[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]






                    HUD'S ROLE IN RENTAL ASSISTANCE:
                 AN OVERSIGHT AND REVIEW OF LEGISLATIVE
                        PROPOSALS ON RENT REFORM

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         HOUSING AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 25, 2018

                               __________

       Printed for the use of the Committee on Financial Services


                           Serial No. 115-88





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






                                   ______
		 
                     U.S. GOVERNMENT PUBLISHING OFFICE 
		 
31-434 PDF                WASHINGTON : 2018                 


















                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                     Shannon McGahn, Staff Director
                 Subcommittee on Housing and Insurance

                   SEAN P. DUFFY, Wisconsin, Chairman

DENNIS A. ROSS, Florida, Vice        EMANUEL CLEAVER, Missouri, Ranking 
    Chairman                             Member
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
STEVAN PEARCE, New Mexico            MICHAEL E. CAPUANO, Massachusetts
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
STEVE STIVERS, Ohio                  STEPHEN F. LYNCH, Massachusetts
RANDY HULTGREN, Illinois             JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DANIEL T. KILDEE, Michigan
LEE M. ZELDIN, New York              JOHN K. DELANEY, Maryland
DAVID A. TROTT, Michigan             RUBEN KIHUEN, Nevada
THOMAS MacARTHUR, New Jersey
TED BUDD, North Carolina


























                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    April 25, 2018...............................................     1
Appendix:
    April 25, 2018...............................................    27

                               WITNESSES
                       Wednesday, April 25, 2018

Fischer, Will, Senior Policy Analyst, Center on Budget and Policy 
  Priorities.....................................................     7
Gentry, Richard C., President and Chief Executive Officer, San 
  Diego, California Housing Commission...........................    10
Russell III, William O., President and Chief Executive Officer, 
  Sarasota, Florida Housing Authority, on behalf of the Florida 
  Association of Housing and Redevelopment Officials.............     5
Todman, Adrianne, Chief Executive Officer, National Association 
  of Housing and Redevelopment Officials.........................     9

                                APPENDIX

Prepared statements:
    Fischer, Will................................................    43
    Gentry, Richard C............................................    28
    Russell III, William O.......................................    81
    Todman, Adrianne.............................................    57

              Additional Material Submitted for the Record

Cleaver, Hon. Emanuel:
    Letter from the G7U Housing Organization led by the National 
      Low Income Housing Coalition...............................    87

 
                    HUD'S ROLE IN RENTAL ASSISTANCE:
            AN OVERSIGHT AND REVIEW OF LEGISLATIVE PROPOSALS
                             ON RENT REFORM

                              ----------                              


                       Wednesday, April 25, 2018

                     U.S. House of Representatives,
                                    Subcommittee on Housing
                                             and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:12 p.m., in 
room 2128, Rayburn House Office Building, Hon. Sean Duffy 
[chairman of the subcommittee] presiding.
    Present: Representatives Duffy, Ross, Posey, Luetkemeyer, 
Stivers, Hultgren, Rothfus, Zeldin, Trott, Cleaver, Beatty, and 
Kihuen.
    Also present: Representative Perlmutter.
    Chairman Duffy. The Subcommittee on Housing and Insurance 
will come to order. Today's hearing is entitled, ``HUD's Role 
in Rental Assistance: An Overview and Review of Legislative 
Proposals.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Without objection, the 
members will have 5 legislative days within which to submit 
extraneous materials to the Chair for inclusion in the record. 
Without objection, members of the full committee who are not 
members of this subcommittee may participate in today's hearing 
for the purpose of making an opening statement and questioning 
witnesses.
    The Chair now recognizes himself for 3 minutes for an 
opening statement.
    I first want to thank our witnesses for their participation 
in this hearing today as we continue to look at how we can 
reform various programs at HUD that are intended to provide 
low-income families with taxpayer-assisted housing while 
incentivizing self-sufficiency and increasing the opportunities 
for employment.
    I will just note that we are starting a bit late because we 
did have votes on the floor and it has taken a while for 
everyone to get to the committee room, so I apologize for that.
    Now, if you watched last week's hearing, you will know that 
we are participating in Speaker Ryan's A Better Way agenda with 
the goal of fighting poverty. We received a number of good 
suggestions that we hope to address in the discussion drafts 
presented last week and I am looking forward to suggestions and 
takeaways from this hearing today as well.
    While last week, we highlighted how we can reform HUD's 
Housing Choice Voucher Program to further the goal of self-
sufficiency, it also became clear that there are other issues 
in HUD's housing assistance programs that require our 
attention.
    One consistent theme from last week's hearing was how to 
incentivize public housing authorities to focus on the person 
they are helping through policies on setting appropriate rents. 
We should from time to time review our laws to see where 
improvements can be made.
    Today, it is incumbent upon us to make sure the system is 
helping those in need while ensuring taxpayers' funds are 
effectively and efficiently used. We must also remember why 
these programs are here and do what we can to reduce the 
limitations holding back our PHAs' (public housing agencies) 
ability to tailor solutions to families and individuals who 
come with different circumstances.
    I want to reiterate that I truly believe we don't evaluate 
and measure the success of these programs by how much money we 
spend. Instead, we should measure success by how many people we 
move out of poverty and into self-sustainability.
    Today, we will be looking at a proposal from our Vice 
Chairman Mr. Ross, to help families and individuals that are 
negatively impacted by the current income-based rent setting 
formulas. The reforms in Mr. Ross' proposal will provide 
options for PHAs through rent-setting policies to incentivize 
housing assistance recipients to earn higher wages.
    Allowing rent to be tailored to a family or individual's 
own situation will help assist them to become self-sufficient 
with the ultimate goal of those families at some point not 
needing taxpayer assistance. Whether it is through the Family 
Self-Sufficiency Act, voucher mobility, or ensuring a path 
toward independence for our foster kids, I want to make sure 
that we are breaking down the walls that are keeping our 
families in a cycle of poverty from one generation to the next.
    I believe Mr. Ross' legislation will help in that effort 
and I look forward to hearing from our panel, getting their 
feedback and insight on Mr. Ross' bill and what we might do to 
improve it and make it better.
    With that, I now recognize the gentleman from Missouri, the 
Ranking Member, Mr. Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman. I am not sure I will 
need the entire 5 minutes, but let me also welcome those of you 
who are here in the role of providing us with testimony and 
information. We appreciate your presence.
    This hearing centers on housing rent reform legislative 
proposals offered by Congressman Ross titled, ``Promoting 
Resident Opportunity Through Rent Reform.'' And as always, I 
appreciate a conversation on suggestions to improve Federal 
housing programs.
    Having a stable home is a crucial component for children to 
succeed, for the elderly to thrive, and for our veterans and 
the disabled to have a place, a safe place to stay. And we have 
had study after study after study cite the importance of 
affordable housing for our communities and I have firsthand 
experience of the impact.
    The proposal we are considering today would allow public 
housing authorities to adopt new rent models for public housing 
and housing choice voucher programs. Specifically, the 
legislation would allow for tiered rent systems, stepped rent 
systems, rent based on gross income, shallow subsidy vouchers, 
or any other rent setting policy that is approved by HUD.
    I have a number of concerns that these models could lead to 
large rent increases for families as well as the elderly and 
disabled. I also believe that a program this varied would be 
very hard for HUD to oversee administratively.
    Additionally, just last week, we discussed the importance 
of enhancing voucher mobility to allow families to move from 
one area to another. This discussion draft would greatly 
increase, from my perspective, barriers for mobility as each 
PHA may be overseeing drastically different rent models. In my 
hometown, for example, there were and are three distinct public 
housing developments.
    Last, Congress then-Housing and Insurance Subcommittee 
Chairman Luetkemeyer and I co-sponsored the Housing Opportunity 
Through Modernization Act, HOTMA. This legislation made huge 
strides in improving and streamlining our public housing 
services. The bill passed unanimously in the House and was 
later signed into law.
    Currently, HUD is working on finalizing a number of HOTMA's 
provisions and I look forward to seeing this process completed. 
But I have to tell you and I don't think this has anything to 
do with partisan politics, maybe I am wrong, but there is some 
frustration on my part that HUD seems to be slow-walking the 
implementation of this program. It is like they are saying so 
much to do and so little desire to do it.
    And unless we as a committee, an oversight committee, 
demand that HUD carry through with legislation that we 
approved, I don't think we are going to get any results from 
this or any other piece of legislation. So, it seems to me that 
we shouldn't put any other legislative business before the full 
Congress until we have the implementation of what we have 
already approved. Or HUD needs to come in and explain something 
to us.
    So, Mr. Chairman, with that, I yield back the balance of my 
time and look forward to a discussion.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the Vice Chair of this 
subcommittee, the gentleman from Florida, Mr. Ross for 2 
minutes.
    Mr. Ross. Thank you, Chairman, and thank you for holding 
today's hearing. Our proposal is to reform HUD's method of 
calculating rent for beneficiaries of our rental assistance 
programs.
    And thank you to our outstanding panel for joining us to 
share your expertise and your thoughts related to my 
legislation, the Promoting Resident through Rent Reform Act or 
the PRO Rent Reform Act of 2018.
    As most of you know, under the current rent regime, once a 
family is selected to receive HUD assistance, the rent they pay 
is generally based on 30 percent of their adjusted income. This 
is the essence of our income-based rental assistance model. 
There are an estimated 4 million families served by HUD's 5 
main rental assistance programs and some 3,300 housing 
authorities embedded in communities across the Nation charged 
with administering these programs.
    For years, we have forced our PHAs to administer a one-
size-fits-all policy that zeros out what should be a strength 
of our system, the proximity and sensitivity PHAs have to meet 
the needs of their local community. In addition to one-size-
fits-all policy we force PHAs to use itself, is deeply flawed.
    It is well-documented that income-based rents create an 
effective tax on success. Each time a tenant earns a raise or 
gets a new job, the cost of their housing chases after them. 
For most of us, a pay raise means more disposable income to 
save for the future or spend on household needs, but for the 
rent-assisted families, it just means higher rent for the same 
living space.
    Not only does this paradigm discourage work, it also limits 
a resident's opportunity to practice managing their own 
budgets, makes rent calculations complex and burdensome, and 
punishes dual earning two-parent households. The discussion 
draft of the PRO Rent Reform Act that we will examine today 
aims to address many of these shortcomings.
    It does so by empowering PHAs in the local communities 
through the very public annual plan certification process to 
select from a menu of alternative rent options, one which is 
better suited to serve the needs of their residents. To be very 
clear, the draft also ensure that if a PHA and its community 
likes the current system, they can continue to use it.
    There are few additional important reforms in this bill 
including a shallow subsidy for families on a waiting list and 
a move to a bi-annual income recertification which I look 
forward to discussing with the panel.
    In closing, I want to emphasize that this is a discussion 
draft. It is not a final product. I am hopeful that today's 
hearing will produce insights on how we may improve upon this 
legislation, and I am eager to work with my colleagues on this 
subcommittee to develop a bill that we can win bipartisan 
support.
    I thank you and I yield back.
    Chairman Duffy. The gentleman yields back.
    I do want to welcome our panel. Thank you, for being here 
today and for offering your insights and intelligence on Mr. 
Ross' bill. With that, I am going to re-recognize Mr. Ross for 
the introduction of our first witness.
    Mr. Ross. Thank you, again, Chairman.
    It is my pleasure to introduce Mr. William Russell, 
President and CEO of the Sarasota Housing Authority in my home 
State of Florida. Mr. Russell joins us today representing the 
Florida Association of Housing and Redevelopment Officials, 
FAHRO, where he serves as a member of the board of directors 
and as chair of FAHRO's advocacy committee.
    Mr. Russell began his tenure at Sarasota in 2005 following 
3 years working for the U.S. Department of Housing and Urban 
Development as a Deputy Assistant Secretary for Public Housing 
and Voucher Programs. When he first came to Sarasota, William 
Russell took over a HUD-designated troubled agency at the 
beginning of a rare Federal receivership.
    In just a few short years, he was able to transform the 
agency into a consistent high-performer in all areas and he 
continues to push the envelope seeking innovative ways to serve 
his community. We are fortunate to have Mr. Russell joining us 
today to share insights from his many years working alongside 
low-income families to help provide them with a place to live 
and an opportunity to thrive.
    I would like to thank him and all of the FAHRO members for 
partnering with me in an effort to fix our misguided rental 
assistance policies, the negative effects which they may 
experience firsthand almost every day.
    Mr. Russell, we are very much looking forward to hearing 
your testimony and thank you again for taking off from your 
important schedule to join us in this panel today.
    I yield back.
    Chairman Duffy. Mr. Russell, welcome. And I would just note 
that when you get introduced by a member from your home State, 
you get a very lengthy introduction. It's probably not offered 
to everybody else, but it is nice to have you here.
    We next welcome our second witness, Mr. Fischer, the Senior 
Policy Analyst at the Center on Budget and Policy Priorities. 
Welcome.
    Ms. Todman is our third witness, the CEO of the National 
Association of Housing and Redevelopment Officials. Welcome, 
Ms. Todman.
    And finally but not least, Mr. Gentry is the President and 
CEO of the California Housing Commission.
    To all of you, welcome. In a moment you will all be 
recognized individually for 5 minutes to give an oral 
presentation of your written testimony.
    Without objection, the witnesses' written statement will be 
made part of the record following their oral remarks. Once the 
witnesses have finished presenting their testimony, each member 
of this subcommittee will have 5 minutes within which to ask 
the panel questions.
    I would just note that on your table, there are three 
lights. It is pretty simple. The green light means go. The 
yellow light means that you have 1 minute left. And the red 
light means that your time is up, pretty straightforward.
    Your microphones are sensitive so if you don't hear 
yourself speaking, the microphone is probably not on, so just 
make sure when you are speaking you do have the microphone 
activated. They are sensitive, so speak directly into them.
    With that, Mr. Russell, you are now recognized for 5 
minutes.

                  STATEMENT OF WILLIAM RUSSELL

    Mr. Russell. Good afternoon, Chairman Duffy, Vice Chair 
Ross and Ranking Member Cleaver and members of the 
subcommittee.
    My name is William Russell, and I appreciate the 
opportunity to testify today on behalf of the Florida 
Association of Housing and Redevelopment Officials, which 
represents 84 housing authorities. I am a FAHRO board member 
and chair its advocacy committee.
    Last summer, FAHRO developed a rent reform proposal which 
we shared with Congressional and HUD staff. We are very pleased 
that Vice Chair Ross has embraced our proposal and incorporated 
it into the discussion draft before you today.
    Housing assistance should serve as a springboard of 
opportunity for the families we serve. However, current policy 
says to HUD-assisted families, the more you earn, the more you 
will pay in rent. There is little incentive to do better, only 
a promise of higher rent.
    Our families are not well-served by current policy. We must 
ask ourselves these questions. Why would we keep a rent policy 
that discourages our residents from increasing their earned 
income, that is so complicated to calculate income and 
exclusions and deductions that it causes hundreds of millions 
of dollars in errors.
    That says if you quit your job voluntarily, we will 
immediately drop your rent to the absolute minimum under the 
law, that taxes two-parent households by charging more rent for 
two incomes rather than encouraging it by allowing two working 
adults to share the rent.
    Current rent policy has the same economic cliff effect that 
plagues many Federal anti-poverty programs. When families are 
on the verge of earning more and doing better, they peer over 
the edge of an economic cliff and see the benefits they stand 
to lose, such as food stamps, child support, and housing 
assistance. It is not surprising that some hesitate to lose 
that assistance and take a precautionary step back. We must 
correct this if we want families to reach their full potential.
    My written testimony provides several real examples of 
families making decisions to avoid rent increases and perceived 
economic instability. But let me discuss one recent example of 
that.
    A resident of ours found a job earning $35,000 a year 
working for an insurance company. Once her case manager 
notified her of her new rent portion which is around $800, she 
decided to quit her job shortly thereafter. Her rent was then 
dropped to the statutory minimum rent of $50 and when the $75 
utility allowance was applied for her unit, the housing 
authority paid her $25.
    Promoting resident opportunity through rent reform will 
improve things in three important categories. This reform will 
reduce barriers to economic advancement, provide reasonable 
options for local housing agencies to optimize economic 
opportunities in their community, and offer real simplification 
in how income and rents are calculated and the frequency of 
having to recertify income, thereby reducing subsidy errors and 
administrative burden on local agencies.
    The bill offers multiple rent options for housing providers 
and also allows them to develop other rent policies that HUD 
can approve. Several of these options offer a real improvement 
over current policy and will help families make economic gains 
without being penalized.
    I provide more comments on each option in my written 
testimony and believe there is something here for every agency 
to work with to meet the needs of their community and their 
families.
    The shallow subsidy voucher is an optional policy tool to 
address the need for housing assistance that far exceeds 
available vouchers and causes agencies to close their waitlists 
for years on end. The shallow subsidy option offers families 
the rent assistance they need, that is the difference between 
covering their rent and being severely rent-burned or even 
homeless.
    In closing, I am grateful and honored to have the 
opportunity to appear before you today and provide testimony on 
the current HUD rent policy as well as the PRO Rent Reform 
discussion draft. As more families do better and graduate from 
assisted housing, more units become available to assist other 
families, and we will be able to serve more families over time.
    I ask that you give serious consideration to changing the 
current rent policy to encourage, not penalize, economic 
advancement and wellbeing.
    [The prepared statement of Mr. Russell can be found on page 
81 of the Appendix.]
    Chairman Duffy. Thank you, Mr. Russell.
    The Chair now recognizes Mr. Fischer for 5 minutes.

                    STATEMENT OF WILL FISCHER

    Mr. Fischer. Thank you, Chairman Duffy, Ranking Member 
Cleaver, members of the subcommittee for the privilege to 
testify before you today.
    I want to start by emphasizing how much difference rental 
assistance programs make in the lives of low-income Americans 
today. They help more than 5 million low-income households keep 
a roof over their heads. A great majority of those are elderly, 
people with disabilities, and working families.
    Research shows that they are the most efficient and 
effective tool we have for reducing homelessness and housing 
instability. So, these are effective and important evidence-
based programs under the current rules.
    That said, it is still important for policymakers to look 
for ways to strengthen them even further and the HOTMA 
legislation that this committee developed is a great example of 
that. That included a whole set of careful policy changes 
including substantial rent reforms that, once HUD implements 
them, will streamline administration, encourage work, and trim 
costs, while at the same time keeping in place the key program 
standards that have made rental assistance effective.
    Going forward, I think any changes beyond those in HOTMA 
should be done in an evidence-based manner. The Congress has 
directed HUD to conduct two major rent reform evaluations, 
which once they are completed will provide findings on a whole 
range of alternative rent policies including many of those in 
the bill that we are discussing today. I think it would be hard 
to justify enacting those proposals on a large-scale basis 
until those evaluations have been completed and you can assess 
what the impact of those policies is.
    I want to turn now in a little more detail to the bill. I 
think it would be a step in the wrong direction for a few 
reasons. It would radically alter the public housing and 
voucher programs in ways that would make them less effective.
    The first reason is that it would result in large rent 
increases for low-income people that would increase hardship, 
evictions, and homelessness. It would allow HUD to increase 
rents on elderly people and people with disabilities by an 
unlimited amount. It would also allow very large rent increases 
for non-elderly, not-disabled people, for example the tiered 
rent option in the bill would raise the minimum rent that 
housing agencies can charge to the lowest income families by 
more than $500 on average per month.
    The second big concern is that the bill is not well-
designed to support work, I think increasing earnings and 
employment among rental assistance recipients is a really 
important goal, but there's no evidence that these proposals 
would do that and a lot of them seem more likely to have the 
opposite effect.
    So, just for example, the bill would allow very large rent 
increases on working poor families who can't afford rent, who 
can't afford market rents on their own. That would place them 
at greater risk of eviction, which would just make it harder 
for them to keep a job and raise their earnings.
    I think if policymakers want to support work that it will 
be better to focus on initiatives like Jobs Plus or Family 
Self-sufficiency, which provide financial incentives and 
service coordination but don't put families at risk of 
displacement and hardship. And the Family Self-Sufficiency Act, 
which the ranking member and the Chair sponsored and which the 
House passed overwhelmingly late last year would be a big step 
in that direction that would strengthen the Family Self-
Sufficiency program.
    The third big concern is that this would make rental 
assistance much more complicated because this would allow the 
3,800 State and local housing agencies that administer public 
housing and vouchers to each pick their own rent rules. Already 
having that many agencies is a complicated system that makes it 
much more difficult for voucher holders to move from one 
community to another including to higher opportunity 
neighborhoods with good schools that will have important 
benefits for kids.
    I know there has been bipartisan concern about this 
including the hearing that was held last week on legislation to 
promote regional cooperation to support voucher mobility. This 
bill would go in the opposite direction by creating much more 
fragmentation and complexity. A family that wanted to move 
would have to navigate a complex patchwork of local rent rules, 
frequently 10 or more in a single metropolitan area just to 
figure out where they could use their subsidy and have a 
reasonable rent burden.
    In addition, the complexity would make it much harder for 
HUD to provide oversight over how taxpayer funds are used, and 
that is important because HUD oversight has played a central 
role in reducing payment errors by local housing agencies in 
the past.
    In summary, I would urge the committee to set aside this 
bill. I think the most important concrete steps that can be 
taken in the near term to improve rent rules and support work 
are, first, for HUD to issue the regulations to implement HOTMA 
so that those reforms can begin to take effect and, second, for 
Congress to finish the job and enact the Family Self-
Sufficiency Act so that program can help more families to earn 
and save and build a better future for themselves.
    So thank you again for the invitation to testify today and 
I will be happy to take any questions you have.
    [The prepared statement of Mr. Fischer can be found on page 
43 of the Appendix.]
    Chairman Duffy. Thank you, Mr. Fischer.
    Ms. Todman, you are now recognized for 5 minutes.

                  STATEMENT OF ADRIANNE TODMAN

    Ms. Todman. Good afternoon, Chairman Duffy, Ranking Member 
Cleaver, and members of the subcommittee. I am Adrianne Todman 
and I am the CEO of NAHRO and thank you for inviting me to 
testify today.
    This year, NAHRO celebrates its 85th anniversary as a 
membership organization for the affordable housing and 
community development industry. Our 20,000 members provide 
homes for more than 7.6 million people across the country in 
urban, rural, and suburban America.
    Rent reform is a concept that has been discussed and 
debated for decades. The current approach to rent was 
established in the 1960's when Congress capped public housing 
rent at 25 percent of residents' income and then in 1981 raised 
the rental cap to 30 percent.
    While income-based rents are a well-intentioned measure, 
the unintended side effect is that this rent structure deprives 
housing authorities of the financial support needed to operate 
and maintain public housing. This is why the operating subsidy 
is such an important tool for housing agencies and more 
importantly the residents that they serve.
    While various important rent initiatives were authorized in 
HOTMA, they were not necessarily all-encompassing nor did they 
provide any alternative rent determination structures for 
housing agencies.
    We deeply appreciate Congress' efforts in streamlining the 
current rent recertification process through HOTMA, but most 
PHAs are still extremely limited in how they are allowed to 
charge their tenants rent.
    Just this week, we had our Washington Conference and we 
walked around and talked to some of our members about their 
thoughts about rent reform. A director out of Michigan said all 
agencies, but particularly small ones, need flexibility and 
local control to meet the needs of their low-income families.
    Another senior housing official out of Texas focused on 
consistency and complexity. Real rent reform needs to address 
the two biggest issues with the current system, lack of 
transparency and consistency, and errors caused by this 
complexity. A sensible approach would simplify the calculation 
while ensuring that the subsidy is adequate for the local 
market.
    Currently, the only agencies allowed to shape and implement 
rent reform are Moving to Work agencies. And these agencies, it 
is important to note, have said they have done so gradually and 
cautiously. This includes many years of policy development, 
consensus building, and resident buy-in. As these rent reform 
proposals must be included within their Moving to Work plan, 
they must undergo a rigorous public comment before moving 
forward.
    This subcommittee has posed several questions to this 
panel. One question was around the error safeguards. Moving to 
Work agencies have provided many examples of how hardship 
exemptions can be created so that there is rent reform but also 
protecting the interest of the residents.
    In order to help residents achieve self-sufficiency and 
give them greater access to employment or career opportunities, 
many Moving to Work agencies have provided case management 
services, in fact, many of them rely on those case management 
services in order to have their rent reform initiatives be 
successful.
    Another question the committee has posed is whether or not 
rental assistance programs contribute to an overreliance on 
Government assistance. According to HUD's Picture of Subsidized 
Housing database, the vast majority of public housing program 
participants and voucher recipients are either already working 
or are households headed by disabled or elderly individuals. 
But many critics of income-based rent believe it acts as a 
disincentive to work and adding family members to the list.
    Another question was whether or not there needs to be--
policymakers should ease regulatory burdens on housing 
providers and I think that that is a resounding yes. I think 
that many housing authorities would say to you that given the 
amount of regulatory burdens that they have, they spend so much 
time on compliance and not enough time and energy in helping 
families in their homes.
    Although regulatory streamlining will help, no amount of 
regulatory streamlining will make up for the extremely deep 
cuts to programs that help support our Nation's most vulnerable 
people and help to develop and revitalize communities. While 
NAHRO is deeply committed to regulatory reform, NAHRO notes 
that this reform does not replace the need for adequate funding 
for these essential programs.
    The final question was around flexibility to structure 
rent. Sadly, HUD has not yet implemented the components of 
HOTMA that speak to this, so I agree with our previous two 
panelists that we do look forward to HUD putting those 
regulations in place and we should really look at what has 
happened inside the Moving to Work agencies on how these 
different rent structures have been in place.
    Many of the proposed rent determination methods included 
here are already in effect across the country. But Moving to 
Work agencies have had the advantage of resources to really do 
the kind of case management and other initiatives that really 
help residents move out of or to live well inside their units.
    Thank you, Chairman Duffy, for inviting me to testify today 
and I am happy to answer any questions that you may have.
    [The prepared statement of Ms. Todman can be found on page 
57 of the Appendix.]
    Chairman Duffy. Thank you, Ms. Todman.
    Mr. Gentry, you are now recognized for 5 minutes.

                   STATEMENT OF RICHARD GENTRY

    Mr. Gentry. Thank you, Chair Duffy, Ranking Member Cleaver, 
and the other members of the subcommittee. Thank you for having 
me here today.
    I will point out in starting my career in the affordable 
housing industry spans almost 46 years and I have had the 
privilege of working in a number of cities across the country 
during that time period.
    The agency that I have led for the last 10 years, the San 
Diego Housing Commission, provides Federal rental assistance to 
more than 15,000 low-income San Diego households on the voucher 
program and also operates 189 Federal public housing units.
    In addition, we operate a number of city and State finance 
programs as well in addition to the Federal. We also are one of 
the 39 public housing agencies nationwide to have received a 
Moving to Work designation from the Department of Housing and 
Urban Development. The Moving to Work status, as Ms. Todman 
just indicated, gives those of us who are fortunate enough to 
have that designation, the flexibility that created innovative 
cost-effective approaches to provide housing assistance to the 
low-income families and customers whom we serve.
    Based on the breadth of my experience, and I will point out 
that I was a CEO both in Austin, Texas and in Richmond, 
Virginia in the past, as well as also spending some 
considerable time in the private sector, I would submit that 
there are two guiding principles that should guide our housing 
programs nationwide, one is achieving the greatest benefit for 
the low-income families, the customers whom we serve, and the 
second is maximizing efficiencies in the expenditure of 
taxpayer funds. If there is a third item, it is far down the 
list from those two.
    With these principles in mind, the right time to rent 
reforms, I believe, can enhance the effectiveness of both the 
Section 8 Voucher Program and also the Public Housing Program. 
I think there are two extremes, one currently in effect and one 
that has been proposed in the past that misses the mark. The 
current practice of utilizing income-based rents I think misses 
the mark by creating marked disincentives for productive 
behavior. In fact, in many cases, as Mr. Russell pointed out, 
they can be confiscatory and it can hinder, if not prohibit, 
gainful activities on the part of our customers.
    I think the other extreme is that of term limits, which I 
think can serve the purpose of penalizing families frequently 
for being poor and not giving those families the help that they 
need to hopefully move up and out of their current situation.
    In San Diego, I will point out that there are two efforts 
that we kicked off as part of our Moving to Work experience 
that made our rent reform work I think exceptionally well. The 
first is that in October 2010, we opened our Achievement 
Academy. The Achievement Academy is a learning and resource 
center, a computer lab with programs that emphasize career 
planning, job skills, and personal financial education.
    Achievement Academy staff known as Work Readiness 
Specialists are assigned to work with families on a customized 
plan for educational and employment objectives. Since 2011, 
more than 4,000 individuals have received one-on-one assistance 
from the Achievement Academy. And we have helped some 1,053 
participants to date get placed in jobs and some 590 to get 
better jobs in their future.
    We set the Achievement Academy up on purpose before we 
started altering rents in order to give the residents a leg up. 
About 8 months after the Achievement Academy opened, HUD 
approved our Path to Success rent reform initiative on June 21, 
2011. This Path to Success program was created to encourage 
Housing Choice Voucher families to become more financially 
self-reliant with help again from the Achievement Academy. This 
initiative was first started in 2011 with a 2-year initial 
process. The first rents were implemented on July 1, 2013.
    Under our Path to Success program, we identified families 
as work-able or elderly/disabled. A household that is work-able 
with at least one adult under 55 years old, not disabled and 
not a full-time student between the ages of 18 and 23. I will 
point out that the average annual income of our approximately 
6,200 work-able families in this time period has increased 25 
percent from 2011 to 2017, a 6-year time period.
    All other households who are considered elderly/disabled, 
they do not participate in this program and they are held 
harmless. I would also point out that in addition to a minimum 
rent, which is based on the minimum wages for California 
families, we also instituted tiered rents for families that do 
have earned incomes who are in that policy set and we have seen 
great success in this program.
    And that concludes my testimony, Mr. Chairman.
    [The prepared statement of Mr. Gentry can be found on page 
28 of the Appendix.]
    Chairman Duffy. Thank you, Mr. Gentry.
    The Chair now recognizes himself for 5 minutes for 
questions. Maybe just first off, the panel agreed that outside 
of those who are elderly or disabled that it should be a goal 
that we should move folks through the assistance to self-
sufficiency? Does anybody object to that concept? Do you all 
agree with that? OK. Good.
    Ms. Todman. Well, let me just--I don't suggest that it is 
not something that I would disagree with, I just think that we 
need to be cautious on the practical application of that.
    Chairman Duffy. Right. But as a goal, how we get there we 
could discuss and debate, but that would be a noble goal of 
those who can get out, we should try to encourage that. And is 
it fair to say that if we have someone in one of our programs 
that, again, is potentially going to get a raise, someone who 
might have the opportunity to work more hours or overtime or 
get a new job that pays them a little more might be a little 
tougher job but to get more money from it, if that benefit is 
taken from them because they pay higher rents, is it a fair 
human assessment that that is a disincentive? Does anybody 
disagree with that concept?
    Mr. Fischer?
    Mr. Fischer. So I think an important clarification is that 
for the great majority of folks on rental assistance, the great 
majority of families on rental assistance because of the 
incentives that are provided by other programs like the earned 
income tax credit and the child tax credit, they are going to 
be better off working in a low wage job than they are not 
working. So I think it is important to recognize that those 
families are better off working than they are not working.
    Chairman Duffy. But I am talking about this program, where 
you have a disincentive, some of that extra earned income is 
going to be taken away from you. At first blush, it will tell 
you it makes sense. If you make more money, you should pay more 
for your rent. At first blush, that makes a lot of sense until 
we look at human behavior and then we might say, well, oh, my 
gosh, if I work harder and earn more and I just have to give 
that away in increased rents, I am not going to work harder. It 
seems like that is common human nature.
    Mr. Russell, do you agree with that concept?
    Mr. Russell. I do agree with that. And one of the examples 
that I talk about in my rent testimony is the dual income 
couple and they had a goal of becoming homeowners. So they 
decided they would actually both be willing to work a second 
job to get ahead and help save up to buy a home. And I would 
think that would be something we would want our housing policy 
to support.
    And as soon as they started working that second job and 
increasing their income, as you said, the rent jumped up, and 
was chasing after that increased income and they finally just 
said what is the point of working a second job if we can't even 
get ahead? So they pulled back and they didn't--they kept their 
current jobs, but that incentive to work harder and do better 
and save up and buy a home of their own, they felt like that 
whole effort was being defeated by the rent policy.
    Chairman Duffy. And this may be shocking. Mr. Ross is a 
Republican who introduced this bill and Republicans are 
allegedly always trying to take money away from people and 
say--I think that--but a common sense policy this is, I think 
people are better off if we care about people's lives and what 
gives them worth to make sure we give them a roadway to self-
sufficiency and to let them keep a little more of their hard-
earned money to get to that bridge point where they can make it 
on their own. In the end, aren't we better off as a society, 
letting them keep a little more at the frontend, in the long 
run they are the ones that get to step out and get out of the 
programs and thrive and not just survive.
    Mr. Gentry, do you agree with that?
    Mr. Gentry. Yes, sir, I do. I point out that if you are a 
behavioralist which I am and you believe that people respond to 
sanctions as well as to incentives, that we want folks to 
engage in the American Dream of being able to be productive--
    Chairman Duffy. Right.
    Mr. Gentry. --and to be self-sufficient insofar as 
possible. Now, there may be some folks who are elderly/disabled 
or have other issues and need to be taken care of.
    Chairman Duffy. That is right.
    Mr. Gentry. And I think that to understand some of the 
objections to this, we need to make sure that if folks have a 
hardship situation or if they need some time to work their way 
into understanding how to work in a productive setting, that 
those kinds of opportunities can be made available to them. I 
think that is where the San Diego's Achievement Academy has 
been greatly successful. And, again, I will point out that in 
the 4 years, 2013-2017, we showed an average income increase 
among our work-able families of 25 percent.
    Chairman Duffy. Yes. My time is up, but I want to ask a 
quick question because this is meaningful the way I view the 
world and I think what evidence would show us is that it is not 
always possible. But if we can raise our kids in a two-family 
home, it is probably better for the kids. And the odds of 
poverty are diminished with a two-family home. Does this 
program, the way it is structured today, disincentivize 
marriage in a two-family home?
    Mr. Russell?
    Mr. Russell. We believe it does. When we look at the 
demographics of our families and we compare it to the 
surrounding community, it doesn't match up in terms of the 
disproportionate number of single female head of households 
that occupy our units. I was raised by a single mom so it is--
    Chairman Duffy. Kudos to single moms.
    Mr. Russell. Yes. But certainly, I think it would be 
positive for our community and our kids to have more two-parent 
households in our communities. And quite frankly, the policy 
just discourages that.
    Chairman Duffy. And if it is a benefit, we should try to 
structure our policy to incentivize it instead of having a 
policy that may be a disincentive to marriage or a husband and 
wife. My time is way over. Thank you for answering my 
questions.
    The Chair now recognizes the Ranking Member, the gentleman 
from Missouri, Mr. Cleaver for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Let me first of all say to the gentleman from Florida. 
Well, even before I say that, when you started out you said 
FAHRO instead of FAHRO and in my district, FAHRO doesn't poll 
well. So I was obviously a little nervous. But thank you.
    It is important I think for me to say, I agree 100 percent 
with the concept of your outline of legislation. And as you are 
thinking about it, I think it might be important for some of 
the things that I have said to at least be considered or maybe 
even more appropriately from what our distinguished panel says.
    And I am interested, Mr. Fischer, HUD right now is going 
through this rent reform demonstration to test the impact of 
higher rents and calculating rent based on gross income.
    And so, I think that the report is due out--2020, 2020 
something like that. And so, what I was trying to say perhaps 
and articulate was that I am concerned about implementing 
proposals without the results of the programs we just put in 
place. Is that a legitimate concern? Just based on your 
information presented to us.
    Mr. Fischer. Yes, I think that is absolutely a legitimate 
concern. These evaluations, the Rent Reform Demonstration they 
are doing now and some that they plan as part of Moving to Work 
expansion are going to test tiered rents, stepped rents, the 
whole range or a whole range of alternative policies. And we 
will know much more about what they do after those evaluations 
are completed.
    Mr. Cleaver. Thank you. Ms. Todman, last week, weeks start 
running together if you are in this place, but we considered a 
proposal either last week or the week before about increased 
mobility, which I support completely.
    But will that proposal be a barrier to this--be a barrier 
to tenant mobility, given that neighboring PHAs could possibly 
have different rent models?
    Ms. Todman. So, I had the great honor of running a housing 
authority in my previous life. And one of the things that we do 
is when a resident is ready to, in this case port out into 
another agency, as the welcoming agency, we sit down with 
residents and guide them in terms of what the rules and 
regulations are inside of that housing authority.
    So, I do think that--I don't see that the bill--the bill 
does need some perfecting, but I don't see in and of itself 
that it would be a disincentive for families to move from one 
place to another. In its current state, I think that families 
will move based upon the current state of their household and 
their housing needs.
    Mr. Cleaver. Thank you.
    Now, my final question. Mr. Gentry, as I stated earlier, I 
think this is a very good concept and hopefully it will develop 
into a very good piece of legislation. But I don't know how HUD 
can possibly administer this program, adding some additional 
program management, when we have actually been cutting HUD's 
budget year after year after year.
    So, I am wondering about the administrative burden that 
will fall on HUD and the additional dollars went to communities 
under grants, to my knowledge we are not expanding anything 
administratively. So, is that a legitimate concern, Mr. Gentry?
    Mr. Gentry. Yes, sir. I think it is. However, I don't think 
we should limit the application of a good idea based on the 
lack of ability of a group of folks to implement it. I think 
that the good idea should be implemented and then the 
administration should be required to keep up quite frankly to 
make sure it does work.
    I will point out, too that the way I look at it and I do 
believe in mobility, allowing people to make a choice in where 
they live, what they do, where they want to work, how much of 
that money they can keep for themselves as much as they can.
    But I think mobility should be economically up, should be a 
primary factor rather than looking for another place to move 
to. And already, if you move from one community to another, you 
are going to work--encounter differences and a lot of different 
factors where you move to.
    So the way I look at it is not using our organizations or 
our programs as the way to protect our people who are work-able 
from the larger economy. But to help those people fully engage 
it.
    Mr. Cleaver. Yes. I agree with you. All the studies show 
that if you move from a lower income area to a higher income 
area, that mobility does create a whole new world for the PHA 
resident. I yield back. I am sorry, Mr. Chairman.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the author of the underlying bill, 
the Vice Chairman of this subcommittee, the gentleman from 
Florida, Mr. Ross, for 5 minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    I will remind the members that this is a working draft. And 
my good friend from Missouri raises some good points and I 
apologize on my initial pronunciation of the acronym. I think I 
was hooked on phonics at the time, so.
    But my concern and the reason I think this hearing is 
important is because I don't believe nor do I ever think that 
the intended goal of public housing with very few exceptions 
was to create permanent housing.
    In fact, I think just the opposite. I think it is, has been 
in its initial conception as a starting point for those to do 
what many Americans have done throughout the history of this 
country and that is to be able to gain economic growth and go 
up in a mobile fashion throughout their community into a 
successful livelihood.
    In fact, work is actually synonymous with dignity. Dignity 
is a byproduct of work. And so, what we have here is not that 
one size is going to fit all. And I think we would all have to 
agree that whatever housing policies are in New York City 
aren't going to work in Laramie in Wyoming or in Lakeland, 
Florida or in New Orleans, Louisiana.
    We have to have some sense of flexibility and those 
flexibilities, I think, are dependent upon the communities with 
which those public housing residents live. And so, what we have 
seen here and what we have today that I am very grateful for is 
some testimony from witnesses who have experienced the 
innovative programs, the Moving to Work program, Mr. Gentry 
has.
    Mr. Russell's program in Sarasota, Florida. Ms. Todman's 
efforts in Washington, D.C. All of these are based upon 
incentives to allow people to improve their social and economic 
situation. I think that is what the intended purpose of our 
public housing programs are.
    And so, what I would like to do, Mr. Russell, some 
stakeholders have expressed concerns that the PRO Rent Reform 
Act is too complicated for PHAs to implement and that it is 
unlikely that communities will ever take advantage of the 
flexibility to choose a new rent calculation method. Do you 
agree with that?
    Mr. Russell. I don't at all. I think, I know your bill 
includes an option to basically have a housing authority to 
say--
    Mr. Ross. An option, correct.
    Mr. Russell. An option to stay with the status quo. And I 
think that is a fine option to have in the bill, but I can't 
imagine a housing authority deciding to stay with the status 
quo. Just, again, given the complexity, the errors, we get 
audited for compliance with these complex rules every year.
    Our auditors come in and audit our book, but they also 
audit our compliance. And it is really hard to have no findings 
on compliance because this rent policy is so complicated.
    Mr. Ross. And why do you think it is important for 
alternative rent options to be included in the statute as 
opposed to having HUD promulgate a rule to bring about that 
reform?
    Mr. Russell. Well, I think the options that are laid out in 
the bill are I think reasonable options. They are options that 
have been demonstrated in the Moving to Work program. 
Obviously, you included a provision where someone could be 
creative and propose a new option to HUD for their 
consideration. But I think giving HUD the full discretion to 
put out options.
    Mr. Ross. That would adversely impact your current program 
today, wouldn't it?
    Mr. Russell. Yes.
    Mr. Ross. Yes, it would. And you have been pretty 
successful. It is impressive to see what you have done from a 
borderline agency.
    Mr. Gentry, the Moving to Work program, that is something 
that we are delighted that we have been able to see activated 
here even though it is on a pilot project. How long did it take 
you to put together your Path to Success program and how 
resource intensive was the project?
    Mr. Gentry. I moved to San Diego in late 2008 and the 
Moving to Work program had been suspended, believe it or not, 
prior to my arrival. We reactivated it in January 2009. And 
Moving to Work, oh, I am sorry, the Path to Success program we 
kicked off 2 years later.
    We wanted to institute the Achievement Academy first 
because we saw that before we started talking about improving, 
helping a resident improve their economic livelihood, we needed 
to have a mechanism to help them do that.
    So, it took us about 2 years to grow into that and then 
another 2 years to get the program fully functioning and 
implemented, so that when we hit the ground running on the new 
rents, both the new minimum rents and the new rent tiers in 
July 2013, we needed to have a good program developed, which we 
did.
    We also needed to publicize and communicate it among our 
residents which we did--we spent 2 full years doing that. So it 
took about 4 years, sir, to make it ready in the way we wanted 
it to. But when we kicked it off, it started hitting on all 
cylinders all at once in 2013.
    Mr. Ross. The tiered rent scheme has not been a problem at 
all, has it?
    Mr. Gentry. No, Sir.
    Mr. Ross. Thank you. My time--
    Mr. Gentry. And the tiered rent is not unlike--this is 
April, income taxes. It is not unlike tiered taxes, so that you 
get the benefit of the income within those tiers before your 
income picks up. We also re-examine our families every other 
year.
    So you get a full year's benefit before an increase in 
price kicks in. And then what we have also done with the 
residents is make sure that--and again, we are heavily a 
Section 8 agency mainly because we transferred most of our 
public housing to vouchers also early during my tenure in San 
Diego.
    So, we have almost 16,000 vouchers, 189 public housing 
units. So in the voucher program, as people's income rises, 
eventually they don't need the program anymore. We are easy to 
transition. I will point out, however, and this is true 
nationally as well as in San Diego, well over half of our 
participating families or individuals are elderly or disabled 
and those are off the table and for those the old rents apply.
    Mr. Ross. Absolutely. Thank you. I yield back.
    Chairman Duffy. The gentleman yields back.
    The Chair now recognizes the gentleman from Nevada, Mr. 
Kihuen for 5 minutes.
    Mr. Kihuen. Thank you, Mr. Chairman, and thank you, Mr. 
Ranking Member.
    I thank you all for being here this afternoon. I just have 
a couple of quick questions. The first one to Mr. Fischer. 
During the recession as you well know, Nevada was ground zero 
for the housing crisis. Thousands of Nevadans lost their homes 
and many were pushed into the rental market. Nevada is now 
facing an affordability crisis, with a shortage of more than 
81,000 affordable and available rental homes for extremely low-
income renters despite many of them working full time.
    In Nevada, to afford a two-bedroom rental home at HUD's 
fair market rent, a person would need an annual income of 
$37,462. However, there is no State in the U.S. where a person 
working full time at the Federal minimum wage can afford a two-
bedroom apartment at fair market rent.
    Wage inequality in this country continues to grow. The 
average minimum-wage worker in my State earns less than $18,000 
a year. So my question is, what will be the impact of the Ross 
bill on individuals who are already working full time, but 
still cannot afford the cost of rent in the private market?
    Mr. Fischer. Well, it would allow very large rent increases 
for those families. In some cases hundreds of dollars a month. 
Those would be increased, like you said the families are doing 
their best to make ends meet and make a living. They don't have 
the ability to cover those costs. They would have to divert 
money away from other basic needs, things like clothing or 
school supplies. And ultimately, they face a much higher risk 
of eviction and being left without a home.
    And the impact of that is going to fall most heavily on the 
kids in those families who could lose their homes and have 
those other harmful effects.
    Mr. Kihuen. Thank you.
    And a quick follow up, there are many who argue that the 
families who will receive this Federal rental assistance who 
are able to work are not working. What does the data tell us 
about this assumption?
    Mr. Fischer. The overwhelming majority of people on rental 
assistance are elderly, have disabilities, or they are workers. 
So there are 85 percent that either are elderly, have a 
disability, work, or recently were among the people who are 
left.
    A lot of them are--have other health limitations that don't 
qualify as a disability, but make it very difficult for them to 
work. There are others who are responsible for--who care for 
young children or for disabled adults and don't have access to 
affordable care for those people. And so, the share of people 
who are readily able to work and don't is very small.
    Mr. Kihuen. Thank you. And just one more question, while 
there is virtually no evidence that the punitive rent increases 
actually encourage work-able individuals to work, there is 
substantial evidence supporting the effectiveness of the family 
self-sufficient program.
    Can you talk a little bit about why this is a better 
approach to encouraging self-sufficiency?
    Mr. Fischer. Sure. The family self-sufficiency and the 
related thing is the Jobs Plus demonstration, and both of these 
are programs that provide financial carrots. They provide 
financial incentives for people to raise their earnings, but 
they don't pull the rug out from under working families or 
other people and risk causing hardship in the way that the rent 
increases in this bill would.
    And so for both of those programs there have been 
encouraging research findings that show very large earnings 
increases and I think that they are both promising ways to go 
forward and help. I think we all agree the goal is which to 
help these families raise their earnings and succeed.
    Mr. Kihuen. Correct. Thank you, Mr. Fischer. And then my 
last question to Ms. Todman. Thank you again for being here. 
The Ross discussion draft does not provide any additional 
resources for case management, job training, or other services 
that would help residents take steps to increase their earned 
wages.
    In your experience, how important are these kinds of 
supportive services in achieving success for families?
    Ms. Todman. They are certainly very, very important. And 
there is a distinction between what Moving to Work and non-
Moving to Work has been able to do from my testimony. But I 
will say this much. Non-Moving to Work agencies are actually 
very, very well-equipped to partner and to create collaboration 
at the local level even without the additional resources.
    I think what allows the Moving to Work agencies to do is to 
create their own program in a way and be more intentional. But 
there are thousands of examples across the country where 
housing authorities have partnered with their local department 
of employment services or non-profits to be able to afford 
those kinds of case management for their residents.
    Mr. Kihuen. All right. Thank you, Ms. Todman. And I yield 
the balance of my time, Mr. Chairman.
    Chairman Duffy. The gentleman yields.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Hultgren for 5 minutes.
    Mr. Hultgren. Thank you, Mr. Chairman.
    Thank you, all. I appreciate your work and your testimony 
here today.
    Mr. Gentry, if I can address my first question to you, and 
listening to your testimony, it seems to me that you have some 
understanding of the affordable housing needs in Chicago and 
the rest of Illinois from your time with the National Equity 
Fund in Chicago.
    Despite inflation, the current minimum rent for non-Moving 
to Work agencies of $50 has not been increased since 1998. On 
page eight of your testimony you state that as of July 1, 2015, 
households with one work-able person, work-able person pays a 
minimum rent of $300.
    I have several questions if I could. I will give them to 
you all and then if you can touch on the ones that you feel 
able to discuss, that would be great. One, do you believe that 
a minimum rent standard is good public policy and if so why?
    How do we address the concerns that some residents have 
absolutely no income and how do they even survive? What would 
be the effect of a minimum rent increase across the board for 
all agencies?
    And then what types of hardship exemptions and processes 
should be in place to make sure the minimum rent policy doesn't 
have unintended adverse consequences to those who truly are 
unable to afford at least $50 a month?
    Mr. Gentry. Well, the short answer is it depends.
    Mr. Hultgren. Next.
    Mr. Gentry. The longer answer is that if you notice in my 
paper, San Diego has no minimum rent if you are not work-able. 
If you are elderly, disabled, hardship situations for a 
relatively short period of time, there is no minimum rent.
    Our assumption in those cases is that we work with the 
family through our Achievement Academy and hook them up with 
non-earned income that would be appropriate to them--Social 
Security, SSI, welfare, food stamps, whatever will be 
appropriate to help that family, which we should be doing 
anyway.
    So, for a work-able family, if you remember the definition 
of that, there is at least one individual in that family who is 
under 55, who is not a full-time student under 23, and is not 
disabled.
    So that particular family, we will work with them and help 
them find a job, but rather than trying to make it more 
complicated perhaps than it should be, we figure that if we are 
offering help and they are work-able, they should be paying a 
minimum rent based on minimum wages.
    And it has been remarkable to me how few complications or 
problems we have had with this since we implemented it in 2013. 
I will point out with respect to the FSS (Family Self-
Sufficiency) program, it is a wonderful program, but I think it 
only goes halfway. It basically says, we are still going to 
charge you an exorbitant, confiscatory rent based on your 
income, but we are going to give some of it back to you.
    So the family can look at it that way, then it makes sense, 
it is better than not having FSS. And I do support it. But it 
is only half way there. Better I think that we assume that a 
resident who, in my 46 years in this business, some of the low-
income people I have worked with are some of the best financial 
managers I have ever met.
    Mr. Hultgren. That is right.
    Mr. Gentry. Who can get a lot--a long way on a minimum 
amount of money, we need to treat them with dignity and respect 
and basically say we will help you. We expect you to do it and 
we think you can carry it off. And so far at least in San 
Diego, it is working very well.
    Mr. Hultgren. It is great. We go on with my last minute and 
a half here to, Mr. Russell, if I could. On page two of your 
testimony you referenced that the current rent policy and I 
quote, ``taxes two-parent households by charging more rent for 
two incomes rather than encouraging a cohesive family unit it 
by allowing two working adults to share the rent burden,'' end 
quote.
    Wonder if you could provide some more context based on your 
experience of the connection between the current rent policies 
and quasi-punishment of the maintenance of two-parent 
households.
    Mr. Russell. Well, in the non-HUD-assisted world, there is 
an economic benefit to having a two-parent household, with dual 
income or with a second parent, assisting with things that 
would otherwise cost money to do.
    So, and sharing the rent, splitting the rent, for example. 
Under our policy, they can't share the rent. They can't split 
the rent. There is no economic benefit to having a two-parent 
household.
    There is actually a penalty to do that because if the 
second parent or second adult has income, we have to charge 
them more rent accordingly. And it is so--it is kind of 
insidious because we have single female heads of households who 
have significant others that they want to have residing with 
them and, but because of the rent policy, and the 
discouragement of that, they literally have someone kind of 
sneaking in and out at night and hoping to not going to be 
discovered by the housing authority, and then if we find out it 
becomes like a fraud issue.
    And that is just--that is terrible climate that our policy 
is creating for people who just want to have a two-parent 
household. We should be encouraging that, not discouraging 
that.
    Mr. Hultgren. Well, my time has expired. Thank you. I yield 
back, Chairman.
    Chairman Duffy. The gentleman yields back. The Chair now 
recognizes the gentleman from Florida, Mr. Posey for 5 minutes.
    Mr. Posey. Thank you, Mr. Chairman, for holding this 
hearing, and thank the witnesses for appearing and for your 
testimony here today. I don't think there is a single Member of 
Congress that likes the word homeless. And I--and I like to 
think that every Member of Congress would like to do whatever 
they could to effectively make sure we didn't have anybody that 
was homeless.
    I am especially chagrined today to hear that we actually 
penalize married people or couples. I think the family model is 
probably the best thing we can do to help people advance 
forward and I always thought the goal of the public housing was 
to help people along until they can get into private housing, 
not to entrap them in public housing for their entire lives.
    Mr. Russell, and then I will ask the other panelists. What 
percentage of public housing residents annually, let us say, 
graduate to private housing? You can swag it, I am not going to 
hold any of you to this number, I am just really curious.
    Mr. Russell. Yes, I would say, sir, in my agency, I would 
say maybe about 5 percent.
    Mr. Posey. OK. Mr. Fisher?
    Mr. Fischer. Well, I just want to say, I--so I don't have 
that figure off the top of my head, and it varies a lot from 
one agency to another. So, for example in high-rent 
neighborhoods, markets like New York City, it is a lower 
number, because it is really hard for a working family to 
afford housing on their own.
    But the number that I do have is that the average length of 
stay is about 3 years both in public housing and vouchers, that 
is what is typical.
    Mr. Posey. OK. Ms. Todman?
    Ms. Todman. Yes, my--that was going to be the nature of my 
response too, which is the average tenure, and I don't think 
that there is any data on how many individuals leave public 
housing or the voucher program and are going to the--into the 
commercial market.
    I will say my own experience, how that has happened is by 
having families graduate into homeownership programs that have 
been created by the housing authority, and also helping them 
going into tax credit units. But that is not a hard number that 
I can--
    Mr. Posey. Thanks, Mr. Gentry?
    Mr. Gentry. I can give you a specific number on a smaller 
cohort of the broader program based in San Diego.
    Mr. Posey. OK.
    Mr. Gentry. The San Diego Housing Commission owns and 
operates about 3,700 units of hard housing units. Only 189 of 
those are public housing, the others are all affordable, mainly 
based on our local models, some tax credits, some based on 
Section 8 rents that are purely locally developed.
    Five years ago, our turnover rate was 35 percent a year, 
that means in a 3-year time period it would all turn over, 
because as we came out of the great recession, because of the 
overbuilding that occurred that you heard about a while ago, 
whether in Las Vegas, or San Diego, or Florida, or where, there 
was a place to move up and out to.
    The turnover rate now has gone from 35 percent to 14 
percent.
    Mr. Posey. OK.
    Mr. Gentry. Meaning it takes a 7-year time period. That has 
less to do with our programs though than it has to with the 
broader economic circumstances within San Diego. We have seen--
and this is going on in every high-cost area in the country, 
and that probably--will be the subject of another hearing.
    Mr. Posey. Right.
    Mr. Gentry. But it--but the next tier to move up into has 
gotten much more difficult. And I think, the way that would 
translate to what we are talking about here is it makes it even 
more difficult when we are punishing families from increasing 
their own economic base for them to then access an ever-
increasingly expensive market.
    Mr. Posey. OK. Thank you. Do you--do any of you know where 
there are requirements for able-bodied people to seek 
education, job training, or such requirements, or is that a 
requirement anywhere?
    Ms. Todman. So, again, the--there are a number of Moving to 
Work agencies that have put into place some measure of time 
limits, and also some work requirements, and there is still 
lots of work being done in terms of the impact that that has 
had at the local level.
    We have been speaking to those agencies over the past 
several weeks about what has the impact on the ground really 
been, and their response to us is they take great lengths to 
not harm the family with the term limits and work requirements. 
What they do, is wrap case management around the household to 
ensure that they can be successful, but they are really heavy 
on the hardship exemptions.
    Mr. Posey. Thank you. Mr. Russell, on page two of your 
testimony, you reference that the current rent policy taxes 
two-parent households by charging them more rent for two 
incomes rather than encouraging a cohesive family unit by 
allowing two working adults to share the rent burden. Could you 
provide more context based on your experience of the connection 
between the current policies and the quasi-punishment of the 
maintenance of the two-parent households?
    Mr. Russell. Yes. Well, as I mentioned that under the 
current rent policy, I have no flexibility in how I treat the 
second adult income in the--in the household. So, if a family--
if a single head of household wants to have their partner or 
spouse move in and share in the economic burden of raising the 
family and supporting their rent, I have to increase their rent 
based on that income, I have no discretion to give them a 
break, where they would be able to share rent in unsubsidized 
housing.
    Mr. Posey. And you think that this legislation will give 
you the latitude you need to make a two-parent household more 
practically applicable?
    Mr. Russell. I do, and I think I may have noted in some of 
my written testimony that under a couple of the options, there 
probably could be a couple of tweaks to allow us to offer a 
steep discount on that second wage earner's income and not 
charge the full rent on that second income. But, yes, I believe 
it does give us that option.
    Mr. Posey. Thank you very much, thank you, Mr. Chairman.
    Chairman Duffy. Gentleman's time has expired, the Chair now 
recognizes the gentleman from Pennsylvania, Mr. Rothfus, for 5 
minutes.
    Mr. Rothfus. Thank you, Mr. Chairman. I would like to keep 
going with Mr. Russell here. Talking about flexibility that you 
may or may not have, do you have any flexibility that is 
available in a non-Moving to Work situation?
    Mr. Russell. Not much to speak of.
    Mr. Rothfus. How does that lack of flexibility affect your 
ability to help assist in a beneficiary's transition out of 
public assistance?
    Mr. Russell. Well, to be honest with you, it is 
discouraging, because we are doing a lot in my agency to help 
families provide services, complete their GED, get job 
training, we are very focused on early childhood literacy, to 
give our kids a bright opportunity.
    And, again, whether it is two-parent households or families 
who are trying to do better, and work harder, it is very 
discouraging to see some of the decisions that they are making, 
because of how our current rent policy penalizes them doing 
better. And we--
    Mr. Rothfus. But let me ask you a follow up to what Mr. 
Posey was talking about, because we talked--touched on the two-
parent, two-income families, have you seen one or both parents 
quit their jobs or scale down their hours?
    Mr. Russell. Yes.
    Mr. Rothfus. Wow. That is telling.
    Ms. Todman, in your testimony, you discussed how Moving to 
Work housing agencies are using their rent policy 
flexibilities, can you describe how these agencies have used 
these flexibilities?
    Ms. Todman. Certainly, they have instituted--some of them 
have instituted flat rents within income bands, similar to what 
Mr. Gentry referred to where you are--as you are--you earned 
income, it is not an automatic hit on the earned income, it 
doesn't increase--it doesn't increase in the rent until you get 
to the next income band, so a number of them have done that.
    Others have actually eliminated deductions in their 
calculation of rent, which is an adjusted rent, eliminated 
deductions, and gone to just a simple 28 percent or a 27 
percent of gross income across the board. So, there have been a 
number of different models, but those two have been the most 
prevalent.
    Mr. Rothfus. Many of us see facilitating portability and 
decreased dependency among the able-bodied as important goals 
that should be part of our public assistance programs. Do you 
view rent policy flexibility as an important component of the 
toolkit that should be provided?
    Ms. Todman. I think that rent reform is important for two 
reasons, one is just the simplification of the process as--you 
have heard Mr. Russell say, it is very, very complicated for 
housing agencies to do this often and sometimes do it very 
well.
    But the other is tied to some of the disincentives that are 
tied to adding a family member to the household, and also 
getting a job or a better job. And so I think for two those two 
reasons rent reform is something that we should pursue.
    Mr. Rothfus. Thank you. Mr. Gentry, I think we--we talked a 
little bit today about metrics of success, and some viewing 
full occupancy is one measure, it is a measure because there 
are people in need who we want to make sure are going to have a 
place to live. But beyond that, there needs to be stage two and 
in moving people up. What do you think a measure or a metric of 
success can or should be?
    Mr. Gentry. I think certainly for the work-able, helping 
families to achieve economic independence, or at least greater 
degrees of it is an absolute essential. And I think also for 
the broader community, there is one group of people who are--do 
not have a natural group of advocates here. And those are the 
folks on our waiting list. In San Diego, we consistently have 
over 60,000 families on the waiting list for 15,000-plus 
vouchers with a turnover rate of 50 to 75 per month. You can do 
the math.
    There is a--there is a growing need without a growing--
    Mr. Rothfus. They are--and there have been people on 
waiting lists for years?
    Mr. Gentry. The typical wait is anywhere from 7 to 10 
years, sir. And San Diego also has a huge homeless issue, which 
is there for a variety of reasons. So, I think that measures of 
success are not always clear, but I think they certainly should 
reflect values, and those values should be helping families 
insofar as possible to become economically self-sufficient, 
while providing a safety net for those like the elderly or 
disabled who are not in that category, and providing options 
too for our limited--from our limited resources, for those 
families who need the help but are currently not getting it.
    Mr. Rothfus. Thank you, and I yield back.
    Chairman Duffy. The gentleman yields back. The Chair now 
recognizes the Ranking Member, Mr. Cleaver for some purpose.
    Mr. Cleaver. Thank you, Mr. Chairman, I ask unanimous 
consent to enter a letter from the G7U housing organization led 
by the National Low Income Housing Coalition into the record 
for today's hearing.
    Chairman Duffy. Without objection. And if I could ask the 
Ranking Member just to ask the panel one last question before 
we adjourn. And if I could just have everyone answer this, and 
I want some clarity from the panel. In regard to elderly and 
disabled, how will they be impacted by giving PHAs flexibility, 
if at all? If you could just go in a line, Mr. Russell?
    Mr. Russell. Well, we--FAHRO's goal is to hold them 
harmless. And I think the bill discusses giving HUD some 
discretion about setting a rent policy, that with the goal 
being we are not charging any additional rent for the elderly 
or disabled. And, hopefully, we can create a process that is a 
little more dignified, and simplified for them. Right now we 
have elderly people literally bringing in shoeboxes of medical 
receipts, and that is not dignified. And so, the goal would be 
to simplify it, but not at all increase their rent burden going 
forward.
    Chairman Duffy. OK. Mr. Fischer?
    Mr. Fischer. Well, that is not what this bill does, it 
allows HUD to impose unlimited rent increases on the elderly 
and people with disability, disabilities--that is what the 
language allows. They can set a percent of gross rent with no 
cap, this is a HUD that has repeatedly proposed to raise rents 
on the elderly and people with disabilities. They did it in 
last year's budget. Just today, they released legislation that 
would do that, would propose to do that again. So, I think they 
would be harmed by the bill.
    Chairman Duffy. But in--it is not mandatory, it is--
    Mr. Fischer. It is not mandatory for HUD, but they said 
they want to do it.
    Chairman Duffy. And for the--for the PHAs it is not 
mandatory either.
    Mr. Fischer. No, it is mandatory for the PHAs, in this bill 
it is mandatory for the PHAs.
    Chairman Duffy. Ms. Todman?
    Ms. Todman. As evidenced by those housing authorities that 
have access to this level of flexibility, they have tended to 
use rent reform to help to relieve administrative burdens from 
our seniors and our disabled population.
    On the flipside, where they have actually instituted work 
requirements or time limits, they have exempted the elderly and 
disabled from that through hardship exemptions.
    Chairman Duffy. OK. Mr. Gentry?
    Mr. Gentry. I would agree with Mr. Russell's comments 
entirely, and that does reflect San Diego's practice and 
policy.
    Chairman Duffy. Very well. Listen, I want to thank our 
witnesses for their testimony today. I appreciate your insight 
to this committee as we look forward with this discussion 
draft, to take your points of view and those of others and try 
to get a proposal of this bipartisan, but also works.
    Without objection, all members will have five legislative 
days within which to submit additional written questions to the 
Chair which will be forwarded into our witnesses, I ask the 
witnesses--if we get some of those, respond in a timely manner. 
Without objection, this hearing is now adjourned.
    [Whereupon, at 3:30 p.m., the subcommittee was adjourned.]

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                             April 25, 2018


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