[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
HOUSING IN AMERICA: ASSESSING
THE INFRASTRUCTURE NEEDS OF
AMERICA'S HOUSING STOCK
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
APRIL 30, 2019
__________
Printed for the use of the Committee on Financial Services
Serial No. 116-19
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
37-450 PDF WASHINGTON : 2019
HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California PETER T. KING, New York
GREGORY W. MEEKS, New York FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut ANN WAGNER, Missouri
BILL FOSTER, Illinois ANDY BARR, Kentucky
JOYCE BEATTY, Ohio SCOTT TIPTON, Colorado
DENNY HECK, Washington ROGER WILLIAMS, Texas
JUAN VARGAS, California FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas LEE M. ZELDIN, New York
AL LAWSON, Florida BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan WARREN DAVIDSON, Ohio
KATIE PORTER, California TED BUDD, North Carolina
CINDY AXNE, Iowa DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota
Charla Ouertatani, Staff Director
C O N T E N T S
----------
Page
Hearing held on:
April 30, 2019............................................... 1
Appendix:
April 30, 2019............................................... 63
WITNESSES
Tuesday, April 30, 2019
Carter, Daryl J., Founder, Chairman, and CEO, Avanath Management,
LLC, testifying on behalf of the National Multifamily Housing
Council and the National Apartment Association................. 10
Lawson, Steven, President, The Lawson Companies, testifying on
behalf of the National Association of Home Builders............ 8
Todman, Adrianne, CEO, National Association of Housing and
Redevelopment Officials........................................ 6
Yentel, Diane, President and CEO, National Low Income Housing
Coalition...................................................... 5
APPENDIX
Prepared statements:
Carter, Daryl J.,............................................ 64
Lawson, Steven,.............................................. 114
Todman, Adrianne............................................. 129
Yentel, Diane................................................ 137
Additional Material Submitted for the Record
Waters, Hon. Maxine:
Written statement of the Center on Budget and Policy
Priorities................................................. 151
Written statement of the Council for Affordable and Rural
Housing.................................................... 153
Written statement of the Council of Large Public Housing
Authorities................................................ 160
Written statement of the Credit Union National Association... 164
Written statement of Enterprise Community Partners........... 167
Budd, Hon. Ted:
U.S. Chamber of Commerce, Center for Capital Markets
Competitiveness report entitled, ``The Role of Insurance
Investments in the U.S. Economy,'' dated Winter 2019....... 170
Gonzalez, Hon. Anthony:
Agreement between the U.S. Department of Housing and Urban
Development, the New York City Housing Authority, and New
York City, dated January 31, 2019.......................... 212
McHenry, Hon. Patrick:
Written statement of Howard Husock, Vice President for
Research and Publications, Manhattan Institute............. 264
Ocasio-Cortez, Hon. Alexandria:
Article from The New York Times entitled, ``Mold, Lead, Leaks
and Broken Locks. Tenants Vent Fury at Housing
Authority.'', dated September 26, 2018..................... 267
Article from The New York Times entitled, ``Tests Showed
Children Were Exposed to Lead. The Official Response:
Challenge the Tests,'' dated November 18, 2018............. 269
Article from The New York Times entitled, ``No Heat for 10
Years, and the City Is Their Landlord,'' dated December 19,
2018....................................................... 276
Wagner, Hon. Ann:
Chart of St. Louis City & County Opportunity Zone
Recommendations............................................281 01
HOUSING IN AMERICA: ASSESSING
THE INFRASTRUCTURE NEEDS OF
AMERICA'S HOUSING STOCK
Tuesday, April 30, 2019
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10:10 a.m., in room
2128, Rayburn House Office Building, Hon. Maxine Waters
[chairwoman of the committee] presiding........................
Members present: Representatives Waters, Velazquez, Sherman,
Clay, Scott, Green, Cleaver, Himes, Foster, Beatty, Vargas,
Gottheimer, Gonzalez of Texas, Lawson of Florida, San Nicolas,
Tlaib, Porter, Axne, Casten, Pressley, McAdams, Ocasio-Cortez,
Lynch, Gabbard, Adams, Garcia of Illinois, Garcia of Texas,
Phillips; McHenry, Wagner, Posey, Luetkemeyer, Huizenga, Duffy,
Stivers, Barr, Tipton, Williams, Hill, Loudermilk, Mooney,
Davidson, Budd, Kustoff, Gonzalez of Ohio, Rose, Steil, Gooden,
and Riggleman..................................................
Chairwoman Waters. The Financial Services Committee will come to
order. Without objection, the Chair is authorized to declare a
recess of the committee at any time............................
Today's hearing is entitled, ``Housing in America: Assessing the
Infrastructure Needs of America's Housing Stock.'' I now
recognize myself for 4 minutes for an opening statement........
Today, this committee convenes for a hearing on addressing the
infrastructure needs of America's housing stock. Congress must
recognize that our nation's infrastructure extends beyond
making investments in our roads, bridges, ports, and airports.
It also includes our nation's affordable housing...............
We are in the midst of a housing affordability crisis. According
to the National Low Income Housing Coalition, there is a
shortage of more than 7.2 million rental housing units that are
affordable and available to the lowest-income families. In
fact, no State in America has an adequate supply of affordable
housing for the lowest-income renters..........................
For example, California has a deficit of over a million
affordable and available units. Wisconsin has a deficit of
nearly 140,000 units. Mississippi has a deficit of nearly
50,000 units. New York has a deficit of over 600,000 units.....
Rising rents and gentrification are part of this problem. For
example, in my district, the City of Inglewood, California, is
experiencing economic development which, while it offers many
benefits for the community, has also resulted in higher rents
and has led to displacement of residents. Affordable housing
must be a part of any solution or long-time and often lower-
income residents will lose their homes.........................
Our public housing system, which houses 2.6 million Americans, is
also in dire need of investment to repair kitchens, elevators,
baths, doors, windows, and roofs. There is a public housing
capital need backlog of $70 billion, and around 10,000 units
are lost each year as a result of disinvestment................
Neglecting our housing infrastructure hurts our economy. Studies
have found that the lack of affordable housing hurts economic
productivity and wages. For all of these reasons, I have put
forth a discussion draft that would make the investments we
need in our housing infrastructure and critical jobs across the
country........................................................
The bill contains $1 billion to fully fund the backlog of capital
needs for Sections 515 and 514, that is rural housing stock; $5
billion to support mitigation efforts that can protect
communities from future disasters and reduce post-disaster
Federal spending; $5 billion for the Housing Trust Fund to
support the creation of hundreds of thousands of new units of
housing that would be affordable to the lowest-income
households; $100 million to help low-income elderly households
in rural areas age in place; $1 billion for the Native American
Housing Block Grant Program to address substandard housing
conditions on tribal lands; $10 billion for a CDBG set-aside to
incentivize States and cities to eliminate impact fees and
responsibly streamline the process for development of
affordable housing; and $70 billion to fully address the public
housing capital backlog........................................
We also need to consider ways to incentivize developers to reduce
the energy costs of affordable housing and to create housing
that accommodates generations of families living under one
roof...........................................................
This committee has already passed the Ending Homelessness Act to
house the more than 500,000 persons experiencing homelessness,
and is now turning its attention to addressing another aspect
of the affordable housing crisis: the lack of housing
infrastructure.................................................
I now recognize the ranking member of the committee, Mr. McHenry,
for 4 minutes for an opening statement.........................
Mr. McHenry. Thank you, Chairwoman Waters. I thank you for
holding this hearing on the very important subject of housing..
First, I am encouraged, Madam Chairwoman, that you agree with
committee Republicans that barriers to advancing and promoting
affordable housing at the local level are important topics
worthy of debate and consideration. That is included in this
bill...........................................................
In particular, we need to find solutions to assist and partner
with local communities who struggle to address affordable
housing, especially the supply and demand dynamics in local
neighborhoods..................................................
A report which was the discussion by this committee in the last
Congress found that up to 30 percent of the cost of developing
and constructing affordable housing is attributed to outdated
and sometimes unnecessary local regulations. On the other hand,
Madam Chairwoman, this hearing is more than a discussion on how
to incentivize local innovation to attract development of
affordable housing for lower-income families...................
This legislation you drafted as a subject of today's hearing
raises serious concerns about the funding for publicly assisted
rural and Native American tribal affordable housing projects.
There is no question that today's federally supported
affordable housing stock has serious capital improvement needs.
The last HUD study estimated $21 billion, and today we will hear
that number could be as high as $70 billion. These are big
costs representing big needs. But I would suggest that if we
are to discuss a proposal to infuse $70 billion into public and
assisted housing programs, then we need to really hear what
should be happening for a 21st Century modern model for
government-funded and assisted housing.........................
We shouldn't just be funding old models, we should be looking at
the newest innovative models and the current models that
actually work and get the most bank for the buck. Funding
aside, public and rural assisted housing is struggling and it
is not just because of a lack of funding.......................
Innovation, in particular using private financed markets to
design and influence programs that advance able-bodied working
families to get back into the workforce are effective models in
the community. We have work-capable adults who are on the
sidelines. We need to give them the means, the mechanism, and
the opportunity to get back into the workforce and to find
themselves in their own stable situation. We need a more
holistic approach..............................................
That is what is working in communities and getting people back
into a sustainable housing situation. We know some of the
toolset can work, Move to Work, the Rental Assistance
Demonstration Program, and really the most recent idea, thanks
mainly to Congressmen Duffy and Cleaver, is the Housing Choice
Voucher Mobility Demonstration Act of 2018.....................
I would also bring attention to work conducted by Harvard
University economist Raj Chetty, who developed the opportunity
atlas using data from the U.S. Census Bureau and the Internal
Revenue Service. And here is what Dr. Chetty found: If a person
moves out of a neighborhood with worse prospects to a
neighborhood with better outlooks, that move increases lifetime
earnings for low-income children by an average of $200,000.....
So I am interested in the opportunity atlas because it indicated
that my neighboring community, Charlotte, North Carolina, which
is really important for my region, ranked dead last out of 50
cities. I think that is problematic. So, I hope that we can
work together to use the models that do work, and that we can
focus on innovation............................................
I am happy to have a discussion that is not about throwing money
at Depression-era programs that don't fit a modern setting in a
modern situation and a modern economy. And to make sure that we
have the right Federal investment for the best outcomes........
And so with that, I look forward to the panel and the questions
today..........................................................
Chairwoman Waters. The Chair now recognizes the gentleman from
Missouri, Mr. Clay, the Chair of our Subcommittee on Housing,
Community Development, and Insurance for one minute............
Mr. Clay. I want to thank the chairwoman and the ranking member
for convening this important hearing on housing infrastructure.
As the Chair of the Subcommittee on Housing, I am honored to
mark the 51st anniversary of the congressional passage of the
Fair Housing Act during the month of April, which is National
Fair Housing Month.............................................
President Johnson signed the Fair Housing Act on April 11, 1968,
one week after the assassination of Dr. King. The Fair Housing
Act was a monumental step forward for the Civil Rights Movement
and pivotal to establishing equal opportunity in housing for
all Americans..................................................
A 2018 report from the Council of Large Public Housing
Authorities estimated that completing the $25 billion backlog
of public housing repairs would infuse $80 billion into local
economies. And according to the National Low Income Housing
Coalition, in my Missouri congressional district, there are
only 3 affordable homes for every 10 low-income renter
households.....................................................
So we are coming up short and must address this problem with the
necessary investment at the Federal, State, and local level.
Madam Chairwoman, I see my time has expired, so I yield back...
Chairwoman Waters. Thank you.....................................
The Chair now recognizes the gentleman from Wisconsin, Mr. Duffy,
the ranking member of the subcommittee, for one minute.........
Mr. Duffy. Thank you, Madam Chairwoman. I appreciate you holding
this hearing today and I look forward to parts of your draft
that work with rural housing developments, Sections 514 and
515. Chairman Clay held a hearing on these issues last month
and I think this is a point of potential bipartisanship and I
look forward to working with you and Mr. Clay and other
Democrats......................................................
But I also will have to say, do we just open up a checkbook and
start spending money, to Mr. McHenry's point, or do we have a
new vision for what programs will work for the 21st Century,
and how do we effectively spend taxpayers' money on really
important programs for virtually all of our communities?.......
As Mr. McHenry pointed out, we have to look at the cost of
regulation, of local, State, and Federal regulation on the
construction of housing. And I think we have to work as a
committee and as a Congress to identify those costs and try to
reduce those costs as opposed to some of the proposals that
have come from the left that would actually dramatically
increase those costs. And I think that is a point of
bipartisanship as well.........................................
And just one last note, I would say that if we are going to be
effective in fixing the housing crisis we have in America, we
have to make it bipartisan, and that means working on
legislation I think from the starting point to get it to the
Senate and get the President to sign it. And I look forward to
working with the Majority......................................
I yield back.....................................................
Chairwoman Waters. Today, we welcome a distinguished panel of
witnesses to discuss issues around the U.S. housing stock: Ms.
Diane Yentel, president and CEO of the National Low Income
Housing Coalition; Ms. Adrianne Todman, CEO of the National
Association of Housing and Redevelopment Officials; Mr. Steven
Lawson, president of the Lawson Companies, testifying on behalf
of the National Association of Home Builders; and Mr. Daryl
Carter, founder, chairman, and CEO of Avanath Capital,
testifying on behalf of the National Multifamily Housing
Council and the National Apartment Association.................
Witnesses are reminded that your oral testimony will be limited
to 5 minutes. When there is one minute left, a yellow light
will indicate that you should wrap up your testimony...........
And without objection, all of your written statements will be
made a part of the record......................................
Ms. Yentel, you are now recognized for 5 minutes to present your
oral testimony.................................................
STATEMENT OF DIANE YENTEL, PRESIDENT AND CEO,
NATIONAL LOW INCOME HOUSING COALITION
Ms. Yentel. Thank you. Chairwoman Waters, Ranking Member McHenry,
and members of the committee, thank you for the opportunity to
testify today..................................................
On behalf of the National Low Income Housing Coalition (NLIHC), I
commend Chairwoman Waters for your leadership on the Housing is
Infrastructure Act of 2019. The investments proposed are badly
needed and long overdue........................................
Our country's affordable housing crisis has reached historic
heights, most harming the lowest-income people who are in less
than the poverty line or 30 percent of area meeting incomes.
Nationally, we have a shortage of over 7 million homes
affordable and available to these lowest-income people.........
In other words, there are fewer than 4 homes affordable and
available to every 10 of the lowest-income seniors, people with
disabilities, or families with kids. No congressional district
has an adequate supply of available rental homes affordable to
its lowest-income residents. As a result, nearly 8 million of
the lowest-income renter households pay more than half of their
incomes towards housing and over half a million people in our
country have no homes at all...................................
The private market cannot on its own meet the housing needs of
the poorest renters. Without government intervention, decent
and affordable homes cannot be reliably built, operated, and
maintained at a price that the lowest-income households can
afford. Federal subsidies are necessary but funding for such
subsidies has been declining for decades. In addition to the
tremendous need to produce homes affordable to the lowest-
income people, we must preserve our country's existing
affordable housing infrastructure..............................
Public housing, home to over 2\1/2\ million low-income people,
plays a critical role in addressing America's affordable
housing needs. Congress has underfunded public housing for
decades. Between 2000 and 2016, funding for public housing
repairs was cut in half........................................
With limited funding, public housing agencies are unable to make
needed repairs to preserve these homes and these investments.
Our country loses 10,000 to 15,000 public housing apartments
annually to obsolescence or decay, and other units fall into
deep disrepair. The funding needed to address capital repairs
in public housing is estimated to exceed $50 billion today.....
An infrastructure spending package is an opportunity for Congress
to respond. Like roads and bridges, affordable housing is a
long-term asset that helps communities and families thrive.
Investments in affordable homes increase economic mobility,
strengthens communities, creates jobs, and lifts local
economies......................................................
NLIHC strongly supports Chairwoman Waters' Housing is
Infrastructure Act and its proposed investment of $5 billion to
expand the National Housing Trust Fund, which would address the
underlying cause of our affordable housing crisis, the severe
shortage of homes affordable for the lowest-income people......
The Housing Trust Fund's first allocation of $170 million has
allowed States to build or preserve 160 projects with over
1,900 Housing Trust Fund-assisted homes, housing our country's
most vulnerable people: those previously experiencing
homelessness; youth exiting foster care; survivors of domestic
violence; people with disabilities; seniors; veterans; and
others.........................................................
Funding for this successful and necessary program should be
expanded to no less than the $5 billion proposed by Chairwoman
Waters. We strongly support the chairwoman's proposal to invest
$70 billion for the public housing Capital Fund. This
investment could quickly be used to repair America's
deteriorating public housing infrastructure by fixing leaky
roofs, replacing outdated heating systems, and remediating mold
to improve the health and living conditions for millions while
creating local jobs and protecting a key piece of America's
affordable rental housing stock................................
And we strongly support the proposed $2 billion to address
critical housing needs in rural and tribal areas that have some
of the country's most severe housing needs.....................
As infrastructure bills move forward in Congress, NLIHC will
monitor and oppose proposals attempting to increase income
levels targeted by existing subsidized housing programs or to
create new programs to subsidize middle-income market-rate
housing........................................................
Using scarce Federal dollars on market-rate housing is misguided
and wasteful. In most areas of the country, the private market
meets these needs. Where it doesn't, the Federal Government's
role should be to incentivize or require local communities to
decrease regulatory and zoning barriers to private sector
development....................................................
Chairwoman Waters' CDBG set-aside proposal is a good step towards
creating effective incentives. Thank you for the opportunity to
testify before you today. I look forward to any questions you
may have.......................................................
[The prepared statement of Ms. Yentel can be found on page 137 of
the appendix.].................................................
Chairwoman Waters. Thank you, Ms. Yentel.........................
Ms. Todman, you are now recognized for 5 minutes to present your
oral testimony.................................................
STATEMENT OF ADRIANNE TODMAN, CEO, NATIONAL
ASSOCIATION OF HOUSING AND REDEVELOPMENT
OFFICIALS
Ms. Todman. Good morning, Chairwoman Waters and Ranking Member
McHenry. Thank you for inviting me to talk to you today about
public housing and the importance of Housing as Infrastructure.
Last year, the National Association of Housing and Redevelopment
Officials (NAHRO) celebrated its 85th anniversary as a
membership organization. Our members represent over 70 percent
of the agencies that actually administer public housing, HOME
and CDBG across the country. America's public housing is an
integral component of our nation's infrastructure; it is home
to almost one million families including more than 360,000
families with children and more than 315 senior households.....
We owe it to those families, children, and veterans, and also our
homeless individuals who need access to those units, and people
who are struggling with housing affordability, to preserve
those units....................................................
One might ask, how did we get here as it relates to the condition
of public housing? Over the years, and as the public housing
program rules changed, the rents of the families who lived in
public housing could no longer sustain the operating costs of
the units. Congress then authorized the provision of operating
assistance which also could not keep up with existing costs.
Unfortunately, funding needed to address the capital needs of
this important housing portfolio has never truly been realized
and we are now bearing witness to the consequences of those
decisions......................................................
The Capital Fund is provided annually to public housing agencies
for the development, financing, and modernization of public
housing developments. Housing authorities use this money to
repair and improve their public housing sites, address deferred
maintenance needs, and replace obsolete utility systems........
While we are extremely grateful for the increased appropriations
that were made in 2018 and 2019, the current appropriations
levels are just not keeping up with costs. Extrapolating from
HUD's 2010 capital needs assessment, we join our sister
association, the Public Housing Authorities Directors
Association (PHADA), in estimating the capital needs backlog to
be upwards of $70 billion, and this is even after considering
contributions made by the Rental Assistance Demonstration
Program (RAD) and the Housing Choice Program...................
We applaud the inclusion of $70 billion in Chairwoman Waters'
housing infrastructure bill for the public housing program.
Public housing is not just infrastructure, it is also an
economic engine. Every dollar that's spent on public housing
produces an additional $2.12 in indirect economic activity.....
We also recommend to the committee that it consider investments
into the HOME program, which has created more than a million
units of affordable housing and provided direct rental
assistance to more than 356,000 families across the country. We
encourage you to consider including $5 billion into the HOME
Program........................................................
In order to prepare for the natural disasters that impact our
housing infrastructure, we need to have both a firm plan to
ensure resilience as well as a path back for when our housing
is damaged or destroyed. We are pleased to see that the
proposed legislation acknowledges the role that natural
disasters play in interrupting housing affordability in
communities across the country.................................
Investing in affordable housing, particularly the public housing
portfolio, truly is an investment in people and it is a cost-
saving mechanism that prevents additional expenditures
downstream. In fact, a 2016 study found that living in
subsidized housing as a teen was positively associated with
adult earnings. The research also found that subsidized housing
was associated with reduced likelihood of incarceration........
Another 2015 study found that older adults who were able to
access housing after experiencing homelessness had lower rates
of emergency hospital visits and reduced overnight
hospitalization................................................
And investing in people is what this conversation is really
about. Without this investment, there is a generation of
children who will not have stable housing, who may not have
opportunities and become, as Raj Chetty has also said, the
``lost Einsteins'' in our country, folks who would have had an
opportunity but for destabilization............................
It is that part of our work that inspires housing professionals
across the country to get out of bed every single day and go to
work even in the face of impossible decisions, and choices they
have to make to keep public housing stable. And it is that
reason that this committee and this Congress should be
compelled to look at not just public housing as part of
infrastructure, but also the entire affordable housing
continuum across the country. I look forward to your questions.
[The prepared statement of Ms. Todman can be found on page 129 of
the appendix.].................................................
Chairwoman Waters. Thank you, Ms. Todman.........................
Mr. Lawson, you are now recognized for 5 minutes to present your
testimony......................................................
STATEMENT OF STEVEN LAWSON, PRESIDENT, THE LAWSON
COMPANIES, TESTIFYING ON BEHALF OF THE NATIONAL
ASSOCIATION OF HOME BUILDERS (NAHB)
Mr. Lawson. Chairwoman Waters, Ranking Member McHenry, and
members of the committee, thank you for the opportunity today
to testify on this very important subject......................
My name is Steve Lawson and I am chairman of the Lawson
Companies. I am proud to say, I am a third generation
homebuilder and apartment developer from Virginia. Owning and
renting a suitable home is increasingly out of financial reach
for many Americans. NAHB strongly believes that increasing the
inventory of new single family and multifamily housing is key
to improving housing affordability.............................
Factors such as regulations, availability of lots, lack of
skilled labor, cost of building materials, and financing
account for the increased building costs and insufficient
supply. One aspect that directly limits the ability to develop
affordable housing is the financing of it......................
Construction financing is commonly misunderstood and propagates a
pervasive misconception that builders prefer to develop luxury
homes and rentals. However, as I cannot stress enough, the
builders would gladly serve families at all income levels if
they could simply make the numbers work........................
Developers must be able to demonstrate that projected revenues
will be sufficient to cover the loans. Builders will be unable
to secure financing to develop a project if the projected rents
or sales prices are too low to cover the expenses..............
As a small business owner operating in a heavily regulated
industry, I understand how difficult and often costly it is to
comply with the myriad of government regulations. It is
particularly noteworthy in an industry where margins are thin
and consumer sensitivity to price fluctuation is so acute......
Although regulatory reform will help with housing affordability,
it is important to note that NAHB does not believe that all
regulation is bad. There is a role for sensible regulation to
protect health, safety, and fair housing rights. However, when
it accounts for 24 percent of the cost for a single family
home, or 32 percent of the cost of a multifamily project,
affordability needs to be part of the larger discussion when
discussing or updating regulations.............................
Impact fees are an example of imposed costs that have a direct
negative effect on housing affordability. Impact fees are
imposed often upfront at the time of a building permit as a
price of admission for developments to be approved by local
governments....................................................
These fees are typically dedicated to specific public use like
sewer, water facilities, parks, roads, or schools. Impact fees
affect affordable and market rate development alike............
The premise of impact fees is that development, especially
residential development, does not pay for its fair share of the
bargain imposed on the local government. However, NAHB's
research shows this premise to be false. The impacts of
building 100 rental apartments include $11.7 million in local
income, $2.2 million in taxes for local governments, and 161
local jobs.....................................................
Results show that new homes generate enough revenue for local
governments to not only cover their current expenses but to
service and pay off all the debt incurred to invest in these
public structures in one year..................................
NAHB applauds Chairwoman Waters for starting this important
discussion on the role that additional costs such as impact
fees play in housing affordability. NAHB supports funding for
important housing programs such as the Rural Housing Programs
and the Housing Trust Fund. We applaud the innovative ideas to
incentivize lowering of impact fees and streamlining of the
development process in your legislation, the Housing is
Infrastructure Act of 2019.....................................
We look forward to working with you to address the unmet demand
for low-income rental housing. While regulatory reform will
help us lower developing costs, it is financially infeasible to
construct new affordable rental units without a Federal
subsidy, and that bears repeating: It is financially infeasible
to construct new affordable rental units without a subsidy.....
Thank you again, Chairwoman Waters, for the opportunity to
testify. We appreciate you convening this very important
hearing to explore strategies for removing barriers to
affordable housing development. NAHB stands ready to work with
you to achieve thoughtful and effective policies to expand the
availability of affordable housing.............................
[The prepared statement of Mr. Lawson can be found on page 114 of
the appendix.].................................................
Chairwoman Waters. Thank you, Mr. Lawson.........................
Mr. Carter, you are now recognized for 5 minutes to present your
oral testimony.................................................
STATEMENT OF DARYL J. CARTER, FOUNDER, CHAIRMAN,
AND CEO, AVANATH MANAGEMENT, LLC, TESTIFYING ON
BEHALF OF THE NATIONAL MULTIFAMILY HOUSING
COUNCIL AND THE NATIONAL APARTMENT ASSOCIATION
Mr. Carter. Good morning. Chairwoman Waters, Ranking Member
McHenry, and members of the committee, thank you for this
opportunity to speak on behalf of the National Multifamily
Housing Council (NMHC) and the National Apartment Association
(NAA) on the apartment industry's infrastructure needs.........
I am the chairman and CEO of Avanath Capital, an apartment firm
with $1.7 billion in assets under management. Avanath is
somewhat unique in that we focus exclusively on affordable and
workforce housing in low-income communities where renters have
high cost barriers.............................................
More than half of our properties are located in communities of
color. We applaud Chairwoman Waters for recognizing that
housing must be a key component of any infrastructure
initiative Congress and the Administration undertake...........
Before I begin my testimony, I think it is important to
understand the context within which the apartment industry is
operating. As you know, the U.S. has a serious shortage of
housing affordable to low- and middle-income households. That
is in part because demand for rental housing is at historic
levels.........................................................
Since the mid-2000s, the number of rental households has
increased by more than seven million, the greatest renter wave
in history. To meet that demand, we need to build 4.6 million
new apartments by 2030. That translates into 328,000 new
apartments every year, a mark that we have only hit twice since
1989...........................................................
Our greatest need is in the low- and middle-income levels, which
is all but impossible to develop without deep subsidies.
America loses an estimated 100,000 units a year to
obsolescence, conversions, or demolition. And the majority of
those lost units are from the lower-income housing stock, the
very units we need the most, while development costs continue
to escalate....................................................
We need to look for new ways to better preserve existing units
and to cut development costs for new construction. That is why
housing must be considered a vital element of this nation's
infrastructure. Infrastructure and housing are connected in
important ways. As communities struggle with inadequate
transportation, water, sewage, and other public systems, they
are increasingly looking for ways to pass infrastructure
improvement costs to developers by making project approvals
contingent on infrastructure investments.......................
This, of course, translates into higher rents for a household. My
written testimony includes a number of examples of how housing
and infrastructure interact for NMHC and NAA members. But let
me share one example from my firm, we acquire older apartment
assets with older infrastructure, we make investments to
mitigate life, safety, and sanitation matters..................
In one project, for example, we provided all new piping and
fixtures to make water and sewer flow more efficient.
Nevertheless, we continue to have sewer backups because the
municipal trunk lines feeding the property are too small. In
many cases, these systems are 50 to 100 years old..............
Investment in public infrastructure will also facilitate more
affordable housing preservation. But that alone is not
sufficient to address our affordable housing shortage. While
apartment completions have increased in recent years, it is
virtually impossible to develop and renovate units at the rent
levels that low- and middle-income households can afford.......
The cost to develop apartments has escalated dramatically in
recent years. Land, material, and labor costs have increased
significantly. But regulatory barriers have also raised the
cost of housing; research shows that 32 percent of multifamily
development costs are attributable to local, State, and Federal
initiatives....................................................
Developers must contend with things like outdated zoning laws,
unnecessary land use restrictions, and arbitrary permitting and
parking requirements. On top of that, many localities impose
impact and inspection fees, inclusionary zoning mandates, and
rent control rules.............................................
Easing these regulatory and other policy obstacles is critical as
policymakers explore solutions that close housing affordability
and look for ways to make serious investments in our nation's
infrastructure. Madam Chairwoman, we commend you for holding
this hearing and for your work on the Housing is Infrastructure
Act of 2019. Housing and infrastructure are both critical
nationwide needs...............................................
Policymakers at every level of government have a role to play in
removing obstacles to housing production, easing costs, and
creating supporting environment providing apartment homes......
The apartment industry is committed to providing high-quality and
attainable housing for all Americans. Thank you very much......
[The prepared statement of Mr. Carter can be found on page 64 of
the appendix.].................................................
Chairwoman Waters. Thank you very much. I now recognize myself
for 5 minutes for questions....................................
I am going to address this to Mr. Lawson.........................
Mr. Lawson, 60 percent of U.S. cities have more than 25,000
residents in the imposed impact fees, which are fees on housing
developments to fund other infrastructure projects.............
Dwindling Federal resources for infrastructure improvements have
pushed State and local governments to turn to impact fees to
raise revenue for this purpose. This shift is raising costs on
home builders as well as new renters and home buyers,
ultimately making houses less affordable.......................
In California alone, impact fees average $23,455 for a single
family home and $19,558 for a multifamily unit, which is almost
3 times the national average. My bill aims to address these
challenges by providing funds for cities to incentivize or
eliminate impact fees and responsibly streamline the process
for the development of affordable housing. What are your views
on impact fees?................................................
Mr. Lawson. Thank you for the question, Chairwoman Waters. My
view, as you stated very well, is that impact fees are high,
getting higher, and not often used toward the things for which
they are intended to be used...................................
We also operate at--each one of our developments operates at what
we call the margin of feasibility. So, every dollar in
additional fees that we pay reduces the number of households we
can serve. Very simply stated, higher impact fees directly
affect the number of units that we can build, that affects the
feasibility of those units especially at the lower-income
levels.........................................................
Any effort that this committee can make or that Congress can make
to lower those fees, those impact tap fees and other fees,
would be very much appreciated in the industry. We also want to
make sure that the incentive is done in a way such that the
fees that are reduced for affordable units are not transferred
to other units in the marketplace, therefore making the
affordability problem worse for other renters and other buyers.
Chairwoman Waters. Thank you very much. I would like to ask you
another question about the departments of city governments, for
example, who have the responsibility for reviewing the plans
that are put before them for the development of housing, and
how there seems to be a lot of flexibility in determining what
other kinds of requests can be made of developers that cost
them more money, for example, the moving of a pole, this, or
that, what are those experiences like?.........................
Mr. Lawson. It is a very frustrating experience for us on the
ground, because often those requirements are not very
specifically spelled out and that is a process, in many cases
it is a process and negotiation with the local municipality....
And they very rightly have their goals and the things they would
like to do for their community. However, one new community
cannot bear the cost of 5 decades or more of neglect in public
facilities.....................................................
Chairwoman Waters. Thank you very much. The Chair now recognizes
the distinguished ranking member for 5 minutes for questions...
Mr. McHenry. Thank you, Chairwoman Waters. And thank you all for
your testimony. This is a very important issue to my
constituents and all of our constituents represented on this
committee and even those that are not on the committee.........
Mr. Carter, I want to go directly to your decision-making. How
many States are you invested in?...............................
Mr. Carter. We operate in 12 States..............................
Mr. McHenry. Twelve States, okay.................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. But you have to make decisions on which States to
operate in?....................................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. I would guess that is in part the economy, am I
correct? How do you make that decision on which States to
invest in?.....................................................
Mr. Carter. Well, we invest primarily in States where there is
job growth, where there is lots of demand for housing, and also
where there are people moving into that area...................
Mr. McHenry. Okay. Now, the question of the local appetite to
either enable you to fix up these properties and make them
ready for folks to have safe housing, walk me through that
decision on a local zoning effort, regulatory effort and how
that goes into your decision-making............................
Mr. Carter. Well, we operate in about 50 different municipalities
across the country, primarily on the two coasts................
And very often when we go into properties, particularly where we
are acquiring and preserving an affordable property working
with that local government, we often will buy a tax credit
property that may have Project-based Section 8 over it where we
may have 6 different regulatory agreements on that particular
property that we have to navigate with 6 different public
housing agencies...............................................
So very often, in our business, I spend a lot of time, a
considerable amount of my time dealing with local agencies.....
Mr. McHenry. Okay. But that question of your experience with
these agencies, that will determine whether or not on the
margin you will invest in a project, is that correct?..........
Mr. Carter. Yes..................................................
Mr. McHenry. So if you lighten that barrier for you to more
affordably put your money at work, would you do more projects?.
Mr. Carter. Yes, we would. And more importantly, I think the key
part of it is that when people look at a company like ours
where we have $1.7 billion of assets under management, we
partner with institutional investors...........................
And those institutional investors, most of them are public
pension funds. So when I look at investing in what we do, I
think of my sister who is a teacher in the State of Michigan,
and when we take on a specific property, we are looking at the
risk of how long it takes to do and the riskiness of it........
So you have many public pension funds where the workers are
dealing with the affordability crisis themselves, but then in
making the projects that we invest in more riskier when you
have many of these local mandates, it creates risks for them on
the other side.................................................
Mr. McHenry. If you would do like a quick back of the envelope
calculation for me, so you buy a small apartment complex,
right? Give me a number of units...............................
Mr. Carter. Probably our average size is 150 apartments..........
Mr. McHenry. Okay, 150 units. Roughly speaking, what type of
investment do you make per unit to get that up to your
standards?.....................................................
Mr. Carter. A range of $7,000 to $20,000 a unit..................
Mr. McHenry. $7,000 to $20,000...................................
Mr. Carter. Yes..................................................
Mr. McHenry. $20,000 a unit is a serious investment..............
Mr. Carter. Yes, it is...........................................
Mr. McHenry. Okay................................................
Mr. Carter. Of private capital...................................
Mr. McHenry. Private capital.....................................
Mr. Carter. Yes, sir.............................................
Mr. McHenry. So what if you took that number and made it about
$50,000? Would that speak to the deficiency of the unit or
would that speak more to the inefficiency of the dollars?......
If I told you we are going to spend $50,000 on the housing unit
in a similar apartment complex, would you tell me I was making
a bad investment or do you think that would be a wise
investment?....................................................
Mr. Carter. Well, it depends on what the situation was. If it is
a really old and dilapidated situation, it may need that.......
Mr. McHenry. The bill that we have here today will spend between
$50,000 and $55,000 per public housing unit in America today.
That would tell you that is about 25 percent of the median home
value sold last year. That is an extraordinary amount of money
and that is why I want to talk about the efficiency of these
dollars in this hearing. Thank you. I yield back...............
Chairwoman Waters. Thank you very much. The gentlewoman from New
York, Ms. Velazquez, is recognized for 5 minutes...............
Ms. Velazquez. Thank you, Chairwoman Waters, and Ranking Member
McHenry, for holding this important hearing. I just would like
to say that I understand what you are both saying, Mr. McHenry
and Mr. Duffy, that we need to help create more affordable
housing, we need to work with our partners at the local level..
But the fact of the matter is that in my City, New York City,
Mayor de Blasio and the city council have made numerous
concessions and renegotiated labor contacts and zoning
requirements, but that doesn't take away the reality that my
town still faces the largest backlog in the country, more than
$36 billion, almost three quarters of the entire nation's
needs..........................................................
So while you are right, we need to work with our State and local
partners, that does not mean that we do not have the
responsibility here. In fact, the state of public housing in
our nation is a direct result of the Federal disinvestment that
has taken place in our nation for years........................
We need to put more money into the Public Housing Capital Fund,
the Section 8 program, and affordable housing programs. So I
look forward to working with both of them to make sure that we
invest wisely..................................................
Ms. Yentel, when we discussed providing more, better funding for
public housing, one of the main arguments we consistently hear
from the other side of the aisle is that bureaucratic delays
and mismanagement by public housing authorities (PHAs) make
investment in public housing an unwise use of taxpayers' money.
However, the last time Congress included an infusion of funding
for the Public Housing Capital Fund in 2009 as part of the
American Recovery and Reinvestment Act (ARRA), a GAO analysis
later confirmed that housing authorities used the funding in a
timely and efficient manner....................................
Can you explain the GAO's finding and why you believe including
money for the Capital Fund as part of any infrastructure
package will be a wise and efficient use of the taxpayers'
resources?.....................................................
Ms. Yentel. Yes. Thank you for the question. So as you say very
well, the public housing capital needs backlog has reached well
over $50 billion, and that is a direct result of decades of
Federal disinvestment in capital repair dollars by Congress....
Between 2010 and 2016 alone, Congress cut funding for public
housing capital repairs in half and that was on top of prior
decades of disinvestment as well. So today, the public housing
capital needs are severe and investment in repairing public
housing is badly needed........................................
PHAs can spend money when they have it available to them and they
spend it efficiently and effectively. As you said, the last
time we had an infusion of funding for public housing capital
repairs was under ARRA, and the GAO studied how PHAs were able
to use those funds and found that the vast majority of them
used them within the time limits that were set.................
NICHA in particular does well with spending its capital
expenditures: the last four capital expenditures that it
received, it spent well in advance of deadlines required by
HUD............................................................
Ms. Velazquez. Thank you. Ms. Yentel, a recent study produced by
the Council of Large Public Housing Authorities showed that for
6 PHAs around the country, $4.5 billion in direct capital
spending between FY 2013 and FY 2017 generated an estimated
$7.6 billion in economic activity and supported 7,600 full-time
jobs...........................................................
Moreover, the $4 billion in capital funding provided by the ARRA
generated over $12.5 billion in economic activity. Can you
explain how investing in public housing creates jobs and acts
as an economic generator by leveraging public and private
sector resources?..............................................
Ms. Yentel. Yes. There are multiple studies that share statistics
as you just did that show that if we were to spend $25 billion
in repairing public housing, it would generate close to $80
billion in new money in local economies........................
And I think it is important too to note that funding for public
housing repairs has an added benefit of providing not just
jobs, but jobs for residents of public housing and other low-
income residents in the community through the Section 8 program
that requires that when communities receive funds from HUD,
they give preference for those jobs to public housing
residents......................................................
Ms. Velazquez. I yield back......................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Missouri, Ms. Wagner, is recognized for 5
minutes........................................................
Mrs. Wagner. Thank you, Madam Chairwoman.........................
Mr. Carter, you started your investment firm in 2007 to take a
kind of different approach to Section 8 and affordable housing.
How does your firm lift up residents of distressed communities
and go beyond just developing a brick-and-mortar building?.....
Mr. Carter. Thank you very much for that question, Mrs. Wagner.
We view that our investment strategy is holistic. We are not
investing just in brick and mortar. For instance, about half of
our residents are Section 8, and of our Section 8 residents,
about 95 percent work, and many of those are two-income
families. They just happen to live in a very expensive place
like Southern California.......................................
And so, what happens in many of our communities, particularly
those that have kids, is when the school bus pulls up, you have
the properties--all of these kids and what we do in a number of
our communities where we have lots of kids, is we do
afterschool programs that really provide a place for the kids
to go that is safe afterwards..................................
And we can afford to make this investment and things like that if
in fact--and we find that it lowers our operating cost and many
other things. So, we take a holistic approach to it............
Mrs. Wagner. It is a great model. The Tax Cuts and JOBS Act that
we passed in the last Congress in 2017, created the Opportunity
Zone Program. This tax benefit is designed to drive economic
development and create jobs by encouraging long-term
investments in economically distressed communities.............
The St. Louis region where I am from has 40 designated
opportunity zones, including some in Missouri's 2nd District. I
would like to submit this map, Madam Chairwoman, for the
record.........................................................
Chairwoman Waters. Without objection, it is so ordered...........
Mrs. Wagner. Earlier this year, you launched a fund to invest in
one of the nation's more than 8,700 designated opportunity
zones. How will the tax benefit help your firm continue its
mission?.......................................................
Mr. Carter. Well, we are very excited about opportunity zones,
because it really made projects that maybe were not financially
feasible before that benefit, feasible. We believe it adds
about 4 percent of return which allows us--we had invested 4
percent more in return.........................................
Mrs. Wagner. Right...............................................
Mr. Carter. We own about 15 communities today that are in
opportunity zones. And so, one of our strategies is to take a
number of those communities where they are already affordable
and add more density, add more apartments there................
We have communities--we have a community in Oakland which is
really close to downtown Oakland, an opportunity zone that
stays at 100 percent occupancy and we have a waiting list of
200 people. So, it would be great to add more units to a
property like that.............................................
Mrs. Wagner. That is fantastic. So, you have seen really positive
result as a result of--........................................
Mr. Carter. Absolutely...........................................
Mrs. Wagner. Standing up these opportunity zones based solely on
the fact that we already passed and have signed into law the
Tax Cut and JOBS Act. Is that correct?.........................
Mr. Carter. Absolutely...........................................
Mrs. Wagner. Are there other multifamily firms planning to
participate in the new opportunity zone program?...............
Mr. Carter. Many are, yes........................................
Mrs. Wagner. Many are............................................
Mr. Carter. And I do think this will help add more housing in
places that we really need it..................................
Mrs. Wagner. Right. And we talked I know kind of at length about
the local barriers, and I just want to clarify with you, it
sounds to me like the barriers in terms of overregulation and
burdensome barriers are not at the Federal level. They are at
the municipal level and the city level. Is that correct?.......
Mr. Carter. Yes, ma'am. Most of them are at the local level......
Mrs. Wagner. Thank you very much.................................
In my limited time, I want to thank you, Ms. Yentel, and the
National Low Income Housing Coalition, for your support of the
disaster relief legislation that Representative Green and I
have joined hands on. We want to ensure that people who need
money the most can get access to funding while safeguarding
against fraud with the proper controls.........................
Can you talk briefly about how codifying the CDBG-DR program
would help grantees gain access to funding more efficiently?...
Ms. Yentel. Yes. And thank you, Congresswoman Wagner, for your
leadership in that area. It is very important. The CDBG
Disaster Recovery grant program is the largest source of funds
that local communities receive for their housing recovery needs
after disasters, but without codifying CDBG Disaster Recovery
legislation, Congress, HUD and communities rewrite rules after
every disaster which delays the funds from being put to use....
And the legislation that you have put forward would ensure that
those funds are directed towards those with the greatest needs
and for the housing needs......................................
Mrs. Wagner. Thank you, Ms. Yentel. Anything else you should
submit for the record, I appreciate it. I am over my time, but
I am so grateful for Mr. Green and for the chairwoman joining
us in this endeavor............................................
Chairwoman Waters. The gentleman from California, Mr. Sherman, is
recognized for 5 minutes.......................................
Mr. Sherman. One way to look at it is the rents are too damn
high. The other way to look at it is the wages are too damn
low............................................................
We, in this room, celebrate with the Fed that we have what they
consider to be a very low unemployment rate. But until we see
an acute labor shortage that leads to rapidly increasing wages,
we are not going to solve not only the housing problem but a
host of other economic problems as well........................
Transit and density related, Congress tends to fund a lot of
transit and not ask a lot of questions about density and
zoning. We need perhaps to involve ourselves. This is a
national problem and the most important decisions are made in
zoning and we do not play a role at all. My State government is
beginning to play a role.......................................
Density without transit is gridlock, but transit without density
is underutilization and operating losses for the transit
system. We need density near subway stations. We need subway
stations near density..........................................
One issue is just how much housing does each person need. We have
a lot more square-footage in this country per person than
Europe or Japan, yet we are the one with the housing crisis. It
is certainly patriotic to demand that every American have a
much bigger home than any European or a resident of Japan. But
I see square-footage requirements per unit per person as
leading to keeping working class units out of a community,
another kind of exclusive zoning...............................
Does anyone have an opinion on how many square-feet need to be in
a unit for a family of four? I am not seeing anybody jump in.
So, I am going to ask you, Mr. Lawson..........................
Mr. Lawson. I think we can go to the occupancy--the standard
occupancy requirements and a three-bedroom unit in that case
would fit the bill and--.......................................
Mr. Sherman. So, we should keep the standards and the system the
way it is......................................................
Mr. Lawson. I believe the market should dictate that and
actually, we build--...........................................
Mr. Sherman. The market is dictating that I have homeless people
in every park in my district...................................
Mr. Lawson. Yes..................................................
Mr. Sherman. So, I am not sure we want to leave things the way
they are.......................................................
Mr. Lawson. And I am speaking--to clarify, I am speaking to
affordable tax credit units, not for sale. That is a different
dynamic........................................................
Mr. Sherman. Ms. Todman?.........................................
Ms. Todman. Yes. Thank you, Congressman. I think that you raise a
larger point which is how do we look at the built environment
in a very innovative way so we can maximize the availability
and access to affordable units.................................
And I would go so far as to say if you look at using technology
as a means of decreasing costs and increasing affordability--..
Mr. Sherman. The Japanese have been very innovative in the use of
technology so that people can live well in a smaller space, and
I would rather be living in a small Japanese unit than living
in the park in Rosita or Konoba Park or Granada Hills or
Sherman Oaks...................................................
Mr. Lawson, you mentioned the importance--and we had to blindside
you with this question, so, I am going to ask you to give me an
answer for the record--the importance of these impact fees. See
what lower impact fees, that takes money away from the city
where you are building. I want you to explore with your
organization, lobbying our State governments so that the sales
tax on everything that goes into a unit goes to the city where
the unit is being built, not where the builder's headquarters
is located, not where the warehouse store is located, but where
it is being built..............................................
Because, if you want to lower impacts fee from cities, you are
going to have to backfill some at least some of that, now, that
is not going to solve the whole problem. We are probably
talking hundreds of dollars of units and you are talking
thousands, but your testimony indicates that by every few
hundred dollars we reduce the cost to building a unit, we can
get a few more families affordable.............................
I do have a question for you, one last question, how do these
impact fees affect affordable and market-rate units? Are they
different for a luxury building than for an affordable
building?......................................................
Mr. Lawson. I will take that last question. First, the impact
fees are typically assessed on a per unit or per bedroom or per
bathroom basis based on the load on the public facilities. And
I can say in one jurisdiction where I built both low-income
housing tax credit units and luxury townhome units, for the tax
credit units, I was paying about $11,000 per unit just for the
right to break ground..........................................
Chairwoman Waters. The gentleman from Florida, Mr. Posey, is now
recognized for 5 minutes.......................................
Mr. Posey. Thank you very much, Madam Chairwoman, and Ranking
Member McHenry, for holding this important hearing. Making
housing affordable is an objective I share with members of this
committee. However, housing is truly not infrastructure like we
consider roads and bridges, I don't believe....................
Housing has historically been provided by the private market and
differs from roads and bridges where public provision has been
relied upon because markets can't always provide the relief
these facilities provide in an efficient way. Therefore, I
think it is important to think about housing as a private good
that we take a public interest in that we make provisions for
the market to make sure people have access to housing as a
fundamental need...............................................
In the context of housing market supply, supply conditions are
really important. If housing is restricted by unnecessary use
regulations and other non-value-added regulations, that raises
the price of public housing obviously, then, the price of all
housing rises and not only for new housing but for existing
housing........................................................
When we drive up demand without addressing the cost of building
housing, we may be actually making housing less affordable
because we drive up the price across the board. That is why it
was pointed out at our first affordable housing committee
hearing the role of local land use regulations in restricting
supply in driving up prices....................................
I introduced, and with this committee's help passed, an amendment
in the committee to provide incentives for local communities to
ease restrictions on land use to help increase the supply. I
think that a carrot is probably better than a stick. And one of
the fundamental challenges that we face today obviously is
creating affordable multifamily housing or apartments. Changing
demographics seem to drive that need...........................
While none of us would support development of any housing that is
free of reasonable, prudent, and healthful building codes, we
must ask ourselves if we can make housing affordable in a
regulatory environment that pushes up cost to this extent.
Costs stem from what many consider as excessive standards. For
example, a survey respondent to the study conducted by the
National Multifamily Housing Council and the National
Association of Home Builders estimates that recent changes to
the international and energy conservation code have the
potential to drive up costs by much more than the savings in
the utility bills. And I hope we can all agree that does not
help those living in affordable housing at all.................
And, Madam Chairwoman, I would ask unanimous consent to enter
this survey into the record. As we move forward on affordable
and fair housing, I hope members of the committee will join me
in keeping a laser focus on opportunities to offer supply side
solutions that make housing truly affordable...................
My first question is for Mr. Carter. America's housing markets
are changing just as our population is changing more broadly.
For example, rentership has remained at historic highs since
the financial crisis. Our millennials, the largest generation
since the baby boomers, are entering the workforce and choosing
a lifestyle and the flexibility it affords over home ownership.
How can we update and improve housing policy to reflect the needs
of Americans now and in the future?............................
Mr. Carter. Well, I will give you--thank you very much for that
question. One very quick example that I think could move the
needle as low hanging fruit, when I go to many of our
communities, I go at night and just look at the parking. And we
have a lot of empty spaces and simply put, with ride sharing
and other things and Uber, we don't have as many cars at our
communities and I think many of our parking requirements are
outdated.......................................................
And if I could take the land on some of my communities and add
more apartments, it would be a great thing, but that is just
one innovation which has changed with the change in driving....
Mr. Posey. Well, that was one of the suggestions offered at a
hearing that the Chair called on homelessness, requiring two
parking places for a homeless person. I mean, if they don't a
home, the odds are they don't own two cars. It is just common
sense..........................................................
According to Harvard's Joint Center for Housing Studies, in 2015,
more than one-in-four renter households, approximately 11.1
million, paid more than half of their income in rental housing.
Please share with the committee your specific examples of the
ways in which the Federal Government can update our policies to
provide a better--.............................................
Chairwoman Waters. The gentleman from Missouri, Mr. Clay, the
Chair of our Subcommittee on Housing, Community Development,
and Insurance, is recognized for 5 minutes.....................
Mr. Clay. Thank you, Madam Chairwoman............................
Ms. Yentel and Ms. Todman, a question for you, I know you can't
see me. These two are in front of me...........................
Ms. Yentel. We can see you, Congressman..........................
Mr. Clay. All right. But the last comprehensive infrastructure
spending package was the American Recovery and Reinvestment Act
of 2009 which acknowledged the importance of affordable housing
as part of our national infrastructure and provided $4 billion
to address public housing capital needs........................
I understand those firms generated an additional $12.5 billion in
economic activity. With such a successful precedent, the recent
history in mind, would you agree that investing in public
housing should be a vital component of any future
infrastructure spending package?...............................
Ms. Todman. I could not agree more, Congressman, and that is the
basis of my testimony today. I would also add to that that
housing authorities across the country--all 3,000 of them--not
only spent that money quickly but spent it well................
And of the $4 billion, $3 billion was given out via formula, and
the other $1 billion was given out to support green retrofits
and other energy efficiency projects for very low-income
housing products, and they did a great job. The industry stood
up, and that is why I feel very confident, having run a housing
authority in the past myself, that this industry is prepared
and ready for an infusion of dollars to really deal with the
backlog of capital needs that they have........................
Mr. Clay. Thank you..............................................
Ms. Yentel?......................................................
Ms. Yentel. I agree and I would just add on that certainly
affordable housing investments belong in an infrastructure
spending package just like roads and bridges. Our country's
affordable housing infrastructure is a long-term asset that
assists with families and communities in thriving. It creates
jobs. It lifts local economies.................................
So, certainly, investments in an infrastructure package should
include our affordable housing infrastructure..................
Mr. Clay. As a follow-up question, how do you think the RAD
program works for public housing authorities? Have you seen any
successes?.....................................................
Ms. Todman. I will say that over the past decades, because of the
Federal disinvestment, housing authorities had to rely on all
the tools in the toolkit and RAD became a recent tool. And I
think we have reached over 110,000 units that have converted
into the RAD program. RAD is simply just converting the asset
from one program inside of HUD to another program inside of
HUD. It creates, not just some regulatory relief but also
creates stability by leveraging private funds to do the capital
improvements that are needed...................................
There have been a number of very successful RAD experiences
across the country. I will lift up the El Paso housing
authority and the Austin housing authority--...................
Mr. Clay. Yes....................................................
Ms. Todman. --which have done extraordinary jobs in terms of
using RAD to improve the units that they own...................
Mr. Clay. Great..................................................
Ms. Yentel. I would just add to that that RAD is an important
innovation and there are PHAs that are using it for its purpose
and to their advantage in order to leverage private dollars to
invest in the capital need repairs of public housing...........
But we should also note that: one, for many public housing units,
RAD will not be feasible, because the finances just don't work
given the level of repairs that are necessary; and two, often
when we talk about private investments going into public
housing repairs through the RAD program, they are not often
actually private. There are other public resources like HOME
dollars or CDBG dollars or low-income housing tax credit
equity.........................................................
And while it is good and important to be able to use those funds
to repair public housing, those dollars could be used for their
intended purposes of building new homes affordable for low- and
very low-income people. So, where we to instead invest in the
capital repair dollars for public housing on its own, it would
free up those resources to do what they were intended to do,
which is build, to be additive, to be creating additional
affordable housing units.......................................
Mr. Clay. Okay. Thank you........................................
Mr. Carter or Mr. Lawson, any thoughts on RAD?...................
Mr. Carter. Well, one thought is that RAD is administered through
public housing authorities, and as a company, we deal with
about 45 of them and they are all different and they all have
various capabilities. And so, that is one of the challenges
with the fact that many of HUD's programs are administered
through public housing authorities and there are 4,000 of them
and they have varying levels of ability to execute.............
Mr. Clay. Thank you. I yield back................................
Chairwoman Waters. The gentleman from Missouri, Mr. Luetkemeyer,
is recognized for 5 minutes....................................
Mr. Luetkemeyer. Thank you, Madam Chairwoman.....................
Good morning, ladies and gentlemen. A recent study by the
National Multifamily Housing Council and the National
Association of Home Builders, which Mr. Lawson and Mr. Carter
represent this morning, found that an average of 32 percent of
multifamily development costs are attributable to complying
with State, local, and Federal regulations.....................
That is very concerning to me, and this morning, I want to talk a
little bit about some of the bank regulations that could be
causing the ability of individuals to have access to funds and
restricting their ability to those funds, what they may have...
Mr. Lawson, you represent the National Association of Home
Builders. And back in December, we had--I was Chair of the
Financial Institutions Subcommittee and we had a hearing, and a
representative from your association appeared and testified,
and I asked the question with regards to the increased cost and
what kind of effect it would have on people with regards to
access to credit...............................................
And he said--and we since have found it on your website--that
apparently for every $1,000 increase in the cost of a home
loan, 100,000 people no longer have access to credit and
therefore have no ability to own a home, the American Dream.
And so, I am very concerned because with the new FASB rule, the
regulation called CECL that is causing home mortgage folks to
assess the risk of their home mortgage portfolio and change the
way they reserve is going to have a dramatic effect on homes
being able to be built or purchased which is going to have--and
especially on low- and moderate-income folks, is going to have
a dramatic effect on those folks...............................
I have talked to the new Director of FHFA and he is trying to get
us some numbers. So, my question to you this morning is, have
you looked at CECL and the effect it may have on the totality
of the home mortgage business across the country?..............
Mr. Lawson. I cannot say I can speak personally about the
specifics of CECL, but I will say that obviously the mortgage
business, the mortgage origination business has changed very
dramatically over the last several years.......................
In fact, many companies that have been stalwarts in that business
simply decided to get out of the business. That decreases
competition and will therefore raise costs which cost to the
consumer meaning less affordability, and less home building....
Mr. Luetkemeyer. Mr. Carter, you represent the Multifamily
Housing Council. Have you looked at CECL and what effect it may
have on multifamily housing availability?......................
Mr. Carter. No, I have not. We have spent a little bit more time
looking for instance, at CRA--.................................
Mr. Luetkemeyer. Yes.............................................
Mr. Carter. --which certainly has an impact on our business
because we have a number of investors that are banks that
invest through CRA via the fact that it fits within their
affordability requirements.....................................
And so, we would like to see more modernization of that, because
some of the rules of CRA are outdated. The other thing is that
we operate sort of proprietary equity funds that we have to
register now with the SEC as a result of the Dodd-Frank Act,
which probably adds another 10 percent to our cost when we
launch a new fund..............................................
Mr. Luetkemeyer. Have you done a number or a study to show how
much increased costs restrict the ability of people to finance
or go out and build multifamily housing? Have you done any
studies on that, see where the cost line is so that at a
certain point, people no longer can afford to build a
multifamily housing?...........................................
Mr. Lawson?......................................................
Mr. Lawson. I can't say that we draw a line in the sand, but that
is what we do every day, is we are drawing lines based on the
moving variables that the variables go up and down every day.
Interest rates or one of those costs and all of these other
things, rents we can charge, so, any movement there reduces,
any upward movement reduces affordability......................
Mr. Luetkemeyer. Okay............................................
Mr. Carter, you helped segue into my next question with regards
to CRA. To me, it is concerning. The original intent is
worthwhile and it did a good job for a number of years. Now, it
is sort of becoming antiquated. It is kind of outdated with the
ways things are working today. Can you give me some ideas,
because you have already started down that path of things you
would like see different with the modernization of CRA?........
Mr. Carter. Well, many of the CRA regulations for banks are based
on kind of the old branch banking system and assessment
districts. And when you look for instance at Internet banking
where it comes from anywhere, everywhere, we think one of the
things which would be helpful would be to modernize and to
focus on the activity of what gets invested as opposed to
where..........................................................
Mr. Luetkemeyer. Interesting. Thank you very much................
I yield back.....................................................
Chairwoman Waters. Thank you.....................................
The gentleman from Georgia, Mr. Scott, is recognized for 5
minutes........................................................
Mr. Scott. Thank you very much, Madam Chairwoman.................
This is a very timely and very interesting hearing, but let me
start with this. I want to ask each of you how can we even
begin to intelligently address these housing infrastructure
needs particularly as it affects middle- and lower-income
people when the Trump Administration is proposing to zero out
the budget of the one major instrument that we have to address
this, which is the community development block grants program..
Now, if we don't put that on the table and if we don't put
pressure on this Administration to cut it out, it is insane.
All of us realize that this is at the core a financial problem.
It is a money problem. And when you have Dr. Ben Carson, I
respect him, but every time he comes before the committee, I
ask him, why and how...........................................
Now, I would like for each of you to give us your indication,
particularly Ms. Todman and Mr. Lawson. This is a financial
issue. This requires money, and here, you have the Trump
Administration wanting to cut out and zero out $8.2 billion at
this great need when one of the fastest growing groups that
need it are our veterans. How cruel can you be?................
So, tell us. How can we intelligently deal with this? Does it
upset you all the way it should?...............................
Ms. Todman. Well, yes, thank you, Congressman. I think that
everybody here at the table will agree that the White House's
proposal was less than ideal when it came to infusing funds
into the affordable housing programs...........................
Our members rely on CDBG, HOME, and the Capital Fund and, we have
been disappointed year after year to see that those programs
have been zero-funded. But we have been thrilled that this
Congress has done the right thing and come back and seen what
the needs are at the local level and the national level. We are
hoping that will happen again during the 2020 budget cycle. We
were very excited about what happened in 2018 and 2019, also...
I think that this issue requires a sense of leadership. It
requires leadership at every level, that is why we are excited
to be here and see the chairwoman exhibiting leadership and
having this conversation. And so, while these proposals zero
out important programs for localities, we look to this Congress
to do the right thing..........................................
Mr. Scott. All right.............................................
Mr. Lawson?......................................................
Mr. Lawson. Yes. Great question. NAHB, of course, opposes the
zeroing out of the CDBG as well as the HOME. Those are
important resources. They are not all the resources. We need
more resources obviously.......................................
While it is not under the jurisdiction of this committee, the Low
Income Housing Tax Credit is probably the most fundamental
resource for creating affordable housing. We certainly oppose
that. It is a financial issue and we should do everything in
our power as an industry to preserve the funding...............
I think this issue is gaining a lot more traction and a lot more
attention nationwide. I know it is locally in the areas where I
work, so that is a positive sign...............................
Mr. Scott. Very good.............................................
Mr. Carter and Ms. Yentel?.......................................
Ms. Yentel. Yes. If I could, thank you. We share your concern and
your outrage over the proposed cuts that go much deeper and
broader than eliminating CDBG. The Administration would
eliminate the National Housing Trust Fund, would eliminate
public housing capital repair dollars at a time when there is
such a substantial need........................................
Like Ms. Todman, we are pleased that Congress has not only
rejected those proposals but actually increased spending by 10
percent for the first time in many, many years. This is an
important first step, but we have a long way to go to make up
for decades of disinvestment in these programs.................
And we are still under the very tight spending caps required
under the Budget Control Act, which is why it is so important
to look for opportunities outside the appropriations process to
invest in affordable housing like through an infrastructure
spending package, through GSE reform, and through other
methods........................................................
Mr. Scott. Mr. Carter?...........................................
Mr. Carter. The quick answer is we will invest private money if
we can get more private money if we can get more obstacles
reduced........................................................
Mr. Scott. Thank you, Madam Chairwoman...........................
Chairwoman Waters. The gentleman from Michigan, Mr. Huizenga, is
recognized for 5 minutes.......................................
Mr. Huizenga. I appreciate that, Madam Chairwoman, and I would
like to welcome the witnesses..................................
My family has had a long history in home building and
construction. My family was one of the founding families of our
local home builders association. I still own our third
generation sand and gravel operation. A cousin owns our ready
mix concrete company, all small businesses.....................
But we have had the opportunity to provide hundreds of dwellings.
And we have looked at multifamily housing as well. And one of
the concerns that we have had is working with local
municipalities to try to keep those costs down. We have a real
issue in West Michigan with workforce affordability and trying
to make sure that we can provide quality opportunities for
people to live in or rent......................................
We battle this notion all the time. And back when I was selling
real estate full time, we had to battle one of our local cities
who had a great idea which was to do set asides for affordable
housing. The one lone housing development though in the city
had a minimum lot size requirement of 100 by 150, 15,000 square
feet. And houses, they wanted then to have affordable housing
put on those. And it just wasn't functional....................
They also were making a proposal to retroactively go back into
rental units and put in hard sprinkling, not even smoke
detectors, sprinkling systems. And they had no concept about
what this would actually cost or what it would do for rents
because it all looked great on paper. But there is a detachment
from reality...................................................
And Mr. Lawson and Mr. Carter, I am curious, I don't want to just
curse the darkness, I do want to light a candle on this, and I
am curious if you can provide maybe some of those candles. What
have some of those local businesses or, I'm sorry, local
governmental agencies done to help affordability rather than
hinder affordability?..........................................
Mr. Carter. The one thing I would point out is that one of the
issues that we have talked a lot about is the cost those things
add. But I think what we sometimes miss is the additional risk
that the process makes for the project.........................
The fact that particularly in California, which is my current
home State; I grew up in your home State--.....................
Mr. Huizenga. I won't make you point to your hand where you are
from...........................................................
Mr. Carter. Okay. I was over here................................
Mr. Huizenga. Okay. I am over here so--..........................
Mr. Carter. But the problem in many municipalities across the
country particularly in--and California is one of them where we
are based, is that it may take 3 to 10 years before you know
the final zoning approval of what you are getting and whether
you are going to have 200 units or 300 units, and you may in
that time period spend $3 million to $10 million of risk
without knowing the economics of the projects..................
Mr. Huizenga. Just so we can figure out the math, does that make
it cheaper if you can put 300 units in versus 200?.............
Mr. Carter. Yes, 300.............................................
Mr. Huizenga. Okay. Let us just make sure, because we sometimes
lose sight of that in Washington. And I think that goes back to
what my friend from California, Mr. Sherman, was talking about.
The phrase he used was, ``The rent is too damn high.'' Well,
sometimes the costs are too damn high, right?..................
And how do you make sure that it is not just materials. It is the
process. It is the development cost. It is that time value of
money for anyone in the private sector that is going to do
this, and we cannot just simply point this over the government
at all times...................................................
Mr. Lawson, I want to give you an opportunity to answer as well,
to light the candle............................................
Mr. Lawson. Yes, sir. I appreciate that. You clearly feel our
pain, so thank you for that. I think one of the discussions we
had earlier about creating incentives for local municipalities
to streamline the process or to make their zoning less
exclusionary...................................................
One of the things in the industry that or one of the things many
municipalities have taken up is inclusionary zoning and
mandatory inclusionary zoning. I oppose that. I think it should
be voluntary. There should be an economic quid pro quo between
that, so that it doesn't simply become a tax on the market rate
units in a community...........................................
And that would be density bonuses, fee waivers; all sorts of
incentives can be created......................................
Mr. Huizenga. And this notion of mixed use is something that
seems to be lost as well. And having the ability to have
different incomes all in the same area, maybe not with the same
lot size like my city back in the district was trying to do....
But if you change and vary the lot size, you could actually make
it more affordable to have those families have that
opportunity....................................................
So with that, I yield back.......................................
Mr. Lawson. Absolutely...........................................
Chairwoman Waters. The gentleman from Missouri, Mr. Cleaver, the
Chair of our Subcommittee on National Security, International
Development, and Monetary Policy, is recognized for 5 minutes..
Mr. Cleaver. Thank you, Madam Chairwoman.........................
I was in my home State of Texas this past weekend. So, I got up
yesterday morning, drove 26 miles from the Renaissance downtown
Dallas to the place where I was born, Waxahachie, a little
community of about 12,000......................................
I drove from my maternal grandmother's home, gone, to my grandma
Gardner's home, gone. I went to my paternal grandfather's home,
gone, Aunt Edna's house, gone, little town, all you see is just
vacant land....................................................
And I couldn't help but wonder the same thing I wondered about
Capitol Hill. I moved here 14 years ago to Capitol Hill. And it
was a rather homogenous neighborhood and now you have to hunt
down Black people. If you walk from my apartment right across
the street from the Supreme Court to the Eastern Market-- I was
trying to count Black people as I walked a couple of weeks ago,
and I saw two, on a nice sunny day.............................
And I think about the new stadium, human beings used to live down
there, I wonder where all those people, wonder where all those
people are in little Waxahachie, I wonder where all those
people are who used to live on Capitol Hill, all gone. I was in
San Francisco this past August, staying with some friends, my
wife and I. And we were driving around and our host said the
Black/Brown population in San Francisco has dropped now to
about 2 percent because they can't afford to live there........
So, I asked Barbara Lee, ``Are they moving over to Oakland?'' She
said, ``Well, they were, but the price of homes now in Oakland
are rising to the level they were in San Francisco, so they
have left Oakland.'' And I asked, ``Well, did they go to
Richmond?'' She said, ``We don't know where they are going.''..
Have you guys wondered where they are going? You are in the
housing business, can you tell me where they are going?
Anybody?.......................................................
Ms. Todman. Congressman, I think that that is the value of this
conversation today. If you look at the public housing portfolio
across the country, it is important to make sure that it is
preserved for years to come, otherwise the people who live
there--brown, black or otherwise--will also be gone because
those units have not been preserved............................
But it also speaks to the importance of balancing market forces
with the intervention of government to make smart choices for
the community. And when we do that, we can see that there are
certain tactics that are put in play to preserve, not just the
small businesses that were there during the difficult times and
who should thrive during the robust times, but also for
families who live in unsubsidized affordable housing, what we
call Naturally Occurring Affordable Housing to be able to stay
in communities as well.........................................
I am a strong believer in what market forces can do, but I also
believe it takes leadership inside of the public policy space
to make sure that what you are describing doesn't continue to
be an issue throughout the country.............................
Mr. Cleaver. Yes. It is a major issue. Let me get this out to
make sure I get it said. And that is it is not just the urban
areas. I don't think people realize because it is a little more
convenient to believe it is an urban problem, but it is worse
in the rural areas.............................................
I have been working on a housing project in a little town called
Marshall, Missouri, now for 3 years. It is very difficult, the
builder said they can't build the housing, this is the Midwest,
for under $125,000. So, we are virtually at a standstill.......
But the new problem that just cropped up that you may or may be
aware of is the tariffs. The tariffs that were imposed on
countries like China are hurting in housing because the price
of everything is rising. They closed down a nail factory in my
State. So, anything from nails to granite countertops, the
price is rising. And we had a dramatic drop in new housing
starts last March. Affordable housing just stopped because the
cost is rising so high.........................................
Anyway, take it from there, Mr. Lawson...........................
Mr. Lawson. That is the eternal challenge for us as practitioners
in every aspect of affordable housing, home building, anything,
we are constantly, constantly assessing our costs and fighting
against that, trying to find new resources, hence I think the
discussion today. If we could find a reasonable way to lower--.
Mr. Cleaver. It is a national emergency..........................
Chairwoman Waters. The gentleman from Wisconsin, Mr. Duffy, is
recognized for 5 minutes.......................................
Mr. Duffy. Thank you, Madam Chairwoman...........................
I think what is unique about this hearing is that we agree we
have a problem, a problem exists with affordable housing in
America. And now the question becomes, how do we find the right
solutions to address that problem, and I don't know that I
would agree that a blank check approach is the only approach we
could have to making sure housing works for our families and
our communities................................................
And I would agree with Mr. Cleaver that there are different
problems in different parts of the country and in our cities
and in rural America, I think we have different and unique
problems that face those kinds of communities and all should be
addressed......................................................
But I want to go to maybe Mr. Carter. You said you do some work
in Southern California?........................................
Mr. Carter. Yes, sir.............................................
Mr. Duffy. Could you lay out for us some of the challenges that
you face with zoning and regulation as you try to do projects
in Southern California?........................................
Mr. Carter. Well, I think the first one is density, how big will
it be because that obviously drives the economics of the
project, is density. And I think the second is--...............
Mr. Duffy. When you say density, when you are trying to get
approvals, is that a problem, the density of your project?.....
Mr. Carter. Yes, whether it is 200 units or 150 units, obviously,
the more density, we could make it cheaper per unit. And then
the push back is well, you are going to add more people and
there is more mitigation that you have to do with roads and
things like that. So, it is a back and forth process...........
Mr. Duffy. But finding that sweet spot of getting the right
density to get the right price for the most people is an
important consideration........................................
Mr. Carter. Yes, sir.............................................
Mr. Duffy. And maybe just stick on that point before you give me
the layout of some other things for us, obviously, we have a
crisis in Southern California, and specifically in Los Angeles,
that the Chair has talked about. There is a homelessness
problem in L.A. that we have to address and I have heard her on
that point. And she is a great advocate for the homeless.......
But if we could make housing more affordable, that could
potentially reduce the number of people who can't afford homes
and are on the streets. And so, do those leaders in L.A.
partner with you and clear the way and cut the red tape to
allow you to do more of your projects to drive down the cost of
housing and serve more people?.................................
Mr. Carter. Many try and a lot of what we are able to succeed at
in many places like Los Angeles and around the country are
preservation of older properties that have, potentially are
falling out of the housing supply because they need renovation.
And so, we generally--.........................................
Mr. Duffy. Is this the dense supply or is this like single
family?........................................................
Mr. Carter. No. This would be an existing apartment community
that might have some challenges and is rundown that we acquire
and renovate. And I think the gentleman who--the point about
displacement, one of the things that we try to do in our
investments is to retain 75 to 80 percent of the existing
residents when we do an acquisition and a rehab, because we
have found--the other thing that we found that the model of
mixed income communities really work...........................
And that is one of the things we have to figure out how to do
where we are not segregating low-income people all in one
place..........................................................
Mr. Duffy. So maybe beyond the land cost and maybe the labor cost
is that no more expensive to build in L.A. compared to other
parts of the country that you work in because of rules and
regulations or they are pretty good on rules and regulations
that is only in L.A.?..........................................
Mr. Carter. No. I would say the cost. We have two properties that
we are working at right now. It is similar spec. One is
$500,000 a unit to build. We are looking at it in the State of
Michigan and it is $250,000....................................
Mr. Duffy. So, half the price....................................
Mr. Carter. Yes..................................................
Mr. Duffy. And I guess that is my point. And if those costs come
to bear on the zoning and regulatory side in the local
communities, and those same local communities are having
problems with homelessness and affordable housing, don't we
start to say, Hey, Congress, you guys might have to spend more
money. But shouldn't we also be putting pressure on local
communities to say streamline this stuff so we can help you fix
your problem...................................................
Mr. Carter. Absolutely...........................................
Mr. Duffy. Right?................................................
Ms. Yentel. Congressman Duffy, can I respond to that as well?....
Mr. Duffy. Sure..................................................
Ms. Yentel. So, absolutely, I agree that we have to look at
zoning and land use regulations that are driving up the cost of
any type of housing or even prohibiting any kind of multifamily
housing from being built which is raising costs for everyone.
That is a central piece of the puzzle to solving the housing
crisis.........................................................
Even were we to do so when we do so, I think we already heard our
colleagues from the home builders, we have heard economists and
others agree that those homeless households that you referenced
in L.A. will not find housing that is affordable to them. So,
while we have to do what we can to eliminate restrictive
zoning, lower costs for everybody, that affordability will not
trickle down to the lowest-income households. For them,
government subsidy, government intervention is essential.......
Mr. Duffy. But making sure we can have affordable houses,
affordable housing for more people--...........................
Ms. Yentel. It is all part of the spectrum, absolutely...........
Mr. Duffy. Make sure we have less people who are on the streets.
And so, I agree with you. But my point is this has to be a
holistic approach..............................................
And I was going to get to Ms. Todman because in her testimony she
cited a study that actually references back to the cost of
regulation in these projects. And, again, I am about, what are
the dollars, what are the regulations, how do we look at this
in the 21st Century with new data, new information and a new
vision?........................................................
I yield back.....................................................
Chairwoman Waters. The gentleman from Florida, Mr. Lawson, is
recognized for 5 minutes.......................................
Mr. Lawson of Florida. Thank you, Madam Chairwoman, and I thank
all of the witnesses. Welcome to the committee. I have never
heard my name called so much in committee. I have been tempted
to ask a lot of questions when they called on Mr. Lawson. Thank
you............................................................
My question is in terms of public housing and I might be a little
off, and maybe Mr. Lawson, or anyone can help me, with the new
millennium group that live in housing area or place, is it
possible in this legislation that we have to create a portion
of the rent going into what I would consider as housing IRAs so
that you can move individuals from public housing into
homeownership? And maybe I might be a little bit off on that,
but Mr. Lawson, Mr. Carter, anyone can come in. I want to know
whether that is possible.......................................
Mr. Lawson. I don't have specific information on that but I know
that those programs do exist where a portion of the rent is set
aside for down payment assistance and other things. Perhaps Ms.
Todman and Ms. Yentel could speak to that......................
Ms. Todman. What Mr. Lawson is referring to, one particular tool
that housing authorities use is the Family Self-Sufficiency
(FSS) Program which allows households to increase their income
as they get a job or a better job, and the net new rent that
would occur because of their increased income is placed into an
escrow account by the housing authority, or in some cases these
days private affordable housing providers......................
And as that escrow grows, FSS participants will be able to use it
as a down payment towards a home or other family goals. So,
that tool does exist and it is a very powerful tool. It is not
spoken of a lot, but Family Self-Sufficiency is probably one of
the best resources to helping families move up and out of
public housing and the voucher program, that exist today.......
Mr. Lawson of Florida. Would anyone else like to answer? Mr.
Carter?........................................................
Mr. Carter. One of the things that we do with some of our banking
partners is we do financial literacy programs in many apartment
communities. And one of the things that we have learned and
particularly in affordable housing communities is that if we
noticed for instance people are paying with a cashier's check
or cash, that means they are doing check-cashing...............
And if you could just get them into the banking system, the
standard banking system, you have given them a 5 to 10 percent
raise, because they are not paying those check-cashing fees.
And so, the other thing that I wish, my wish for renters is
more rental stability such that people who have paid their rent
get that reflected into their credit score so they can
eventually buy a house.........................................
Right now, from what I see, that rental credit history doesn't
seem to move the needle as much in the credit scoring as other
things so--....................................................
Mr. Lawson of Florida. Ms. Yentel?...............................
Ms. Yentel. Yes. Thank you.......................................
So, the Family Self-Sufficiency Program is very important and it
does exactly what you are suggesting. And I think looking for
ways to assist low-income residents who are able to reach
homeownership, we should. But we should also recognize that the
vast majority of residents in the public housing program that
you mentioned specifically, the vast majority of them are
seniors, they are people with disabilities, or they are people
in the labor force who are working very low wage jobs and the
kind of jobs where it is difficult to cobble together enough
hours in a week or in a month to make ends meet................
This will be an issue for the foreseeable future. So, as was
raised earlier, it is not just a housing issue; it is a wage
issue. The Department of Labor projects jobs to have the
greatest growth and 7 out of 10 of the jobs that are projected
to have the greatest growth over the next 10 years pay less
than what it costs to rent a one-bedroom apartment.............
So, the problem is not just that people aren't working hard
enough, it is that jobs don't pay enough to cover the cost of
rising rents...................................................
Mr. Lawson of Florida. Okay. I am about out of time..............
But I want to thank these groups like Millennium and so forth
that take these housing projects and they don't reinvest into--
Ms. Todman, can you tell me, should that be a part of this
legislation to make them more accountable?.....................
Ms. Todman. And which groups are you referring to, sir?..........
Mr. Lawson of Florida. Different groups that have the housing,
Federal housing programs where they get dilapidated............
Ms. Todman. Right................................................
Mr. Lawson of Florida. And I guess I yield back..................
Chairwoman Waters. Thank you.....................................
The gentleman from Ohio, Mr. Stivers, is recognized for 5
minutes........................................................
Mr. Stivers. Thank you, Madam Chairwoman. I appreciate your
holding this hearing on a very important topic. And one of the
provisions in the draft legislation that I want to address that
I think is a follow-up on what Mr. Duffy talked about is, and I
think it merits consideration, I think it is a great idea is
that in the builder supervision that would reward community
development block grant recipients with additional funding if
they demonstrate they are eliminating or reducing impact fees..
And while I do think impact fees can be used for positive things
like making sure sewer lines and other infrastructure are in
place for growing communities, I suspect that in some
instances, city planners and city policymakers have used such
fees to make the economics of development too high.............
My first question for Mr. Carter and Mr. Lawson is, have you ever
seen a circumstance where impact fees made building affordable
housing too high?..............................................
Mr. Lawson, first................................................
Mr. Lawson. Yes. Absolutely. And in my earlier example, I was
noting a municipality in which I built both affordable housing
under the low income housing tax credit and market rate luxury
townhomes. The tax credit affordable apartments, that TAP and
impact fees were $11,000 per unit..............................
Mr. Stivers. Wow.................................................
Mr. Lawson. For the $325,000 town homes, the fee was $13,000 a
unit...........................................................
Mr. Stivers. So, a lot more for the affordable housing and really
changes the economics..........................................
Mr. Lawson. A lot more. Precisely................................
Mr. Stivers. Do you have a similar view, Mr. Carter?.............
Mr. Carter. Well, I would just maybe touch on a philosophy that
exists broadly both locally and even to programs at HUD. They
are disincentives and they are designed to catch the bad actors
if you will, in the sense of if you look at things like for
instance Section 8 housing which we have about half of our
inventory--....................................................
Mr. Stivers. I want to get to that in a second. Yes, keep moving.
Mr. Carter. But clearly, one of the things is that there needs to
be more incentives versus penalties. That is the--.............
Mr. Stivers. Thank you. That is great. The next thing I want to
cover is lawsuit abuse with regard to the Americans with
Disabilities Act and the Fair Housing Act, and while I support
the goals of both of those pieces of legislation, in many cases
there are folks, and I have seen examples in my district, who
have a sue and settle mentality that aren't interested in
fixing any of the violations. They are only interested in
pulling money out of the system................................
Mr. Lawson and Mr. Carter, I will start with Mr. Carter this
time, have you seen any examples of this frivolous legal
activity that actually increases the cost of affordable
housing?.......................................................
Mr. Carter. Not for us...........................................
Mr. Stivers. Not for you.........................................
Mr. Lawson, have you seen any of that?...........................
Mr. Lawson. We have experienced personally in our market and NAHB
for a long time has advocated for a safe harbor accessibility
provision where we have numerous different regulations that
come into play, and we are not always sure and our professional
consultants, our architects can't always say you are 100
percent fine if you do A, B, and C, that is a challenge........
Mr. Stivers. One of the things that I have pushed for is a right
to cure which would ensure violations get fixed and doesn't
make it about just money to these organizations. Since you have
seen some of this, Mr. Lawson, do you think a right to cure
would make affordable housing more affordable while still
living up to the ideals of the ADA and the Fair Housing Act?...
Mr. Lawson. Yes, I would agree...................................
Mr. Stivers. Thank you. One more question I have for Mr. Carter,
and you started to talk about it is, can you talk about what
could be done to make building managers more likely to
participate in HUD's Section 8 program?........................
Mr. Carter. It is to create consistent standards across public
housing authorities, that they have to do inspections within a
certain period of time and the like, but developing a set of
standards that are consistent because HUD deals with, again,
over I think it is 3,000 or 4,000 different public housing
authorities, consistency there. And, again, we deal with 45,
and one and 45 are very, very different........................
Mr. Stivers. So, Mr. Carter, what you are saying is owners of
apartments and building managers want consistency and certainty
across jurisdictions so that they can understand what they are
dealing with and that would make Section 8 housing more
attractive as an alternative or a way to get involved in
affordable housing.............................................
Mr. Carter. Yes, sir.............................................
Mr. Stivers. Thank you...........................................
Thank you, Madam Chairwoman, for holding this hearing. I yield
back the balance of my time....................................
Chairwoman Waters. You are so welcome............................
The gentleman from Guam, Mr. San Nicolas, is recognized for 5
minutes........................................................
Mr. San Nicolas. Thank you, Madam Chairwoman.....................
I have been listening very intently and I am finding a lot of
interesting connotations in the conversation. It sounds like in
the interest of trying to move forward this legislation to
provide funding for affordable housing, there is a resistance
or a hesitation to do so if we don't pursue deregulation
perhaps first..................................................
And I think that deregulating makes sense to a certain extent.
But I don't think we should be abdicating our responsibilities
to address the affordable housing crisis in this country. We
shouldn't be abdicating that responsibility to localities which
we do not have any jurisdiction over. I think that maybe
perhaps in our role, we can influence our respective districts
to address whatever is holding back the development
opportunities in the regulatory framework. But I think that we
need to stay focused on what our duties are here now with
respect to this particular piece of legislation................
And in the context of that, I wanted to talk about how--or
looking at, I think, two different arenas here, really, and we
are comparing them in ways that I don't think are very
accurate, at least not an accurate reflection of what we are
dealing with in those two particular areas.....................
Mr. Carter, your interest in the whole affordable housing arena
is focused on private capital and utilizing private capital to
address the public housing issues in this country..............
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. And in the earlier conversation, it was talked
about how your target range is about $7,000 to $20,000 as a
cost basis when it comes to rehabbing existing structures for
affordable housing purposes?...................................
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. And it was also mentioned in that conversation
that the $55,000 per unit cost that is going to be addressed in
this particular legislation is--well, it was intonated that it
was higher than what your costs are, but the whole purpose of
your operation is to pursue those kind of projects that have
the least amount of cost and the highest rate of return. Is
that correct?..................................................
Mr. Carter. I would say that those that have the appropriate risk
adjusted return, yes, sir......................................
Mr. San Nicolas. Okay............................................
Now, Ms. Todman, you represent the agencies?.....................
Ms. Todman. That is correct......................................
Mr. San Nicolas. And this $55,000 per unit public housing cost is
to address the agency concern..................................
Ms. Yentel, you spoke about how the agency rehabilitation issues
have been underfunded for decades..............................
Ms. Yentel. Yes..................................................
Mr. San Nicolas. And it has been cut off by as much as 50 percent
over the last almost 20 years..................................
Ms. Yentel. That is right........................................
Mr. San Nicolas. Now, I think that we can get the private sector
and the public sector to agree that when you defer maintenance
for that long, the cost to rehab those units increases
exponentially over time, is that correct?......................
Ms. Yentel. Yes, that is correct.................................
Mr. San Nicolas. And we have a consensus across the board on
that...........................................................
Mr. Carter. Yes, sir.............................................
Mr. San Nicolas. Okay. So the under-investment overall these
decades is I would argue a large cost component of why we are
talking about $55,000 per unit today as opposed to $7,000 or
$20,000 per unit for a private firm is able to go out and
almost pick and choose what projects to undertake. Is that
correct?.......................................................
Ms. Todman. Yes..................................................
Ms. Yentel. That is correct, sir.................................
Mr. San Nicolas. Do we have consensus on that across the board?..
Mr. Lawson. I would simply say that we may be comparing apples
and oranges in that case, because I think the level of capital
needs and the level of the deferral of maintenance in some of
the public housing portfolio would be much greater than that,
which Mr. Carter, than a property that Mr. Carter might be
buying.........................................................
Mr. San Nicolas. I am glad we are able to get that on the record
because I don't want us to--I think we are all on the same page
here. I think that we definitely need to support and deregulate
to allow for the private investment to continue to help meet
those demands, so we don't have to invest public money in the
areas where the private investment isn't going to flow toward..
I think that we will have to figure out how to find that happy
ying and yang here. I do want to talk about something that was
mentioned by my colleague, Mr. Sherman, about how rents are too
damn high and wages are too damn low...........................
And I think that, of course, that formula factors into the
equation when it comes down to affordable housing. Ms. Yentel,
you mentioned a single person with a disability relying on an
annual income of just over $10,000 from supplemental security
income as an example of inadequate income to meet housing
needs, is that correct?........................................
Ms. Yentel. Well, it's an example of an extremely low-income
household and they are the households who have the most severe
shortages for homes affordable and available to them, yes......
Mr. San Nicolas. Right. And so, I wanted to just kind of
reference that when I make this point here and that is that,
well, I know that your purposes are to advocate for housing in
particular, I think that because we just have so much crossover
here in the need for housing and the need for incomes that can
afford that housing, I would ask that your organizations begin
exploring the availability of their testimony to actually speak
towards income issues in this community........................
And one of them in particular, and I will end with this, is that
Guam is a territory does not get SSI. We don't even have that
$10,000. And I just wanted to close by asking across the board,
your organizations are national organizations, does that
include territorial data?......................................
Ms. Todman. Yes..................................................
Ms. Yentel. Where the data is available, yes.....................
Mr. San Nicolas. Great...........................................
Thank you very much, Madam Chairwoman. I yield back..............
Chairwoman Waters. Thank you.....................................
The gentleman from Colorado, Mr. Tipton, is recognized for 5
minutes........................................................
Mr. Tipton. Thank you, Madam Chairwoman. And I appreciate you
holding the hearing here today. I would like to be able to
describe a little bit of what we have in my district. We have
some resort communities that have developed building for a
specific clientele.............................................
But here is part of the challenge. The plans were not put in
place for the lower-income folks who are going to be the
workers who are going to be in those communities. We also have
a second challenge; they come from rural Colorado..............
We have the statistical information to be able to support that we
have a lower per capita income. However, some of the
regulations that are applied at the State level and even at the
local level as well are increasing some of those housing cost
that are making those homes less affordable....................
And I want to be very clear, a lot of the regulations happen to
be very good, to be able to have a fire alarm within your home,
carbon monoxide detectors, good ideas to be able to have those
but, Mr. Carter, you had mentioned earlier in your testimony
that you are dealing with six public housing agencies..........
You just mentioned 45 different regulators just a little bit ago
that you are having to be able to deal with. When we are
looking at the cost of an actual home or for a place for people
to be able to rent, how much is added on to the cost of those
units from the cost of regulations that the people have to be
able to pay?...................................................
Mr. Carter. We think 30 percent or more..........................
Mr. Tipton. And arguably some of those regulations are obviously
good to be able for the safety and soundness of the community..
Mr. Carter. Yes, sir.............................................
Mr. Tipton. Is there a better way when you were just describing
just when Mr. Stivers was questioning you that having to deal
with a variety of different folks in terms of the regulations,
does that increase your cost as well, with effectively one or
two or maybe even three stop shopping, would that be a better
way to be able to do business?.................................
Mr. Carter. Well, what I mentioned is we operate in affordable
housing communities with over 45 different public housing
agencies, so I have a team. I have a staff of 10 people who
just deal with our compliance issues...........................
Mr. Tipton. Ten people...........................................
Mr. Carter. Yes..................................................
Mr. Tipton. And so that does drive up the cost for people with
lower incomes to be able to get that type of housing...........
Mr. Carter. Yes, sir.............................................
Mr. Tipton. It seems to me, we are dealing with this from the
Federal end. If you were to make just an educated guess in
terms of some of the regulatory cost, is the heavier burden
from the Federal side or from the State and local sides?.......
Mr. Carter. State and local......................................
Mr. Tipton. State and local side.................................
Mr. Carter. Yes..................................................
Mr. Tipton. So, what is happening at the State and local level in
terms of creating affordable housing for people in those resort
communities, in areas with lower incomes is actually creating a
hardship on people?............................................
Mr. Carter. Yes, sir.............................................
Mr. Tipton. Great. So, do you have some ideas on how to best
address that?..................................................
Mr. Carter. Well, certainly, the area that you mentioned
specifically, in your district, I mean, we own a property in
Naples, Florida, which is a perfect example of a very high-end
community with a lot of resorts and then a lot of workforce
that has to support that.......................................
And I do think the low income housing tax credit is still the
best way to produce housing units for that segment in those
communities....................................................
Mr. Tipton. Great................................................
Mr. Lawson, do you have any comments on that?....................
Mr. Lawson. Yes. Obviously, there are a lot of things that affect
the cost but risk is very much one of those, and the State and
local regulatory processes are a big piece of that. It can
sometimes take us, as Mr. Carter said, years to get something
done...........................................................
Your investment is at risk that entire time. And to create more
certainty, to streamline that process sounds like a great idea.
I think we have discussed here, and other people have discussed
the idea of creating an incentive in order to streamline that
process. The incentive, the Federal incentive could perhaps
affect the State and local behavior............................
Mr. Tipton. Great. I appreciate your comments on this because it
is a multi-level issue that we have to be able to deal with
impacting people at home. And we do need to be cautious and
aware as well..................................................
There is no free literally in the world, be it a Federal
incentive there are going to be costs associated with that that
ultimately those same people that we are talking about who are
having a hard time maybe being able to make that mortgage or
that rent payment are going through taxes to be able to have to
assume some of that cost.......................................
Simplification, good streamlining which is what we do in the
private sector is something that I think is something that we
ought to be aspiring to. And again, Madam Chairwoman, I
appreciate you holding the hearing today.......................
Chairwoman Waters. Thank you.....................................
Mr. Tipton. I yield back.........................................
Chairwoman Waters. The gentlewoman from Michigan, Ms. Tlaib is
recognized for 5 minutes.......................................
Ms. Tlaib. Thank you, Madam Chairwoman...........................
The average price for homes in Detroit is $30,000, an affordable
rate for home buyers in my district. Despite this, since the
early 2000s, we saw more of a drop in Black homeownership than
any other State in the country.................................
Traditional banks are carrying out the very practices outlawed by
the Fair Housing Act, a 50-year-old law that banned racial
discrimination lending and refusing to offer mortgages for low-
income borrowers for less than $50,000.........................
Currently, the City has over 43,000 vacant homes. So Detroit,
unlike similar cities, has both an increase in demand and its
supply of housing stock. Ms. Yentel, can you talk about the
challenges buyers typically face when attempting to get smaller
mortgage loans?................................................
Ms. Yentel. Thank you for the question. And you are right to be
concerned. We share your concern about minority homeownership.
And in fact, today, as you mentioned, the numbers in Detroit
and beyond nationally, Black homeownership levels are lower
today than they were before the Fair Housing Act was enacted...
So clearly we have a long way to go and more to do to ensure that
access to credit becomes possible for historically underserved
communities. It is a place where Fannie Mae and Freddie Mac
play an important role and it is one of the reasons why we have
to ensure as we address comprehensive housing finance reform
that that access to credit for historically underserved
communities remains available..................................
Ms. Tlaib. Now, I am so glad you mentioned Fannie Mae and Freddie
Mac in that and their duty to serve efforts to preserve
affordable housing. How can we get them to facilitate financing
of smaller mortgages? What can we do as public servants and
Congress Members to push for that initiative?..................
Ms. Yentel. Well, I think duty to serve is an important
initiative and it is something that Fannie and Freddie--it is
relatively new. It is something that Fannie and Freddie are
starting and doing well........................................
It is requiring more thought and more initiative, more innovation
in serving historically underserved communities, including
renters in rural communities, including manufactured housing
residents......................................................
So, I think, one, ensuring that we retain duty to serve and
continue to allow for this innovation to happen and measure
what is working and what isn't, and then work to take to scale
the lessons that we learn from that............................
Ms. Tlaib. Thank you.............................................
Ms. Todman, what can be done under the Community Reinvestment Act
to ensure that banks are being properly examined by the Office
of the Comptroller of the Currency to receive the CRA credit?..
Ms. Todman. I think that oversight is important. And I believe we
should trust, but verify. And so, if there are situations--....
Ms. Tlaib. We do.................................................
Ms. Todman. --where our financial institutions have made
commitments, we need to make sure, at the local level, that
those commitments are kept to those areas that, but for
investment from financial institutions, certain community
amenities and housing improvement would not occur..............
And I look at programs like New Market Tax Credits as a program
available to financial institutions to infuse equity and
improve what is happening inside the community.................
Ms. Tlaib. Because residents in Detroit in the 13th Congressional
District are locked out of the traditional mortgage market,
they are often forced to borrow from nonbanking lending
institutions, even high rates of land contracts are just out of
control........................................................
Our other largest source of mortgage loans right now, which are
obviously outside of the purview of the Community Reinvestment
Act regulations, and this is something that I am increasingly
becoming more passionate about these kind of loopholes and the
need to update the CRA.........................................
Ms. Yentel, can you talk a bit about the risks that consumers are
faced with right now when borrowing from nonbanking
institutions?..................................................
Ms. Yentel. So, I have to be honest and say that is outside of my
area of expertise..............................................
Mr. Carter. But I would--first of all, I grew up in your
district, so I know it very well...............................
Ms. Tlaib. Then we are brother and sister now....................
Mr. Carter. Yes. I went to Cass Tech High School. But we actually
are involved in Detroit now in developing new apartments there.
And one of the things that we believe that part of--it is a
great objective to buy a home but quality rentals are needed
there as well..................................................
And we find that there is a lack of quality rentals and we are in
the process of developing a new property on the north end of
Detroit. And we think it is a great market--...................
Ms. Tlaib. Mr. Carter, what do you mean by quality rentals?
Because I have articles, they say rising rents, falling wages,
Detroit's poor face housing crisis. For some, the price is
just--.........................................................
Mr. Carter. We will have affordable apartments where we are
building.......................................................
Ms. Tlaib. But the definition of ``affordable,'' I'm sorry
gentlemen, maybe we can talk offline, but the definition of
affordable is the issue. And we need to really have a serious
conversation about that........................................
Chairwoman Waters. The gentleman from Kentucky, Mr. Barr, is
recognized for 5 minutes.......................................
Mr. Barr. Thank you, Madam Chairwoman, for holding this important
hearing........................................................
Mr. Carter, included with your testimony were some articles that
tell your story and the creative solutions that you have
offered and developed to improve the lives of tenants and
communities, and we are very impressed with your story and your
commitment to serving these communities........................
I wanted to ask about how we might attract more private capital
in the development of apartments in multi-family housing as
opposed to just always resorting to more taxpayer expenditures.
There are a lot of things that we can do, I think, to change the
way we do business in this country to attract private capital.
And one government program that actually, I think, does a
pretty good job of this is the RAD program.....................
Ms. Todman, I think you have may have testified about this
earlier. And I will get to that in a minute. But before we get
to that, could you expand a little bit on your testimony about
the changes to the--the retooling of the Community Reinvestment
Act that could really help in this regard?.....................
Mr. Carter. Well, I would say the first one would be that the old
assessment districts aren't necessarily aligned to where the
need is. And so, there are certain banks that say, well, I
can't invest there because my assessment district is here......
And the reality of it is it would be great if it is affordable
housing that serves an underserved market wherever it is, that
the banks get credit for.......................................
Mr. Barr. Let me ask also about your testimony about opportunity
zones. There are a lot of investors who are very interested in
this, but I think there is still some uncertainty with the
Treasury rollout...............................................
As you look at this--the tax bill opportunity zones--tell me how
opportunity zones are going to attract private capital? And are
the rules that you are seeing so far, are they positioned to
attract that private capital?..................................
Mr. Carter. I would say, yes. I think there was a big uncertainty
that came out of it last week. One of the issues though is the
challenge in developing new things and the timeframes are very,
very--the opportunity zone legislation requires that we get
things processed quickly where there is certainty as to what
fees and things are there, which doesn't exist today. And that
is where we have to get the--..................................
Mr. Barr. So maybe a message to the local governments is look at
those opportunity zones. Look at your local regulations and
match those up.................................................
Mr. Carter. Yes, sir.............................................
Mr. Barr. Now, that could really help super charge the
opportunity zones..............................................
Mr. Carter. Yes, sir.............................................
Mr. Barr. In my district, we have an outstanding community
leader, PG Peebles, who is the CEO of the Lexington Urban
League. And a city council member, also James Brown who is--
they both come to me and talk to me about the need for more
affordable housing and yet at the same time the problem of
gentrification.................................................
Can you talk a little bit about how we can do some of these
things, to invite more private capital, to revitalize
opportunity zones in other neighborhoods without the problem of
displacement?..................................................
Mr. Carter. Well, I think that is the key. We have to be
inclusive. We have to keep people who are there. And we have
to--to me, we have to add additional levels of income to a
community to make it viable....................................
I believe that a diversity of incomes will make a stronger
community. We own mixed income properties. I can tell you where
we range from 50 percent, 40 percent of AMI to market-rate
units. And those are some of our most successful communities...
Mr. Barr. Great..................................................
And Ms. Todman, back to you on RAD. The Lexington Housing
Authority is moving towards jurisdiction. They are doing some
great things, Austin Sims leads that agency. I don't know if
you know Austin................................................
Ms. Todman. Yes..................................................
Mr. Barr. But they are taking advantage of RAD...................
Ms. Todman. Yes..................................................
Mr. Barr. And RAD is a great opportunity to take all the
dilapidated public housing stock, invite private investment
which is great for those tenants, and convert those into
Project-Based Section 8........................................
To me, this sounds like a great way to both rehab our existing
public housing stock while at the same time save some taxpayer
dollars and invite more private capital in.....................
Ms. Todman. Sure. So Mr. Sims is a colleague of mine and he is
able to marry two programs, RAD and Moving to Work, to improve
his units. But that is sometimes unique to agencies like in
Lexington that have all of those tools in the tool kit. For a
fair amount of our members, RAD, as powerful a tool as it is
and as successful as it can be, it is not always a tool for all
agencies. And so, I think an infusion of capital funds will
help those agencies and for those who can use RAD and
capitalize on it, it is a tool for the future..................
Mr. Barr. Thank you. I yield back................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Massachusetts, Ms. Pressley, is recognized
for 5 minutes..................................................
Ms. Pressley. First, I want to say thank you, Chairwoman Waters,
for renewing this committee's sense of urgency around this
issue and framing the conversation to reflect the real gravity
of it..........................................................
In 2013, a National Infrastructure Protection Plan was released,
outlining 16 critical infrastructure sectors. Of the 16, not
one was housing or shelter. Just to be clear for the purposes
of the record, would the 4 of you indicate by a show of hands,
do you believe it is vital that we recognize our nation's
housing supply as critical infrastructure if we are serious
about addressing our current housing crisis?...................
[Show of hands.].................................................
Ms. Pressley. Let the record reflect--enthusiastic showing,thank
you. In cities across the country, including those in my
district, the Massachusetts Seventh, the housing supply lacks
both in quantity and quality...................................
In Cambridge, one housing property alone vacated 57 housing units
as a result of hazardous mold. Now, we know that multi-family
units and apartments house a large proportion of low-income
families, and while some are in good shape, many of these
buildings have deteriorated and do require significant
renovations....................................................
Unfortunately, these situations are plagued by split incentives
where owners see repairs more as sunken cost than as
investments in their properties................................
Mr. Carter, would you say that because of split incentive, many
building owners choose not to make these needed repairs and
many residents contend with poor and subpar housing conditions?
Mr. Carter. I would say that as an industry, I believe that, and
I know as a company, we focus on making those investments
because the most important thing to us is the safety and
wellness of our residents. So, we do make those investments and
we cure those situations.......................................
Ms. Pressley. Would anyone else like to comment before I move on?
Mr. Lawson?......................................................
Mr. Lawson. I would just say that within the industry--within any
industry there are good participants and there are bad
participants. And we all know that there is a small percentage,
I think, of landlords who do not keep up their building........
As an industry, we welcome our local codes officials putting
pressure. We think they should be even more aggressive.........
Ms. Pressley. Thank you. Reclaiming my time......................
Okay. Very good. When I served on the city council, I chaired the
Public Health Committee and we spoke often about the weathering
effect that we learned about through the Massachusetts
community health center where they surveyed low-income
residents in public housing about how bad did they think their
children's asthma rates were...................................
And they put it in like the 3 to 5 range but when they were
tested, they were actually at life-threatening risk, 8 to 10.
And so, we know that housing is a fundamental and critical
determinant of public health...................................
And repeated studies have shown this link between housing
stability and health outcomes. The current state of much of our
housing supply poses a literal hazard to families and
particularly children..........................................
One 2-year study by the Boston Housing Authority at the Mary
Ellen McCormick neighborhood found a 47 percent reduction rate
in asthma symptoms, asthma attacks, ER visits, and school
absences, when tenants moved out of older apartments into newly
renovated units................................................
This reality is no clearer than the story of a constituent of
mine, Angelo, who first came to the Boston Medical Center Grow
Clinic at 8-months-old but was the size of a 4-month old.......
He and his mom were living in an overcrowded apartment, sleeping
in the living room with a leaking ceiling, and infestations of
mice and cockroaches among other things. He developed allergies
and was so weak he could not raise his head up.................
Since then, as a result of moving into quality public housing, he
has now started to thrive, to gain weight, and to hit the
necessary developmental milestones to enroll in day care.......
Ms. Yentel, do you agree that housing is a critical determinant
of health?.....................................................
Ms. Yentel. Absolutely. And if I could add, I would say I think
you raised such an important point not only for the individual
costs to children and to families, but to the Federal
Government through inaction....................................
So, we are talking a lot about what are the benefits of a major
investment and infusion of funds to repair public housing and
build more? Inaction is expensive. We are paying for housing
instability and homelessness one way or another................
And as you raise, we are paying for it through increased health
costs. When people are affordably housed, their visits to
primary care physicians increase by 22 percent. Their visits to
the emergency room decrease by 18 percent. Medicaid costs fall
by 12 percent..................................................
There was a study in your backyard from Children's Health Watch
where a group of pediatricians in Boston found that over the
next 10 years, we will spend $111 billion in avoidable health
care costs because of housing instability and housing
insecurity.....................................................
Ms. Pressley. Yes. So one more time, just for the record, in your
opinion do you believe the current level of funding poses a
risk to the public health of our children and families?........
Ms. Yentel. I do. Yes............................................
Ms. Pressley. Thank you. And I yield back........................
Chairwoman Waters. Thank you.....................................
The gentleman from Texas, Mr. Williams is recognized for 5
minutes........................................................
Mr. Williams. Thank you, Madam Chairwoman. The chairwoman's draft
legislation cost for $92.1 billion for housing infrastructure.
This is double the entire budget of the Department of Housing
and Urban Development..........................................
I think the private sector which I am part of will have an
important role in solving an affordable housing issue, and I am
not convinced throwing this much money at a problem as the
government sometimes does will solve the underlying issues that
led us here in the first place.................................
So, Mr. Lawson, my first question to you is, what do you view as
the most effective way for the public and private sectors to
work together to help solve the affordable housing problem that
we have here in this country?..................................
Mr. Lawson. Again, while it's not under the jurisdiction of this
committee, I think the low income housing tax credit program
has been the most successful affordable housing program that
the country has ever created...................................
That works in conjunction, however, with a lot of funding, a lot
of programs that aren't under the jurisdiction of this
committee. I think the reason that the tax credit program works
so well is it marries the private sector discipline with the
public sector resource of the tax credits......................
And everyone has a responsibility. A responsibility of the
resident on one hand is to pay the rent and pay it on time. The
responsibility of the owner is to rent to income-qualified
people. If that doesn't happen then there are very serious
penalties at play..............................................
Mr. Williams. Thank you..........................................
Mr. Carter?......................................................
Mr. Carter. Yes, sir.............................................
Mr. Williams. Your LLC manages over 8,000 units in 12 States, as
we have heard today. This is a very impressive accomplishment.
You were able to find a free market solution to help solve the
affordable housing crisis......................................
And I think this is the beauty of capitalism. So before I
continue to my question, Mr. Carter, are you a capitalist or
are you a socialist?...........................................
Mr. Carter. Capitalist...........................................
Mr. Williams. Thank you very much. I appreciate that. Now, the
economy is strong. I think we would all agree with that. There
are more jobs than people looking and the economy grew at an
impressive rate, we found out, at 3.2 percent in the first
quarter of 2019, which surpassed almost every economist's
projection.....................................................
Mr. Carter, on page six of your testimony you talked about the
intersection of jobs, affordable housing, and infrastructure.
So can you please elaborate on what role jobs play in this
discussion?....................................................
Mr. Carter. Well, certainly, as we create jobs, for instance,
Amazon, people look at that and they see Jeff Bezos, but the
reality of it is that it creates lots of jobs for people who
make $40,000 to $50,000 a year in warehouses...................
And those are the people that we house. So that is, as we even
create technology jobs and things like that, there is a very,
very close relationship, jobs and the need for people to live
close by. In one of the areas that university towns, we own in
Boulder and also Poughkeepsie, New York, huge demand for people
that work at the universities..................................
Mr. Williams. Mr. Lawson, you mentioned in your testimony that
the shortage of housing units in low- and moderate-income
families reflects the market reality, not a lack of interest in
serving the population.........................................
We have heard testimony today that local policies have a
significant effect on construction prices of affordable housing
units. So my question would be from a Federal level, how can we
better get the numbers to reflect the market reality if we are
hindered by over-regulation at the local level?................
Mr. Lawson. I think we can create incentives for local
municipalities to streamline their regulations and to adopt
less restrictive land use policies. A lot of zoning ordinances
in suburban areas which is a lot of our--a lot of areas in
which I work, are by definition exclusionary. They are
excluding the least expensive home and apartment types.........
Mr. Williams. Okay. My last question to you, Mr. Carter, is to
piggyback off my previous question to Mr. Lawson. Your company
has found a way to make the numbers work and is operating in 12
different States, as we have said..............................
Studies have shown that local regulations can account for over 30
percent of the cost of development in renovation of the
apartment complex. And so, what are some of the unique
regulatory challenges that you are facing in development in
Southern California versus the one right outside my district in
Austin, Texas?.................................................
Mr. Carter. I would say that the environmental regulations are a
lot tougher in California than Texas. That is one. I would say
that the ability to get density is greater, is easier in Texas
than California................................................
Mr. Williams. And we have no personal income tax either in Texas.
Mr. Carter. Yes, sir.............................................
Mr. Williams. I yield back the rest of my time...................
Chairwoman Waters. Thank you very much...........................
The gentleman from Utah, Mr. McAdams, is recognized for 5
minutes........................................................
Mr. McAdams. Thank you, Madam Chairwoman, and thank you, all, for
being here today. As a former mayor myself, I worked on housing
issues on a daily basis. And we certainly struggled with many
of the same concerns that you all have raised in your
testimonies, that is how to incentivize affordable housing
development, and how to plan for development projects in a way
that made sense for communities, our schools, and our existing
infrastructure and how to do it financially....................
And planning for our existing infrastructure, integrating housing
with our infrastructure, that is the point I want to focus on
in my questions. So, Mr. Carter, in your written testimony, you
note that infrastructure and housing are linked in significant
ways...........................................................
You go on to note that contemporaneous consideration of housing
demands and infrastructure needs maximizes community benefit
and promotes efficiencies in transportation, land use, and
public works...................................................
In short, what I believe you are referring to is the need for
smart growth and thoughtful city planning, planning that links
jobs with housing and with infrastructure investments and not
to look at these as separate activities endeavors of their own
right but collectively how we are connecting people to the
opportunities that they desire to access.......................
Housing is linked to jobs, is linked to a transportation
infrastructure. So, Mr. Carter, can you elaborate on one point
that you are making in your testimony, how important it is to
link affordable housing development with infrastructure
investments and what benefits this can bring to those cities
and to those residents?........................................
Mr. Carter. Well, I think that the--thank you very much for that
question. That in the creation of jobs, I believe that in most
industries there is a diversity of different workers at
different salary levels which really reflect the need for
housing at a variety of different levels.......................
So, we have seen it with technology. People assume that every
tech worker is a millionaire, but the fact is there are a lot
who work in doing things at where they make--support staff, so
you need housing for those people as well......................
Mr. McAdams. And, Mr. Lawson, as a developer yourself, how does
access to transportation influence where you seek to put a
project? And how often are the cities you interact with trying
to link jobs and housing with their infrastructure investments?
Mr. Lawson. I think that is a great question, because I think we
can do a much better job of aligning our transportation and our
housing. And that has been a struggle, I can say in my
hometown. That has been a big struggle. It has been a political
struggle to the extent that we can, again, create positive
incentives for municipalities to align those to, I think the
outcome would be better........................................
Mr. McAdams. So this hearing today is about housing as
infrastructure. And I think that is right that housing is a
critical piece of infrastructure but I also think it is
important to note that a bus line or a transit line or a road
is part of our housing infrastructure..........................
That housing in a silo, people don't just live in the place of
their residence. They have to get to work. And so, connecting--
looking at housing not in a silo but as it relates to their
transportation choices, I think is important...................
So, I guess, I am curious if anyone on the panel has any
recommendations that we could pursue legislatively to
incentivize smarter housing growth strategies that ensure
affordable housing development has access to our transportation
resources, such as rail or bus.................................
Mr. Lawson. I think again, what we have talked about and I think
one of the other Congress Members here said that we give away a
lot of money for transportation to localities but we don't
require anything in return, perhaps this is an opportunity.....
Mr. McAdams. Okay. I think that gets at some of my concerns which
is as I have seen affordable housing projects come forward,
trying to make this pencil even with--tech and other incentives
is difficult...................................................
And so oftentimes, we find affordable housing on the land that is
less desirable, which means then once the housing is built the
residents have to have a car, have to have gas, have to walk
long distances to work and other unintended consequence of the
location and yet land next to our transit is more expensive but
maybe better capable of sustaining these developments and a
better quality of life for those residents and the development.
Ms. Todman. I would say I had the great joy of being in St.
George, Utah, for Utah's NAHRO chapter meeting and I was
impressed by the level of growth there, particularly from a
jobs perspective, but I have lots of questions about the low-
income individuals who are in those jobs and how they were able
to move around.................................................
Every city has their consolidated plan that they are to submit to
HUD to receive funds. I do believe that there is an intersect
between housing and transportation. Maybe that is someplace we
can look to to have localities coordinate......................
Mr. McAdams. Thank you. I am interested in that. And I yield
back...........................................................
Chairwoman Waters. Thank you.....................................
The gentleman from Georgia, Mr. Loudermilk, is recognized for 5
minutes........................................................
Mr. Loudermilk. Thank you, Madam Chairwoman. I appreciate the
panel and your testimony here today. Housing is something that
we are dealing with even in my district back in Georgia........
I met with one of our manufacturers recently and asked them what
is their number one issue? I anticipated trade or the economy,
which was growing, that their answer would be the labor
workforce......................................................
Then, they told me their number one concern is the lack of
starter single-family homes, because what they have seen is
there are numbers of people who could qualify for a mortgage
today, who couldn't 2 years ago, because of how strong the
economy is and how they are building the workforce.............
But there are no starter single-family homes for them to purchase
in our area, which is just surprising to me. But even with
that, with more people qualifying for homes, there are still a
lot of Americans for whom homeownership is out of reach for
various reasons................................................
I have worked with several of these nonprofits. One, Homes for
Vets, actually will build homes for disabled veterans and they
give them a zero interest mortgage going forward. They custom
build these homes. I have had the honor doing several ribbon
cuttings, but also in my home State of Georgia, one of the
largest nonprofits is Habitat for Humanity that actually will
build homes for those for whom homeownership is just out of
reach..........................................................
And as we are looking at some things we can do, there is one
thing that we could do this pretty simple to build it. It
actually passed unanimously out of this committee last Congress
and passed out of the House, unfortunately, it didn't go
anywhere in the Senate, that would provide some regulatory
relief for these nonprofits....................................
The TRID rule is making it more difficult for the nonprofits
because you have a 2,000-page regulation that organizations
like these have to comply with, which in many cases requires a
full-time compliance person and these are nonprofits and some
of them have just said it is not worth doing...................
It is too onerous for us to comply with such heavy-handed
regulations that were actually designed for large bank mortgage
companies. And so, the BUILD Act is what we introduced that
would basically allow these nonprofits to go back to the pre-
TRID reporting forms...........................................
Just those that make the zero percent mortgage loans, to allow
them to give them a little flexibility to go out and do more of
what they do, building these affordable homes or zero interest
mortgages for these low-income families........................
So, my question is really around that as, Ms. Yentel, can you
discuss the important role that these nonprofits play in the
nation's affordable housing arena?.............................
Ms. Yentel. I have to look more closely at the BUILD Act to get
back to you specifically on that. Nonprofits are an important
part of our country's affordable housing solution, whether they
are helping to provide low downpayment, no downpayment homes
for those who can afford them or whether they are developing
and operating rental housing for the lowest-income people......
Mr. Loudermilk. Yes. And that is really my question, what
important role do they play?...................................
Ms. Yentel. Yes..................................................
Mr. Loudermilk. And as I have seen, it is a very important role.
It is another piece of the larger puzzle.......................
Ms. Todman, should we be careful not to overregulate these
companies that, or these nonprofits that are there to provide a
service, especially with regulations that are geared toward the
huge, big, mega mortgage loan companies........................
Ms. Todman. I would speak to regulation in general and say that
when regulations exceed the tipping point of addressing health
and safety and have folks become paper shufflers in terms of
what their duties are, there is a monetized impact to that. I
do think we have to look very carefully at how regulations
impact housing affordability and whether you are able to have
new growth and preservation inside an overregulated
environment....................................................
Mr. Loudermilk. Thank you. I appreciate that.....................
Mr. Lawson, how do private sector home builders partner with
these nonprofits?..............................................
Mr. Lawson. We partner with a number of nonprofits, mostly on the
multi-family side within the context of the low income housing
tax credit program that our State creates incentives for. But I
think we do--what we should do is align incentives.............
We should not look at--we should look at the goal first and not
look at the taxability, yea or nay, of a particular
practitioner in the market. We should say what is the best
housing goal and let us create incentives for it...............
Mr. Loudermilk. Thank you. I appreciate that. And hopefully, we
can move this bill forward again in this Congress. I yield
back...........................................................
Chairwoman Waters. Thank you.....................................
The gentlewoman from Texas, Ms. Garcia, is recognized for 5
minutes........................................................
Ms. Garcia of Texas. Thank you, Madam Chairwoman, and first, I
know that you all have already talked about this, but I just
wanted to get it clearly on the record, because having grown up
poor in South Texas in a four-room only kitchen, no bathroom,
no living room house, I have seen what the need for housing was
then. And I have been a social worker and have visited many
homes like mine where there are 10 people and 10 children a
room, so you can imagine the crowded situation, I have visited
and they have same or similar conditions.......................
When I block walk some of my own neighborhoods now that still
exists now. So, housing shortage is not a new problem. It has
been around for a long time. And as much as we can say that
private industry will take care of it and that the markets will
take care of it, well, guess what? They really haven't. I think
it has helped but it really hasn't.............................
So, I just want to ask each one of you, just yes or no, do you
all agree that without some government involvement, the market
fails to develop any new low-income housing?...................
Ms. Yentel. Yes..................................................
Ms. Todman. Agreed...............................................
Mr. Lawson. I absolutely agree...................................
Mr. Carter. Agreed...............................................
Ms. Garcia of Texas. Agreed. Now, I was also a lawyer in the
housing section and my favorite T-shirt actually said,
``Housing for poor people, not profits.'' And Mr. Carter, you
probably would disagree with that and, Mr. Lawson, you probably
would too because you are here to make a profit................
But you still utilize some of the incentives that we have, right?
Mr. Carter. Yes, we do...........................................
Ms. Garcia of Texas. Right. So which one do you think works best?
And if you could just be brief because I still have one more
question?......................................................
Mr. Carter. I would say Section 8--Project Based Section 8 and
the low-income housing tax credit..............................
Mr. Lawson. I would say the tax credit because as I said before
it marries a public subsidy with the private sector discipline.
I think that public private venture is what creates the
sustainability long-term.......................................
Ms. Garcia of Texas. Okay........................................
And, Ms. Yentel, you talked about how there are different
strategies and different levels of poverty, and the one that we
really need different strategies for each, what can we really
do like a lot that I see in my district and it is still like
the house that I grew up in that is four rooms with--it may not
be 10 children for the one family. I was from a very large
family, but in fact it may be 10 children and 4 adults and it
is 2 or 3 different families living in them. And what can we do
to really reach the very poorest of the poor of America?.......
Ms. Yentel. Yes. Thank you for the question. The only segment of
the population for which there is an absolute shortage of homes
that are affordable and available to them are those extremely
low-income households..........................................
The National Housing Trust Fund Program is our country's newest
and most deeply targeted housing program. It was created and
designed precisely to meet this need. And at its current
funding level, 100 percent of the dollars go to build or
preserve apartments that are affordable to extremely low-income
households. The first year's allocation of $174 million has
resulted in about 1,900 units that have been developed that are
housing some of the country's most vulnerable people...........
A lot of the people that you are talking about are people who
would otherwise be living in severely overcrowded situations or
would be sleeping in shelters. The only challenge with that
program is that it is woefully underfunded compared to the
overwhelming need. So, an infrastructure spending package is an
ideal opportunity to increase investments in this important
program........................................................
Ms. Garcia of Texas. Right. I feel like the mayor back here who--
housing is just the first start, but you also have to include
the transportation and maybe wraparound services so that they
can be able to maintain the home and address all their needs...
So have you seen any strategies that really work by combining the
housing assistance with the wraparound services needed so that
someone can really get the lift up?............................
Ms. Yentel. Sure. Housing First is a good example of that and it
is the model that we use today to help end homelessness in
communities across the country. And while some people
experiencing homelessness or some extremely low-income renters
may have challenges in their lives that go beyond housing
affordability, until people are affordably housed, they can't
effectively address those other issues.........................
So the idea is first get people housed in homes that are decent,
safe, affordable, accessible, and then the wraparound services
can help them address the other issues in their lives, to
maintain those homes, to address accessibility issues, mental
health issues and beyond. But the home and living in a safe,
stable, affordable environment is essential to success in those
other areas....................................................
Ms. Garcia of Texas. Thank you. Thank you, Madam Chairwoman. I
yield back my time.............................................
Chairwoman Waters. Thank you. The gentleman from Ohio, Mr.
Davidson, is recognized for 5 minutes..........................
Mr. Davidson. Thank you, Madam Chairwoman. And I thank our
witnesses today for your expertise in the matters before us....
You know, affordable housing is important in every district. It
is certainly important in Ohio's 8th District. We have pockets
of great wealth, but we also have, right nearby, pockets where
people are struggling to find affordable housing...............
Our rural communities are, even though the net cost is fairly low
by national standards, struggling to find affordable housing.
And I just want to understand how, when we look at the ability
to afford housing, normally you would think income growth is
key. And when you look at the economy that we have been under
for the past couple of years and certainly the economy the
numbers look great, 3.2 percent GDP growth in the first
quarter, 3 percent personal disposable income..................
So that is the cash that you have to pay your bills with in the
household, that has gone up by 3 percent. And it is not always
where the GDP is going up and wages are going up. We have seen
the GDP go up and wages remain stagnant, so thankfully, both
trends are positive............................................
And I am finding it odd that as I look at our spending on Federal
housing subsidies, we are spending more money on poverty
assistance. We have a safety net and America values the safety
net, but you would think that as the economy heats up, as
people are more fully employed, more fully employed than they
have ever been in many of our communities and certainly by
demographics, record low levels of unemployment, yet we spend
more money on Federal housing subsidies, we are spending more
money with 3.8 percent unemployment than we were spending at 10
percent unemployment right after the Great Recession...........
Ms. Yentel, I will start with you, why would that be?............
Ms. Yentel. The economy is working well for some of the mostly
higher-income households. while lower-income earners, for them,
the economy hasn't gotten much better, because they don't have
stocks in the stock market--...................................
Mr. Davidson. No, wages are up. The wages are up for everybody...
Ms. Yentel. For the lowest-income people, wages have
predominantly been stagnant and are just now getting--.........
Mr. Davidson. That is true for the century. It is not true for
the past couple of years.......................................
Ms. Yentel. It is true and if we look at the jobs--..............
Mr. Davidson. It is not a debate. The time is mine. Ms. Todman?..
Ms. Todman. Yes. I would say that you have a lot of middle-class
families impacted by the Great Recession who are still catching
up in terms of their housing needs. They are only just
beginning to see the impact of the economic improvements that
you suggest....................................................
Another issue is just supply. We, as a country, are running into
a supply issue. It relates to the actual number of housing
being produced, which is why it is important to keep one
important supply, the public housing stock, and it is also
important for us to invest in other affordable housing units,
and it is important for us to encourage market-rate housing.
Supply is key to the cost of housing...........................
Mr. Davidson. Thank you for that. And the reality is, while wages
are going up, in the low-income portion, without some of the
programs that we talked about, there are challenges in meeting
the needs, because the market doesn't produce all of the
affordable housing without some of the incentives we have......
And as I go to Mr. Lawson and Mr. Carter, maybe you can highlight
each briefly some of the hurdles that you run into, maybe I'll
begin with Mr. Carter. We have all these programs. We spend
nearly $900 billion a year on poverty assistance, over 92
programs, some of them are duplicative. They all come with all
kinds of rules and barriers. What are a couple that you find
that would help you meet the needs better if you could get some
reform?........................................................
Mr. Carter. Thank you for the question. One is just the cost of
developing. And I just want to point out to your last question,
we were involved in a project in downtown San Francisco in
2001. It was $200,000 a unit to build at Mission Bay. Today, it
would cost $650,000 a unit to build............................
Mr. Davidson. Wow. Thank you. Mr. Lawson.........................
Mr. Lawson. Supply and demand, and the increase in construction
costs and the the scarcity of supply has driven housing costs
higher than the increases in incomes...........................
Mr. Davidson. Thank you. And as you look at the way some of the
programs work, here is a piece. Right. So even one of my
Democratic colleagues was speaking about one of his two
programs that he had been involved with as a former mayor and
one worked really efficiently, they would spend all the money.
The other one didn't, there was money trapped there because
there were a lot of rules......................................
As we look at that, the proposals will spend $92 billion more
with no reforms. I know most people won't spend an extra 200
bucks without expecting a better bang for the buck. And it is
just shameful that we are not talking more seriously about
reform.........................................................
My time has expired, and I yield back. Thank you.................
Chairwoman Waters. The gentlewoman from New York, Ms. Ocasio-
Cortez, is recognized for 5 minutes............................
Ms. Ocasio-Cortez. Thank you, Madam Chairwoman. Ms. Todman, would
you agree that if you try to make repairs to your home after 20
years of neglect, it would be much more expensive to repair at
the end of that 20 years than if you just invested in routine
maintenance?...................................................
Ms. Todman. Agreed. And my testimony speaks to that. There is a
chart that shows some of the longitudinal impact of non-
investment in the past several decades.........................
Ms. Ocasio-Cortez. And, Ms. Yentel, would you say that public
housing is part of our national infrastructure?................
Ms. Yentel. Yes, absolutely......................................
Ms. Ocasio-Cortez. Well, for more than 2 decades, the Federal
Government neglected to make the New York City Housing
Authority's (NYCHA's)developments--they failed to invest in
them for more than 400,000 New Yorkers. And so now we have
about 2 decades of complete neglect, and that bill for 2
decades of neglect is a lot bigger than if we had just invested
in that routine maintenance. Would you agree with that, Ms.
Yentel, Ms. Todman?............................................
Ms. Yentel. Agreed. I agree......................................
Ms. Todman. Yes, agreed..........................................
Ms. Ocasio-Cortez. So people just throw out the term $32 billion.
That is what is owed to New York City's Housing Authority
alone, $32 billion. But what does that $32 billion in neglect
look like?.....................................................
Well, we took up some stories from our district and it seems this
is what that $32 billion in neglect looks like. In one
apartment in the Bronx, sewage flows into an apartment when it
rains and water leaks through the roof. Children like Mikayla
Bonaparte have blood lead levels hitting 8 times the amount
that prompts Health Deaprtment action; 800 children under the
age of 6 living in NYCHA housing tested positive for high
levels of lead between 2012 and 2016 during the Federal
disinvestment period...........................................
While already in decay, Hurricane Sandy devastated many housing
developments whose boilers were located in the basement and
they already struggled, and continue to struggle with that
replacement. During the winter, residents have to open their
gas ovens to heat their apartments because the disinvestment
has prevented and tied the Housing Authority from being able
replace these heating systems..................................
People are going without hot water and heat during the
wintertime. In some cases, residents estimate heat in their
apartments began to falter over 10 years ago and they have to
make do with space heaters in the middle of the winter, and
other residents have to put up with the stench of pervasive
mold that triggers their asthma. Madam Chairwoman, I seek
unanimous consent to submit to the record multiple articles
from the New York Times highlighting each and every one of
these cases....................................................
Chairwoman Waters. Without objection, it is so ordered...........
Ms. Ocasio-Cortez. Thank you so much.............................
Ms. Yentel, do you believe that all of these horrific cases were
necessary? Or were they unnecessary in terms of the
government's disinvestment?....................................
Ms. Yentel. Well, certainly, those kind of health consequences
are unnecessary and shameful and a direct result of
disinvestment over decades into the repairs necessary to upkeep
those homes....................................................
Ms. Ocasio-Cortez. So it was completely unnecessary for these
kids to get lead in their blood. It was completely unnecessary
for these families to live through winter without heat. It was
completely unnecessary for these families and children to
breathe in mold. And we did it anyway, because we decided that
their lives and that their housing was not worthy of Federal
investment. Would you say that is correct?.....................
Ms. Yentel. I would. I would say that the funding that is
required to keep those homes at a decent, safe level have been
underfunded for decades, funding for public housing repairs to
repair all of those units that you are talking about were cut
in half over the years 2000 to 2016 and continue to be terribly
underfunded compared to the need...............................
Ms. Ocasio-Cortez. So this is what we did--......................
Ms. Yentel. It is fixable. It is all fixable.....................
Ms. Ocasio-Cortez. And as we thank you. And as we said, that this
and as people made excuses that these investments were
unaffordable and that there was no money, we exploded our
military budget. We expanded fossil fuel subsidies to oil and
gas companies, and we continue to provide tax cuts to
corporations and the exceedingly wealthy that didn't need them.
Yet at the same time, folks have the audacity to say that there
is no money for public housing and that it is that we can't
afford for children to have clean blood and clean water........
This is morally wrong and it is also fiscally unnecessary. I have
one last question. As we transition to the necessity of green
and clean energy, are there health benefits that are possible
here? Can we create jobs for folks in housing in that are
living in Housing Authority as we make that transition?........
Ms. Todman. Certainly. The Section 3 program is one that as we
look at the Capital Fund as the preservation tool, many housing
authorities will use Section 3 as a way to employ residents but
also there is--................................................
Chairwoman Waters. Time has expired..............................
Ms. Ocasio-Cortez. Thank you. Thank you very much................
Chairwoman Waters. The gentleman from North Carolina, Mr. Budd,
is recognized for 5 minutes....................................
Mr. Budd. Thank you, Madam Chairwoman, for yielding and, again,
for hosting this hearing. I want to start by highlighting the
role that the insurance industry plays as an investor and
supporter of American infrastructure projects. The U.S. Chamber
of Commerce Center for Capital Markets Competitiveness has an
excellent report summarizing this..............................
And, Madam Chairwoman, I ask unanimous to submit this into the
record.........................................................
Chairwoman Waters. Without objection, it is so ordered...........
Mr. Budd. Thank you. And to highlight some of the findings from
the Chamber's report, of the roughly $6 trillion in investment
assets held by insurers, about a trillion are held in municipal
securities that are issued to fund our roads, our schools, and
our hospitals, which, of course, is great infrastructure for
housing........................................................
Insurers also directly invest in infrastructure projects, having
provided $26 billion or 6 percent of all private infrastructure
investments in 2016 alone. Insurers also initiated 11 percent
of all commercial real estate loans in 2017 valued around $54
billion. These figures show that the insurance industry plays
an important and key role as an investor in American
infrastructure.................................................
So, Mr. Carter, I would like to ask you a question. I want to
talk about regulatory burden with you just for a moment.
According to the research from Hoyt Advisory Services
commissioned by the National Apartment Association and the
National Multifamily Housing Council, America needs to build
more than 4.6 million new apartment homes at a variety of price
points by the year 2030. So how can the Federal Government
partner with the private sector to better house our nation as
well as help this nation's infrastructure needs?...............
Mr. Carter. Well, I thank you very much for your question. I
think the first thing is to make it easier for private
investors to invest. You mentioned insurance companies, and
about 10 percent of our investors are insurance companies. And
the other important thing that people forget about the
insurance industry is it plays a huge role in insuring what we
do.............................................................
And so in terms of our properties and so over the last few years,
we have had challenges with hurricanes and windstorms, which
has also increased our operating expenses and that has impacted
affordability, but I would say making it easier for them to
invest in some of our apartment communities by eliminating some
of the regulatory challenges and some of the uncertainty.......
Mr. Budd. So eliminating regulatory challenges, any permitting
challenges that are slowing down projects, make it harder to
invest?........................................................
Mr. Carter. Yes. Again--and those roadblocks, they impact the
certainty of the viability of the project, when it will come
on. Again, in many places around the country, it is 3 to 10
years before you get final approval to get a project done......
Mr. Budd. Understood. Another question. Mr. Carter, a recent
study by the National Multifamily Housing Council and the
National Association of Home Builders found that on average, 32
percent of multi-family development costs are attributable to
the costs associated with complying with local, State, and
Federal regulation like we just talked about. Can you please
provide us with some examples of programs, practices, and
regulations at the Federal level that add to the cost of
housing? This really follows on the last one since you
mentioned regulation being an obstacle, if you can give us some
examples.......................................................
Mr. Carter. Well, one is parking. I think today, and I mentioned
earlier as society has evolved, I think the parking
requirements are based on where it used to be one car per
bedroom and people are driving less and there is other car-
sharing and things like that. And certainly more density, that
is the big thing. You know, being able to build more units.....
Mr. Budd. Mr. Lawson, with the same question, do you have some
more obstacles that you would like to talk about?..............
Mr. Lawson. Yes. Well, one example several years ago, we bought a
parcel of property, and we were going to build 96. Well, we
ended up only being able to build 96 apartment units on it,
affordable apartment units, because we found out there are
wetlands on this parcel that was miles from water or any other
tributaries or anything else. The regulations have changed the
indicative species for wetlands to include very common species
rendered this wet area wetlands, which then required mitigation
ended up costing about $150,000 and reducing what we could with
the property at the end of the day.............................
Mr. Budd. Understood. Environmental, parking lots, and I am sure
the list could go on. I appreciate your time, and, Madam
Chairwoman, I yield back.......................................
Chairwoman Waters. Thank you very much. The gentleman from
Illinois, Mr. Garcia, is recognized for 5 minutes..............
Mr. Garcia of Illinois. Thank you, Madam Chairwoman. And I would
like to thank all the panelists for their testimony and their
replies to questions asked. I would like to shine the spotlight
on the Chicago Metro region for a quick snapshot that I think
is informative nationally. I would like to ask a question
regarding the National Housing Trust Fund after sharing some
data with you about affordable housing in the Chicagoland area.
Ms. Yentel, according to your organization's analysis, there are
about 92,000-plus affordable and available rental homes in the
Chicago area, but about 326,000 extremely low-income renter
households. That is right, one of three households in Chicago,
less than one in three have access to affordable housing.......
DePaul University's Institute for Housing Studies found that in
Chicago's Logan Square community, for example, there was a 12
percent drop in the share of available affordable housing
between 2012 and 2014 and between 2015 and 2017. This enormous
lack of affordable housing is driving some troubling trends....
For example, some of the outcomes that this reality has produced
according to the Chicago Community Trust is that Chicago lost
about 100,000 African-American residents in the past 10 years.
Logan Square alone has lost over 20,000 Latino residents and
nearly 10,000 African-American residents in the past 15 years
alone. How can increased investment in the National Housing
Trust Fund help low-income communities stay in their homes?....
Ms. Yentel. Well, the National Housing Trust Fund program was
designed exactly to meet the need that you are describing very
well. And the need that you are describing exists in your
district. It exists in every congressional district whether
they are rural, suburban, or urban. The primary cause of the
affordable housing crisis we have today is the shortage of
homes affordable and available to the lowest-income people.....
The National Housing Trust Fund program at its current funding
level, all of the funding, all of the dollars go to States in
order for them to get the funds out to developers to build and
preserve apartments for the lowest-income people. So in your
State, there is a project that has been funded through the
first year's allocation of the Housing Trust Fund that is
serving homeless veterans. In other communities across the
country, Housing Trust Fund homes are housing people
experiencing homelessness, previously experiencing
homelessness, survivors of domestic violence, people who were
previously chronically homeless, and others of some of the most
vulnerable people in our country...............................
Mr. Garcia of Illinois. Thank you. Transit-oriented development:
The Chicago City Council 5 years ago passed an ordinance
encouraging transit-oriented development. I believe in
improving transportation and mobility for neighborhoods. That
is a major reason why just last week, I was in Logan Square to
support a proposed 100-unit affordable housing development next
to a transit station, the Chicago Transit Authority............
However, we know that development when done incorrectly in
Chicago can lead to gentrification, displacement, and racially
inequitable outcomes. Since Chicago's council passed its
transit-oriented development, several developments have gone
up, but only one is currently available. How do we prioritize
and provide resources for equitable transit-oriented
development projects that will maintain diverse communities in
the full sense of the word like Logan Square?..................
Ms. Yentel. Right. It is a great question. Thank you. And so
transit-oriented development is a really important part of the
solution, ensuring that we have density in homes that have
access to transportation, good jobs, and with that often comes
increased investments in the community and gentrification. And
what we have to ensure is that there is not displacement as a
result of that gentrification..................................
Affordable housing is the key to that. Affordable homes that are
built and preserved in communities that are gentrifying become
the anchor that allows for long-time residents, low-income
residents, people of color, to remain and continue to afford
their homes as costs go up around them. So it is essential to
ensuring any kind of transit-oriented development project that
there are affordable homes, affordable to the lowest-income
people to allow those residents to remain......................
Mr. Garcia of Illinois. Thank you. Madam Chairwoman, I yield back
the rest of my 3 seconds.......................................
Chairwoman Waters. Thank you very much. The gentleman from
Tennessee, Mr. Kustoff, is recognized for 5 minutes............
Mr. Kustoff. Thank you, Madam Chairwoman. And I want to thank the
witnesses for appearing today. I looked at the clock, and it
has been almost 3 hours, and we appreciate all of your
testimony today. Mr. Carter, if I could with you first, in your
written testimony, you discussed the importance of the
community development block grants and how that can address the
shortage of affordable housing.................................
We had a hearing 2 or 3 weeks ago and we discussed in the hearing
about withholding the CDBG funding to local communities to
better incentivize and streamline the permitting process and
other policies that create barriers to development projects. I
know you likely support increased funding for these CDBG
projects, but do you believe that withholding these community
development block grant funds from communities would better
incentivize affordable housing in lane use policies?...........
Mr. Carter. Yes, I think that there should be incentives to
create a path of efficiency to make sure that we can get things
done...........................................................
Mr. Kustoff. Thank you very much. Ms. Yentel, as it relates to
the Community Development Block Grant Act of 1974, of course,
it used census data in the funding formula. It has created, I
think, anomalies within the dividing programs funding between
the most needy and least needy communities across the United
States. What I am talking about is formula B, which you may or
may not be familiar with; it allocates funding based on a share
of growth lag..................................................
It is pre-1940 housing and it is weighted at 50 times the
appropriation. Some of the older suburbs benefit greatly from
that pre-1940 data even though they may have relatively low
needs to their community. Are you familiar with the formula
process? And if so, do you have an opinion about whether the
formula itself needs to be updated?............................
Ms. Yentel. I am not familiar enough with that provision to speak
specifically to that, but I would say generally that the CDBG
formula would benefit from updating in order to assure that
resources go to the communities that most need those resources.
Mr. Kustoff. Thank you, Ms. Yentel. Ms. Todman, are you familiar
with the formula process? And if so, do you have an opinion
about the way it is allocated?.................................
Ms. Todman. I am not familiar with it. I would say though as it
relates to older suburbs, we should be very careful, because
there are a lot of lower-income neighbors who are moving out of
the urban core and into suburbs and ex-urbs because that is
where affordability exists. So I think we need to be careful as
we consider moving the antenna to look at the historic movement
of people in and out of the suburbs and the urban core.........
Mr. Kustoff. Thank you, Ms. Todman. Mr. Lawson, are you familiar
with the formula and about the pre-1940s way that it is
calculated?....................................................
Mr. Lawson. Unfortunately, no....................................
Mr. Kustoff. Okay. And you wouldn't have an opinion then?........
Mr. Lawson. No, sir..............................................
Mr. Kustoff. Mr. Carter, are you familiar with it?...............
Mr. Carter. No, sir..............................................
Mr. Kustoff. Okay. As it relates to my community, I represent
part of Memphis, Tennessee. There has been some questioning
about the linkage between access to public transportation and
to affordable housing. In my community, there have been some
news reports lately about how some of the commutes on public
transportation can take hours for the individuals to get from
where they live to where they work. Ms. Yentel, do you have an
opinion about what approaches this committee should consider or
could consider that would better align efficiencies for housing
needs and public transportation?...............................
Ms. Yentel. Well, I would say transit-oriented development is a
good way to achieve both, and the reason why people live so far
from where they work is because they are not able to find homes
that are affordable to them that are closer, and so it points
back to the shortage of homes for the lowest-income people and
the importance of investing in constructing and preserving more
homes that are affordable to them closer to where they work in
all communities................................................
Mr. Kustoff. Thank you. Ms. Todman, in my remaining time, do you
have any ideas about better aligning those needs?..............
Ms. Todman. I do think--having practiced at the local level as a
houser, I do think that there is a robust conversation that
should always be had between the planning department, housing
agencies, and also the transportation department, and to the
extent the Federal Government can infuse that conversation with
resources, I think we all will benefit from that...............
Mr. Kustoff. Thank you...........................................
Chairwoman Waters. The gentleman from Texas, Mr. Green, the Chair
of our Subcommittee on Oversight and Investigations, is
recognized for 5 minutes.......................................
Mr. Green. Thank you, Madam Chairwoman. And I thank the witnesses
for appearing as well. I am of the opinion, Madam Chairwoman,
that the infrastructure starts with housing, because all roads
lead to some home, some community where people dwell. Housing
is the necessity for people that creates the opportunity for
contractors and engineers to build infrastructure. So let us
not de-value the infrastructure of a home......................
And just for edification purposes, Mr. Carter, we have a bill,
H.R. 123, that does exactly what you called to our attention.
It is a pilot program, FHA, to allow rent, light bills, gas
bills, water bills, and phone bills to be scored, so that
people who probably could afford a home but for poor credit or
thin credit, will be able to do so. I was very pleased that you
brought this up. Would you just give an additional comment on
how this can be beneficial, please?............................
Mr. Carter. Well, I would like to start by saying that I do think
in this country we have a bias of homeowners versus renters,
and I don't believe that renters are often the given the credit
both in terms of their community standing as well as how credit
bureaus recognize their consistent payment of rent and utility
bills, and to me that is one philosophical thing that I think
that this country and certainly our organization believes that
renters have, they are an important part of this nation........
Mr. Green. Thank you. Quickly, let me ask this of all of you.
Assuming that there is waste, fraud, and abuse, and there is,
as a matter of fact, we have it in the military, but we always
increase the budget. We don't decide that because there is
waste, fraud, and abuse that we are not going to enhance the
military budget. But can this problem that we are confronting,
can it be solved without money? Do we have to have money to
solve the problem? Is that a necessary ingredient?.............
Mr. Carter. Yes..................................................
Ms. Yentel. We need funding, yes.................................
Mr. Green. Let the record reflect that all agree. Moving on, here
is what we are confronting. Some of my colleagues believe that
the poor can do more with less, but that the wealthy need more
to do more. It has been my experience that the poor can benefit
from more, too. And that sometimes it is just the luck of the
draw. You just weren't born in the right place, the right ZIP
code as we are now prognosticating. You weren't born in the
right family. You just didn't get the luck of the draw.........
And but for the grace of God, a President who had a tough time,
had to pull himself up by a $1 million dollar bootstrap, some
of us just don't get those kinds of bootstraps and have to
contend with receiving at the demise of our parents a legacy of
poverty, it is just the truth. So when I hear my colleagues
talk about how they want to include more people in the social
safety net, they want to make sure that more people can be
moved into various programs to help the homeless, but at the
same time won't increase the funding...........................
So what you are saying is more people, less money, because you
don't increase this funding, so you are expecting the people
who are getting the benefits to do more with less. I find that
quite intriguing and I am trying to be delicate with my
verbiage. Sometimes, my diction can be less than superb. My
final point is this: I think this $5 billion for the Housing
Trust Fund is absolutely needed, and I thank you, Madam
Chairwoman, for placing it in there. I yield back..............
Chairwoman Waters. Thank you. The gentleman from Ohio, Mr.
Gonzalez, is recognized for 5 minutes..........................
Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, for holding
this important hearing today...................................
I want to start by entering into the record this agreement dated
the 31st day of January 2019 between HUD and the New York City
Housing Authority and New York City............................
Chairwoman Waters. Without objection, it is so ordered...........
Mr. Gonzalez of Ohio. Thank you..................................
And this is a follow-up to my colleague from New York earlier,
who cited some of those New York Times articles................
I just want to read this. The complaint set forth the findings of
the United States investigation alleging among other things
that NYCHA had routinely failed to comply with lead-based paint
safety regulations, had failed to provide decent, safe, and
sanitary housing including with respect to the provision of
heat and elevators and the control and treatment of mold and
pests, and had repeatedly misled HUD through false statements
and deceptive practices........................................
In the next section, NYCHA made admissions regarding, among other
things, deficiencies in physical conditions with respect to
lead, mold, heating, elevators, and pests. Untrue statements to
HUD regarding the condition of NYCHA properties and NYCHA HUD
then declared that NYCHA is in substantial default. Ms. Yentel,
were you aware of this specific agreement?.....................
Ms. Yentel. Yes..................................................
Mr. Gonzalez of Ohio. You were, okay. Would you agree then based
on this that--I think it was suggested earlier that the Federal
Government is solely responsible for this specific challenge...
Do you agree that NYCHA bears some responsibility given that they
in fact admitted to it themselves?.............................
Ms. Yentel. Well, much of what you read there is them admitting
to deficiencies in conditions of units, broken elevators,
broken boilers, lack of heating, which is the result of decades
of lack of funding for NYCHA to support and redevelop those
properties.....................................................
Mr. Gonzalez of Ohio. So, again, whereas based on NYCHA's
misconduct as detailed in the complaint, the Secretary of HUD
declared that NYCHA is in substantial default, but moving on...
So switching gears, I want speak about a different type of
regulation. Mr. Carter, Mr. Lawson, you spoke quite well about
the importance and I think we actually agree on this, that
local and State regulations can have on the development of
properties, can hold you back, it can bring down supply
artificially...................................................
So I want to speak about a different type of regulation, and
those are the increases in regulation that have been proposed
by the Green New Deal, which I believe would mandate net zero
emissions for all buildings in the country. Mr. Lawson and Mr.
Carter, you both cited today 32 percent of costs to development
are due to regulations in multi-family units. Mr. Lawson, in
your testimony you said that when you do not build more
affordable housing, it is for two reasons: one, regulatory
cost; and two, lack of Federal subsidy. Speaking specifically
about the regulatory cost, what do you think being forced to
build at net zero emissions on all projects would do to those
costs? Mr. Lawson?.............................................
Mr. Lawson. I think it is unequivocal that the cost would go up
because that technology is not in standard use today...........
Mr. Gonzalez of Ohio. Significantly. Mr. Carter, do you feel the
same way?......................................................
Mr. Carter. In general, yes. Although I think it is important to
understand that when we acquire a property, we try to make it
more energy-efficient and we invest LED lighting and things
like that. And one of the reasons is that it lowers our
residents' monthly cost........................................
Mr. Gonzalez of Ohio. Right. And we all agree that we need to
improve in that regard, I think everybody in this room, but
this is something over and above that would add tremendous
cost. And see in my opinion, the reason why the Green New Deal
is such a bad idea and I really think it is it would be
devastating in my community. I live in Northeast Ohio, Ohio's
16th District, and I'm proud to represent Northeast Ohio, is
and you guys just discussed it, that the development cost would
move to such an astronomical level that we wouldn't be able to
build. We wouldn't be able to build affordable housing. And so
the way that would hit my community not just in affordable
housing but look at energy costs, we would have families making
real trade-offs between heating their homes and putting food on
the table. That is the cost of these regulations. We need to
talk about how do we remove barriers to development, which we
all know is important and everybody agrees on, not how can we
add an additional layer that is unrealistic that would price
low-income families completely out of the housing market. And
with that, I yield back........................................
Chairwoman Waters. Thank you. The gentlewoman from North
Carolina, Ms. Adams, is recognized for 5 minutes...............
Ms. Adams. Thank you, Madam Chairwoman. And thank you for holding
this important hearing. And to our witnesses, thank you for
your testimony today. Let me first direct this question to Mr.
Lawson and Mr. Carter. In my district, in the city of
Charlotte, North Carolina, the community development
organizations, many of them in the private sector, are working
together to tackle our local housing crisis and indeed it is a
crisis for us in Charlotte. Private investment in affordable
housing infrastructure is crucial, but do you agree that it is
difficult for private developers to create affordable housing
for the lowest-income households without the benefit of Federal
housing subsidies?.............................................
Mr. Lawson. Yes, I agree.........................................
Mr. Carter. I agree as well......................................
Ms. Adams. All right. Both of you, okay. Can you speak to the
importance of some of the key Federal housing programs that
help home builders create and reserve affordable housing?......
Mr. Lawson. Yes. The programs that help us create affordable
housing are absolutely key. As I said in my testimony,
affordable housing cannot be constructed without some form of
subsidy........................................................
Ms. Adams. Right.................................................
Mr. Lawson. That base subsidy is the low-income housing tax
credit. HOME funds are often used in conjunction with that
Project-based Section 8 and housing choice vouchers are also a
component in many of our communities...........................
Ms. Adams. Do you agree?.........................................
Mr. Carter. I agree..............................................
Ms. Adams. Okay. Let me ask all of you if you believe that
housing is a human right, just a yes or no.....................
Mr. Carter. Yes..................................................
Ms. Adams. Did everybody say yes?................................
Mr. Lawson. Yes..................................................
Ms. Adams. All right. We have unanimous agreement. Mr. Lawson,
Ms. Todman, the Trump Administration has proposed to zero out
critical HUD and USDA housing programs such as the community
development block grant program. From the development
perspective, why are these funds important to maintaining the
current affordable housing stock and increasing the supply of
affordable housing?............................................
Ms. Todman. I would say for two reasons. One, HOME dollars,
sometimes CDBG, are used as important gap financing tools to
pay for the cost of building a unit. I always say a unit costs
exactly what a unit will cost whether it is for somebody who is
middle-income versus somebody who is low-income. So it takes
money on the front end or the back end, by way of project-based
vouchers, to actually write down that cost for low-income
families.......................................................
So it is important from that regard, but it is also important in
preserving the housing that we have. And CDBG is used for that.
HOME is used for preservation tactics with private owners so
all of those programs are key for both preserving and building
new housing....................................................
Ms. Adams. Would you like to add something, Mr. Carter?..........
Mr. Lawson. Yes..................................................
Ms. Adams. Mr. Lawson, excuse me.................................
Mr. Lawson. I would simply agree that the HOME funds in
particular in a lot of cases are the gap funding, the piece of
funding that gets the property over the hump...................
Ms. Adams. Okay. Thank you. Ms. Todman, you represent a coalition
that includes several public housing agencies, can you describe
the severe shortage of public housing and Federal rental
assistance that your members see in the communities that they
serve?.........................................................
Ms. Todman. Certainly. Many of the communities I serve including,
I might add, some of the smaller and rural agencies, are seeing
increased demand on the resources that they have. There is
evidence that for every four people who can actually qualify
for affordable housing, there is only one family who actually
receives it. And our members see that across the country no
matter what their geographic area may be.......................
And that is not just in public housing, it is particularly in the
voucher program, which is larger than the public housing
program, and I will say probably a little bit more popular
because families have the opportunity to navigate communities.
The voucher program is entirely capped as well. There have not
been any net new vouchers in some time. While we are grateful
for the mobility demonstration, the need grows in lower- and
middle-income families. Our housing agencies are trying to meet
that need, but it is becoming harder every day.................
Ms. Adams. Great. Thank you very much, Madam Chairwoman. I yield
back...........................................................
Chairwoman Waters. Thank you very much. The gentleman from
Wisconsin, Mr. Steil, is recognized for 5 minutes..............
Mr. Steil. Thank you, Madam Chairwoman. And thank you for calling
today's hearing to discuss what is a really critical issue. I
want to focus in a little bit here as to how we lower the
actual underlying cost of housing. I think as we look across
the United States, we see a great diversity in the cost of
housing. You look at San Francisco, the average rent is roughly
$3,300; $3,200 in Los Angeles; approaching $3,000 in New York;
contrast that with Chicago, where the average rent is a little
bit below $1,700; or in the City of Racine in Southeast
Wisconsin, around $1,400 a month. That is a pretty significant
variation in housing. Mr. Carter, could you comment how cities
like Chicago are keeping housing costs low compared to say San
Francisco, Los Angeles, and New York?..........................
Mr. Carter. That is a very, very good question. I would say if
you look at specifically New York, and we operate in New York
and also in California, they are where you have the highest
land costs, the highest entitlement costs, and you have some
unique factors in California. You are dealing with seismic
issues and things like that. And actually in Chicago, it tends
to be flat and it is a little bit easier to build there........
The other thing I think that when you are looking at construction
costs, one of the things that has gained more acceptance in a
few other places are modular type factory-built components,
which seems to happen a little bit more in the Midwest than the
two coasts.....................................................
Mr. Steil. Is there a reason why you are seeing more modular
homes in the Midwest versus on the coast? Is that a local
regulation or is that--........................................
Mr. Carter. I think it is a combination of two things. One, it is
local regulation. Two, there are more people who produce those
components that are in the Midwest, so transportation is a big
part of having to ship them....................................
Mr. Steil. You commented earlier that there are higher
entitlement costs in certain areas that are impacting the cost
of housing. Can you comment on what you mean by that?..........
Mr. Carter. Well, the fact that when you look to build on a piece
of land, to build an apartment in California, it is maybe
$150,000 just for the land and maybe $50,000 of that would be
entitlement costs. And the price in the Midwest might be
$25,000 to $50,000.............................................
Mr. Steil. So going back now to kind of Southeast Wisconsin, less
of an urban area, what policies are you looking at that would
ultimately lower the cost of housing to make it more affordable
for people in those regions?...................................
Mr. Carter. I believe the one thing is to make sure that the
number one is greater density, because if we can get to greater
density, it reduces the cost per unit construction for
development....................................................
Mr. Steil. Thank you. And looking in particular at those average
rents, where roughly $3,200 is the average rent, somewhere in
the neighborhood in San Francisco, but you are providing rents
in the neighborhood of a thousand or average rents in Los
Angeles approaching $2,000, you are well below that in the
neighborhood of $1,100. What are you doing in particular that
is allowing you to keep those rent costs as low as you are?....
Mr. Carter. We are generally buying things that are existing
properties that we buy that we buy very, very well and we try
to do what we call smart renovations. We use synthetics as
countertops not marble. We resurface cabinets, we don't replace
them, but we try to do smart renovations to keep our costs at a
point where we could rent at those levels......................
Mr. Steil. So it is market-based decisions, you are analyzing,
you determine how you were able to keep your cost under
control........................................................
Mr. Carter. Yes. And many times we buy things in communities that
have been underserved by institutional capital that we make the
investment and we are able to buy perhaps a little cheaper than
in more desirable locations....................................
Mr. Steil. And as you are looking at some of those renovations,
how impactful are local codes that you need to meet in the
reconstruction of those buildings, does it impact on the
ultimate price on rent post-renovation?........................
Mr. Carter. It varies by locality................................
Mr. Steil. Okay. If you looked in particular at some of the
building regulations that you would see in the Green New Deal
and the impact that that would have on your ability to
provide--......................................................
Mr. Carter. I have not specifically looked at that...............
Mr. Steil. Thank you. I appreciate your time. I yield back my
time. Thank you................................................
Chairwoman Waters. Thank you very much. I would like to take a
moment to recognize a former Member of Congress who has been
with us today, Congresswoman Laura Richardson is in the
audience. Thank you for the time you have spent in our
committee today................................................
I would like to thank our witnesses for their testimony today....
The Chair notes that some Members may have additional questions
for this panel, which they may wish to submit in writing.
Without objection, the hearing record will remain open for 5
legislative days for Members to submit written questions to
these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.....................................................
And with that, this hearing is adjourned. Thank you..............
[Whereupon, at 1:29 p.m., the hearing was adjourned.]............
A P P E N D I X
April 30, 2019
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]