[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                     PERSISTENT POVERTY IN AMERICA:
                    ADDRESSING CHRONIC DISINVESTMENT
                    IN COLONIAS, THE SOUTHERN BLACK
                     BELT, AND THE U.S. TERRITORIES

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

                             HYBRID HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HOUSING,
                         COMMUNITY DEVELOPMENT,
                             AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 15, 2022

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-102
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
49-482 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   

                 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             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
CINDY AXNE, Iowa                     TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois                ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
RITCHIE TORRES, New York             BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts      LANCE GOODEN, Texas
ALMA ADAMS, North Carolina           WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan              VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania         PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                  Subcommittee on Housing, Community 
                       Development, and Insurance

                  EMANUEL CLEAVER, Missouri, Chairman

NYDIA M. VELAZQUEZ, New York         FRENCH HILL, Arkansas, Ranking 
BRAD SHERMAN, California                 Member
JOYCE BEATTY, Ohio                   BILL POSEY, Florida
AL GREEN, Texas                      BILL HUIZENGA, Michigan
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
CAROLYN B. MALONEY, New York         TREY HOLLINGSWORTH, Indiana
JUAN VARGAS, California              JOHN ROSE, Tennessee
AL LAWSON, Florida                   BRYAN STEIL, Wisconsin, Vice 
CINDY AXNE, Iowa, Vice Chair             Ranking Member
RITCHIE TORRES, New York             LANCE GOODEN, Texas
                                     VAN TAYLOR, Texas
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    November 15, 2022............................................     1
Appendix:
    November 15, 2022............................................    27

                               WITNESSES
                       Tuesday, November 15, 2022

Arriaga-Salinas, Amber, Assistant Executive Director, Proyecto 
  Azteca.........................................................     7
Bonilla, Yarimar, Director, Center for Puerto Rican Studies, 
  Hunter College.................................................     4
Burt, Kiyadh, Vice President of Policy & Advocacy and Interim 
  Director, Hope Policy Institute................................     6
George, Lance, Director of Research and Information, Housing 
  Assistance Council (HAC).......................................     8
Potterpin, Chris, President, Council for Affordable and Rural 
  Housing (CARH).................................................    10

                                APPENDIX

Prepared statements:
    Arriaga-Salinas, Amber.......................................    28
    Bonilla, Yarimar.............................................    37
    Burt, Kiyadh.................................................    46
    George, Lance................................................    58
    Potterpin, Chris.............................................    69

              Additional Material Submitted for the Record

Cleaver, Hon. Emanuel:
    Written statement of cdcb come dream.come build..............    77
Hill, Hon. French:
    GAO report, ``Targeting Federal Funds, Information on Funding 
      to Areas with Persistent or High Poverty,'' dated July 2020    81
    GAO report, ``Areas with High Poverty, Changing How the 10-
      20-30 Funding Formula is Applied Could Increase Impact in 
      Persistent-Poverty Counties,'' dated May 2021..............   151

 
                         PERSISTENT POVERTY IN
                          AMERICA: ADDRESSING
                        CHRONIC DISINVESTMENT IN
                         COLONIAS, THE SOUTHERN
                          BLACK BELT, AND THE
                            U.S. TERRITORIES

                              ----------                              


                       Tuesday, November 15, 2022

             U.S. House of Representatives,
                           Subcommittee on Housing,
                             Community Development,
                                     and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Emanuel Cleaver 
[chairman of the subcommittee] presiding.
    Members present: Representatives Cleaver, Velazquez, 
Beatty, Vargas, Torres; Hill, Posey, Huizenga, Rose, and 
Taylor.
    Ex officio present: Representative Waters.
    Chairman Cleaver. The Subcommittee on Housing and Community 
Development will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, members of the full Financial Services Committee who 
are not members of this subcommittee are authorized to 
participate in today's hearing.
    Today's hearing is entitled, ``Persistent Poverty in 
America: Addressing Chronic Disinvestment in Colonias, the 
Southern Black Belt, and the U.S. Territories.''
    I now recognize myself for 4 minutes for an opening 
statement.
    Persistent poverty is a major problem in this country. And 
in counties around the country, they have a rate of poverty 
that has exceeded 20 percent for 30 years or more in a row of 
the country's 377 persistent-poverty counties. The vast 
majority are in rural and non-metro areas.
    The millions of Americans grappling with persistent poverty 
are diverse. They are located in Appalachian communities in 
States like Tennessee and Kentucky; in Native American 
communities in States like South Dakota; in Latino communities 
in States like Texas; in African-American communities in States 
like South Carolina and Alabama; and in the U.S. Territories.
    These Americans--Americans--are represented in Congress by 
Democrats and Republicans, and by Democratic and Republican 
members of this committee. Addressing persistent poverty is in 
the interest of all Americans, regardless of geography, race, 
or political preference. And addressing persistent poverty is a 
significant challenge, despite flows in the economy. In good 
economic times and in bad, persistent-poverty areas of the 
country are struggling, resistant to time and effort.
    Democrats continue to advocate for rural America and the 
Territories. Under the leadership of Chairwoman Waters, the 
Financial Services Committee passed the Build Back Better Act, 
which would have made a historic level of investments in rural 
and persistent-poverty areas. The housing title of the bill 
would have specifically provided over $100 billion in fair and 
affordable housing investments throughout the United States. 
This would have included $2.1 billion for housing and 
homeownership preservation to increase the supply of housing 
and provide rental assistance in rural communities through the 
USDA, as well as $500 million for infrastructure improvements 
and manufactured housing communities, and $700 million for 
housing and community development investment in colonias, 
including those located outside of the 150-mile area from the 
United States-Mexican border, through the Community Development 
Block Grant (CDBG) program. Territories would have received a 
significant portion of these investments through required 
minimum allocations.
    I hope that this hearing will dive deeper into the 
financial solutions and the Federal solutions on this table and 
the full range of tools at our disposal.
    The Chair now recognizes the ranking member of the 
subcommittee, Mr. Hill, for 4 minutes.
    Mr. Hill. I want to thank the chairman. And I appreciate 
today's topic of the hearing, persistent poverty in America.
    This topic is certainly an important one, and it is a 
troubling one. According to the Census Bureau, the national 
poverty rate was 12.8 percent in 2021, with about 37 million 
people in our nation in poverty, up more than 3 million from 
the prior year.
    It might be hard for some to fathom that in a country so 
blessed with abundance, there are still so many places where 
poverty not only exists but where it has taken root and shows 
no sign of relenting. These places are remnants of a more 
forgotten time in America, before the economic boom that for 
many dominated the latter half of the 20th Century and carries 
on today.
    And despite the specificity of the title of today's 
hearing, these deeply-impoverished areas can, sadly, be found 
in all corners of our great nation: from the southeast counties 
of the Blue Grass State of Kentucky to the Native American 
Reservations of central South Dakota, western Alaska on the 
Bering seacoast, and in my home State of Arkansas.
    These places might not all look alike, but they do share at 
least one major characteristic: They are, for many purposes, 
all rural in nature, and for many, extremely so. So in a lot of 
ways what we are really talking about here today is the impact 
of poverty in rural America. And more of the pointed question 
we need to be asking is why does poverty seem to hit those 
living in the country with such a tremendous impact over those 
in impoverished urban areas, like the south Bronx or Detroit? I 
am not sure we will ever be able to answer that important 
question here today, but let me make a couple of observations.
    First, the high levels of poverty we see in these rural 
areas of our nation, despite 60 years of focused Federal 
efforts to eradicate them, continue. The Department of 
Agriculture's Rural Housing Service was created in 1949 to 
build or improve housing and essential community facilities in 
rural areas. That was followed in 1965 by HUD's efforts under 
urban renewal, and by Sergeant Shriver and the Commerce 
Department's Economic Development Administration (EDA), all to 
try to help economically-distressed areas and cities.
    In fact, if you go back to the launch of the Federal 
Government's 1960's war on poverty, President Johnson boldly 
proclaimed: ``We have declared an unconditional war on poverty; 
our objective is total victory; I believe that 30 years from 
now, Americans will look back on these 1960s as the time of a 
great American breakthrough towards victory of prosperity over 
poverty.'' Well, $22 trillion later, I am reminded of President 
Reagan's quip from 1988: ``President Johnson declared war on 
poverty, and poverty won.''
    These were lofty goals by President Johnson, but after 60 
years and hundreds of billions--as I say, $22 trillion in 
inflation adjusted spending, Big Government approaches to 
battling poverty have not worked for many rural households.
    It seems to me it is a great time to rethink this strategy 
as we try to tackle it. We can no longer define success by 
annual increases in funding levels for programs that fail to 
elevate families out of poverty. Instead, we should focus on 
what is likely to be the most effective way to combat it: 
greater development and deployment of economic opportunity, 
including broadband; better available education in these rural 
areas; private lending and investment; and job creation.
    I have seen that success in Arkansas, Mr. Chairman. One of 
the poorest counties in the First District of Arkansas, in the 
Mississippi Delta is now the world's largest producer of steel. 
And hundreds of people are employed, and that economic 
prosperity and that corridor from Memphis to the Missouri 
border is growing because of those kinds of investments.
    I thank my chairman for this hearing. I look forward to the 
discussion, and I yield back to him.
    Chairman Cleaver. The gentleman yields back.
    The Chair now recognizes the Chair of the full Committee on 
Financial Services, the Honorable Maxine Waters of California.
    Chairwoman Waters. Thank you very much, Mr. Cleaver, for 
this hearing.
    Over 1.7 million people in the U.S. live in rural counties 
experiencing persistent poverty. These rural communities face 
chronic disinvestment and population loss as housing, lending, 
and community development needs have gone ignored. We cannot 
continue to turn a blind eye, especially as inflation, driven 
in large part by rising housing costs nationwide, has 
exacerbated rural job loss, further entrenching persistent 
poverty in many communities.
    One year ago this month, the House passed the Build Back 
Better Act, which included historic investments for housing in 
rural America, but not one single Republican Member supported 
it. I hope we can build bipartisan support for efforts to 
invest in affordable housing, especially in rural areas, and to 
effectively reduce inflation. And I hope, as we go down this 
path for the future, that we can get some support from the 
Republicans.
    Thank you. I yield back.
    Chairman Cleaver. The chairwoman yields back.
    We will now turn to our witnesses: Yarimar Bonilla, the 
director of the Center for Puerto Rican Studies at Hunter 
College; Kiyadh Burt, the vice president of policy and advocacy 
and interim director at the Hope Policy Institute; Amber 
Arriaga-Salinas, the assistant executive director of Proyecto 
Azteca; Lance George, the director of research and information 
at the Housing Assistance Council; and Chris Potterpin, the 
president of the Council for Affordable and Rural Housing.
    Our witnesses are reminded that their oral testimony will 
be limited to 5 minutes. You should be able to see a timer that 
will indicate how much time you have left. I would ask that you 
be mindful of the timer so that we can be respectful of the 
other witnesses' and the committee members' time.
    And without objection, your written statements will be made 
a part of the record.
    Ms. Bonilla, you are now recognized for 5 minutes to give 
an oral presentation of your testimony.

STATEMENT OF YARIMAR BONILLA, DIRECTOR, CENTER FOR PUERTO RICAN 
                   STUDIES AT HUNTER COLLEGE

    Ms. Bonilla. Thank you.
    Good morning. My name is Yarimar Bonilla, and I am the 
director of the Center for Puerto Rican Studies at Hunter 
College, the largest research institute and archive devoted to 
the Puerto Rican experience. I am grateful for the invitation 
to testify today on the question of persistent poverty and 
chronic disinvestment in the U.S. Territories. Alhough, given 
the time limit and the data challenges, I will focus narrowly 
on Puerto Rico.
    When I gathered with my team to present this testimony, the 
first question we asked ourselves was, is persistent poverty 
really the right term for thinking about Puerto Rico's 
challenges?
    The U.S. Government has set 20 percent for 30 years as the 
trigger of an alarm, but the fact is that Puerto Rico's poverty 
rate has been twice that for over half a century. At 40.5 
percent, Puerto Rico has the second-highest poverty rate in the 
U.S., second only to American Samoa, and the absolute lowest 
median income of any U.S. jurisdiction.
    A full quarter of the Puerto Rican population subsists on 
just $10,000 a year. Some assume that these depressed incomes 
are tied to a lower cost of living, but the contrary is true. 
Rent, mortgage, and utility burdens are all higher in Puerto 
Rico than the national average.
    The U.S. Territories as a whole share these concerning 
metrics, leading us to ask whether this is really a question of 
persistent poverty, or rather, of the systemic poverty of 
empire.
    Sadly, those most impacted by poverty and inequality are 
Puerto Rico's children. A whopping 55 percent of Puerto Rican 
children are living in poverty, 60 percent in rural areas. It 
has been shown that the best way to attend [inaudible] is to 
ensure access to public infrastructure and services like 
education that facilitate upward mobility. However, in Puerto 
Rico, acute poverty rates have been met by a systemic 
disinvestment in public infrastructure due to austerity 
measures, leading to the closing of schools, the defunding of 
the university system, and the privatization of essential 
infrastructure, such as roads, tolls, and energy distribution.
    Since the privatization of the grid in 2021, outages have 
become commonplace, even as utility costs rise. This has 
impacted education, healthcare, communications, sales, and even 
the preparation of this testimony. Just yesterday, one of our 
researchers was among the hundreds of thousands without 
electricity due to yet another mass power outage.
    The toughest part of all of this is that those who fail to 
provide us with the most basic of services, services which 
arguably should be guaranteed human rights, seem to operate 
with complete impunity. Although many wring their hands and 
accept this as the unfortunate fate of life in the colonies, we 
remind the Members of Congress that the U.S. Constitution 
grants them the singular power to change the lives of millions 
of citizens and nationals who reside in the Territories.
    The U.S. Supreme Court has established that Congress has 
the power and authority to treat the Territories differently 
than the States. This has historically been interpreted as a 
congressional right to treat the Territories worse, by leaving 
them out of critical Federal programs while failing to address 
their systemically-depressed incomes. However, Congress could 
just as easily treat the Territories better, by attending to 
the demographic particularities and historic legacies of 
systemic dispossession.
    If the U.S. Government recognizes that a persistent poverty 
rate of over 20 percent for 3 decades warrants Federal action, 
we request that the committee ponder what is necessary to 
attend to communities that have had twice that rate for 
multiple generations.
    To begin, Congress must exercise its oversight role to 
critically examine the impact of the Fiscal Board it created. 
What has been the tangible impact and long-term consequences of 
the focus on austerity and privatization? Further, since the 
board conceded that a large portion of Puerto Rico's debt was 
unconstitutional, why is it forcing Puerto Ricans to pay it and 
refusing to have it audited? In addition, HUD and FEMA must be 
held accountable and work in better partnership with local 
watchdogs.
    Discrimination and excessive scrutiny of Puerto Rican 
agencies and applicants in the aftermath of Hurricane Maria had 
been widely documented and [inaudible] yet we already hear the 
same issues are unfolding in the wake of Hurricane Fiona.
    Lastly, Congress must address the exclusion of Puerto Rico 
and other U.S. Territories from Federal programs like SSI and 
other Federal benefits geared at precisely the most-
disadvantaged sectors of the population. Otherwise, it should 
speak clearly on what moral grounds residents of the 
Territories are excluded from these entitlements. Again, 
Congress can treat Territories differently. It should use that 
power.
    Thank you for your time.
    [The prepared statement of Ms. Bonilla can be found on page 
37 of the appendix.]
    Chairman Cleaver. Thank you.
    Mr. Burt, you are now recognized for 5 minutes.

STATEMENT OF KIYADH BURT, VICE PRESIDENT OF POLICY AND ADVOCACY 
          AND INTERIM DIRECTOR, HOPE POLICY INSTITUTE

    Mr. Burt. Thank you.
    Good morning, and thank you to the committee for having me 
here today.
    My name is Kiyadh Burt, and I am the vice president of 
policy and advocacy and the interim director of the Hope Policy 
Institute (HOPE).
    Since 1994, HOPE has worked to increase financial inclusion 
among the most-vulnerable populations in the Deep South: the 
Deep South States of Alabama, Arkansas, Louisiana, Mississippi, 
and Tennessee, a region that is home to one-third of this 
nation's persistent-poverty counties, most of which are rural.
    HOPE is also one of the largest Black and women-owned 
financial institutions in this country, and on behalf of the 
organization, I am here today to discuss the strategies to 
increase affordable homeownership and housing in this region, 
with the emphasis on increasing opportunities for communities 
of color.
    The first strategy in increasing homeownership and 
affordable housing concerns down payment assistance. In the 
Deep South, there is nearly a 27 percent difference between 
Black and White homeownership. Largely due to financial 
exclusion and exploitative practices, many Black and Brown 
communities simply lack adequate capital to purchase a home.
    Down payment assistance is a critical strategy in resolving 
that gap. Down payment assistance has the ability to transition 
households from a history of renting to a future of 
homeownership.
    HOPE is familiar with the positive impact of down payment 
assistance, particularly through our experience with the 
NeighborhoodLIFT Program, a partnership between Wells Fargo and 
the NeighborWorks America organization, to increase the number 
of first-time home buyers, particularly among communities of 
color. In our experience, when we see an increase in down 
payment assistance programs, we see a clear correlation in the 
increase of homeowners of color.
    The second strategy is that we must ensure that banks and 
credit unions offer mortgage products that meet the needs of 
communities that often find themselves in rural, persistent-
poverty counties, and also that a secondary market supports 
those efforts. HOPE has an in-house mortgage product that meets 
the challenges of communities that often lack access to down 
payments. This product is manually underwritten. It discounts 
student loan deferred debt, and it also has a loan to value 
ratio of 100 percent, effectively eliminating the down payment 
disparities and challenges.
    Now, what is interesting about our product is that the 
Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie 
Mac, do not support the flexibility of this product. Their 
inability to purchase these loans really speaks to the lack of 
capacity to provide increased homeownership for these 
communities, and also limits our ability to expand our capacity 
to lend to these communities by the failure of them to purchase 
this loan product.
    And lastly, for strategy, we must hold State Housing 
Finance Agencies (HFAs) accountable for meeting pandemic 
recovery needs of local people. An examination of the Emergency 
Rental Assistance Program shows that State Governments in the 
Deep South did not meet the needs of local people in the 
distribution of rental assistance at levels achieved across the 
country. Such findings call for increased accountability among 
States, particularly States with questionable track records in 
serving the most-vulnerable populations.
    In conclusion, communities in America's Black Belt have 
long endured persistent poverty and its associated ills. 
However, these communities and the institutions that serve them 
have demonstrated the expertise to mitigate the effects of race 
in place, most often with significantly fewer resources than 
other parts of the country. The Community Development Financial 
Institutions Fund (CDFI Fund) has a track record of reaching 
and working with communities in partnership model solutions 
that work. With adequate resources supported in these 
institutions, and increased commitment by others to do the 
same, it is possible to ensure prosperity and mobility in the 
most economically-distressed communities in this country.
    [The prepared statement of Mr. Burt can be found on page 46 
of the appendix.]
    Chairman Cleaver. Thank you very much.
    We will now hear from Mrs. Arriaga-Salinas. You have 5 
minutes to present your oral testimony.

    STATEMENT OF AMBER ARRIAGA-SALINAS, ASSISTANT EXECUTIVE 
                   DIRECTOR, PROYECTO AZTECA

    Mrs. Arriaga-Salinas. Good morning, Chairman Cleaver, and 
members of the subcommittee, and thank you for this 
opportunity.
    I am Amber Arriaga-Salinas, assistant executive director at 
Proyecto Azteca. We are a nonprofit construction company based 
in San Juan, Texas, and our mission is to provide affordable 
housing for low-income families who cannot obtain a traditional 
mortgage. Our goal is to empower them to become responsible 
homeowners and move away from poverty to prosperity.
    Colonias are substandard, isolated developments where 
residents lack basic services like potable drinking water, 
sewage treatment, electricity, paved roads, adequate drainage, 
street lights, sidewalks, and decent housing. Cheap former 
agriculture land was sold to low-income families, and 
developers were not required to improve infrastructure. Health, 
safety, economic, and housing challenges plagued thousands of 
colonia residents by the end of the 1970s.
    There are approximately 200,000 people living in Hidalgo 
County colonias. They are industrious, hardworking, and family-
oriented people, but it is not uncommon for residents to work 
multiple jobs to make ends meet. There is a low rate of 
conventional homelessness, but we do see a great deal of 
overcrowding.
    In 1996, the State legislature began to implement model 
subdivision rules, where many improvements were made, but 
colonias still lack safe, decent, and affordable housing.
    There is a great deal of persistent poverty despite decades 
of economic growth. In 1977, research showed that 40 percent of 
families were living in poverty, but today, we believe that it 
has not changed.
    The McAllen and Edinburg metropolitan areas are some of the 
poorest in the country. There is very limited public 
transportation, and owning a vehicle is a necessity for colonia 
residents in order to maintain a job, go to school, shop for 
groceries, and visit the doctor.
    Drainage improvements cannot keep up with the rapid growth. 
As buildings, parking lots, and highways grow, there is less 
space to divert water. And because colonias are isolated, the 
issues are magnified. There are many health challenges 
associated with flooding, such as diseases and increased mental 
distress.
    Although the infrastructure is poor in colonias, we did see 
a great deal of improvements in great part due to the Colonia 
Ombudsman Program that the State unfortunately vetoed in 2016. 
Housing is the most important component that determines a 
family's quality of life, and communities cannot thrive when so 
many live in unstable conditions. We ask that a program like 
the State Colonia Ombudsman Program be revived in order to 
track improvements. And colonias would have a greater 
opportunity to address affordability, equity, and 
sustainability problems if the term, ``colonia,'' were included 
in the Federal Housing Finance Agency's (FHFA's) Duty to Serve 
(DTS) definition.
    Build Back Better and the American Rescue Plan moneys 
provided great relief for the families that we serve. However, 
Federal dollars are designated to address homelessness and 
rental assistance, and the definitions do not address the needs 
of housing in colonias. Rental units are limited for families 
in colonias. Rental vouchers outside city limits are not 
available. Rentals in colonias actually consist of travel 
trailers parked on lawns. Funds should be set aside in order to 
specifically address the unique need for affordable housing and 
community development in colonias.
    [The prepared statement of Mrs. Arriaga-Salinas can be 
found on page 28 of the appendix.]
    Chairman Cleaver. Thank you very much.
    Mr. George, you are now recognized for 5 minutes to give an 
oral presentation of your testimony.

      STATEMENT OF LANCE GEORGE, DIRECTOR OF RESEARCH AND 
         INFORMATION, HOUSING ASSISTANCE COUNCIL (HAC)

    Mr. George. Thank you.
    Chairwoman Waters, Chairman Cleaver, Ranking Member Hill, 
and members of the subcommittee, greetings, and thank you for 
this opportunity to testify on the issue of persistent poverty 
in America.
    My name is Lance George, and I am the director of research 
and information at the Housing Assistance Council. The Housing 
Assistance Council, often referred to by our acronym HAC, is a 
national nonprofit corporation that supports affordable housing 
efforts in rural areas of the United States and the 
Territories. Inherent to HAC is our longstanding attention to 
persistently-poor rural areas and people. HAC's efforts in 
these communities have been at the core of our work since our 
founding over 50 years ago.
    In addition to HAC's direct services, we continually assess 
and study the issue of persistent poverty to help inform 
strategies and solutions for these important communities. We 
know the members of this subcommittee are knowledgeable on the 
issue of persistent poverty, but we wish to highlight five 
quick trends that we believe are key to improving social, 
economic, and housing conditions in these communities.
    No. 1, areas of persistent poverty are not random, and are 
geographically-clustered. While seemingly invisible to much of 
the nation, persistent-poverty counties make up one-tenth of 
all counties and 15 percent of our nation's land mass.
    No. 2, persistent-poverty areas are fluid. According to 
HAC's recent estimates, 70 counties moved off of the 
persistent-poverty list, while 13 countries newly reached this 
threshold. But approximately 78 percent of current persistent-
poverty counties have been in that state consistently since 
1980. Although, I would note there has been a dramatic 
reduction in these counties over the last 40 or 50 years.
    No. 3, poverty is not new to the Territories. Because of 
the focus of this hearing, HAC would also like to highlight 
that, for the first time, we calculated persistent-poverty 
status for Puerto Rico. All 78 of Puerto Rico's municipios were 
classified as having persistent poverty in 2020.
    No. 4, race and ethnicity are closely aligned with the 
persistence of poverty. Sixty percent of people living in 
persistent-poverty counties are people of color, and 42 percent 
of persistent-poverty counties have majority populations of 
color.
    And finally, trend No. 5, the visible impact of economic 
distress is evidenced in the housing conditions in these 
communities. The incidents of housing units lacking adequate 
plumbing is twice the national rate, and over 380,000 
households in persistent-poverty counties live in crowded 
conditions. Additionally, more than half of persistent-poverty 
renters experience affordability challenges. Mortgage and 
housing finance are similarly unbalanced. Low levels of loan 
applications and loan originations and high rates of loan 
denials and high-cost lending are prevalent in many persistent-
poverty counties.
    Persistently-poor communities face regional and local 
challenges, yet importantly, have unique assets, strengths, and 
opportunities to combat geographic inequality. HAC recommends 
proactively considering geographic factors in Federal 
policymaking.
    In our experience, and given the persistent-poverty 
landscape outlined before, there are two critical factors 
necessary to build equity in persistently-poor rural places. 
The first is just local organizational capacity. The second is 
access to capital. Additionally, tailoring the Federal 
resources and improving the reliability and availability of 
rural data would also improve equity for persistent-poverty 
communities. An example of this importance of data are HAC's 
development of the colonias investment areas. This research 
created a usable and programmatic definition of, ``colonia,'' 
so that mortgage and housing finance resources can be more 
efficiently directed to colonia communities.
    In closing, I would ask for indulgence from the 
subcommittee to add a personal note. I grew up and lived the 
first 18 years of my life in Lewis County, Kentucky, a 
persistently-poor county in Appalachia, that has experienced 
very high poverty rates since the 1960s and before. I wish to 
be clear, I did not live in poverty as a child, but I have 
family, friends, and acquaintances who were poor, and continue 
to live in poverty in the place that I love. And while the 
residents of Lewis County, like those from every persistent-
poverty community, suffer from distressed economies, 
underresourced assistance, and disinvestment, but they also 
have a rich cultural history, perseverance, and a deep sense of 
pride in their community, and I share that pride.
    Through this paradox of perseverance and pain, HAC 
appreciates the subcommittee's attention and motivation to 
provide meaningful change to the condition of persistent 
poverty in rural America. And the Housing Assistance Council, 
in collaboration with our community partners, stands ready to 
assist Congress in this goal.
    Thank you again for this opportunity to testify.
    [The prepared statement of Mr. George can be found on page 
58 of the appendix.]
    Chairman Cleaver. Thank you, Mr. George.
    Mr. Potterpin, you are now recognized for 5 minutes to give 
an oral presentation of your testimony.

STATEMENT OF CHRIS POTTERPIN, PRESIDENT, COUNCIL FOR AFFORDABLE 
                    AND RURAL HOUSING (CARH)

    Mr. Potterpin. Thank you.
    On behalf of the Council for Affordable and Rural Housing, 
or CARH, I would like to thank you for the opportunity to 
provide this testimony in support of the efforts to address 
chronic disinvestment in the colonias, the southern Black Belt, 
and the U.S. Territories.
    CARH focuses on housing investments and providing 
affordable housing, and that is going to be the focus of my 
testimony.
    CARH is an industry trade association with headquarters in 
Alexandria, Virginia, representing the interests of for-profit 
and non-profit builders, developers, management companies, and 
owners, as well as financial entities and suppliers of goods 
and services to the affordable rental housing industry in rural 
America. My company, PK Companies, based in Michigan, develops, 
manages, and owns approximately 5,000 units of affordable rural 
housing units in about 8 States. We are a second-generation 
company that is committed to efficient, effective, and 
affordable rural housing.
    The members of this committee and the other witnesses have 
done a great job of describing the problem that the southern 
Black Belt, the colonias, and the U.S. Territories are facing, 
and I believe that these problems are expressed throughout all 
rural areas in this country. And there continues to be an 
overwhelming need for both affordable and decent housing.
    The lack of safe and decent housing in rural America is one 
of the greatest contributors to the challenge of poverty. The 
lack of affordable housing reflects the lack of investment in 
these localities more broadly. In fact, rural renters are more 
than twice as likely to live in substandard housing compared to 
people who own their own homes.
    In these areas, we are losing our affordable units. Loss of 
federally-assisted multifamily housing means losing a finite 
resource, and that trend is contributing to challenges in rural 
areas. Most areas never had enough decent, safe, or affordable 
housing, and increasingly, those that did, are losing this 
resource.
    The adverse effects of housing instability, as I said, have 
been covered well in this hearing already, but I want to 
highlight that the number-one impact is on the education and 
health of the country's greatest asset--the children--and it 
has been well-documented.
    Neither the private nor the public sector can produce 
affordable rural housing independently of one another. There 
needs to be a partnership. We actually have a very good Federal 
program built to address this already. Federal programs have 
been very effective, when properly funded and supported with 
technology and government staff. But too often, these programs 
focusing on rural areas have been shorted as compared to their 
urban counterparts, and the agencies have been limited on staff 
levels and training resources.
    Specifically to housing in rural areas, we are talking 
about the USDA Rural Development Program, specifically the 
Sections 514 and 515 loan programs and Section 521 rental 
assistance. They were reasonably well-funded from their 
inception up until the mid-1990s, and produced a large number 
of housing units in rural areas. Since the mid-1990s, these 
programs have not seen proper funding. The majority of the 
existing projects that were built are now 30-plus-years old, 
with no way of preservation or rehabilitation outside of the 
housing tax credit, which predominately goes to urban areas or 
suburban areas.
    We are already losing our affordable housing projects. We 
are down to less than 14,000 projects and properties. Over the 
next decade, as many as three-quarters of all Section 515 
mortgages will mature, and with it, the end of rental 
assistance for the folks in those properties, and that will 
affect approximately 250,000 families and elderly persons, 
leaving them without the ability to house themselves.
    In 300 counties, Section 515 properties are the majority of 
project-based subsidized units, and 90 percent of all Section 
515 properties are in counties with persistent poverty. We do 
have some tools available to help this problem. Rural 
development rental housing programs and the housing credit 
program are the best tools we have to develop more housing 
units from the housing that we have. Section 521 is rental 
assistance for [inaudible] programs and currently subsidizes 63 
percent of the 515 units that are created. We need to increase 
this number to 100 percent.
    Almost all of the residents who live in 515 housing that is 
not subsidized are overburdened, and that is a key tool to 
preserving the housing and using outside private resources to 
rehabilitate and preserve this housing for the next 30 years, 
and stop it from becoming market-rate housing and losing it out 
of the program.
    Rural development needs more specific direction on how to 
use that rental assistance and using it for preservation of 
existing projects. We also need to modernize the housing credit 
to be more focused towards rural and allowed to use for more 
rural projects. We need to allow LLCs and S corps to 
participate more fully in the housing credit and support 
relief.
    I know that I am over now, but we do need to support the 
Rural Housing Office with technology upgrades. Some of their 
programs are still from the 1990s, and they need more staff 
there. They have been chronically-understaffed.
    On behalf of CARH, I would like to thank this committee for 
the opportunity to discuss rural housing issues with you today. 
And with a few relatively minor changes, we can apply the tools 
needed to continue successful partnerships in affordable rural 
housing. Thank you.
    [The prepared statement of Mr. Potterpin can be found on 
page 69 of the appendix.]
    Chairman Cleaver. Thank you for your testimony.
    I now recognize myself for 5 minutes for questions.
    I want to begin with Mr. Burt. Based on your testimony, you 
have a lot of experience in dealing with this issue. What would 
you like to see that could help spur sustainable homeownership 
opportunities for people in rural communities facing persistent 
poverty?
    Mr. Burt. I think we want to see more down payment 
assistance. Earlier in my testimony, I mentioned the 
Neighborhood LIFT Program. Through this program, we have been 
able to provide down payment assistance grants of up to $10,000 
for 359 Mississippians. Approximately one-quarter of the 
mortgages originated were located in rural communities, 90 
percent went to Black households, and 63 percent went to women 
head of household. This program is solid proof that down 
payment assistance is an opportunity to bridge the gap from 
renting to homeownership.
    We actually estimate that we can close the homeownership 
gap in the Deep South through funding the mortgages for 500,000 
people of color. Now, achieving such a goal would require the 
funding and maintenance of a flexible down payment assistance 
program. And to date, we have seen no other set of proposals 
with a greater potential to close this gap than the Downpayment 
Toward Equity Act. This Act appropriately targets down payment 
assistance to first-generation homebuyers, people most in need 
of an equity boost to get into a home. We also remain excited 
about that opportunity and look forward to more possibilities 
of increasing down payment assistance, particularly for rural 
communities, people of color, and communities that find 
themselves in persistent poverty.
    Chairman Cleaver. I agree with you. And I am wondering, Mr. 
Potterpin--I may have misunderstood you, but you were saying in 
your testimony that a great deal of the money went into the 
urban areas and a not so significant amount went into the rural 
areas. Did I interpret that correctly? Federal funds?
    Mr. Potterpin. In regards to the Low-Income Housing Tax 
Credit Program, yes. There are certain set-asides that provide 
housing in rural areas, but not compared to the population that 
lives in rural areas or reflecting the need or the challenges 
that the rural housing is facing.
    Chairman Cleaver. Yes. I represent, believe it or not, a 
large rural area of Missouri, and the problem is not--from my 
perspective; I am interested in yours--based on Washington 
making decisions about where the money is spent. The problem is 
based on the fact that we give the States Federal funds to do 
exactly what you said needed to be done. And my interpretation 
is that the problem comes with the State. And if the money goes 
into entitlement cities, CDBG, they go into entitlement cities, 
and probably in most States, there may be four or five 
entitlement cities, with the exception of Texas, California, 
and New York. But then these smaller communities have to go and 
fight it out--200 or 300 smaller cities have to go and fight it 
out in their State capitals, and even then they get a puny 
piece of the money.
    Mr. Potterpin. That is right.
    Chairman Cleaver. So if we are going to correct the 
problem, it needs to be with what is going on with the Federal 
allocation to the States because that is where the problem is 
most clearly seen. And I have been arguing this for a long time 
now, that we need to take a whole different view of this.
    Even if you have to get the Community Development Block 
Grant, the States will have to--since they are not entitled, 
they have to go out and fight a little community 5 miles down 
the road to get a new water tower. It is a horrible situation 
that needs to be corrected. This might not be exactly what this 
hearing is about, but this creates one of the biggest obstacles 
to providing at least--it still wouldn't be sufficient housing 
dollars or dollars to fight poverty, but it is a serious, 
serious problem.
    Thank you very much. My time is up.
    I now recognize the distinguished ranking member, Mr. Hill.
    Mr. Hill. Thank you, Chairman Cleaver. And first, let me 
thank you for your chairmanship of this subcommittee during 
this Congress, and for our work together and for your 
outstanding voice for the challenges in this subcommittee, 
particularly in housing and community development, with your 
background both in Congress and as a mayor. And while the bills 
that were noticed and attached to this hearing aren't partisan 
and had much bipartisan engagement, I would say, I hope in the 
coming Congress that we will be able to work effectively 
together in a bipartisan way.
    Mr. Chairman, I ask unanimous consent to enter two 
documents into the record, both from the U.S. Government 
Accountability Office. The first is entitled, ``Targeting 
Federal Funds, Information on Funding to Areas with Persistent 
or High Poverty,'' by GAO's Director of Financial Markets and 
Community Investment, Bill Shear, and others. It was issued in 
July 2020. And the second is also by Director Shear and his GAO 
colleagues. It is called, ``Areas with High Poverty, Changing 
how the 10-20-30 Funding Formula is Applied Could Increase 
Impact in Persistent-Poverty Counties,'' that was issued in May 
of 2021.
    Chairman Cleaver. Without objection, it is so ordered.
    Mr. Hill. Both of these reports are focused on economic 
development in areas with persistent or high poverty, and 
discuss how to improve ways various programs can target Federal 
funds, and overall transparency. And I would note that in the 
reports, GAO has found that HUD, USDA, and the Department of 
Commerce's Economic Development Administration (EDA) have not--
and I am quoting from the report--incorporated leading 
practices for effective interagency collaboration in select 
economic development programs.
    Mr. George, what is your view of that? Could we do a better 
job of interagency coordination to laser-beam all of these 
programs into these counties?
    Mr. George. Thank you, Ranking Member Hill. I agree that 
there could be more coordination and more effort generally. I 
do think the agencies try really hard and are making sound 
investments in these communities. There are some instances that 
were noted in the testimony where there is a lack of adequate 
staffing and resources in some of these agencies to direct 
those funds, but by all means, we think collaboration is a good 
effort across-the-board among the agencies.
    Mr. Hill. Right. Thank you.
    Mr. Burt, first, please tell Bill Bynum hello for me. We 
were on the CDFI advisory board together in the early 2000s, 
and I enjoyed my association with him in overseeing the CDFI 
program at the Treasury. And thank you for being a good 
investor and partner in Arkansas with Hope Federal Credit Union 
and your nonprofit work.
    What is your view of that coordination, on down payment 
assistance? In Arkansas, in talking to the Arkansas Development 
Finance Authority, we have really, because of our--we use the 
bond program to replenish that--we effectively have more down 
payment assistance available than people applying for it, as a 
general statement. I don't want to say any given year, but we 
have a robust State program there.
    But how do you feel about the coordination of these Federal 
programs in persistent-poverty counties, and who stands out? 
Does the Delta Regional Authority help broker some of that, in 
your experience, in the Mississippi Delta?
    Mr. Burt. Absolutely, we do support the interagency 
collaboration in deploying funds to communities that are deep 
in poverty. One of the things that we like to highlight is 
making sure that Federal funds get to the communities that do 
the best work in serving these communities, as evidenced by the 
Emergency Rental Assistance Program, and in some cases, the 
Homeowner Assistance Program is that, at times, our States may 
have the inability, or unwillingness to effectively serve these 
communities.
    From our experience, we saw communities and households 
express challenges in accessing the Rental Assistance Program, 
whether due to an online application or having to have an email 
address or simply lacking access from State agencies that were 
managing the funds to actually access that critical relief.
    But in addition to that, what we also like to amplify is 
that, where there are opportunities, send these funds directly 
to CDFIs with the strongest track record. We have a good 
example of the ways in which CDFIs have the ability to 
encourage public and philanthropic dollars to make a difference 
in homeownership in real communities.
    This question reminds me of a story of Eastmoor, 
Mississippi, a small subdivision in Moorhead, which is a small 
town of about 2,000 people in the Delta. Around 1970, an 
Eastmoor subdivision was built right outside of the small town 
of Moorhead, hastily constructed. And in subsequent years, the 
sewage actually seeped into several yards and caused about 20-
something homes to be either burned or destroyed.
    In 2015, HOPE put a branch there in Moorhead, and we 
reached out to several partners and got a grant from Goldman 
Sachs, got money from the HOME Fund, got money from the 
Department of Agriculture, and with a few of the philanthropic 
moneys, we were able to provide rehabilitated housing for that 
community. That was 44 houses rehabilitated. That was 44 
households that became homeowners.
    So when we talk about the ways in which agencies could 
collaborate or think about the ways in which we could bring 
about greater resources to these communities, you have to 
include CDFIs with a strong track record and you have to 
include getting the money directly to them.
    Mr. Hill. Thank you, Mr. Burt. My time is over, but thank 
you. I thought your answers were very, very helpful. And I 
yield back, Chairman Cleaver. Thank you for the hearing.
    Chairman Cleaver. Thank you.
    I now yield to the Chair of the full Financial Services 
Committee, Chairwoman Waters.
    Chairwoman Waters. Thank you very much.
    Since Mr. Hill started talking about whether or not there 
is cooperation between the agencies, and Mr. Burt, you 
mentioned how it became difficult to get rental assistance out 
into the community, let me ask you, do you believe that poor 
communities that do not have access to computers, do not have 
access to the technology that is oftentimes needed in order to 
make application for some of what we are sending to the cities 
or the counties or the States, and what do you think we can do 
about that, if you believe that is true?
    Mr. Burt. I do think it is a challenge. That has come from 
my experience being on the ground with communities trying to 
access the rental assistance programs. One of the things we 
want to do is partner with organizations and also raise 
advocacy efforts to get those technologies to these 
communities, and even more importantly, making sure that these 
programs are just simply accessible to the communities where 
they are.
    Simply put, when we construct policies and construct these 
Federal programs that we put under the jurisdiction of the 
States, we want to make sure the States are doing what they 
need to do to make sure the most-vulnerable communities have 
access to these critical funds in a post-COVID reality.
    Chairwoman Waters. Thank you very much.
    Mr. George, how would housing and community development 
investments, like the more than $150 billion my committee 
secured in the Build Back Better Act, help alleviate persistent 
poverty in rural America? And what more can we do to ensure 
that existing Federal housing resources really reach poor rural 
communities?
    Mr. George. Thank you, Chairwoman Waters. I would like to 
follow up on Mr. Burt's comments, candidly, and say that our 
number-one strategy that we posed was organizational capacity. 
At the Housing Assistance Council, we work with local, 
community-based organizations, nonprofit organizations, 
municipalities, Tribal entities, and some for-profit 
developers. And candidly, they know what is best for their 
community. We just try to enhance their services and their 
ability to provide those services. But they are trusted actors 
in these communities, and I applaud the subcommittee for 
including many of these entities in this discussion. These are 
valuable partners that we work with every day and they really 
know their communities.
    So, I think our goal is to enhance those funds to enhance 
the capacity of those local community-based organizations. For 
example, the Housing Assistance Council uses vital resources 
from HUD's Rural Capacity Building grant, and we have made 
valuable investments in many of these organizations, which is--
    Chairwoman Waters. Of the $150 billion that we worked so 
hard for, to get out to assist the housing needs of this 
country, everything from Section 8 vouchers, to money to deal 
with the renovation and repair of public housing, and on and on 
and on, how much would that have helped the poverty in some of 
the communities with which you deal?
    Mr. George. It obviously would have been an immense help. 
It is almost incalculable. But obviously, these communities 
need all the assistance and all the directed targeted 
assistance that they can handle.
    Chairwoman Waters. We are going to continue to fight for 
housing, despite the fact we did not get the support that was 
needed from the opposite side of the aisle.
    But on this issue of whether or not the resources we worked 
so hard for, if we get them signed by the President, they go 
out to the communities. We still have poor communities who are 
not able to access these resources for lack of computers and 
technology. And I had to call in Legal Aid in Los Angeles and 
set up meetings and get people into board rooms, et cetera, to 
try and help people who needed it so desperately.
    What are we going to do? Do we have enough nonprofits that 
can basically utilize these resources and get them out to the 
persistent-poverty communities, or do we need to set up some 
brick-and-mortar offices and locations with big signs on them 
so people can come and get some help for the utilization of the 
resources? What do you think? How are we going to do it?
    My time is running out. I know you have some answers.
    Mr. Burt. I was about to say, I will take it. Again, I 
think the point to be made is that we want to make sure that 
State leadership is doing all that they can to reach the 
communities that are most in need. When you talk about the 
challenges around broadband and technology, money has already 
been deployed to get these communities the technology that they 
need. So, some of this is on nonprofits, but the brunt of the 
responsibility lies on the administrating authority over the 
fund.
    And I would say that we can continue to put pressure on our 
States to do right by the communities that need it, with 
research, advocacy, and data. And I think that may be one of 
the best ways forward.
    Chairwoman Waters. Thank you. And thank you, Mr. Chairman.
    Chairman Cleaver. Thank you.
    The gentleman from Tennessee, Mr. Rose, is now recognized 
for 5 minutes.
    Mr. Rose. Thank you, Chairman Cleaver and Ranking Member 
Hill, for holding this hearing.
    According to the Majority's memorandum for this hearing, 
the focus of the hearing is intended to explore persistent 
poverty in regions that are predominantly rural, so I believe 
that it would have been a good idea for us to have the Rural 
Housing Service Administrator testify.
    I will note that this committee has not had a Biden 
Administration official testify since July 20th. Thankfully, 
that is changing tomorrow, when we will have the bank 
regulators coming before the committee, but this cannot 
continue. One of our core responsibilities as Members of 
Congress is oversight, and we cannot conduct adequate oversight 
when the Majority is shielding the Administration from 
scrutiny.
    As my time is limited, I will dive right into my questions. 
In my district in Middle Tennessee, 12.9 percent of total 
occupied housing units are manufactured homes. Manufactured 
housing is an affordable homeownership option available 
nationwide for minorities, the underserved, and low-income 
borrowers.
    USDA Section 502 offers Federal backing for loans issued by 
approved private-sector lenders to low- and moderate-income 
families for purchased, construction, or rehabilitation of 
modest homes. Eligible borrowers can obtain financing for up to 
100 percent of the appraised value of the home. New 
manufactured homes are currently eligible for financing through 
the Section 502 program, but existing homes are not.
    Mr. Potterpin, do we need to make sure that the USDA 
Section 502 program better supports manufactured housing so 
that more low- and moderate-income rural Americans can access 
financing to purchase manufactured homes?
    Mr. Potterpin. Absolutely. I think that we need to make 
sure that all of USDA's programs--502, 514, 515--have better 
funding and more access to folks to provide more housing units 
and to preserve more housing units.
    Mr. Rose. Thank you. I believe that we need broad-based 
solutions to increase our housing supply to meet demand. This 
includes both single and multifamily options.
    Regarding multifamily, research from the National 
Association of Home Builders and the National Multifamily 
Housing Council notes that regulations imposed by all levels of 
government account for an average of 40.6 percent of 
multifamily development costs.
    Mr. Potterpin, do you believe that when multifamily 
development costs rise, it translates to higher rents and 
reduced rental housing affordability?
    Mr. Potterpin. Yes, it does. And I would also add that 
rural areas are impacted even more because their rents are 
typically lower, but when the costs rise, as they do 
everywhere, and we have less options for contractors or 
competitive bidding, they are feeling the impact even greater. 
And the rents go up a greater percentage. That is why it is 
important to improve rental assistance and the amount of 
assisted units and have more access for these funds.
    Mr. Rose. And just to reiterate, Mr. Potterpin, do you 
believe that multifamily development could help improve the 
supply of affordable housing in rural areas?
    Mr. Potterpin. No question at all. Yes. It is desperately 
needed in almost every rural area. And with minimal investment 
into these programs, we can leverage private dollars on an 
average of $7 to $11 for every dollar invested to create more 
units.
    Mr. Rose. The Community Development Block Grant (CDBG) 
program was created to help urban areas modernize and respond 
to the blight and decay that plagued cities in the 1970s. The 
authorizing statute states that the primary objective of the 
law was to establish the development of viable urban 
communities. Since then, cities now have far greater access to 
economic development and services than their much smaller rural 
neighbors.
    Mr. Potterpin, does it make sense to update the mission and 
purpose of the CDBG program so that it also focuses on the 
unique challenges of rural Americans living in the 21st 
Century?
    Mr. Potterpin. CARH would welcome this being addressed. The 
challenges of rural are different and sometimes greater than 
those facing their urban counterparts, and I think we need to 
update this to give easier access to these funds, as was noted 
elsewhere in this hearing. Rural municipalities often have less 
resources to pursue funds and compete for funds than their 
urban counterparts, so they are at a disadvantage, and they 
need more assistance in doing so on a level playing field.
    Mr. Rose. Thank you. And, Mr. Chairman, I see my time has 
expired, so I yield back.
    Chairman Cleaver. The gentleman yields back.
    The gentlewoman from New York, Ms. Velazquez, who is also 
the Chair of the House Committee on Small Business, is now 
recognized for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman, and Mr. Ranking 
Member, for this important hearing.
    Professor Bonilla, I agree with you in terms of how poverty 
in Puerto Rico is directly linked to the colonia situation in 
Puerto Rico, and that Congress has a responsibility for 
resolving this issue.
    Following Hurricane Maria in 2017, under President Trump's 
leadership, HUD imposed unique restrictions and stalled almost 
$20 billion in Federal disaster funding to Puerto Rico. 
President Biden has since removed this restriction. But can you 
explain how President Trump's decision to set up roadblocks and 
make it difficult for Puerto Rico to access disaster funding in 
2017 has compounded its current recovery efforts?
    Mr. Bonilla. Yes. Thank you, Congresswoman. The Trump 
Administration engaged in practices of overscrutiny of 
applicants of color and put excessive barriers on applications 
for aid on behalf of both individuals and the Puerto Rican 
Government. Some of these measures were placed in the name of 
preventing corruption, but it is important to mention that the 
only people who have been accused of corruption in the wake of 
Maria have been FEMA agents and contractors.
    The delay of Federal aid and of Federal assistance programs 
to which Puerto Ricans are fully entitled as residents of the 
U.S. Territories has caused incalculable damage to a society 
that was already, as I mentioned, experiencing 40-percent acute 
poverty, and that had already been facing measures of 
austerity, that had dismantled the education system, public 
infrastructure, and other public services that were then unable 
to respond and be available to citizens in the time of 
immediate emergency.
    At the Center for Puerto Rican Studies, we call for greater 
scrutiny of these FEMA practices and the practices of other 
government agencies that should be assisting Puerto Ricans in 
their time of need.
    Ms. Velazquez. Thank you. Professor, one of the issues 
facing Puerto Rico after the most recent hurricane is the lack 
of specific data on how low-income Black and rural communities 
remain at a disadvantage on the island.
    What should Congress do to immediately address this 
information gap so it can enhance long-term investment in these 
communities?
    Ms. Bonilla. The first issue is that we need clarity on why 
certain government agencies just suddenly stopped providing 
data for the Territories. One example is the American Housing 
Survey, which just stopped being done in Puerto Rico after 
Hurricane Maria, at a time when this information was the most 
necessary for documenting the challenges of local residents.
    A second example is the Household Pulse Survey, another 
important survey, which not one Territory has participated in.
    We also need greater data related to FEMA claims. It is 
difficult to know where and who was denied and who did not have 
access to aid; 60 percent of applicants were denied, and there 
is really no transparency as to how those decisions were made.
    I should also add that Federal agencies should be working 
with local groups to make sure that the existing mechanisms are 
adequate for the Territories. A primary example is the U.S. 
Census, which in 2020 suddenly added a race question in Puerto 
Rico with inadequate categories and inadequate education 
campaigns. So, we really stress the need for that, yes.
    Ms. Velazquez. Yes. Although FEMA updated its policy last 
year to allow homeowners to self-certify their ownership, 
reports from the ground indicate that FEMA is wrongfully 
denying assistance to eligible survivors of Hurricanes Fiona 
and Ian.
    Wouldn't you agree that it is not enough for FEMA to simply 
change its policy, but it also needs to act with recovery 
partners on the ground to ensure Puerto Rico homeowners get the 
assistance to which they are entitled?
    Ms. Bonilla. Absolutely. We have seen that simply 
[inaudible] is not enough. The community organizations on the 
ground are reporting that we are seeing the exact same issues 
of lack of Spanish translation at FEMA sites, of lack of 
interpretation for deaf communities, and of overscrutiny and of 
a demand for documentation that is not actually necessary to 
apply for aid.
    As one of my colleagues in Puerto Rico says, FEMA must 
learn how to learn; that is, they cannot be impervious to 
changes made at the top, that are announced, and need to 
somehow trickle down so that we actually see them applied and 
in action. And we feel strongly that it is only by working in 
partnership with community watchdogs that we can actually 
ascertain if these changes are being implemented.
    Ms. Velazquez. Thank you.
    Mr. Chairman, I yield back.
    Chairman Cleaver. The gentlewoman yields back.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Steil, for 5 minutes.
    Mr. Steil. Thank you very much.
    I want to thank the chairman and the ranking member for 
holding today's hearing. Entrenched multigenerational poverty 
is an incredibly serious challenge in many parts of our 
country. It is true of the areas listed in the hearing title, 
but it is also true in rural and urban communities in 
Wisconsin, in my home State.
    As many of you may know, or some of you may know, I am the 
ranking member on the Select Committee on Economic Disparity 
and Fairness in Growth, what I call the economy, and we have 
really dug into the impact of the persistent poverty that is 
plaguing far too many American families.
    Interestingly, in one of the areas we went to, a colonia in 
Texas on the U.S.-Mexico border, we saw kind of the direct 
impacts that the failure to secure the U.S.-Mexico border has 
had on a lot of the local communities in Texas, where they are 
expending resources at the local and State levels for what 
should be a national solution to that challenge that actually 
would be far better off serving many of the people who are 
suffering from the topic we are discussing today.
    Let me shift gears slightly to you, Mr. Potterpin. Your 
company specializes in developing projects using Low-Income 
Housing Tax Credits, Historic Preservation Tax Credits, and New 
Market and Opportunity Zone Programs.
    Could you offer a few recommendations and improvements to 
those programs that make it easier for developers to add 
affordable units in more challenged communities?
    Mr. Potterpin. Absolutely. Thank you. A lot of the changes 
that I would recommend were actually proposed and still exist 
in the Affordable Housing Credit Improvement Act. That Act 
would have expanded the 9-percent Housing Tax Credit by 50 
percent, and also would have increased rural basis boost. We 
were offered a rural basis boost of up to 30 percent, offering 
more credits to those, and that is essential to allowing real 
deals to compete federally on bond deals, 4 percent credit 
deals where many of the rural deals with lower rents don't 
pencil for those types of credits. That development deals don't 
make sense with a 30 percent boost, many deals now would and 
would offer preservation.
    Additionally, one other thing that is being discussed right 
now that would be very helpful is reducing the bond test from 
50 percent to 25 percent, essentially doubling the capacity of 
4 percent credits in each State. Many States which are now 
using all of their allocation, all of these would offer a lot 
more units and, again, leverage a lot of private dollars to 
provide those.
    Mr. Steil. Thank you very much, Mr. Potterpin. Let me shift 
gears somewhat significantly. We talked a lot about government 
intervention in our more-urban areas or denser-population 
areas. I know your business also does a lot of work in rural 
America.
    Shifting away from just government support, what are the 
chief problems you encounter when your firm is investing in 
rural communities, and what can be done to encourage more 
investment in more-rural or less-densely populated areas?
    Mr. Potterpin. I think a lot of what we are facing, 
especially in the affordable housing world, where we have to 
work with the communities very closely, sometimes we need--we 
are offering lower-rent communities, so we need tax abatement 
or other assistance or at least cooperation from those 
communities. And those communities often don't have the staff 
or the resources that urban communities do to facilitate the 
development and make a more open--
    Mr. Steil. Let me push you there just a little bit, if I 
can. What areas outside of government intervention might be 
helpful, particularly in rural areas, understanding the impact 
that tax structuring can have?
    Mr. Potterpin. Sure. In many areas, most communities are 
often dependent on one big supplier or job supplier, so those 
areas are dependent on that and it is hard to underwrite or 
solicit investment. So if we can find ways to broaden the 
supply base of jobs and the infrastructure, especially 
infrastructure where it is hard to--oftentimes we are coming 
from--if we are looking to develop in rural communities, the 
water infrastructure, the broadband infrastructure, the other 
infrastructure that is necessary to provide amenities and 
provide housing for those residents, it does not exist. Other 
ways to do that would be to improve that infrastructure there, 
or we can work directly with job suppliers.
    Mr. Steil. Thank you very much, Mr. Potterpin. I appreciate 
you and all of our witnesses here.
    Mr. Chairman, thank you for holding today's hearing. I will 
yield back.
    Chairman Cleaver. The gentleman yields back.
    The gentlewoman from Ohio, Mrs. Beatty, who is also the 
Chair of our Subcommittee on Diversity and Inclusion, is now 
recognized for 5 minutes.
    Mrs. Beatty. First of all, let me say thank you, Mr. 
Chairman, and thank you to the witnesses present and on the 
screen. Thank you for allowing us to have the opportunity to 
take a look at persistent poverty in America in those areas as 
cited in the hearing.
    Let me also say thank you--I am sorry our Chair of the Full 
Committee is not here, but certainly we did hear from the Biden 
Administration, and most of us will know that no one has been a 
bigger advocate for housing than Chairwoman Maxine Waters, and 
you, Mr. Chairman.
    And I was very pleased when our HUD Director came before 
the Financial Services Committee--Biden's Administration, just 
for the record--and talked about the $3.8 billion in CDBG, and 
also specifically said that their area of interest in housing 
included working in those underserved areas in cities, small 
towns, and rural areas. So, I think we know where the Biden 
Administration stands on that.
    My first question will go to you, Mr. Burt. And I want to 
make the connection to when we talk about housing, especially 
in the southern States, that we tie it to the racial wealth 
gap. And certainly, we know that it is important to increase 
homeownership for Black Americans. When we think about places 
like Mississippi and Tennessee and Arkansas, I noticed that 
most of you talked about those southern States and talked about 
the percentage of poverty for the nation coming from those 
southern States in rural areas.
    The renowned Bryan Stevenson said, ``The opposite of 
poverty is not wealth, but it is justice.'' So when I look at 
homeownership, I look at the disparities, I look at whether 
those are in Black communities, and in urban or rural areas. 
Certainly, a lot of our Members represent rural areas and also 
are members of the Congressional Black Caucus.
    Can you explain why median home values in Black communities 
are significantly lower than outside of the Black Belt and the 
effect that has had on the racial wealth gap?
    Mr. Burt. Yes, I can. Effectively, in the Deep South, this 
is the region that holds the Black Belt, these counties that 
are majority persons of color. It is not unusual to see that 
they have higher rates of homeownership in the region, given 
that a lot of the housing stock is actually passed down 
generation to generation.
    The issue is that because of historical challenges of, 
again, financial lending exclusion, redlining, and the lack of 
access to affordable mortgages, the quality of housing hasn't 
kept up with the pace of homeownership.
    Said more simply, in Black communities that are in 
persistent poverty, and in rural counties, people may have a 
house, but they don't have the capital, or the access to 
capital to get renovations, or they don't have the access to 
get capital to pull equity and increase the equity out of the 
same housing stock.
    In short, what we see with homeownership is we actually see 
that it is really a function of the lack of affordable 
mortgages. And even beyond that, when we talk about persistent-
poverty counties, we realize that of the 158 counties that have 
an unbanked and underbanked rate of 1\1/2\ times the national 
average, 75 percent of those counties are persistent-poverty 
counties.
    Again, persistent-poverty counties in our region are 
majority persons of color, and they are more likely to be 
rural. What we see is an intersection of the compounding impact 
of the lack of investment into these communities. So, it is 
affecting not only their ability to get a home mortgage, become 
a homeowner, but also--
    Mrs. Beatty. I am going to have to stop you, because my 
clock is running out, but that was very helpful.
    Mr. George, kind of to segue from that, what do you think 
are some of the things we can do to boost homeownership in the 
southern Black Belt regions?
    And I say that because we know the small number of Minority 
Depository Institutions (MDIs) that we have, and Community 
Development Financial Institutions (CDFIs). What are some of 
the things you think we can do?
    Mr. George. Thank you, Congresswoman. Obviously, to 
reiterate the comment, access to capital is a major strategy, 
and notably, what we would call good capital, improved 
resources to USDA's Rural Development Service, so borrowers can 
get good quality loans and not access to subprime loans or 
chattel loans in many cases.
    Mrs. Beatty. My time has run out, but you can respond more 
in writing, if you like. Thank you.
    Mr. George. Okay. Thank you.
    Mrs. Beatty. I yield back, Mr. Chairman.
    Chairman Cleaver. Thank you. The gentlewoman yields back.
    The Chair now recognizes the gentleman from San Diego, Mr. 
Vargas, for 5 minutes.
    Mr. Vargas. Thank you very much, Mr. Chairman, and I thank 
the ranking member and all of the witnesses today.
    HUD defines colonias as communities located within a 150-
mile region along the U.S.-Mexico border that, ``lack adequate 
water, sewer, or decent housing, or a combination of all 
three.''
    Mrs. Arriaga-Salinas, you noted that colonias suffer from 
persistent poverty, limited access to healthcare and public 
transportation, and flooding due to lack of adequate 
infrastructure. What can Congress do to prioritize the voices 
of individuals who live in your community as well as colonias?
    In my home State of California, my district is the entire 
California-Mexico border, and all of it is within 150 miles of 
the border. What can we do?
    Mrs. Arriaga-Salinas. I think that there are quite a few 
things that can be done. Coming from a nonprofit, I think 
giving opportunities to nonprofits and local voices is very 
important.
    For colonias, I think the challenges are very unique. There 
are moneys that were mentioned today that would assist with 
rental assistance or to make other developments. However, in 
colonias, we cannot use vouchers for that because people are 
renting a dilapidated mobile home or a shed. That is their 
rental unit. There is no way for them to be able to access 
vouchers when that is their option.
    There aren't enough funds for people to rehabilitate their 
homes. And one of the challenges that we see is that as these 
colonias are annexed into cities, they are not seeing the 
benefits. They are not seeing the infrastructure improvements, 
but their taxes are going up. And I think that when a colonia 
is no longer under that designation, but they are annexed into 
the city, the term, ``rural,'' goes away.
    We are not allowed to use rural development moneys, 502s 
and things like that, because there is population growth, but 
the housing and the infrastructure has not changed, and I think 
that is something that absolutely needs to be addressed.
    When the term, ``colonia,'' dissipates the amount of funds 
that we are able to use, that makes it much more challenging. 
So, I think that recognizing the unique problems in colonias 
would make a great deal of change.
    Mr. Vargas. First of all, thank you for that answer. But 
let me challenge you a little bit on the definition of, 
``colonia,'' because, again, the definition helps in my 
district, but frankly, the Central Valley of California has 
what I would consider colonias, but it is beyond the 150-mile 
area of the border.
    Do you think that some of those areas should be designated 
as colonias? Why or why not?
    Mrs. Arriaga-Salinas. I absolutely do. I recognize that 
communities that haven't been able to improve their 
infrastructure need the change, because if there is severe 
weather that affects them, and the infrastructure is not in 
place to address that, then the potential damage is just 
magnified. And I feel that would be very beneficial.
    Mr. Vargas. Often, severe weather in central California is 
the lack of water. So it is not the flooding because there is 
too much water; it is the lack of water. It goes the other way.
    Mr. George said that the $150 billion that we put in the 
Build Back Better Act that our Chair fought so hard for would 
help immensely, almost incalculably.
    Mr. Potterpin, you also said that the leverage ratio would 
be 1 to 7 in some instances. Could you tell us then what you 
think, Mr. Potterpin, that money could have gone for or how 
helpful it would have been for this persistent poverty?
    Mr. Potterpin. I concur with Mr. George. Almost 
incalculable, the amounts that were talked about when looking 
at those budgets for Build Back Better. Specifically, in the 
Rural Development, what was slated for the rural development 
budget at that point for the 515 and 521 programs was almost 20 
years of normal funding in 1 year, and it would have--these 
properties are falling behind through deferred maintenance 
every year. There is not enough money to even maintain what is 
there, and this would have put them back on the right track for 
preserving its entire portfolio.
    Mr. Vargas. I am running out of time. Thank you very much. 
I hope we do that. I think the problem was the name. We should 
call it the Republican plan and just pass it.
    Thank you again, Mr. Chairman. I appreciate it.
    Chairman Cleaver. Thank you.
    The gentleman from New York, Mr. Torres, is now recognized 
for 5 minutes.
    Mr. Torres. Thank you, Mr. Chairman.
    I have several questions and comments directed toward Ms. 
Bonilla. One of the root causes of persistent poverty in Puerto 
Rico is the Insular Cases, which, to me, represents a 
continuation of Jim Crow. Denouncing the Insular Cases as a 
vestige of Jim Crow is not hyperbole, it is a statement of 
historical facts. The Supreme Court that gave us Plessy v. 
Ferguson and the doctrine of separate but equal is the same 
court that gave us the Insular Cases, which imposes second-
class status on the U.S. citizens of U.S. Territories.
    There are more than 3 million American citizens of Puerto 
Rico deprived of equal protection simply because those citizens 
happen to live in an unincorporated Territory, which is a 
second-class status fabricated by the United States Supreme 
Court.
    The term, ``unincorporated Territory,'' appears nowhere in 
the actual text of the Constitution, yet the self-proclaimed 
textualists and originalists on the Supreme Court seem to be in 
no rush to overturn the Insular Cases. How telling.
    As you know, Ms. Bonilla, the Insular Cases enable the 
Federal Government to discriminate against the American 
citizens of Puerto Rico. The American citizens of Puerto Rico 
are excluded from SSI, excluded from SNAP, excluded from their 
fair share of Medicaid funding, and excluded from far too many 
programs to enumerate.
    Do you think there is a single State in the United States 
that could absorb the fiscal shock of losing all of its SSI 
funding, all of its SNAP funding, and most of its Medicaid 
funding? Can you think of a single State that could absorb 
those fiscal shocks?
    Ms. Bonilla. Obviously not.
    Mr. Torres. Is it reasonable to expect Puerto Rico to 
suffer fiscal conditions and constraints that not even the 
wealthiest States like New York or California could survive?
    Ms. Bonilla. Absolutely not.
    Mr. Torres. And the Federal Government denies Puerto Rico 
access to Federal programs that are crucial to the fiscal 
solvency of just about every State.
    Is it fair to say that the United States, by denying the 
island access to that which is essential, has essentially set 
up Puerto Rico to fail?
    Ms. Bonilla. It has set it up to fail, but it has set it up 
to succeed as a colony, which is what the United States wishes 
to hold it as since it is what it continues to replicate in 
Puerto Rico and in the other U.S. Territories.
    Mr. Torres. Do you believe, as I do, that overturning the 
Insular Cases is necessary for the recovery of the island?
    Ms. Bonilla. Honestly, this might surprise you, but I don't 
think it is necessary because it is, in fact, just an excuse. I 
think it would help to remove the excuses that the U.S. 
Government uses to keep treating Puerto Rico differently, but 
the fact is that the U.S. Government, the U.S. Congress, could 
begin to treat Puerto Rico differently today. It doesn't have 
to remove the Insular Cases in order to do that.
    Do I think it is a racist law that brings shame to the U.S. 
Government? Yes. But I don't think it is more than just an 
excuse for the conditions that are currently in place.
    Mr. Torres. As you might know, the Jones Act is a third 
wheel in American politics. Congress is fiercely protective of 
the Jones Act, which discriminates against Puerto Rico. What 
are your thoughts on the disparate impact of the Jones Act on 
the island?
    Ms. Bonilla. Without a doubt, the Jones Act brings nothing 
but increased costs to a place that is experiencing persistent, 
acute, and systemic poverty across every single one of its 
counties and municipios.
    The problem with the Jones Act is that it is not a partisan 
issue. It does not impact one party or another, and it has not 
been taken up by one party or another. But the fact is that the 
only folks who benefit from the Jones Act are the shipping 
industry in the United States. So, it does need to be brought 
under greater scrutiny and questioned and repealed.
    Mr. Torres. Not every State and Territory is subject to the 
Jones Act. Both Puerto Rico and Hawaii have the highest 
electricity costs in the United States, and both Puerto Rico 
and Hawaii are subject to the Jones Act. Do you think that is a 
coincidence?
    Ms. Bonilla. No. Obviously, there are folks who are 
benefiting from the extreme costs that are spent in 
transporting goods to these places. However, I think it is 
important to recognize that some folks benefit, but this does 
not benefit the U.S. economy as a whole, since it actually 
makes it more expensive for many U.S. businesses to operate in 
Puerto Rico because of these excessive shipping costs.
    Mr. Torres. My time has expired. Thank you.
    Chairman Cleaver. Mr. Torres yields back.
    We have no further witnesses.
    Let me thank the witnesses for your testimony, and your 
participation today.
    The Chair notes that some Members may have additional 
questions for these witnesses, 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.
    This hearing is now adjourned.
    [Whereupon, at 11:32 a.m., the hearing was adjourned.]

                            A P P E N D I X


                            November 15, 2022
                            

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