
railroads and the passenger railroads and would not have
happened but for public private partnerships. Now it is easy
for the private part to come up with its money but where does
the public come up with its share and that is where something
like the TIGER program is invaluable.
Mr. Gardner. Congressman, its, rail finds itself in a
unique position because the normal highway programs in Title 23
do not permit even though they fund a variety of other
transportation investments, the one investment that they will
not sort of, that is not eligible there is inner city passenger
rail investments generally. So the TIGER program and programs
like it that are aimed at a broad, multi modal base are a
unique and important source of investment.
As Ed said, we have approached the program as partners, as
partners with host railroads, with states, with local
communities to make improvements and it has been I know an
important vital feature for a number of projects that otherwise
just had a hard time finding a home in the current federal set
of programs. So it has been very important.
Mr. Aguilar. Appreciate it. Mr. Gardner, Amtrak announced
that beginning in 2019 obviously you won't run on tracks that
haven't fully implemented PTC. What steps are you taking to
work with partners to ensure that that deadline is being met
for later this December?
Mr. Gardner. Well, thank you. We have approached the end of
this year with first, absolute dedication and focus to try and
gain implementation across the network. We have had excellent
leadership from Administrator Batori, we have had a great
working relationship with all the class one railroads and with
Ed and his team and I think we are making very significant
progress across the network.
Having said that, we still at the end of the year will find
several situations where PTC is not yet fully implemented and
operational. There will be a whole host of carriers who have
qualified for alternative schedules through the FRA and have a
longer period of time. We hope most of that time will be
necessary for interoperability testing, that the systems will
be up and operational and working and providing an increased
level of safety but the kinks are still being worked out
between the various systems and carriers.
So for those routes we are focused on analyzing the risks
and hazards that might be present in this period of time before
PTC is fully operational and undertaking any kind of additional
actions or mitigations we need to to ensure we have a common
level of safety across our network. We owe it to our
passengers, to our employees to have a single level, single
sort of standard of safety so that when you get on an Amtrak
train you know you are in safe hands. And we are going to be
working to do that.
For those carriers that have not qualified for an extension
and we hope that those are very, very few, there may be
portions of--well, there will be portions of our routes where
we will not operate over. We cannot operate over a line that is
not qualified for an extension. We hope that those, again, are
very few and we will be working with every carrier who we think
might be in that case to try and avoid that kind of situation.
We hope that they qualify but we are prepared to cease service
rather than operate if it is not really within our power to do
that.
And lastly, there are a number of portions of the network
that have exemptions from that have qualified for and received
exemptions from PTC implementation. We are going back to look
at those because ultimately our standard is we believe PTC is
part of a modern passenger rail system and we want to see PTC
levels of safety across our network. We are going to be looking
to those areas, analyzing them and seeing what kind of safety
improvements can be made and the appropriations bill did
provide additional resources for us up to 50 million dollars on
our national network to be able to make investments to improve
safety in those areas. So that's a top priority for us.
Mr. Aguilar. Thank you. Appreciate it. Thanks, Mr.
Chairman.
Mr. Diaz-Balart. Thank you. As I mentioned in my opening
statement, actually no, Mr. Valadao, your timing is perfect.
You are recognized, sir.
Mr. Valadao. Thank you, Chairman. I apologize, I had a
constituent group outside that I had to visit with. A few
different questions. One, the Administrations FY 2019 budget
for the federal FRA request 202 million for safety and
operations, a reduction of roughly 10 percent from 221.7
million that we appropriated in 2018. How do you view this
efficiency of this request for FRA to address its rail safety
responsibilities? Any one of you can take that. I mean,
obviously it is a concern and some of us, at least on my side
of the aisle had an issue with a little train safety ourselves
not too long ago and that has kind of hit close to home.
Mr. Hamberger. Given the demands at FRA to analyze and
approve what will be a blizzard of paperwork, it seems to me
that they are going to need every resource they can get to make
sure that railroads can continue on schedule with FRA approval.
So I would--I don't know where that 20, that 10 percent was
coming from but I certainly would hope that there is enough
there for in the PTC arena.
Mr. Valadao. So and then FRA's 2019 budget request proposes
to offset a portion of FRA's rail safety cost by opposing 15
million in fees on railroads. Have, has the FRA discussed this
with any of you? Do you guys have any thoughts on that?
Mr. Hamberger. They have not discussed it with us. It is a
hardy perennial that shows up in just about every budget going
back as far as I can remember and, you know, no other surface
transportation mode has a user fee to pay for, you know, their
safety regulators at OSHA or Formexa, whatever and so we have
long opposed it and would urge you to oppose it.
Mr. Valadao. All right. And then FRA's 29 request shows
roughly 2000 highway rail grade crossing incidents each year
and FRA expects that number to increase due to increases in
train and highway traffic during the next decade. What can be
done to improve safety at the highway rail grade crossings?
Mr. Hamberger. I think there are two things. One is as I
mentioned earlier the section 130 grade crossing program which
helps communities provide in some cases a minimal level of
safety but in other cases, quad gates. And then secondly is
support for operation lifesaver and the FRA just started I
think with federal highways or Formixa, a program of public
awareness.
What we too often see in the recent, it is not so recent
anymore but a GAO report found that over 90 percent of grade
crossing accidents are caused by driver error. And we now have
cameras on the head end of most of our locomotives and it is
frightening quite frankly to see what happens as the locomotive
is coming down toward the crossing, the gates are down and the
guy three cars back decides well, he is going to make a run for
it and, you know, it doesn't always work out. So but a lot of
that is public awareness and I think support of the operation
lifesaver. They have got an ad campaign and then a very
aggressive local through the states, a local campaign to try
to, you know, various statements. But it, you know see tracks,
think train. It takes a mile for a train to stop, you know,
that just, that people don't think about. So that I think would
be a second area.
Mr. Valadao. So this is just a personal question. When the
crossing guards come down, is that enough time for a train to
stop?
Mr. Hamberger. No. They come down 30 seconds ahead of time
before the locomotive will get there. At 60 miles an hour a
freight train takes, you know, a mile to stop
Mr. Valadao. All right. And then regarding automating train
operations, some are advocating that Congress require that
trains be operated by two person crews in order to promote
safety. But for highway vehicles companies are enthusiastically
pursuing automated vehicles which are seen as having the
potential to greatly improve safety by removing the leading
cause of highway crashes, human error. Would automated train
operations improve rail safety and if so how?
Mr. Hamberger. Well, clearly we are moving into that
direction, spending 10 billion dollars on positive train
control. And I believe that the implementation of positive
train control supplies the redundancy that some think is
necessary. I would point out that around the world most trains
operate with one person in the cab. I know that Amtrak has
conductors back on the passenger cars but for anything under
four hours, they only have one person in the cab.
And so I think having PTC in operation would address
perhaps some public concern and I would close by just drawing
your attention to a proposed regulation that has been withdrawn
by this administration from the last administration. And on
page 7 of their regulatory impact analysis, the FRA stated we
do not have any data to show whether or not two people in the
cab is safe or less safe than one person in the cab. And at a
hearing at the Transportation Infrastructure Committee and now
two years ago then NTSB chairman Mr. Hart was asked if he
thought two people in the cab would be an improvement in safety
and he said that he has no data to indicate that.
Mr. Valadao. All right. Well, I appreciate the time and I
apologize, I'm another one of the members that is going to have
disappear so I hope that is no reflection on the importance of
this so. Thank you.
Mr. Diaz-Balart. Thank you, sir. Let me go, you know, so
3.1 billion dollars in rail from the, in the OMNI which this
committee is very proud of and one of the things that can help
us leverage that is obviously P3's as some of you have talked.
So let me start with a couple of the questions to President
Fry. And so I understand that the 30th Street Station
redevelopment in Philadelphia involves again public and private
funding.
If you could just tell us a little bit about that project
and what entities are involved, what benefits this project
could have number one. And number two, is so we also provided
250 million dollars for federal state partnership for the state
of good repair. And could this grant program benefit this
project that I am asking you about or projects like that and do
you believe that it could encourage further public private
partnerships?
Mr. Fry. Sure. Well, I mean, one of the themes today is
lack of funding and another theme today is public, private
partnerships. And so even before I could maybe just say a word
about the 30th Street district plan, I should tell you about
something called Schuylkill Yards which is being developed on
14 acres of university property immediately to the west of 30th
Street Station. Literally touching the edge of the station.
That is a private development project, all private monies.
3.5 billion dollars to be invested over the next 20 years to
develop 7 million square feet of commercial, academic,
research, retail, residential and public space. It is under way
and we are about a year into it. The first four projects are
either coming out of the ground or tenanted or about to be
built about 1.5 of that 7 million square feet. That's
completely private funds.
And the reason I mention that is that as we speak, this is
underway in the 30th Street district plan which we completed in
partnership with Amtrak and Septa which is our regional rail
and Penn Dot which is the state agency, has developed a plan
that basically can take that investment and leverage it many
times over. And so we have a project that is actually underway
where someone is going to spend 3.5 billion dollars on making
Amtrak's holdings a lot more valuable than they are right now
and so it makes sense for us to proceed into the implementation
of this 30th Street district plan. I know Steve and his
colleagues have documented the various phases that would be
required to get this moving.
And then to your point about the 250 million dollars, I
mean, just taking a portion of that and beginning the
implementation of a 30th Street district plan would I think
stimulate public, I am sorry, private interstate in this in
significant ways.
So the answer is that there is so much value that we can
unlock that I think can support some of the points that we are
talking about here in terms of investing in safety and giving
everyone what they need to operate, you know, these railroads
at the highest level but in addition the multiplier effect from
a local employment standpoint is enormous and we are one of the
20 cities where Amazon is taking a look at us and I can tell
you that the development that I just talked about is the
leading one in Philadelphia. So this is it they found to work.
Mr. Diaz-Balart. Great. Sticking with the P3's, let me go
to the Chicago region now, the Create Program. And that is what
70 projects now are underway that will improve the, you know,
the regions rail and roadway infrastructure, et cetera. And I
guess its billions of dollars in benefits so the question to
both Mr. Hamberger and Mr. Derwinski is both of you have
firsthand experience with passenger and freight. The bottleneck
issue, right, of Chicago which is I believe I have heard is one
of the worst in the country. It is one of the busiest in the
country so talk to me a little bit about the benefits of the
Create Program to deal with not only the bottleneck issue but
just in general. And I don't know which one of you want to----
Mr. Hamberger. Can I start? I started in 1999 actually and
at that point it took 43 hours for a rail car to make its way
across Chicago. We are now down to 25 hours. Which is by my
math a 42 percent decline. And which is a substantial progress.
A lot of that is because of the investments through Create but
there are other things that have happened.
The industry has created something called CIROC. I know it
stand for something, Chicago Integrated Rail operations Center.
Where Amtrak, Metra and the freight railroads operating are
collocated, have all of the network in front of them and make
decisions on operations. In addition although the number of
cars and the number of trains has increased, as Chicago has
occasionally become clogged, the railroads have decided that
there are other ways to interchange and there used to be that
one in every three freight rail cars either originated,
terminated or transmitted through Chicago. That is now one in
four as the railroads have looked at other ways to hand off and
so the service has gotten better, unit trains and intermodal
trains are getting through in about half the time they did in
1999. But I think it has had good impact for Metra as well.
Mr. Derwinski. Yes, absolutely. Any time we can do a major
project where we are actually going to separate the railroads,
we are in a great spot. Freight train delays typically are
highest in our top three of reasons for delay. Not because they
are not trying to work. Like he said CIROC works. They actually
look almost 24 to 48 hours out as trains approach but then, you
know, things happen. Mechanically, structurally, weather and we
try to work through it. The only true answer is these Create
projects that will actually physically start separating and of
course the roadways making them much safer as well.
Our big concern of course in all of these as Mr. Hamberger
indicated earlier, is our side of the funding and where does
that come from? Some of these projects now are much beyond the
scope of the work that we can handle with the limited funding
that we get in.
Mr. Hamberger. We would love to how this subcommittee out
there and it is just a site to behold to see an Amtrak train or
a Metra train going on a fly over at speed, 70 miles an hour
while there is a freight train rumbling along underneath. It
is, you know, it is really the way to speed things through.
Mr. Diaz-Balart. Thank you. Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I want to pick up on
Mr. Aguilar's line of questioning about PTC implementation and
the time table we are facing and I address this mainly to
Amtrak and the AAR.
Of course this is a critical priority, it is a major
challenge all of you have said that as we approach the
implantation deadline. Dozens of railroads, passenger, and
freight must work collaboratively with each other, with the
federal government, with various equipment manufactures to
install, test and deploy PTC technologies and ensure that they
are interoperable. So we are on task.
I do understand though that the process can become more
complicated with state supported routes and that is where I
want to ask for some further clarification. The North Carolina
Department of Transportation has its own locomotives but it
partners with Amtrak to operate both the Carolinian and the
Piedmont lines. NC Dot is seeking access to Amtrak's back
office servers for their PTC software. They are also working
with freight railroads to ensure the right PTC equipment is
installed and operational on the tracks that they share.
So how are Amtrak and the freight railroads approaching PTC
implementation with respect to state supported routes
specifically? And are you confident that passenger service will
be maintained on these routes after the December 31 deadline?
And if not, what steps need to happen between now and the end
of the year to ensure service won't be interrupted?
Mr. Gardner. Thank you, ranking member. There are a subset
of the state partners who have their own rolling stock. In this
case, in particular locomotives and cab cars that need to
receive hardware and software to make them compatible with the
PTC system.
So North Carolina is an example of one of those states and
at kind of a basic level, the equipment owners need to install
the proper equipment and then that equipment needs to be tested
and certified in certain instances and then we will use the
system that exists for the host railroad on the wayside and
with the back officer server.
So are actively working with the states that are in this
situation but have their own equipment, primarily some states
in the Midwest and on the West Coast in addition to North
Carolina. And I think we feel confident about the installation
of that equipment and it is over time throughout the year the
federation and of our respective servers and then the
integration of that equipment into the fleet. Additionally,
Amtrak has its down locomotive fleet that has its installed
equipment so in the rare instance where we might have a carrier
who has a locomotive that has not, the installation has not
progressed, we of course could use our locomotive in those
services to try and maintain the service. So we feel that there
is a good path with the various state supported services
related to equipment.
Now there are some routes that I mentioned before that are
on the state supported network where the infrastructure may be
the issue with the host railroads but on the equipment side we
primarily are focused on the locomotives and making good
progress with the various states.
Mr. Price. Good progress equals sufficient progress in
terms of the timeline we are facing?
Mr. Gardner. Yes. We believe so and again we have, since we
have our own locomotive fleet with installed hardware that is
ready to go.
Mr. Price. Yes, but that is a, but that is a distinct to
second best option substituting your own.
Mr. Gardner. Absolutely. That is definitely Plan B so the
Plan A would be we are not doing the installation on the
equipment so it is up to the manufacturers and the owners of
the equipment to complete the hardware installation on the
locomotives. When that is done, we are confident we will be
able to integrate the equipment into our network.
Mr. Price. Okay. Mr. Hamberger?
Mr. Hamberger. I think Steve addressed sort of the generic
way to approach it. By definition each class one railroad will
have 100 percent of its equipment installed by the end of this
year or be in violation of the statue and they will in fact
have it. So all of the wayside detectors and the communications
equipment will be installed. I don't know enough about the
specifics of the North Carolina state supported routes to be
able to address that per say. I do know looking at Mr. Aguilar
that in southern California, Metra link is already completed
interoperability testing with BNSF and is in field testing with
UP but I will get for the record, sir, the answer from NS and
CSX where they are from their standpoint for North Carolina.
Mr. Price. Thank you very much.
Mr. Diaz-Balart. Mr. Aguilar.
Mr. Aguilar. One follow up on that, Mr. Gardner. We fully
support the implementation of PTC and maybe this is a deviation
to Mr. Price's state supported question. I know that there are
segments that do not have to be PTC compliant and where your
line, where you're proposed, you have proposed to end service
along the southwest chief route because a portion of that
segment through New Mexico is not compliant and is not proposed
to be compliant because of some mainline track exclusions I
believe.
So I guess my concern is, you know, some of those stops
include Las Vegas, Flagstaff and the community that I represent
in San Bernardino, so this is running through Raton Pass which
is not required to comply with PTC which is I think where I am
going with this. How will Amtrak work with stakeholders to
ensure that services continued along routes like this where a
portion is not required to comply with PTC?
Mr. Gardner. Thank you. Well, so on the southwest chief
route we have two situations. One, we have the rail runner
segment which is New Mexico DOT which runs from Albuquerque to
Lamy and their commuter railroad they have the infrastructure
and that responsibility of either achieving the alternative
schedule or complete compliance. So we are focused on their
progress there.
And then the section that goes east from there across Raton
is a main track exception for the service. So we are as I
mentioned before, for these routes that are excluded, we are
doing full risk analysis to understand what we believe the
remaining risk is in these instances. We have got a team of
folks led by our new chief safety officer looking at all of
these areas and trying to come up with what we think is the
safest course here for these services.
So for sure if as I mentioned in those instance where a
carrier has not qualified for an exception or an extension,
excuse me, we will not be able to operate. In these areas where
exemptions exist, we are undertaking this work now to see what
we believe the safest course is and we will be working with the
respective carriers there. If we have an instance where a
portion of the route is not--is--does not have PTC and we
believe that presents issues for us, we will be making that
clear. But looking for alternatives certainly we will be able
to serve portions of the route where we have PTC in service but
there may be in parts of our network where we believe PTC is
required. And particularly that route has high operating speeds
and we need to make sure that we have a single level of safety
across our network.
Mr. Aguilar. Who give the mainline track exclusion because
that is based off of a low hazardous and low passenger so----
Mr. Gardner. The Federal Railroad Administration.
Mr. Aguilar. What is your timeline for this deeper dive
from your safety officer and team?
Mr. Gardner. We are, we have started already. We have got a
whole series of them across the country and we intend to have
decisions by this summer around each of these areas.
Mr. Aguilar. And in the----
Mr. Gardner. And again we have also received some
additional funding to be able to try and put in place
mitigations whether they be technological, operational, or
otherwise for those areas.
Mr. Aguilar. In the meantime do you let the locals know
that this line is being threatened or how does that roll out an
announcement and public facing side gone?
Mr. Gardner. Yes. Well, so we have as our CEO recently
testified, we have made it clear generally that we are looking
at all these exemptions and we are in contact with all the host
railroads that have these routes and we will stay in close
contact here as we undertake the work and make sure that we
keep both Congress and the communities and partners we have
informed as we go through the work.
Mr. Aguilar. Thank you. Appreciate it. Thanks, Mr.
Chairman.
Mr. Diaz-Balart. We have spoken today a lot about the
importance of the rail investments in the northeast corridor
including New York and New Jersey. I know that Amtrak has been
working on that for a long time and has done some work even
determining the economic benefit of its projects in the region.
One significant project and it was already kind of brought
up is the Hudson Tunnel. It is an old tunnel. It carries
820,000 passengers a day so needless to say it is a vital
tunnel not only to New York, New Jersey and the northeast
corridor but to the entire economy of the United States.
So, Mr. Gardner, the President issued an executive order to
reduce the time it takes for the environmental reviews with the
goal of completing environmental impact statements within 24
months and I believe that the review of the Hudson Tunnel is
nearing the 24 month timeline. Any idea what the situation is
regarding the Hudson Tunnels EIS?
Mr. Gardner. Thank you, Mr. Chairman. Yes. We have, we had
a somewhat audacious goal when we started the process for the
environmental work on the Hudson Tunnel project and that was to
take what we thought would be a four year typical EIS process
and compress that down to two. And I can say that we have had
tremendous support from Secretary Chao, from all of the DOT up
to this point to achieve really streamlining sort of an
exemplary picture of what a compressed and yet fully effective
EIS process can be.
So we are very close to the end. We, the project team has
completed the New Jersey transit led the environmental work in
support of the, of all the sponsors and funded by Amtrak and we
are hopeful the department will complete its work soon and I
think it stands as a model of how projects and environmental
work can move forward and the huge benefits it has to advancing
both the outcomes, the positive outcomes of the programs and
also reducing costs.
Mr. Diaz-Balart. And how much in essence, there has got to
be a cost if there is delays as well so any idea what that,
what are we dealing with there?
Mr. Gardner. Absolutely. We are scheduled to start
construction in 2019, in the middle of 2019, on the project.
The two projects of phase one of this program the Hudson Tunnel
Program--Hudson Tunnel Project and Portal Bridge are
collectively almost $15 billion over the decade or more that
they last. So, any delay naturally leads to inflationary cost
that will increase prices over time. If--we are on schedule now
to start the program in 2019, we hope to keep that schedule,
and we feel confident working with all our partners we can. But
if we delay construction starting in 2019, it could cost us up
to a million dollars a day in increased cost for this big
project.
Mr. Diaz-Balart. Let me for the file, you know, from your,
in essence, private sector perspective, talk to me about the
importance of the real infrastructure assets in the Northeast
Corridors. In other words, what are the implications of the--if
we had a failure in any of those assets, the implications not
only for the economy regionally or locally, but potentially
nationally?
Mr. Fry. Yeah. No, I think a lot of business would start to
shut down in Philadelphia, you know, when you think of our
largest company, which is Comcast, you know, the need for them
to be here in Washington, the need for them to be up in New
York because of NBC Universal. You take that and you multiply
that by many companies within the city. I know our university,
which is a research university, has a huge number of people
going up between, you know, Philadelphia and New York, down to
Washington. I mean, just that the--probably the greatest asset
that we have in Philadelphia is our location of the
transportation and infrastructure. That is sort of what we sell
as our competitive advantage. And so, beyond just the logistics
of not being able to do our work day today, it also undermines
sort of our big pitch, that this is sort of a growing, vibrant
city with probably the best set of transportation conditions
around. And so, you know, that is how we sort of brand
ourselves. And how we have done, you know, how we have
approached this whole Amazon opportunity as an example of how
the transportation and infrastructure is to our competitive
advantage as a city and as a region.
Mr. Diaz-Balart. Let me now shift to Mr. Gardner and Mr.
Derwinski and the--again, going back to the FY-18 Bill provides
a significant increase in three, frankly, very important grant
programs. So, Federal State Partnership, the State of Good
Repair grants, the Consolidated Rail Infrastructure, and Safety
Investment grants, and the TIGER grants. And so, to both of
you, how will these grant programs benefit your organization
and what types of projects potentially will benefit
specifically anything that you can think of?
Mr. Derwinski. Well, of course, there is a competitive
process. So, the implications that we have clearly will be
toward the safety aspects, where we can look at the Great
Crossings, the bridge renewals and in some cases some core
capacity type of infrastructure things where we could work with
Amtrak. We have a couple corridors in there where the literally
the rail infrastructure itself, if re-developed, if expanded,
will allow not just us, but the region to economically grow. We
feel that, you know, the competitive process is good and it is
our job to go ahead and put forth our best effort in that
process.
Mr. Diaz-Balart. Comments, Mr. Gardner?
Mr. Gardner. Yeah, I would echo those. I think our focus is
on addressing both areas of safety where we can that--where
additional investments could be made and we are looking at a
series of possibilities. For the grant programs that are
discretionary, we really see it as opportunities to strengthen
our partnerships with both the state and commuter railroads and
the host railroads together. So, to find those areas where we
can address chokepoints, capacity limitations, elements that
are impeding either the ability to grow service or to provide
reliable service.
So, we think there is huge opportunities there and we are
very interested, of course, in also expanding service to new
corridors or increasing frequencies. Part of that essentially,
a very big portion is, is equipment and so, looking at
opportunities where there might be a limited chance to start
down the path of equipment for new service. So, we think
together, the--this suite of grant programs and the additional
funding of Amtrak is provided directly, particularly for our
Northeast Corridor investments, really starts us down a path of
being able to improve the network in a major way.
Mr. Diaz-Balart. Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I will have additional
questions to submit for the record. But before we adjourn, I do
want to turn to President Fry because he touched on the
multiple dimensions of this redevelopment effort that
Philadelphia is involved in where transportation and multimodal
transportation becomes then the catalyst for all kinds of
economic development. There is widespread discussion across
this country of just this phenomenon and this impact of transit
and transport--and intercity rail. And it has, you might say,
the two halves of this Subcommittee together as we focus not
just on transportation, but also on housing, community
development, the kind of patterns of development that
transportation decisions inspire and make possible.
So, I am just asking you to go a step further and talk
about that aspect of the redevelopment effort that you are in
involved in, the importance of intercity passenger rail,
multimodal transportation connections to the community
development that you are involved in.
Mr. Fry. You know, it is a vivid opportunity for us. If you
take a look at this 30th Street District Plan that we worked on
together with him prior to some of the other constituencies,
you know, the opportunity there is a 16 to 18 million square
foot development over a long period of time right in the middle
of the city. What is important about this is that immediately
north of that development is a Federal Promise Zone.
It was one of the 5 original Federal Promise Zones that
were designated by President Obama back in 2013, which means
that is a very, very high poverty district, low educational
attainment, very high on employment, and it is an isolated
community, isolated in part because of the railyards. The
railyards have really sort of, you know, formed a barrier
between the prosperous University City and Center City
precincts and then the rest of the northern part of West
Philadelphia, you know, which is really in such a state of
difficulty.
By doing this kind of development, we can essentially fuse
these neighborhoods together, first, I think, physically. But
then also when we think about the level of development that is
going on, construction jobs, permanent jobs of all types, and
the opportunities for employment for people have been un or
underemployed, you know, in these neighborhoods for years and
years, it is a pretty important way of taking all the assets of
an innovation district, tying it in an inclusive growth way to
a Federal Promise Zone, and seeing prosperity and opportunity
and hope for a lot of people who do not have it right now. And
So, I am absolutely convinced that the work that we are doing
is, you know, the real estate developmental is--almost is the
least of it. The societal impact, I think, is incredible.
And we do not have time today, but we are working on a
significant set of investments in public education, affordable
housing, job training through the West Philadelphia Skills
Initiative to enable all of the above to occur. And So, the
catalytic activity, though, is what is happening around that
station right now.
Mr. Diaz-Balart. You said what?
Mr. Price. Thank you.
Mr. Diaz-Balart. I am sorry, what?
Mr. Price. Thank you, Mr. Chairman. Oh.
Mr. Gardner. Just say, if I could, I just would like to
recognize John. He--Drexel and John in particular have been a
huge catalyst, I mean, because--is the best word, really, to
drive this kind of smart development around stations. We at
Amtrak have been fortunate to partner with him and his
leadership here has been tremendous. Our goal is to take these
assets that we have, 30th Street Station, which is a
monumental, extraordinary station, one of our jewels, and to
leverage that asset, to create additional investment that
really serves two purposes: one that allows us to address some
of the longstanding State of Good Repair expenses that exist at
stations like these.
So, in this case, we are just nearly finishing a $70
million facade job; that is just to keep the facade of the
building in place. These are all, of course, historic
landmarks. We have to keep them in great shape; it is our
stewardship role. But it is also to centralize development,
jobs, and housing near our nodes of transport because that
creates for us the long-term ridership base at growth. Really,
we are at our best when we connect central city business--
central business districts in cities to other central business
districts.
And John's leadership and vision there has been tremendous
at this station and we are already similarly pursuing programs
in Chicago and Baltimore, which take the assets that we have
and use them to create greater value for communities and to
help reduce our need for federal investment from you all So,
that we can take care of some of our own infrastructure issues
in partnership with the private sector.
Mr. Price. Thank you very much. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Chairman, I know--thanks
for being here. I know you have got--again, you Chair another
Subcommittee and you have been running around, So, thanks
again.
Mr. Dent. Multiple hearings this morning. Thank you all for
being here and especially Dr. Fry, thank you for being here
from Drexel. My daughter lives right next door to 30th Street
Station. I know it very well and I am glad that you are here
representing the City of Champions. That said, yeah, we won,
you know, we won the Super Bowl, just want to remind you, and
the NCAA Championship----
Mr. Diaz-Balart. The good thing is that you do not rub it
in much.
Mr. Dent. No, I just--we, you know, we are very modest and
humble about these things. I would like to just quickly just
say to Mr. Gardner, if I could, I would like to talk about what
this Committee did last year and the significant--we recognize
there are significant needs within the Northeast Corridor
provided substantial funding to address its backlog on the FY18
on the bus. The $250 million was provided for the Federal State
Partnership Investment for State of Good Repair Program. This
was an increase of about $225 million over the '17 level and as
you also know, this program provides assistance for the
rehabilitation of transit infrastructure and with this large
increase to the State of Good Repair Program and the potential
influx to Amtrak, how are you making sure that this funding
will be used effectively and in a timely manner? And I suppose
that I open this question to others on the Panel as well if
they have any insight. So that, Mr. Gardner.
Mr. Gardner. Thank you, Congressman. The Federal State
Partnership Investment is a water ship movement. It is a huge
increase and well-timed because we have a number of significant
projects that are ready to either take that next step in final
design or move to construction. One of the critical things for
us is--and really, it is required in the program is that we
have a strong partnership with commuter railroads who share in
the use of these assets. So, core to getting effective programs
underway and I think making our way through the grant program
and through the selection process is strong partnerships with
our commuter railroads and good combination of local funding
and Amtrak support to go after these investments. When we
have--we are looking forward to the process that is soon to be
underway to go after those additional funds and we will be
working with all of our commuter partners to find the right
match; create the priorities and then pursue the investments.
Mr. Dent. Anything you might like to add to Dr. Fry, I am
sorry, I came in late for your presentation about all the good
work that you are doing down at Drexel in West Philadelphia
with respect to 30th Street which is--I am in your neighborhood
all the time and I just see a lot of good things happening.
Anything you wanted to add from what you said earlier?
Mr. Gardner. Well, I think that catalyzed a lot of that
frankly, is the great relationship and partnership we formed
with Amtrak. I mean, from the very beginning, we have been with
Amtrak thinking about our combined holdings are economic
development, impact and possibilities. The partnership we
formed to create the 30th Street District Plan. Probably had
well over 20, you know, constituencies anchored by Amtrak and
Drexel, but also joined by Septa and PennDOT and the City of
Philadelphia and the University of Pennsylvania goes on and on.
And what has happened is there has been a big network effect to
that, that has tied together a lot of the sort smart
development around the station. We have talked about
School.I.arge which I mentioned to your colleagues previously,
but that is three and a half billion dollars of private capital
that is flowing into that area. There is no sort of
underwriting of that by state or local or federal government,
so it shows you the power of this kind of development to, you
know, catalyze the kind of things we are talking about in the
30th Street District Plan. Getting that station squared away,
which is what Steven's colleagues are doing and having so many
other possibilities that would pivot off of that in a public/
private partnership is only going to take the success that you
see today and just push it so much further. So, I think the
opportunities are bright, but it is all routed in a public/
private partnerships. And a sense that, look at all your
assets, including your real estate assets when you are
undertaking those kinds of improvements to rail.
Mr. Dent. Well, yeah, just--I just want to commend
everybody because with not only 30th Street, but with Cira
Centre, Evo and all that investment and what is going on at the
University Science Center, it is really exciting so, just
wanted to commend you for that. I would like to shift to Mr.
Hamberger quickly, if I could on the issue of trade and with
this Administration's efforts to renegotiate NAFTA, its
recently announced tariffs on steel, aluminum and potential
trade action with regard to China, I was hoping that you could
share with me how you believe these actions could impact your
industry's investment and infrastructure more generally. As
members of the Appropriations Committee, we have an interest in
showing our investments at the maximum positive impact possible
and I would like to hear your perspective about how factors
outside of our Committee's direct control might affect those
efforts.
Mr. Hamberger. Thank you very much for that, Chairman Dent
and as a native Pennsylvanian and former staff member for the
Pennsylvania member, may I just say the delegation of this
Committee and Congresswoman sitting next to you.
Mr. Dent. Thank you for that.
Mr. Hamberger. And I did hear you mention the 76ers and the
Phillies are at 5 and 5--so I mean, we got a lot of
opportunity.
Mr. Dent. And the Flyers are about to win the Stanley Cup.
Mr. Hamberger. There you go. All right, so--getting back to
the question at hand. We have always known sort of intuitively
the trade was important to the freight/rail industry and you
missed my opening where I emphasized and I know you know this,
but for the record, 99 plus percent of the investment in the
freight/rail industry comes from private sector. We have to do
it the old fashion way, we earn it. And so we did a study in
the Spring of '17 and found that fully 42 percent of our car
loadings; 35 percent of our revenue come directly from export
and import traffic. That does not count indirect. For example,
in Peoria, Illinois, there is a caterpillar plant that exports
just about a hundred percent of its finished product, mining
equipment around the world. We counted that as part of trade
because we carry that to the port. We did not count the steel
coming in, the components that went into manufacture that
finished product. So, 42 percent and 35 percent understates the
importance of trade to the freight/rail industry. Fifty
thousand jobs are directly related to that 42 percent of our
car loadings. About a third of that is north, south NAFTA and
so, we have been very aggressive meeting with the
Administration and taking part with the Chamber and NAHEM and
others in trying to get this across, you know, to the
administrators--to the Administration what impact this would
have. The steel tariff, of course, had--you know, we put in
miles and miles and miles of track and some of that does come
from Japan where they are the only manufacturer of something
called head-hardened steel which is needed to be able to move
the 286,000 pound of car loads of grain, coal and other
commodities. So, that would have a direct impact on us.
Obviously, it would have some potential positive impact on
domestic, so I do not know what it would do to the mix of our
traffic, but it would certainly impact the cost of our doing
business if that tariff went into effect. And then, if the
trade war happened, obviously, there would be, you know, just
disastrous repercussions.
Mr. Dent. Yeah, just my time is over, so I am just going to
conclude this by saying that a lot of the rail traffic and
freight/rail traffic in our own community----
Mr. Hamberger. Of course.
Mr. Dent [continuing]. Comes out of your Port Elizabeth,
Newark and that offloaded rail in the city----
Mr. Hamberger. Right.
Mr. Dent [continuing]. Of Bethlehem and elsewhere and we
have a lot of----
Mr. Hamberger. Yeah, it--we try and get the point across
that it would and I think the market is making that point as
well that if this were to come to fruition, it would be a
disaster.
Mr. Dent. Thank you. I yield back.
Mr. Diaz-Balart. I want to thank the gentleman in
particular for his sports humbleness.
Mr. Dent. I am an Eagles fan. I cannot help myself.
Mr. Diaz-Balart. Let me thank the panel. I think this has
been frankly, very, very interesting.
Mr. Hamberger. Mr. Chairman, may I be so bold.
Mr. Diaz-Balart. Please do.
Mr. Hamberger. I did not make a connection between two
questions I had on autonomous trains and on grade crossing
safety in an autonomous vehicles. We have suggested to the
Department of transportation and I would suggest that you might
want to support as the guidance regulation, whatever the
Department ends up promulgating with respect to autonomous
vehicles, something that we think they should take a close look
at is having that technology take into account grade crossings.
Google has already, under the previous Administration, put
grade crossing into Google Maps, so as you are driving along,
you can be alerted that there is a grade crossing up ahead. As
I mentioned the GAL has found that 90 percent of grade crossing
accidents are driver error. And so, if the technology were
programmed that it would not allow the driver to go around that
gate that is down and that it would stop at the grade crossing,
I think there might--I am sure there is probably an override
system in there somewhere, but it seems to me that, that would
certainly in the first instance, help mitigate and lower the
number of grade crossing accidents. So, I just wanted to get
that on the record and I apologize for extending----
Mr. Diaz-Balart. No, I appreciate that. Thanks.
And again, thank you to every one of you. I think this has
been a very helpful. The Committee staff will be in contact
with you all regarding any questions for the record; any
answers you might want to add. We would ask that you return
that information for the record to the Committee within 30
days. That would then allow us to be able to publish it--
publish the transcripts of today's hearings. Mr. Price, any
further comments?
Mr. Price. No, thank you.
Mr. Diaz-Balart. With that then, the hearing is adjourned.
Thank you very much.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Thursday, April 12, 2018.
DEPARTMENT OF TRANSPORTATION
WITNESS
HON. ELAINE CHAO, SECRETARY, U.S. DEPARTMENT OF TRANSPORTATION
Mr. Diaz-Balart. Let's call the subcommittee to order.
Today, we welcome Secretary Elaine Chao to testify on the
fiscal year 2019 budget request for the Department of
Transportation.
The fiscal year 2019 budget request for the Department of
Transportation is $15.9 billion in discretionary budget
authority and $75.9 billion in total resources. That includes
obligation limitations for surface transportation and aviation
programs.
I would note that this budget request was developed prior
to the Bipartisan Budget Act that lifted the sequester for 2
years and raised the discretionary budget caps. And I think we
should all keep that in mind.
The bipartisan deal set the stage for us to take immediate
action last month to invest in our Nation's future and to
rebuild our roads, our railways, and our airports.
And the 2018 THUD bill invests nearly $11 billion in new
transportation and housing infrastructure. And, again, I want
to thank the chairman for a very generous allocation.
So what we just did in the omnibus, in the omni, showed
that this committee does real infrastructure. That is real
money. And so I would note that we made these investments
without adding to the bureaucracy. We literally just wanted to
make sure that we did not add bureaucrats, bureaucracy, and we
did none of that.
I would also note that if you take what we did to invest in
infrastructure, just us here on this subcommittee alone, and
extend it over 10 years, you get over $100 billion in
infrastructure investment in transportation and housing alone.
And so, again, this is over half of the $200 proposal that
the administration is putting together, and that is something
that Congress has been talking about putting together.
Well, this subcommittee did that. And again, thank you, Mr.
Chairman, for allowing us that, I think, very generous
allocation, which allowed us to do a big downpayment on the
infrastructure commitment that we have all been talking about.
So, again, my point is that this is real, this committee
does real infrastructure, as we did in the omnibus. And I
believe that, hopefully, we will be able to do that again in
fiscal year 2019.
Madam Secretary, I don't think that you will see support on
this committee for massive reductions. And, as I mentioned
before, your budget was done before the budget, the 2-year
negotiated deal.
Obviously, this is not to say that we should not look at
wherever we can make smart reductions to ineffective programs,
but I think there is a consensus in this subcommittee that we
have to continue to invest wisely in infrastructure, something
that we all want to do.
There is no doubt that we need to improve our roads, our
bridges, and our railways to bring them to a state of good
repair. And we also must continue making good progress to
modernize our air traffic control system, which is the most
advanced, the most complex, and the safest system in the world.
The administration had proposed general outlines for a
larger infrastructure initiative. And we have not yet seen the
specific legislative proposals for this initiative, but know
that we are ready and we are anxious to work with you on that.
I also agree that we should have a discussion on how to
innovate, how to incentivize, how to streamline, but, right now
we can move forward with authorized programs, something that
this subcommittee worked hard to do, particularly building on
the bipartisan FAST Act. And we just did that in the omnibus,
and we intend to focus on authorized programs once again as we
get to work on the fiscal year 2019.
Just a reminder, I think most people know the next fiscal
year is less than 6 months away, but we are ready to move
forward.
Secretary Chao, I will tell you, and you know this, but I
think it is important to say it publicly, I have always enjoyed
our frank and open conversations. And I appreciate your
appearance before us today to discuss how we can invest in
America and get our country moving again efficiently and
effectively.
Now, I would be remiss if I didn't before take a moment to
express my deepest sympathies to the families and loved ones
who lost their lives during that horrible pedestrian bridge
collapse at Florida International University last month. It
goes without saying that we must leave no stone unturned to
make sure that something like that is avoided in the future and
that it never happens again.
I am grateful that the Secretary immediately mobilized the
NTSB to start an investigation, and they are doing that. I also
would be remiss if I didn't--and, Madam Secretary, I hope you
don't mind me saying this--but we were all shocked by what
happened. And before I was able to call the Secretary, she
called me to offer her prayers, her thoughts and her prayers to
the victims, but also her help.
So thank you. Thank you for being there in such a difficult
moment for the community that I am blessed to represent.
With that, again, before we open up to the Secretary's
testimony, let me recognize my friend and the ranking member of
the committee, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I am pleased to be here
this afternoon as we examine the fiscal year 2019 budget
request for the Department of Transportation.
Secretary Chao, we are glad to see you again, and we
appreciate your joining us today.
Infrastructure service is the foundation for our economy
and our quality of life. It facilitates the flow of goods and
services. It connects people to employment and educational
opportunity. The condition and the performance of our
infrastructure is critical for the Nation's health, welfare,
and economic competitiveness.
Unfortunately, our country has been steadily falling behind
our international peers when it comes to investing in the
infrastructure that is required in the 21st century economy.
The American Society of Civil Engineers estimates that there is
a U.S. infrastructure funding gap of $2 trillion over the next
decade. According to Federal statistics, 70,000 bridges, 1 out
of every 9, are classified as structurally deficient.
The U.S. economy is expected to lose almost $4 trillion in
GDP between now and 2025 if this infrastructure gap is not
addressed. In other words, we have every reason to be mindful
of the cost of not facing up to our infrastructure crisis, and
I do not think crisis is too strong a word.
That is why it is disappointing to see that the U.S.
Department of Transportation for the second year in a row has
put forward a budget that is woefully inadequate for the task
at hand. The request largely adheres to the funding levels
agreed upon in the FAST Act for programs that rely on trust
fund dollars. But overall budget authority would be cut by
nearly $3 billion, or 15 percent.
The brunt of these funding reductions would fall on
discretionary accounts designed to advance public transit,
rail, and other multimodal projects that are critical to our
Nation's transportation future.
For example, the highly competitive and oversubscribed
TIGER program would be eliminated in the President's budget.
Capital Investment Grants that advance critical transit
projects across the country would once again be drastically
curtailed, so that only projects with existing grant agreements
might receive funding.
The result would also slash resources for Amtrak and rail
infrastructure grant programs. And it once again includes
unrealistic assumptions about air traffic control
privatization, while reducing key safety facilities and
operations accounts at FAA.
The budget request also stands in stark contrast to the
recently enacted fiscal 2018 omnibus appropriations bill, which
passed on a bipartisan basis and was signed into law by the
President last month.
The omnibus triples funding for TIGER. It brings New Starts
funding to the highest level in recent memory. It fully funds
FAA activities. It includes billions of additional funding
above the authorized levels for formula programs, for highways,
transit, and aviation. And it represents the largest Federal
investment in rail since the Recovery Act almost a decade ago.
So I want to congratulate our chairman, Mr. Diaz-Balart,
our subcommittee colleagues, for advancing legislation that
meets the priorities of so many Members on both sides of the
aisle. It does represent a downpayment toward improving our
Nation's infrastructure.
So, Madam Secretary, I hope you will clarify how your
proposed budget, which would in many cases slash these
bipartisan investments, undo what has just been done, how would
this move our country forward? The request appears quite
similar to last year's budget, and that budget was roundly
rejected on a bipartisan basis.
I also look forward to hearing how the Department will
administer the new funding provided in the omnibus, especially
when it comes to the Capital Investment Grants programs. It is
my expectation that the Department will distribute this funding
efficiently and effectively, while adhering both to relevant
statutes and to the directives of the Appropriations Committee.
Before I close, I would also like briefly to note my alarm
at reports in the media that indicate Republican leadership is
working with the White House to develop a rescission package,
to claw back and cancel certain nondefense spending, including
in the 2018 omnibus appropriations package.
This action would not only damage critical programs that
Americans rely on, it would undermine the entire appropriations
process and the good faith and the trust on which it depends.
It would be a betrayal and it would make future bipartisan
agreement much more difficult to achieve.
Madam Secretary, I look forward to your testimony today,
working with you to ensure vital transportation programs are
adequately funded.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you very much, sir.
Now we are privileged to have the chairman of the full
committee.
And as I mentioned in my opening statement, Mr. Chairman,
because of--and you have to make tough choices--but because of
your allocation, this subcommittee, your committee, your
subcommittee was able to make, I think, historic investment in
infrastructure. So thank you for that hard work, and we are
grateful for that.
And with that, we welcome the chairman for any remarks he
may make.
Mr. Frelinghuysen. Thank you, Mr. Chairman, for the time
and for your strong leadership of the committee, along with
your very able ranking member, Mr. Price of North Carolina.
I also want to welcome Secretary Chao to the Appropriations
Committee again.
Madam Secretary, we look forward to your testimony and to
hearing your frank and candid views on a wide range of issues.
As I say at every meeting, the power of the purse lies in
this building. It is the constitutional duty of Congress to
make spending decisions on behalf of the people we represent at
home. And Chairman Diaz-Balart and Mr. Price have spent the
increased fiscal year 2018 allocation from the caps deal wisely
on your behalf from that agreement.
Furthermore, Mrs. Lowey and I look forward to rapidly
concluding our work on the fiscal year 2019 bills with the same
amount of oversight and forethought.
The Gateway Project is a prime example of the
infrastructure investment that will promote greater economic
and national security benefits as it affects 20 or more States
who use the East Coast rail system and whose passengers and
freight depend on this narrow access point in New York and New
Jersey known as the Gateway, the trans-Hudson River tunnels.
Madam Secretary, the necessity of this project is quite
clear. I remain angered by the administration's opposition and
very calculated indifference towards the project. And this
posture from an administration which claims to be
infrastructure-centric is totally unacceptable.
Some have suggested that partisan considerations by the
White House and some in my own party are at work here. I should
hope not. To me, this is a national priority, above politics,
by two States that bore the brunt of September 11, 2011, those
terrorists attacks, and more recently Superstorm Sandy.
I needn't remind the committee that $900 million Chairman
Diaz-Balart put in the House-passed bill this last September
was available for other eligible authorized projects around the
Nation, not just for the Gateway. Sadly, we had an
administration fixated on removing it entirely during the
budget negotiations, and I was heavily involved in those
negotiations.
The Gateway Project is vital to the Northeast, and it will
be completed sooner or later, despite opposition. After all,
the Northeast rail corridor is the most heavily used passenger
line in the entire United States, serving more than 750,000
people every day on more 2,200 intercity and commuter trains.
Quite honestly, I worry about the possibility of a
catastrophe in one of those tunnels. So there are potentially
homeland and national security implications as well short-term,
and to use your own words, Madam Secretary, into perpetuity.
God forbid if one of those tunnels were to fail for any reason.
The negative economic and national security implications would
ripple across the East Coast and the Nation.
I repeat, Gateway will be built, if not during your tenure,
Madam Secretary, then thereafter.
And in closing, may I thank Chairman Diaz-Balart and Mr.
Price for providing the needed funds for such projects, not
only potentially Gateway, so we can go forward, admittedly with
a lesser amount, but nonetheless a strong start.
I am incredibly grateful to the committee for making sure
that the money was there for these projects. It was less than
we wanted, but I think we have got a good foundation.
I yield back the balance of my time.
Mr. Diaz-Balart. Thank you very much, Mr. Chairman.
I would now like to welcome our distinguished ranking
member of the full committee, Mrs. Lowey, for any remarks that
she might have.
Mrs. Lowey.
Mrs. Lowey. Thank you very much. And I would like to thank
Chairman Diaz-Balart and Ranking Member Price for holding this
hearing. And I welcome Secretary Chao before this committee.
It is clear that the United States must invest to improve
our infrastructure. Our airports, bridges, tunnels, electric
grid, schools, hospitals, ports, and sewers are in desperate
need of updates to make them work more efficiently and
effectively for the American people.
You have spoken before Congress in favor of President
Trump's infrastructure plan, but, unfortunately, his plan fails
to invest in the public good and instead places significant
infrastructure projects in the hands of private corporate
interests.
Last month, Congress passed the fiscal year 2018 omnibus
appropriation bill, which provided $27.3 billion for the
Department of Transportation, an increase of $8.7 billion from
fiscal year 2017. We provided $1.5 billion for TIGER grants,
$2.525 billion in new funding for highway grants, $1.94 billion
for Amtrak, $800 million in new funding for transit formula
grants.
So Congress has given your Department robust funding to
make serious investments in projects that would improve
infrastructure in our country.
And I also would like to say, I echo Mr. Frelinghuysen's
sentiments and express to you just how important the Gateway
Project is for my district and the movement of people and
commerce up and down the East Coast.
Gateway will create a one-seat connection for my
constituents in Rockland County to commute into New York City,
something that commuters and working families have needed for a
long time.
So I just want to make it very clear. Congress has given
your Department robust funding to make serious investments in
projects that would improve infrastructure in our country. Yet,
I am puzzled that your Department requested a 19 percent
reduction in discretionary spending on programs that directly
support infrastructure improvements and development.
I am deeply disappointed by your proposals to eliminate
programs that are proven to work, like TIGER. TIGER is one of
the most valuable, important programs I have been working with
since I have been in Congress. And to privatize air traffic
control operations, which does not have even enough support to
pass the House, let alone the Senate. I am really puzzled,
Madam Secretary.
Overall your budget fails to reflect what should be the
priorities of your agency and proposes to destroy the progress
we can make as a result of the fiscal year 2018 spending bill
that was just enacted.
So, Madam Secretary, I really want to thank you for being
here. I have a feeling there are other forces, other people,
who may have input into this proposal, which most of us on this
dais reject. And I do hope we can work closely with you and
explain the value of the investments that, for some of us, who
have been working in this job for a while, and you have been
here for a while, we really understand how important these
programs are. And I do hope we can have a positive, strong
relationship and not include a 19 percent reduction in
discretionary programs.
Thank you very much.
Mr. Diaz-Balart. Thank you very much.
Secretary Chao, again, Madam Secretary, your full written
testimony will be included in the record. You are recognized
for 5 minutes. And, again, it is a privilege to have you here.
Secretary Chao. Thank you, Chairman.
Chairman Diaz-Balart, Ranking Member Price, and members of
the subcommittee, thank you for the opportunity to discuss the
President's fiscal year 2019 budget request for the Department
of Transportation. I look forward to working with all of you to
continue our joint efforts to provide the American people with
safe and reliable transportation systems.
The President's budget request and the $200 billion
provided for his infrastructure proposal work together to
provide new ideas for using our financial resources wisely,
expanding our partnerships with State and local governments,
and encouraging private sector involvement where appropriate.
These changes provide a path forward to improve our
transportation infrastructure quickly without dramatic
increases in Federal spending that would stifle economic growth
and job creation.
The President is requesting $77 billion for the Department
of Transportation. This budget would promote two of our highest
priorities, advancing the safety of our Nation's transportation
systems and preparing for our future transportation needs.
About 80 percent of these dollars will fund State and local
surface transportation projects of their own choosing.
The President's request also includes funding targeted
toward new technologies and innovation. These funds will help
us address the opportunities and challenges posed by
integrating emerging technologies and systems into our
transportation network safely and efficiently. For example, the
President's budget proposes more than $73 million for unmanned
aircraft systems and $18 million for automated driving systems.
While not included in the original budget release
materials, the President's budget request also includes $300
million to support the replacement of two of the oldest ships
in the Maritime Administration's School ships fleet. These new
assets will enable us to continue to meet the training needs of
our future merchant mariners as the current ships are retired.
At the same time, the President's budget request calls for
reforms to several major programs and the manner in which they
are traditionally funded. These programs are ideal candidates
for the new programs outlined in the President's infrastructure
proposal.
As you begin your consideration of the President's budget
request and his infrastructure proposal, we will continue to
focus on our new responsibilities. The recent passage of the
fiscal year 2018 Omnibus Appropriations Act included increases
to many of the Department's vital safety programs. It also
provides a downpayment of resources that acknowledges the
President's vision of quickly investing in our Nation's
infrastructure.
The Department is assessing the requirements and
instructions in the act and is identifying the steps needed to
responsibly administer this funding and the new programs
provided.
Thank you again for the opportunity to appear before you
today to discuss the President's fiscal year 2019 budget, and I
look forward to continuing our partnership on transportation
issues on behalf of the Nation. And I will be happy to answer
your questions.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Diaz-Balart. Thank you very much, Madam Secretary.
Members, we will proceed in the standard 5-minute rounds,
alternating sides, and, obviously, recognizing the members in
order of seniority as they were seated at the beginning of the
hearing. And I don't have to tell you to be mindful of your
time because both questions and answers will be within that 5
minutes.
Madam Secretary, the fiscal year 2018 omni provided $2.64
billion into the Capital Investment Grant programs. As you
know, the House and the Senate both placed a huge priority on
continuing the authorized transit Capital Investment Grants.
That is a program that has gotten wide bipartisan support with
an emphasis on moving projects through the pipeline and leading
to the expectation, that those full funding grant agreements
would go forward and they would be signed and those projects
that have met the criteria would move forward.
And so this year there was an inclusion of a new provision
in the law that requires 80 percent of the Capital Investment
Grants to be obligated by December 31, 2019. And so typically
those funds are available until they are expended, until they
are spent, but there is this different language and different
change in the law. And it is because we wanted to show how
important it is to use that money, to put it to good use as
soon as we can, because they are important programs.
So there are many critical projects that are ready to go
and waiting for the Federal commitment. And I just wanted to
ask you, how do you plan to execute those funds by that
deadline? And again, the deadline is December 31, 2019. It is
not a lot of time.
Secretary Chao. No, it is not a lot of time at all. In
fact, the omnibus gave the Department about $12 billion over
what the President's request is. That is a lot of money.
So we are in the process of reviewing what the omnibus
says, what it requires, what its instructions are. It has taken
us about 2 weeks just to understand what the omnibus says. It
was passed on March 23, and we are diligently working to
fulfill the wishes of Congress.
Mr. Diaz-Balart. Great.
Secretary Chao. But I do think the time is very tight.
Mr. Diaz-Balart. It is.
Secretary Chao. On the TIGER grants, on the $1 billion
additional in the TIGER grants, $1.5 billion basically with
INFRA grants. And then we have the first round of INFRA grants
coming out by June, hopefully. And then we have got the INFRA
grants in the omnibus, which is another huge tranche. So the
timelines are very, very tight.
I just want to make that point, understanding that we will
do our very, very best, obviously, to fulfill that.
Mr. Diaz-Balart. So your intention is, obviously, to do
that?
Secretary Chao. Absolutely.
Mr. Diaz-Balart. But we understand. Which is why we are
hoping to get the 2019 bills done in a more timely fashion.
And, Madam Secretary, you know, as you have been down there
in my area of the State of Florida, they have been working for
years on a transit plan to submit to the CIG pipeline. And,
hopefully, they can get those parameters and those guidelines
taken care of. And I want to thank you for going down there and
seeing it firsthand. So we will hopefully be able to have that
eventually in that pipeline.
My colleague Mr. Visclosky has a transit project that has
been in the planning stages since the 1990s, so I guess I
shouldn't be as frustrated as I feel about the situation in
South Florida. Which is why, again, we are very committed to
those programs. And I am glad to hear of your efforts.
In another area, in the Federal-State partnership for State
of Good Repairs, which is another authorized program that
received an increase to $250 million for this program, DOT has
not yet published a Notice of Funding Opportunity, not only for
the 2018, but also for the 2017 amounts. Do you have any idea
when you expect to have those published for both the 2017 and
the 2018?
Secretary Chao. We hope to have that very soon.
Mr. Diaz-Balart. And any idea if you can put them both
together and do them both? Or is it 2017 or 2018?
Secretary Chao. There are two separate. First, there are
two separate NOFOs. And then there are two separate years as
well.
Mr. Diaz-Balart. Right.
Secretary Chao. So it is certainly our intent to try to get
that out as quickly as possible.
Mr. Diaz-Balart. Right.
Secretary Chao. But last year, obviously, was a transition
year, and there were people, obviously, who were not in the
agencies. And so that was a bit of a slow start. But as soon as
we are getting people, we are turning them out as quickly as we
can.
Mr. Diaz-Balart. I am glad to hear that. And I thank you,
Madam Secretary. I, obviously, have a number of other
questions, but I try to lead by example and not exceed my time.
So with that, let me recognize the ranking member.
Mr. Price. Thank you, Mr. Chairman.
Madam Secretary, I would like to focus in on the Capital
Investment Grants in transit and ask you to elaborate on the
funding timetable, the funding plans for these grants.
Hereto, the fiscal year 2018 omnibus bears little
resemblance to the fiscal year 2018 budget request or the 2019
budget request, so you have some funding and administering to
do that you hadn't fully anticipated perhaps.
But this is no longer a hypothetical. We have had some
frustrations when seeking answers about how programs are going
to be administered and executed, but now it is no longer a
hypothetical. We have got to get this done. And that is why I
want to ask you to provide some specifics.
We know what investment in transit does for our
communities, improving local mobility in high density
corridors, addressing our energy, environmental, economic
challenges. We have got to move ahead.
The process, of course, is multifaceted, and I would like
to ask you to provide here, if you can, or for the record
otherwise, some documentation of exactly how projects have been
moving through the pipeline. How many projects entered the
project development phase so far this fiscal year? How many
projects moved from project development and into engineering so
far this year? How many projects moved from engineering into
full funding grant agreements, that is construction so far this
year?
I am pleased, I know that you have recently taken steps to
sign some Small Start grant agreements. I wonder when you are
going to begin signing full-funding grant agreements for New
Starts and Core Capacity projects.
And, of course, in asking you this and in raising this
whole subject, I am asking to you pledge to move projects in a
timely way, projects that meet the statutory criteria, through
the project pipeline and to move them through in ways
commensurate with the funding level provided in the 2018 bill.
Secretary Chao. Congressman Price, let me assure you that I
am a partaker. I have been a user of the transit system. I grew
up in New York City. As an immigrant, we had no car, so I would
basically take the subway all the time and the bus system. So I
am very well aware. And we all support transit systems that aid
mobility and connectivity around our country, especially in our
urban centers.
$12 billion is a lot of money. The short answer to your
question is, we are going to do everything we can to get the
moneys out. But just in Federal transit alone there has been
$2.255 billion in additional funding. That is a lot to absorb.
We are trying to see what these programs require, whether there
are any additional prerequisites for releasing them. And these
projects are complicated.
So to your first point, about how many are in the project
development, how many are in the engineering, and how many can
advance to construction, let me answer that first. In the past
fiscal year, three projects have entered the project
development phase. There is San Bernardino in West Valley, St.
Paul, Minnesota, Kansas City, Missouri, Indianapolis, Indiana.
In the past fiscal year, there have been no projects that
have been approved in the engineering phase because FTA is
conducting the risk assessments before approving them. There
are two projects that are awaiting advancement for this reason,
the Los Angeles Westside section 3 and the San Francisco BART
Core Capacity.
And you are right, a number of Small Starts have received
construction grant awards this past year, and they include Fort
Lauderdale, Jacksonville, Grand Rapids, SMART California,
Everett, Washington, and Kansas City.
These are complicated, multiyear projects. So sometimes it
is not us who are delaying it, but because the particular
project is not ready to go on to the next phase. But please be
assured that we understand what you are saying to us, and it is
just our wish as well to be able to move this money out as
quickly as these projects are ready and eligible.
Mr. Price. Well, thank you. I will take that as an
affirmative answer to my request for a pledge to move projects
that meet the statutory criteria through the project pipeline.
Do you have any exact estimate as to when you might begin
signing full-fund grant agreements for New Starts and Core
Capacity projects, agreements as opposed to the Small Starts?
Secretary Chao. No, I really don't because Small Starts--
they are called Small Starts for a reason. They are a little
bit less complicated, and they are smaller in dollar and in
scope. So these larger ones, we don't have a policy against
them, but it has to be done on a case-by-case basis.
Some of them are not ready. Others have to go through--
there is a process. It is not as if I am the one that signs off
on all of this. There is a queue. There is a process. And we
will evaluate each project on a case-by-case basis.
Mr. Price. Well, of course, it is true that you have more
money than anticipated. On the other hand, we are talking about
the current fiscal year with an amount of money that is more
along the lines of past appropriations and with expectations
that we would see some movement in advance of the new
appropriation being fully determined.
Secretary Chao. Congress has given us aggressive deadlines.
And as I mentioned, we will do our very, very best, and I hope
that we will definitely meet them, because I don't want to have
another conversation with you again.
Mr. Price. Thank you.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you. I thank the ranking member.
Mr. Valadao, the gentleman from California.
Mr. Valadao. Thank you, Chairman.
Thank you, Secretary, for your attendance today.
I applaud the recent steps the Department of Transportation
is taking by granting an additional 90-day extension of the
agriculture exemption from the electronic logging device
mandate.
Livestock haulers in my district and across the country
have a challenging task of balancing both the safety of
motorists and the health and welfare of animals that are being
transported. That is why I diligently worked to include
language in the fiscal year 2018 THUD appropriation delaying
implementation of the electronic logging device mandate for
freights carrying agricultural commodities such as livestock.
It is clear the electronic logging device rule and the
existing hour service rules do not adequately accommodate this
subset of the trucking industry.
Stakeholders have expressed the need for flexibility when
it comes to Hours of Service for electronic logging devices to
properly address concerns and provide sufficient training in
education for uniform compliance and enforcement. While
motorist safety remains a top priority, so does the welfare of
our animals.
What long-term solutions do you recommend to ensure both
motorist safety, as well as animal welfare? Would the Federal
Motor Carrier Safety Administration be willing to work with the
livestock and insect industry to provide further exemptions or
flexibility under the Hours of Service Rule?
Secretary Chao. Last year you raised this issue, and I hope
that we have at least been responsive, not only to you but to
all the Members in the rural States and districts that face
this issue.
The Department, FMCSA, has engaged in multiple discussions
and briefings, and I don't want to call them educational
sessions because it sounds kind of arrogant, but sessions in
which the Department explains, or FMCSA, the agency, explains
what these rules are.
We just got confirmed Ray Martinez, who is the
administrator for the FMCSA, and I have given him the request
and the directive that among his first priorities is to meet
the stakeholders who are concerned about this issue, meet with
the Members who are concerned about this issue. And I believe
that they are doing so.
Having said that, this is a very difficult issue, because,
as you mentioned, it is not an issue that is just the waiver or
the exemption. It really hits upon an underlying issue, which
is the Hours of Service. That is a law that was passed by
Congress on a bipartisan basis.
So we have to do what we have to do under that statute to
the best of our ability. We have given two waivers. The first
90-day waiver, the second 90-day waiver, which just began on
March 18, 2018.
But the exemption that you are talking about is very
strictly prescribed. And, again, it touches upon, as you
mentioned, the Hours of Service. We will do as much as we can
within the intent of that statute, but we are limited in what
we can do.
Mr. Valadao. Well, and they have reached out and we have
spoken with--we are working on getting more opportunity out
into the district so that some of my locals have the
opportunity to hear from FMCSA about how this goes into play.
But we have to continue the dialogue to make sure this works
out the way we need it to.
Because just today I heard a story from a trucking outfit.
One driver was pulled over. And the owner of the truck actually
called and asked the highway patrolman to release the truck and
they can keep the driver. But there were animals stuck on the
side of the road in a truck for 8 hours.
If you can imagine, that is not a situation we want to
have. And if that plays a role, or if we don't have the ability
to move these animals, there is a welfare issue that needs to
be addressed and paid close attention to.
Secretary Chao. Yes.
Mr. Valadao. Since I have a few more seconds, a city in my
district applied for a Buy America waiver back in January of
2017 to purchase a new lower-polluting refuse truck with
Congestion Mitigation and Air Quality funding. I understand
that this waiver was approved yesterday, but only because it
was submitted prior to the Buy American, Hire American
executive order.
The Federal Highway Administration has announced it is
revaluating the Buy America waivers for vehicles and equipment
because of the executive order. Do you have a timeline of when
this reevaluation will be completed? And how long will it take
to determine vehicles and equipment waiver applications going
forward?
Secretary Chao. Each application is different. And it takes
a long time because, again, these are complicated cases. We
want to be fair.
I will say that this administration has been much, much
tighter in terms of granting waivers for Buy America
provisions. As the President has said, his theme is Buy
American, Hire American. So these waivers are tougher to come.
And we have to report back to the White House on every single
waiver.
Mr. Valadao. So you don't have a timeline?
Secretary Chao. We try our best, but it can take a long
time.
Mr. Valadao. Any idea what ``long time'' means?
Secretary Chao. It depends on the case. I will be more than
glad to have my people talk to your staff. But they are
complicated.
buy america waivers
The Department is taking a holistic look at its Buy America
processes across its Operating Administrations in an effort to find
efficiencies and ensure consistent application of Buy America
requirements across the Department. We hope to have some additional
information in a few months.
As for specific waivers, the Department carefully reviews them on a
case-by-case basis as expeditiously as possible.
Mr. Valadao. That would be helpful.
Thank you. I yield back.
Mr. Diaz-Balart. I thank the gentleman.
Mrs. Lowey, the ranking member of the full committee.
Mrs. Lowey. Thank you, Mr. Chairman.
Madam Secretary, it took 445 days for President Trump to
nominate a leader for the National Highway Traffic Safety
Administration, leaving NHTSA without a leader at its helm.
This is so disturbing, particularly in light of the trends, the
increasing trend of deaths on American roads.
NHTSA may be behind on important work to prevent drunk and
impaired driving, including the Driver Alcohol Detection System
for Safety Program. I wrote a letter to President Trump to
remind him that NHTSA needs an administrator, and I am glad he
finally listened.
Could you explain to me what caused the delay to nominate
Deputy Administrator Heidi King?
Secretary Chao. You will like her very much. She is a very
nice person, very capable.
I think this whole confirmation process is very
troublesome. There are delays in the nomination part of it, and
then there are also extensive delays in the confirmation part
as well.
The FBI clearances are taking so much longer. And the OGE,
Office of Government Ethics, is taking so much longer, as well.
We who are in the departments would love to see these
nominations spring forward sooner, announce sooner. But, again,
that clearance process is really, really long now. And then
once they come out, it has been tough to get them confirmed in
a reasonable period of time as well.
Mrs. Lowey. Well, I hope you watch it carefully.
Secretary Chao. Absolutely.
Mrs. Lowey. Because this is so important to keep people
safe on our roads.
Another issue that I have been following is sleep apnea and
rail safety. I was really disappointed by the agency's decision
to withdraw the Federal Motor Carrier Safety Administration and
Federal Railroad Administration's joint and advance notice of
proposed rulemaking on obstructive sleep apnea.
As you know, it has been cited as a contributing factor in
multiple crashes, including the Spuyten Duyvil crash in 2013,
the Hoboken crash in 2017. And I have many constituents who
were on both trains. Scores more were impacted as loved ones
were injured or lost their lives.
So it is really shocking to me that the Department of
Transportation would ignore a pressing problem that was already
on its way to being solved.
Can you tell me why did the Department turn its back on
addressing obstructive sleep apnea and other health disorders
that may interfere with an operator's ability to carry out
their safety responsibilities? Was there data that the
Department relied on that led to the decision to withdraw the
proposed rulemaking?
And if you can tell me what concrete actions will the
Department undertake to make sure that obstructive sleep apnea
does not contribute to any more deaths on American roads and
railways?
Secretary Chao. We are not at all unconcerned about this
issue. In fact, we are very concerned about the whole array of
sleep-impaired influences on overall safety in driving.
So we would like to take a more holistic approach, and we
are taking a look at what are the, again, the array of
impairments to driving at night, to sleep impairment, that can
contribute to this. So that study about sleep apnea is the
wrapping to a much larger holistic approach.
Mrs. Lowey. Can you give me an idea, and I hope you stay in
touch, the progress of this study and how long will it take?
And are you satisfied that it is moving as effectively as it
should?
Secretary Chao. I don't have a specific timeline, and I
will get back to you.
[The information follows:]
status of the sleep apnea rule
The Federal Motor Carrier Safety Administration (FMCSA) and the
Federal Railroad Administration (FRA) initially posted an Advance
Notice of Proposed Rulemaking (ANPRM) on March 10, 2016, concerning the
prevalence of moderate-to-severe obstructive sleep apnea (OSA) among
individuals occupying safety sensitive positions in highway and rail
transportation. The ANPRM was withdrawn on August 4, 2017 following the
determination that existing safety programs and rulemakings can address
fatigue risk management.
Safety is the Department's top priority and DOT still believes that
regulatory action is best focused on addressing fatigue risks
holistically, rather than focusing on just one specific source of
potential fatigue, OSA.
Currently, the FMCSA is working to update the 2015 "Bulletin to
Medical Examiners and Training Organizations Regarding Sleep Apnea" to
include the Medical Review Board's August 2016 recommendations. This
bulletin is intended to ensure that medical examiners fully understand
their role in screening drivers for OSA, identifying drivers at the
greatest risk of having OSA, and referring only those individuals to a
sleep specialist for testing. The Agency continues to encourage drivers
and their employers to use the North American Fatigue Management
Program (NAFMP) (http://www.nafmp.org/index.php?lang=en). The NAFMP is
a voluntary, fully interactive web-based educational and training
program developed to provide both truck and bus drivers and carriers
and others in the supply chain with an awareness of the factors
contributing to fatigue.
Additionally, the FRA plans to fully implement the Fatigue
Management Plans, statutorily mandated by The Rail Safety Improvement
Act of 2008 (RSIA). This entails the System Safety Program and Risk
Reduction Plan final rules which address all aspects of fatigue in rail
operations.
Mrs. Lowey. Thank you very much.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you.
Mr. Dent, you are recognized, sir.
Mr. Dent. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for joining us this afternoon.
Secretary Chao, I would like to start by addressing a
proposed program within the administration's infrastructure
plan, specifically the plan would establish the Infrastructure
Incentives Program, which would provide grants for a portion of
the cost of certain infrastructure projects.
In evaluating projects for selection, the agency would
examine how an applicant would be able to secure and commit new
non-Federal revenue for infrastructure projects. In
Pennsylvania, the State already acted to modernize its
infrastructure revenue stream in 2013 by increasing the gas
tax. Actually, they eliminated the gas tax and uncapped the oil
franchise tax, but it was an increase at the per gallon, was
the effect of it all.
Given the White House's blueprint, could you tell me how
the plan would take into consideration the important choice
that Pennsylvania has already made to secure infrastructure
revenue? So we have already done our bit. And then more
generally, how would the blueprint take into consideration
revenue that has been raised in the last few recent years?
Secretary Chao. Great.
The infrastructure, I think the issue you are talking about
is lookback. Is that----
Mr. Dent. Yeah.
Secretary Chao. Yeah, Okay.
The Infrastructure Incentives Program, it is different, but
it is a new way of trying to see how we can fund and finance
our public infrastructure.
Infrastructure is very important. We all acknowledge that.
I think where we differ is how do we finance it, how do we fund
it.
The Infrastructure Incentive Program, as provided in the
President's proposal, will provide for targeted Federal
investments, it would encourage innovation, streamline project
delivery, and will also transform the way that infrastructure
is designed, built, and maintained.
The Department will award grants using the six evaluation
criteria laid out in the infrastructure proposals. And these
criteria include the dollar value of the overall project; the
applicant's ability to secure and commit new sustainable
investments using non-Federal revenue; three, the applicant's
ability to secure new operational services, such as maintenance
or rehabilitation using non-Federal sources; and the
applicant's procurement and project delivery policies that
encourage efficiency in project delivery and operations.
I have got just two more. And then number five is the
applicant's incorporation of new and evolving technologies. And
number six, the project's ability to spur economic and social
returns on investment.
Pennsylvania has been very prescient. It has been very
farsighted. So it has gone ahead and done a lot of things and
funded and financed a number of its overall infrastructure
proposals.
Mr. Dent. The point I want to make, on your second point,
you said new revenue, I think.
Secretary Chao. New sustainable revenue investments, yeah.
Mr. Dent. New sustainable. So a State like mine----
Secretary Chao. You did that.
Mr. Dent. We did it.
Secretary Chao. Yeah.
Mr. Dent. Now, the question is, how new is new?
Secretary Chao. So this is an issue which was brought to
our attention. So I think we were trying to balance how do we
try to encourage States to incentivize and commit new
sustainable investments but not penalize those who have already
had the courage, the foresight to do it.
So I think the compromise was to come back with a 3-year
lookback.
Mr. Dent. Three-year lookback. That might not be enough,
because we really were ahead of the game on this and we made a
massive investment.
Secretary Chao. Our intent is not to penalize.
Mr. Dent. Yeah. Okay. Well, we will have to follow up. I am
sure Chairman Schuster will be all over you on this one, too.
But just a final question, an issue regarding safety, and
this time as it relates to autonomous technologies. As the
development of these autonomous vehicles moves forward, it is
inevitable that we will at some point see major cyber attacks
against these systems. Not only is it important to protect
against these attacks to prevent their direct negative impacts,
but also I believe that addressing these concerns is crucial to
securing the public's trust in these new technologies.
So could you tell me how the Department is engaging with
the developers of autonomous technology to address issues
related to cybersecurity? And can you also tell me about any
potentially difficulties that the developers or your Department
have identified as particularly challenging or worrisome?
Secretary Chao. First, let me talk about, we all know--
well, maybe we don't--the benefits of self-driving cars are
many. Ninety-four percent of accidents occur because of human
error. If somehow we can reduce that component, we actually can
make driving safer.
Also, self-driving cars, autonomous vehicles is a
tremendous avenue for newfound freedom for the disabled and for
the elderly. So those are the good things. But there are also
legitimate public concerns about safety, security, as you
mentioned, and also privacy.
So we are committed to addressing all those legitimate
public concerns. And as regulators, we want to be responsible,
but not hamper the innovation and the creativity that is so
much a hallmark of America.
So the cybersecurity issue is something that we have been
in discussion with the law enforcement agencies as well as
Department of Homeland Security and also the Defense
Department.
Without, obviously, getting in too much of the details, we
can imagine that an autonomous driving system, when hacked, can
become a weaponized tool. So we are very much aware of that.
We are putting forward guidance. We are coming out with A
Vision for Safety 3.0. That should come out in August of this
year and it will also address some of these cybersecurity
issues.
Mr. Dent. Thank you, Madam Secretary.
Mr. Diaz-Balart. The gentleman from the great State of
Illinois, Mr. Quigley.
Mr. Quigley. Thank you, Mr. Chairman.
Mr. Chairman, Madam Secretary, I want to associate myself
with the remarks of the full committee chairman when we began
this hearing, because this is a special committee,
Appropriations, I think particularly when we are talking about
infrastructure. Because I should care just as much about
Gateway as he or anyone else should care about rebuilding the
Blue Line in Chicago, because it speaks to the whole country
and our economic opportunities that we care about each other
and recognize in a sense that we are stronger together than
divided.
So it is pretty clear that the chairman was referencing his
concerns that this project wasn't put in the omnibus for
political reasons. I think the reasons that were used could
create problems nationwide and everybody on this committee
should care about that.
You made recent statements at the House Transportation and
Infrastructure Committee that implied that RRIF and TIFIA loans
are considered part of the Federal share of the project. In the
past, loans, given that they are repaid with local funds, were
considered part of the local share.
In fact, your 2017 notice of funding opportunity for INFRA
grant programs stated, quote, ``Funds from Federal credit
programs, including TIFIA and RRIF, will be considered non-
Federal funding.''
Yet some months later, and I have the quote here, in the
context of another project, the one the chairman talked about,
these loans are being considered as Federal funding.
This will be a substantial departure from existing and past
policy, and I am concerned that the administration's ambiguity
on this subject will have a chilling effect on infrastructure
loan programs nationwide, the very programs that this
administration is relying on to leverage State and local funds
for infrastructure.
So I would certainly appreciate some clarity on this issue.
Secretary Chao. I totally agree with you that the reasons
for the supposed cluster of nine projects between New York and
New Jersey as being precedent-setting is one that concerns me
as well. Because, in the CIG program, there is a process.
People have to get in line, they have to fulfill the
requirements, and they have to take their turns. And no
political pressure is going to take one of those projects, put
it at the head of the line, ahead of all other projects, which
is what is happening in this particular case.
In terms of the INFRA, there are different kinds of
programs. Different programs will have different regulatory and
statutory requirements. But I do----
Mr. Quigley. But the specific findings----
Secretary Chao. But I do not believe that TIFIA and RRIF
were ever considered, not under this administration, as part of
the local share.
I often use this example: You are buying a house. You have
to put 20 percent down. You are going to get an 80 percent
mortgage. And then you are going to go back to the bank, ask
for another loan for 20 percent, and use that 20 percent as a
downpayment for the equity. It doesn't work like that. I mean,
Sarbanes-Oxley or Dodd-Frank wouldn't let that happen.
Mr. Quigley. Again, your 2017 notice of funding
opportunities: ``Funds from Federal credit programs, including
TIFIA and RRIF, will be considered non-Federal funding.''
Secretary Chao. That was for the INFRA grants. That is
different. They are different programs, and there are different
statutory requirements.
Mr. Quigley. There was never the distinguishing before. You
are----
Secretary Chao. Oh, I don't think so. I think they were
all--there is a whole array----
Mr. Quigley. You are finding an excuse to kill the project.
Secretary Chao. No, no, no, not at all.
Mr. Quigley. You are finding an excuse not to----
Secretary Chao. I used to live in New York. I mean, my
family is in New York. So I know the transportation system up
there very well.
Mr. Quigley. So what is the difference between----
Secretary Chao. I think there is----
Mr. Quigley [continuing]. The percentage required for TIFIA
and RRIF than the one you are talking about, the 20 percent----
Secretary Chao. Because they are different programs with
different statutory requirements.
Mr. Quigley. But there is still the Federal share.
Secretary Chao. No, I am----
Mr. Quigley. If they are Federal loans, they have to be
paid for.
Secretary Chao. No. Different programs will have different
requirements. That is why it is kind of hard to explain, also.
Mr. Quigley. Give me a shot at figuring it out. If it
requires a local payback of the loan, no matter what the
program is, it is still a local share, right?
Secretary Chao. No. It depends on the pro--it depends on
the----
Mr. Quigley. Why does it depend on the program?
Secretary Chao. Because that is what--these programs are
different, and so they have different requirements. And it is
very--it is not consistent.
Mr. Quigley. The only thing that should be consistent----
Secretary Chao. But it is not set by us.
Mr. Quigley. If the local government has to pay back the
loans, that is a local share. Are we on the same page on that?
Secretary Chao. I think we are going to have to
respectfully disagree, because--and that is why--I am not
interested in arguing. I am interested in trying to find common
ground.
Mr. Quigley. I am trying to find out what the answer is.
Secretary Chao. But if you are asked to put 20 percent in
equity, you can't go off and get a second loan and use that
loan as part of your equity.
Mr. Quigley. But you acknowledge that we do that with at
least one program.
Secretary Chao. It depends on the program.
Mr. Quigley. But we do it with at least one program, what
you just described. So we are doing it with one program but not
the other programs. Why?
Secretary Chao. Yes. That is correct.
Mr. Quigley. But what is the difference?
Secretary Chao. Because different programs have different
statutory requirements.
Mr. Quigley. There is no--nothing in the statute deals
with----
Secretary Chao. Okay. I don't want to argue, but I will
take a look at----
Mr. Quigley. The whole point of arguing is to try to find
out what the answer is, and I still don't have an answer.
Mr. Diaz-Balart. Okay. Let's try to allow----
Mr. Quigley. I am just trying to protect the chairman's
project.
Mr. Diaz-Balart. No, I get that completely, and----
Secretary Chao. No, we understand. And I certainly don't
want to get involved in an argument, so let me--I will take
another look at that. But----
[The information follows:]
consideration of tifia and rrif loans in regards to infra
Projects which are awarded INFRA funding may also utilize Federal
credit assistance from the TIFIA or RRIF program-provided that the
overall level of Federal assistance, including grants and loans, does
not exceed 80 percent of the total project costs. 23 U.S.C. 117(j)(2)
establishes this limitation.
Mr. Quigley. It is so much more fun to sing ``Kumbaya'' and
not get anything done. I understand.
Secretary Chao. No, no. We want to get things done too. But
I think, you know, there is going to be some disagreement on
this, so let's try to work through it.
Mr. Diaz-Balart. And I would ask members--and, again, I
don't want to interrupt when there is a conversation going on,
but I am going to ask members to try to stick to the time
limit, if possible. But I do appreciate--I think it is
important to have these conversations.
The vice chairman, a heartbeat away. But don't get any
ideas, Mr. Joyce.
Mr. Joyce. Why, thank you very much, Mr. Chairman. And I
have no ideas.
But I do have a few questions for you, Secretary Chao. And
thank you very much for being here today.
A few weeks ago, your department held a public meeting to
get feedback on the draft Automated Vehicles 3.0 framework and
identify activities that can accelerate the safe rollout of
those vehicles.
Can you discuss the feedback from this event and
specifically the role proving grounds will play in this process
in the future?
Secretary Chao. First of all, I want to thank you for your
interest and focus on that. Preparing for the future, in terms
of emerging technologies, is very much a part of the
responsibility of this department.
In the last administration, it was decided that 10 cities
or 10 areas would be selected so that they can be a place where
autonomous vehicles can go. And, supposedly, it was the seal of
Good Housekeeping.
Mr. Joyce. Uh-huh.
Secretary Chao. It really was nothing more than, we
believe, some marketing ploy that really was quite unfair to
other cities and areas that were not selected.
So we were concerned about how the criteria for selection
occurred; why were only certain cities selected and not others.
And, frankly, we saw no criteria that was--I am being
questioned now, but, you know, we saw no criteria for
understanding why these 10 proving grounds were selected. One
suspicion was that it was to be selected and then funding was
to continue. We thought that was too cynical a thought, but,
indeed, we now have funding for these areas.
So we don't believe in command and control. We do not
believe in selecting one place over another. We believe in full
competition. And we hope that cities and regions that are
interested in this area will welcome new technology and do what
they can to promote greater technological advancement,
transformational technology.
So we did not view that these 10 proving grounds were that
important, thinking that this opportunity would be available to
every region, every city that wanted to partake. But in light--
but go ahead.
Mr. Joyce. And I like your thinking on that, because in
Ohio we happen to have the Transportation Research Center
attached to----
Secretary Chao. Just missed it.
Mr. Joyce [continuing]. That is attached to the Ohio State
University. And we were hoping that you would consider or could
explain to me if you have any plans to expand this pilot
designation program, given the industry demand.
Secretary Chao. We actually had not. But given that there
is now funding provided in the omnibus and--you know, how do we
address the disparity between the 10 that have been selected in
2016 and many, many other worthy cities and regions,
localities, counties that can also participate? We haven't
quite solved that issue, and if you have some thoughts, we
would appreciate your wisdom.
Mr. Joyce. Well, certainly, with competition in the
marketplace, the Buckeyes have always proved to be dominant on
the football field, much to the chagrin of my chairman's
University of Miami, but, we certainly would enjoy an
opportunity to be able to compete, going forward.
Shifting gears, if you would, I would like to discuss the
Maritime Security Program. I understand the Department has had
a tough time enforcing cargo preference among other agencies
and contractors. To that end, Congress passed legislation in
2008 as part of the National Defense Authorization Act which
deems your department the final authority for cargo preference
enforcement.
What can we do as appropriators to help ensure that cargo
preference laws are followed?
Secretary Chao. I am a tremendous advocate of the U.S.
Merchant Marine Fleet, the Jones Act including, and also the
cargo preference. So we have been strong supporters of that in
the interagency process. There are some others who are not
supportive, but, currently, I don't see any developments along
that front.
And in the MSP program, obviously, the omnibus has
increased it to the full funding that was requested by the
operators.
Mr. Joyce. And is there anything we as appropriators can do
to help you to that end?
Secretary Chao. I think that goal has been met, the funding
has been reached, and the cargo preference enforcement, I
think, has been--by this department, has been enforced.
Mr. Joyce. And I also----
Secretary Chao. We would never have refused help from
appropriators.
Mr. Joyce. And my concern is the maritime industry and our
sealift capacity have reached a diminished state. If we lose
more ships and mariners, we will lose our ability to support
our Armed Forces, which you had touched on.
What additional tools does the Department need in order to
help us move forward in strengthening our U.S. flag fleet?
Secretary Chao. It is a very, very tough issue. And I think
the best way to discuss that is if we can have a conversation
with you and your staff.
I am actually considered an expert in transportation,
especially maritime transportation, and so I know U.S. flag
shipping very, very well. It has been a long-term issue for
many years. At the very least, I think we can, right now, hold
the line, protect the Jones Act, protect cargo preference.
And, again, there are other agencies within the executive
branch that do not agree, but--and then, finally, the MSP
program, as I mentioned. Yeah.
[The information follows:]
maritime sealift capacity
Congress' support for the Maritime Security Program (MSP), the
Jones Act, and Cargo Preference ensures that a U.S. flag commercial
fleet and a trained American mariner force are ready and ``on call'' to
meet DOD requirements, all while preserving a minimal but critical U.S.
role in global sea trade. However, the Department must address the
long-term issue of not having enough U.S. flag commercial ships and
trained U.S. mariners to fully crew the Government-owned sealift fleet
in a major extended conflict. The GAO is currently completing an audit
of the MSP program, and we look forward to receiving the final report
and reviewing any recommendations they may have to address this need.
According to MARAD, the Nation requires at least 225 large,
oceangoing U.S.-flag ships to employ enough mariners to meet sealift
requirements during a major conflict. As of February 1, 2018, there are
181 such vessels in the Jones Act and international fleets, leaving a
shortfall of 44 ships. DOT and MARAD are exploring ways to increase the
U.S. flag international fleet. The Department looks forward to
discussing both short and long-term solutions to this problem with
Congress and industry to develop a shared vision for the marine
transportation system.
Mr. Joyce. Thank you.
And I am running out of time, but I just wanted to thank
you for the leadership that you have shown. I would like to
continue to work with your department, especially when it comes
to the matters involving autonomous vehicles.
Thank you, Mr. Chairman.
Secretary Chao. Thank you.
Mr. Diaz-Balart. Thank you, sir.
The gentlelady from Massachusetts.
Ms. Clark. Thank you, Mr. Chairman.
And thank you, Secretary Chao, for being with us.
And I want to continue on the maritime topic. And I do
thank you for your commitment to the State maritime academies.
And Congress has appropriated $300 million to replace the
TS Empire State. Thank for your support in this process. And I
wondered if you had a sense when construction might begin.
Secretary Chao. There is actually a second ship, the
Massachusetts State----
Ms. Clark. Well, I was coming to that. Let's get right to
that. So the $300 million, I know, under your proposal, that
was going to be a shared amount for refurbishing of both of
those ships, at 56 and 52 years old. I know you understand very
well the importance of having new ships.
But now that we have separated them, the TS Kennedy is also
in dire need of replacement. So would you support those
replacement costs in the fiscal year 2019 budget?
Secretary Chao. Actually, we have an amendment to the
budget in which we have requested another $300 million.
Ms. Clark. Okay.
Secretary Chao. So that actually could be the second ship.
Ms. Clark. Right.
Secretary Chao. So it was originally thought with the $300
million, the first tranche, that there can be two cargo ships,
and those can be refurbished, as you mentioned.
Ms. Clark. Right.
Secretary Chao. But if it turns out that we have
discretionary funds available, that $300 million would be
available for the second ship, that would be a more ideal
proposal.
Ms. Clark. Great.
Secretary Chao. So, as for construction, there is a lot to
be done before construction.
Ms. Clark. Okay.
Secretary Chao. And we don't have, you know----
Ms. Clark. But you see both of those ships, in the end.
Secretary Chao. I think the second $300 million is in the
amendment to the President's budget for 2019.
Ms. Clark. Thank you.
On the topic of marines, the United States merchant marine
academies. I know that you must share our concern about the
reports of sexual harassment, sexual assault at the academy.
The events that led to the cancellation of the Sea Year
program, training program, in June of 2016 were deeply
troubling, and the subsequent suspension of the USMMA soccer
team and soccer season, and continued reports of sexual
misconduct on campus.
All of this highlighted in the March report by the
inspector general's office that indicates the academy has
failed to complete many of the recommendations that they had
before them. About 45 percent of the 138 recommendations were
completed. And a lot of this had to do because there were
vacancies in key positions, including a vacancy in the Civil
Rights Director position.
One further example I found particularly disturbing is that
the academy's sexual assault incident reporting form did not
even include a field to identify a perpetrator, if known. This
was not corrected until November of 2017, just a few months
ago.
So my question to you is, do you share these concerns? And
what specific steps since becoming Secretary have you taken to
make sure that the academy fulfills its duty to keep all of its
students safe, all of the merchant marines, the young people
from my district and across the country who go there? And what
are you specifically going to do to make sure that these
recommendations from the IG are met?
Secretary Chao. Of course I am concerned about it. And, in
fact, when I came on board on February 1, 2017, the issues at
the U.S. Merchant Marine Academy was among the very, very first
topics that came to my attention, that I specifically asked
about and began to address.
This issue was complicated. You did mention this November.
We have been working on this since last February, as I
mentioned. There were complicating issues because, without
going too much into the personnel issues, there were counter-
charges and challenges. There were----
Ms. Clark. To the form?
Secretary Chao. No, not to the form; to the whole issue.
Ms. Clark. Okay.
Secretary Chao. So there were criminal, there were civil
charges. There were also the IG and the Justice Department. So
there were many agencies that were involved.
But just because the form was not changed did not mean that
we were not on it. We have been paying very much attention. The
Administrator of the Maritime Administration was not confirmed
until the summertime, or even September 23, I think. So Admiral
Buzby is now confirmed and on the job. He spends an enormous
amount of time up at Kings Point.
There was another problem, obviously, also, of academic
excellence, with the accreditation issues. So there were many--
and, also, relationships with the alumni. There were a whole
host of issues up there. And with the new Administrator coming
on board, this has taken up an enormous amount of his time. I
have been up there a number of times.
So, of course, we do not--we will not tolerate any such
behavior. And we are in the process of changing people, hiring
a new civil rights officer.
I don't say this with any comfort, but I do think we are
seeing an increase in reporting. And we see that as positive,
meaning that people feel safer in coming forward.
So I understand your concern about this, because we talked
about it the last time that I was here. I think the situation
is improving. We will be more than glad to give you a report, a
full report. But we also know that this requires constant
vigilance.
And this is a wonderful industry for young people to have
their careers in. It has a very important national security
aspect. And we want to make sure that young people, young men
and women, who are going through this program are not only
learning a trade, a profession, but that they are safe as well.
So I am all over this.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Clark. All right. I am way over my time, but I
appreciate your offer to give us a more comprehensive report,
and we will be following up with you. Thank you.
Mr. Diaz-Balart. And, again, it was important, too, because
I think this is about as important of an issue as we will ever
deal with. So thank you for your leadership on that.
And, Madam Secretary, thank you for yours also.
And, as far as the NSMV, the ship, we will continue to
talk. Because, as you saw, this subcommittee, I think, did a
pretty good job. And, Madam Secretary, I know that is something
that you have been advocating for. And as we develop the 2019
bill, we will have to look at what our next step is--what our
next step is.
Mr. Young, great State of Iowa.
Mr. Young. Thank you, Mr. Chairman.
Secretary Chao, welcome. Thank you for being with us here
today.
I want to tag-team on my colleague's comments, Mr. Valadao,
regarding electronic logging devices, the ELD. As you know,
there is a waiver out there to delay that for agriculture,
specifically livestock. But it is really an underlying issue
about hours of service. It is a difficult issue. You have
recognized that. We have all recognized that as well.
It seems, though, maybe it can be simplified if we cut it
down a little bit by category, and maybe we can find a
permanent solution for at least livestock. Because I imagine
that we are just going to continually do 90-day, 90-day kind of
waivers----
Secretary Chao. I don't know whether you can do 90 days
forever either.
Mr. Young. Yeah.
Secretary Chao. Not that I don't want to.
Mr. Young. Sure. So do you think we should just be both
working together to advocate a permanent solution at least for
livestock so there can be some certainty there?
Secretary Chao. Well, I am certainly very open and willing
to work on this issue. And I think it would also help if
Members would work with other stakeholder groups that feel very
differently as well. Because, obviously, this is a very
difficult issue. There are opinions on both sides--multiple
sides. The hours of service is an issue, and I have actually
encouraged legislative action on clarifying that.
Mr. Young. Uh-huh. I have had a lot of talks back in the
district on this, and from those----
Secretary Chao. It is heartbreaking. The stories are
heartbreaking.
Mr. Young. Yeah.
Secretary Chao. Yeah.
Mr. Young. And I have invited the head of the FMCSA to come
out and maybe----
Secretary Chao. Good.
Mr. Young [continuing]. Just hear these stories. I know
that the head already hears them, but just get on the ground. I
think it is very, very important.
The Highway Trust Fund hasn't been self-sustaining in a
while, and we seem to be finding funds from the general
treasury to borrow and to put over in there to keep it going.
There is a lot of great new technologies out there, new
vehicles, new fuels out there. There is a big concern that I
have always had out there, that everyone out there on the roads
is not paying to play, and that some are out there using our
roads and not really paying into the Highway Trust Fund.
And how fair is that? And how do we approach this disparity
in a fair way? Has the Department been looking at some
alternatives? I mean, I have been, and there are a lot of
different ones out there. But it seems like we have to address
this at some point in a real way, instead of doing what we have
always been doing.
Secretary Chao. Well, the wear and tear on roads is real.
And the heavier a vehicle is, the more damage that it does. And
vehicles are getting heavier and heavier. And the twin--there
are now newer technology that has the twin containers--I am
not----
Mr. Young. Uh-huh.
Secretary Chao. So that creates more wear and tear on an
already stressed and aging infrastructure.
So, as to how best to address that, the truckers have
agreed that they actually want a gas tax. And the question is,
what are other ways in which to increase revenue? And,
unfortunately, I don't have a good answer for you on that, in
that we don't really have an agreement----
Mr. Young. Yeah.
Secretary Chao [continuing]. Within the administration on
how to proceed.
Mr. Young. Would you agree--and this is not a ``gotcha''
question, but it seems to me that everybody who is on the roads
should be paying something. I mean, the new technologies, the
electric vehicles and those kinds of things, are awesome, but
you have to pay to play, it seems.
Secretary Chao. We actually have looked at vehicles-
traveled mileage user fees of some sort.
Mr. Young. Right.
Secretary Chao. But we have run into--there has been
opposition registered by those who fear having an electronic
chip----
Mr. Young. Yeah. The privacy issue. I get it. Yeah.
Secretary Chao [continuing]. Embedded in their vehicle that
would, again, infringe upon the privacy issues.
So I think the next--we have the infrastructure proposal
coming up, we have reauthorization coming up, so I think we are
going to talk more and more about these issues, because we have
to come to some kind of a consensus on the way forward.
Mr. Young. Well, thank you for your open-mindedness on this
and being part of the solution on this to try to think of new
ways to make sure that people are paying their fair share in
this, and the pay-to-play aspect of this, and that we get away
from, kind of, the funding mechanisms that we have been doing
before, where we are not--the Highway Trust Fund hasn't been
self-sustaining and we keep doing what we are doing. So thank
you for being here and being part of the solution.
Secretary Chao. Thank you.
Mr. Diaz-Balart. Thank you.
The gentleman from sunny southern California, Mr. Aguilar.
Mr. Aguilar. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for being here.
The TIGER program, as the chairman and the ranking member
both mentioned, is a popular program here with this committee
and in Congress and provides important infrastructure projects
that I can personally attest to.
One in my community, the Redlands Passenger Rail Project,
was an $8.7 million TIGER grant program that I advocated for
first as a local city council member and local mayor. That is a
project that will create thousands of jobs and contribute to
our economy by providing low-income residents with alternative
and affordable transit routes.
I have a quote that you gave that said ``TIGER grants are
direct Federal investments in projects that will improve our
surface transportation at the national, regional, or local
level.'' I completely agree. However, for the second fiscal
year in a row, the administration has proposed to zero-out the
program.
Why continue to zero-out the program even though you
understand the importance that it provides to our
infrastructure?
Secretary Chao. Well, we were hoping that the TIGER grants,
the INFRA grants, would somehow be wrapped into the
infrastructure proposal.
There are so many different grant programs now scattered
throughout the whole department. The TIGER and INFRA grant, for
example, come out of the policy shop. When I was at the
Transportation Department over, you know, 20 years ago--I won't
tell you exactly how many years--policy was a strict policy
shop. Somehow, because of the FAST Act, the policy shop is now
an operational arm of dispensing grants, and yet that is not
the structure.
So we are struggling a bit, now, especially, with so much
money coming into the Department. We have to get that money out
really quickly, because there are deadlines coming. And we are
talking about an avenue, a channel, a funnel that has
traditionally not had this much money go through them.
So we want to invest in infrastructure. We were just hoping
that with the TIGER and INFRA grant that it would be part of
the infrastructure proposal.
Mr. Aguilar. So you don't disagree with the program; you
disagree with how it is administered within the agency?
Secretary Chao. Well, the other thing, also, is we weren't
supposed to have earmarks. So, coming back to the government
after all these years was kind of confusing, also, to see now
these different projects that are specifically, kind of,
designated. So that is another, kind of, confusion.
But we want to invest in infrastructure. We want to do so
in a fiscally responsible and efficient way that will be good
for the community and for the country.
Mr. Aguilar. Back to the capital investment grants, I know
many of my colleagues have touched on this before, but specific
to the review process, one of the criteria, one of the
evaluation criteria, among many, is population density. And
since population density is a component of the process,
applicants, obviously, from more urban areas are more
competitive when it comes to the grant side.
The current framework doesn't provide that equal access to
cities that might be emerging or growing or even from
disadvantaged areas and highly congested highways.
How is the Department objectively rating these projects so
that applicants from regions transitioning from suburban to
urban are not penalized?
Secretary Chao. Are you talking about the infrastructure
proposal or the current TIGER and INFRA?
Mr. Aguilar. No, no, no. I am talking about the current
CIG, the current capital investment grant. It is one of the
criteria, the evaluation criteria, for CIG.
Secretary Chao. Oh, I think you make an excellent point.
Most of the CIG grants actually go into urban areas.
Mr. Aguilar. Right. And I guess what I am saying is, you
know, the current change of our demographics and geography, you
know, how can we in the future, you know, better capture those
emerging and growing communities that are becoming more urban
and will be? If infrastructure and transportation should be
investing in where the issues may lie in the future, how are we
capturing that, from a policy perspective?
Secretary Chao. Well, we try to do that in the President's
infrastructure proposal by focusing more on suburban and also
rural areas. In some years, rural areas have only received
about 7 percent of the overall funding.
Mr. Aguilar. Can you share with me an example within the
infrastructure proposal where a suburban designation, as you
just mentioned, a suburban or rural----
Secretary Chao. There is actually a section that would be
devoted to rural America.
Mr. Aguilar. You mentioned suburban. So are there any
examples----
Secretary Chao. Yeah, so I think that--it depends on what
you call ``rural.'' Some of them are, like--it is defined as
250,000, which in some areas could be defined as ``suburban.''
Mr. Aguilar. I am sure Mr. Young and Mr. Valadao and I
would probably all have different definitions of what ``rural''
might mean----
Secretary Chao. Yes.
Mr. Aguilar [continuing]. In different parts of the
country. So I would welcome more discussion and dialogue about,
you know, how we reach----
Secretary Chao. You are concerned about rural and suburban
areas.
Mr. Aguilar. Correct. Well, I am just----
Secretary Chao. Yes. No, no. I just want to----
Mr. Aguilar. Yeah. Yeah. I am concerned that some of those
growing communities that are growing in population much faster
than the rest of the Nation, that they adequately receive
designation and that the criteria doesn't punitively affect
them in a negative way where they would be scored less within
our current framework as an emerging community. That is my
point.
Secretary Chao. I understand.
Mr. Aguilar. Thank you, Madam Secretary.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir.
And from that State way up north from where I am from.
Mr. Graves. That is right. That is right.
Mr. Diaz-Balart. How are you, sir?
Mr. Graves. Mr. Chairman, thank you.
Madam Secretary, good to see you. Thank you for your many
great years of service and joining us today. And
congratulations on your first year--just over your first year
of being Secretary of Transportation.
Secretary Chao. Thank you.
Mr. Graves. As you know, just over a year ago, March 30, a
few weeks after you took your new helm here, one of the busiest
stretches of Georgia's roads was impacted. 225,000 people or so
travel I-85, and yet it collapsed during a fire one evening
during rush hour. But with your help and the President's help,
Federal assistance was flowing immediately, and I want to thank
you for that. I want to thank you for your swift response and
for your many visits you have made to our State as well.
But I know you are aware of this, and I just wanted to lay
it out for the record and for the committee, that the Georgia
Department of Transportation had contractors, including C.W.
Matthews and D.H. Griffin and others, on site with inspectors
and demolition crews beginning work before the sun came up the
very next day.
And it was determined that all the spans across this
interstate, a hugely busy interstate--three spans southbound,
three spans northbound--had to be removed and replaced, with 13
million pounds of debris. And demolition was completed just 7
days after the accident, construction on the new columns
beginning. C.W. Matthews had crews going 24/7. And just very
swiftly, 43 days after this tremendous accident and removal of
debris and new construction, it was opened up.
And so it wouldn't have been possible, though, without your
help and the President's help and certainly the contractors.
But it was done a month earlier than anticipated, and it was
because regulations were streamlined, your assistance was very
swift, the private sector was very engaged and was relied on.
And so I want to commend you, the Georgia Department of
Transportation, the contractors, everybody involved.
And, all that being said, it was rather remarkable. And we
don't see that happen often with transportation projects, that
something can go from beginning to end in 43 days, and a new
construction project.
So is there anything you can share with us--and hopefully
you have had a chance to reflect--on, were there any lessons
learned from that, anything that we can do as a Congress or
anything you can do in your position? Or is there anything that
our States have learned from the success of this project that
might help future projects?
Secretary Chao. A lot of credit really goes to your State
and your State Department of Transportation and also your
Governor. Your Governor was very prescient in staging EMTs and
highway police around the I-85 intersections at key points so
that when this accident occurred the police moved in right
away, within literally 10 minutes.
And then your Department of Transportation was very
prescient, in that they were coordinated, they were organized,
they knew what to ask us for so that we could give the response
quickly. So, within literally 2 hours of their initial
notification and request, we gave them $10 million, because
they had all the papers ready, the documentation was there.
This also shows that, under certain emergency criteria, we
can actually streamline the permitting process. Because the
permitting process was what was taking the most time. And the
permitting process included concurrently working on some
surveys, getting agreement within the community as to what was
duplicative, getting MARTA to be a willing and enthusiastic
partner in taking some of the passenger load off of the
highways. I mean, it was a wonderful partnership between the
State, local, and Federal government.
And I think, under emergency circumstances like these were,
everyone's attention is focused. Where the permitting processes
can be streamlined, it really makes a difference.
Mr. Graves. Well, thank for your work on that.
And for the committee and chairman, you should know, I
mean, ahead of time and under budget a project was completed in
transportation. So it can be done.
And so, Madam Secretary, I hope that--there are some great
lessons to be learned--even outside of emergency situations, if
there are opportunities to streamline regulations or
coordination could be a little better, that you would point
that out and help our States as they are trying to squeeze
every penny they can out of these limited resources we have.
But thank you again for your great help there.
Secretary Chao. That is an excellent point, Congressman,
that I wanted to echo as well.
When we have these permitting delays, they actually add to
the cost and the risk of a project. So, if we can streamline
the permitting process without compromising the quality, you
know, of the environment--we all care about the environment.
Because that is always the one criticism lodged. No, we are
talking about just doing away with--using commonsensical ways
to cut red tape and, in so doing, actually save time for these
projects and, thus, save money and reduce the risk factor as
well.
Mr. Graves. Thank you.
Secretary Chao. Thank you.
Mr. Diaz-Balart. Thank you. I thank the gentleman.
Madam Secretary, if that is alright with you, we can do
another round. We will do it shorter, 3 minutes, if you can
stay for that.
Secretary Chao. That is fine.
Mr. Diaz-Balart. By the way, I would be remiss--I notice my
former LD, Miguel Mendoza, is in the audience. He was working
so hard I almost didn't recognize him.
So, Madam Secretary, let me shift our attention a little
bit now to the ports. That is something that I know you know a
lot about and have always been very supportive of, and I don't
have to tell you the importance to our economy.
So can you discuss what potentially you can do or are doing
to prioritize port infrastructure projects? And so, especially,
for example, programs like TIGER and INFRA, where DOT is making
funding decisions, is there a way to emphasize and to make sure
that ports have a better shot at those pots of money, and other
places?
Secretary Chao. Well, certainly, the ports are a part of
the infrastructure proposal of the President. And Chairman
Shuster--I know that is another committee--was a tremendous
proponent of the Harbor Maintenance Fund, which, actually, is a
great program as well. We have also the maritime highway
programs. So I think we just need to not forget that ports are
part of the infrastructure of our country as well.
Mr. Diaz-Balart. Yeah. And I would like to work with you
on, again, whether it is through TIGER or INFRA--or, for
example, are there other opportunities for Congress to maybe
clarify, you know, what authority you may or may not have to
better support some potential port projects?
For example, TIFIA, as you know, is a loan program which
has a large unexpended balance, you know, that, hopefully,
potentially, could support tens of millions in additional
projects. And I would love to see if there are ways that--and I
will follow up with you--to see if there are ways that we can
look out how, from the current pots of money out there--and you
mentioned that there are so many different pots of money out
there--that we could look at working together to kind of
emphasize the ports, because, as you know, that is a big part
of our economy.
Secretary Chao. Great.
Mr. Diaz-Balart. So I look forward to working with you on
that.
Secretary Chao. Of course.
[The information follows:]
tifia port investment
TIFIA can be used to help finance surface transportation
infrastructure projects located within the boundaries of a port
terminal that facilitate direct intermodal interchange or transfer of
goods into and out of a port. The types of port projects that TIFIA can
support, include improvements to wharves, piers, docks and waterborne
mooring infrastructure.
In addition, other eligibilities include infrastructure or assets
that facilitate more efficient transfer of goods between ship and
shore, between vessels, and into and out of the port such as container
lay-down areas, rail-mounted gantry/ship-shore cranes, and berths. If a
project satisfactorily meets eligibilities, including a
creditworthiness review, a TIFIA loan can provide long-term debt at a
low fixed rate of interest with flexible amortization, thereby lowering
overall project costs.
Mr. Diaz-Balart. Mr. Price?
And, by the way, notice that I am below my 3 minutes.
Mr. Price. Thank you, Mr. Chairman.
Madam Secretary, many on the dais today, including our full
committee chairman, have spoken about the Gateway project in
New York and New Jersey. At one time, this project was number
one on President-elect Trump's priority list of emergency and
national security projects, but that was then.
I want to be clear: This is a national project with
national benefits. Each week, constituents from my district
board the Amtrak Carolinian line, and they travel across the
Portal North Bridge and through the Hudson Tunnel. So, while
this tunnel may be located just outside New York City, the
benefits from high-capacity passenger rail accrue to the entire
country. And I believe that delaying this project will only
raise costs in the long term, because we have to get it done.
So let me turn our attention to what I am arguing is a
related matter--namely, the Southeast Rail Corridor. This
corridor would increase connectivity between Atlanta,
Charlotte, Raleigh, Richmond to Washington, D.C., and up the
main line of the Northeast Corridor.
Amtrak has already expanded the Northeast Regional Service
to Richmond and Virginia Beach. And we have made great strides
in upgrading the Raleigh-to-Charlotte leg, with the help of
Recovery Act funds.
The fiscal 2017 omnibus contained a million dollars to
stand up the Southeast Rail Commission, modeled after the
Northeast Corridor Commission, to coordinate rail investments
in the corridor. So my question is quite simple: Please provide
us an update on your plans for establishing this commission.
Secretary Chao. I will do so. I am not very familiar--I
will do so. Yeah.
[The information follows:]
southeast corridor commission
The Federal Railroad Administration (FRA) is working with the North
Carolina Department of Transportation (NCDOT) to obligate the $1
million appropriated under the FY17 Consolidated Appropriations Act to
stand-up the Southeast Rail Commission.
FRA has been collaborating with rail stakeholders in the Southeast
region over the last two years to develop a Regional Rail Plan that
outlines a 40-year vision for intercity passenger rail service in the
region. A component of this long-term vision is to identify the
institutional and governance structures necessary to support a high
performing regional rail network.
NCDOT will serve as the grantee for the $1 million on behalf of the
states of Virginia, South Carolina, Georgia, Florida, Tennessee, the
District of Columbia, and the existing Virginia-North Carolina
Interstate High Speed Rail Compact to formalize and institute the long-
term governance model for the Southeast Rail Commission.
Mr. Price. All right. Thank you.
Mr. Diaz-Balart. Madam Secretary, since we have a little
bit more time, let me just hit you with one final question. And
that is that the FAA--I will wait until----
Secretary Chao. I was trying to get an answer----
Mr. Diaz-Balart. No, absolutely. Please.
Secretary Chao. I was trying to get an answer----
Mr. Diaz-Balart. Right. Take your time.
Secretary Chao [continuing]. For Congressman Price, but I
don't think I have that one. Let me answer it for the record.
Mr. Diaz-Balart. And I appreciate you trying to do that for
the ranking member's question.
The FAA has utilized advisory committees to collaborate--
and this is on aviation--collaborate with aviation stakeholders
to advance innovation and safety and to modernize, frankly, our
air traffic control system. And the NextGen Advisory Committee
includes both FAA and industry professionals and has helped
focus and advance FAA's effort to modernize our air traffic
control system.
So, last year, by the way, we had members of the NAC meet
with the subcommittee here to discuss how we can improve our
air traffic control system. And so we think the NextGen
Advisory Committee represents just a phenomenal example of
public-private partnerships that has clearly been a priority of
the administration and of his--of the President and his
administration.
So, given the interest in the advancement of FAA's NextGen
programs, we would really hope and expect that you would advise
us in advance of any plans to change the NAC's mission, the
structure, or the charter. And we would really hope that, if
there are going to be any changes there--because we have worked
with them--if you could let us know ahead of time.
And it would be great if we could hear from you and get
that assurance from you. Because, again, we have worked with
them. We see their value. And we would like to make sure that
we are in the loop if there are any changes that are going to
take place.
Secretary Chao. We will do so.
Apparently, you are talking about the Radio Technical
Commission, I think, as well.
Mr. Diaz-Balart. Yes, ma'am.
Secretary Chao. They are currently in contract negotiations
to hopefully, I think, gain the Commission's agreement to
continue to support these advisory committees.
So we are very committed to the work of the committee.
There is some requirement to recharter, according to the
Federal Advisory Committee Act requirements, but we will keep
you in----
Mr. Diaz-Balart. That is great. And that is what I would
like. Let's stay in contact on that. It is just--again, it is a
group that we have worked with rather closely over the years
and find them to be very helpful. And, it is because it is all
of the, you know--it is a lot of the stakeholders are there.
Mr. Price, further questions, comments?
Mr. Price. One further question.
Mr. Diaz-Balart. Absolutely.
Mr. Price. I appreciate the chance to ask it.
It has to do with a matter that, I am sure, Madam
Secretary, we talked about last year--namely, the controversy,
it is fair to call it, at that point, about the way your
department and other departments responded to oversight
requests.
Let me just recall what you said to Ranking Member Nita
Lowey at that point. You said, ``It has always been my history
to work with both sides. I have always done it that way and
will continue to do so. But there is a precedent that oversight
questions are handled in a certain way. Again, we are not
talking about requests for data or information needed for
developing legislation or any information a Member needs to
help constituents.''
I bring this up because Democratic colleagues on the
Transportation and Infrastructure Committee tell me that when
they recently requested copies of positive train control
implementation reports they were told to go to a website. They
were simply----
Secretary Chao. We are pretty transparent.
Mr. Price. ``Go to the DOT website.'' Well, I will--''Go to
the DOT website.'' And when they went there, this is what they
found.
Secretary Chao. Well, that is--I don't think that is right.
Mr. Price. Well, there it is. This is the best we could do,
apparently.
Secretary Chao. Well, let me definitely check into that.
Yeah.
Mr. Price. Heavily redacted, heavily redacted reports that
made it impossible to make any sense of it. You couldn't view
data. You couldn't assess the progress you are making toward
complying with the law or understand what further legislation
might be required.
So I do hope you will follow up on this. Is this an
isolated incident, or is this the response that you----
Secretary Chao. No. We try to be----
Mr. Price [continuing]. Typically give to data requests?
And do you think we are entitled to full, unredacted copies of
such documents?
Secretary Chao. Well, we certainly want to be transparent.
And I don't know what happened on that page with the PTC,
because we actually have a great story.
I personally have gotten involved on this issue. I sent a
letter to all of the CEOs of rail and transit, telling them
that their deadline is coming, December 2018, and that they
need to get ready for it.
We have been having stakeholder meetings. The newly
confirmed FRA Administrator, Ron Batory, and his team have met
with over 41 rail companies, transit, and they are continuing
to meet with suppliers.
So we actually have been very transparent, and we thought
that we would have just put it all up there. So let me take a
look at that.
Mr. Price. Thank you. I hope it is an aberration and would
appreciate whatever steps you need to take to correct this.
Thank you very much.
Thank you Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir.
Madam Secretary, let me first thank you again for your
participation today, for your answers, and, again, for your
willingness to step up as you have. The committee staff will be
in contact with your budget office regarding questions for the
record.
I do want to mention one more time, on a personal note, my
gratitude for your sensitivity and--frankly, your just--what is
the right word--your willingness to step up, come forward
immediately after that tragedy of the overpass at FIU and how,
again, as I mentioned, before I was even able to call you, you
called me. And so thank you for that.
Madam Secretary, I know there will be a number of other
questions that will be submitted. And so I would ask, please,
that you work with OMB to return the information for the record
to the subcommittee within 30 days from Friday, which will
allow us to publish the transcripts of today's hearing and,
obviously, so we can continue to make informed decisions as we
put together the fiscal year 2019 bill.
Mr. Diaz-Balart. Mr. Price, any further comments?
Mr. Price. No.
Thank you, Madam Secretary.
Mr. Diaz-Balart. Madam Secretary, I look forward to
continuing to work with you.
Secretary Chao. Thank you.
Mr. Diaz-Balart. With that, this hearing is adjourned.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Tuesday, April 17, 2018.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--OFFICE OF PUBLIC AND
INDIAN HOUSING
WITNESS
DOMINIQUE BLOM, GENERAL DEPUTY ASSISTANT SECRETARY FOR PUBLIC AND
INDIAN HOUSING
Mr. Diaz-Balart. We will call the subcommittee to order
now. Good morning.
Today we welcome General Deputy Assistant Secretary for the
Office of Public and Indian Housing, Dominique Blom, from the
Department of Housing and Urban Development, to really discuss
the Fiscal Year 2019 Budget Request for those programs
administered by public housing authorities, and obviously our
partners in Indian Country.
The core mission of PIH is to provide residents with the
dignity of a safe, decent and affordable place to live, and at
the same time provide opportunities and incentives for economic
self-sufficiency, obviously, and also independence. Fulfilling
this promise is one of the most fundamental roles played by the
Federal Government and communities across the country.
A role that will consume over 40 percent of HUD's net
budgetary resources this fiscal year, and so in light of this,
the Subcommittee gathers today to dedicate special attention to
those critical elements of the HUD Budget Request.
For the fiscal year 2019, the HUD request is 24.5 billion
in new budgetary resources for PIH programs, which is a rather
dramatic reduction from fiscal year, the 2018 enacted level.
Now, as I said before, to be fair, the request was
formulated before the recent bipartisan budget caps deal, and
the passage of the Omni--of the Omnibus.
So, obviously, I am curious to learn about what those
numbers may look at, and what you are looking at as well for
any potential changes.
It is critical for us to understand how this request can
afford two years of rent inflation without, frankly,
potentially cutting off support to vulnerable families, who
rely on HUD for their housing.
Once again, I want to acknowledge that in the wake of the
Caps, of the Caps Deal and the 2018 Omnibus, the
administration's budget request has been somewhat overcome by
events, and because, again, this was done before those new
numbers, but it is a relevant representation of the
administration's priorities, that is what the budgets are, and
we look at it that way in principle. So, I look forward to
hearing from our witness today.
We also understand that the Department is working on a yet-
to-be-released legislative proposal to reform how PIH programs
work, and that these reforms impacted, potentially impacted the
formulation of the budget request.
Now, as you know, such reforms are outside of our
jurisdiction as appropriators, because again, it is
authorizing, those are the Authorizing Committee. So, while we
look forward to the administration's reform ideas, fiscal year
2019 is less than six months away, and we are moving full steam
ahead and, again, we had the responsibility in the Subcommittee
to adequate--fund the PIH and its state and local partners, as
they currently function.
So, again, we look forward to your testimony. We want to
thank you for your service and for being here, and look forward
to continue working with you on such a huge issue for the
Subcommittee, Full Committee and for the entire Congress and
the country.
And now let me recognize my friend and my partner, the
Ranking Member, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I would like to join
you in welcoming the Acting Assistant Secretary for Public and
Indian Housing, Dominique Blom, Ms. Blom, thank you for your
good work and for being with us today.
HUD's Office for Public and Indian Housing administers a
wide range of housing programs that provide critical lifelines
for millions of low-income Americans.
These programs include tenant-based Section 8, traditional
public housing, Native American Housing Block Grants, Choice
Neighborhood Grants, VASH vouchers for veterans, and several
Resident Self-Sufficiency initiatives. And totally they account
for more than $30 billion in annual funding.
These programs serve some of those vulnerable people in our
society, the elderly, the disabled, children, veterans, and
single parents trying to make ends meet. Unfortunately, studies
from HUD and other sources indicate that more and more families
are struggling to pay rent.
Calls for housing, transportation, medicine, education, all
of them keep increasing. At present only one of four people are
eligible for Federal rental assistance can receive it because
of funding restraints. At a time when we should be making
housing a front-burner issue in this country, and we seem to be
falling further behind.
This is not a reality any of us should be comfortable with,
in fact, it should force us to ask tough questions about our
values and our priorities.
Given the fact that last year's budget request was roundly
rejected on a bipartisan and bicameral basis, it is surprising
and disappointing to see the administration doubling down in
its fiscal 2019 request. The request includes 41.2 billion in
funding offset by 10 billion in receipts. The total budget
authority provided in the request would be lower than the
fiscal 2017 enacted level by approximately $7 billion or 15
percent.
This request is especially alarming in the context of the
recently-enacted 2018 Omnibus, which included a long, overdue
10 percent increase to the HUD budget.
For example, HUD's 2019 request for 18.7 billion for
tenant-bases Section 8 renewals is more than 800 million below
the 2018 enacted level. This request could lead to current
voucher holders losing their assistance.
If I am right about this, I hope HUD will concede the fact,
and then provide the Subcommittee with revised budget estimates
as soon as they possibly can.
The budget request also proposes eliminating the Choice
Neighborhoods Initiative, a highly successful program that
leverages outside investment to transform and revitalize
struggling communities.
We have seen this program and its predecessors, HOPE VI,
work to great effect in North Carolina and many other places
across the country. And I feel confident in saying there is no
other program in the HUD portfolio like it; that has a similar
comprehensive impact.
The 2018 Omnibus provided 150 million for Choice
Neighborhoods, the most funding in the program's history, and I
do want to commend HUD from promptly releasing the 2018 Notice
of Funding Availability so soon after the Omnibus Bill was
signed into law. We commend you for that.
Returning to the 2019 request, the Department will
eliminate the Public Housing Capital Fund, despite a massive
maintenance backlog in our deteriorating public housing stock.
This decision was viewed alongside the request for 100 million
in new RAD subsidies, implies that HUD intends to phase out
public housing.
If the intent behind this proposal is to move all public
housing to Section 8 funding streams via RAD conversions, then
we have a data corresponding increase in funding for Section 8.
This is conspicuously absent from the request, so we need
further explanation. What is going on here? What is
anticipated?
Finally, I would like to once again register my concerns
with the Department's so-called rent reforms which would
essentially shift HUD program costs onto residents. Raising
minimum rents, imposing work requirements, eliminating long-
standing rent deductions for medical expenses and other costs.
All this could have serious repercussions for the people who
rely on housing assistance. And, as the Chairman has said, if
such changes are to be considered they are best left to the
authorization committees.
Ms. Blom, I look forward to your testimony today, in
working with you and my colleagues to ensure that the Office of
Public and Indian Housing has the resources necessary to
complete your vital mission.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Ms. Blom, your full
written testimony will be included in the record. Again, thanks
for being here. And you are recognized.
Ms. Blom. Good morning. Thank you for having me. Good
morning Chairman Diaz-Balart, Ranking Member Price, and Members
of the Subcommittee. Thank you for inviting me here today to
discuss our work in HUD's Office of Public and Indian Housing.
I am Dominique Blom, the General Deputy Assistant Secretary
for PIH.
Our mission has three parts. One is to ensure safe and
affordable housing for low-income families; two, to create
opportunities for residents' economic self-sufficiency and
independence, and three, to ensure fiscal integrity by our
program partners who administer our funds and the residents we
collectively serve.
PIH manages a range of programs for low-income families,
including the Public House Program, the Housing Choice Voucher
Program, and programs that serve the Native Americans, like the
Indian Housing Block Grant.
Our programs total more than $30 billion in the fiscal year
2018, funding accounting for more than half of the Department's
budget.
I am a Senior Executive among HUD's career staff have I
have served the Department through several administrations in
several different capabilities. I am honored to represent PIH
here today, as we await the confirmation of our Assistant
Secretary Nominee, Hunter Kurtz.
Among the guiding principles that drive PIH programs is
providing local communities with the flexibility to best manage
their affordable housing resources. My team is also driven by
the desire to support HUD-assisted households with housing
opportunities and then sending them on a path towards self-
sufficiency. And Secretary Carson testified last month to this
committee, the 2019 budget includes some difficult choices.
However, we believe that the request ensures that HUD can
continue to serve the most vulnerable populations, specifically
the elderly, and persons living with disabilities.
Despite millions of dollars in investment over the last 75
years, the remaining one million public housing units across
the nation, an estimated capital needs of over 25 billion with
that figure growing annually by 3.5 million.
This is a problem that requires a comprehensive and
collaborative approach for many partners. The administration is
working on transforming public housing by providing public
housing authorities with a range of tools to accomplish what
years of shrinking funds have failed to do, reposition public
housing onto a more stable platform.
One of the ways we are doing this is through the Rental
Assistance Demonstration. RAD has enabled PHAs to general an
additional $5.4 billion in private and public investment to
construct or rehabilitate hundreds of thousands of units. RAD
is a proven approach to recapitalize the nation's at-risk
public housing stock.
In fiscal year 2019 we hope to receive funding for RAD, to
make this a viable preservation strategy for properties with
severe capital needs.
Thank you for lifting the RAD limit to 455,000 units. You
are helping PHAs move forward with recapitalization strategies
and ultimately provide better housing for thousands of families
across the country.
To further help PHA's repositioning their public housing,
we have updated our policy on demolitions and dispositions, and
we are evaluating the cost-effectiveness of funding certain
public housing units, through a subsidy program.
Our goal is to give PHAs greater flexibility to manage
their properties, but also ensure that families remain assisted
while providing them with greater housing choice.
For Fiscal Year 2019 Funding Request also reflects our
focus on putting families on a path towards economic
independence. The Family Self Sufficiency and Jobs Plus
programs connect residents to job search, job training,
financial education, child care assistance, and many other
services.
The programs have changeable results that create real
change in residents' lives. The FSS Program, more than half of
those who graduate go on to become homeowners. And the Jobs
Plus Program has helped place 2,500 residents into part-time
and full-time employment.
Building off the success of the HUD Veteran Affairs
Supportive Housing Program, we have made great strides in
implementing the Tribal HUD-VASH Demonstration Program in
partnership with the VA.
As of this month, 320 Native American Veterans have
received case management services, and 273 veterans have been
housed using the Tribal VASH Program.
Our VASH Programs have provided 144,000 veterans with
housing assistance and supportive services since 2008.
Fostering long-term stability in preventing future returns to
homelessness.
In closing, PIH programs have advanced HUD's mission to
provide, safe, fair and affordable housing for American people.
PIH is committed to improving the lives of low-income families,
by increasing flexibilities for our local housing partners, and
increasing incentives and opportunities for self-sufficiency.
I have been in public service at HUD for nearly 25 years,
and believe the value of affordable housing for communities,
and more importantly for the families that live there.
Thank you for the opportunity to speak with you this
morning. And I look forward to answering your questions.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Diaz-Balart. Thank you, again, for your testimony, for
being here, but more importantly, for your service.
Ms. Blom. Thank you.
Mr. Diaz-Balart. So, we will begin with the usual, the way
we always do it, right, alternating, and depending who got here
when, 5-minute rounds. Is that all right, Mr. Price?
PUBLIC HOUSING CUTS
Mr. Price. Yes, it is.
Mr. Diaz-Balart. All right. So, I will begin. The request
for public housing slashes funding by more than a half, and the
budget also includes $100 million for Section 8 conversions,
and 30 for--$30 million, I should say, for demolitions. So all
this is characterized as a strategic reduction, a strategic
reduction to public housing.
And again, as I mentioned before, obviously I get it that
all the numbers were before the Omni and before even Bipartisan
Budget Deal.
But as soon as you can, if you can explain the rationale
behind those kind of proposals, and those rather dramatic
reductions in public housing?
Ms. Blom. Thank you very much for the question. In looking
at this first from the big picture, the national budget and
looking to see that the President is dedicating funds to
national security and defense.
Given that, within the HUD budget, the Secretary is
determined that there are priority programs that first needed
to be funded, first, ensuring that those who are the most
vulnerable, receive protection, so the elderly and the
disabled; second, to ensure that families and individuals who
are homeless today receive assistance, and for those that are
affected by lead-based paint, that we are going more to assist
those families.
Within that context, that then means that there are very
difficult choices that the Department needed to make, and
unfortunately that meant reduced funding for the public housing
program.
But I think what we are seeing here is a shift from public
housing as we know it, to putting public housing on a more
sustainable platform that being the Section 8 Program.
As a result of that, we are asking for additional funding
in the fiscal year 2019 budget, $100 million for the Rental
Assistance Demonstration (RAD) to ensure that the RAD Program
remains successful and viable.
As a result of RAD we have had over $5.4 billion of funding
dedicated to public housing, making that stable in long-term
housing resource for families for years to come.
We also believe that smaller housing authorities will need
assistance of demolition funding, that where smaller housing
authorities have distressed property, they don't receive enough
capital funding, even with prior year's funding, to be able to
demolish that severely distressed housing.
So, $30 million of demolition-only funding, we believe will
help particularly small housing authorities reposition their
public housing. And, again, the Department is seeking
additional funding for tenant-protection vouchers. We believe
that this is critical to provide housing authorities and the
residents the ability to reposition public housing, and to
provide residents with choices.
Mr. Diaz-Balart. And I understand again that, you know, you
are dealing with different numbers, and so it would be helpful
however--are you all planning to do an amendment? Because here
is the issue, we are putting these bills together now, we are
pulling the bill together now, and so I think it would be
helpful for all of us to have, you know, an updated, of what
some of your priorities may be, now that we do have different
numbers.
Because otherwise, we frankly do it with very delinquent--
from the administration which I think is a shame; and so, I
think, any idea if you all are looking at doing an amendment?
Ms. Blom. So, for now, the fiscal year 2019 budget stands
on its own, that reflects the President and the Secretary's
priorities for the Department of Housing and Urban Development.
PUBLIC HOUSING DEMOLITION
Mr. Diaz-Balart. You mentioned demolition, and so, you
know, the taxpayers have invested for a long, long time on
housing stock, right? And any idea how many of those,
potentially could be lost, if we don't adequately fund it?
And I know that you have--again, you mentioned you have 30
million for demolition. You mentioned that some of those are
for older buildings that are, you know, obviously problematic,
but any idea if we could lose stock if we don't adequately fund
it? Or, how many more we would have to demolish if we don't
potentially, adequately fund them.
Ms. Blom. Sure. Thank you. The strategy here is that we are
reposition public housing. So, overall, there should not be a
tremendous loss of affordable housing units in the community.
This is the reason why the Department is asking for additional
funding, for tenant protections, up to $140 million that is $60
million more than what we would need in an average year,
because we want to be able to dedicated those resources to
housing authorities as a result of demolitions that may be
occurring with the $30 million, as well as other repositioning
strategies now that we have provided more flexibility.
We don't want to see a net reduction of affordable housing
in communities.
Mr. Diaz-Balart. Thank you. Mr. Price, you are recognized,
sir.
Mr. Price. Thank you, Mr. Chairman. Madam Secretary, I want
to pursue the same line of questioning, because while I don't
doubt that there are overall constraints, self-imposed
constraints, I must say, by this administration to low-ball
housing in general, and public housing in particular, even
granting that, the tradeoffs in this budget proposal, just
don't make sense to me, so I want to ask you about them.
TENANT PROTECTIONS
First of all the Tenant Protection Vouchers, I don't
understand why that is an answer to any of this. We always have
a certain amount of money for Tenant Protection Vouchers, there
is a certain turnover there that we have to deal with.
It doesn't seem to me that that request is of sufficient
magnitude to deal with the dislocations we would anticipate
from other aspects of the budget.
But maybe you can help me out. You are talking about
slashing the Public Housing Capital Fund by 68 percent. That is
the principal source of funds to preserve housing for more than
two million citizens.
Now, we didn't accept this last year, or anything like it,
but instead of taking that lesson to heart, the administration
is now doubling down, proposing to totally eliminate the
capital fund. It appears you are merging the capital fund, and
that the operating fund, but then you are also cutting the
operating fund by 25 percent from the fiscal 2017 level.
The Omnibus increases the capital fund, so I just don't
understand. This is totally unresponsive to the Omnibus, and
internally, just in terms of the tradeoffs, it doesn't make
sense.
RENTAL ASSISTANCE DEMONSTRATION
Now, what about RAD? What about rental conversions? Well,
if you envision RAD conversions as some kind of answer to this,
then wouldn't we see a corresponding increase in Section 8
funding for new people who will be served by vouchers? And then
what about these housing authorities for whom, for whatever
reason RAD isn't the answer?
Please, help me figure this out.
Ms. Blom. Thank you very much, for the question. When we
look at the PIH Budget Request, the principles behind our
requests are three-fold. First, that we want to ensure that the
residents who are currently receiving Housing Choice Vouchers,
can continue remain in their housing.
For the budget request that we put forward, anticipated
that there would be no terminations from the program. That is
the most important factor when looking at the PIH budget, which
then meant that, unfortunately, funding that traditionally has
funded the public housing program, was used to ensure that
families continue to be housed in the Housing Choice Voucher
Program.
The second principle behind the PIH budget; is for economic
self sufficiency, this is the reason why the Department
continues to seek funding for the Family Self-Sufficiency
Program, and the Jobs Plus Program.
And then third, asking for some additional funding for
repositioning of public housing. It is the reason why we are
asking for the $100 million of RAD so that despite decreases in
the funding request for the capital fund and the operating
fund, that 30,000 units of public housing would continue to be
repositioned through the rental systems demonstration.
That we continue to ask for increased funding for the
tenant protection account, so that housing authorities can
reposition their developments through utilizing low-income
housing tax credits, and other funding sources.
It is those three principles behind the PIH budget,
dedicating funding towards specific ways that housing
authorities can reposition, provide assistance to low-income
families, and also ensure that residents who receive Housing
Choice Vouchers continue to remain in their homes.
ROSS GRANTS
Mr. Price. Well, as to the encouragement of self-
sufficiency, it would make more sense if you actually were
increasing those accounts, right? But you have referred now
twice to the Jobs Plus, you are cutting that by 5 million in
this budget.
The Resident Opportunities and Self-Sufficiency Grants, or
ROSS grants, you are proposing to totally eliminate. And you
are flat-funding the Family Self-Sufficiency Grant. So what
kind of answer is that?
I mean, how? It just doesn't add up. That is my point. I
don't think the Tenant Protection Grants are increased in
anything like the magnitude that they will take to offset these
dislocations. And then it is just like everything is being cut.
You are transferring these funds, from one account to another
supposedly, but then it all ends up being flat-funded or worse.
Ms. Blom. So, I would have to say that this budget reflects
very difficult choices that needed to be made. Ideally----
Mr. Price. Excuse me. Choices, who are the winners? Can you
tell me that? Choice implies some win some lose. What wins
here?
HUD BUDGET INCREASES
Ms. Blom. So, in the overall HUD Budget, we see increase in
homeless assistance programs, we also see increases in the 202
and 811 programs, and also increases for lead prevention. So,
those are the main areas where HUD sought increased funding,
which unfortunately meant that there was some reductions in the
public housing account.
Mr. Price. We will explore this further. It strikes me that
202, 811 and I'm very, very eager to see those programs thrive,
it doesn't appear that there is a direct pipeline, so to speak,
from the people you are cutting. And we want to have it
documented that nobody loses their housing here, and that we
are talking about a no-net-loss proposition. That needs to be
verified.
But the 202 and 811 programs, it seems to me that is
largely irrelevant, those programs need to thrive, but it is
not going to take care of the people coming out of public
housing under these proposals.
Ms. Blom. So, for the public housing program we are looking
to see how housing authorities can receive more flexibility, so
that they can reposition their development so that public
housing residents are living in safe and decent housing long-
term. And that will mean that over the next several years,
looking to access additional tax credits for housing
authorities, being able to leverage other funds, so that there
is still affordable housing for public housing residents.
Mr. Price. Well, we are certainly going to need to do that,
because even if nobody was going to lose their housing under
these proposals, you are talking about 25 percent of the people
who need and would be eligible for this kind of support, not
getting it.
It is not at all unusual in our communities to have
hundreds, thousands of people paying 60, 70 percent of their
income in rent. It is a crisis. And we need a budget that
addresses it.
Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. But I just want to make
sure that I was clear about, so you did an amendment that was
after the deal before the Omni, and so I just look forward to
continue working with you on that.
Great leader in the Subcommittee, the gentleman from
California, Mr. Valadao.
MOVING TO WORK DEMO
Mr. Valadao. Thank you, Chairman. Thank you. General Deputy
Assistant Secretary. My question: in 2016 Congress authorized
and expansion of the Moving to Work demonstration which HUD is
currently implementing. There are public housing agencies in my
district that are interested in participating in expanded
moving toward demonstration.
I understand from your testimony that the Office of Public
and Indian Housing Plan to announce the first round of the
expansion, the Public Housing Agency at some point this year.
Do you have a specific timeline on when the expansion will take
place? How many PHAs do you expect to be included in this
round? And what is your timeline or the rest of the 100 that
were authorized?
Ms. Blom. Thank you very much, for allowing me the
opportunity to let you and the Committee know where we are with
our MTW expansion. Thank you very much for authorizing 100 new
agencies to be added to the program.
We are currently in the process of updating the notice that
governs the expansion program. We call that the operation
notice, it is going through the final review at HUD and then it
will be published in the Federal Register for public comment
again for a 30-day period. At the time that we published that
operations notice for public comment again, we will be
publishing our--what we call our selections notice. This is the
notice that will add the first cohort of MTW agencies to the
program. We are anticipating that 30 out of the 100 agencies
will be added this way and it will be testing the MTW
flexibilities themselves. Dow do the combined funding of MTW,
as well as the statutory, regulatory flexibilities allow
smaller agencies to be able to provide enhanced self-
sufficiency and housing choices for families.
PHA FLEXIBILITY
Mr. Valadao. Aside--I am sorry. Aside from moving to work
fiscal 2019 HUD Budget request includes a number of proposals
that could provide similar flexibility for a small public
housing agencies, can you discuss those proposals and how they
might relieve administration burdens and promote more
flexibility for small and rural public housing agencies?
Ms. Blom. The Senate has proposed a bill, Senate, 2155,
that the Department endorses and supports that will provide
smaller agencies with more flexibility. Reduced schedules for
HUD inspection of public housing units, as well as reduce
inspection at housing authorities need to administer for the
Housing Choice Voucher Program. But aside from that, the
Department is looking to see how can we reduce burdens for
small PHAs. We are very eager to be able to finalize the less
remaining components of HOTMA which was enacted in 2016 which
would provide smaller rules, larger agencies with more
flexibility to be able to administer their Housing Choice
Voucher Program. So, we continue to look to see how we can
ensure that we are reducing burden for small PHAs.
Mr. Valadao. What is that doing using the current statutory
authority to relieve these administrative burdens and promote
more flexibility?
HOTMA
Ms. Blom. So, our main vehicles today are looking at
implementation of HOTMA, which I just spoke about. We are also,
as part of our regulatory reform, have pulled back several
regulations that would affect small and large housing
authorities. We are no longer seeking to implement our physical
needs assessment. We are no longer putting enhanced
requirements for demolitions and dispositions. Those are some
of the ways, not just for small agencies, but all agencies that
we are hoping to reduce burden.
HUD VASH
Mr. Valadao. All right, let us switch--change a little bit
here, topics. The district I represent continues to experience
Veteran homelessness, as do other parts of California and the
country as a whole. As a most recently published point in time
count for 2017, the counties in which the district is located
has 346 Veterans that are homeless. The HUD budget for fiscal
2019, proposes no new funds for the HUD VASH Program which has
been used in the district to help homeless Veterans find
housing. Can you walk me through the process of how the
Department determined to not request new VASH vouchers and I
understand parts of the country are underutilizing VASH
vouchers. How are you encouraging public housing authorities to
quickly utilize these vouchers and help homeless Veterans?
Ms. Blom. Right. Thank you. The Department cares very much
about our homeless Veterans and for that reason, we continue to
administer the HUD VASH Program as well as the Tribal HUD VASH
Program. With regard to traditional VASH, the Department is not
seeking additional funding in fiscal year 2019 because we
believe that given the funds that Congress has already
appropriated, it is sufficient to be able to address the
current need. What we have seen in some jurisdictions is that
they have with their current allocation of VASH vouchers been
able to serve all of the Veterans that are looking to be
housed. Where there is a surplus of vouchers, we are now
working with those communities along with the VA to see how can
we redistribute those funds, first within that same community
to address other homeless Vets who are not eligible under the
VA requirements. And to the extent that, that entire community
may not need HUD vouchers. We are looking to see how we can
distribute those HUD vouchers across the country for higher
need communities.
Mr. Valadao. Thank you, Mr. Chairman, I yield back.
Mr. Diaz-Balart. The gentlelady from Massachusetts is
recognized.
RENT REFORM
Ms. Clark. Thank you, Mr. Chairman. Thank you for being
here with us today. One of the questions I had is the budget
justification from HUD submitted to this Committee states that
the Department will be proposing a legislative package of
comprehensive rental assistance reforms. I believe those were
promised in March. It is now the middle of April. I know my
office has asked repeatedly to get a copy. And we know that the
FY19 budget according to your testimony incorporates these
rental reforms, which leads me to believe that you have
finalized them if you were able to calculate your budget on
them. So, is that correct? Do you have a final reform proposal
and can we see it?
Ms. Blom. Yes. So, thank you very much for the question on
our rental reform program. We are finalizing the rental reform
program and in the next few weeks, the Department anticipates
being able to release that rental reform legislation to the
Hill and begin the conversation about rent reform; how we can
create a more simplified way to calculate rent; how we can
encourage work through tri-annual re-certifications instead if
annual re-certifications and how we can treat our residents
with dignity. So, we believe that this is the beginning of a
conversation with your Committee and authorizers to be able to
look to see how we can create a more simplified transparent and
more dignified way of calculating rent for all of our HUD
assisted renters.
Ms. Clark. So, how is the rent reform incorporated into
your budget proposal if it is not finalized?
Ms. Blom. So, we did create some estimates that we use as
part of our calculation for the amount of funding that we are
asking for the Housing Choice Voucher Program. It did not
impact the request of funding for the public housing operating
fund. So, we did have some estimates for that, but from the
time that the budget was released to now, there have been
refinements to that. And we look forward to having a discussion
with you on that budgetary impact as well as the more important
policy discussions that we look to have on rent reform.
Ms. Clark. And do you have a final date for release at this
point. You said a few weeks, more or
Ms. Blom. Yes. We anticipate in the next couple of weeks,
that it will be released and we will be able to further discuss
with you and other members the fine points to our rental reform
proposal.
Ms. Clark. Okay. Also, as part of your budget
justification, you said that the current rent structure and
HUD's rental assistance programs create disincentives to
employment and stable family formation. Can you define for me
what HUD means by the phrase, ``stable family formation''?
Ms. Blom. Yes, let me provide a little bit of context and
then I will answer that question directly. What we see today is
part of our rent calculation, is that every time a resident--is
it increase in wages or goes from not working to working, there
is a 30 percent tax on that residence income. So, likewise, if
a person is added to the household, whether that is a parent;
whether that is a husband or a wife, if that additional person
is added to the lease, there is automatically a 30 percent
increase in the rent that needs to be collected. So, we believe
that by having tri-annual re-certifications instead of annual
re-certifications that it will allow families who are currently
not together on the lease to be able to be together on the
lease and that way live together in that home.
Ms. Clark. So, it is nothing to do with the definition of
stable families like, a single mom or a grandparent raising a
child, or----
Ms. Blom. It would be stable family formation, which could
be a husband and wife. It could be an individual with another
family member joining into the family to be able to help with
providing good parenting; parental role models for the children
that are living there.
Ms. Clark. So, you are looking at increasing mandatory
minimum rents and increasing tenant rent contributions. How is
this going to incentivize stable family formation?
Ms. Blom. So, I think that component of the rent reform is
less about stable family formation and more about ensuring that
our assisted housing programs can be viable for the long-term;
that we are looking for shared responsibility for the rent and
for the cost of public housing--the Housing Choice Voucher
Program and the multi-family programs that given budget
constraints, that the HUD budget along is not enough to be able
to ensure that all those families that are currently housed can
remain housed. For this reason, we are asking for a sharing of
responsibility and for residents to be paying a little bit
more.
Ms. Clark. All right. My time is expired, thank you, Mr.
Chairman.
Mr. Diaz-Balart. Thank you. Mr. Joyce. Mr. Joyce. I think
you can go unless you are--you need a little more time to
prepare, we can give that to you, but--
Mr. Joyce. Oh, no, I am fine.
Mr. Diaz-Balart. You are always ready, Mr. Joyce. You are
always ready.
Mr. Joyce. I was going to defer, but I appreciate it. Thank
you. Thank you very much for being here today and I understand
the work HUD is doing to encourage families to achieve economic
self-sufficiency and independence. Can you elaborate on the
work the Jobs Plus Program has done to support work readiness
for fulfill community workforce needs and promote quality job
placement?
JOBS PLUS
Ms. Blom. Yes, so our jobs plus program has been
implemented since 2015 starting with fiscal year '14 funds. And
each year, we have been able to add more housing authorities
into the program. This program allows housing authorities to
focus on a particular development and release re-saturate
develop with a culture of work, as we call it, since this is
where all of the work-able individuals are expected to work
where housing authorities and other service providers provide
supports to enable individuals to work. So, additional support
such as transportation; childcare; if there are any health
issues; and ensuring that people become trained and ready to be
employed. This has been a successful program. We have seen
increases in income as a result of that, as well as more
individuals who are employed. Today, we have over 2,500
individuals that have become employed, either from not employed
at all to part-time or to full-time employment over the last
several years.
Mr. Joyce. So I take it because of the success, you have
plans to expand this program?
Ms. Blom. So, as part of the fiscal year 2019 budget, we
are not asking for an increase in funding. Instead, we are
asking for $10 million of funding for the Jobs Plus Program, so
that we can continue to fund the housing authorities and
support residents.
CAPITAL REPORTS
Mr. Joyce. Speaking of the housing units themselves, I
understand that you have estimated capital repair needs in
excess of $25 billion. I have also read the estimates that
10,000 public housing apartments are lost to disrepair. How
does your office work with public housing authorities to assess
and prioritize repair needs? And how will your budget address
capital repair needs of our current public housing
infrastructure to ensure housing quality standards are met?
Ms. Blom. So, housing authorities determine locally what
their capital needs are. Housing authorities each year go
through a capital funding process where they identify their
highest risks work items. Whether that is roofs; whether that
is windows; the repairing of brick facades; major systems; and
that given the amount of capital funds that they receive each
year, plus other ways to leverage resources through the Low
Income Housing Tax Credit Program and other local and state
funding, they prioritize their needs to be able to make repairs
to their public housing.
Mr. Joyce. Will your budget be able to address those needs
going forward or?
Ms. Blom. What we have seen over the last decade is that
there simply has not been enough funding appropriated by
Congress to be able to keep up with the need. Back in 2010, a
report was issued that showed that there was $25 billion of
capital needs and as we see with annual appropriations, simply,
that is not enough to be able to keep up with the capital needs
across the nation. I think for that reason, we are looking at a
different way to support public housing units long-term and
that we believe by moving to a Section 8 Program through RAD
and through other ways; through project basing assistance which
was permitted through HOTMA that we will be able to put public
housing units on a much more stable platform using Section 8.
Mr. Joyce. I take it that is your plan going forward and on
how you are going to replace the stock that is in disrepair
by----
Ms. Blom. Yes, sir.
Mr. Joyce [continuing]. Going to those methods.
Ms. Blom. Yes.
Mr. Joyce. Thank you. No further questions.
Mr. Diaz-Balart. Thank you, sir. Mr. Aguilar, thanks for
your patience.
INDIAN HOUSING BLOCK GRANTS
Mr. Aguilar. Thank you, Mr. Chairman. Madam Secretary, I
wanted to talk a little bit about Indian Housing Block Grants.
Sam Adwell banned a mission Indians as a tribe in my district
that has benefitted from the Indian Housing Block Grant Program
which provides for a series of activities on reservations that
support the community. Funds are used for construction,
rehabilitation, acquisition of buildings to create
affordability opportunities on tribal lands. The Indian Housing
Block Grant Program received an increase in the recently passed
omnibus and a change from prior years though. A hundred million
of this funding will be awarded via competition. A strategy
that we used last during the American Recovery and Investment
Act. So, can you talk with me a little bit about how that will
work, specifically, I think, first, how that worked during the
RO portion, when we last implemented this type of funding?
Ms. Blom. Yes. Thank you very much for the opportunity to
be able to talk about the programs that we serve for Native
Americans. The Indian Housing Block Grant's additional funding
for a hundred million dollars will be able to make tremendous
impact on tribal communities. Thank you very much to this
Committee for additional appropriations for that much needed
housing that we need on reservations. When we look at the
Recovery Act, we saw that tribes were able to utilize those
funds for construction of new housing, rehabilitation of
housing, construction of health services and community services
and infrastructure. We believe as part of the additional
hundred million dollars appropriated in fiscal year 2018 that
tribal entities will be able to fully utilize those funds for
projects that they have in their communities. We will
prioritize that funding for construction and rehabilitation for
housing units.
As we know, through the Indian Housing Study, there is a
tremendous need for housing units. Sixty-eight thousand units
of affordable housing is needing on--needed on Indian
reservations. We will also prioritize the funding for those
tribal entities that have the highest need and the highest
capacity.
Mr. Aguilar. Will any be excluded, will any uses be
excluded? You mentioned--I appreciate you walking me through
the priority fund--the priority list rehab and construction and
those that need it the most, but will any of your uses be
excluded from the possibility of use?
Ms. Blom. We are just at the beginning stages of developing
our Notice of Funding Availability for that program, so it has
not yet been determined if there will be any types of
activities that will be excluded, be we are happy to talk with
you further about that to receive your input.
Mr. Aguilar. I appreciate it. Can you talk to me a little
bit about what this means if there is tribes you visited and
others kind of on the ground, what this looks like and the
change that some of these tribal lands will be benefited by
these resources?
Ms. Blom. Yes. So, what we have seen as a result, dedicated
funding through the Recovery Act and now with this hundred
million, that this hundred million dollars will have a
tremendous impact on tribal communities. In the past, through
the Formula Program, it spread across 567 tribes, which means
that particularly for those smaller tribes that they are not
able to amass the amount of resources that they need to make a
major impact in their community. So, we do believe that the
hundred million dollars in dedicated funding through a
competition will allow tribes to have impacts on a grander
scale than what they are able to do with the formula funding.
To be able to do larger construction projects for new homes, to
be able to do larger infrastructure projects and to be able to
create the community centers and health centers.
Mr. Aguilar. Great. I think it is a great use and I think
that this is something that obviously the Committee wants to be
supportive of. We want to make sure that it is done right, as
do you. I hope that you get an opportunity to visit some of
these rural tribes, as well that need it the most. Because
there are access to--whether it is medical professionals and
others who provide resources throughout these Native American
lands, they are deprived of a lot of things. And so I think
that these resources do go a long way. I appreciate the
Committee allocating more funds to this category and look
forward to working with you, as that notice put out, to make
sure that we put it forward in the very best way possible.
Ms. Blom. Thank you.
Mr. Aguilar. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Mr. Young. You are
recognized, sir.
RURAL COMMUNITIES AND RAD
Mr. Young. Thank you, Mr. Chairman. Welcome. We had
Secretary Carson here not too long ago and I raised a question
about some of the real needs we have in rural America with
housing. And he acknowledged that was a fact and that the--you
are all working on trying to address this issue. Can you talk a
little bit about how the rental assistance program was working
in rural communities, what is being done? Just give me a
snapshot of where we are and where we would want to go and how
we get there.
Ms. Blom. Thank you very much for the question on how the
Department is surveying rural communities. With regard to the
Rental Assistance Demonstration Program, we have seen that that
has been successful for smaller housing authorities and those
in rural communities. So, we are very pleased by that. We are
also looking to see how we can streamline that program to make
it easier for smaller housing authorities so it is less
burdensome and less costly. We also believe that we need to
provide additional strategies for smaller agencies. One way
that we are doing this is we are looking at what is called the
Voluntary Conversion Program. This is where housing authorities
can convert their public housing from traditional public
housing to a voucher program. Do a Section 8 Program through
the programs if the development needs a cost that it is more
cost effective to provide housing through a voucher----
Mr. Young. Are you seeing that want and that need and that
trend to go to that platform of Section 8?
Ms. Blom. We are seeing that. We are seeing that is a much
more stable platform. I think we see that through the demand of
the Rental Assistance Demonstration that was fully subscribed
before Congress lifted the cap to 455,000 units. And we believe
in another year that, that new limit will be fully subscribed.
We are seeing a tremendous demand for the RAD program, which
signals to us that housing authorities believe that the Section
8 Program is much more stable and viable long-term.
Mr. Young. You talk about that in your testimony about
streamlining that process to cut the regulatory bread--red tape
to--from--to move to that Section 8 platform. That red tape, is
that something that can be taken care of at the administrative
level or do you need Congress to help you with that or is there
a legislative fix on that that you need help with?
Ms. Blom. With regard to the Rental Assistance
Demonstration Program, we believe that we have the tools within
our controls, especially given the waiver authority that is
part of the Rental Assistance Demonstration to be able to make
a more streamlined program for smaller housing authorities. And
so we believe we have that ability.
Mr. Young. If you find out that you do not, would you let
us know?
Ms. Blom. Absolutely.
Mr. Young. Okay.
REDUCING OVER-INCOME LIMITS
Ms. Blom. We are happy to work with you.
Mr. Young. In 2015, the HUD OIG Study found that as many as
about over 25,000 families who resided in public housing had
income that exceeded the 2014 eligibility limits. As a result
of the findings of the report, what are you doing about it? Why
is this happening? What steps has HUD taken to reduce the
number of over-income families living in public funded housing
to allow maybe those on a waiting list to receive those
services? What is happening there and what are you doing about
it?
Ms. Blom. Yes. So, thank you very much for the question on
how the Department is addressing those families that are over-
income. We are currently in the process of developing a Federal
Register Notice that will be issued in the next several months
that will begin to implement the provisions in HOTMA, which
provided a cap on the income that families can receive and
still be eligible for public housing and asked for a two-year
transition period where those families are over-income. We will
then follow that with a regulation that we are hoping to
publish by the end of the calendar year that will fully
implement those provisions in HOTMA. We do believe that this is
a way to be able to transition those higher-income families
then to a market-based program and to free up units for other
families on the waiting list.
Mr. Young. For those that exceed the eligibility limits,
what is--what percentage of that do you think is that?
Ms. Blom. There is about one percent that we are over the
limit, but I will say that most families are just slightly over
the limit. There are only very few that are well above the
limit who could be affording a market-rate rent.
Mr. Young. Thank you.
Ms. Blom. Mm-hmm.
Mr. Young. No more questions. Thank you, Mr. Chairman. I
yield back.
Mr. Diaz-Balart. Thank you very much, sir. Earlier this
month, the President signed an executive order to--in essence,
calling all agencies, right, to strengthen work requirements
for folks that are on federal assistance and with different
goals, including to invest in federal programs that are
effective at moving people into workforce and out of poverty.
So, can you outline for us what HUD and the PHAs, including
MT--MTWs--I am having a hard time putting words into phrases
this morning; I apologize. What they currently do to
incentivize or require recipients to seek employment? And what
are you doing--how is that working?
Ms. Blom. So, the President signed that executive order on
April 10th, seven days ago, so the Department is looking at
that executive order and seeing how the Department would be
able to carry out the tenants that are part of that executive
order. One of the themes of that executive order is work and we
see that as part of our rental rent reform proposal that will
be released in the next several weeks. But I would say that as
part of our budget justification, that we are not requiring
work, right? We are incentivizing work, but the proposal does
not require work. But we have seen through the MTW program that
several MTW agencies do have work requirements. We have seen in
Atlanta how a work requirement or an educational attainment
requirement is a way to incentivize residents to become self-
sufficient.
Mr. Diaz-Balart. So, what happens, though--all right. So,
you incentivize somebody to get a job, which is great because
work is so empowering, obviously. But then all of a sudden, do
you then in essence get kicked off because your income is too
high? So, how do you deal with that sort of cliff?
Ms. Blom. As part of our rent reform proposal, you will see
that there are hardship exemptions. So, we do not want as a
result of our rent reform to have families be unstable and have
the threat of homelessness. That is precisely what we want to
guard against. So, you will see as part of our rent reform
proposal that there is consideration for hardship exemptions.
We are not imposing additional work requirements or increase
rents on elderly and disabled, but for those that are work able
and have an unforeseen circumstance, there will be hardship
exemptions.
Mr. Diaz-Balart. Right. Those are ones who are struggling,
but how about those that are doing well? In other words, they
start working, their income goes up, and then all of a sudden,
they potentially can get disqualified potentially, right, from
benefits, including HUD benefits. And so that is--those are--
that kind of cliff of folks that potential could do better,
would like to do better, but then all of a sudden, they lose
their benefits, including potentially housing when they do
better. And those are the issues that we have been kind of
grappling with.
Ms. Blom. We want to ensure that we are incentivizing work,
that we are not penalizing individuals as they have increases
in income. That is one of the reasons why we are seeking the
triannual re-certification, so that as residents earn more that
they are able to keep more than what they could under the
current system. But we are happy to continue the discussion
with you and with other members to be able to see how we can
refine the reform proposal so that it works for residents and
it works for multi-family and public housing owners, as well as
for the government.
SECTION 184
Mr. Diaz-Balart. I look forward to working with you. Let me
just quickly go to--Secretary Carson has focus on the need to
increase home ownership and opportunities for home ownership.
And I think one of those programs that has encouraged private
lending on reservations is the Section 184 Indian Loan
Guarantee Program. I was actually able to say that for a
change, right? And so as you know, under this program, HUD
guarantees loans made by private lenders and therefore, they
can charge lower rates. So, if you could briefly tell me how
this process has been going and how is it working and do you
think it is effective and how does--how can we make sure that
it remains being an effective program?
Ms. Blom. The 184 Program is our cornerstone for home
ownership in Native American countries. This has assisted
Native Americans, as well as others to be able to live on
tribal lands. The 184 Regulation has been in existence for over
20 years and we are in the process now of consulting with
Native American tribes and tribal-designated entities to be
able to revise those regulations to enhance them and make them
more effective for Native Americans and for others. So, we are
involved in 11 meetings across the country for tribal
consultation. We will then provide a revised regulation
specifically to Native Americans for their review before that
regulations go for public comment.
Mr. Diaz-Balart. Great, I am glad to hear that. And Mr.
Price.
Mr. Price. Thank you, Mr. Chairman. Madam Secretary, I want
to return briefly to our earlier discussion about the programs
that may somehow absorb some of the transfers out of public
housing that would be necessitated by your budget proposals. I
express some skepticism that the 202 and 811 programs for the
held--house--for the elderly and disabled would be likely
places where these tenants would land. But I do want to say
that I appreciate your expression of support for those
programs. The administration's proposal for 202 is a decrease
as you know from the fiscal 2018 enacted in the omnibus. And
your proposal for housing for the disabled is a reduction from
both 2017 and 2018. So if we are going to put great stock in
those programs, we are going to have to have adequate funding.
I am happy to say that the funding provided in the omnibus
will make possible for the first time in years some modest new
construction in both programs. And I think that will serve our
communities well and we look forward to working with you to
make sure that it turns out that way, that these increases are
realized and in housing and our communities.
RAD
So let me return now to RAD, there has been a lot of
discussion of RAD this morning. You obviously put great stock
in it and a lot of our housing authorities do as well. The
omnibus expanded RAD from 25, 225,000 units to 455,000 units
and that's welcome news for many authorities like the Durham
Housing Authority in my district. A lot of high capacity PHA'S
are able to use this flexibility to recapitalize public housing
priorities, provide quality housing for low income residents.
However, as you know, the experience has not been uniformly
positive and that's what I want to ask you about. A recent GAO
report concluded that HUD does not accurately assess private
sector leveraging, in many cases has not. Has not always
tracked and monitored the effects of RAD conversions on tenant
household and most importantly the report concluded that HUD
hadn't fully developed processes to ensure tenant protections
and by tenant protections I mean quite simply, no displacement
of low income residents as a result of conversion.
So I would like here this morning and then in writing to
elaborate an indication of how HUD is going to implement these
GAO recommendations and then what steps particularly you're
going to take to ensure tenant protections and long term
affordability are integrated into each and every RAD deal. And
this does relate to my earlier questions about the cuts that
you're proposing to public housing, capital and operating
funds.
RAD doesn't happen all at once. It takes years. What
happens in the meantime? These cuts suggest that in the
meantime may be a real problem. And just to help us gauge that,
how many units to date have been converted and closed? And what
does this suggest about the pace that you've projected as to
the kind of timeframe we are talking about here for these
conversions.
Ms. Blom. So a lot of things to talk about. With regard to
the Rental Assistance Demonstration and the GAO report that was
recently issued, we are, we take the issues and the concerns at
GAO seriously. We want to ensure that we are implementing a RAD
program that does protect residents and does recapitalize the
public housing units. We will continue to work with the GAO to
see how we can improve that program and we are happy to provide
you in writing how we plan to do that.
Several years ago the department did issue a new notice
with regard to ensuring that housing authorities were properly
relocating and offering residents the right to return. And as a
result of that, I would say over the last year there has been
much more consistency and uniformity of ensuring that residents
are protected when a development is converting through the
Rental Assistance Demonstration.
To date, there have been over 88,000 units of housing that
have converted to the Section 8 program. Many of those that
have been recapitalized as a result of other investments to
those developments. The pace has increased over time and we
anticipate it will continue to increase over the next several
years.
But I think you are right. It is going to take some time
before the, you know, hundreds of thousands of units will be
converted to the Section 8 program. This is a voluntary program
from housing authorities and it requires many partners and
stakeholders to be working together. So I think over the next
several years we will continue to see an uptick in the program
but it will take many years for housing authorities to
recapitalize their developments.
So one of the reasons why we are also looking at other
tools now besides RAD. We are looking at providing additional
flexibilities to housing authorities with regard to demolitions
and dispositions and repositioning those developments through
programs other than RAD. We are looking at our voluntary
conversion program and simplifying that for smaller housing
authorities and we are also looking to see how we can release
the declaration of trust for these properties so that housing
authorities can then singularly own them without restrictions
but again as part of the departments tenant protection request,
asking for additional authority to provide tenant protections
for those properties that would be released from the
declaration of trust.
Mr. Price. Thank you. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir.
Yes, ma'am, you are recognized.
202/811 PROGRAMS
Ms. Clark. Thank you, Mr. Chairman. In your budget
justification it repeatedly says that current elderly and
disabled households will not be impacted by the rent reforms
and increases in rent. There is such an emphasis on current
that I am assuming that future households will be impacted
including elderly and the disabled. Is that correct?
Ms. Blom. Yes, that is correct that the congressional
justification does speak to current residents. The department
will be releasing the rent reform legislation over the next
several weeks and then we are happy to have further
conversations with you and others on the types of protections
and the types of increases in rent that we are seeking for all
assisted residents.
Ms. Clark. Okay. With the work requirements, I believe I
heard you say that the triennial evaluation will apply to the
work requirements as well as to the rental income evaluations,
is that right?
Ms. Blom. So we are looking for triennial recertification's
on income which will mean that residents would have to provide
documentation with regard to their income every three years
instead of every year. And so as a result of that, where
residents have increases in earnings whether because they are
working more, because they are, have received a raise or they
went from not working to working. Over that three year period
they will not be penalized with having to pay a higher rent
even though they are earning more.
RECERTIFICATION
Ms. Clark. Okay. And that will be a requirement for--the
PHA's get to elect to do work requirements under your proposal?
Is that right?
Ms. Blom. Yes.
Ms. Clark. And so but that will be a requirement for all
PHA's who elect to do further work requirements that that be a
three year recertification?
Ms. Blom. We are looking for all housing authorities to
have a three year recertification instead of a one year
recertification and we believe that this is to the benefit of
all PHA's to reduce their burden and----
Ms. Clark. Yes.
Ms. Blom [continuing]. Administrative costs as well as that
to the residents. In addition to that, housing authorize can
elect to establish work requirements.
Ms. Clark. Okay. But that's great.
Ms. Blom. Separate.
MOVING TO WORK
Ms. Clark. All right. Thank you. I had a question too about
the expansion of moving to work and the MTW's and we authorized
back in 2016 regional MTW agencies and in fact Cambridge
Housing in my district and Boston Housing Authority put
together a proposal that was rejected by HUD that said they
still needed to evaluate the many legal and programmatic
questions this new concept presents.
So here we are two years later. Can you tell me what
progress has been made and have you approved any applications
for this designation?
Ms. Blom. So the department has been working on creating
the framework for this regionalized concept for MTW agencies
and we are planning on issuing a notice on that by the end of
the fiscal year. That would then allow existing MTW agencies as
well as agencies that will be added to the program to form a
regional MTW agency.
So to date we haven't yet approved any PHA's, existing MTW
agencies to be working together and former regional housing
authority.
Ms. Clark. Okay. So by the end of the fiscal year you think
that you will have those?
Ms. Blom. Yes. We are planning on issuing a notice by then
so that then housing authorities could apply to the department
for the regional MTW status.
DOMESTIC VIOLENCE
Ms. Clark. And I just wanted to touch briefly in my
remaining minute on domestic violence and wondering if you
could tell me sort out what is the state with HUD and do you
need help from us on looking at domestic violence programs, how
we respond when a family that's receiving assistance has an
incident, family members leave for safety reasons.
Can you talk about that framework? I realize I'm not
leaving you any time to do this but if it's too hard to go into
now we would love to follow up with you and see if there are
parts in the system where we can be helpful.
Ms. Blom. We would be happy to continue the conversation
with you to see how we can address domestic violence in public
housing and through our housing choice voucher program.
Absolutely.
Ms. Clark. Okay. Thank you. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Mr. Aguilar.
SECTION 184
Mr. Aguilar. Thank you, Mr. Chairman. The chairman got to
one of my questions. He was reading my notes which he does
occasionally on Section 184. Again I will just put in a plug.
We sit so close together. I will just put in a plug that, you
know, that is a program that I support, you know, has worked
and just from a raw leveraging perspective, I mean, such a
small budgetary amount leveraging hundreds of millions in new
housing stock really is something that we need to kind of think
through and to think how we can, you know, grow that program to
maximize the effectiveness in tribal country. Picking up on Ms.
Clark's comment about moving to work, within the 2016
consolidated appropriation I think it mentioned specifically
100 new PHA expansion she was talking about regional, the
regional concepts which is interesting and innovative and
something we need to support but out of the 100 new is that the
piece you are talking about has the June NOFA?
Or I guess my questions is out of the 100 that was
mentioned specifically within the 2016 appropriations, how many
have we designated?
GUIDELINES 100 PHA EXPANSION
Ms. Blom. We are in the process today of establishing the
guidelines and the rules associated with that 100 PHA
expansion. Later this spring we will be publishing the notice
for public comment that provides for those guidelines but at
the same time we want to be able to start adding MTW agencies
to the program. So at that same time we will be issuing a
notice inviting our first group of agencies to join the
program. And then still in fiscal year 2018 we will have a
second notice to invite the second group of MTW agencies to
join.
So while it has taken us some time to stand up the program,
we believe that we are on the cusp of now quickly being able to
invite agencies to apply to the program. That is separate from
Representative Clark's question with regard to regionalism.
Separate from that we will be issuing a notice by the end of
the fiscal year to allow existing MTW agencies so really
affecting right now those 39 agencies that are part of the
program to see how they can create a unified administration of
their programs to--in a regional way.
Mr. Aguilar. Okay. So 39 existing consolidated
appropriations added 100 you indicated two tranches basically
that those would be let out. Equal, you know, 30/70, 50/50,
what is that look like within your timeframe?
Ms. Blom. The first as we call them, a cohort.
Mr. Aguilar. Cohort.
Ms. Blom. We anticipate having about 30 agencies
participate in that and then the second cohort would be a
smaller group. It will be looking at rent reform and the exact
number hasn't been determined yet but I do anticipate it will
be smaller than 30. Leaving then two additional cohorts to fill
the additional slots available for the 100 PHA expansion.
ADMINISTRATIVE FLEXIBILITIES
Mr. Aguilar. Okay, got it. Within that context, you've also
proposed administrative flexibilities for those additional
PHA's. So can you talk to me about what type of flexibility,
what type of new flexibility you are looking to propose within
that subset?
Ms. Blom. With our MTW program, we want to provide very
similar flexibilities to what the existing 39 agencies have
today. Where we have provided less flexibility it's so that we
can isolate the effects of that policy issue that we are trying
to study. So that is the one incidence where we would not
provide as many flexibilities to a certain cohort because it
would impede the evaluation of that policy area. With the
notice that we published several months ago, we indicated to
the public these are the types of flexibilities that the
department is going to be offering as part of the MTW
expansion.
So it, we are publicly on record of those types of
flexibilities. We are making some minor changes to that with
the public notice that will be issued in the next few weeks
which will again go through another public comment period.
Mr. Aguilar. Would the PHA's view that change in
flexibility as being more helpful or less helpful than the
initial cohort I suppose? So you are basically saying that they
may not have the types of specific programmatic contexts and
framework this next cohort as the existing moving to work
functions, correct?
Ms. Blom. There are only very limited instances where they
would not have the same types of flexibilities.
Mr. Aguilar. Okay.
Ms. Blom. So one is if they weren't legally permitted in
the first place, we're not offering those to the expansion
PHA's and then if that type of flexibility would impede the
evaluation of that policy area we are not providing for that
flexibility. So that was spelled out as part of the initial
notice.
Mr. Aguilar. Okay. Otherwise they would be the same?
Ms. Blom. Yes.
Mr. Aguilar. Okay.
Ms. Blom. More or less.
Mr. Aguilar. I appreciate it. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Let me throw 2 questions
at you, and again thanks for your willingness to stick around.
HUD REFORMS
So based on your experience with previously enacted
legislation bills, what potentially is a realistic timeline to
implement reforms once Congress enacts them? So I'm not going
to hold you, you know, know that for example the actual
proposals, some proposals are still under review so I'm not
going to hold you to the timelines and things like that but
just, you have had a lot of experience so roughly what are some
of those timelines once Congress does pass those reforms?
Ms. Blom. So I will say it really depends. It depends on
how complex that legislative changes and those new statues are.
So for instance under the MTW program, Congress provided us
with a 7 year implementation for that program and we do believe
that we will be able to achieve that.
With regard to the regulations that need to be issued to
implement HOTMA it has taken us some time to do that. We
implemented those provisions that were self-implementing very
quickly through notices. We have also issued other federal
registered notices to make other provision applicable. And now
we are in the final rule making stage for the additional
provisions in HOTMA to be able to provide those flexibilities
to housing authorities.
I want to give you my commitment that I am working with the
team to ensure that we are implementing those HOTMA provisions
as quickly as possible with the goal of having proposed rules
available for public comment by the end of the calendar year.
Mr. Diaz-Balart. The reason I'm asking this is because
there are some reforms that are in essence, you know, cooked
into the numbers, in your budget, right. And so obviously we
are already in the process up to the 2019 bill so it's highly
unlikely that even if Congress were to act super quickly which
is a question if we can do that, right, whether we would be
able to benefit from those savings now.
So any idea if that were to be the case that we wouldn't be
able to benefit from those reforms to save us some money? Any
idea how much of a hole potentially would have to be filled in
order to just keep delivering the same level of services that
we are now?
Ms. Blom. With regard to the rent reform proposals, the
department did anticipate that the implementation of rent
reform would happen later in the fiscal year so that not all of
the reductions in funding would occur as soon as October 1. But
I think you're asking the question how much funding would be
required to ensure that residents who receive housing choice
vouchers today continue to receive them at the beginning of
October 1 and we are happy to provide that figure for you.
ENVISION CENTERS
Mr. Diaz-Balart. Great. That would be helpful. One of
Secretary Carson's main priorities, I have heard him say that,
is the envision centers initiative and so I understand that
these centers will coordinate services to facilitate self-
sufficiency and enable individuals and families to graduate
from HUD assisted housing which is a great, great goal and so
do you want to, can you briefly explain the concept of the
envision centers and how these centers will be implemented?
Ms. Blom. Sure. Thank you for the opportunity to talk about
envision centers. This is something that is very important to
Secretary Carson and that we want to establish throughout the
country. We received robust feedback from housing authorities
and others that are interested in establishing envision centers
which would be places where residents, HUD assisted residents
as well as others can come for job training and assistance, for
health and wellness, for educational services, and where other
federal agencies will be able to provide assistance along with
HUD assistance.
So we do see this as a way to capitalize on investments
that are already occurring in localities and working with the
partners and the stakeholders already on the ground to be able
to establish these envision centers.
Mr. Diaz-Balart. Any idea of what kind of funding might be
required to actually implement to successfully implement these
envision centers?
Ms. Blom. As part of the Fiscal Year 2019 budget, the
administration is seeking 2 million dollars to evaluate the
envision centers. But we believe that the funding is already
available on the ground with investments that Congress has
already provided as well as nonprofit and philanthropic funding
that will be able to support the envision centers.
Mr. Diaz-Balart. That's great. Mr. Price.
Mr. Price. Well, thank you Mr. Chairman. Madam Secretary, I
want to wrap up also with some questions that you can deal with
here orally and then supplement for the record if you wish.
One has to do with the research program accompanying the
moving to work initiative and the second has to do with the,
our efforts of some duration to provide workforce housing in
Indian country.
MOVING TO WORK
The fiscal 2017 omnibus expanded the moving to work
demonstration as you know from 39 to 136 agencies. One of the
components of this expansion was a rigorous research
requirement to evaluate the effectiveness of various aspects of
the program. HUD at that point convened a research advisory
committee charge with recommending polices for studying areas
for further research in other words.
This is a change from how the moving to work demonstration
operated in the past and it should provide rigorous evidence of
the effectiveness of the policy options in the program. I think
Congress has amply shown our commitment to the research by
providing robust resources for MTW research in each of the past
2 fiscal years.
So I wonder here this morning if you could provide a brief
update on the research program for the moving to work expansion
and elaborate on your experience with the research advisory
committee and what policy interventions were recommended.
Ms. Blom. Thank you very much for the opportunity to talk
about the research component and the public process associated
with the expansion of MTW.
Thank you very much for the 10 million dollars of funding
specifically dedicated to be able to evaluate and research the
policies that we will be studying as part of the expansion. The
Federal Advisory Committee that the department established had
MTW, existing MTW agencies, residents and HUD staff as well as
researchers form this committee. That committee provided to the
Secretary four recommendations on the cohorts that would be
part of the expansion.
So first, to look at the MTW flexibilities themselves and
to be able to evaluate that. Second, to look at rent reform.
Third, on work requirements and then fourth on landlord
incentives.
So the department is taking the advice of the research
committee and we will be implementing four cohorts over the
next several years with two of those cohorts being initiated
still in 2018.
And then with the research funding, we are already working
with our policy developed and research team at HUD to be
putting together the research framework on how we are going to
be evaluating those four policy areas for study.
Mr. Price. Thank you and we will see if there are details
on any of this that we need to ask you to elaborate further for
the record.
SECTION 184
Well, in the time remaining, let me turn to an important
topic. This too concerns the fiscal 2017 omnibus. It contained
1.7 million for loan guarantees in the Section 184 loan
program. And it was aimed at increasing the supply of housing
for skilled and professional workers in Indian country. These
loan guarantees would leverage more than 400 million dollars in
new housing units for skilled workers. That's a big problem.
The recruitment of doctors, nurses, teachers, lay enforcement
officers in Indian county. It's often difficult and the lack of
suitable housing is an important part of the problem.
So I just would appreciate us, an update on the status of
this program. What HUD is doing to encourage tribes and
tribally designated housing entities to participate in the
program.
Ms. Blom. Thank you very much to this committee and for
Congress for providing the additional lending authority to
specifically target professionals so that they can live on
Native American land. So this ensures that teachers and doctors
and police are--have homes on triable designated properties.
We have gotten the word out to our TDHE's to ensure that
they are aware of this additional authority and also thank you
to Congress for providing expansion to our technical assistance
resources so that now we can use technical assistance funding
to be able to put together guidance to our tribes and TDHE's on
this program to ensure that this additional authority is used
to support housing for professionals.
Mr. Price. What kind of assessment do you have even though
it's probably a preliminary as to whether this is working?
Ms. Blom. I will need to get back to you on who tribes have
used the authority to date and in the past that they have this
authority but now that it's specifically targeted to it so we
will be able to provide you with that data very shortly.
Mr. Price. You have the data at present or what would be
the timeframe when we would get a preliminary assessment?
Ms. Blom. Let me check with my team and then we will get
back to you on the data that we currently have as and the
timetable for that.
Mr. Price. Thank you very much. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir.
Madam Secretary, first let me say that your deep knowledge
and experience was evident once again in this hearing so we
thank you for your service and for your work for the folks that
you are serving.
Ms. Blom. Thank you.
Mr. Diaz-Balart. Let me thank you again and your staff, the
HUD staff for your answers and for participating in this
committee and the staff will be in contact with HUD's budget
office regarding questions for the record. Any questions, I'm
sure there is going to be other questions.
I would ask you that to please work with OMB to return the
information for the record to the subcommittee within 30 days
from Friday and that would allow us to publish the transcript
of today's hearings and again as we put this 2019 bill together
to allow us to have to make informed decisions.
With that, Mr. Price, any further, any final comments?
Closing comments?
Mr. Price. No, thank you. Thank you, Madam Secretary.
Mr. Diaz-Balart. Thank you very much. Looking forward to
continuing to work with you.
Ms. Blom. You're welcome. My pleasure.
Mr. Diaz-Balart. Thank you all. Meeting is adjourned.
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Wednesday, April 18, 2018.
MEMBERS' DAY HEARING
Mr. Diaz-Balart. Let us call the subcommittee to order.
Good morning, and welcome to this year's Member Day
subcommittee hearing.
Today we welcome our distinguished colleague, so far,
colleagues to testify on their priorities for the Department of
Transportation, Housing and Development, Fiscal Year 2019,
obviously under the leadership of our Full Committee Chairman,
our Distinguished Chairman, we brought back at his insistence,
hearing days, in order to give every member the opportunity to
express their priorities and their concerns, and their wishes
for this Subcommittee and or the entire Committee. So,
obviously we want to remember to be involved in the
Appropriation's process, and their views are so important.
So, with that I want to recognize my friend, my partner in
this Subcommittee, the gentleman from North Carolina, Mr.
Price, for any remarks that he might care to share with us.
Mr. Price. Thank you, Mr. Chairman. I join you in welcoming
our colleagues, one by one, to talk about their priorities in
our area of jurisdiction. This is a good idea to make our
hearing platform available to colleagues. And we look forward
to hearing from them. Thank you.
Mr. Diaz-Balart. Thank you. So, we were just talking about,
we are starting with a member who understands this process as
well as anybody. And so I appreciate your passion,
particularly, for Capital Investment Grant Program. And, you
know, I want you to know that last week at our DOT Hearing I
mentioned, by the way, a little project that I know you have
been working just since, I believe, is it the 1890s or the
1990s, right?
Mr. Visclosky. Eighteen.
Mr. Diaz-Balart. Eighteen, 1790s? Well, we brought that up,
sir, to Secretary Chao. And, you know, I know that your project
is in the CIG pipeline currently, and we want to make sure that
projects, including the one like yours, which has taken way too
long, continue to move through the project--through that
pipeline.
We are also having a model hearing with the FTA next week,
where the FTA Administrator will be testifying, and as I am
sure you are already aware we have reached out to your staff
extending you an invitation, hopefully to participate. I know
you are going to be busy in that time, but if you are
available, we would love for you to participate, if possible,
in that hearing, to address your concerns with the Acting
Administrator.
And so, any comments, Mr. Price?
Mr. Price. No. Welcome to our friend. We look forward to
his testimony.
Mr. Diaz-Balart. Thank you. Sir, you are recognized.
----------
Wednesday, April 18, 2018.
WITNESS
HON. PETER VISCLOSKY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
INDIANA
Mr. Visclosky. Mr. Chairman, first of all, I thank you
holding testimony for outside witnesses and other members. I do
think it is an excellent idea for the Committee at large.
Secondly, as a member of the Committee I understand the time
constraints, but felt compelled to take some of your time
today, and Mr. Price's, to thank each of you from the bottom of
my heart for your help over the last several years on the
Capital Investment Grant Program, which has not directly
benefitted our district yet, but has benefitted this country,
by growing the economy and putting us in a place for fiscal
year 2019.
I want to thank all of the members of this Subcommittee,
and I want to thank your staff for all of your work. You
clearly understand the implications of this program.
I would, in reference to your other remarks, a quote from
an article from March 15, 1990, during another Congressional
Election, when I was criticized in the Democratic Primary by of
my opponents for suggesting that regional planners must develop
a tax that is needed to help finance this railroad, knowing we
would have to come up with half the money.
That was March of 1990. We have. And I appreciate the fact
that this Subcommittee understands the importance of that
Capital Investment Grant Program.
I just want to make two points. One, since 1970, the First
Congressional District today now has over 73,000 less school-
aged children in it, because our young people have not stayed.
I am convinced this investment is going to retain and attract
young people and grow our economy.
Secondly, in this day of upset, politically, I am pleased
to note that two General Assemblies ago, it was then Governor
Pence who signed State funding into place for Part 1 of this
program. It is Governor Holcomb who has signed the second piece
of legislation. Senators Donnelly and Young support this
legislation, Ms. Pilarski and I do.
We have four counties involved, two controlled by
Democrats, two controlled by Republicans. They have set their
differences aside, and agreed, because of the value of this
program.
So, from the bottom of my heart to reward that good
behavior over these last 30 years, I can't thank you enough.
And that concludes my testimony.
Mr. Diaz-Balart. Thank you, sir. I do want to mention and
something that will not surprise you. But this Subcommittee
works really closely together. And so, you know, there are some
urban members, there are some rural members in the
Subcommittee, and we all understand that we have to do what is
right for the country, and it hasn't been--we haven't had any
partisan, real partisan battles, we work really closely
together.
Obviously, a big part of that is I think our Ranking Member
who, as you know, one can agree or disagree with him, but he is
always a gentleman, always a gentleman. And so we have that
added to the tone. And I want to thank the members of the
Subcommittee for, again, working in such a collegial way.
So, Mr. Price, any comments, questions?
Mr. Price. Excuse me. I didn't realize I was wired here.
Thank you.
No. I have no questions. I do want to commend our colleague
for his testimony, and also for the spirit in which he has
worked on this for so many years, understanding that the
transportation alternatives we need to develop, and certainly
need to develop in the Greater Chicago area, the area that we
are talking about here, that these do require support at all
levels of government, and support in both parties, both
chambers, that we need all hands on deck.
And he has exemplified that spirit, and I commend him for
it. I thank him for his testimony.
Mr. Diaz-Balart. Thank you. Thank you, sir. Thank you very
much. Thank the gentleman from New York, and we appreciate you
being here. This is your Committee, and so we want to hear what
is on your mind, and how we can be helpful. So you are
recognized, sir.
Mr. Suozzi. Thank you, Mr. Chairman. As you see my name is
Suozzi----
Mr. Diaz-Balart. Suozzi, Suozzi, I apologize. I apologize.
Mr. Suozzi. Okay. Thank you so much, Mr. Chairman, for
taking the time----
Mr. Diaz-Balart. With a name like Diaz-Balart, I am careful
to----
Mr. Suozzi. I didn't know how to say yours either.
Mr. Diaz-Balart. Right, absolutely. Well, there are
different reasons for that though. Anyway, I apologize. Go
ahead, please.
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Wednesday, April 18, 2018.
WITNESS
HON. THOMAS SUOZZI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW
YORK
Mr. Suozzi. Thank you, Mr. Chairman. And thank you, Mr.
Price, I really appreciate you taking the time to be here as
well. And Congressman Young, thank you so much for being here
also.
I am here today to talk about an issue that affects many
places throughout the country, certainly it affects my district
as well, and that is airport noise. I am the Chairman, the Co-
Chairman of a group called the Quiet Skies Caucus, Eleanor
Holmes Norton also serves on as well. Congressman Quigley and
Congressman Lynch are also Vice Chairs of it, coming from major
metropolitan areas in Boston and Chicago. But it is a problem
throughout the country, over 40 members of the Quiet Skies
Caucus; it is a bipartisan group as well.
And it is not my written testimony, but just so you
understand, it is a part of NextGen, we have changed the flight
patterns throughout the country.
So, in the old days, the flights would come in at this
level, and would spread out the noise from airplanes amongst
this big group, but under NextGen it has been narrowed like
this, so it is faster, it is cheaper, it is safer, but the
people that live under the flight path now on this very narrow
takeoff and landing patterns are very much affected by constant
traffic coming over their homes.
So, NextGen is a new phenomenon that has affected a lot of
residents throughout the country that not only live right near
the airport, but live anywhere within the flight path for
landing or for takeoffs.
I am home to the Third Congressional District along the
North Shore of Long Island and Queens, two airports in the
region, LaGuardia and JFK, so two of the busiest airports in
the country. So I am very familiar with this problem, and the
effects that are caused by noise pollution and airplanes. And
also another issue I am going to bring up, which is
helicopters, and the effect it has on people's lives.
We have been talking with the FAA, and they have given us
commitments to study flight patterns, to look at disbursal from
the NextGen system. They have said they will do health surveys,
they are going to create a central complaint system, they are
going to do a better job on community outreach, but it is
unclear that they are going to be acting in a timely basis. It
is very difficult to get them to move forward on a lot of these
different issues.
So we are asking for your help in two ways. I have a
specific set of requests related to the entire Quiet Skies
Caucus that will affect the entire country that relates to all
of my colleagues on the Quiet Skies Caucus. And then I have a
second request that is specific to my district, related to
helicopter noise. So, one is regarding the whole country with
Quiet Skies Caucus, the second is, separately, related to my
district specifically.
So, a couple different requests that we are asking for from
the Quiet Skies Caucus, we are asking to include funding for
the FAA to study health impacts of airplane flights on
residents exposed to a wide range of noise and the air
pollution levels.
Second, we are asking the Subcommittee to include report
language that directs the FAA to evaluate alternative metrics
to the current day/night level, DNL 65. We think it should be
lowered to a lower level, such as the use of noise sampling and
other methods.
In the old days 65 may have been an acceptable idea when it
was disbursed like this, but now the constant level of traffic
over these few homes, or these limited number of homes, we need
to lower that DNL level.
The DNL was developed over 10 years ago at 65, but again,
the world has changed dramatically because of NextGen. DNL,
just so you know, expresses an average noise level based on
annual aircraft operations for an entire calendar year, and it
doesn't really do a good job of capturing the devastating
effects of NextGen over our communities.
My second set of requests; is specific to my district in
New York 3. Thousands of my constituents in northeast Queens
are bombarded daily by helicopter noise, and it gets a lot
worse in the summer when people's windows are open, but also
with the increased traffic of people traveling from Manhattan,
or from other parts of the city of New York, I have got Queens
in my district, it is part of the city of New York, but then
out to the vacation spots, very wealthy people taking
helicopters to go out there.
Well, there was a new route put in place called the North
Shore Route back in 2016 through 2020. The problem is, there
has been a tremendous byproduct of that route in the
constituents that live in Northeastern Queens, and they have
been bombarded with constant helicopter noise.
It is a very complicated issue related to the bridges that
are in the area, the airplane traffic in the area, but the
helicopters, as you know, are not that heavily regulated.
So I am asking the subcommittee to include in the fiscal
year 2019 Appropriations Bill language; that would direct the
review of regulations around helicopter noise, and assess three
different things.
One, the noise impacts of regulations for communities, and
communities in locations where aircraft are landing or taking
off; two, enforcement of applicable flight standards including
in the requirements for helicopters to remain at or below 2,500
feet mean sea level; and three, the availability of new routes
to reduce noise impacts, including the institution of all water
route over northeastern Queens, the County of New York.
If the helicopters could simply travel over the water for
the entire route, it would solve this problem, because no homes
are under the water, obviously.
So that would be a solution to this problem, but we are
going to need some help from the FAA, and from this committee
to direct them to look at that.
So, that is my testimony. And I thank you so much for your
time. I am sorry if I went over.
Mr. Diaz-Balart. No. Actually, thank you so much for being
here. Now, I don't know if you are aware, I know you are of
that, and again, a lot of the credit goes to Mr. Quigley of our
subcommittee, so on the 2018 bill, we did quite a bit, to start
the process, including adding staff to New York, specifically
to deal with the noise issue.
And secondly, in the 2018 Bill there is also, we did add
that language that you mentioned to study the DNL, and so we
will obviously be looking at it when we put together the 2019
bill. It is important that you came to talk to us about this,
and we thank you for your input. But this committee has been
very sensitive to try to accommodate their members.
Mr. Suozzi. And Congressman Quigley does a great job on
this issue and is really very heavily affected by all these
issues as well.
Mr. Diaz-Balart. Absolutely. Mr. Price.
Mr. Price. Just to elaborate for a moment. The helicopter
traffic that you are talking about, these helicopters take off
all over the place. Is that right?
Mr. Suozzi. Yes, but they mainly take off from Manhattan.
But, yes, they take off from all over the place.
Mr. Price. And they are headed to eastern Long Island?
Mr. Suozzi. Right, up to the vacation spots of the
Hamptons.
Mr. Price. So, this problem you are identifying is not
particular related to LaGuardia, to helicopter traffic at that
airport?
Mr. Suozzi. That is correct, but LaGuardia is very closely
situated to where the problem takes place. It is not related to
LaGuardia, no.
Mr. Price. I see. Well, we will take what you say under
advisement. It sounds like a relatively new problem, and one
that has intensified.
Mr. Suozzi. It has actually gone on for years. It is just
that we are bringing it to everybody's attention now, and
people are really--you know, the challenge with a lot of these
issues is, you know, there seems to be an impression that a lot
of those people that are complaining are just cranks, and they
are just overemphasizing.
It is really clearly obvious based upon, not only the
conversations with my colleagues, conversations with my
constituents, that NextGen is a major problem that caused--you
know, it is a lot of benefit to NextGen, but a major problem
for these people that are in the flight paths now, the NextGen
flight paths, it is a new phenomenon that are heavily impacting
people, and the helicopters is a new phenomenon back from 2016
when they changed this North Shore route and it has affected
this one community very negatively.
Mr. Price. Thank you. And thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Thank you, sir. Mr.
Correa? How are you, sir? Thanks for joining us, and we look
forward to hearing what we can do to help you.
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Wednesday, April 18, 2018.
WITNESS
HON. JOSE LUIS CORREA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
CALIFORNIA
Mr. Correa. Mr. Chairman Diaz-Balart, and Ranking Member
Mr. Price, and Congressman Young, thank you very much for the
opportunity.
I am here today to talk about our heroes, our warriors, our
veterans that come back from fighting all over the world to
protect our freedoms. And many come back with invisible wounds
that don't seem to heal. I am here to talk homeless veterans. I
am here to talk a robust funding for programs that provide
assistance for homeless veterans.
As a member of the House Committee and Veterans Affairs, I
am asking this Committee, asking you, please, provide 47
million for the Housing and Urban Development Veterans Affairs
Supported Program, commonly known as HUD/VASH Program for
fiscal year 2019, which is consistent with the 2017 funding
levels.
According to the most recent 2017 Annual Homeless
Assessment Report issued by HUD, there are about 40,000
homeless veterans throughout the country. And as I said, no
veteran that has served our country, none of these heroes who
have served our great nation should be left homeless.
As the gatekeepers of taxpayer money, and keeping the
promise to make our young men and whole when they come back
from serving, it is our responsibility to make sure that we do
everything we can to get homeless veterans off the street.
My state, the State of California, is home to the biggest
number of veterans in the country. Sadly, we are also home to
the greatest number of homeless veterans in the United States,
over 11,000.
California is followed by the States of Florida and Texas,
who are the second and third highest number of homeless
veterans in this nation.
I am going to make my comment short, and say, gentlemen,
ladies and gentlemen, I hope you agree with me and provide that
funding for homeless veterans, the way they deserve to be
treated by this great country.
Mr. Diaz-Balart. Thank you, Mr. Correa. And this
Subcommittee is very, very sensitive to that. And one of the
things that we--and by the way, because of the leadership of
our Full Committee Chairman, and the Ranking Member as well, we
have got a pretty good allocation, as you know for 2018, so we
were able to put on top of the $500 million annually just to
keep the folks that we have in there. We did an additional $40
million in 2018.
We don't have our allocations yet, but just know that this
Subcommittee is very, very sensitive. We have been able to I
think do some good things. And we thank you for your passion.
And just know that we are going to stay in touch with you. Stay
in touch with us. We hope to be able to, again, continue to do
the good work that we started, no, we didn't start it, but that
we were able to add to in 2018.
Mr. Price.
Mr. Price. Thank you. And I also want to commend our
colleague and assure him that your request has bipartisan,
bicameral support as evidenced in the final outcome of the 2017
and 2018 appropriations. The problem of homelessness and of
under-resourcing of housing support is a problem that our
country must simply come to grips with more adequately and of
course this budget that we are reviewing now for 2019 is an
important part of that.
But I think there is wide agreement that the veterans'
population is a special case, because of the needs of this
population, because of the way they have served this country.
And so it is appropriate I think that one segment of this
housing support be singled out for those veterans.
And it does have widespread support in a way that other
housing programs haven't always had, and so we have made
headway.
And I would like to know if you have the California figures
on veterans' homelessness, and how much headway we have made in
reducing that. I know in our state it has been cut in half, in
North Carolina.
But it needs to be zero, or as close to zero as we can make
it, and so I commend you for your focus on this particular
group of people. It is a deserving group of people, and we need
to reflect that in our budget. So, thank you for being here.
Mr. Correa. Thank you, Mr. Chairman Diaz-Balart, and
Ranking Member Price. We have an all-volunteer military, these
young men and women don't ask, they go and serve the country.
And as I said before a lot of them come back with those
invisible wounds, still not healed, and many of them end up in
our streets, homeless.
In California we have over 11,000 homeless vets. We are
working hard. In Orange County, my county, working really hard,
but I think partnering with the Federal Government with your
assistance would go a long way to helping us as elected
officials, keep our promise and commitment to our veterans.
Your words are very positive. I welcome them. I sit, again,
on the Veterans Affairs Committee. Let us work together in
partnership and make sure we do the right thing for our heroes.
Thank you very much for the opportunity.
Mr. Diaz-Balart. Thank you. Again, I just want to also
thank the Ranking Member for those words, which I think really
sums up the feeling of the subcommittee. Thank you.
Mr. Correa. Absolutely, gentleman. It is not a partisan
issue. It is an American issue, it is a moral issue. Thank you
very much.
Mr. Diaz-Balart. Thank you very much. Are you ready, sir? I
want to make sure that you have a little time to get your
thoughts in order. But while you do, I will let you know that,
again, we thank you for your participation. We are here to
listen to you, and I have had the privilege to work with you in
the past, and have been able to get some good things done for
the country. So, I appreciate you, one again coming in front of
this Subcommittee.
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Wednesday, April 18, 2018.
WITNESS
HON. ADRIANO ESPAILLAT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
NEW YORK
Mr. Espaillat. Thank you, Chairman; and Ranking Member
Price, and Chairman Diaz-Balart.
This Subcommittee hearing and the decision that come out
are very important to the constituents that I represent in the
13th Congressional District in New York City.
First and foremost, I want to thank you because the Rental
Assistance Demonstration Project, RAD, was included this year
in the Fiscal Year 2018 Omnibus Legislation. Saving the
Lakeview Apartments in East Harlem, one of the last remaining
Mitchell-Lama buildings in that area, there is a dire need to
maintain and secure affordable housing in that particular
section of the city.
So, with your cooperation, Mr. Chairman, Mr. Ranking
Member, we were able to save 446 units, apartments for families
that live right off of Fifth Avenue. The market rate of those
apartments would have driven the rents through the roof, and
because of your efforts and your help we were able to keep them
affordable, and keep those families there. So I want to thank
you.
It has been a long-standing priority of mine, and I want to
thank the Chairman and the Ranking Member for their tireless
efforts and time working with me since I became a Member of
Congress to ensure that Lakeview's affordability remain by
providing comparable market rent.
The current area fair market rent cap is 120 percent, and
through the legislative language, Lakeview will be able to
receive a significant increase in the cap to meet the gap in
street rent, to market rent, and keep rent affordable for its
current tenants.
The other issue that is very important to me in the
district, is public housing. The New York City Housing
Authority has 400,000 people in it. It is larger than many
cities across the country, and the district has the highest
concentration of NYCHA, New York City Housing Authority, units
in the entire country.
As I said, New York City is the home to the largest public
housing in North America, known as NYCHA, and NYCHA is
responsible for 176 public housing apartments that house over,
just slightly over 400,000 residents.
NYCHA serves low-income tenants including recipients of
Housing Choice Voucher Program, Project-Based Vouchers, and
Veterans Affairs Supportive Housing, HUD programs. For NYCHA to
effectively service tenants, it requires a commitment to robust
funding for public housing, for the Public Housing Operation
Fund, or the day-to-day operation of NYCHA, and long-term
projects of rehabilitating the units.
So, NYCHA has a lot of challenges. One of those challenges
is capital. They have a big deficit, $17 billion, and some feel
that when it is reassessed it can go as high as $26 billion
deficit for capital repairs. That means bollards, roof work,
pointing, windows, elevator work.
And so this winter we saw a tremendous crisis--many of us
tend to do in the very cold winter months. So, they really need
the infusion of capital dollars. They also need the infusion,
obviously, of Section 8 vouchers, the rental assistance. And
over 123 Section 8 housing vouchers are dually administered by
the New York City Housing Authority and also New York City's
Housing Agency. The increase to the additional moneys in the
fiscal year 2018 omnibus will better accommodate for needs, so,
this year's budget was helpful in increasing not only the
capital, but also increasing by 40 percent the operational
budget and I think 5,000 vouchers for Section 8. So, I hope
that we get our fair share of those particular increases in
NYCHA. Therefore, with a total of $30.3 billion allocated for
Section 8 and public and Native American housing, I urge the
Committee to dedicate at least $22.8 billion to fully fund all
existing vouchers for their Housing Choice Voucher Program,
Section 8 Rental Assistance for fiscal year 2019.
As I said earlier, public--the Capital Fund is an important
one for New York City housing that is transitioning in
leadership right now, as we speak. HUD's most recent capital
needs assessment shows a deficit of $26 billion. So, actually,
they have already made the assessment. I said that their
deficit was $17 billion. That is the old deficit; it has
ballooned now to $26 billion in capital repairs. And that is--
of course, is roofing, so I am proposing a--I am proposing that
the Public Housing Capital Funding be increased to a level of
at least $5 billion in fiscal year 2019. So, that is important.
Obviously, we cannot make all these repairs in a short period
of time. They will have to be staggered in. So, we feel that a
$5 billion allocation is a good one. We also have the proposals
for the community development grants.
In the past calendar year and even now, the utility and
flexibility of community development go--block grants cannot be
underscored. In New York City alone, community development
block grant money has been used to repair over 19,000
households of multifamily buildings. Investing in a single
family or multifamily in NYCHA, we have a resilience program
has yield dividends in surplus of the investment. So, community
development block grants are very important and I want to thank
the Committee for allocating $3.3 billion in fiscal year 2018
and urge the Committee to fund this vitally important program
at the maximum amount, if possible, in 2019.
Finally, Mr. Chairman, I have a particular project that I
wanted to discuss with you that involves public safety. And you
have seen how unfortunately, there have been several terrorist
tracks--attacks, one in New York City on the West Side Highway
and several across the country and across the world. The use of
vehicles to basically run down pedestrians. And so, I am
calling on the Committee to consider the funding of bollards.
Bollards are structures that will impede vehicles from being
used as a terrorist weapon to kill civilians, as it was done
in--unfortunately, in the West Side Highway New York City and
many places across the world and some other places across the
country. We feel that this is a sensible and practical measure
that will save peoples' lives and we--I have presented the Stop
Act, which will stop the threats on pedestrians that will help
fight back on terrorist attacks. So, I will consider--I would
love the Committee to consider funding these--this particular
project.
With that, I close, Mr. Chairman, and I again, want to
thank you for your efforts to help out Lakeview and for your
efforts to bring funding to NYCHA. And I think that we have a
lot more to do, but I want to continue in a very collegial and
bipartisan fashion to work with you to make sure we accomplish
that.
Mr. Diaz-Balart. Let me----
Mr. Espaillat. Thank you so much.
Mr. Diaz-Balart [continuing]. Let me--again, I would be
remiss if I did not mention your just tireless leadership and
advocacy. You have been--you--I mean, heck, you had barely
gotten sworn in and you were already jumping on us on these
issues. And so--and we do listen. We do----
Mr. Espaillat. Okay.
Mr. Diaz-Balart [continuing]. Listen and so I know that you
know that we raised the cap on the program on RAD to 455,000
units and also expanded the use of RAD for the elderly program.
And so just know that we do listen to you.
Mr. Espaillat. Thank you.
Mr. Diaz-Balart. And you mentioned--you were very gracious
in thanking us, but frankly, we have to thank you for your
leadership. You got some big things done for your constituents
and also you mentioned Public Housing Capital, which we did--we
were able to put a substantial increase of--an increase of $750
million, which is substantial and again, full funding of
Section 8. So, again, just know that the Subcommittee works
very closely together. We have been listening to you and we
look forward to continuing working with you.
Mr. Espaillat. Thank you so much. Thank you, Chairman.
Mr. Diaz-Balart. Mr. Price.
Mr. Price. Thank you. I also want to thank you for your
advocacy. Everything you said this morning, just now, is
relevant to our 2019 deliberations. We have made headway, as
the Chairman says, on most of these items in 2017, 2018 by
virtue of bipartisan budget agreements. But the adequate
funding of public housing repair and maintenance, the support
for CDBG, and funding a reasonable number of RAD conversions
where those are the chosen path forward for housing
authorities, all of those are on our agenda and we thank you
for underscoring there for us.
Mr. Espaillat. Thank you so much. Thank you. Thank you,
sir.
Mr. Diaz-Balart. Gentlewoman from Washington is recognized.
Thank you again, for being here. Always a pleasure speaking to
you.
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Wednesday, April 18, 2018.
WITNESS
HON. PRAMILA JAYAPAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
WASHINGTON
Ms. Jayapal. Thank you so much, Chairman Diaz-Balart. Turn
that on. Thank you so much, Chairman Diaz-Balart for having me
here, Ranking Member Price, thank you, Members of the Committee
for the tireless work that you have done. I think we saw some
very, very good results in the omni and I think I am probably
going to mention some of the same issues that my colleague just
mentioned, as well, because frankly, coast-to-coast, rural and
urban, these are the issues that we are tackling. And so, I
want to talk about both housing and transportation.
My District, which is Washington's 7th Congressional
District, it includes Seattle. It is not limited to Seattle,
but it includes Seattle. Housing affordability is one of the
biggest challenges that we face. Seattle's median home value is
$740,000 and home value skyrocketed by 18 percent. I know, it
is--believe me, having lived there for so long, it is stunning
to see what is happening. Skyrocketed by 18 percent in 2017
alone. Median rent prices--here is another staggering figure--
$2,500. And Seattle is expected to have the highest cost of
living increase in the United States this year. And as the cost
of living increases, it is our responsibility to ensure that
our low and middle-income families can continue to call Seattle
home.
Because costs are rising so steeply, we have had an
incredible increase in homelessness. And I actually
participated in what is called the One Night Count to end
homelessness. This year's annual Point-In-Time Count of persons
experiencing homeless totaled 11,600 people, homeless
individuals living in King County, with 5,485 living
unsheltered, 70 percent of whom are in Seattle. And many of
these are Veterans, they are members of the LGBT community, and
sadly, increasingly members of our young people, our youth.
And I just have to say, we have a lot of highways that run
right through Seattle and so when I was out on the One Night
Count, to see the staggering disparities between the incredible
wealth that we have--we have skyscrapers everywhere, a lot of
boom and business everywhere in Seattle--but increasing numbers
of tents under the freeways, which is now sort of the only
place that these tents can go. Federal Funding goes an
incredibly long way to addressing this issue, eradicating
homelessness, and expanding access to affordable housing. And
so, thank you for the work that you did already in fiscal year
2018 and for 2019, we are urging increases in Section 8,
community development block grants, and the McKinny-Vento
Homeless Assistance Grants. These are essential for our local
governments and non-profits working to end homelessness and
expand affordable housing.
The Seattle Housing Authority has a patchwork of funds to
ensure that people like Marvin--and I always like to bring
stories of my constituents because I think it is easy to think
about these things in numbers. But for me, it is based in
people and lives. So, people like Marvin can transition from
years of addiction and experiencing homelessness in Seattle's
most dangerous areas to now his situation, seven years of
sobriety, a stable job, and an apartment of his own. Jill, a
single mother, aspiring to be a nurse, who gained affordable
housing, she is now enrolled at Seattle University's College of
Nursing. These Federal Funds that you allocate every year are
critical to changing peoples' lives. They allow them to have
the stability to get back on their feet and pursue their dreams
and education, the workforce, and life.
I want to specifically mention Section 8, which I know my
colleague was just mentioning. That has been essential to my
District in particular. We did receive $17.7 million in Section
8 Funding. And for fiscal year 2019, I am hoping that you will
appropriate $22.8 billion for Section 8 and specifically $20.6
billion for renewals, $110 million for new vouchers, $1.9
billion for administrative fees, and $190 million to renew
approximately 14,000 mainstream vouchers.
Mr. Chairman, the dedicated organizations that are working
on these issues do stretch the funds as far as they possibly
can and I did not plan this. This is--this was not a plant, but
it so happens that the executive director of the Low Income
Housing Institute happens to be in D.C. today. She is here.
LIHI used a combination of funding sources to construct Marian
House, which is a mixed use affordable housing apartment
building, 49 studio apartments, 20 of which are affordable for
homeless youth, 29 of which are for low-wage workers who are
just getting their start in the workforce. So, they really do
incorporate crucial wrap-around services and that is what the
Federal Funding allows us to do.
Our downtown emergency service center uses the McKinny-
Vento Homeless Assistance Grants to house some of our most
vulnerable populations in both traditional emergency shelters,
as well as innovating setting--innovative settings that embrace
the Housing First model. Last year, my District received about
14 million in funding for these programs and we are really
urging an increase for fiscal year 2019 to 2.8 billion.
I also wanted to briefly mention how important the housing
opportunities for Persons With AIDS program is because for
people living with HIV and AIDS, they are far more vulnerable
to experiencing homelessness and it also reduces the
transmission of HIV, improves patient health, and saves cost on
emergency and in-patient services. Last year, my District
received about $2 million in HOPWA funding and the need
continues. I am urging an increase in fiscal year 2019 funding
for that program to $393 million.
And then I just want to mention a couple of important
transportation projects. The first is passenger train safety
and the second is around general transportation projects.
Regarding passenger rail, as you know, Mr. Chairman, in
December of 2017, the Seattle area became the latest community
to experience tragedy when the Amtrak Cascades 501 traveling
from Seattle to Portland, carried 80 passengers and seven crew
members, derailed near Olympia. Three Washingtonians died and
nearly a hundred were hospitalized. So, for our communities in
the Pacific Northwest, this terrible incident--accident was a
stark reminder of how badly we need to invest in passenger rail
safety.
The FY 2018 omnibus, I want to thank you, included nearly
$2 billion for Amtrak and my hope is that the national network
of passenger rail will be robustly supported with a serious eye
towards passenger rail safety. We think it is very important
that no new lines come onboard without those controls in place,
but we do need to make sure that we increase the funding
quickly so that people can put those safety measures into place
so that we never have such accidents.
Finally, Mr. Chairman, very pleased that the Subcommittee
provided a-hundred million in fiscal year 2017 under the
Capital Investment Grant Program for a very important program
in my District, it is the Sound Transit Lynnwood Link Extension
that connects North Seattle to Lynnwood. This is the area--we
have Boeing just above the District. All of our housing and
much of our employment is being pushed to expand beyond
Seattle. If we do not have transportation that connects to the
port that helps get goods from Eastern Washington or apples or
all of the things that we export from Eastern Washington in, if
we do not have clear transit that connects north south, we are
going to be in trouble. So, this is a critical project for us.
Sound Transit last month submitted all of the work to the
Federal Transit Administration in order to execute the full
funding grant agreement this summer. But unfortunately, we have
not seen a response from the Department of Transportation to
live up to the side of the deal that says the--that, ``Yes, we
are going to release these dollars.'' So, Secretary signature
on FFGAs guarantees that our communities do not get left
footing the bill for the federal share of these critical
projects. This is a project that really took all of the funding
sources that we have. We got the state to commit. We do need
the federal commitment in order to move this forward. And so, I
was very pleased that the Subcommittee included language in the
2018 omnibus that sets a clear deadline for the Department to
commit to releasing the funds. And I hope you will help us to
continue to push for a very quick release and push the FDA to
implement the law and sign those FFGAs so we can get to work on
putting those funds to good use and leveraged use, which I
think is one of the most important things in the federal
dollar.
So, with that, Mr. Chairman, I thank you very much again
for all of the work that this Committee has done on these
critical issues that, really, for our District in Seattle,
remarkably difficult time for us as people struggle with these
astronomical rents and housing prices and homelessness. Thank
you, Mr. Chairman.
Mr. Diaz-Balart. Let me just thank the gentlelady for being
here, but not only being here because we have had the
opportunity to talk----
Ms. Jayapal. Yes.
Mr. Diaz-Balart [continuing]. At other times and--by the
way, those numbers are astonishing.
Ms. Jayapal. Yeah.
Mr. Diaz-Balart. They are.
Ms. Jayapal. It is----
Mr. Diaz-Balart. They are hard to almost comprehend, right?
And so again, thank you for--as you know, we did have that $250
million for PTC because, you are absolutely right, there are
some accidents that potentially could have been avoided all
together and that is--I do not know if it makes it worse, but
it makes it clearly--well, if it is avoidable, we need to avoid
it. And so, this Subcommittee has been very committed and also,
that $2.6 billion for transit CIG, which are historic highs.
And again, we--this Committee is committed to it. We actually
also--on the last issue that you mentioned in the hearing with
the Secretary, we actually brought that up.
Ms. Jayapal. Oh, great.
Mr. Diaz-Balart. And so we do have the language, but we
also want to make sure that--because they are going to--they do
not have a lot of time and so we are going to be on top of
that, to make sure that what the Committee has put there and
Congress has approved actually takes place. And I think the
Secretary was very helpful and very amenable, understanding
that they are going to have some challenges because of the
timeline. But, Mr. Price, any comments, questions?
Mr. Price. Thank you. I want to join in thanking our
colleague for really a remarkable survey of the importance of
the Subcommittee's work to a city like Seattle. It is striking
how many points of contact there are. And I would say your
story is not atypical, just speaking about my own District and
others I know about. Affordable housing has risen to the top.
It should have been at the top all along, but it has certainly
risen to the top now of challenges we are facing and it is
very, very clear that the way development is going, the way
gentrification is going, that the market forces are not going
to take care of this on their own. On the contrary, they are
going to price many of our fellow citizens out of housing. And
you have, of course, documented that, but you have also shown
where some of the solutions may lie. So, we thank you for your
testimony.
Ms. Jayapal. Thank you so much.
Mr. Diaz-Balart. Thank you. Mr. Graves, gentleman from
Louisiana. While he comes up, Mr. Graves is not an
appropriator, but I do not think there are many people in
Congress that have had more of an impact, particular on the
Relief Bill. The hurricane and fires and the supplemental that
Mr. Graves, he has been a staunch leader. I appreciate, by the
way, thank you for spending all the time with us individually.
Your work and your knowledge has been invaluable and I want to
thank you. So, again, you have your fingerprints all over the
omni, you have your fingerprints all over the relief bill, and
so we want to thank you for your leadership.
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Wednesday, April 18, 2018.
WITNESS
HON. GARRET GRAVES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
LOUISIANA
Mr. Graves. Mr. Chairman, Congressman Price, thank you very
much for the opportunity to be here today. Garret Graves from
South Louisiana.
We have had the opportunity to discuss this a bit, but I
think it--I think it is really important to reemphasize. When
you take a step back and look, since 1980 we have had somewhere
around 220, 230 disasters in this country that have cost over
$1 billion. And, in fact, when you add it all up, including the
$180 billion dollars that we spent on the 2017 disasters, this
nation spent about $1.5 trillion responding to disasters. And
an important component in addition to all the FEMA funds is
what your Subcommittee does and the community development,
block grant, disaster recovery funds.
In the case of Louisiana, we had a little-known storm that
actually wreaked havoc in August of 2016. We had a storm that
was a 1,000-year storm. The Red Cross at the time and I believe
it was the National Flood Insurance Program indicated that at
the time it was going to be the 4th most costly flood disaster
in U.S. history. This thing was not well-known, it did not get
a lot of attention or press, but it, again, it wreaked havoc on
many in South Louisiana.
To date, the Subcommittee has provided approximately $1.7
billion to the State of Louisiana and community development,
block grant, disaster recovery funds, and they are being used
for a program in Louisiana called Restore Louisiana to provide
assistance to homeowners and businessowners that have been
adversely affected. Let us keep in mind, Mr. Chairman, with a
1,000 year flood, approximately 80 percent of the homes and
businesses that flooded were outside of the flood plain and
didn't have flood insurance. I apologize because the graphic
shop had some problems this morning, but you get the point here
anyway, despite the gap, that one $1.7 billion is what you
provided. The first allocation was about $430 million in
September of 2016, over a year and a half ago. Second
allocation in December of 2016, approximately $1.2 billion and
the third allocation, which I believe was May of 2017 that was
around 50. But here is the point. So, we're talking of this
actually happening over a year and a half ago. You have been
very helpful in working with us in providing $1.7 billion. This
chart is from our local newspaper, largest circulation in the
state and I believe it was the first week in March. A disaster
a year and a half ago, you provided first allocation of funds a
year and a half ago. Sixty million dollars has been distributed
to homeowners. Again, I want to be clear this is a chart that--
a graphic that was done the first week of March. It has been
updated since then. I do not know what the current number is.
Seventy million dollars is what has been paid to the contractor
to administer this program. Mr. Chairman, you and I have talked
about this and I know that there are a lot of fingers we can
point, at the federal government. The reality is this is
inexcusable. It is just unacceptable. These are flood victims
and thousands and thousands of these people are still living in
gutted homes; living in tents; living in moldy, unsanitary
conditions because they do not have an option. Now, I know this
gets outside of your subcommittee's jurisdiction, but to add
insult to injury, many of these people are living in trailers.
FEMA has come in and said that they are moving the trailers on
May 15th. Well, if these people do not have access to the
dollars to get back into their homes, what alternative do you
have? There is a total disorganized effort here that is
revictimizing the survivors of these floods and I think it is
unfortunate and I would love to work with you as well as others
in ensuring that the victims of Hurricane Harvey, Irma, Maria
do not experience these same disasters and we are able to fix
this as well.
Mr. Diaz-Balart. If I may interrupt you and just to let Mr.
Price know. We met with him, was it yes--a couple days ago, but
we have had multiple meetings with him and he has been--
frankly, has been--as bringing this up totally documented and
so we committed to him that we are going to try to figure out
what is holding it back and--because we do not really know and
so, Mr. Price, I look forward to--because I know you are going
to be--both of, by the way, as you know, are very sensitive----
Mr. Price. Yes.
Mr. Diaz-Balart [continuing]. Not only because just as
Americans, we need to be, but on top of that, we live in states
that have had the same kind of, you know, we get hit by storms
as well, so, Mr. Price, we will get together and see how we can
coordinate to make sure that we get to the bottom of this
because this is obviously a major problem, an unacceptable
problem that we need to figure out.
Mr. Graves. You mentioned--right, you do not want to point
fingers, but we do need to figure out what is holding us back.
What the problem is because that is clearly unacceptable, and I
do not know if you have any comments, Mr. Price.
Mr. Price. I agree and we are all in on this disaster
relief and the way we need to support one another because the
kind of human catastrophe you describe, I do not think that is
too strong a word is what this spectrum of assistance is
supposed to avoid. And we are not only talking about CDBG here.
We are talking about the full range of FEMA support and so, we
appreciate your advocacy and we will, of course, continue to
work with you.
Mr. Graves. Thank you, we have to get to the bottom of it
and again, as I said before, I cannot thank you enough for your
leadership. You have been exceedingly well informed and
frankly, every time I sit down with you and I talk with you, I
learn and so just know that we are going to work together. We
are going to get to the bottom of it. Well, I certainly do
appreciate it and I understand some of this may be outside this
subcommittee's jurisdiction potentially, if it is in our----
Mr. Price. We will work with our colleagues.
Mr. Graves. But we do need to identify these problems
because it certainly is going to continue to be problematic to
other disaster victims. If I can just quickly, two other
things, Mr. Chairman. One, this duplication of benefits issue
where folks have applied for a loan through the SBA because
they were told to do so. Maybe they were given a loan, maybe
they were not. In either case, they are prohibited from
accessing some of the grant funds available from Community
Development Block Grant because it is considered a duplication
of benefits. I would argue that a grant and a loan are two very
different instruments that do not duplicate one another. Those
people that were proactive and sought the loan and took the
advice of the--of FEMA officials and did what they were told to
do are now being penalized they are not being allowed to get
access to grants. We did pass a Bill through the House of
Representatives on December 21st that addressed this. The
Senate has not taken it up to date, but I just wanted to
highlight this, is that I do think it is a policy problem and
that there is this perception that a grant and a loan are the
same thing. Lastly, Mr. Chairman, right now, we have about a
hundred billion dollars in the Corps of Engineers that are
backlogged, a hundred billion. We are appropriating somewhere
around one to $2 billion a year. You can do the math. Just
based on inflation, you will finish that backlog approximately
never. And what you have done through the Community Development
Block Grant Flood Mitigation Funds, I want to commend you for
that. That is a huge deal. I talked when I opened up about $1.5
trillion in disaster spending. It is unaffordable. We are on a
trajectory that is completely unsustainable. You, leaning
forward and being proactive with those flood mitigation
dollars, that is going to save multiple times the funds in
disaster recovery. It allows us to stop this reactive nature of
our disaster policy in the United States and begin leaning
forward and being proactive. I really want to commend you for
doing that. I think it is very important. We may need to
address a technical issue with the available of those dollars
to advance some core authorized projects that do not have
resources available. With that, I just want to thank you very
much for an opportunity to be here and look forward to
continuing to work with you.
Mr. Diaz-Balart. Well, thank you. Again, we look--we are
going to get you some answers because, not only do you deserve
it, but the American people deserve it. And again, I cannot
thank you enough for your leadership. Look forward to continue
working with you.
Mr. Graves. Thank you very much. Appreciate it.
Mr. Diaz-Balart. Mr. Kildee. How are you, sir?
Mr. Kildee. I am well, thank you.
Mr. Diaz-Balart. Thank you for coming before the
Subcommittee today.
Mr. Kildee. Thank you very much.
Mr. Diaz-Balart. You are recognized, sir.
There you go. If there is a button there on----
Mr. Kildee. Oh, there we go.
Mr. Diaz-Balart. Now, we are talking. All right.
Mr. Kildee. The sound of my own voice. It is music.
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Wednesday, April 18, 2018.
WITNESS
HON. DANIEL KILDEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
MICHIGAN
Mr. Kildee. Well, thanks for taking a few minutes. I can do
a 1-minute speech. I can do a 20-minute speech easily. Five
minutes is a bit of a challenge, but let me do what I can. What
I would like to discuss with you is the need for what I think
is a much more robust Federal role in the health, both
financial and social economic health of America's cities and
towns. I think the history of the country, let alone the
history of the world shows us that where people live and work
in proximity to one another, they are far more creative. They
are ingenuous, they are inventive, ideas are commercialized and
I think to a great extent in this country, particularly at the
federal level, we have taken--essentially abdicated our--what I
think is a unique responsibility to support strong cities and
towns. To a certain extent, it feels as though in recent years
at the federal level, we have been essentially adopting a
hippocratic oath fighting essentially to do no harm and I was
pleased frankly, in the most recent budget that we saw for the
first time in a very long time an increase in two programs that
are really two of the remaining programs to support strong
cities. The CBDG Program and the Home Program. That was a step
in the right direction, but I think it falls, at least from my
perspective quite short of what our--the emerging needs in
these places. Many cities in this country are facing a kind of
fiscal stress that is really difficult for us to get our heads
around. My own hometown of Flint, while it could be considered
an extreme example, is only just that in its example. It is
just an example. The way state governments, in particular, have
viewed these places, it is as if cities are the municipal
corporations that were formed to provide services to them. And
what we know, of course, is that cities are not the municipal
entity. Cities are social and economic organisms and so, while
many state governments have taken the position as was the case
in my hometown, that you can essentially bankrupt a city. You
can deal with its obligations; you can get them to a balance
sheet level of solvency. Unlike typical corporations, you
cannot sell off the parts and dissemble that corporation. There
is still a living and breathing community left behind. I
believe that the next big institutional failure that we will
see in this country is the collapse of the whole subset of
American cities. What we saw in my hometown of Flint, with the
water crisis, a community that just now, after 4 years of not
being able to drink the water is being told that they no longer
have to draw every ounce of water from bottles like this. 4
years. Think about the economic and social impact on that
community.
If Flint were some sort of an anomaly, if the cause of the
water crisis for example was a mistake or a storm or some
catastrophic event, rather than what I think is the natural
result of disinvestment in older industrial cities particularly
cities large and small that have had significant population
lulls, high concentrations of poverty and it could be left
behind even with the next wave of federal investment absent
some specific support for those places, we are going to see
more Flint, Michigan's.
Last point I will make and this is in the context of not
just conventional support for cities at I think the federal
government could play a great role in but the concern about the
unintended consequence of what might feel like a really big
down payment on investment and community and that is a national
infrastructure bill. Certainly not the way the President has
framed it. The notion for example that a place like Flint and
the state of Michigan could come up with 80 percent of the
money to have fixed this water system. If they had 80 percent
of the money already, they would have been spending it a long
time ago.
But here is my bigger concern. In the 1990's post war
growth and expansion was coupled with a huge investment in the
interstate highway system which in the net was a big boon for
the country. Increased our productivity, our connectivity,
helped lots of growth occur. But it also had this unintended
consequences of efficiently emptying out many of the places,
many of the older communities that were having a tough time
making the transition to the next economy.
Here is my worry. Absent a significant essentially martial
plan for these distressed communities, and absent a really
thoughtful approach, the next wave of significant investment
could actually be a repeat of that phenomenon. And I am deeply
concerned that unless Congress and the federal government
understands that while states have the principle role, we are
not absent from this discussion nor is the federal interest
absent from the health of these communities and we really need
a focused effort.
Otherwise, Flint will not have been the anomaly that many
people think it is. It will have been a warning that we failed
to heed. So I am hopeful that the modest increase that we have
seen recently is a signal that there is an openness and a
recognition that we need to do much, much more.
Mr. Diaz-Balart. All right. Let me thank you for again
coming in front of the subcommittee. Just as you know in the
2018 omnibus it was an increase of 10.6 billion dollars. And so
there is a lot of talk about infrastructure but this Congress
and this subcommittee has done it. This is a real investment
into infrastructure and also if you look at HUD, it is a 1.9
billion dollar increase so this was a very generous allocation.
We don't know what is going to happen for the 20, you know, for
the next year's budget. And we don't have the allocation for
this one yet but I will tell you that the full committee
chairman and the ranking member have been very generous with
the subcommittee and so rest assured that, you know, we are
committed to obviously investing in infrastructure.
One final point that I do want to make and I know you are
aware of this. We focus so much as we need to, that is what
this committee does, the full committee on in essence 30 cents
on the dollar and yet we ignore 70 cents on the dollar which is
growing exponentially and so one of these days we are going to
have to obviously and that is not something that this committee
can do, but Congress is going to have to, Congress and the
Administration is going to have address the other 70 percent of
the spending which is frankly creating some big issues with us
and debt and everything else but again that is for another day
but we can't just continue to ignore 70 cents and only focus on
the 30 cents which is more and more challenging.
Mr. Kildee. There is no question. One little stat that I
will throw out because I think the Flint experience is one that
is instructive. For the lack of about 20 million dollars to
completely retrofit the city's lead service lines, the federal
government and state government now just in the last 3 years
have spent over half a billion dollars to repair the damage
done by the failure to market that initial investment. So the
point I think that I know you are well aware of is that there
is spending and there is spending. And sometimes spending just
gets a bad name but spending in the name of preventing massive
future costs is a really wise investment that we ought to be
considering and I know you do so thank you for that.
Mr. Diaz-Balart. Thank you. Mr. Price.
Mr. Price. Thank you for giving us a broader perspective on
our work here. I think sometimes we are focused on preventing
harm as a witness said earlier. We have the sense, justified I
think, that most if not all HUD accounts have long since been
under resourced and the same is less true on the transportation
side but there is plenty of underinvestment there as well.
Just in the limited time we have, since you are bringing a
broader perspective to this, I wonder if you, you are clearly
not advocating simply an incremental approach. As you survey
the programs under this subcommittee's jurisdiction, are there
some that are more vital than others in to the kind of
situation you are describing? In your experience or as you
project future needs?
Mr. Kildee. Well, yes. The issue for me, the interesting
part of that question is I think to a great extent I believe
there is a need for a specific set of new initiatives around a
specific subset of cities. I do support and agree that the
programs that this committee has jurisdiction over,
particularly when we look at CDBG and home, those are important
programs for communities across the spectrum but where I think
we have failed is in recognizing that there is a, this subset
of cities for whom even marginal increases in those resources
are a small offset to what has been dramatic loss of their
locally available resources due to regional changes in the
economy, the emptying out of those places.
My hometown of Flint is such a good example but there are
so many others. But this is a city that once had the highest
per capita income in the United States. Highest per capita
income in the United States. Not only in my lifetime but in my
working career and now is the poorest city in America.
Forty-five percent of the people in Flint live below the
poverty line. 58 percent of the children live below the poverty
line. So the notion that an incremental approach is helpful is
true. But there are something in the neighborhood of 50 cities
and towns and I am not talking about just big places but some
places of 20 and 30 thousand population even smaller for which
modest increases in existent programs not only are only
incremental but those communities don't even have the capacity
to manage what they are doing. There needs to be some kind of
an approach that is far more robust for those specific highly
distressed communities.
Mr. Price. The capacity to manage what about the capacity
to pursue these, this support. Has that been a problem as the--
--
Mr. Kildee. Very----
Mr. Price. Has the city had the capacity to go after what
is available?
Mr. Kildee. They do not and it is a god point because when
we see communities go through this financial collapse, the last
programs to be cut are the basic services of a civil society.
For example, police and fire. The first programs to be cut are
the management capacity like for example in my own home town
until very recently there was not a city planner. There was no
one in the planning department. Not a person at any desk. So
when programs such as the most recently adopted program around
opportunity zones come along, absent some simply are missed.
They don't have--either--because you have been very generous
with your time.
I invite any member to come to my hometown and I am
planning another visit soon mainly to point out that it wasn't
just this water crisis. The kind of physical austerity that has
been imposed on this community, largely because it is left to
itself to raise revenue to provide the basics elements of a
civil society. The--beyond anything you might comprehend there
is a, sometimes in a city of 100,000 people there might be 4
police officers. And this is a city that has high crime. The
parks are not mowed. The streets are never maintained. This is
my hometown.
My wife and I were visiting another community and we saw a
street sweeper and it was as if we were looking at a unicorn.
We never see a street sweeper. The kind of austerity that these
communities are experiencing is the type of austerity that they
have no capacity to climb out of and that is why I think there
is a social and economic cost that is born by the entire
country which argues for a more robust federal involvement in
this specific subset of cities and it is really my argument is
that it is not just the programs that are in existence now but
there needs to be a recognition that there is this looming
institutional failure in a smaller set of cities for which the
existing programs are just not really adequate to deal with the
problems they are facing.
Mr. Price. Thank you. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Gentleman from Nevada. How are you, sir?
Great, thanks for being here.
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Wednesday, April 18, 2018.
WITNESS
HON. RUBEN KIHUEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
NEVADA
Mr. Kihuen. Thank you. Good morning. Chairman Diaz-Balart,
Ranking Member Price and my colleagues on the Subcommittee on
Transportation, Housing and Urban Development, thank you so
much for this opportunity to testify in front of your committee
this morning to talk about some important issues impacting
Nevada on transportation infrastructure, especially the I-11
project as well as the need for affordable housing in the state
of Nevada.
Mr. Chairman, as you know our nation's infrastructure is
crumbling with the American Society of Civil Engineers giving
the United States a D plus. To fix this, we need to invest in
our nation and rebuild our roads, our bridges, tunnels, ports,
and airways.
One such project underway is the I-11 projects which is an
interstate highway that will eventually span from Arizona's
border with Mexico to Montana's border with Canada. This
project will link Las Vegas and Phoenix which are the only two
adjacent cities in the nation with populations of more than 1
million people that are not currently linked by an interstate.
Once completed, this project will mark the first new
infrastructure addition to the 47,856 interstate highway
systems since it was deemed complete in 1992.
Not only will I-11 serve as an important link between major
metropolitan areas in the southwest, it will also serve as a
vital link for rural communities in Nevada's 4th Congressional
district which as you know, Mr. Chairman, is the third largest
congressional district in the country, covers almost 55,000
square miles. And so it is critical that the I-11 corridor does
not and I repeat does not bypass towns in rural Nevada
including Mina, Looning, Hawthorne, Walker Lake, Shers and
Yerington which would cost these communities the economic boost
that would come with the development of I-11.
In particular, Mr. Chairman, I-11 is vital for the
Hawthorne Army Depot. In order to meet personnel demands and
ensure that our, ensure our national security.
I-11 is a type of infrastructure project our country needs.
It will not only improve our nation's crumbling infrastructure
and create jobs but it will also make possible a key
international trading route that will improve tourism, mobility
and economic growth. I-11 is critical for the State of Nevada
and I ask that this subcommittee make this major infrastructure
project a reality and reject any proposals to toll our nation's
highways and bridges.
Mr. Chairman, in addition to the I-11 project, I strongly
urge this committee to continue funding the TIGER program, the
grant program. These TIGER grants are a valuable funding tool
for state and local governments and have provided millions of
dollars to the state of Nevada over the years. These grants
have been essential in maintaining our existing infrastructure
and providing for future needs.
In addition to transportation, one of the most critical
issues facing my constituents in the State of Nevada is access
to affordable housing and neighborhood stabilization. As many
of you know Nevada was the hardest hit state in the country
during the housing crises. While the State of Nevada is in a
much better place than it was during the recession, the pain
from the housing crisis continues to this day.
As my constituents know, Nevada led the nation in
foreclosures for more than 5 years during the recession. In
2010 Nevada's mortgage delinquency rate peaked at 10.7 percent,
one of the highest in the country. Only last year did this rate
come down to the national average of just 1 percent.
As homes are being foreclosed upon and families were being
forced out of their homes, many Nevadans were pushed into the
rental market. Due to a drastic slowdown in new home
construction, more Nevadans were competing for fewer units. In
fact, only 10 affordable housing units in Las Vegas are on the
market for every 100 low income people seeking a rental. At the
same time, HUD rental assistance decreased giving a one, two
punch to Nevada families.
The HUD housing choice vouchers play an integral role in
helping low income families, the elderly and people with
disabilities afford these safe and sanitary housing in the
private market. Many of my constituents rely on this program
and I urge the committee to fully fund the housing choice
vouchers.
Another important program to ensure strong sustainable and
inclusive communities is through the community development
block grant program which was discussed earlier, Mr. Chairman,
which provides communities with the resources and needs to
address community development needs. Even though this program
has been highly effective in seeking to ensure decent,
affordable housing, the Trump Administration has proposed
eliminating the CDBG program. For Nevada, this will mean a loss
of nearly 20 million dollars in funding. This is why I am
asking the committee to fully fund the CDBG program so that the
state and local jurisdictions in Nevada and across our nation
can thrive.
And finally, Mr. Chairman, I would like to discuss the
importance of the Native American Housing Block Grant Program
which is critical for these, for those living in Indian
country. Native Americans are twice as likely to live in
poverty compared to the rest of the country with homes that are
overcrowded and in need of repairs. To address these housing
needs, the Native American Housing Block Grant Program can be
used for housing development and assistance. We owe it to our
nation's tribes to provide them with affordable and decent
housing which is why I urge the committee to fully fund the
Native American Housing Block Grant Program.
Mr. Chairman, ranking member and members of the committee
so you can see Nevada has many housing and transportation needs
that fall under this committee's jurisdiction. And that is why
I am asking you to continue to fund these vital programs that
invest in and improve our infrastructure to help working
families across the 4th Congressional District and across the
country. Thank you for this opportunity to testify in front of
your committee.
Mr. Diaz-Balart. Let me thank the gentlemen for being here
and--obviously this subcommittee listens to its member. And we
are very grateful to the full committee chairman and the
ranking member. We had a very, very strong allocation for 2018
and so you mentioned a number of issues and let me just say in
TIGER for example, we were able to increase that to 1.5 billion
dollars which by the way is a billion dollar increase. I think
it is a billion dollar increase over frankly the historic high
as far as I know. 2.5 billion dollars for new highway grants.
That is new money that went to the states. 750 million
dollars--755 million dollars for Native Americans for housing
which is an issue that I know is of great concern of yours. And
19.6 billion dollars for Section 8 which is full funding.
And so we were grateful to get a, we don't know what our
allocation is going to be for the 2019 bill but we are very
grateful, are very grateful that not only did we get a very
strong allocation and I think this, I am very proud of the work
that this subcommittee did in allocating those funds I think
wisely and those decisions are made after a lot of work. A lot
of hard work. A lot of tough negotiations and so that is why I
am always grateful to my ranking member. He and I work as a
team and so I think this, again I am very proud of that 2018
omni and let's see what we can do right for the 2019 bill. Mr.
Price.
Mr. Price. Thank you, Mr. Chairman. I agree with the
comments you have made. We, I have no questions but I do want
to commend our colleague for advocating for a range of programs
that clearly are important to his constituents and important to
the country. So we are looking forward as the chairman says to
our allocation and to being able to make use of the input you
and other members have provided this morning. Thank you.
Mr. Diaz-Balart. Thank you, Mr. Price, and thank you, sir,
and by the way we are going to need help because once we put
the bills together we are going to, it requires the votes. And
so we are going to need everybody's help to not only get it
through committee because this committee will get it through
the committee one way or another, right, Mr. Price? We will get
it done but we are going to need everyone's help to get it
through the floor.
Mr. Kihuen. Thank you, Mr. Chairman.
Mr. Diaz-Balart. So thank you for being here today.
Mr. Kihuen. Thank you, Mr. Chairman. Thank you, ranking
member.
Mr. Diaz-Balart. Mr. Price, I believe that concludes the
members who had asked to testify in front of the subcommittee.
We appreciate their testimony and as I said earlier everyone's
written statement will be included in the record. Mr. Price,
any closing remarks?
Mr. Price. No, thank you.
Mr. Diaz-Balart. Thank you, sir. With that the subcommittee
is adjourned.
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Wednesday, April 25, 2018.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--OFFICE OF HOUSING AND
FEDERAL HOUSING ADMINISTRATION
WITNESS
DANA WADE, GENERAL DEPUTY ASSISTANT SECRETARY FOR HOUSING
Mr. Diaz-Balart. Let us call the subcommittee to order.
Good morning, everyone. And I apologize. As you know, they
called votes and so it kind of threw our schedule off a little
bit.
We are pleased to welcome the General Deputy Assistant
Secretary for the Office of Housing, Dana Wade, by the way, you
are a Floridian, are you not?
Ms. Wade. Yes, I am.
Mr. Diaz-Balart. North Florida?
Ms. Wade. That is correct.
Mr. Diaz-Balart. That is correct. Wonderful part of the
country. And, again, from Department of Housing and Urban
Development. Ms. Wade is here to testify in the fiscal year
2019 budget request for the important and really diverse
programs administered by HUD's Office of Housing.
And so the mission of the Office of Housing is to
contribute to building and preserving healthy neighborhoods and
communities, maintain and expand home ownership, rental housing
and healthcare opportunities, and to stabilize credit markets
in times of economic disruption.
And to carry out this mission the Office of Housing
oversees the Federal Housing Administration which is the
largest mortgage insurer in the world, in the planet. As well
as regulates the housing industry.
It provides rental assistance to more than 1.6 million
families through the project-based rental assistance and
housing for the elderly, and the housing for persons with
disabilities programs.
I note that this subcommittee, in a non-partisan way, has
supported these vital programs, and in the FY-18 Omnibus we
provided funds to actually create additional housing,
affordable housing units for these vulnerable populations.
These programs, I do not have to say, are critical to
individual communities across the country, to people, as well
as to our national economy as a whole.
The fiscal year 2018 Omnibus provided $12.7 billion
budgetary resources for the Office of Housing, and for fiscal
year 2019 the request from HUD is $12.2 billion which is a
reduction of $436 million from the 2018 enacted level.
Now, as I have stated before, to be fair, the request was
formulated prior to the bipartisan budget cap deal, and also
prior to the passage of the negotiated FY 2018 Omnibus. But,
obviously, it is critical for us to understand how the proposed
level would affect programs under, again, the Office of
Housing's portfolio. So, you know, how it would affect
potentially vulnerable families who rely on HUD programs.
We also understand the Department's working on a
legislative-- actually, that is right, has just released a
legislative proposal to reform how its rent subsidy programs
works, and these reforms impacted the formulation of the
request.
So as the members of this committee know, such reforms are
outside of our jurisdiction, and, obviously, I look forward to
the Administration's reform ideas, and we will look at those
with great detail and a lot of interest.
Fiscal year 2019 is less than six months away and,
obviously, this subcommittee must write a bill now that
adequately funds housing programs as a currently function, and
again, because of the people that depend on them.
Ms. Wade, I greatly appreciate your appearance today before
us to discuss those issues. Because, obviously, we want to make
sure that we meet our nation's affordable housing needs, and
ensure our housing policy supports affordability, as well as,
obviously, our economy, and more importantly, those that depend
on these programs while, crucially, being accountable to the
taxpayer.
So with that, let me yield to my friend and partner the
ranking member of the subcommittee, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I would like to join
you in welcoming Dana Wade, the General Deputy Assistant
Secretary for the Office of Housing and the Federal Housing
Administration. Ms. Wade, thank you for being here today. We
look forward to your testimony.
HUD's Office of Housing administers several critical
programs that affect the lives of tens of millions of
Americans. For example, the Federal Housing Administration,
FHA, is the largest mortgage insurer in the world with more
than $1.3 trillion in its portfolio. FHA policies have an
enormous impact on the nation's housing market and the overall
economy. We look forward to receiving an update about FHA's
ongoing activities during our hearing today.
I am also planning to ask some questions about the Section
202 and Section 811 programs for the elderly and disabled,
respectively. These programs provide a measure of independence
and dignity to some of society's most vulnerable individuals.
In North Carolina and across the country these programs have
successfully leveraged the resources and expertise of nonprofit
groups and faith organizations to meet local community needs. I
was pleased to secure additional funding in the 2018 Omnibus.
That is the first new funding or funding for new construction
in these programs in years to create nearly 2,000 additional
units of 202 and 811 housing. So I look forward to hearing how
HUD plans to administer these new resources.
HUD's Office of Housing also oversees the Housing
Counseling program. While this account receives a modest
appropriation, just $55 million last year, it does pack a large
punch. Research confirms that HUD approved housing counselors
create better outcomes for consumers by helping them improve
their credit, reduce debt, and avoid foreclosure. Hundreds of
thousands of people benefited from these services last year
alone, and I am concerned that HUD has proposed nearly a 20
percent cut to this program in the 2019 request.
Finally, I want to once again register my concerns with the
Administration's so called rent reforms. We have not seen a
detailed proposal yet, but I understand the Secretary is
unveiling it today. From what we do know, these reforms would
essentially shift HUD program costs onto residents, raising
minimum rents, imposing work requirements, or eliminating long-
standing rent deductions for medical expenses and other costs
could have serious repercussions for the people who rely on
housing assistance. Moreover, if such changes are to be
considered they are best left to the authorizing committee.
Ms. Wade, I look forward to your testimony today and
working with you to ensure that HUD's Office of Housing and the
Federal Housing Administration have the resources necessary to
carry out your mission. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. If I may, it is great to
have somebody here who has been in the process, understands the
process, and the fact that you are a Floridian, obviously, adds
a lot more to your resume. So your full written testimony will
be included in the record, and with that, you are recognized
for five minutes. Thank you for being here.
Ms. Wade. Thank you Chair and ranking member, and members
of this subcommittee thank you for inviting me here today to
discuss our work in the Office of Housing and the Federal
Housing Administration. As a former Congressional staffer
having worked on both the House Budget Committee, the Senate
Appropriations and Banking Committee I have a great respect for
the role that Congress has in setting the budget and providing
oversight of government spending.
The Office of Housing's programs focus on making housing
affordable for individuals and families. For 83 years FHA has
provided opportunities for Americans to build equity through
home ownership and climb the economic ladder. To meet our
objectives we must operate programs that are sustainable for
borrowers, renters, and taxpayers.
More than 8 million, mostly first time and low to moderate
income homeowners count on FHA. In addition, HUD's multi-family
rental properties provide more than 2.5 million affordable
rental units. Importantly, taxpayers stand behind everything we
do, including FHA's book of business. This is a responsibility
that demands prudent management of our programs.
For fiscal year 2019 we requested funding to develop a
stable technology and risk management platform to ensure
continuity of our operations and to avoid financial losses.
FHA's current platform which supports more than $1.3 trillion
in insurance in force is built on a 40 plus year old mainframe
system. The risk that outdated technology presents to FHA, and
by extension, to taxpayers is significant. FHA's viability
depends on financial stability too. This Administration has
already taken several actions to safeguard FHA's Mutual
Mortgage Insurance Fund, or MMIF, a few which I will highlight
today.
One of our first actions was to suspend a premium reduction
for FHA single family insurance program. Had the reduction
taken effect, the MMIF capital ratio would have fallen below
FHA statutory requirement of 2 percent to 1.67 percent.
We also took action last year to improve the fiscal
condition of FHA insured reverse mortgages called home equity
conversion mortgages, or HECMs. Since fiscal year 2009 FHA
insured HECMs have resulted in an estimated cost of $14.5
billion to the MMIF. We cannot rule out the possibility of
future losses. We will continue to protect seniors who
currently depend on HECMs to age in place, while also ensuring
that FHA's forward program and, ultimately, taxpayers do not
have to subsidize the reverse mortgage program.
This Administration has also taken action to reduce risk to
taxpayers by restoring long-standing FHA policy on property
assessed clean energy, or PACE, obligations. Property
encumbered with PACE will no longer be eligible for an FHA
insured mortgage. Taxpayers should never have another lien jump
in front of FHA mortgage.
In fact, we will remain diligent in protecting the MMIF and
borrowers from default risk wherever possible. Although, FHA's
core business for forward mortgages has seen positive
performance we also see certain trends and indicators of
potential defaults. For example, we have seen increases in high
debt to income ratios, increases in the use of down payment
assistance, and increases in the number of cash out refinances.
We have also seen a change in composition in FHA's portfolio.
Depository institutions now represent less than 15 percent of
lenders, compared to about 45 percent in 2010. Many banks have
stayed away from FHA because of perceived legal liability
stemming from the government's use of the False Claims Act. Bad
actors, let me be clear, bad actors will have no place in our
programs, but we do not want to see the False Claims Act used
to penalize FHA lenders for minor mistakes.
Secretary Carson and I and our general counsel are
committed to reviewing and addressing this issue with the
Department of Justice. We are actively involved in discussions
on this topic. We are also actively reviewing HUD rules on
manufactured housing which is a critical component of
affordable housing in the United States. Our goal is to reduce
undue burdens while ensuring that HUD promotes affordability,
quality, durability, and safety.
And, importantly, I would like to thank this committee for
supporting our goals for HUD multi-family housing which is a
cornerstone for renters seeking a safe and affordable place to
live. Specifically, the fiscal year 2018 Omnibus increases the
cap for the Rental Assistance Demonstration, or RAD. This will
allow us to continue the much needed recapitalization of our
nation's aging housing stock while leveraging private capital
and offsetting taxpayer risk. We believe RAD is key to
improving the quality of life for low income and very low
income renters.
And, finally, I want to also thank this committee for your
support of our efforts to respond to the devastating
hurricanes, wildfires, and mudslides that occurred this and
last year. We immediately stepped up to assist borrowers and
renters impacted by the disasters. These efforts continue to be
a priority, and I am grateful and also so thankful to the hard
work of my staff in the Office of Housing and at HUD.
Thank you and I am happy to answer any questions that you
have today.
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Mr. Diaz-Balart. Thank you very much for your testimony. I
will tell you that a lot of the things that you said were music
to my ears. We will proceed in the standard fashion if that is
all right with everyone, and so let me start with something
that you already talked about regarding the MMIF.
Obviously, just a short few years ago the fund finally
reached its statutory capital reserve ratio of 2 percent and
six years ago this fund was forced to draw $1.7 billion from
Treasury to cover projected losses on loans it guarantees. And
so I know that HUD has taken, you have taken, steps to
stabilize that fund to protect both the FHA borrower and the
taxpayer, and you mentioned that a little bit in your
presentation.
HECM
So my first question has to do with the home equity
conversion mortgage which you just mentioned, and I do not have
to remind you, since you are a Floridian, that I happen to
represent a lot of folks that utilize this.
And so there was an article in 2017, an AARP article, that
stated that HECM default rates increased by 646 percent in
2016. There was also another study by Ohio State that stated
that the default rates on HECM mortgages increased 10 percent
following the housing crisis. So if that would be accurate, if
it is accurate it appears the HECM program is, potentially,
hurting the very population it is meant to protect. Obviously,
it was devised to help seniors stay in their homes, but,
obviously, there are a lot of questions. So let me start with
this, are those real numbers? Did the HECM default rate
increase by 646 percent in 2016? And, if not, what is the
default rate and is that improving? What is the real situation
here?
Ms. Wade. Well, I want to say, first of all, that number,
the 646 is a largely misunderstood number, and we are working
to get to the bottom of defaults that would happen while the
borrower is still in the home, largely due to failure to pay
taxes and insurance. And we would be happy to sit down with you
and your staff can go over some of the numbers. But the one
thing I want to stress is that HECM does continue to be a
financially and operationally challenged program. As I
mentioned, the economic value is negative 14.5 billion.
And it is certainly something that when we look at our
fiduciary responsibility to maintain a 2 percent capital
reserve ratio, we are concerned about HECM, we are closely
monitoring it. We did take steps to try to put future loans on
a fiscally sustainable path moving forward.
However, we still have a legacy book of business of old
loans, and we are seeing some trouble there, and continuing to
assess that situation. But, yes, this is definitely an issue
and reverse mortgages, in general, that continues to weigh on
the Mutual Mortgage Insurance Fund.
Mr. Diaz-Balart. Clearly, and obviously there is also the
issue of, again, there are in some cases, it doesn't seem to be
helping those that it is trying to help. And so do we have an
idea as to why seniors are defaulting, and again those numbers,
and I know look forward to continue this conversation, but
there are some that are clearly defaulting, and do we have an
idea as to what the main reasons are behind those defaults?
Ms. Wade. Seniors, I think if it is due to a lack of
information of the commitments under the HECM Program or the
reverse mortgage program, lack of information on, you know,
taxes and insurance obligations, I think there are some
solutions. We are looking at housing counseling programs and
better leveraging those to provide adequate information to HECM
borrowers so that they know what to do if they face a potential
default due to taxes and insurance losses.
You know, however, I believe there are some numbers that,
at least that I have seen, that do not fully take into account
some of the changes that were made a couple of years ago to the
HECM program that require financial assessment, and life
expectancy set aside, which we believe, had some positive
impact on reducing the number of TI defaults.
But it is obviously something we are monitoring very
closely. We know, you know, we have a commitment to make sure
that the obligations under HECM are as transparent as possible,
to the seniors who rely on this program to aging in place.
Mr. Diaz-Balart. And I appreciate some of those changes,
but obviously then the question is, how about the folks that
didn't have--before those changes took place, so you have
seniors out there, and I represent a number of them that come
to see me. That in essence, firmly believe that they didn't get
the information that they should have gotten. Are they kind of
out of luck, because they were there before these changes took
place?
Ms. Wade. No. We would certainly uphold all of our
obligations to make sure that we provide transparent
information to them, and if it is, you know, by ramping up the
use of our housing counseling program, I think it could be an
effective tool to help borrowers who are duress who current
have HECM loans. But certainly, we will do everything that we
can to try to put forward solutions that will allow a positive
workout with these types of situations.
Mr. Diaz-Balart. And I know you are committed to that, and
I look forward to working with you.
Ms. Wade. Thank you.
Mr. Diaz-Balart. Mr. Price.
SECTION 202
Mr. Price. All right. Thank you, Mr. Chairman. Let me turn,
as promised, to housing for the elderly and housing for the
disabled. Section 202 housing for the elderly, it is the only
Federal program that specifically addresses the need for
affordable elderly housing, 400,000 units produced today, for
low-income elderly households, rental housing under the
program.
The average annual general income for these households is
$13,300. Demand for the program is high. HUD has been able to
provide only to 1 in 3 seniors, for 1 in 3 seniors who are
qualified for this assistance.
Despite that, the Trump administration's request is 77
million below the recently-passed Omnibus. It doesn't allow for
new construction. By contrast, I am very proud that we
increased, in the Omnibus, the number of seniors who can be
assisted. We provide $105 million for capital advances and
project-based rental assistance contracts.
This is the first time since fiscal 2010 that new units
will be added. About 1,100 new units we estimate, a good start.
So, what are your plans for implementing this new construction
funding? What mix of capital advances and PRACs do you
anticipate using, or considerations will go into that decision-
making? And what is your timeline for issuing another, so
funding availability?
Ms. Wade. I understand. Thank you so much for that
question, and I think you are absolutely right, Section 202 is
a program that is designed for a population that is, you know,
among the most vulnerable in the country, low to very low-
income seniors. And it is a program that is priority for us.
When we were writing our budget for FY 2019, we did not yet
have the bipartisan budget deal that raised the discretionary
caps, so the baseline that we were working off of was the FY
2017 baseline.
But we are very appreciative to this Committee for
supporting Section 202. We, it is a priority for us as well,
and certainly for the additional funding, actually two things
with 202. You know, allowing 202 to become a part of RAD, that
is a tremendous step forward to being able to help as many
elderly renters as possible.
And in addition what you had mentioned, the 105 million for
capital advances in the recent budget deal, which we really
appreciate. We have already started working on it, and I know,
as you know, there was 10 million that was provided for FY
2017, that could have been either used for capital advances for
new units, or for preservation, and we had already taken steps
to kind of strategizing, and put together a plan of how to
utilize and most effectively leverage that funding.
So we actually do have some ideas in place that we plan to
use to further the goals of the 105 million that is provided in
the FY 2018 budget. We would be happy to sit down with you and
your staff anytime to discuss this.
Mr. Price. Well, we would like to do that. Can you give us
now an estimate of when we might see another funding
availability?
Ms. Wade. We are looking to do a number of those, and my
hope is that some of the NOFAs, or Notice of Funding
Availabilities, will be released this year, and probably next
year as well.
Mr. Price. All right. We would like to nail that down as
much as we can, and of course get this money out into our
communities.
Ms. Wade. Yes, sir.
SECTION 811
Mr. Price. Let me just, in them remaining ask you,
essentially, the same question about Section 811. Here, too,
the budget request is disappointing but, on the other hand, we
have the Fiscal '18 Omnibus to build on. And we did secure 82.6
million in that bill, for new capital advance, and project
rental systems awards to create new housing, again, the first
time since 2010 that we have been actually adding units.
We also directed HUD to prioritize the creation of new unit
configurations that comply with the obligations under the
Homestead court decisions. Many states, including mine, have
struggled to integrate disabled individuals into community-
based settings.
So I hope this funding will help us alleviate that problem,
and of course enable communities across the country to create
more housing for the disabled.
So, how are you going to implement the new funding for the
new construction? How are you planning to comply with the
Committee's specific direction about Homestead? And what
progress have you made on that question? And is there a
timeline?
Ms. Wade. Thank you for that question as well. With regards
to Section 811 housing for persons with disabilities, that is
also a priority, and it also targets some of our nation's most
vulnerable, the low to very low-income persons with
disabilities. And we are very appreciative for the 80-plus
million for capital advances so that we can utilize that and
leverage that to produce additional units of housing.
This is something we will be--we are still in the early
stages of planning and strategizing, we obviously want to this
moving as quickly as possible.
And, you know, it is another topic that we would be happy
to sit down with you. We certainly support compliance with the
Homestead decision on integrated housing, and we very much took
note of the direction of this Committee to follow that.
Mr. Price. All right. That there too, I will take you up on
the offer, and look forward to--the Homestead decision and the
mix of formats here for housing for the disabled, does create
some complexity, but there is a clear need. There is a clear
need for the capital advances, and for the projects that that
would fund, and there is a clear need of course for giving
people who are eligible access to housing in the community.
And so, we look forward to making some headway here for the
first time in a long time, some new opportunities to provide
this housing. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Mr. Valadao. Thank you,
sir.
Mr. Valadao. Thank you, Mr. Chairman. Thank you for your
attendance today, I appreciate the opportunity to listen and
ask some questions here.
FHA LENDING
As you know the Federal Housing Administration plays a
significant role in providing credit for first-time low to
moderate-income and minority homebuyers. However, aggressive
application enforcement of the False Claims Act has negatively
impacted banks' ability to participate in FHA lending. In
October, before the House Financial Services Committee,
Secretary Carson was asked about the future of the FHA, and
specifically about the government's recent use of the False
Claims Act, as a means to extract settlements from mortgage
lenders engaged in FHA lending.
I understand from your testimony Secretary Carson is
committed to reviewing and addressing these concerns, stemming
from the False Claims Act with Department of Justice, and both
Departments are now actively involved in discussion on this
topic. Can you tell me the status of your work to address this
problem?
Ms. Wade. Congressman, I appreciate the question. And, you
know, first of all, we do not believe that the False Claims Act
should be used to penalize lenders for minor mistakes. And, you
know, the False Claims Act is really, it is a blunt instrument,
it should be used as a tool of last resort.
We are in active discussions pursuant to the Secretary, to
Secretary Carson's direction, with the Department of Justice,
and we are reviewing a couple different things including HUD's
definition of materiality. We think materiality should be
consistently applied, it should be transparent, it should be
well defined.
We are looking at things like our defect taxonomy, which is
essentially a ranking of our defects by tier and, you know,
discussing kind of how HUD used each tier of defect, and we
want to provide as much clarity as possible to lenders so we
can really apply the rule of law, and be as transparent as
possible with them.
Mr. Valadao. So, the Agency has earned some praise for
changes embedded in this loan defect taxonomy, which alerts
lenders to mistakes that could subject them to penalty. What
progress has been made towards improving and fully implementing
the FHA's defect taxonomy?
Ms. Wade. Yes, it has been implemented in our Lender Review
System, you know, but I said, we are taking another look. We
want to look at it with a fresh set of eyes, to make sure that
we are being as clear and consistent as we possibly can. I
think the marketplace depends on certainty.
Mr. Valadao. Next, we have seen success in credit risk
transfer programs at Fannie Mae and Freddie Mac, in de-risking
taxpayers, and diversifying their counterparty exposure.
Secretary Carson has stated that HUD staff were exploring
whether FHA or Ginnie Mae could engage in risk-sharing
transactions to similar benefits in terms of reducing taxpayer
exposure and risk in the system impacting homeowners. Can you
please provide an update on your efforts?
Ms. Wade. That is a great question, and thank you for that
too. We do have the authority, and that is right to engage in
risk-sharing transactions. And, you know, I think the goal of
that would be to reduce the overall taxpayer exposure in the
housing markets, which is quite outsized right now.
Our first priority is looking at FHA's own credit box, to
make sure that we are making sustainable loans, good loans to
borrowers that they can afford to repay. So, that will be a
first step, but we are engaged in some pretty early-on
discussions on, you know, what risk-sharing would look like,
and potentially how could we reduce taxpayer exposure. As you
know, FHA guarantees 100 percent of the loan. That is not how
it is in other government agencies, such as the VA.
Mr. Valadao. Would FHA benefit from any expanded legal
authority in this regard?
Ms. Wade. We would be happy to come to Congress, after we
do a thorough evaluation, and have that discussion with you.
HOUSING COUNSELING
Mr. Valadao. All right. So, on the housing counseling,
HUD's Housing Counseling Assistance Program provides
competitive grants to how to approve housing counseling
agencies to use for a range of housing counseling services.
What are the challenges of providing housing counseling
services in more rural areas? How does HUD attempt to ensure
that Housing Counseling funds reach these rural areas?
Ms. Wade. For rural areas, and housing counseling, you are
right, there are some special challenges that more densely-
packed areas do not face. I think the HUD Housing Counseling
Program last year counseled over a million potential home
buyers and renters. I have got about 130,000 came from rural
areas.
The things that housing counselors do, it does take a
little bit of an extra effort, we have a lot of counselors who
are willing to drive very far to make sure that borrowers can
get the information that they need, you know. With housing
counseling it is oftentimes to make the largest financial
decisions of their lives. So, we are looking to facilitate
housing counseling in rural areas as much as possible.
Mr. Valadao. Does that witness greater success in rural
areas versus urban areas when it comes to impact of housing
counseling? If so, how are you working to bridge that gap?
Ms. Wade. You know, I would really have to back and study
it to measure the relative effectiveness. But I think you ask a
very good question, and I am happy to get back to you on that
topic.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Valadao. Thank you. And I yield back.
FHA LOAN LIMITS
Mr. Diaz-Balart. Thank you, sir. Mr. Aguilar.
Mr. Aguilar. Thank you, Mr. Chairman. Thank you, Ms. Wade.
I appreciate you being here. According to HUD's fiscal year FHA
Report, and your testimony to us today, more than 33 percent of
all FHA borrowers were minority home buyers. The program is
critical to creating a path to home ownership for minority
homeowners as you know, but these communities also live in
high-cost areas that may present challenges accessing these
programs.
For example, the district I represent, Southern California,
there are cities in which the FHA loan limit is lower that the
cities' median home price. These are cities with a high
percentage of Latinos living in the city that want to utilize
the FHA Loan Program.
Living in a city with a high median home price, above the
FHA loan limit means many consumers in the region can't utilize
the existing program to buy a home. Because this program is so
critical to borrowers I am concerned about some proposals from
industry stakeholders to reduce FHA loan limits. Would you
support reducing FHA loan limits? And what about those
individuals who live in high-cost areas?
Ms. Wade. Congressman, as you know, FHA's loan limits are
set by statutes, they are actually set in the National Housing
Act as amended by the Housing and Economic Recovery Act, and
they are currently set at 115 percent of metropolitan
statistical area. Median price of each MSA, which is based on
the highest price in the county of the MSA, and we understand
that this Committee did include language in the appropriations
report, directing us to study the issue of large-lot land size,
counties and their impact on loan limits.
We are happy to do this, we are happy to perform that. And
I think our Policy Development and Research staff is already
hard at work looking at this issue.
Mr. Aguilar. Yes. But you wouldn't support--so would you
support, look, we understand that that is said in the statute,
but would you folks submit information to us that would reduce
or raise the median income price that would make it more a cost
affordable.
Ms. Wade. I think the thing that we would want to do is
complete the study first and thoroughly evaluate it using all
of the data and the analysis.
Mr. Aguilar. What types of programs do you think work
within minority communities to offer that level of assistance,
to offer that ability to place folks in homes?
Ms. Wade. I think you are right. You know, FHA is a very
critical program to minority communities and allowing minority
communities and families to climb the economic ladder of
success. You did cite 33 percent of FHA. Homeowners are
minorities, and that is certainly a focus of ours. I think FHA
has been a useful tool to allow that, and we are happy to
discuss with you other ways to expand the effectiveness in
those communities.
Mr. Aguilar. Sure. Also in your testimony you stated that
FHA programs should be targeted, on page three of your
testimony. Can you expand a little bit of what you mean by
targeted? Do you support restricting the FHA loan limit program
to only first-time home buyers?
Ms. Wade. I think, well, it is currently 82 percent, so it
mostly serves, it mostly serves first-time homebuyers, and low
to moderate income and minority homebuyers. And I think
targeting it, really just means we want, you know, no matter
who is a qualified borrower for FHA, we want them to be in a
loan that they can afford, that they have a good ability to
repay.
And so targeting it, means striking the right balance
between, you know, appropriately calibrating our ability to
protect the capital fund as well as getting borrowers
protecting homeowners from getting into a mortgage that they
can't build equity, and cannot afford to maintain.
Mr. Aguilar. Would you support, you said 82 percent, that
is also in your testimony, would you support the program being
exclusively for first-time homebuyers?
Ms. Wade. We have not put forward any proposals to do that,
I think targeting really just means to trying to run the best
programs, and the most sustainable program, and focusing on our
mission.
FHA CONDO POLICY
Mr. Aguilar. Sure. In 2016 Congress passed H.R. 3700, the
Housing Opportunity through Modernization Act, and the bill
included a provision that is meant to streamline the process
for condos, for applying for FHA to participate in the loan
program. Proposed rule for the modification of the FHA
requirement for condos, was issued September 2016. Can you
share with us the timeline for HUD to publish a final rule on
the condo policy?
Ms. Wade. Yes. And thank you for that question. We are
moving as expeditiously as possible. We have come to almost the
final stages of our HUD Review, and we hope this is a rule, and
the Condo Rule is a very critical rule for first-time
homebuyers. And for that, you know, for the homeowners who we
hope to target, that will allow them to have access to FHA
Program and non-FHA-approved buildings.
And we think, you know, it is really, this is a really
important step forward especially as so many cities and
communities face issues with affordability, that we think the
Condo Rule is really going to make a positive impact. So, we
want to move it forward as quickly as possible. We are doing
everything that we can, and we have come to the very final
stages of our HUD review in our HUD process.
Mr. Aguilar. Final stages, so we can look forward to seeing
that soon?
Ms. Wade. We are hoping within a couple months, and
definitely this year. And by the way, we will brief you on, we
are happy to come and brief you on that issue as well.
Mr. Aguilar. Thank you. I appreciate it. Thank you, Mr.
Chairman.
Mr. Diaz-Balart. Thank you, sir. Mr. Joyce.
MANUFACTURED HOUSING
Mr. Joyce. Thank you, Mr. Chairman. And welcome, Ms. Wade.
Manufactured housing makes up a key segment of the affordable
housing industry. Report language from the recent Omnibus
directs the Department to reconsider burdensome rules regarding
the completion of manufactured homes. How do you intend to
develop a solution that ensures the safety of consumers while
minimizing cost and burdensome requirements on manufacturers?
Ms. Wade. Thank you for the question. Manufactured housing
and HUD's role in manufactured housing is critical, it is a
critical priority to us, which is one of the reasons why I
instituted a top-to-bottom regulatory review of all
manufactured housing rules and policies. And our plan, so that
review was completed a couple months ago, we solicited public
feedback; we are currently going through all the comments.
We received over 400 comments and about 150 of those were
unique. So, people really, in groups and interested parties
really did weigh in on this. It is really important to kind of
gather the data, and do our due diligence. And what our plan is
to present the Manufactured Housing Consensus Committee, which
is the independent Federal Advisory Committee with the findings
based on the regulatory review, and give them the opportunity
to weigh in.
Mr. Joyce. What guidance should we expect to see or
stakeholders, and being issued to the stakeholders on this
issue?
Ms. Wade. Well, there are a variety, I think, of policies
and rules, in particular, that we are looking at. You know,
such as On-site Completion of Construction, and other rules,
the Frost-Free Foundation Rules, we mentioned a couple rules,
even just the safety and construction standards, which is
really what HUD is directed to produce, under the statute,
under the guiding statute of 2000.
So, it is a really critical priority that we move forward
with all of this, and those will all be priorities, we will,
you know, look at all of those, in particular the safety and
construction standards. The Federal Advisory Committee is due
to meet in a couple months, so we will be able to provide more
information to you then.
Mr. Joyce. In a few months?
Ms. Wade. Yes.
Mr. Joyce. Okay.
Ms. Wade. But rest assured, this is a top priority for us.
We acknowledge the vital role of manufactured housing is and
affordable source of housing in this country.
Mr. Joyce. In the past year, manufactured housing has
played an especially important role in the recovery efforts.
Obviously with disasters, wildfires, hurricanes and storms.
With a continued industry growth what challenges have you seen
so far with the program?
Ms. Wade. I think the challenge is, there are couple. We
want to make sure that HUD acknowledges the very important role
that states play in this program. And the partnership that we
have with states, and we want to make sure that we have the
best working relationship, and that we are able to accomplish
our mandate under the statute which is to put forward rules
that promote quality, durability, affordability and safety. But
I think engaging the states is a top priority for us.
Mr. Joyce. It certainly was of key interest to Governor
Kasich, who expressed concern that too many people are dying in
manufactured homes over the last year. And so do you believe
that the state and local planning agencies are better equipped
to oversee on-site completion and/or inspections?
Ms. Wade. I think they are critical partners in everything
that HUD does with respect to its activities within the Office
of Manufactured Housing.
Mr. Joyce. Thank you. I yield back, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. Ms. Clark.
Ms. Clark. Thank you, Mr. Chairman. And thank you Assistant
Secretary Wade for being with us today. I truly appreciate it.
I would say that your budget justification is somewhat of a
study in contradictions. On the one hand, you have stated that
public and private housing development has substantially failed
to keep up with growing demand for affordable rental housing.
So much so, there are only 38 units available for every 100
extremely low-income people.
You also set forth that specifically with Section 202, our
housing for the elderly, your justification states, HUD is only
able to provide assisted housing to one in three seniors who
qualify.
And, again, in Section 811, for housing for persons with
disabilities, your justification states there is an estimated
188,000 non-elderly disabled persons living in nursing homes
who could potentially be transitioned at great savings to
Section 811 units.
Despite all of this, in your justification, it appears that
your only policy proposal is to raise the rents, to put out a
new formula that you just rolled out, I guess, officially about
a-half-an-hour ago, going up to 35 percent of gross income.
RENT REFORM
Can you explain to me how are you going to use this new
rental money, and how specifically, how many new 202 and 811
units are going to be built with that rent increase?
Ms. Wade. Thank you for the question. And, you know, I
think first of all, the Rent Reform Proposal is intended to
provide as many opportunities for individuals and families to
be able to climb the economic ladder as possible, given our
budgetary constraints.
You know, going specifically to what you mentioned, the 202
and 811 programs, we did develop our budget prior to the
Omnibus Bill, and to the Bipartisan Budget Deal, where the
budgetary caps were raised. However, with the increase in
funding, and with the additional funding for capital advances
for Section 202, and Section 811, we want to do everything we
can to spend that money as efficiently and effectively as
possible.
And, you know, in particular, with regards to 202, you are
right, there is a lot that we can do. I think that the
composition in a way that the seniors are living their lives
has changed. And there is a lot that we can do to integrate
supportive services, in particular through use of the Service
Coordinator Grants, and programs like that, so that seniors can
live for longer, and more independently.
Ms. Clark. I guess I am trying to figure out, and I
understand we have had some intervening positive news since you
wrote this, but you highlighted all the problems, and the
proposal was only to raise rents.
Just let me give you one example from my district. Carol,
who lives in Cambridge is 76 years old, she has a sizeable
deduction for medical expenses, but under the new formula her
rent would increase almost over $3,100 a year, if we went off
the gross income, you know. How does that help us with the
shortage?
Ms. Wade. I guess to be clear, under the rent reform
proposal put forward, there will be no changes in rent for the
elderly and the disabled, they will be held harmless as part of
this proposal.
Ms. Clark. Current years?
Ms. Wade. For 14 years, yes, for a number of years. In
addition, really, the only component is not raise rent, it is
actually, this is a proposal where there is a lot flexibility,
a lot of reduction and administrative burden, I think
acknowledging the very real budgetary constraint that we face.
But in particular, I think, reducing the barriers that a lot of
the residents, whether it be public housing assisted residents,
or multi-family assisted residents, that they face to kind of
working a lot of the disincentives there, including the really
burdensome income certification process.
So, another really important component of this proposal
that I would like to stress is that, this would require or it
would allow income certification every three years, to avoid
the disincentive to work, and climbing up the economic ladder.
Ms. Clark. And I agree with you that triannual
certification is a positive, but I think that with the disabled
and elderly populations that we are talking about, these rent
incomes have to somehow be tied to HUD specific plans, and we
can maybe have a discussion more in-depth about exactly how you
plan to expand public housing. Because as we look at some of
your RAD conversion plans, you know, it is not clear to me what
the commitment is to robust public housing that HUD has?
Ms. Wade. I would be happy to have that discussion. And
thank you.
Ms. Clark. Thank you.
Mr. Diaz-Balart. Thank you very much. Mr. Young.
Mr. Young. Thank you, Mr. Chairman. Colleagues, hello; it
is nice for you to be with us today. Thank you. We are going to
be losing one of colleagues here on this Committee, Mr. Dent,
of Pennsylvania, who has been a great advocate for housing, and
specifically for the Housing Counseling Assistance Program.
HOUSING COUNSELING
You talked a little bit about that with my colleague, Mr.
Valadao of California. HUD's budget request for FY'19 included
$45 million dollars for housing counseling assistance; and this
$10 million less than the fiscal year 2018, the Consolidated
Appropriations Act that we just passed.
This is a great program, it provides critical training for
consumers every day, at every stage of the housing process,
from homelessness, to budgeting from the home, and to teaching
skills to prevent foreclosure. How can HUD continue to
effectively carry out the mission of this program, given HUD's
requested cut in this funding?
Ms. Wade. I appreciate the question on housing counseling.
Housing counseling continues to be a priority for us. I think
what we are dealing with is scarce number of dollars, and so
that means, we have to use every dollar as efficiently and
effectively as possible. We are looking at a lot of different
ways, that we can maximize the value of every dollar spent on
housing counseling, as I said.
You know, I think it is really important for a lot of
renters, first-time homeowners to know that they can turn to a
housing counselor for independent and unbiased advice, and it
is a huge financial decision that they are making. It is an
incredibly valuable program, walks borrowers through things
like budgeting and creating their own financial assessment to
see if they are ready for home ownership.
And quite frankly, I think, you know, I think a lot of
housing counselors don't get enough credit, because they
provide a lot of information to borrowers that they wouldn't
otherwise receive. And sometimes they answer is, you are not
quite ready for home ownership, but let us get you on that
path, and maybe it is a few years away. So, you know, we fully
support the Housing Counseling Program, and we want to just
make sure it is as effective as possible.
IT SECURITY
Mr. Young. Thank you. That is good to hear. Looking at your
testimony, and speaking with other agencies and departments,
the information technology infrastructure had some challenges
in many areas. A lot of it is aged, and not up to date, a lot
of different systems trying to talk to one another within an
umbrella.
I worry about cyber security, I worry about the proprietary
information that people have who may--you may help Americans
out there with housing, and maybe some other personal
information. Their financial information, that is within those
systems.
I worry about identity theft and fraud, and I wonder, are
you worried about hackers? How are you making sure that this
proprietary information, financial information of those that
you are seeking to help is actually being protected?
Ms. Wade. I think we should always be very vigilant in
doing everything we can to protect borrowers when it comes to
personally identifiable information. And I believe this is one
of the reasons why FHA so desperately needs IT funding. Because
right now, we have 400,000 paper-based case files, these are
the files of the borrowers.
And they are at our homeownership centers across the
country with sometimes 300 pages in each case file, so that is,
if you add it up it is a 120 million pieces of paper every
year. I think moving to a paperless and secure environment
where, you know, it would have to be our goal if we were to be
able to upgrade our technology that we would put in place the
absolute best systems for protecting personally identifiable
information that would meet or exceed their private sector
standards.
Again, it is something you always have to be vigilant
about. I believe the risk is very great though, due to our
Legacy systems, and I think an upgrade will allow us to do a
better job, quite frankly, in protecting this kind of
information.
Mr. Young. Good. Because there is an industry out there of
bad people, very nefarious folks out there around the world
trying to steal people's identify, and a lot of times they
start with the most vulnerable who are going through economic
ladder, and seeking assistance, I mean the help they need
sometimes from the Federal Government.
FHA FEE PROPOSAL
The administration's budget includes a new administrative
fee on FHA mortgage lenders, the proposal would charge $25 per
FHA-backed loan to generate $20 million for IT improvements. I
understand the FHA IT systems we talk about, they are four
years old, the registration system I think experienced about 75
outages maybe in 2017 from what we understand. A similar fee
has been proposed for a number of years, in the past the
industry has strongly objected to this proposal.
Did you coordinate with or reach out the industry this year
regarding the fee, and do you believe you have addressed their
concerns?
Ms. Wade. I think it is always very important to get the
feedback of not only the industry that will help us implement
something, but also Congress. And we wanted to certainly work
with you and interested parties. I believe, and so you are
right there, there has been an IT fee requested in the past,
and from what I understand the concerns with that it was not
well defined enough.
I think a portion of it was used for salaries and expenses.
I don't think there was a time limit on it, and I think it is
very, very important that we are good stewards of whatever
funding we would be lucky enough to receive for IT. I believe
it is our job to manage this, and to create a roadmap, and to
provide as much as specificity on what exactly our needs are,
and what we would do with that funding. I think that is likely
what would get the industry more comfortable with it.
Mr. Young. Yes. I would be interested to know what you
would do with that funding, and if it would increase the cost
for borrowers seeking FHA guaranteed loans.
Ms. Wade. Well, we would do this. The whole point I think
of making an investment in IT at FHA would be for the purpose
of serving our borrowers. I think borrowers actually, you know,
face a lot of headaches when an FHA system goes down, when
there is an outage, and it can last up five days. That is a
delay, you know, in them getting a loan. So I think, the system
would really have to be designed with borrowers in mind.
Mr. Young. Thank you for being here today. I yield back.
Mr. Diaz-Balart. The time you don't have?
Mr. Young. I take that back.
Mr. Diaz-Balart. But you used it very wisely, I may say.
Madam Secretary, let me go back to the MMI, and so as you know
the prior administration reversed HUD policy, it was in July
2016, and began allowing FHA mortgage and properties, mortgage
and properties with PACE loans. And so last year the new
administration returned to HUD's original policy, which then
makes that policy consistent with the Federal Housing Finance
Agency's policy.
PACE LOANS
The FHFA prohibits, for example, Fannie Mae and Freddie Mac
from producing or refinancing a mortgage with an existing
first-lien PACE loan. So, now I understand, right, is that now
FHA loans are not to be in the second-lien position period.
Ms. Wade. Mm-hmm.
Mr. Diaz-Balart. So, let me ask you, why did HUD return to
the original and consistent policy on PACE. I would like to
kind of understand what your thinking is. I actually was very
vocal in supporting the new administration doing that, but I
just want to see if I can understand your take on that.
Ms. Wade. Thank you. Thank you for your support. The real
issue and the fundamental issue is that no other lien or
assessment should ever be allowed to jump in front of FHA
Mortgage Insurance, especially for property improvement. I
think that is a pretty grave concern for us. We also think that
it violates the tenants of the National Housing Act which
states clearly, there shall be no other lien coming before FHA.
It puts the taxpayer at risk.
Mr. Diaz-Balart. That is the statute?
Ms. Wade. It is in the statute.
Mr. Diaz-Balart. Right. So, potentially, actually, and I
hadn't thought of this, but potentially to even, again,
lawful--against statute?
Ms. Wade. We are evaluating the legality. Yes.
Mr. Diaz-Balart. That is interesting. That is interesting.
And so let me also then, again, as I said, the MMI, does a
second lien position potentially create greater risk to the MMI
Fund, and again, or potentially, with the taxpayers?
Ms. Wade. Yes. It does.
Mr. Diaz-Balart. Is that something that was looked at?
Ms. Wade. Absolutely, and in fact the number one concern
was risk to taxpayers. In the event of a default, you know, if
there was another lien that was going to be paid off before FHA
that is really a problem for FHA. And in fact, I think the
entire foundation of the FHA Program would be put at risk if we
allowed that sort of thing to happen.
Mr. Diaz-Balart. Let me also then, throw something else,
which is obviously in a traditional sense. Right, lenders they
will determine risk associated with the loan and charge
interest rates corresponding to that risk. And so, a loan that
is in a second-lien position typically has a higher interest
rate, right, than a loan in the first-lien position.
And so, would you be concerned, or is one of the things
that you all looked at whether, for example, FHA loans, sooner
or later, and again, with the change that the last
administration did, could potentially even increase the cost of
homeownership, to the very populations that we are trying to
serve, like those vulnerable populations, potentially by
increasing interest rates? Or is that not something that was
looked, and is that inaccurate? Would that be an inaccurate
thing for me to say, that that could happen?
Ms. Wade. I think that is a great point, and in fact I
believe if it is a borrowers that is already, say, cost-
burdened with a PACE lien or an assessment. You know, adding
that to an FHA mortgage insurance, that just kind of increases
their payment burden, so that would definitely be an area of
concern for us.
Mr. Diaz-Balart. And again, I have nothing against,
obviously, folks doing that in their home that is great. As a
matter of fact, in our house we did it, because my controls all
that. But the concern would be, again, potentially risk to the
taxpayer, to the MMI Fund, and potentially increasing rates,
right?
Ms. Wade. You are exactly right.
Mr. Diaz-Balart. So that would be accurate? In other words,
I am not saying that is not potentially accurate. And those are
some of the considerations that you all looked at?
Ms. Wade. Yes, we definitely looked at the overall risk and
how that would burden the borrower.
Mr. Diaz-Balart. But we didn't do anything through PACE
loan, so just so we are clear, very clear about not doing that,
but anyways. Mr. Price.
HOUSING COUNSELING
Mr. Price. Thank you, Mr. Chairman. Let me briefly revisit
the matter of counseling assistance. It has come up many times
today. You have been I think uniformly positive in your
comments about the guidance that this provides to consumers,
and the positive results we get from serious engagement an
counseling assistance.
So, it does raise the question, why the administration is
cutting the program, when it is providing clearly needed
services, and having success? So, let me ask you exactly what
it implies, what the request implies. The lower funding level,
you say in the request will allow HUD to provide these services
to about 950,000 consumers. How many consumers are you able to
provide services to now, at the Fiscal '18 enacted level of 55
million?
Ms. Wade. You were right. 950,000 is the level of our
consumers in our Fiscal Year 2019 Budget Request. And I think
really represents a tough choice for us. You know, it is a
slight decrease compared to the status quo. It is a tough
choice, it also is something, you know, we have been directed
really to use. Use the funding as efficiently and effectively
as possible.
You know, one example is, the average age of an FHA
borrower is about 36 to 38. These are very, I would say,
technologically savvy, and Internet savvy borrowers, and I
think as the younger subset of the population becomes
interested in homeownership, there are things that we can do
from an educational perspective that provide a lot more of this
information online.
We are investigating that, you know, obviously that is not
the solution for everyone, but I think the important thing is
we just have to spend every dollar that we receive very wisely.
Mr. Price. Okay. The question is how many can you serve at
the fiscal '18 level? In other words, 950,000 is a reduction
from what?
Ms. Wade. From about a million.
Mr. Price. From about a million, all right. You are
conducting research and I applaud you for that, to ensure that
the Housing Counseling Program remains effective. Can you
provide an update about your follow-up research to HUD's 2017
baseline study about the impact upon buyer education?
Ms. Wade. I will have to look at it. I believe that is
still in process. But as soon as it is completed, we would be
happy to you and to this Committee and provide that update with
more specificity.
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Mr. Price. All right. It is clearly relevant, has the
potential to be relevant to these discussions that we are
having about funding levels, and program utilization.
RENT REFORM
All right, let us return to rent reform. We now know that
the Secretary is going to propose to set the family monthly
rent contribution, at about $150 per month, which is three
times higher than the current minimum.
He is going to eliminate certain deductions when
determining a tenant's rent, such as medical and childcare
costs. Proposals are going to include work requirements, this
is going to affect 4.5 million families. Let me just remind us,
90 percent of public housing households are either elderly or
had disabilities, they worked or had recently worked, or were
subject to work requirements through another program.
So, that is 90 percent.
It is not clear whom this impacts, and also what the point
is of this requirement, and particular making huge claims about
how much money this is going to save here, and how many more
people can be served if these requirements were to be imposed.
These look like vulnerable populations to me, and it is one
thing to say we are not going to affect current tenants, what
about future tenants? They are not going to be any less
vulnerable.
The same, well, think about the 202 population, the Section
8 population--I mean the 811 population, the average 202
household, $13,300 in income. For the disabled population two-
thirds of these people that we are talking about have
developmental disabilities or chronic mental illness.
Where is this going to come from? But let me just ask you
one very specific question, and anything you want to say in
general about it, I will welcome. But how much consultation
have you really done in putting this together with other
agencies who administer other forms of assistance, or job
training, requirements?
Do these reforms fit with other requirements? For example,
the SNAP benefits, has anybody really figured that out? I know
the administration always talks about not being overly burdened
with regulations but, you know, these folks have requirements
from other branches of government from other programs. Are we
making sure that they are not overly burdened? Have you
coordinated with other agencies in formulating these proposals?
Ms. Wade. I think you bring up a very important point. And
I appreciate that; that it is incredibly important because
there is so much overlap between different and different
agencies, to coordinate with other agencies. You know, we had
coordinated. I think we can do more, I think especially now
that we put forth a proposal. And it really is a proposal that
we are open to discussing it with Congress. We want to make
sure that you have as much information, and this is really
something that begins the dialogue.
And, you know, we feel the same way about consulting with
other agencies, we would be happy to take whatever feedback
would help us, you know, put together the best possible
proposal to serve. And most people, you know, will also point
out, on the elderly and disabled, the proposal does hold
elderly and disabled populations harmless.
You know, that does affect 202 and 811 as well as project-
based rental systems. About 47 percent of those in PBRA are
elderly, 17 percent are disabled.
Mr. Price. Future tenants as well present tenants?
Ms. Wade. In the future there will--there will be changes
in the future. You are correct?
Mr. Price. That was my question, why would you expect those
populations to be any more affluent or any less vulnerable?
Ms. Wade. I think that the issue that we are presented with
is that we have limited resources and we are just trying to use
them as effectively and efficiently as possible.
Mr. Price. Well, I know my time has expired, but I must
say, of course we all want--we all want to serve more people,
we all want to make the most of limited resources, but if in
the name of that, we are squeezing, just mercilessly squeezing
the populations we are already serving, and just making it
impossible to make ends meet, that doesn't look like much of an
achievement.
And I do think that thinking about these other benefits and
these other programs; it looks like that should take place at
the front end that kind of consultation. Not just put these
proposals out there, and then cleaning it up. Why don't we have
a well-worked out proposal to begin with, and one that is
coordinated across government?
Ms. Wade. What we propose is a framework, and again it is
something that we are open to discussing. It certainly is a
statement of priorities. But, you know, we are happy to make
sure we can do everything we can to maximize our consultation
with you and other agencies.
Mr. Price. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you, sir. We have been joined by
Charlie Dent, and it sounds like you are working on these days,
right? It sounds like you have got a whole appropriations
subcommittee to put together. But thank you for--your name was
invoked a little while ago, and again, your leadership on all
issues, but particularly on the housing, will be greatly
missed, greatly missed.
Mr. Dent. Thank you. Thank you, Mr. Chairman, and Ranking
Member for your strong leadership on all these issues related
to housing and transportation. It is much appreciated.
HOUSING COUNSELING
And just a couple things; I know that my colleague, I think
Mr. Young, might have already touched on the Housing Counseling
Program. But I wanted to briefly ask about one other aspect of
your testimony on this particular issue. In your testimony you
briefly mentioned that you intend to focus on serving those
affected by disasters. Can you tell me a little bit more about
how you will be planning on doing that?
Ms. Wade. Yes. In fact, this is one particular aspect of
the Housing Counseling Program that I am very proud of. The
Network of Housing Counselor supported by HUD stepped up
immediately, and said, what can we do to help the disaster, and
they have been a critical link in providing homeowners impacted
by disaster, including those who were unsure about their
financial future, with as much information to get them back on
their feet as possible.
Helping to explain some of the programs that HUD has, and
the Office of Housing has to help them. So, I am very proud of
the work that the Housing Counselors have done. In particular,
we are looking at, potentially, providing an additional tranche
of funding that has already been appropriated specifically for
these purposes. And we would be happy to come in and brief you
on this issue with greater detail.
FHA FEE PROPOSAL
Mr. Dent. Thank you. My second question deals with HUD's
budget requested an FHA be provided, the authority to collect
$25, a $25-fee per loan from FHA lenders. The fund would be
used to upgrade FHA's IT system, to protect against outages and
security risks.
In this Committee we have heard a great deal about the need
to upgrade this infrastructure, and the risk of continuing down
the current path, while I am encouraged to see the
administration taking steps to address this outdated
infrastructure it is certainly important, that the plan in
place to effectively implement these particular IT solutions.
How are you and your Agency preparing to potentially use this
funding proposed in your budget, and from what we have heard on
the issue in the past, solving HUD's and FHA's IT problems will
require more than just dedicating additional funding?
Ms. Wade. That is exactly right. We have to provide
details. You know, and I think we have to provide a specific
roadmap so that you can feel confident that you are funding
something that is going to succeed. And you know, it is
critically important, it is a top priority for us to have the
necessary funding to upgrade FHA's IT systems.
You know, as I mentioned, yeah, IT, FHA is a $1.3 trillion
platform that is running off a 40-plus-year-old mainframe
system. It is beginning to break. We are sort of at the
breaking point. In fact, we have already seen some fractures.
There were about 73 outages last year alone. You know, our
homeownership centers deal with something around 120 million
pieces of paper a year.
So, it is a critical, it is a critical need that we have to
address, and in particular, you know, I think it will be us
putting together what will really help it succeed, it is us
putting together the details, and making sure that we are
providing as much information as possible.
You know, I think the first step on this road, would
certainly be to move towards a more paperless environment. Away
from the physical hardcopy of the case binder, the case file
for the homebuyer. I think that would create a lot of positive
benefits including more certainty on the front end, at
origination.
You know, Fannie and Freddie have invested a lot of money
in technology over the past decade, and Fannie Mae, in
particular, can do something called Day 1 Certainty with Reps
and Warranties. We are not able to do this, and this does
affect our ability to do quality control. Most of that happens
on the back end, and I think that is a pretty big risk for
taxpayers.
Mr. Dent. Thank you. Mr. Chairman, I have no further
questions.
Mr. Diaz-Balart. Thank you, Mr. Dent. Actually, Mr. Dent
just reminded me of another issue I wanted to toss your way,
when you were talking about disastrous emergency. But this
deals with the fact that HUD has the authority to issue these
foreclosure moratoriums right after a disaster. And the policy
requires lenders to stop or delay the initiation of a
foreclosure proceeding for 90 days.
DISASTERS/FORECLOSURES
And so, obviously, as you know, a lot of the country was
hit hard this last session, season, hurricane season in
particular. Do you have an idea of the status of foreclosure
moratorium HUD has issued in response to Hurricanes Irma, Maria
and Harvey? Any idea what those would be?
And also just, look, has this been an effective tool, to
allow borrowers the time they may need after a disaster to get
back on their feet?
Ms. Wade. Mr. Chairman, thank you for that question. We did
automatically provide a 90-day foreclosure moratorium, dealing
with those impacted by Hurricanes Irma, Maria and Harvey----
Mr. Diaz-Balart. I know that at least in case of the
Florida you extended it, right?
Ms. Wade. That is right.
Mr. Diaz-Balart. Right.
Ms. Wade. And we did extend it for another 90 days, and
that has since expired, and I think the way that I view a
foreclosure moratorium it is successful in the sense that it
allows, it allows borrowers some breathing room to get back on
their feet, when they are faced with a devastating storm. You
know, like Hurricane Irma, there were a lot of borrowers who
just needed that time to recover, and honestly it gives them
also more time, so that they can kind of talk to the servicer,
figure out what their options are.
Under FHA we provide a lot of options for borrowers who are
impacted by disasters. We provide up to a year and we require
servicers to provide up to a year of forbearance. We have a
special disaster loan modification that is tailored for
disaster-impacted borrowers.
We also rolled out a new tool that I think will be
particularly useful in places like Florida, in places like
Texas, which is allowing a partial payment of claim for
disaster-impacted borrowers. There is really a second loan that
allows them to roll their missed payments or their arrearages
into a second loan that sits on top of the FHA mortgage. And I
think, you know, we are hoping that this will really be useful,
and this will allow borrowers to become current.
Mr. Diaz-Balart. That is great. That is great. Mr. Price,
any further questions, comments?
Mr. Price. No further questions. Thank you. I appreciate
the testimony and look forward to working with you on the bill.
Ms. Wade. Thank you.
Mr. Diaz-Balart. Let me thank you again, for your
testimony. By the way, when I was looking through your bio, it
has a line that says that, you know, you have a keen
understanding of how banking and housing policy impact the
affordability of affordable housing, and also the taxpayer
commitments, and by extension our neighborhoods and community
as well.
I will tell you it is refreshing to be able to speak to
somebody who does get it, and understands the impact of all of
these decisions that are made all the time. So, I just wanted
you to know that I am very grateful that you are doing this.
There may be some other questions, and so I would--some of
them will probably be submitted later.
I would ask you, please, if you could work with OMB to
return information for the record to the Subcommittee within 30
days from Friday. That again will allow us to publish the
transcripts of today's hearings, and as we put together our
bill to make informed decisions. And obviously I look forward
to continue working with you, as we put the bill together.
Again, Mr. Price, thank you. No parting thoughts, words of
wisdom?
Mr. Price. Thank you, Mr. Chairman.
Mr. Diaz-Balart. Thank you. Thank you very much.
Ms. Wade. Thank you.
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Thursday, April 26, 2018.
DEPARTMENT OF TRANSPORTATION--FEDERAL HIGHWAY ADMINISTRATION, FEDERAL
TRANSIT ADMINISTRATION, & U.S. MARITIME ADMINISTRATION,
WITNESSES
REAR ADMIRAL MARK H. BUZBY, ADMINISTRATOR, U.S. MARITIME ADMINISTRATION
BRANDYE HENDRICKSON, ACTING ADMINISTRATOR, FEDERAL HIGHWAY
ADMINISTRATION
K. JANE WILLIAMS, ACTING ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION
Mr. Diaz-Balart. Let us call the subcommittee to order.
Today we welcome the leadership of three of Department of
Transportation model administrations to discuss Fiscal Year
2019 Budget Request.
So, we are pleased to have Admiral Buzby, who is the
Administrator of U.S. Maritime Administration. Admiral? Brandye
Hendrickson, Acting Administrator of the Federal Highway
Administration. Thanks for being here. And also, Jane Williams,
Acting Administrator of the Federal Transit Administration.
Again, we are pleased to have the three of you here.
Each of you play a critical role in maintaining really the
strength of our nation's transportation infrastructure, whether
it is our roads, our bridges, our trains, buses and ships, et
cetera.
The Fiscal 2019 Budget Request proposes $696 million for
the Maritime Administration, $45.8 billion in total budgetary
resources for the Federal Highway Administration, and $11.1
billion in total budgetary resources for the Federal Transit
Administration. These are, obviously, all below the 2018
enacted level.
Now, I have said this multiple times, and we have had other
witnesses come in front of us, this budget request was
developed before the recent Bipartisan Budget Act, that lifted
the sequester for two years, and raised the discretionary
budget caps.
So, the budget request, in some respects, and I think we
all need to recognize this is outdated because of the changes
that took place afterwards. I don't think a lot of you will see
support on this Committee for the deep cuts, two important DOT
programs. However, it is important to hear from you what those
priorities are, and what you are thinking, and what you are
looking at.
As you know, last month the President signed the FY 2018
Omnibus, which obviously is a negotiated product between the
House, the Senate and the White House, and I am proud that this
bill provides really a significant down payment on our nation's
infrastructure. And we have all been talking about that for a
long time, and I know that there are other plans out there, but
with this Congress, again negotiating with the White House, and
particularly the subcommittee. and this Committee has done, is
a very, very large down payment on infrastructure that we all
have been talking about for such a long time.
So, this includes an additional $2.5 billion in
discretionary highway funding to rebuild our nation's roads and
bridges; $2.6 billion for capital investment grants and to
support major transit projects. And I would like to outline
that that is the highest level ever funded, and something that
I am very pleased with.
Four hundred million to help them modernize their bus
systems, another $400 million for transit systems to maintain
the state of good repair, and we know that there is a huge
backlog in that account, but at least we were able to address
it in some way; $980 million for the Maritime Administration,
including $300 million for a new school ship, and $121 million
for the United States Merchant Marine Academy.
Again, what we just did recently in the Omnibus showed that
this Committee actually does real projects, real
infrastructure, and again, it is not theoretical, this
Committee has done it.
And so, we now turn; however, now that we have got the Omni
out of the way, and again I think we have some good--a lot of
things to be proud of in that Omni. We turn to fiscal year
2019, and we look forward to making further, whether strategic
investments in our infrastructure, but also making sure that we
protect, and we remain accountable to the taxpayer, to those
who pay their bill.
So, this is an infrastructure committee, and we will
continue to move our country forward in the right direction. We
will hopefully continue to, if it is the will of the
subcommittee, and I am very proud of the work that the
subcommittee has done, and we will be able to move forward,
continue to move forward, and continue to invest in some key
infrastructure areas that we severely need.
So, again, I want you to know that each of you that play an
important role in these efforts. And so, I am grateful for your
testimony. I look forward to your testimony.
And with that, let me yield to the distinguished Ranking
Member, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. I am happy to add my
welcome to our witnesses this morning. And I look forward to
this hearing. We are going to hear testimony from the
leadership of several agencies. The Federal Transit
Administration, the Federal Highway Administration, the
Maritime Administration. So, thanks to all of you for being
here.
Our transportation infrastructure continues to serve as the
foundation for our economy and our quality of life. The
condition of the performance of that infrastructure, the
condition and performance of our infrastructure are critical
for the nation's health and welfare, and economic
competitiveness.
As the panel before us demonstrates, America's
transportation network is also extremely complex and varied,
and interrelated. We rely on public transit to move large
numbers of people safely and efficiently in our high-density
corridors, our Federal-aid highways and bridges ensure the
reliable flow of goods and services in all 50 states in a
variety of climates and terrains, and waterborne
transportation, that serves as the linchpin for international
trade, shipping and port operations, along our coasts and major
rivers.
Now, these different modes are often viewed as distinct
components, but in reality we know they are all connected.
USDOT, Congress and this subcommittee must continue to work
together to ensure seamless integration among modes
particularly as emerging technologies offer new opportunities,
and new risks for our transportation system.
I look forward to our discussion today about the challenges
and opportunities facing our nation's transit systems, and
especially how FTA plans to administer the Capital Investment
Grants Program. This subcommittee provided robust funding for
new starts, small starts and core capacity projects, and
resources being put to good use in communities across the
country.
The recently-enacted Omnibus also contains approximately
2.5 billion in new highway funding, above and beyond the FAST
Act authorized levels. So, we are looking forward to an update
about when this funding is going to be made available, the
State Department of Transportation and other eligible grantees.
Meanwhile, the Omnibus provided significant new funding for
our nation's maritime operations including resources for the
decommissioning of the aging NS Savannah, and the procurement
of a new training ship for the State Maritime Academies. We
will need additional information about how MARAD plans to
execute these challenging projects.
I also want to express my concern about sexual harassment
at the U.S. Merchant Marine Academy. The DOT Inspector General
in March noted that gaps in the Academy's Sexual Assault
Prevention and Response Program limit its effectiveness.
We need for MARAD and USDOT leadership to offer sustained
attention to this problem and to take concrete steps to address
it.
So, I look forward to today's discussion. I appreciate the
Chairman's willingness to hold this hearing, as we begin
formulating our Fiscal 2019 Appropriations Bill. Thank you.
Mr. Diaz-Balart. Thank you, sir. And so, again, your full
statement will be submitted for the record. And, so we will
start with you, Admiral. You are recognized for three minutes.
Admiral Buzby. Good morning, Chairman Diaz-Balart; Ranking
Member Price, members of the subcommittee. First, let me say
thank you very much for the $980 million in funding provided to
the Maritime Administration in the fiscal year 2018
appropriations bill and for the opportunity today to discuss
the President's fiscal year 2019 budget priorities for the
Maritime Administration.
The President's budget request for MARAD is focused on
increasing the competitiveness of the U.S. flag fleet,
investing in education and training of the next generation of
merchant mariners, and supporting the maritime industry's
commercial and national security objectives.
Our country's economy is dependent on its maritime assets
and efficient freight movement, and while our nation's economy
relies on foreign trade, the U.S. commercial presence in the
international maritime domain has been at historic lows over
the past several years.
Only 81 ships remain in international commerce, carrying
less than 2 percent of our annual foreign trade. We must
increase the size of the U.S. flag fleet engaged in foreign
trade to ensure sufficient capabilities to support Department
of Defense sealift requirements.
The Maritime Security Program or MSP, for one, ensures
access to U.S. flag ships and ocean-borne foreign commerce, and
the intermodal logistics networks to move equipment, military
equipment and supplies during armed conflict or national
emergency.
For FY 2019, $214 million is requested for MSP, providing
$3.6 million for each of the 60 ships currently enrolled in the
program, while it is fully recognized that this request is less
than the authorized level for MSP, it reflects the hard choices
as the Administration pursues rebuilding DoD capabilities. The
Department strongly supports MSP, and recognizes the critical
contribution it plays in this nation's security.
MARAD also maintains a fleet of government-owned merchant
ships and a National Defense Reserve Fleet, or NDRF, which
includes 46 Ready Reserve Force vessels that are used to
transport military cargo for critical operations.
These vessels were activated to provide relief efforts
following Hurricanes Harvey, Irma and Maria, and in the past
year supported DoD with the largest round of ammunitions
sealift operations in decades.
The ability to accrue these government-owned surge sealift
assets requires maintaining an adequate pool of qualified U.S.
merchant mariners in peacetime.
The United States Merchant Marine Academy educates and
trains the next generation of leaders who will serve as
officers aboard commercial ships, and commissioned officers in
our Active and Reserve Armed Forces.
The President's FY 2019 Budget Request includes $74.6
million for the Academy with $70.6 million going toward
operations, and another $4 million directed for capital repairs
and improvements in its buildings and infrastructure.
Here I want to reaffirm that MARAD, the DOT and the Academy
take sexual assault and sexual harassment at the Academy and at
sea, very seriously. The Academy has made progress in improving
its prevention and response efforts, but we recognize more work
needs to be done. Funding in the FY'19 budget request will
allow us to continue these efforts.
MARAD also provides funding assistance to the six State
Maritime Academies which graduate about three-quarters of the
entry-level Merchant Marine Officers annually. The President's
FY'19 budget requests $24.4 million for the State Academies,
including $22 million for maintenance and repair of the
Federally-owned school ships, and $2.4 million to fund the
Student Incentive Program.
I want to thank Congress again for providing the $300
million in the FY'18 appropriations bill for the construction
of our new National Security Multi-Mission Vessel, to be used
to train young mariners and respond to national emergencies. To
continue this effort $300 million is requested in FY'19 to
replace the outdated training ship school fleet.
Finally, MARAD and DOT are grateful to Congress for
providing full funding in the FY'18 appropriations bill to
complete decommissioning of the nuclear ship Savannah.
The President's FY'19 budget requests additional funding
for MARAD's Ship Disposal Program, which includes funding to
continue safe storage of the ships during decommissioning. Mr.
Chairman, I thank you for the opportunity to present this
testimony and I look forward to working with you on advancing
maritime transportation in the United States.
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Mr. Diaz-Balart. Thank you, sir. Administrator Hendrickson.
Ms. Hendrickson. Thank you. Chairman Diaz-Balart, Ranking
Price and Members of the subcommittee, thank you for inviting
me today to discuss the President's Fiscal Year 2019 budget
request for the Federal Highway Administration. I am pleased to
appear beside my FTA and FHWA colleagues. The President
requested $46 billion for Federal Highway which is the amount
authorized under the fourth year of the FAST Act.
FHWA has made significant progress in implementing the Act
and the President's budget request ensures that FHWA will
continue to invest in projects that improve roadway safety,
repair aging bridges and highways, and facilitate the movement
of freight. Importantly, the budget supports FHWA's
transportation performance management approach which will
ensure that federal dollars are invested wisely as states are
responsible for meeting performance targets. Safety is FHWA's
top priority and the President's budget request includes
funding for important safety initiatives such as the Highway
Safety Improvement Program.
This program is essential to reducing traffic fatalities
and serious injuries on all public roads. The budget also
ensures investment in our nation's most traveled highways by
requesting funding for FHWA's Formula and Block Grant Programs.
These programs provide necessary resources to states to allow
them to improve the condition and performance of interstates as
well as other Federal-aid Highways. The President's budget
request also makes needed investment in our freight
infrastructure recognizing the efficient movement of people and
goods is vital to our economy.
This request reflects FHWA's commitment to promoting
innovation to address current and emerging transportation
issues. Most notably, with regard to autonomous and connected
vehicles. Supporting our efforts to better understand what is
needed to safely accommodate automated systems in the highway
infrastructure. FHWA's operating expenses are supported,
including our dedicated and professional, the strength of our
organization.
Finally, I would like to provide the Committee with a brief
update on our implementation of the recently enacted Omnibus
which provided funding for the remainder of this fiscal year.
In addition to funding the regular Highway Program, Congress
also appropriated an additional $2.5 billion in discretionary
highway funding from the General Fund. $1.98 billion of that
amount was set aside for highways, bridges and tunnels eligible
under the Surface Transportation Block Grant Program and I am
very happy to report that funding has recently been issued.
Mr. Chairman, thanks again, for the opportunity to appear
before you today and for your commitment to FHWA's programs. I
look forward to answering your questions.
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Mr. Diaz-Balart. Thank you. Now, Administrator Williams.
Thank you.
Ms. Williams. Thank you, Chairman Diaz-Balart, Ranking
Member Price and Members of the subcommittee and thank you for
inviting me here today to discuss the President's fiscal year
2019 budget request for the Federal Transit Administration. At
FTA, we share Secretary Chao's departmental priorities: safety,
infrastructure investment and preparing for the future.
The FTA budget request reflects these priorities. Overall,
FTA's request totals $11.2 billion, which includes $9.9 billion
to fund mandatory programs at FAST Act levels, representing a 2
percent change from FY18. The remainder, $1.2 billion, will go
towards discretionary programs and administrative expenses. I
would like to talk first about safety.
Since being granted safety authority in MAP-21, FTA has
established a robust safety oversight program. The FY19 budget
request includes $163 million to continue our significant
safety duties. A top priority for FTA leadership is the
certification of state safety oversight programs under the new,
stronger standards required by Congress and MAP-21 and the FAST
Act. I would like to take this opportunity to reiterate that
all affected states must be certified by April 15th of 2019. If
any state misses that deadline, by law, FTA must withhold all
transit funding from that state. We have made great progress so
far with 11 of the 30 states now being certified. But there is
still much to be done. I look forward to working closely with
officials in all the remaining states to help them achieve FTA
certification.
Part of safety is maintaining a State of Good Repair. FTA's
FY19 budget request includes $10.8 billion in funds for transit
agencies to address their infrastructure needs. FTA's formula
grant programs cover transit services of all sizes and types,
such as $4.8 billion for urbanized areas; $3.4 billion for
State of Good Repair, buses and bus facilities; and $936
million for rural communities, seniors and individuals with
disabilities.
FTA shares the commitment to delivering projects with more
local choice and less red tape, which is one of the core tenets
of the infrastructure package, proposing $200 billion in
federal funds to unlock at least $1.5 trillion in further
investment. Sponsors of public transit projects will be able to
access funding through the new infrastructure initiatives that
offers them more autonomy, less burdensome federal regulation
and expedited project delivery. While encouraging creative
financing mechanisms that allow our communities to capture the
value of their public transit investments, the President's
proposed infrastructure programs will be a more streamlined
funding source for major transit capital projects. That is why
FTA'S FY19 request proposes to limit funding for the Capital
Investment Grants program to $1 billion which would go toward
existing commitments to projects with signed grant agreements.
Our approach to major capital projects is a new one, but
one that we believe would deliver better results for transit
nationwide. The same principle holds true of our Public
Transportation Innovation program for which our budget requests
$28 million. FTA will continue to promote innovative business
models that have the potential to dramatically improve safety,
reliability and efficiency in public transportation.
Finally, apart from our FY19 budget request, I want to
commend this Committee and this Congress for appropriating
funding for FTA's Emergency Relief Program. When I first joined
the FTA in August of last year, I was immediately confronted
with the challenges of Hurricanes Harvey, Irma and Maria in
quick succession. And those devastated many of our local
partners in Texas, Florida, Georgia, Louisiana, the Virgin
Islands and, of course, Puerto Rico. At FTA, we are working
quickly to get the emergency relief funding out to our grantees
to reimburse them for their emergency expenses and to fund
projects that will help them rebuild even stronger and more
resilient than before. Again, I thank you for inviting me to
join you today and I look forward to answering your questions.
[The information follows:]
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Mr. Diaz-Balart. Again, thank you very much for your
testimony. Let me start with Administrator Hendrickson and the
Accelerated Bridge Construction has been touted as an
innovative approach to reduce costs, time, et cetera. Now, I am
sure you are aware of the pedestrian and bridge collapse in
Miami-Dade County which was a horrible tragedy. Now, that was
using prefabricated elements, a common technology under ABC
Construction. Can you kind of provide us an overview of what
Accelerated Bridge Construction entails and does it have a good
safety record for bridges and that kind of--because obviously,
that is something that left us all very shocked. And is this an
anomaly or is this a problem? What are looking at? I mean, it
is obviously a problem, what happened there, but I am saying,
is this, you know, how safe is this process?
Ms. Hendrickson. Thank you for that question. Obviously,
safety at the Department of Transportation and Federal Highways
is the number one priority and any fatality on U.S. roadways is
unacceptable and too many. However, Accelerated Bridge
Construction (ABC) techniques have been tried and true, you
know, across the country and are a key part of our every day
counts program. They have been--we promoted accelerated bridge
construction through this program since 2011 in various ways of
delivering that model have been successful across the country.
So, we continue to work very, very closely with the NTSB on
their investigation on the FIU pedestrian bridge tragedy and
look forward to understanding from that investigation the cause
of the collapse and we will work very quickly to get that
information out to the public to ensure that if there are any
improvements to the process that those get communicated very
quickly.
Mr. Diaz-Balart. And I appreciate your agency's continued
cooperation and work with the NTSB. We all look forward to that
investigation. Because we ought to make sure that whatever we
have to do to make sure that something like that is not
repeated is done. So, thank you for that background.
Administrator Williams, we obviously recently passed the
Bill that provided $2.46 billion in capital investment grant
program, which I mentioned before, a historic number. And
again, it is to ensure enough funds are available to--for all
the projects that are currently--have been executed, full
funded grant agreements and for other projects that are ready
and expecting grant agreements this year and so, I know--
obviously, I know that you will execute this program in
accordance to the will of Congress, but I just want to make
sure that everybody is clear just for the record that is the
intent of this Committee in Congress to have projects that have
successfully gone through the FTA's rating and evaluation
process. That they meet those requires. Again, that they
receive an executed construction agreement. And so, we all want
to see the qualified small start projects, core capacity
projects, new start projects receive grants--those grant
agreements.
Two weeks ago, when the Secretary Chao was here, she had
reassured us that she would continue to move those projects
through the pipeline and I just wanted to make sure that, that
is your understanding as well and that is your commitment as
well----
Ms. Williams. It is.
Mr. Diaz-Balart [continuing]. To ensure that those projects
continue to move through the process.
Ms. Williams. It is, Chairman Diaz-Balart. Thank you for
the question. We are continuing to look at the FY18 Omnibus. As
you mentioned, it is the historic highwater mark for the FTA
and so, we are looking very closely at that and continuing the
process for the projects through the program according to
statute. And, of course, it always is our intent to follow the
law of Congress and so, we will work diligently with project
sponsors to move them through the program; through Small
Starts; through New Starts; and Core Capacity.
Mr. Diaz-Balart. And I appreciate that, so you are willing
to obviously work with those sponsors to make sure they get
their ducks in a row and then----
Ms. Williams. Absolutely.
Mr. Diaz-Balart [continuing]. Right. And are you currently
reviewing any applications? Do you know if your department is
currently reviewing any applications and what the timelines may
be for some of those reviews?
Ms. Williams. We do have a pipeline of projects that is 55
strong and those projects are all at different stages of the
statutory criteria meeting those deadlines. And so, we are
continuing to process those. As you may recall, we just signed
three additional Small Start grant agreements earlier this
month and so we are continuing to process those projects
through the statutory requirements.
I have to tell you that when I came to FTA, you know, I was
confronted with megaprojects that had lots of problems and
severe cost overruns. And so, looking at projects, such as HART
and MBTA and the like, we took a step back and said, you know,
we have to be good stewards of the taxpayer dollar and to make
sure that we know what the risks are and the assessments are
done and that we truly put out the very best transit projects
we can. And so that has been our commitment to do since I
arrived in office.
Mr. Diaz-Balart. Appreciate that. Let me also just--I am
going to ask Mr. Valdao to take over the gavel for a little
while, while the Ranking Member is recognized. There are a lot
of other hearings going on, so I am going to have to step out
to go to another hearing, but I obviously will return, so, Mr.
Price.
Mr. Price. All right, thank you, Mr. Chairman. I am going
to follow-up on your line of questioning and also the line of
questioning we were pursuing with the Secretary when she
appeared before the subcommittee earlier this month. And this
would be focused on FTA.
As you know, members have been frustrated on this
subcommittee when we have asked these questions about how
programs are going to be administered and executed. So, we
appreciate the chance to bring some further clarity to this
today.
The Fiscal '18 Omnibus rejected the administration's
approach to transit and I am sorry to see that approach
repeated in the 2019 proposal, but I think we have spoken
pretty clearly. We have a record amount, $2.6 billion for
capital investment grants. The Omnibus contained language that
requires the FTA to allocate 85 percent of the funding by the
end of the calendar year, 2019. I think we know the importance
of this investment. We have seen at Tacoma, other places across
the country. Delays add costs; delays sideline well paying
construction jobs. We need to make sure this program is
expeditiously and responsibly executed. I am pleased with those
small start agreements that you have begun to sign. When you
refer to a pipeline of 55, I assume you mean all sorts of
agreements.
When are you going to begin signing? Can you give more
precise information when you are going to begin signing full
funding grant agreements for new starts; for core capacity; and
the remaining small starts projects? Let me just ask a question
of questions here all at once and I will let you address them.
Is there any policy, formal or informal, that would limit the
number of grant agreements in a single state? Any policy we
should know about there. I understand that the FTA undertook an
extensive review of these projects last year, in fact you have
referred to that. And can we expect a more expeditious process
this year? So, I would appreciate your addressing these very
specific timeline issues.
Ms. Williams. Thank you, Ranking Member Price. I am not
aware of any policy that limits or caps a single state to a
certain number of projects. That is not a policy that we
currently live under in FTA, and so I would tell you that that
is not something I have ever heard mentioned in any place in
the Department.
What I would say is that, you know, what I was saying to
the Chairman early on, you know, coming into FTA and being
confronted with projects that have Full Funding Grant
Agreements that are suffering serious cost overruns, and then
with our first Small Start Grant Agreement to the Wave
Streetcar Project in Florida, we were very concerned with that
project moving forward, and has yet to move forward today. I
understand that bids will be opened today, which is good news,
and hopefully that project will be back on track.
But we have suffered about a six-month delay, and that is
Federal taxpayer dollars that are waiting to be used, and are
not available to be used for other projects. And so, a lot of
these projects, as you can imagine, are quite complex and it is
very iterative.
My staff at FTA is phenomenal at working with our grantees
to make sure that we process those projects through the program
and according to the statute. And we will continue to do that,
as we look at each of the merits of the projects individually.
Mr. Price. Can you give us a timeline on when we might
expect some of these FFGAs to be signed? Especially in the New
Starts and core capacity areas.
Ms. Williams. As you can imagine, the Full Funding Grant
Agreements are for the larger projects, the New Starts and Core
Capacity tend to be much larger, obviously, than the Small
Starts. And so they take a bit more time. I can tell you that I
don't specifically have a project in front of me that is ready
today for assigning of FFGA. And so when that occurs, we will
continue to process that through the program like we do all
projects, and we will continue to do that according to the
statute.
Mr. Price. The 55 projects in the pipeline, and not one is
ready today.
Ms. Williams. No, we have three that had just entered into
engineering. We have one specifically in California that is
nearing completion, that we will be looking at closely, in
Orange County. We have two additional that are waiting to go
into engineering, which is our last, you know, they enter into
project development, and sometimes they spend two years in
project development before they progress to the engineering
side.
And so we, you know, work with them to get their funding
plan in order and their project justification in order to make
sure that they rate well in our program, and are eligible for
funding.
Mr. Price. Are there any additional Small Starts that are
ready to go, like maybe Tacoma? I understand Tacoma is more
than ready.
Ms. Williams. It is, and we, in fact, are at the very end
stages of reviewing that project, and I hope to have a very
positive answer for you, soon, on that.
Mr. Price. All right. We look forward to that. This Omnibus
language requiring FTA to allocate 85 percent of the funding by
the end of the calendar year 2019, I assume that is well
understood.
Ms. Williams. It is, absolutely is. And we will work very
hard to meet that deadline, sir.
Mr. Price. Thank you. Thank you, Mr. Chairman.
Mr. Valadao. All right. Well, I am going to recognize
myself here for the next five minutes. I was next in line so.
My question for Administrator Hendrickson. The Buy America
Waiver, a city in my district applied for a Buy America Waiver
back in January of 2017, to purchase a new lower polluting
refuse truck with Congestion Mitigation and Air Quality
funding.
I understand that this waiver was approved earlier this
month, but only because it was submitted prior to the Buy
America and Hire America Executive Order. The Federal Highway
Administration has announced that it is reevaluating the Buy
America Waivers for vehicles and equipment because of the
Executive Order.
Do you have a timeline for when this evaluation will be
completed, and how long it will take to determine vehicles and
equipment waiver applications going forward?
Ms. Hendrickson. Thank you. Promoting jobs here in America
is a huge priority for this Administration, and we take every
application for a waiver very seriously, and judiciously review
every single request to ensure that the maximum content of
American materials is included.
And so, as we review these projects and materials in the
waiver request, you know, we do so with the Executive Order,
and the intent to promote American workers as a top priority.
We did, you know, new guidance is under review as you
mentioned, and we really hope to provide applicants with the
questions, and that the information that we are hoping to
receive from them in their application process, to facilitate
the processing of those waiver requests, and anticipate that
that guidance will be released very soon.
Mr. Valadao. Any idea what that means, very soon? Is that a
week, a month?
Ms. Hendrickson. Hopefully, within the next few months.
Mr. Valadao. All right. Well, I appreciate that. And then
on the FAST Act, the FAST Act made the movement of freight a
top priority, a national priority of funded Freight Formula
Program which is under the control of the states. San Joaquin
Valley is the hardest of California's Central Valley, and
contains 5 of the 10 most productive agriculture counties in
the United States, and generates an enormous of agriculture,
and other freight traffic.
What assurances can you give us that mostly rural areas,
like the San Joaquin Valley, will receive a fair share of the
National Highway Freight Program, and other formula funds?
Ms. Hendrickson. Absolutely. You know, the Administration
is absolutely committed to promoting the movement of goods and
services. We all understand that funding for infrastructure is
critical to ensuring a very robust economy, particularly in
rural America. So, in all of our grant programs, in all of our
discretionary funding opportunities that we have, we take the
rural component very seriously, and prioritize it as the main
criteria, and just would reassure you that throughout all
programs that we have, and we consider rural, particularly
freight mobility in rural areas as the top priority.
Mr. Valadao. I appreciate that. One of the things that we
struggle with, and California is a little bit different than
many other states because it is such a large state, sometimes
we get overshadowed by the Los Angeles, San Francisco
communities that have--I would say a larger population. And so
we always want to make sure that when resources are going out
to the governors, that states like California, we have a little
more opportunity to fight for those dollars, because our
communities always feel like they are overlooked, and we really
struggle.
The Fiscal Year 2018 Omnibus Appropriations Bill added
almost $2 billion to Surface Transportation Block Grant Formula
funds, the Act requires that 53 percent of the these funds are
sub-allocated in the states by population, but the remainder
can be spent anywhere in the state. What is the status of the
distribution of these funds?
Ms. Hendrickson. I am happy to announce that those funds
were distributed yesterday.
Mr. Valadao. Oh, wow. All right. And again, this comes to
the rural, can you give any assurances that rural areas would
not be neglected in the spending of these funds?
Ms. Hendrickson. Sure. So, those funds go to the states,
you know, through our formula program, and so it would be up to
the states to make the determination where those funds are best
utilized. We have, you know, the President's Infrastructure
Proposal, and all of our grant programs do put a heavy emphasis
on rural America, and projects in areas that you just described
would be, you know, very competitive for those dollars.
Mr. Valadao. All right. Well, thank you. My time has
expired. I would like to recognize Ms. Clark for five minutes.
Ms. Clark. Thank you, Mr. Chairman. And thank you to all
the panelists for being here today. Admiral Buzby, I would like
to follow up on some the questions I had for the Secretary of
Transportation. And I really commend you and want to thank you
for your commitment to the State Maritime Academies.
And in particular for your work to replace the TS Empire
State, and the TS Kennedy at 56 and 52, even though I fall
right in between those ages. These school ships are in dire
need of replacement. And the good news is the FY'18 Omnibus
included $300 million to replace the TS Empire State.
And I understand this is a little different than the
proposal that the Administration put forth, but I think it is a
very positive step. I wondered if you could tell me where we
are in the process. Is the design complete? Has a contractor
been selected?
Admiral Buzby. Thanks for the question, and I am very
excited to talk about this, this is, building a large ship in
the United States is a big deal, and we are especially pleased
it is going to be a training vessel. This country has never had
a purpose-built training ship, so this will be a real first,
and I really appreciate the generosity of Congress to put this
appropriation in early.
So, where we are in the process? It is a very mature
design, again, Congress has funded us pretty well over the last
several years to do that design work, and so consequently we
are in a very good place to go into construction true to
design. Where we are going to go with this immediately is our
acquisition plan, which has not been fully approved by the
Secretary yet, but the concept is that we will have a ship
construction manager who will actually oversee the
construction.
And this ship construction manager, which will be led by a
contract, will actually be a U.S. shipping company who has
recent experience building a ship in U.S. ship yards.
Ms. Clark. You anticipated another question. That is great.
Admiral Buzby. So, there are several of those companies. We
have recently built a lot of new Jones Act ships, large tankers
and containerships, so we have--actually we have some company
with very recent experience, current experience in working with
our U.S. shipyard, to build a fairly large ship.
So, we will have that ship construction manager oversee the
actual construction of the ship. We will have a separate
contract for what I would call a QA, quality assurance
technical overseer, who will ensure that all the design
standards are being met, and all of the safety standards are
being met. Both of those will report to our Program Office in
the Maritime Administration.
So, timeline wise, we are going to have an Industry Day
here next month, where we invite all interested parties to come
over to our headquarters to look at the design, and talk about
our acquisition plan.
We hope to get that construction manager under contract by
mid-summer, and we hope to then, you know, let the construction
by the very first part of the calendar next year, and then step
right up. And then it will be about a 26 to 28-month
construction time, once that contract is let.
Ms. Clark. Great. And I know that the funding is for the TS
Empire State, obviously, from Massachusetts, I would love to
see the TS Kennedy go forward as well. And I think we have had
some good discussions. We know that would need to be another
$300 million that is appropriated in FY'19. But I wondered if
you could talk a little bit about what the cost savings would
be, if we were able to do these two ships at once.
Admiral Buzby. Yes. Our estimates are at this point, that
if we can get to a two or a three-ship build, that the second
ship, if we can procure two together, that would get the price,
the unit price down from about 300 to about 280, or so, and we
are looking at probably 260, if we can get, you know, further
ships under that sort of contract.
So, it will all depend on the learning curve of the yard
that gets chosen ultimately, but if it follows any other
shipbuilding procurement program, we will see some definite
savings in multi-ship procurements.
Ms. Clark. Great. Thank you very much. And a brief time,
maybe we will have a second round, but I will leave it at that,
and hopefully we will have a second round. I am getting the nod
to go ahead.
So, I did want to--you mentioned it in your testimony, your
written and verbal testimony you gave today, but I just want to
say, my continuing concerns about the sexual harassment and
assault claims at the Merchant Marines.
When we look at the report that came out, and less than
half of the goals that were set were met, there were key hiring
positions that were not filled in a timely way.
I understand that you acknowledge there is work to be done,
but I did wonder at this point, the State Maritime academies
are not subject to Title IX, and unlike other service
academies, are not subject to the uniform code of military
justice. Do you believe it is time that Congress made those
changes?
Admiral Buzby. Well, but Kings Point is not subject to
Title IX, as you suggest. I think it is probably time to take a
good look at, you know, our process. We do have a process and
it does work. I mean, there was a recent court ruling actually
last week, that verified the process that we do have in place
is constitutional, and it does uphold, you know, all rights of
all parties concerned.
But we are the only academy, Federal academy that is not
under UCMJ, so we are an outlier in that respect. It is not as
easy just to say, okay, we are going to go under UCMJ, there
are a lot of pieces that have to be done. I think it is
probably worthwhile looking in detail at all of those things
that would be required to do that.
I think Title IX is not a good fit at all, just the
elements of it don't really fit at all. UCMJ is probably a
closer achievable goal, but we still need--there are many
things that have to be considered before we go and just say,
let us go that route. So, yeah, a study is probably worth
doing.
Ms. Clark. Okay. Thank you. Thank you, Mr. Chairman.
Mr. Valadao. I would like to recognize Mr. Aquilar for five
minutes.
Mr. Aguilar. Thank you, Mr. Chairman. You look pretty
comfortable in there. A lot of people had to get sick this
morning, in order to for you to be there though. I just want to
point that out. So, saved by the bell, here.
Thank you, folks for being here. Thank you for your
generosity, Mr. Chairman, and for not recognizing yourself
before my turn.
Administrator Hendrickson, fiscal year 2018 will be the
first year of the Nationally Significant Federal Lands and
Tribal Projects Program will be funded. The Omnibus
appropriates $300 million for the program, which provides
funding for the construction rehabilitation of transit projects
on tribal lands.
In the district I represent there are tribes, and in
California and throughout the Southwest there will be tribes
who are interested in taking advantage of this program. How do
you plan to administer the program, and what factors would be
used in awarding a grant? And when do we expect the NOFO to be
published?
Ms. Hendrickson. We are working very hard right now on
putting all of the components necessary for the NOFO together,
and as you said, $300 million was allocated for the Nationally
Significant Federal Lands and Tribal Projects Program in,
again, like the first time that it has been funded.
So, we anticipate that NOFO will be ready very soon. The
requirements are that it is, you know, a minimum of $25 million
project, and that NEPA has been completed. So, those will
certainly be aspects of the NOFO when it is released.
Mr. Aguilar. And those are some of the larger aspects of
the program?
Ms. Hendrickson. That is right.
Mr. Aguilar. And in California, as you know, we have
utilized programs in the past that have allowed us because we
have a more rigorous sequel process, environmental clearance.
Will that same type of discussion be allowed in coordination
between NEPA and SEQUA as you have in normal transportation
projects?
Ms. Hendrickson. We will definitely consider that as a part
of our consideration of the project.
Mr. Aguilar. Okay. I appreciate it. One more question, I
guess, broadly on tolling, in the White House National
Infrastructure Plan, they proposed that states receive more
flexibility, authorized tolling on interstate highways. The
report states that tolling might serve as a major source of
revenue for infrastructure investment, and indicates that tolls
have the ability to generate additional funding for
infrastructure projects.
If a state authorizes and moves forward with tolling on
interstate highways, what type of oversight regulations do you
think are appropriate for the Department and agencies to
implement, in order to provide that fair oversight that is
necessary?
Ms. Hendrickson. The President's Infrastructure Proposal
does suggest that restrictions on tolling existing in
interstates could be lifted if deemed appropriate by the state,
so it would be a state decision to determine whether that was
appropriate for that state.
Those funds would then be required to be reinvested into
the infrastructure for, you know, maintenance of those
facilities or other facilities that are eligible for Federal-
aid funding.
Mr. Aguilar. If asked, what does that mean? What types of
safeguards can we put into law, or at the Department level to
ensure that those dollars do go back? I mean, just a highlight.
I mean, we always just want to be very careful if we are mixing
Federal dollars with, in some cases, you know, local
transportation dollars as well, if there is self-help
communities like many.
In our communities some states have had mixed results with
tolling as well. Some are supporters of it, and some have had
negative experiences. So, what other types of things should we
be looking at from the policy perspective to ensure that those
dollars do go into those programs?
Ms. Hendrickson. So, I would just offer that, you know, at
Federal Highways, we have offices and professional staff in
every state. And those employees work very closely with our
state partners to administer the Federal-aid Highway Program as
it exists today, to ensure that the investment of those
Federal-aid dollars are in line with the law. And so I fully
anticipate that oversight can be accomplished within the
existing structure of the Federal Highway Administration.
Having our staff that are located in each state to oversee the
administration of those funds would be appropriate.
Mr. Aguilar. I appreciate it. Thanks for the interest.
Thanks, Mr. Chairman.
Mr. Valadao. Thank you, Mr. Aguilar. I would like to
recognize Mr. Young for five minutes.
Mr. Young. Mr. Chairman, thank you. You look different,
more hair I think.
Mr. Valadao. Oh.
Mr. Young. Thank you for being here. I appreciate it. You
know, the Highway Trust Fund hasn't been self-sustaining for
quite some time now, resulting in several years of general fund
transfers to make up the coupling of a stagnant gas tax, and
emerging technologies.
From your view, what is the best way to addressing the
shortfalls in the Highway Trust Fund? And I want to preface
with this that, we have got a lot of new technologies out
there, and not everybody is--I don't believe everybody is
paying their fair share into the Highway Trust Fund who is
using our roads and bridges.
And I think it should be pay-to-play kind of system. If you
are going to use it, you should pay into it. I know a lot of
times you will look to Congress to solve these problems, but we
need a partnership here, we need some ideas on how to make sure
that this fund is going to be there. Are you working internally
on any kind of solutions on this, and what are conversations,
and how can we work together to make sure that this is
sustaining?
Ms. Hendrickson. So, the Highway Trust Fund is projected to
have enough cash to cover expenditures through fiscal year
2020. As of March of 2018, the total balance in the Highway
Trust Fund is about $52 billion, and $38 billion of that in the
Highway account. The Administration is, you know, committed to
considering all options for the----
Mr. Young. How about promoting any options?
Ms. Hendrickson. At this point, all options are on the
table. We do have a grant program within Federal Highways, the
Surface Transportation Systems Funding Alternatives Program. It
has awarded 15 grants since its inception, totaling about $30
million that looks at creative funding mechanisms for
transportation infrastructure.
Mr. Young. When will we have some findings on that?
Ms. Hendrickson. We have just issued a Notice of Funding
Opportunity in April for this round of grants, and
approximately $18 million is available this year for an award,
and applications are due to us by July 15th. We continue to
be----
Mr. Young. And so their findings would take two, three
years, or in ten years? What is the timeline we are----
Ms. Hendrickson. We anticipate that the results from some
of past studies will be available in the coming year, as we
continue to develop outreach efforts and, you know, we work
with our different stakeholders including states to advance
some of the ideas that they put forward in their grant awards.
Mr. Young. Thank you. Regarding the FTA, as the
transportation and kind of mobility landscape changes, what
regulations and reporting changes is the FTA considering to
make public-private partnership easier for public transit
agencies?
Ms. Williams. Specifically, I mean, we are looking at value
capture as one of the areas where we can really increase what
transit actually is already doing, and by doing so, between
that and the expedited project delivery, being able to produce
and get projects funded quickly and on the street quickly,
being able to draw some of that private investment into
transit. And so we are working very closely with our partners
to do that.
Mr. Young. So, you have expedited and non-expedited? I
mean, why isn't it just expedited?
Ms. Williams. The expedited pilot program is actually
something that in the present infrastructure, you know, most of
the infrastructure plan talks about a lower Federal investment.
In the Expedited Project Delivery Program we actually increased
that to a 50 percent share from the Federal Government in order
to entice projects to come into that program.
And it has been authorized for quite some time, but we have
never had anyone interested. And so, now I am happy to tell you
that we do have grantees that are interested in coming into
that, so it is an expedited delivery within 120 days, and a
maximum share of 50 percent. And so we are waiting for those
grantees to come to us with those expedited projects, so that
we can consider them.
Mr. Young. Okay. Is there consideration of allowing public
transit agencies to count the rides that come through public-
private partnerships as part of their NTD, their National
Transit Database reporting?
Ms. Williams. I would have to ask about that. I am not sure
if that is underway or not, but I would be happy to get back to
you on that.
Mr. Young. Do you have any reason why it shouldn't be
counted?
Ms. Williams. No. No, I do not.
Mr. Young. Okay.
Ms. Williams. I just want to confirm that that is the case.
Mr. Young. All right. We will follow up on that. Thank you
for being here, everybody.
Ms. Williams. Okay. Sure.
Mr. Young. Thank you, Mr. Chairman.
Mr. Valadao. I would like to, one, thank you for that
compliment earlier. Admiral Buzby, the Fiscal Year 2018 Omnibus
provided 121 million for United States Merchant Marine Academy,
including 52 million to address the Academy's capital
improvement plan, and backlog, and maintenance repairs.
I know Ms. Clark mentioned some of the boat, or at least
one ship. But how will this funding impact the Academy and the
cadets, and what projects will this address?
Admiral Buzby. Thank you for the question, sir. This was a
very big, important plus up for the Academy. We have had a
capital improvement program that we have been embarking upon
for several years now. We have gotten through all of our
barracks, and upgraded all of them.
Our Mess Hall has been redone, and now we are beginning to
work through our academic buildings. Because of the amount of
space limitation we have, we have only been able to do one
project at a time, because we could only displace one set of
laboratories, classrooms, that sort of thing, at a time. So, we
have been in a sequential sort of mode.
This additional funding gives us the ability to now do a
lot of projects in parallel. We can get after some of the other
priorities that we need to get after including completely
revamping our medical center, the hospital, that is in
significant need of upgrade and modernization, it allows us to
get after construction with student activity center.
The current one is in a house that is over 100 years old,
becoming very difficult to maintain, and quite frankly we have
outgrown it. So, it gave us the ability to do that, and also to
construct a new field house.
Again, our current facility, while it has served us well
since 1943, it has been there since 1943, and we need, you
know, some modern facilities, plus infrastructure, there is you
know, just basic utilitarian sort of work that needs to be
done. So, this plus up enables us to get after those in a real
way, and really upgrade the facility.
Mr. Valadao. Any specifics on ships as far as revamping or
purchasing new ones?
Admiral Buzby. No. To this point, we have a different
training model. Our midshipmen go to sea in the U.S. maritime
industry, so they take advantage of actual working merchant
ships out in the fleet. We have a smaller training vessel, the
training vessel Kings Pointer, which is used for more local,
weekend, daily sort of operations to build seamanship skills,
and we also use it when we need to, to make sea days if people
fall short. So, it is well suited for its operations, so we
really don't need a large ship at Kings Point, it is just a
different training model.
Mr. Valadao. And have you analyzed the effect that the 52
million will have on the backlog in maintenance and repairs?
Admiral Buzby. We have, it is going to enable us to really
take a big bite out of that, and address some serious
shortfalls that we have had and the maintenance of this 75-
year-old plant. This year is our 75th Anniversary of opening
the Academy, and a lot of that infrastructure is that old or
older. So, this enables us to really get after some of those
real key investments that we have to make to keep that plant
current.
And quite frankly, as a place where mothers are going to
want to send their kids. I mean, when they look at our campus,
compared to other places, you know, you can see where there has
been some need, this will address that need.
Mr. Valadao. And then you have provided a little bit of a--
the subcommittee with some of the updates on the projects that
are being addressed. Is there a chance, or can you update the
Committee on some projects that still need to be addressed?
This will be important on the fiscal 2019 process.
Admiral Buzby. The--on our current priority list of capital
improvements, the field house that I mentioned with the
investment that we have earmarked right now, is just to do the
engineering and planning for it--not the actual erection of the
facility. So, that is going to have to be addressed in the
future budget considerations. And there are a couple of other
smaller ones that we have to kind of get after, but that's
probably the major big one that was still on the outside of our
current plan.
Mr. Valadao. All right. Well, thank you and I am going to
go ahead and recognize Ranking Member, Mr. Price.
Mr. Price. Thank you, Mr. Chairman. Let me pose a question
to all three of our witnesses involving transportation
technologies and cyber security. We all know that these
technologies portend an exciting future for transportation. We
often focus on autonomous vehicles and unmanned aircraft, but
really they are new transportation technologies that are going
impact every mode of transportation. They are going to depend
deeper communication between the many complex participants
within each mode. If communication networks are not properly
secured, these advanced transportation technologies could
become an appealing target for cyberattacks and cyber
vandalism.
Already, we have read of incidents and with electronic
message signs and ransom wear on transit system computers.
Failing to address these issues could lead to catastrophic
consequences in the future. So, I do want to ask each of you,
what steps are your administrations taking to ensure that new
transportation technologies integrate cybersecurity into the
design from the very beginning? And what efforts are you taking
to ensure that legacy systems become cybersecure? Why don't we
start with MARAD.
Admiral Buzby. Thank you, Sir. It is a great concern for
us, especially in the area of autonomous vessels and limited
manning type vessels. Most ships today sailing seas rely on GPS
position technology. A GPS signal is a very weak signal and it
is very easily spoofed; it is very easily interrupted, which in
a ship that is operating autonomously could lead to some pretty
dire consequences. So, this is a major concern that as we are
looking down the road and working with industry and potentially
moving into more autonomy in vessels, we have a working group
with a couple along with the Coast Guard and industry to look
at specifically how we address this sort of threat going down
the line. It already exists in the maritime world. In Maersk
Line, just last summer, suffered over a $300 million hit to
their terminal operations due to a cyber hack. So, it is a very
real issue and most companies, although they believe they have
fairly good security, really do not. And where it gets even
more critical, is those civilian companies are the ones that
carry--are going to carry the majority of our sea lifts in a
time of national emergency or crisis. We do business with them,
DOD and MARAD do business with these companies and so, our
systems interface with their systems and leads to some
potential significant vulnerabilities.
Working alongside U.S. Transportation Command, we are
proactively looking at information sharing regimes where if one
operator sees an attack and can notify everybody else to get
their guards up and also, how we work through the continuity of
operations sort of thing. So that if someone does get attacked
and our systems do go down, how do we fight through? How do we
continue to deliver the goods to our soldiers and sailors? So,
it is a real challenge for us in the maritime world.
Mr. Price. Thank you, Ms. Hendrickson.
Ms. Hendrickson. So, this is obviously a big concern in an
area where we are--the technology is rapidly progressing in
terms of what we have done so far. We have had several
stakeholder events at DOT, including industry, academia and the
government to look at issues surrounding autonomous vehicles,
including cybersecurity. At Federal Highways, we recently
issued a Request for Information that will hopefully gather
input from industry; from planners; from government officials
that will then inform us regarding what the needs are and how
best to prepare for this technology that is coming. And then,
we do plan several listening sessions for the remainder of this
year at various locations across the country that will include,
you know, getting feedback and information from industry and
academia to further advance our work in this. We have an
ongoing research project within Federal Highway regarding AV as
well. So, this is absolutely one of the key priorities of the
Department and cybersecurity is absolutely a big concern of all
of ours.
Mr. Price. Thank you. Ms. Williams.
Ms. Williams. Absolutely. Our innovation office is working
on this issue as we speak to address how this plays out in
transit specifically. We do have demo projects out on the
street now that will continue to look for areas to address the
threat of cybersecurity. We just issued, about six months ago,
two requests for comments. Those comments from industry on how
AV plays in the transit space and what we need to work in
industry in order to look at cybersecurity specifically, but
also other areas of concern within the industry with regard to
AV and I will not repeat what my colleagues have said regarding
the department's lead on this in AV Summit that we have had.
So, at the risk of being redundant.
Mr. Price. All right, thank you. There is no question. This
is a critical area and if any of you want to supply for the
record, an elaboration of your remarks or complementary
information that, that would be helpful. We need to have a good
benchmark going forward of the range of these efforts. Thank
you. Thank you, Mr. Chairman.
Mr. Valadao. Thank you, Mr. Price. I would like to
recognize Mr. Young.
Mr. Price. I just want to follow-up. Thank you, Mr.
Chairman. I just want to follow up on Mr. Price's--where he
was--where I want to take this now with his lead. And that is,
with the autonomous vehicles, cybersecurity, information
networks, these vehicles have to talk to one another. Are you
working with the FCC as well to make sure they are the proper
and clear in communications routes; whether it is white space
of the spectrum to make sure everybody can talk to one another?
Because when you have these working groups, it is great with
the industries and the private sector out there. They are
pushing these new technologies, but there has got to be a way
for everything to talk to one another. How is that being
integrated and how are you working with the FCC or any other
government agency for that matter to make sure that can happen
fluidly and safely?
Ms. Hendrickson. I am not personally aware of the
interaction that's been ongoing on with the FCC on this issue.
I know----
Mr. Young. Do you think it is pertinent or then--I'm just--
--
Ms. Hendrickson. I think it is certainly, you know, worth--
important to explore all the issues surrounding that, so, yes,
I think it is pertinent. Within Federal Highway, I would say
though that we are working very closely with industry, but also
making sure that we understand from the government planning
side and really understanding what the needs are so that we can
plot a path forward without stifling innovation.
Mr. Young. Any other comments from anybody else on that?
That's fine. Thank you, Mr. Chairman.
Mr. Valadao. Thanks, Congressman Young. I would like to
recognize Ms. Clark, 5 minutes.
Ms. Clark. Thank you, Mr. Chairman and at risk of a very
bad pun, I see our seniority on this Committee is on the fast
track today. Admiral Buzby, I would like to go back for a
second to some of the concerns at the academy around sexual
assault and harassment. And in light of this report's
conclusions that you received earlier, are you confident about
the students will be adequately protected during this year's
Sea Year Training Program?
Admiral Buzby. Yes, ma'am. The short answer is absolutely.
I have great confidence that they are in a secure environment
right now. We have been very meticulous in our vetting of the
companies and there are 17 companies right now that are cleared
to carry our mid-shipmen during sea year. We have personally
vetted all of their programs to ensure that they meet our
standards. We meet with the management of those shipping
companies. And by and large, I must say, they have great
programs in place. I think there is renewed emphasis now. I
think our mid-shipmen are going to sea better equipped, better
educated and better understanding of the environment. We are
equipping all of our midshipmen here beginning this fall with
satellite communication devices so that if they get into a
situation far from port, they can call back to the Academy and
seek some assistance or report their situation.
Ms. Clark. And what would the protocol be when they're--
something happens? It is a great improvement. I'm glad to hear
you are going to have the satellite communications by the fall,
but then what happens when these calls are made? What plans and
procedures have been put in place?
Admiral Buzby. So each midshipman basically has a--is
assigned a mentor when they arrive at the Academy. Someone on
the staff or faculty that they are assigned, but then they can
develop a relationship with their--on their own. So, while they
are at the Academy, if they have an issue, they can go to this
mentor. When they are away at sea, currently, the way the
program works now is there is a ship's officer on the ship that
is designated as their mentor. We are modifying that now with
the introduction of the satellite communication, so that ship
can reach back to their academy mentor and have that same
relationship. So, if they have a situation, they can call that
person up and say, ``I am having a problem out here at sea,''
and those mentors are trained to reach out to the sexual
program coordinator at the Academy and that then, starts a
process. And the midshipman has a choice of making either a
restricted or unrestricted report. That is entirely up to them.
Whether they--if it is restricted, they just note that
something has occurred, and it is--there is no further action.
It just enables them to receive support. If it is an
unrestricted report then, an entire investigative process
begins, with potential for all the way up to prosecution. That
is up to the individual, the shipman, but to get back to your
initial question. I am very confident that we are putting our
midshipmen into a safe environment.
Ms. Clark. And are the protocols that you just described,
are those new? Have you made changes to those?
Admiral Buzby. The--in terms of the mentor?
Ms. Clark. The mentor and sort of the process after one of
these--the restricted and un-restricted--
Admiral Buzby. That has been in place, you know, kind of
from the beginning. We have modeled our program after DOD's
program for restricted and unrestricted, so there is good
continuity there. There is a good understanding of how that all
works. Just for instance, this academic year since August, we
have had 12 reports--midshipmen have reported 12 instances,
four of which were at sea; eight of which were not at sea. Some
restricted. Some unrestricted. And all of those have been
adjudicated. I think the positive news there is that is the
most reports we have had in, I think, ever. And what we believe
that portends is there is increased trust in the system. The
shipmen feel more trusting that they are going to have their
case represented properly and have it followed through. Plus,
their peers are going to support them more. I mean this has
been the instance that we have seen at other service academies
in the services that they have initial uptick in reports and
then it dives--the reports go down, the drives and the
incidents are down as well, so we think we're on the right
track and the midshipmen have confidence in the system going
forward.
Ms. Clark. Thank you. Thank you, Mr. Chairman.
Mr. Valadao. Thank you, Ms. Clark. I would like to
recognize Mr. Aguilar for 5 minutes.
Mr. Aguilar. I am happy to defer to the Chairman who is
sitting in another seat if he has anything else that is--I did
have just one more question, Mr. Chairman. I will not take up
much time here. Administrator Williams, with respect to the
capital investment grant program and FTA, it is the largest and
most important discretionary program in my opinion and I just
wanted a little more clarification on the CIG Grants because
they do use and I mentioned to this Secretary Chao, existing
population density is a criteria and one of my concerns with
that is how we address kind of growing communities. Populations
and regions that are growing in nature rather than looking out
of the rearview mirror and saying what is the population last
year or the last census, you know, how do we capture those
growing communities? In the region of California that I
represent, it is the fastest growing in California of 4.4
million people. It has doubled in the last 15, 18 years. It is
projected to add 30 percent and go to 7 million; from 4 million
to 7 million by 2046. So, I just want to make sure that when we
look at these issues of population density that we are
accurately reviewing those growing communities and making sure
that they are given a fair shot when it comes to the allocation
of CIG dollars. Is that--I do not have a question in that, but
do you have a comment, or a reflection based off of that?
Ms. Williams. Yes, I do. Thank you, Congressman. What I
would tell you is that where the density is growing, the
projects that come into the CIG program are judged on project
justification in addition to their funding plan. And so, where
there is discrepancy, I think at times when you have growing
communities, they overscale their project. So, they do not
scale it to the ridership that they have and they look at--too
far in the distance of what ridership they think they will have
and that causes the cost benefit analysis to go down, the
mobility number to go down and the ridership number to go down.
And then, it is not as competitive in the CIG Program. So, I
would say low density areas can compete, but you have to be
very certain that you scale the project to the need you have
because that project can continue to grow as your community
grows, but if you try to project what the community will look
like 10 years from now, it is not going to rate well in the
statutory criteria in the program. Does that help?
Mr. Aguilar. Is there--yeah. Is there a way that we could
better reflect that from a statutory perspective like, that
kind of forward-looking, rather than the static look?
Ms. Williams. Well, I think our FTA staff is happy to work
with your staff and I realize that you had a project in your
area I think that has requested now to be withdrawn, so my
understanding is maybe they are going to retool that with that
kind of principle in mind and we are working very closely with
them to do that. So, I think you just need to make sure that
the project you put forward is not looking too far in the
future of what you think you will need, but basically what you
think you have right now and you can actually stand behind. So,
that cost benefit analysis is strong and the ridership and the
building numbers are strong as well.
Mr. Aguilar. Okay. I appreciate it. Thank you.
Ms. Williams. sure.
Mr. Aguilar. Thank you, Mr. Chair.
Mr. Valadao. I would like to recognize the real Chairman,
Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you. Thank you, Chairman and thank
you for doing this. I know that, by the way, nobody would ever
make a joke while I was gone about the lack of hair. I know
that. Of course not, but Admiral, let me ask you about
Samaritan will first replace the Empire State, right? A 56-year
old steam propelled ship which I thought was--when I read that
I frankly was shocked. Again, serving in the State University
of the New York Maritime College, I understand that if the
subcommittee were to include additional funding for a
construction of another ship that the next ship would replace
the Kennedy, which again is a 51-year old steam propelled ship
as well. Serving at the Massachusetts Maritime College. Does
MARAD have a school ship replacement order? And if so, what
criteria is used for that to determine the order of the state--
the 6-state academies that will receive the new ships and
finally, did MARAD coordinate with the State Maritime Academies
on that?
Admiral Buzby. Thanks for the question, Mr. Chairman. We
are very excited to even be talking about replacing school
ships. This is not a conversation that has been had in a long
time and it is long overdue. The good news is we are going to
town on getting the first ship contracted for and built. As you
point out, we will go to New York to replace the oldest and
largest of our training vessels. In all likelihood, the second
ship will go to Massachusetts to replace Kennedy which is the
second largest and second oldest ship. And these two ships are
important, not only because they are the last two steam ships.
It is becoming increasingly difficult to maintain and find
operators for them. But also, because they represent so much of
our training capacity. We swap and help out the other schools
from time-to-time. For instance, Texas Maritime, we are
taking--using the Kennedy to take Texas Maritime cadets out on
their training cruise this summer. So, that capacity is really
important, and we count on it. If we were to lose one of those
two ships, it would cause us great difficulty. So, those are
the easy first two ships to pick.
After that, Maine, Texas and California would be the next
three that we would have to sort out which ones would go next.
The Maine ship and the California ship are sister ships. They
were built in the '80s. They are diesel driven. They are in
relatively good condition. The Texas--but they are also half
the capacity. They have 300--approximately 300 people per--
which fits those two academies very well. Texas is operating a
very small ship. It used to be the former training ship at
Kings Point, as a matter of fact. But it can only take about 50
people at a time out, which doesn't meet their needs. They need
about a 300-person ship also.
So--but they have some constraints down there. The physical
place where their ship berths is very shallow. So, there is
significant dredging that would have to occur to accommodate a
larger ship.
There are faculty which the faculty typically operates the
ship. Their faculty is not of sufficient size to man a larger
ship, plus just the operating costs annually for a large ship,
you know, would have to be tackled. So, the answer to your
question is we are going to have to look and factor in all of
those factors, the material condition of those ships when we
get to that point of having them replaced to see where the
major--the most benefit will be to put that third, fourth,
hopefully, fifth ship down the line.
Mr. Diaz-Balart. Admiral, while I have your attention, if I
may, Mr. Chairman, in the Omni, the 18 Omnibus, we complete
full funding to complete the decommissioning of the nuclear
ship, Savanna. Can you give us a status of that project? When
it will be completed, et cetera?
Admiral Buzby. Yes, sir, Mr. Chairman. That is a 7-year
project. It is not an insignificant task to decommission a
nuclear vessel. And--but we have a plan. We have been working
very closely with the Nuclear Regulatory Commission on that
plan. We are in the first phase of that plan. There are three
phases.
The first phase, there is a two-year period where we
essentially prepare and get all of the licensing and
requirements in place. The funding that Congress just provided
in '18 covers Phase 2 and Phase 3 out to that 7-year point. So,
it is the majority of the industrial work that has to occur and
then kind of what I would call the paperwork, sort of clean up.
So, we anticipate finishing up Phase 1 in the latter part of
calendar year '19 and then we will go right into Phase 2 which
is the industrial work. The actual getting into the reactor
vessel itself; removal of the pipes; removal of all of the
interferences that, you know, were part of the nuclear circuit.
We require a dry docking, so it is a fairly significant period,
but again, we have that all now funded so we can actually carry
that out and close out our license. I am actually the license
holder for the--for that vessel. So, we need to go by Nuclear
Regulatory Commission rules. We have to be finish by 2035,
which thankfully now, we will be finished well in advance of
that.
Mr. Diaz-Balart. And Mr. Chairman, if I may just for a few
more seconds and we thank you. Again, I apologize to everybody,
I did have other Subcommittees that are going on at the same
time that I had to go to, but again and thank you, sir, Mr.
Valadao, for doing a great job chairing it. You do not look as
good as the regular Chairman, but you did a great job chairing.
So, thank you.
Mr. Valadao. From what I understand, I have a little less
hair from all the comments I have gotten. I want to thank our
Panel and DOT staff for your answers and participation. The
Committee staff will be in contact with your budget office
regarding questions for the record and I think we did have one
member that wanted to show up, but I just saw that he is on the
floor speaking as we speak. So, if you would please work with
OMB to return the information for the record to this
subcommittee within the 30-days from Friday, we will be able to
publish the transcript of today's hearing and make informed
decisions when crafting the Fiscal 2019 Bill. With that, the
hearing is adjourned.
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