[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
STRENGTHENING AND REJUVENATING
OUR NATION'S COMMUNITIES AND
THE HOPE VI PROGRAM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
APRIL 29, 2003
__________
Printed for the use of the Committee on Financial Services
Serial No. 108-23
89-932 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts
DOUG BEREUTER, Nebraska PAUL E. KANJORSKI, Pennsylvania
RICHARD H. BAKER, Louisiana MAXINE WATERS, California
SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice JULIA CARSON, Indiana
Chairman BRAD SHERMAN, California
RON PAUL, Texas GREGORY W. MEEKS, New York
PAUL E. GILLMOR, Ohio BARBARA LEE, California
JIM RYUN, Kansas JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio DENNIS MOORE, Kansas
DONALD A. MANZULLO, Illinois CHARLES A. GONZALEZ, Texas
WALTER B. JONES, Jr., North MICHAEL E. CAPUANO, Massachusetts
Carolina HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois KEN LUCAS, Kentucky
MARK GREEN, Wisconsin JOSEPH CROWLEY, New York
PATRICK J. TOOMEY, Pennsylvania WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut STEVE ISRAEL, New York
JOHN B. SHADEGG, Arizona MIKE ROSS, Arkansas
VITO FOSELLA, New York CAROLYN McCARTHY, New York
GARY G. MILLER, California JOE BACA, California
MELISSA A. HART, Pennsylvania JIM MATHESON, Utah
SHELLEY MOORE CAPITO, West Virginia STEPHEN F. LYNCH, Massachusetts
PATRICK J. TIBERI, Ohio BRAD MILLER, North Carolina
MARK R. KENNEDY, Minnesota RAHM EMANUEL, Illinois
TOM FEENEY, Florida DAVID SCOTT, Georgia
JEB HENSARLING, Texas ARTUR DAVIS, Alabama
SCOTT GARRETT, New Jersey
TIM MURPHY, Pennsylvania BERNARD SANDERS, Vermont
GINNY BROWN-WAITE, Florida
J. GRESHAM BARRETT, South Carolina
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
Robert U. Foster, III, Staff Director
Subcommittee on Housing and Community Opportunity
ROBERT W. NEY, Ohio, Chairman
MARK GREEN, Wisconsin, Vice MAXINE WATERS, California
Chairman NYDIA M. VELAZQUEZ, New York
DOUG BEREUTER, Nebraska JULIA CARSON, Indiana
RICHARD H. BAKER, Louisiana BARBARA LEE, California
PETER T. KING, New York MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, Jr., North BERNARD SANDERS, Vermont
Carolina MELVIN L. WATT, North Carolina
DOUG OSE, California WM. LACY CLAY, Missouri
PATRICK J. TOOMEY, Pennsylvania STEPHEN F. LYNCH, Massachusetts
CHRISTOPHER SHAYS, Connecticut BRAD MILLER, North Carolina
GARY G. MILLER, California DAVID SCOTT, Georgia
MELISSA A. HART, Pennsylvania ARTUR DAVIS, Alabama
PATRICK J. TIBERI, Ohio
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
C O N T E N T S
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Page
Hearing held on:
April 29, 2003............................................... 1
Appendix:
April 29, 2003............................................... 47
WITNESSES
Tuesday, April 29, 2003
Frasier, Joan Walker, Executive Committee Member, Jeffries Tower
Residents Organization, Atlantic City, NJ, on behalf of
Everywhere and Now Public Housing Residents Organizing
Nationally Together (ENPHRONT)................................. 22
Glover, Renee, Chief Executive Officer, Atlanta Public Housing,
President, Council of Large Public Housing Authorities,
Washington, DC................................................. 23
Guzman, Thomas D., Director, Iowa Downtown Resource Center, Des
Moines, LA..................................................... 25
Husock, Howard, Alfred Taubman Center for State and Local
Government, John F. Kennedy School of Government, Harvard
University, Cambridge, MA...................................... 27
Liu, Hon, Michael, Assistant Secretary, Public and Indian Housing
Department of Housing and Urban Development, Washington, DC.... 7
Marchman, Kevin E., Executive Director, National Organization of
African Americans in Housing, Washington, DC................... 29
Popkin, Susan J., Urban Institute, Washington, DC................ 30
Tracey, Brian, Senior Vice President, Bank of America on behalf
of the Nation Association of Affordable Housing Lenders,
Washington, DC................................................. 32
Zukoff, Lisa B. Executive Director, Wheeling West Virginia Public
Housing Authority on behalf of National Association of Housing
and Redevelopment Officials, Washington, DC.................... 34
APPENDIX
Prepared statements:
Oxley, Hon. Michael G........................................ 48
Liu, Hon. Michael............................................ 49
Frasier, Joan Walker......................................... 55
Glover, Renee (with attachments)............................. 61
Guzman, Thomas D............................................. 78
Husock, Howard (with attachments)............................ 83
Marchman, Kevin.............................................. 103
Popkin, Susan J.............................................. 108
Tracey, Brian................................................ 120
Zukoff, Lisa B............................................... 125
STRENGTHENING AND REJUVENATING
OUR NATION'S COMMUNITIES AND
THE HOPE VI PROGRAM
----------
Tuesday, April 29, 2003
U.S. House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:14 p.m., in
Room 2128, Rayburn House Office Building, Hon. Robert Ney
[chairman of the subcommittee] presiding.
Present: Representatives Ney, Tiberi, Harris, Waters,
Carson, Lee, Watt, Clay and Scott. Also in attendance was Mr.
Leach.
Chairman Ney. [Presiding.] The subcommittee will come to
order. The subcommittee meets today to discuss our nation's
communities and the HOPE VI program, which is administered by
the Department of Housing and Urban Development.
As today's witnesses well know, Homeownership and
Opportunity for People Everywhere, HOPE, is the name given to a
series of housing programs initially authorized by the
Cranston-Gonzalez National Affordable Housing Act in 1990. The
HOPE programs are numbered one through five, with HOPE VI added
later. The HUD Reform Act of 1989 authorized the establishment
of the National Commission on Severely Distressed Public
Housing. The task of this commission was to conduct case
studies and site examinations of public housing developments.
The commission reported that approximately 86,000 public
housing units were severely distressed and recommended that
these units be removed from the housing stock. HOPE VI was
begun as a result of the findings of this commission.
The purpose of HOPE VI programs is to revitalize severely
distressed public housing developments and transform them into
safe, livable environments. The required element of the program
is the provision of a effective targeted self-sufficiency
initiatives so that public housing can regain its role as
housing for low-income families who are determined to improve
their status. HOPE VI funds are used to provide three types of
grants--planning, implementation and demolition. Until 1998,
the bulk of funding provided for HOPE VI was rewarded to
planning and implementation grants. Since 1998, most of the
grantees were awarded funds for the demolition of obsolete
projects or units. A number of concerned housing support groups
and legislators are now questioning the necessity of many of
the demolitions and are debating the future of the HOPE VI
program.
President Bush's fiscal year 2004 budget proposal does not
include funding for HOPE VI. So far, HUD maintains that the
program resulted in the demolition of 55,000 of the 140,000
public housing units that have been approved for demolition
under HOPE VI. In addition, because progress is often slow
under HOPE VI programs for various reasons, billions of dollars
in HOPE VI funds remain in the pipeline and demand the
concentrated attention of HUD and the current grantees.
Despite the success and popularity of the HOPE VI program,
not all proponents of affordable housing support this program.
The intended purpose is to provide quality housing for low-
income families, yet some experts maintain that few of the
newly constructed units are available to these families upon
the completion of a project. In some revitalization areas, as
many as 75 percent of the original public housing tenants
become displaced. As conscious stewards of the taxpayer's
income, we must investigate if this is the best use of
government funding or not. Clearly, the HOPE VI program is in
need of review. We must determine whether it is proper to phase
out HOPE VI, and if HOPE VI is to be continued, then whether
reforms are necessary.
Both Congressman Leach, H.R. 1614, and Congressman Watt,
H.R. 1077, have introduced legislation in the 108th Congress
that includes changes envisioned in H.R. 3995 and H.R. 5499.
These bills are virtually identical, with the exception that
the Leach bill includes a section that would allow HOPE VI
grants to be used to assist small communities to develop
affordable housing as part of the Mainstreet Redevelopment
Program. We hope to have an agreement on these two bills and
move to markup hopefully within the next month.
Although today's hearing is to discuss the HOPE VI program,
interested parties may have noticed today the front page of the
Washington Post article that referred the Administration's
housing assistance for needy families, or HANF proposal. I do
intend to introduce this legislation tonight upon request--I
want to stress upon request--of the Administration, and hold
the first in a series of hearings on the section 8 program
beginning May 22. Section 8 reform is a worthy topic and it
necessitates thoughtful debate and discussion. I look forward
to the leadership of this subcommittee as we move forward in
studying this proposal. Again, we have to lay it on the table
for discussion. Personally, I am in a neutral position on this
whole proposal. We need to have public hearings and we need to
have discussions among members of the committee and advocates
for housing across the United States and with HUD to see if
block granting works. So at the request of the Administration
for discussion purposes, I am going to introduce this.
I want to thank all of our witnesses for taking time from
their busy schedules to be here today. I look forward to
hearing the testimony and having a good discussion on the HOPE
VI program. I would like to thank members for being here today,
and without objection, all members' opening statements will be
placed in the record.
The gentleman from Georgia?
Mr. Scott. Thank you very much, Mr. Chairman, and let me
commend you for having this very, very important hearing on a
most worthy and important program.
The HOPE VI program is an extraordinary, creative and
beneficial program. I want to thank this distinguished panel
for coming before us and for sharing your testimony. The HOPE
VI program is important to my district and the Atlanta metro
area of Georgia because both the Fulton County Housing
Authority and the Atlanta Housing Authority have both received
HOPE VI grants. Because of their successes with this program, I
am a cosponsor of both Mr. Leach's bill and Mr. Watt's bill,
and their efforts to reauthorize and improve HOPE VI. I think
it is very important to note this strong bipartisan Republican-
Democratic partnership to revitalize and reinstitute HOPE VI.
With neighborhood revitalization as the cornerstone of its
strategy, since 1994 the Atlanta Housing Authority has reduced
its workforce by more than 53 percent. It has increased the
number of families it serves by 17 percent. It has privatized
the management of 100 percent of its real estate and leveraged
$184 million of federal grants, including three HOPE VI grants
totaling $1.3 million, into $2.5 billion of local economic
activity. What a success story is the program in the HOPE VI in
my district. The Atlanta model of mixed-income community
development is a proven, sustainable neighborhood strategy that
is definitely eliminating the institutional poverty. These
achievements have been reached and achieved under the
leadership, the sterling leadership of one of our panelists,
Ms. Renee Lewis Glover, from my district in Atlanta, Georgia,
and we are so proud to have you here, Ms. Glover, who is the
chief executive officer of the Atlanta Housing Authority.
If I may, Mr. Chairman, let me just take a moment to
introduce Ms. Glover to us. Ms. Renee Glover joined the Atlanta
Housing Authority as CEO in September of 1994. The Atlanta
Housing Authority is the sixth largest housing authority in the
United States. It owns and operates approximately 9,500 multi-
family apartments and administers approximately 12,000 section
8 vouchers. Ms. Glover was named public official of the year
2002 by Governing magazine, and she has been recognized as one
of the top 10 women in government by the Center for American
Women and Politics, the Ford Foundation, and the Council for
Excellence in Government. She served on the national advisory
council of Fannie Mae, and was appointed by Congress to the
Millennial Housing Commission in 2000, charged with providing
legislative recommendations on national housing policies. Prior
to joining the Atlanta Housing Authority, Ms. Glover was a
corporate finance attorney in Atlanta and New York City. She
received her juris doctorate degree from Boston University, her
master's degree from Yale University, and her undergraduate
degree from Fisk University. I welcome Ms. Glover today to our
committee and we look forward to your testimony.
Thank you very much, Mr. Chairman.
Chairman Ney. I thank the gentleman for his statement.
Mr. Watt of North Carolina?
Mr. Watt. Thank you, Mr. Chairman. I will be brief,
although I have a lot to say about HOPE VI and the process by
which we got here.
First of all, I want to thank the chairman for convening
this hearing. This is exactly the way the process should work.
A debate starts about the value of a particular federal program
and the best way to resolve that debate is to have people who
have been in the middle of the programs come and talk about the
value, the problems, the challenges that they have experienced
in the program, and then try to see whether there is any way to
accommodate those problems and concerns and challenges. I think
that is what we have been trying to do throughout this process.
We introduced a bill last year to reauthorize HOPE VI and
improve it by addressing some of the concerns that had been
identified--displacement of residents, housing authorities who
were getting funds and were not ready to immediately start to
use those funds--the range of issues. So the bill that we
introduced last year and reintroduced this year addresses those
concerns.
Then Mr. Leach approached me about an amendment which had
been offered to last year's bill that had passed the committee,
which we left out of the bill this year, and wanted to know if
I would be offended if he dropped another bill that had that
amendment in it, and I said, not only would I not be offended,
I would join as a cosponsor in your bill. So I have got two
bills out there now that I am supporting. All that does is add
value to the discussion about how to do this.
The other thing I want to say to the representative from
HUD in particular is that I have not been one, despite the fact
that I have authored the bills to reauthorize HOPE VI, I have
not been one, and I think Secretary Martinez will verify this,
to say that I have closed my mind to alternatives that would
improve or make the HOPE VI program a better program. What I am
waiting on is a specific proposal from this Administration. I
think some of the things I have heard that may be being thought
about by the Administration may have some value to them, but I
do not think we can solve the problem by zeroing out HOPE VI,
and then talking about how we revised the program. I think now
is the time to have that discussion and this is the process
within which to initiate that discussion.
So I will end where I began, which was to thank the
chairman for providing this forum in which a discussion and
evaluation of a valuable program can be made, and we can
discuss and evaluate how to make it even better. I thank the
chairman and yield back.
Chairman Ney. Thank you.
Our ranking member, Ms. Waters?
Ms. Waters. Thank you very much, Mr. Chairman and members.
I have a statement that I am going to submit for the record,
but I am going to condense my comments by simply saying that
many of us were alarmed when we learned that the Administration
was not desirous of reauthorizing HOPE VI. As you know, we all
have concerns about public housing--the funding for public
housing, section 8, making more units available, rehab--all of
that. But HOPE VI has taken on quite a significant meaning for
distressed housing in this country. While the Administration
makes the argument that not all of the dollars allocated to
HOPE VI have been spent, our examination of this issue does not
lead us to conclude that this is a good reason why HOPE VI
should not be reauthorized.
We have learned that the number of applications for it
outweigh any concerns about whether it is needed. As a matter
of fact, we believe that if we simply fund it at about 50
percent of those applications that have been put in, we would
be going a long way toward providing safe affordable housing
for so many of our citizens who are in desperate need. Not only
are we concerned about the lack of reauthorization, we think
this sends a message. We do not know why, even if you did not
want to put the dollars into it, if the Administration did not
want to put the dollars into it, we do not know why you would
not simply support reauthorization. That is a signal that says,
we think this program has value. We think that despite the fact
that all of the dollars have not been spent, we do see progress
being made.
We have discovered in our examination of the issue that
increasingly the housing authorities have reduced the number of
days that it has taken them to get up to speed, and we think it
gets even better. We think with the more involvement of the
private sector and all of that, that these grants can be
expedited in ways that can put the rehabilitation of housing
units on line in ways, again, that would make them available to
people who so desperately need it.
So what I would like to hear in addition to whether or not
you understand the request and the needs and the applications
and what you think about all of that, I need to understand how
the projects are chosen. My staff has walked through this with
me, I guess, 100 times now, or many times now, and I do not
understand how the criteria is evaluated and how you can score
high and not get selected to be supported for a HOPE VI grant.
I want to trace the dollars. I am from Los Angeles and our
needs are great. I want to see what is it going to take for me
to be competitive with Texas and Florida, for example. I think
there is something I do not know, I do not understand, about
how the decisions are made. So I am hopeful that in your
testimony today you will help me to understand that.
Also, my staff has brought to my attention that in the
evaluation, in this criteria and the way that it is evaluated,
the dollars are directed toward the unit--rehab of units. And
they have pointed out to me that you have units that are
located in communities that are in great disrepair and there is
a need for support for infrastructure and things that do not
meet the strict criteria for the rehab of units et cetera. So I
would like some comments about whether or not we can take a
look at that so that we can factor that in to these
applications and requests, and this can be given some
consideration.
Having said all of that, HOPE VI has a following, not just
among members of Congress on both sides of the aisle, but
throughout our communities. People who work on housing issues
and consumer issues are now in support. We think the relocation
problems are being worked on. We all are concerned that people
have options and that they can get back into some of these
rehabilitated units. We do not want folks to be displaced and
just disappear, and we not know what happened to them. But we
support HOPE VI and we would like to see it reauthorized, and
we would like to see it funded. But even if it is not funded,
we want to see it reauthorized, and hopefully we can hear
something about those issues.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Chairman Ney. Thank you.
The gentlelady from Indiana?
Ms. Carson. Thank you very much, Mr. Chairman, and
certainly thank you to the Honorable Michael Liu for being here
this afternoon. I hope I have pronounced your name correctly.
If I did not, I apologize, but I appreciate the distinguished
panel who have gathered here today to present your views in
terms of the subject matter before this housing subcommittee.
It seems as though nearly every time this committee hears
from HUD, one area of another is on the chopping block. The
public housing drug elimination program is gone, and it served
very well in my community in terms of a major decline in drug
activity in the public housing projects, and the budget is
proposing to knock out brownfield programs, even though this
committee labored long and hard on it just last year. Section 8
vouchers will not be funded at the 100 percent level, and we
are supposed to somehow be pleased with the fact that it might
be as low as 70 percent after all.
Now, we are here to hear why we no longer hear HOPE VI. I
would simply implore the Administration now more than ever not
to eliminate, not to reduce, not to get rid of so many of these
vital housing assistance programs that have worked well for so
long. When I read your advance copy, sir, of your
Administration's position to eliminate HOPE VI altogether, it
implied that it had essentially served its purpose, or that
there were areas where resources had not been utilized, and the
consequence of that was is that you felt maybe that we do not
need it at all. As I read your very eloquent statement, it
reminded me of a man being with a woman for several years,
having had children and grandchildren, and then decided that
because she began to move slowly and was not meeting up to
capacity, that he no longer needed her; that he kicked her out
in favor of something that may be more energetic, and more that
would be more palatable to his thinking. While I would be
opposed to that kind of strategy in terms of eliminating
domestic tranquility, I would also be opposed to eliminating
HOPE VI, that has in fact worked well for several communities,
including my own of Indianapolis, Indiana. We were having plans
to use further resources from HOPE VI so that we could enhance
domestic tranquility for lower income people.
I realize in your statement that you say, well, it was not
all used, it was used up as fast as it ought to have been, but
I would suggest to you very respectfully that sometimes when
things become a little aged, they do not move as fast as they
used to move, but they still serve their purpose.
I would respectfully ask for some reconsideration on the
part of this Administration. I do not want to sound political,
but I do favor the HOPE VI, as I did section 8, as I did
brownfields, and as I did the drug elimination program. Even
though I am becoming an old member of the United States
Congress and do not move as fast, I would like to assure you
that all those programs worked extremely well. Inevitably, some
have a little flaw here and there, a little arthritis and
osteoporosis, but they still work well. If you would be kind
enough to take back to the Administration our desire
collectively, especially on this side of the aisle, to
reconsider totally throwing the wife out with the bathwater and
bring her back in and kind of patch her up a little bit and see
if we cannot move forward with HOPE VI.
Mr. Chairman, I yield back the balance of my time.
Chairman Ney. I thank the gentlelady from Indiana.
Mr. Tiberi, do you have anything? I want to thank the
gentleman from Ohio for joining us. With that, we will begin
with panel one, and as is procedure, without objection your
written statements will be made part of the record and you will
have five minutes to summarize your testimony.
Michael Liu is the Assistant Secretary for Public and
Indian Housing at HUD. He oversees the Administration of all
public housing section 8 rental assistance and Native American
programs at HUD--programs that comprise more than 50 percent of
HUD's operating budget of approximately $30 billion. Prior to
assuming his position at HUD, Mr. Liu served as Managing
Committee Member for the Federal Home Loan Bank of Chicago.
Welcome.
STATEMENT OF HONORABLE MICHAEL LIU, ASSISTANT SECRETARY, PUBLIC
AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT, WASHINGTON, DC
Mr. Liu. Thank you very much, Mr. Chairman. As you said, my
testimony is in for the record; Michael Liu, Assistant
Secretary for Public and Indian Housing at HUD. I will
summarize. I think in the interest of time I will specifically
direct my verbal comments to the questions presented to us in
your invitation to come before you this afternoon, Mr.
Chairman.
The first question has to do with the Administration has
not included additional funding for HOPE VI in fiscal year
2004; would you please explain why you believe HOPE VI should
not receive future funding. To go over the reasons very quickly
and in general at this point, and of course be open for
questions later, first of all, as we all know, as you
described, the program was authorized for a 10-year period
which expired in 2002. The Administration did request an
authorization for fiscal year 2003 and the Congress agreed with
that. There will be funding for fiscal year 2003. However, we
have found a number of fundamental issues and fundamental
design flaws with the program. Over time, we have now come to
understand that now that we have dealt with much of what was
originally considered the most severely distressed public
housing in America, there is some very serious questions as to
what that really means today. I think there are some attempts
through legislation to address that question, but there is a
lot of debate in academia, among practitioners, among public
housing authorities as to what type of revitalization, what
type of housing we need to address, something which does
deserve very close examination and something which should be
very considered and measured as we move forward.
Secondly, one of the major purposes of HOPE VI as
originally designed was to eliminate most of the severely
distressed housing in America--86,000 units. In fact, in
combination with HOPE VI and other demolition programs within
HUD, we have to date actually demolished over 100,000 units,
with another 40,000 units plus or minus a few, approved,
upwards to 140,000 within the next year. The cost per unit we
have found to be extremely high under the HOPE VI program as
compared to the HOME program. It is 120,000 in the aggregate
nationwide, which is considerably more than what we have found
for similar type units in the HOME program.
There has been concern about time frames in which these
programs in which the grants are actually implemented. We see
successes such as in Denver, Milwaukee and Seattle, a very
minority, 15 out of the 165 grants through 2001, only 15 have
been completed. Whereas programs across the country--New
Orleans, Cleveland, Gary, Indiana--we see projects struggling
to stay on schedule.
A perverse incentive exists in the current program. That
is, if we intend to address the most distressed housing, many
times that is in part related to the capacity of the housing
agency to maintain that property. Yet, we want to work with
housing authorities that know how to spend this money and how
to move in the development world. So we see a very fundamental
tension in this program that we need to pause and look at and
to work out as we move forward. This is one of the major
reasons why we have found that the program has moved much
slower than all of us would like to see.
The second issue that was posed to us was to address our
public housing reinvestment initiative. In a nutshell, the
public housing reinvestment initiative is a proposal which has
been put forward by the Administration to further provide a
tool to public housing authorities to access private sector
capital for the purposes of rehabilitation and revitalization
of public housing; $131 million has been put aside to support
the credit subsidy involved, which is linked to up to an 80
percent guarantee of the program. This proposal is separate and
apart from our HOPE VI initiative. It is one more in a line a
other tools which we have developed over the last five or six
years to assist public housing authorities going to Wall
Street, going to the markets. We have approximately 50 housing
authorities today that have either completed or are in the
pipeline to get bond financing and debt deals which will allow
them to access literally billions of dollars of private sector
capital to assist their needs in dealing with backlogged
capital needs. The public housing reinvestment initiative is
one more tool, in addition to those which already exist today,
to assist public housing authorities and agencies to move in
this direction. These are tools which were not in existence 12,
13 years ago when the original National Commission on Severely
Distressed Public Housing was in existence, or when they
completed their report.
We are also asked to address the specific proposal, H.R.
1614, introduced by Congressman Leach. While we think that
there are some very good ideas in that legislation, the
specific targeting of small communities tied to we believe the
Mainstreet program, and as defined in the bill itself, clearly
is not linked to public housing. In fact, there is language
there that specifically de-links it from the most severely
distressed public housing, which I think is indicative of our
position, which is that there is need to reexamine some of the
underlying fundamental issues before we move on.
The next question that we were asked to address----
Chairman Ney. I would note, not to interrupt, but the time
has expired. If you would like to summarize?
Mr. Liu. In the end, Mr. Chairman, we think that the
program has met its primary goal, the initial goal of
eliminating the most severely distressed public housing. It has
some inherent conflicts which we need to review, and it is time
that we do so.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Michael Liu can be found on
page 49 in the appendix.]
Chairman Ney. Thank you. And also some questions may arise
on the remaining issues that you had, or if you want to work
them into the conversation, we can also do that.
With that, I did want to ask you, since you mention in the
testimony about HOME units and also HOPE VI, and you show that
there has been a big difference in being able to do those, why
do you think there is such a big difference? Is it the
Administration within HUD, or is it some difference of rules or
regulations? Why would there be such a big difference in
administering the two programs?
Mr. Liu. Those are one of the issues that we think is a
valid issue for us to review and look at during this period, as
we look forward as to what should be the next iteration of how
we address the backlog needs. The fact that the HOME program
has shown to be a much more cost-effective program, we have to
do a better analysis to see exactly why. Flexibility may be one
issue--the flexibility on the part of the entities involved in
the development; the fact that the HOME program is not
necessarily tied to use by public housing agencies, which in
many instances may not be the best entities across the country
to be involved in complex real estate-type of development.
Chairman Ney. Because both programs are leveraging low
income tax credits and private funds, so they are both doing
that. Both are administered under HUD. But has there ever been
a comprehensive look at why one was working better than the
other? You were talking about the housing authorities, maybe
that is one part of it.
Mr. Liu. There has not been a direct comparison to the
degree of analysis which would allow us to actually come
forward with a more comprehensive answer at this time.
Chairman Ney. The other question I had, HOPE VI funds are
distributed by way of the notice of funding availability, NOFA,
which is published by HUD each year. The fiscal year 2002
revitalization notice of funds availability on July 31, 2002,
for which applications were due by November 29, 2002, and the
awards were announced March 5, 2003. The fiscal year 2002 NOFA,
demolition NOFA, was published on April 4, 2003, with the
applications due by June 3, 2003. Can you explain what takes it
so long--what is the delay time in there to be able to publish
the NOFA?
Mr. Liu. For fiscal year 2002, we went to considerable
lengths to adjust the program to deal with some of the concerns
that we had; to streamline the process for public housing
agencies once they did receive their grants, so that we could
mitigate the concerns that we saw of grants made prior to that
point in time. So from the standpoint of that work, to review
what we thought would work, to get views from those involved in
development and with the housing agencies, that is what took us
the time in order to get our NOFA out in the time frame that we
did.
Chairman Ney. Because on the other hand, you hear housing
authorities who people will say, well, they have a delay there,
but they might come back and say, well, the delay is actually
here in Washington; $500 million is in the pipeline, but it is
sitting here because it takes a year to get the NOFA out. That
is the other side of the argument.
Mr. Liu. Well, the time frame that we are talking about
here, Mr. Chairman, just deals basically with--we are not
counting any time in which it takes them to apply and in which
the award is granted in order to, in terms of our global view
of what is at issue and what is a problem here. I think even if
you discounted the grants made in 2001, there were 16 made in
that year. The remaining 149 of those we only had fewer than 14
which were completed by the end of fiscal year 2002.
Chairman Ney. So for this year the grants will come out
quicker?
Mr. Liu. We believe that we will need less adjustment so
that we certainly anticipate that we will be able to get a NOFA
out a few months earlier, and that the process will probably be
accelerated.
Chairman Ney. And one note, agencies will run into this all
over the government. I just wondered if internally there has
been any type of look or consideration of how possibly to
streamline it or if anything has been discussed?
Mr. Liu. Absolutely. In terms of, we have cut our review
process, which used to take upwards of four months, of five
months, because we have changed the application process where
housing agencies have to be much more project-ready. The actual
review process is much shorter. I think we took approximately
six weeks instead of the normal three to four months that it
would take once the applications came in.
Chairman Ney. The final question I had--you mentioned
several alternative methods for revitalizing distressed public
housing, such as bond financing and property-based initiatives.
Today, not all the public housing agencies have the expertise
to use the alternative methods that you do discuss in your
testimony. How do you propose that the smaller, more rural
communities address the revitalization and redevelopment needs?
Mr. Liu. Actually, we find a tremendous number of the
smaller and modest-sized housing agencies around the country
are able to access capable advice and guidance from either
consultants or people associated with local and state
organizations to assist them. I can rattle off a few names of
cities now which would give you an example. We have Marquette,
Milwaukee, Suffolk----
Chairman Ney. Not to interrupt, but I have been told there
is a total of about 50.
Mr. Liu. Approximately 50 that are right now in the queue,
but there are more every day. We get calls every day, and we
have done, again, these account for close to probably $2
billion or $3 billion.
Chairman Ney. I appreciate the effort, but it is 50 out of
2,600, we have got to somehow work together to get the curve
up.
Mr. Liu. Understood.
Chairman Ney. Thank you.
The gentlelady from California?
Ms. Waters. Thank you very much.
I don't know if I have a question as much as I have a
statement. I am struck by how dispassionately we are discussing
this issue, when in fact there is a housing crisis in America,
and certainly a housing crisis among poor people and working
people. As I understand it, most Housing Authority Directors
were never considered to be experts as developers and
contractors. They took the jobs basically described as jobs
that would manage public housing under the public housing
authority. So if we know that, what then is HUD's
responsibility to help develop that capability, rather than
sitting back and saying, oh, we gave you some money and you
didn't get it done; you are too slow; you don't really know
what you are doing.
What is HUD's responsibility in helping with this new
mission that is now on this public housing authority to
eliminate distressed housing, and I guess build more units.
What is your role? What do you do to assist them?
Mr. Liu. Congresswoman, since the start of the program, it
is my understanding, and we certainly have staff which have
been with the program for the time frame that it has been in
existence, we get nothing but compliments from the industry
organizations on the professionalism and the outreach and the
efforts made by our staff to work with those housing agencies
that not only receive grants, but those who have attempted to
get grants and are interested in the program. We currently are
very active in working with NAHRO and FATA and CLAFIN and the
various organizations in permitting staff to be out at their
conferences to provide information and background on the
programs.
Ms. Waters. If I can take back my time, I hate to interrupt
you, but we only have so much time. Really, the proof of the
pudding is in the eating. You get all these compliments--what
are they saying now that you are not reauthorizing the program?
You do not want to put in any more money, and the compliments
do not mean anything. The whole idea was to do something about
this distressed housing, and I suppose provide some safe and
secure situations for people to live in. So I guess what I am
saying is, I guess what you are telling me is you think you
have done a good job.
Mr. Liu. Congresswoman Waters, I think we have done what
the program initiated in regards to both the demolition, but we
would all agree, I think there is a consensus that a lot more
has to be done to focus our energies in ensuring that the units
that were promised need to be built. Less than 25,000 of the
promised 85,000 units that were projected to be built under the
program have been completed.
Ms. Waters. So what are you being complimented on if your
assistance has not resulted in the building of those units?
Mr. Liu. We have been complimented on the fact that we have
tried mightily, working with many entities, that as you have
pointed out, were not initially capable. These are one of the
fundamental issues.
Ms. Waters. Are you saying then that you have failed? That
despite all your hard work and everything that you have done,
you have just failed to be able to help the housing authorities
get the job done?
Mr. Liu. One of the fundamental issues that we do have to
examine here and which was I think raised by Chairman Ney, is
whether or not public housing agencies are the only entity that
should be involved in developing housing; whether or not in
terms of HOPE VI, whether or not they are the only entity that
should be considered to be grant recipients. Right now, many of
them work with private developers under contract, but there are
some opinions out there that perhaps a redevelopment program
might work better working directly with other entities.
Ms. Waters. Let me just say this, I think it has taken HUD
too long, and I am not accusing any one Administration, because
this crosses Administrations, has taken too long to come to the
realization that, hey, something is wrong here. I mean, given
the fact that you are now coming to that conclusion and you are
moving in some ways to privatize and make sure that you have
some loan guarantees by which to get some companies in there I
guess who want to do this work and all of that--let's agree
that we can chew gum and walk at the same time. We do not have
to stop and say, well, we just discovered we have not been
doing such a good job; let's take another few years and do a
study. Let's authorize this program, reauthorize it. Let's keep
the money flowing. Get the private sector in there. I do not
care. I understand what some of this is about. I do not
necessarily agree with it all the time, but I get it. Let's get
the private sector in there and let's keep moving so that we
can do the demolition and we can do the building and the rehab
or whatever it is it takes to get it done. That is not a
question. That is just my opinion.
Thank you, Mr. Chairman.
Chairman Ney. The gentleman from Ohio, Mr. Tiberi?
Mr. Tiberi. Thank you for coming, Assistant Secretary Liu.
Back in 1989, I was volunteering in a project in what is
currently my district--it was not my district at the time--and
ended up actually starting a learning center with a teacher
from the Columbus city schools. That project was a pretty
horrible project. It was unbelievable in terms of, it would not
have met building code at the time. That is how poor it was in
terms of its shape. That was one of your HOPE VI projects that
I would like to tell you is now done and completed and quite
nice.
Having said that, however, and that would probably be
considered--and there were three in the district that I
represent that have been successful--at the time, that
particular project when it was built was criticized by many in
the community, and watch dogs around central Ohio, because of
the cost of that particular project. In fact, an argument was
made at the time, and off the top of my head I cannot remember
the actual number, that you could have taken every resident
that was being displaced and replaced back into the new
facility, you could have taken each one of them and built a
house for them at the cost under the HOPE VI program that it
cost to rebuild this new facility, that was once called Windsor
Terrace and then was renamed Rosewynne; again, very nice.
My question to you is with respect to the HOPE VI projects,
because I certainly do not have the understanding that you have
across the country with respect to HOPE VI, is there any
concern internally that the criticism was somewhat legitimate?
That you could have provided maybe homeownership to some folks,
rather than rebuilding the unit in terms of these costs that
were incurred to replace what was there--which by the way,
absolutely needed replaced?
Mr. Liu. Congressman, that is a very insightful question.
The question of providing other opportunities in addition to
rental housing as part of the concept of HOPE in housing is
certainly one which in fact was envisioned by the original
writers of the final report on the National Commission on
Severely Distressed Public Housing. Until recently, we have not
really seen more developments, more plans under HOPE VI which
provides homeownership as a key component part of the HOPE VI
plan. They have been more in a very smaller supportive role,
and unfortunately many times to a great degree in market rate
versus designed to work with various other subsidy programs and
supportive programs to provide public housing residents with
the opportunity or the chance to perhaps qualify. That is
changing a bit around the country, but definitely it has been a
concern of this Administration.
Mr. Tiberi. That the cost of these units just not only in
Columbus but also throughout the country exceeded maybe
expectations at the time, and that other opportunities to
provide maybe even better housing, at what it was costing to
provide this type of housing could have been done for the best
interests of the residents?
Mr. Liu. One of the fundamental problems that has dogged
the program has been the difficulty on the part of the
applicants to project costs in a much more accurate fashion.
Total development cost has been one of those.
Mr. Tiberi. I know the Housing Authority Director in
Columbus believed it was a good program for Columbus, but there
was criticism from the outside in terms of what the costs were.
I have a little bit more time. I wanted to just touch on one
other thing. Low-income tax credits has been in the news lately
with respect to the issue of the dividend tax cut, what impact
it would have on low-income tax credits; the impact of
proposing this elimination. What would it mean to housing, in
your opinion?
Mr. Liu. Congressman, we certainly will defer to Treasury
for the Administration's formal statement on this issue, but I
will point out from a personal standpoint, from history, at the
outset the low-income housing tax credit program in fact was a
program that was invested in mainly by small investors. It was
only after some time evolved in the program did the large
corporate investors get into the picture. So perhaps we are
just at another point in evolution.
Mr. Tiberi. Well, I certainly thank you. It has certainly
been a success in central Ohio.
Thank you, Mr. Chairman.
Chairman Ney. Thank you.
Mr. Scott from Georgia?
Mr. Scott. Thank you very much, Mr. Chairman, and Assistant
Secretary Liu, thank you very much for coming.
I guess the nature of my question is sort of, where do we
go from here? You have mentioned the issue of need, today's
need in terms of an issue of whether we continue this. When
Secretary Martinez was before the committee, I put some
questions to him, and I was left with the impression that all
hope is not lost to revitalize this whole program. On a visit
that I had to the White House some time ago, I mentioned the
question to President Bush. He said that discussions can still
be forthcoming, but there are major, major concerns.
I would like us to start off from the premise that why we
need to save this program; why we need to do it. I was very
interested in the responses that you gave as to some of the
reasons why you think it needs to go out. When you do a cost-
benefit analysis, in this case I think we can safely say that
the benefits of keeping the HOPE VI program intact and moving
it with some changes, with some clarifications, I think we do
need to address the issue that you raise of how we can move
more quickly in the process.
I think also the issue of some of the displacement of some
of the people--are we creating more of a problem--can be
addressed. But when you look at my city of Atlanta and you look
at what has been done there, I would like for us to look at the
success of what we have done there--not just Atlanta, but I
represent Atlanta. There are some other places--Boston,
Seattle, some of the other communities--who I am sure have done
equally well. Given the major need that we still have, wouldn't
the more responsive thing to do, given the need for housing,
given the success of this program, and as I pointed out to the
President and to Secretary Martinez, this is indeed a
Republican initiative. That is to be applauded, and we applaud
it. It does all of those things. It brings about
responsibility. It takes people from living in a mound of
public dependency. It takes people who were once living that
way and tearing down and demolishing those units that were
basically for welfare recipients, and turning them into where
people of mixed income can live and grow together. But the most
important thing that it has done is it has stimulated those
communities all around it.
In Atlanta, all around the Carver Village, which is in my
community in my district, we have taken $44 million of federal
tax dollars and we have converted that into almost $200 million
by building shopping areas and revitalizing those communities.
So I am not clear on the evidence, that we have enough evidence
to justify doing away with this program. It seems to me that I
think your biggest leg that you are standing on here is one
which you mentioned, the cost per unit in comparison to your
HOME block grant program; that it costs--did you say?--about 33
percent more to build one of these units than that. Can we not
try to find out why that is happening, and maybe address the
specific issues within this program, and put things in the bill
that would address those and not turn this program out? What is
that difference, the 33 percent? Why does it cost that?
Mr. Liu. Congressman, some of the issues that you raise and
which you pinpoint, and some of the issues related to cost,
some of the issues related to timing and timeliness of these
projects, go to some of the very premises of the HOPE VI
program, which will require lots of debate. I have already
mentioned one in regards to what are the proper entities in the
community. In Atlanta, certainly the public housing agency
appears to have been extremely successful. I have been there. I
know Ms. Glover and I think there has been a lot of accolades
rightfully so provided to your city and to your Administration
there. But by far, Atlanta is the exception rather than the
rule--the very rare exception. So I think a healthy debate on
what entity should be involved in development has to take
place, and that is a tremendously controversial subject. I
would be the first to indicate that.
Whether or not we are in fact providing options to people,
or the belief that they can move on beyond public housing, the
jury is still out. The mixed income model works to the extent
that we have dealt with where we have been able to build the
units to provide better housing. But having we in fact provided
people the encouragement to move beyond public housing once
they have received those wonderful units? We do not know as
yet.
Chairman Ney. The time has expired.
Mr. Scott. Alright, thank you.
Chairman Ney. Mr. Watt of North Carolina?
Mr. Watt. Thank you, Mr. Chairman.
You have indicated in your testimony that you think HOPE VI
has served its purpose. I am wondering whether that means that
there are no more severely distressed housing units throughout
the country. Is that what that means?
Mr. Liu. Congressman, from the standpoint of what was
identified in the national commission's report on severely
distressed public housing, where they estimated 86,000 units,
the fact that we have moved forward in a very deliberate
process to review severely distressed housing over the past 10
years and we now are in the situation where I can state that we
have demolished over 100,000 units----
Mr. Watt. I know the numbers game. I guess the question I
am asking is, are there still severely distressed public
housing units in America? I cannot believe that HUD is saying
that there are not any, if that is what you are saying, because
I know in my own community there are public housing units that
are boarded up. They cannot be lived in because they are so
severely distressed. So I just cannot imagine that HUD is
telling this committee that there are no severely distressed
public housing units left in America.
Mr. Liu. As I mentioned, congressman, I think the
definition, which I think your legislation and Congressman
Leach's legislation attempts to deal with, and which others
have commented on, is one of the fundamental issues that we
have to ask ourselves.
Mr. Watt. There is really nothing in my legislation that
deals with the issue of severely distressed public housing. My
bill and Mr. Leach's bill address some of the concerns that
have been raised about the Administration--first of all, the
displacement of residents which we think ought to be made a
high priority in the consideration of applications, the delays
that have occurred in commencing and completing projects which
we think should be addressed in the reauthorization of HOPE VI.
I mean, we start from the presumption that there continue to be
severely distressed public housing units. I guess the thing
that I am a little distressed about is that HUD seems to now be
saying that that is not the case. We can pursue that
discussion.
Let me just talk about a couple of other things that you
mentioned, and give you my perspective on them because I
think--and maybe we will get more information about these
things. You talked about the time frames for completing these
projects. My perception was always that it would take longer to
build a community, which is what most of these HOPE VI projects
have been about, than it takes to build a house, or it takes to
build an apartment. If you were just going to tear down the
existing distressed public housing and build back on the
existing footprint, you could do that fairly quickly. But all
of these things, it seems to me, take longer because you are
building--the whole process of HOPE VI was to build community,
not just housing, not low-income public housing. You were
trying to build a community through HOPE VI.
The cost per unit, it seems to me, is just a--unless you
define it in some other way--if you take the cost of all that
was done in Atlanta around rebuilding that community and you
divided by the number of housing units, you are absolutely
right--it is going to come out to something that is higher than
building the public housing back there. The cost of building a
community is higher than the cost of building a public housing
unit, but that was the whole philosophy of HOPE VI in the first
place--not to just build concentrations of blocks of housing
that there that really--you know. So what I hear you saying is
that HOPE VI has been maybe a victim of its own success. I
thought some of the things that you are now describing as
problems with HOPE VI were the very things that we set out to
try to accomplish through HOPE VI.
So I know my time is up, but let me just make this point. I
guess I am disappointed that today your position seems to be
substantially different than the one Secretary Martinez was
expressing. We now have had three different positions on this.
We got the budget that says we are putting nothing in it for
HOPE VI. Secretary Martinez came a couple of weeks later after
that and said, well, we do not really intend to terminate HOPE
VI; we just want to improve it. I said, well, okay, give us
what you want to improve it with so we can start talking about
it. And now today, I am hearing there are no more distressed
housing units in America. We don't need the program. So you
have got to figure out what it is you are saying at HUD and in
this Administration before we can move forward, because those
are three entirely different positions that we have heard.
Mr. Tiberi. The gentleman's time has expired.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Tiberi. I would like to recognize Ms. Carson from
Indiana.
Ms. Carson. Thank you very much.
I do not want to be problematic because I realize you have
very tough choices here. Understand that I come from
Indianapolis, Indiana where we have the highest rate of home
foreclosures in the country, the highest rate of bankruptcies
in the country, and borders on the highest rates of
unemployment. So I am up here trying to squeeze anything out of
a bloodless turnip that I can, so I am sure you would respect
that.
My question is, you want to move toward a more cost-
effective process for HUD and public housing, so eliminating
HOPE VI, eliminating the baby in the bathwater and the wife is
one way you want to be more cost-effective. Does the
Administration have its level of cost-effectiveness resources
in the budget on the way to approval, and if so, at what
amount? That is a difficult question, but I am not well today.
I just cannot get this in my head.
Mr. Liu. Congresswoman Carson, I will point to the various
tools, many of them which are not in the budget today because
they do not have to be in the budget. We have our bond and debt
financing tools which work with the capital fund in moving to
work with cities, they work with the capital fund and our
operating subsidies where we can leverage these dollars to
produce bonds--in Chicago, a $300 million bond last year alone.
We have bonds in the pipelines, bond deals for one entity for
$700 million. We have interesting loan proposals.
Ms. Carson. Excuse my interruption--are you backing those
bonds? Are we in some kind of crap game or what? Are you
putting the resources behind the bonds that you are getting?
Mr. Liu. Yes, we are; yes, we are. Through our capital
subsidy program, we are putting together--we have the resources
needed and there is a process in place where we provide, with
the housing agency, working with them, the debt service dollars
which provide the comfort for Wall Street to issue these bonds.
Ms. Carson. So instead of HOPE VI, you spend around behind
the bonds, guarantee the bonds, work with the housing
authorities who in turn will replace this in a way that you
find feasible and appropriate?
Mr. Liu. Exactly.
Ms. Carson. You see, I am easy to get along with, even
though I do not agree with you. You know what I mean?
Mr. Liu. Understood.
Ms. Carson. But I respect your position on this.
Thank you, Mr. Chairman. I yield back--I am sure he is
happy--the rest of my time.
Mr. Tiberi. Thank you.
I would like to recognize Mr. Clay from Missouri.
Mr. Clay. Thank you, Mr. Chairman. Let me also thank
Ranking Member Waters for holding this hearing also, and thank
you, Assistant Secretary, for being here.
Let me say that HOPE VI is a vital program of the housing
umbrella that has the unique mandate of placing people of
varying economic levels in the same community. I represent St.
Louis, Missouri. We have a very successful HOPE VI project
going there. I noted that you came down pretty hard in your
testimony on public housing authorities. I assume that you
intend to turn over their authority to the states through
grants or block grants. Is that the way that HUD is going?
Mr. Liu. That is for the section 8 program, and our
proposal on HANF, Congressman Clay, but that does not affect
the public housing program. We are not proposing a block grant
for the public housing program.
Mr. Clay. How does HUD plan to replace demolished units?
Mr. Liu. Currently, for those housing agencies that have
not been able to participate in the HOPE VI program, they get
their capital fund subsidy on an annual basis. Through that
capital fund subsidy, housing agencies today, whether or not
they are part of the HOPE VI program, have some means to deal
with the capital needs, backlog needs, revitalization needs in
their public housing units.
Mr. Clay. How well is that going as far as people that are
displaced? Are there plans that will return them to the
developed properties? If there are, how well is that going as
far as placement?
Mr. Liu. Well, back to the HOPE VI program specifically,
that has been one of the major criticisms which we recognize of
the program--that there is displacement or there is concern
about being able to be relocated back into those units. Let me
clarify. The program does require today that the housing
agencies provide a relocation plan, and every family is
promised a voucher that they, working with the housing agency,
can use in the interim while units are being built. Not all
families take advantage of that, and there have been criticisms
that not enough units have been built back on the footprint or
on the sites that we are talking about. Of course, a number of
years ago a federal law was passed which did away with the one-
for-one replacement requirement, so that housing agencies and
HUD and the states and the counties and the cities no longer
have a requirement to replace one-for-one every single public
housing unit which is demolished and planned for redevelopment.
Mr. Clay. Wait a minute. Now, we are getting into
philosophy here. Do you feel as though HUD has a responsibility
to actually provide housing or decent affordable housing for
those who are in need of housing?
Mr. Liu. Absolutely. That is HUD's mission.
Mr. Clay. You still have that mission?
Mr. Liu. Absolutely.
Mr. Clay. Okay. Let me ask you about the application
process. You kind of talked about that in your testimony, about
the PHAs having problems with that. We have many more
applications than are processed each year. What do we do with
the applications from the previous years?
Mr. Liu. Those applications which have been submitted and
which have not been successful are considered unsuccessful
applications and we have a level playing field each and every
year as we move forward. The work they have done may be very
good in terms of their experience for another application, or
as a framework for them to proceed on their own redevelopment
without the HOPE VI dollars in place.
Mr. Clay. Okay. Thank you, Mr. Secretary. Let me say that
since I have heard the criticism that there is a lack of
resources, why wouldn't we stay with HOPE VI?
Mr. Liu. Congressman, as I have pointed out, when you step
back from the minority of cases when there have been successes,
the overwhelming majority of grants have not been completed. We
still need to focus in HUD and the housing agencies which have
that money--it is going to be $3.5 billion by the end of fiscal
year 2003--to make sure that the promises made in those
applications will come to fruition for the betterment of those
communities, as well as the residents involved.
Mr. Clay. Okay. So what happens in a community like St.
Louis? Do we just now--do we aggressively pursue high-density
communities and make them all section 8 public housing? Is that
where we are going with this?
Mr. Liu. Not at all. As I indicated, today separate and
apart from HOPE VI there are many communities that are
embarking on very aggressive revitalization of the public
housing in surrounding communities, using the resources that
they have not, without HOPE VI.
Mr. Clay. How do we get the mixed income?
Mr. Liu. They are making them mixed-income. You can make
them mixed-income.
Mr. Clay. Is it working, do you think?
Mr. Liu. The jury is still out.
Mr. Clay. Thank you, Mr. Chairman.
Mr. Tiberi. The gentleman's time has expired. Thank you.
Ms. Lee is up next.
Ms. Lee. Thank you, Mr. Chairman. I want to thank you and
our ranking member and our Assistant Secretary for this
hearing. Forgive me for being late. If I ask a question that
has already been answered, I apologize. I will take your
testimony, however, and read it very carefully.
I want to ask a couple of things. Well, all of us of course
have benefited--our districts have benefited from HOPE VI. Just
in my own area, I believe we have about $12.7 million in HOPE
VI grants. But one thing that some of us are noticing is the
Administration's focus more on homeownership as a priority. We
all support homeownership and believe that that is the American
way, but in doing that tend to undervalue and under-fund public
housing. For example, there is no request, again, for HOPE VI
in the budget. The drug elimination program has been completely
forgotten, I guess, and we are trying to see how we can restore
that. But the section 8 vouchers, you are going to block grant
it, or are trying to block grant it to the States. With the
desperate need of housing in this country, I would think that
HOPE VI and the drug elimination program, section 8 should be
increased and accelerated, and even presented to our
constituents in the country as a priority, when really it looks
like there is a retrenchment on public housing. Could you
comment on that just in the context of HOPE VI and what you
just said about the funding? If I heard you correctly, you are
saying that the grants have not all been executed. I would
think that you want to make it work, the community groups want
to make it work, public housing authorities in cities and
counties and this committee--everyone wants to make it work. So
why isn't there more focused effort to make it work, rather
than say it is not working, so we are not going to fund
anymore?
Mr. Liu. Well, congresswoman, I think you have actually
placed the emphasis exactly where we want to go, which is to
use our resources over the next few years to ensure that the
$3.5 billion for revitalization, which will be in the pipeline
by the end of fiscal year 2003 or at least by the end of the
calendar year 2003, be used, be managed, be leveraged, so that
we can build those units; so that we can provide the supportive
services; so that we can provide an array of options for public
housing residents, rather than adding to the pipeline; adding
to a program that still needs to meet all of its goals in every
city across America--not just in some cities, but in all of the
cities where the actual dollars exist right now.
Ms. Lee. But you are saying $3.5 billion has not been
spent?
Mr. Liu. By the end of this calendar year 2003, there will
have been $3.5 billion not spent. As we speak right now, there
is $3 billion in the pipeline.
Ms. Lee. Okay. Does that $3.5 billion, even if it is spent,
meet the need in terms of affordable housing and in terms of
those individuals and families that need this type of housing
and public housing specifically?
Mr. Liu. Well, for HOPE VI, for the particular communities
that are receiving the grants, we think that, and we hope that
based on what has been provided to us in terms of the need,
that yes, the dollars are there to provide what is planned by
that housing agency in that city. Understand that it is hoped
that this $3.5 billion will also leverage many more dollars of
the private sector and other resources from other parts of
government so that we are really talking literally in some
instances, well as a whole we are probably talking hundreds of
millions of dollars that will be flowed toward these various
HOPE VI projects, without reauthorization in 2004.
Ms. Lee. So there is a loss of--what?--$574 million from
the program for this year, for 2004?
Mr. Liu. For 2003, it is $574 million for the overall
program, and of course we are not proposing that the program be
funded in 2004.
Ms. Lee. Okay. Why wouldn't you want it funded? Why
wouldn't you want more communities to benefit from HOPE VI?
Mr. Liu. We believe that there are some fundamental issues
as to, one, the definition of what is most severely distressed
public housing. We have been criticized. The program has been
criticized by advocates of the program, by resident groups, as
well as those who oppose the program generally that today,
versus 10 or 12 years ago, there is a difference as to what
might be considered severely distressed housing, and that it
should not be in the eye of the beholder. There should be
clearer definitions. There should be a clearer consensus
understanding. We agree that there needs to be debate on this
fundamental issue.
Mr. Tiberi. The gentlelady's time has expired. I would like
to remind all the panelists that they can submit written
questions to HUD for responses, and I am sure you will respond
and it will be reflected in the record as well.
I would like to thank Mr. Liu for taking time to testify
today. I would like to remind everybody that we have a second
panel that we are going to have seated. Again, thank you, Mr.
Liu, for coming today. I will ask the second panel to make
their way up to the table and I will introduce the second
panel, and give everybody an opportunity to----
Mr. Watt. Mr. Chairman, did Mr. Leach not have any
questions?
Mr. Tiberi. Mr. Leach did not have any questions, but thank
you for bringing that up. You have supporters out there, Mr.
Leach. I am going to allow Mr. Leach also to introduce one of
the panel members who is from the Hawkeye state.
Mr. Leach. Would you like me to do that now, sir?
Mr. Tiberi. Sure.
Mr. Leach. Mr. Chairman, first let me thank Mr. Liu for
appearing, and simply, Mr. Secretary, to indicate that you are
going to be followed by a State official from Iowa. So as
distinguished as you are, you are going to be over-shadowed.
In any regard, Mr. Chairman, I would like to indicate that
one of our next panelists is Mr. Tom Guzman from the State of
Iowa. Tom represents the Iowa Department of Economic
Development's Main Street Program. Tom is one of the leading
experts in the country on Main Street-types of economic
development. He has consulted on programs in Arkansas,
California, Colorado, Connecticut, Illinois, Maine, Michigan,
Mississippi, Missouri, New Mexico, New Hampshire, Ohio,
Oklahoma, Oregon, South Dakota, Washington, and Wisconsin. I
only stress this to note that rural America faces severe
housing and economic development challenges, as well as urban;
and secondly that Mr. Guzman is, from my perspective, the
second leading authority in the world on this subject. I stress
second, Tom, because 28 years ago when I was a young candidate
for the Congress, I attended a series of meetings throughout my
district seeking office, and there was a lady that often
attended, similar Rotary's and Kiwanis', talking about Main
Street as it was originally put together. My talking about a
balanced budget did not seem to get anywhere. Her talking about
Main Street did. So I promptly asked her to marry me, and I
have become a long-term advocate of the Main Street program. I
would hope that as this bill goes forward, people would
recognize that there are parts and parcels of housing that do
apply, and economic development that apply to communities under
30,000. The Iowa model, I think, is an impressive one.
Thank you for allowing me to introduce Mr. Guzman--a first
class individual and an expert on the particular subject.
Chairman Ney. I want to thank you.
The next panelist--Mr. Scott, do you have any additional
comments about Rene Glover? Mr. Scott has made an introduction
of the Executive Director of Atlanta Public Housing. We move on
to Mr. Howard Husock. He is a research fellow at the Taubman
Center for State and Local Government. He is also the director
of the Case Program at the John F. Kennedy School of Government
at Harvard University. He has published numerous articles, as
well as books on housing and entrepreneurship.
Next is Kevin Marchman. He is the Executive Director of the
National Organization of African Americans in Housing, a
nonprofit organization here in Washington, D.C. He has over 24
years of experience in the public housing field, having served
first as director of the HOPE VI program at HUD, and then as
Assistant Secretary for the Office of Public and Indian Housing
at HUD. Previously, Mr. Marchman was the Executive Director of
the Denver Housing Authority. I want to welcome you to the
committee.
Susan Popkin is a nationally recognized expert on public
and assisted housing, with more than 15 years experience in
researching issues related to housing in neighborhoods. Her
work focuses on a wide range of issues related to housing and
neighborhoods. Brian Tracey is a Senior Vice President and
Community Development Market Executive for Bank of America here
in Washington, D.C. Joan Walker Frasier is the chairperson of
the Atlantic City Resident Advisory Board. She also serves as a
State Delegate for the National Organization of Public Housing
Residents, ENPHRONT. Ms. Frasier has been a resident of public
housing for over 10 years. She is currently a resident at the
Jeffries Towers, a public housing development in Atlantic City.
Last is Lisa Zukoff, who has been the Executive Director of
the Wheeling West Virginia Housing Authority, my birthplace by
the way, since 1997. Previously, she headed two other housing
authorities. Ms. Zukoff has construction experience with rural
rental housing projects and section 8 new construction
projects.
Welcome. With that, we will begin with Joan Walker Frasier.
STATEMENT OF JOAN WALKER FRASIER, EXECUTIVE COMMITTEE MEMBER,
JEFFRIES TOWER RESIDENTS ORGANIZATION, ATLANTIC CITY, NJ, AND
ON BEHALF OF EVERYWHERE AND NOW PUBLIC HOUSING RESIDENTS
ORGANIZING NATIONALLY TOGETHER (ENPHRONT)
Ms. Frasier. Good afternoon. I am Joan Walker Frasier,
State Delegate of the National Organization of Public Housing
Residents, ENPHRONT. I am a public housing resident in Atlantic
City, New Jersey, and an executive board member of the Jeffries
Tower resident organization, and also an ENPHRONT State
Delegate.
I want to first express ENPHRONT's strong position that
there should not be any further reduction in the overall public
housing appropriations account. Second, the HOME VI program
should be re-funded and reauthorized. However, an authorized
program can only be effective if comprehensive reforms are
made. In lieu of a re-funded HOPE VI, appropriators should be
urged to shift to the public housing capital fund any amount
equal to the fiscal year 2003 HOPE VI appropriations.
Furthermore, it is important to understand that a reformed HOPE
VI can only work if Congress adequately funds the public
housing capital and operating funds in order to prevent further
deterioration of public housing stock. In reauthorizing HOPE
VI, it is important that Congress align the program with the
original goals and recommendations developed by the National
Commission on Severely Distressed Public Housing. The
commission's final report, among other things, emphasized that
developments were to be revitalized and preserved through
rehabilitation and replacement housing. The commission did not
place heavy emphasis on demolition as a necessary activity to
treat distressed properties. The commission also expressed
support for replacing distressed public housing units with hard
units that would be deeply subsidized.
ENPHRONT believes that another important step in reforming
HOPE VI is to define concretely the terms ``severely
distressed.'' The looseness and lack of consistency of the
definition, along with the lack of reliable data on the
condition of properties, has made it nearly impossible to
identify with any certainty the number of properties that are
truly distressed. We recommend that HUD be required to develop
a clear definition of ``severely distressed'' that reflects the
opinion of residents, activists, public housing agencies, and
housing experts. The agency should also be required to create
and maintain a list identifying properties that are severely
distressed based upon the new definition.
The loss of public housing units under HOPE VI is another
major area of concern. ENPHRONT strongly believes that the
program should not result in the loss of hard units that are
affordable and targeted to extremely low-income households.
There are several ways to reform HOPE VI in order to address
this. For instance, a reformed program should allow HOPE VI
funds to be used in conjunction with project-based vouchers in
order to facilitate the production of more hard replacement
units. In addition, reform should remove all barriers to
combining HUD funds.
ENPHRONT is also concerned about the large number of
residents who do not return to revitalized communities. We
believe that residents living in a property anytime in the one
year period preceding submission of the HOPE VI application and
who remain public housing residents or receive voucher
assistance should have the right to live in units developed
under HOPE VI. H.R. 1614 can address this concern by adding to
the selection criteria and element that looks at the extent to
which the plan demonstrates that all reasonable steps will be
taken to ensure that the maximum number of existing residents
will be offered a priority for and are encouraged to reoccupy
dwelling units in the revitalized community.
Resident participation is another area where reform is
needed. Existing HOPE VI requirements fail to ensure that
residents are engaged in the HOPE VI process in any meaningful
way. H.R. 1614 attempts to address this concern by requiring
ongoing participation in the redevelopment process. However,
other reforms are needed if resident participation is truly to
be meaningful. First, the selection criteria section of H.R.
1614 should be amended to require that HUD evaluate the
applications based on the extent of early and sustained
involvement in the application process. Second, housing
agencies should be required to provide to resident
organizations funds to enable them to retain independent
technical assistance.
I thank you for this opportunity to testify and I urge you
to review my full written comments, and look forward to working
with you in the near future. Thank you.
[The prepared statement of Joan Walker Frasier can be found
on page 55 in the appendix.]
Chairman Ney. I want to thank you, Ms. Frasier, for your
thoughtful testimony. We will review the entire piece of
legislation. Thank you for coming to the U.S. Capitol.
Next, Ms. Renee Glover.
STATEMENT OF RENEE GLOVER, CHIEF EXECUTIVE OFFICER, ATLANTA
PUBLIC HOUSING, AND PRESIDENT, COUNCIL OF LARGE PUBLIC HOUSING
AUTHORITIES, WASHINGTON, DC
Ms. Glover. Thank you, Mr. Chairman, and Ranking Member
Waters, and the outstanding congressman from Georgia, David
Scott.
I want to put a little bit of perspective around this
discussion, because quite frankly I think we are talking about
some very, very serious issues. I believe, based on our
experience in Atlanta, that the HOPE VI program is probably the
most significant economic development program that has ever
been done in this country. When I say that, you only have to
look at the results, because we have a serious problem that is
brewing in this country. We have inadvertently locked out too
many Americans from the American dream. I will tell you in
terms of getting to a description or definition of distressed
public housing, you only need to look at the people. In
Atlanta, in the large communities where we have not treated the
communities with HOPE VI, we have families--and this is the
average income--of $7,300 a year. That is not $17,000 that is
not $70,000--that is $7,300. In all of the public housing
communities, there is a captive elementary school. Those
schools are at the flat bottom of the state. Even in the
Appalachian areas, these schools are terrible performers and we
have a very high rate of truancy. So people are not being
provided an opportunity to pursue the American dream. We have a
disproportionate rate of crime because, quite frankly, people
prey on a sense of hopelessness.
The question is, and I think this is what the Congress
should look at, is if there are thoughtful solutions that can
solve these problems and reconnect the families to the
mainstream of America, because I think a fatal flaw that
evolved over the years with the public housing program was
taking the people out of the mainstream, because the biggest
cost is re-integrating families into the mainstream. We have
developed 11 mixed-income communities. What is a mixed-income
community? A mixed-income community is a market-rate community
that has an affordable resource seamlessly inside of it. If the
affordable component is not seamless, then you end up with the
NIMBY-ism and the other types of resistance that you have in
the programs. But guess what? It is working. The most
frequently asked question that we got back in 1996 after we
developed the first community is, who is going to want to live
next door to those people? Well, shame on us as a society for
coming up with a policy that creates a people called ``those''
people. Those people are you and I, and but for the grace of
God could we be living in the communities.
So if we can, with the same dollars, leverage those
resources, leverage the know-how in the private sector, and
create healthy communities with great schools, because I also
want to let you know that we are working with the school
system. Schools that were at the flat bottom are now exceeding
performance in the state. What that all means is that
environment matters. We do not want to leave any children
behind, but if we have children living in horrible conditions,
then I believe we can do better than that. I think that we
absolutely must reauthorize the HOPE VI program. There is a lot
of focus on it takes too long. Well, it took us 60 years to
develop a policy over time that ended up isolating families.
Segregation around income is just bad public policy.
So I want to come back to you with a few thoughts in terms
of reauthorizing the program. We have got 60 years of evidence
that proves without any debate or discussion that concentrating
poverty is bad public policy. We want to blame the families who
grow up in these situations that often attract preying
individuals and poor schools and poor social services and what
have you, and then we want to say, why aren't those families
more successful? Well, those families are not more successful
because they have been cut off from the American dream. I
believe we are better than that. So let's stop concentrating
poverty. But you cannot stop the concentration of poverty if
the country is not prepared to make an investment in this
program. That is what HOPE VI is. It is a thoughtful strategic
investment that leverages private resources and that in fact
creates a community of hope and excellence and most
importantly, providing resources so families can be in the
mainstream.
Secondly, we should leverage and work with the private
sector and apply market principles. In every one of the
distress public housing communities in a one-mile radius, there
is total disinvestment around public housing communities. In
fact, we use the term in Atlanta that these communities have
become residential brownfields. Well, just like you have to
make an investment to eliminate the brownfields effect of real
estate, we have got to make an investment in terms of
residential brownfields, because again as a country, we are
better than that.
Chairman Ney. I don't want to cut you off, but the time has
expired and we are trying to keep to the five minutes. I will
let you summarize. It is very compelling testimony.
Ms. Glover. Thank you. A third recommendation--this needs
to be comprehensive community building, and not re-building a
program that was based on failed policy. The true weapons of
mass destruction are hopelessness, a lack of strategic
investment, leaving children and families behind, and locking
them permanently out of the American dream. I believe that in
the country, we have the political will and the corporate will
to solve these problems. It works. We have proof that it works,
and I urge this committee to be thoughtful about reauthorizing
the Hope VI program.
Thank you.
[The prepared statement of Renee Glover can be found on
page 61 in the appendix.]
Chairman Ney. Thank you for your testimony.
Mr. Guzman?
STATEMENT OF THOMAS D. GUZMAN, DIRECTOR, IOWA DOWNTOWN RESOURCE
CENTER, DES MOINES, IA
Mr. Guzman. Chairman Ney, thank you for the opportunity to
visit with you. I would especially like to thank Congressman
Leach for his invitation to have us come and talk, perhaps from
a different angle on the HOPE VI initiative. I would again like
to thank you for the opportunity for me to share some of my
thoughts concerning the HOPE VI program, and the reauthorizing
including the Small Community Mainstreet Rejuvenation and
Housing Act of 2003.
Main Street Iowa is in its 18th year of providing technical
assistance and capacity-building services to Iowa communities
committed to improving the social, physical, economic and
political values of their city centers. Through a lot of hard
work from hundreds of community leaders across our State, Main
Street Iowa today is recognized nationally as one of the most
successful Main street models in the country. Because of their
efforts, Iowa Main Street communities have received the Great
American Main Street Award six times. It has only been awarded
40 times in the country, and six of those are within our great
state of Iowa.
Iowa is a state of low population growth. Most of our
counties and most of our communities actually experience
population loss. Despite this trend, the 2000 census revealed
that 74 percent of Iowa's Main Street communities, regardless
of where they were located in the state, experienced population
gains, which means that they are being allowed to thrive, not
just survive, as many other small towns are in our country. The
Main Street Approach (R) is a copyrighted and trademarked
program of the National Trust for Historic Preservation. It is
an economic development program within the context of historic
preservation. Since the early 1980s, almost 2,000 communities
nationally have utilized the Main Street Approach (R). It is
successful because it sets high standards for communities to
aspire to. Communities that consistently meet these standards
are recognized as nationally certified Main Street communities.
In Iowa, about 75 percent of our communities achieve this
designation annually.
As part of the program, Main Street communities are
required to track their incremental economic impact. Since
1986, Main Street Iowa communities have recorded the following
impacts--and you need to recall, this is a state with small
communities and small populations. We have a net gain of over
2,300 business starts, expansion and relocations in our Main
Street communities that employ over 6,500 people full time.
Thousands of local citizens have invested over $363 million
into downtown building rehabs, purchases and construction. What
is really amazing is the private sector ratio, when you compare
that to the state investment in operating the state Main Street
program. Last fiscal year, for every dollar that the state
invested in the state Main Street program, the private sector
invested $131. Since we started the program in 1986, it is a 51
to 1 return. I am willing to bet that there are very few state
or federal programs that can match that kind of excellent
return.
In 2001, we built a partnership with the Federal Home Loan
Bank and with the Iowa Finance Authority to create a new loan
pool offering low-interest commercial loans to rehab upper
floors, renovate old downtown buildings, and for new
construction. Last month, we are pleased to say that we
celebrated our first $1 million milestone. That may seem small
to an awful lot of people, but all of these but one project
that we funded were in towns under 12,000 in population--truly
small towns. However, access to capital for downtown
development projects like upper-floor housing is always scarce.
Federal programs do not seem to fit the needs of Iowa
communities because they do not fit the criteria for eligible
projects or the project minimums are just way too large.
Talking about HOPE VI today just astounds me, at the amount of
dollars that we are investing and what I could just think what
those could do in smaller communities. Most of the federal
programs are targeted for larger urban areas and offer little
opportunity for utilization by rural America. We understand
that the need is great in urban America. However, the needs of
rural America are also great and should be addressed as well.
We must invest in the revitalization and rejuvenation of
our smaller communities who have made the commitment to invest
in themselves, Main Street communities. They have the
organizational capacity necessary to efficiently utilize
development tools. Making these tools available for Main Street
communities under 30,000 just is smart business.
HOPE VI reauthorization is an excellent example of how we
can fine-tune an existing legislative authorization and make it
relevant and useable for America's smaller communities to
address affordable housing. This reauthorization does not
authorize new money for this partnership. It merely takes
advantage of existing monies that could already be authorized.
By including criteria, this could allow America's smaller
communities to participate in providing affordable housing.
I want to admit that I am not an expert on HOPE VI. That is
because it, as currently authorized, there is no opportunity
for us to use it in our State. However, we need HOPE VI to be
reauthorized. We need it to include language allowing small
states like Iowa the opportunity to develop affordable housing
for low-income families. I can truly visualize hotels, upper-
floor apartments and economic vitality to communities as a
result of this.
The signature of America is embedded in its smaller
communities. Developing tools which assist in making them
stronger, more livable communities is good for every state in
our nation. By doing so, we strengthen the economic, physical,
political and social health of our country, and that is a very
good thing.
Thank you.
[The prepared statement of Thomas D. Guzman can be found on
page 78 in the appendix.]
Ms. Harris. [Presiding.] Mr. Guzman, thanks so much for
your testimony. The Main Street Program--you bring a whole
different orientation to this. I had the opportunity to oversee
those in Florida. They were extraordinary, so I thank you for
your testimony and your quick summation.
Mr. Husock, thank you for being here. Welcome, from Harvard
Kennedy School.
Mr. Husock. I believe that the chairwoman is in fact an
alumna of the Kennedy School.
Ms. Harris. Yes, I am an alumna.
STATEMENT OF HOWARD HUSOCK, ALFRED TAUBMAN CENTER FOR STATE AND
LOCAL GOVERNMENT, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD
UNIVERSITY, CAMBRIDGE, MA
Mr. Husock. Thank you very much. I am Howard Husock. I am
Director of public policy case studies at the Kennedy School
and I am a contributing editor to City Journal magazine,
published by the Manhattan Institute of Policy Research, where
most of my writing on housing issues has appeared.
I am testifying in favor of the Department of Housing and
Urban Development's budget proposal for the HOPE VI program. I
am not sure--I might be the only one on this panel. There is no
doubt that HOPE VI developments have replaced severely
distressed housing and there is no doubt that they have
provided homes which are better than their residents could
otherwise have afforded. But beyond this superficial
attractiveness, there are significant questions about HOPE VI
which, especially at a time of budget constraint, ought to be
taken seriously. I would like to frame some questions for the
committee that I hope you will take seriously.
Question one, are we confident that over time HOPE VI
projects will be well maintained? It is important to keep in
mind that the developments which previously stood on HOPE VI
sites, were also hailed when they were built as a great step
forward. This was even true of the public housing high-rises
now so thoroughly discredited. It is a lot easier to cut
ribbons on new projects than to maintain those projects over
time. Like other public housing before it, HOPE VI faces
fundamental challenges because by design, many of its residents
have low incomes and thus pay low rents. These developments
will depend on a combination of market rents and public
subsidies. Neither of these is an assured income stream. We
must always wonder whether those managing subsidized housing in
addition have the capacity and the competence to maintain it
over time. Their track record in the main--not every housing
authority to be sure--but in the main has not been reassuring.
So before we spend millions more on additional HOPE VI
developments, it is far from inappropriate to pause to see
whether those built to date can indeed be well maintained.
Question two, will middle-income tenants choose to live and
remain in HOPE VI developments? Just because a development has
designated a number of units for middle-income tenants or
owners is no assurance, especially in a period of declining
rents and real estate prices when other options may be
affordable, that they will move in. I have already been told by
a HOPE VI developer in Chicago he doubts he can attract the
requisite number of middle-income tenants for a planned
development in the city's State Street corridor. This is a
crucial question for a couple of reasons. Not only will the
developments need income to ensure proper maintenance, but
income mixture, as has been alluded to before, is a key part of
the theory of HOPE VI. It is based on the belief that higher-
income households will set good examples for those of lower
income. If it proves difficult to attract or to retain higher-
income households, the developments could quickly become new
versions of the housing they replaced.
Question three, can we be sure that that HOPE VI social
experiment will work? We have proceeded on the supposition that
the presence of middle-income households will provide positive
role models and generally improve the social fabric in HOPE VI
projects, but we should keep in mind, this is a hypothesis. It
is not a proven approach. Sociologists have long recognized
that it is difficult for households of significantly divergent
incomes to establish deep relationships. We cannot rule out the
possibility that instead of higher income households serving as
role models for those of lower income, that instead there will
be friction between the two groups. We have already seen this
happen when section 8 rent voucher households have moved into
higher-income neighborhoods, most famously in the south suburbs
of Chicago.
Question four, is new housing designated for those of very
low income in keeping with our larger goals for American family
structure? By designating significant number of HOPE VI units
for those of very low income, we cannot flinch. We must
acknowledge the fact that it is highly likely that many, many
of these households will be single-parent households. Such
households, after all, dominate existing public and otherwise
subsidized housing. HUD figures show today 6 percent of public
housing households have two parents and children as residents.
Among public housing families with children in which the head
of the household is not elderly, not disabled, take the out of
the mix, 88 percent are headed by single parents. HOPE VI risks
providing new units for single-parent households, which in
contrast to our overall public assistance policy, will come
with no time limit. We have to ask whether we are providing
better housing for single-parent families than that which
lower-income two-parent families can themselves afford, and are
thereby sending a message inconsistent with our broader efforts
to encourage the social stability and effective child-rearing
which two-parent families in the aggregate provide.
Question five, is HOPE VI making the best use of the land
on which the developments have or will be built? Engaging the
cost, we should not confine ourselves to the cost of
construction and Administration. We have to keep in mind there
are other things you could do with that land. In Boston, for
instance, the HOPE VI development in the city's Mission Hill
section occupies a site adjacent to some of the best hospital
and medical education facilities in the world. It is quite
possible that had that land been put up for public bid, that
other private or nonprofit use might have been made of it,
boosting the city's economy and providing jobs for poor people
and middle-class people alike. Should we assume that simply
because public housing has occupied a particular site, that
subsidized housing of some kind must always occupy that site in
perpetuity. If we do so, we risk creating what I call a frozen
city, one in which economic growth is more difficult to attain.
Keep in mind, the public housing in New York City today
occupies and acreage equivalent to 156 World Trade Center
sites.
I would be less than candid were I not to concede I am
skeptical, it is pretty clear, about the wisdom of the HOPE VI
program. Still, I hope that those committed to improving our
cities, and especially committed to improving the prospects for
the poor, will understand the sincerity of the questions that I
have tried to raise here. The fact that in my view the answers
to all are very much in doubt makes the proposal to pause, at
this point and take stock of the program, the right policy
choice.
Thank you very much.
[The prepared statement of Howard Husock can be found on
page 83 in the appendix.]
Ms. Harris. Thank you, Mr. Husock.
Our next speaker is Mr. Kevin Marchman. Welcome.
STATEMENT OF KEVIN E. MARCHMAN, EXECUTIVE DIRECTOR, NATIONAL
ORGANIZATION OF AFRICAN AMERICANS IN HOUSING, WASHINGTON, DC
Mr. Marchman. Thank you. I am going to limit my remarks to
just two issues this afternoon.
First, I want to review something that was said earlier
today, and talk a little bit about the history of the HOPE VI
office. I was fortunate enough to be recruited to HUD in 1994
to open up the HOPE VI office. Many people did not know it at
the time, but we worked on two tracks. It was the HOPE VI
office and also the office dealing with troubled housing
agencies. In the first two years of HOPE VI, many of those
grants went to housing authorities who had issues. It was our
responsibility to work with those housing authorities as they
began to run the grants.
In 1996, the HUD inspector general released a report saying
that the HOPE VI office simply did not have enough controls,
and that we should add controls to the program. We started the
office with two people. I believe now there are up to 50. I
mention all that in terms of the time that it takes in order to
do these HOPE VI programs. It has expanded, there is no
question about it, but expanded for one real good reason. When
we opened up the office, in agreement with Congress, we wanted
to go through the total transformation of public housing in
this country. We were not interested in simply replacing
projects. We were looking at communities. We were looking at
homes, and not projects and not units.
The fact is, yes, the HOPE VI office and the HOPE VI
program is perhaps the best program that HUD has had in the
last 25 years to work with public housing. There is no question
that what it replaced is far--the HOPE VI replaced a program
that needed terrible, terrible changing. The fact is that the
HOPE VI program looked at families, looked at communities,
looked at economic development. And the fact is, if you look
city from city--and I probably could name you 25--HOPE VI has
been a success in these cities. The cities that have issues
have had issues in their Administration in any case, but even
those are changing. I needed to make that clear.
I have had the opportunity to testify in front of the
commission that set up the HOPE VI program some 10 years ago.
We simply said, nothing less than total transformation is
needed. It was not just about demolition of units. I have had
the great fortune to run housing authorities throughout the
country, in Denver and San Francisco and Chicago, New Orleans
and Camden. When I was at HUD, I ran the program for four years
and am now working with NOAAH, the National Organization of
African Americans in Housing--we work with HUD in expanding
opportunities for MBEs and WEs in the HOPE VI program. Flat-out
experience tells me and it should tell you that the HOPE VI
works and it needs to be reauthorized.
Thank you very much.
[The prepared statement of Kevin E. Marchman can be found
on page 103 in the appendix.]
Ms. Harris. Thank you very much, Mr. Marchman.
Dr. Popkin, thank you for coming today to testify on the
panel.
STATEMENT OF SUSAN J. POPKIN, URBAN INSTITUTE, WASHINGTON, DC
Ms. Popkin. Thank you for inviting me to testify today on
behalf of the reauthorization of the HOPE VI program.
The goals of HOPE VI are ambitious, seeking to address the
physical problems of distressed public housing, while also
improving the overall well-being of residents and promoting
self-sufficiency. HOPE VI targeted some of the most beleaguered
housing in this country--dilapidated public housing
developments that had failed to deliver on the promise of
decent housing for the poor. The problems HOPE VI seeks to
address are among the most complex and difficult to solve.
My remarks today are based on findings from the Urban
Institute's research on the impact of HOPE VI on original
residents. Our findings indicate that the effects of the
program on original residents have been mixed, but on balance
the story is generally positive. Where HOPE VI has been
implemented effectively, most former residents have clearly
benefited. In these cases, residents have moved to lower-
poverty neighborhoods and reported real differences in housing
quality, safety and improvements in mental health and outlook.
However, there are still concerns and evidence that some former
residents are struggling in the private market, that relatively
few have returned to the new developments, and that large
numbers face barriers to making the transition out of
dilapidated public housing and to self-sufficiency.
In my full testimony submitted today, I highlight three
findings from our research. First, and most significant, many
former residents moved and made significant improvements in
their living conditions. These families are living in better
housing and less-poor neighborhoods than their original HOPE VI
developments. Second, residents are facing challenges. A
substantial proportion of families are struggling to find and
keep housing in the private market. Many face challenges in
facing higher utility costs and dealing with individual
landlords. In sites with tight rental markets or where
demolition far outpaces the production of new units, many
former residents have ended up in other distressed communities.
Finally, a large number of households face serious challenges,
including disability and mental health problems, which threaten
their ability to make a successful transition to either new
mixed-income housing developments or the private market.
These findings support the continuation of HOPE VI, but
also highlight the need for reallocation plans that reflect
local rental market realities, offer better relocation services
that provide housing search assistance to encourage residents
to consider moving to lower-poverty neighborhoods, address the
needs of hard-to-house residents such as the disabled, large
families, households with members with criminal records, and
those with complex personal situations, provide enhanced
community and supportive services that offer residents both
pre-and post-move services and include tracking and monitoring
of residents.
Adopting these guidelines has the potential to improve
outcomes for the original residents of HOPE VI developments by
offering the opportunity for public housing families to move to
better housing and safer communities--environments that can
better serve the needs of these low-income families and help
them to improve their life circumstances.
Thank you.
[The prepared statement of Susan J. Popkin can be found on
page 108 in the appendix.]
Chairman Ney. [Presiding.] I want to thank the witness for
her testimony.
Mr. Tracey?
STATEMENT OF BRIAN TRACEY, MARKET EXECUTIVE, BANK OF AMERICA ON
BEHALF OF THE NATIONAL ASSOCIATION OF AFFORDABLE HOUSING
LENDERS, WASHINGTON, DC
Mr. Tracey. Yes, good afternoon Chairman Ney, Ranking
Member Waters, members of the subcommittee. Thank you for this
opportunity to testify both on behalf of Bank of America, as
well as the National Association of Affordable Housing Lenders.
Community development at Bank of America works to help
build stronger and healthier neighborhoods throughout this
country. Our associates at Bank of America do that by
developing real estate, providing financing, and making equity
investments all in low-and moderate-income communities, using a
variety of financial tools and programs and working with
individuals, government, nonprofit organizations and businesses
in these neighborhoods. One of those tools is the HOPE VI
program.
Community development at Bank of America has been involved
as a lender, investor, or developer in more than two dozen HOPE
VI projects in such cities as Atlanta, Charlotte, Los Angeles,
Nashville, Baltimore, Seattle, Chicago and Houston. Public
grant funds largely to HOPE VI resources have been used to
leverage private debt and equity capital, often in the form of
low-income housing tax credits to transform existing public
housing sites, revitalize the surrounding community, and
importantly, improve the lives of public housing residents.
Bank of America's first HOPE VI project provides an
overview of how we view the program. First Ward Place in
Charlotte involved the comprehensive redevelopment of an uptown
city neighborhood. More than 30 government agencies, community
groups and private businesses came together to transform the
former Earle Village, a crime-ridden, badly deteriorated public
housing complex, into a mixed-income urban neighborhood
containing public housing units, affordable and market-rate
apartments, townhouses and for-sale single-family homes. First
Ward Place now has important community services previously
nonexistent in this community.
Funding for First Ward Place came from a broad base of
local support, not only Bank of America and the housing
authority, but also nonprofit organizations, as well as the
city itself. Our goal, and importantly the community's goal,
for First Ward Place was to create a strong neighborhood of
skilled, employable and economically independent residents
living in a safe, comfortable homes with room for people from
all income levels--homes where all of us in this room would be
comfortable. Importantly, the transformation of First Ward
Place, made possible by the HOPE VI funding, has resulted in
private capital flowing to areas adjacent to the community,
creating a multiplier effect often overlooked in judging the
success of HOPE VI developments.
While HOPE VI has been an invaluable tool for neighborhood
redevelopment and affordable housing, additional resources are
needed. The proposal to assist public housing authorities to
take advantage of established private capital markets, moving
certain public housing developments to project-based section 8
and making more effective use of other mainstream affordable
housing and community development financing tools would seem to
be a compelling new resource for sustainable preservation of
affordable housing, but this should be viewed as a new
resource, and not a replacement for the HOPE VI program. Bank
of America and the other members of the National Association of
Affordable Housing Lenders would welcome the opportunity to
expand and deepen our role in the redevelopment of public
housing in severely disinvested communities.
The implementation of any such proposal, such as the public
housing reinvestment initiative, should build on existing
established practice. Many lenders, including Bank of America,
have significant experience in providing financing for
properties with project-based section 8 vouchers. This
experience can provide models for the implementation of any
such new proposal.
Now, I touched in my written testimony on certain
criticisms of the HOPE VI program, that being that progress is
slow and is costly. While some of this criticism is valid, some
is not. Initially, some public housing authorities may lack the
experience to undertake real estate development work with
private lenders, but one benefit of the HOPE VI program is the
public-private partnership that is created by this program,
which should ultimately result in the housing authority gaining
real estate development skills. That is a benefit of this
program. Also, many HOPE VI developments are complex by the
very nature of the real estate itself, and would be slow to
progress and expensive to develop regardless of the funding
source. I think it is important that we distinguish the actual
cause and effect for the cost and the degree of delay for these
projects.
Finally, let me comment on just one other issue--managing
change in a HOPE VI neighborhood. Importantly, neighborhood
goals are identified early in the HOPE VI process, with
government and the community given a great amount of input and
influence over the outcomes of the effort. While there may be
some displacement, we view revitalization that leads to
economically and ethnically diverse communities with a range of
incomes as a favorable outcome, as long as safe and decent
housing is available for those displaced. There must be room
for everyone in the changed neighborhoods.
In summation, Bank of America and the National Association
of Affordable Housing Lenders believe that HOPE VI is a
valuable and effective tool for revitalization of low-and
moderate-income neighborhoods, while improving the lives of
public housing residents. Private capital will play a role in
improving public housing, and those of us at Bank of America
and the National Association of Affordable Housing Lenders do
not stand dispassionately on the sidelines on these issues.
Rather, we stand ready to bring the financial resources of our
members to bear in these communities, but we need help. The
poorest of the poor is such the government is still needed as a
catalyst, helping to spark private investment. We believe that
HOPE VI should continue to be one such spark.
Thank you for the opportunity to participate in this
hearing and I would be glad to answer any questions at the
conclusion of our panel. Thank you very much.
[The prepared statement of Brian Tracey can be found on
page 120 in the appendix.]
Chairman Ney. I thank the gentleman for his testimony.
Ms. Zukoff?
STATEMENT OF LISA B. ZUKOFF, EXECUTIVE DIRECTOR, WHEELING WEST
VIRGINIA PUBLIC HOUSING AUTHORITY, ON BEHALF OF NATIONAL
ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS, WASHINGTON,
DC
Ms. Zukoff. Thank you, congressman. It is always nice to
see a neighbor, Congressman Ney. Thanks, committee.
My name is Lisa Zukoff, and I represent a small housing
authority in West Virginia. We have 600 public housing units
and 400 vouchers. We undertook a grant application in 1998. We
were not awarded the first year, and went back in 1999 and were
awarded $17.1 million to renovate Grandview Manor and Lincoln
Homes public housing developments, which totaled 328 units. To
date as a 1999 grantee, we have completed phase one, 39 rental
units, and are currently under construction with 23
homeownership units. I would like to mention that the three
market-rate units in the homeownership phase have sold first.
I urge you to reauthorize the HOPE VI program. HOPE VI has
undeniably and positively changed the face of Wheeling's public
housing and the way our agency does business. It provides
residents with housing choice and economic opportunity and
helps stimulate the depressed economy of Wheeling. Managing the
grant motivated my agency to reexamine its priorities and
organization, and we established a new department in relocation
and expanded our supportive service program, which also
benefits our general public housing and housing voucher
programs. We are now poised to become the affordable housing
developer in our city. We also offer assistance to other
agencies in our areas attempting to obtain HOPE VI grants.
Regarding the statutory changes in H.R. 1614, NAHRO
believes that the statutory changes can be further enhanced, as
noted in my written testimony. Along with a commitment to
reauthorize the HOPE VI program must come a commitment to
adequately fund the capital, operating and housing choice
voucher programs that support HOPE VI and the residents served
by public housing. NAHRO, which represents both public housing
and community development interests, has considered the
proposal thoughtfully, but we must point out that there are
other funding sources available that small community have
access to, and we cannot recommend using scarce public housing
resources for non-public housing programs.
Relocation and resident choice in housing has become a big
issue in HOPE VI. First, HUD applications require that
residents that live in the complexes that are going to be
revitalized through the HOPE VI program approve of the
applications. Moving is difficult and creates anxiety in the
community, and change is difficult for all of us. A major goal
of the HOPE VI program is the de-concentration of poverty. This
means that not everyone can come back, however all the
residents are housed with a voucher or in other assisted
housing units.
In relocation summary, the lack of affordable housing in
this country is an issue which is greater in scope than the
HOPE VI program. One can debate whether the units demolished
under HOPE VI were viable or not, but the fact remains that
there is an affordable housing crisis in America that affects
renters, prospective homebuyers and homeowners alike. HOPE VI
assists in providing quality affordable rental and
homeownership housing, and the program should be continued.
Progress of Hope VI--I brought one of four volumes of our
closing documents for phase one of our HOPE VI project. These
properties have a lot of federal dollars and require due
diligence. To give you an example, our tax credit closing
required 170 documents just to close that phase of the mixed
finance deal. So when you talk about taking a long time, this
one book of four helps explain what it takes to close a mixed-
finance deal. It is very complicated work. HUD has also dealt
with this problem through their NOFA process by demanding
readiness by those receiving their grant awards over the last
several years in their NOFA process.
Leveraging private funds in the process of assembling an
application--this is a timely effort. It took us over a year in
advance to plan the application. Probably a minimum lead-time
is needed for any city that has not been involved in
development to get that work, just to meet with all the players
involved. Also, we really would like the committee to look at
planning grants that used to be involved in the HOPE VI
process, for smaller agencies in communities that do not have
the resources, to put the applications together. An average
cost of putting a HOPE VI application together is about
$200,000.
The public housing reinvestment initiative that was spoken
of earlier and is part of the reauthorization bill--this is a
good tool for agencies that can make it work, but this does not
provide the large infusion of cash needed to attract
investments in public housing, nor is it financially feasible
to use this approach for severely distressed public housing.
In conclusion, we would like you to please consider
reauthorizing the program at a level of $625 million. Thank you
very much for the opportunity to speak before the subcommittee
today. My full written testimony is submitted for the record.
[The prepared statement of Lisa B. Zukoff can be found on
page 125 in the appendix.]
Chairman Ney. I want to thank everyone for their testimony.
I just wanted to follow up, Lisa, with the $200,000 that it
costs to get an award of----
Ms. Zukoff. $17.1 million. The first application, it cost
us $180,000.
Chairman Ney. Can you just elaborate a little bit? I am
taking it from the angle because I am familiar with you,
obviously, we know each other, and as a small public housing
authority in a small community.
Ms. Zukoff. We actually had to use our operating reserves
to actually help pay for that application, but our board felt
very strongly that it was needed. You have to pay for an
extensive market study. Usually if you do not have a
development background, we had to hire a consultant to assist
us. We had to hire urban planners. Your construction costs have
to be cost-certified by accounting folks who deal with
construction. It is very expensive.
The second year, we gleaned a lot of experience from the
first year and we only had about $60,000 in the application. We
wrote the application ourselves, but we did indeed have to
update our market study, have our urban planners involved, and
have the cost certifications. So that was bare-bones with
$60,000.
Chairman Ney. Do you utilize Bel-o-mar at all in this?
Ms. Zukoff. Yes.
Chairman Ney. You do. The other question I want to ask you,
then, knowing the cost, should it just be public housing
authorities that are involved with the HOPE VI or should we
find a way that other entities can be involved to help
complement or to help public housing authorities?
Ms. Zukoff. Well, I think it is a partnership. There are
obviously other entities involved with our agency--the city and
different organizations--we have 30 memorandums of agreement
with other service agencies within our city that help with our
HOPE VI grant. I think there needs to be a way for smaller
communities. Our city population is 30,000. Obviously, there
are much more rural and smaller communities that can benefit by
such a program. But I really would hate to see public housing
funds go out of the public housing program. So I think, yes,
there is a need, and should we find a way to work them in--
absolutely.
Chairman Ney. Which gets to the other point of my question,
which would be, should we attempt to change--and I stress the
word ``partnership''--attempt to change the partnerships with
the public housing authorities? In other words, if it is tough
for the especially smaller public housing authorities, should
there be any type of change where we create new partners to
work with public housing authorities? Is there something we can
do to help the public housing authorities that would stay
strictly within their domain?
Ms. Zukoff. I think we have been able to really grow as an
agency as a result of HOPE VI--learning the process. It has
been a partnership with state housing finance agencies. I think
that we really just need to look for ways and avenues to train
public housing folks to work with others. This is not a grant
that was done strictly by the housing authority. We have many,
many partners.
Chairman Ney. Okay, well then what is the advantage to
continuing to use just public housing authorities?
Ms. Zukoff. It is the public housing resources--the dollars
that we feel at this point they keep dwindling away, a little
bit every year. Drug elimination--the operating fund gets cut,
we get less money because there was a mistake at HUD last year.
I mean, we are dealing with all of these efforts. This money
needs to stay within the public housing authorization side of
the bill. I feel very strongly about that. So while I agree
that there are other avenues for other folks to be involved in
this partnership, let's find some other pot of money to do that
work with.
Chairman Ney. Thank you.
The question I have for Susan Popkin--you state that many
former residents made significant improvements in their living
conditions. Was this success made independently or did the
housing authority help to do the bridge in this transition?
Ms. Popkin. It is a result of where they have ended up
moving. Whether they have moved to a section 8 unit or a new
development, this is residents' perceptions. They perceive that
they are living in better housing. They particularly perceive
that their new neighborhoods are much safer than where they
started. That has had a clear impact on people's mental health
and their overall outlook.
Chairman Ney. Would that be independent from the public
housing authority?
Ms. Popkin. This is where they were placed when they were
relocated.
Chairman Ney. I want to thank you.
Our ranking member, Ms. Waters?
Ms. Waters. Thank you very much.
Ms. Glover, I want to thank you for your very articulate
and thoughtful testimony. I do not think that Mr. Husock heard
you because he asked some questions that I think you had
already addressed when you described that decent, safe housing
and environments help to promote a lot of other good things--a
lot of hope and a lot of possibilities. But since he did not
appear to hear you, I would like to just phrase the question so
that you can help me with a response to him.
Do you believe, first of all, that HOPE VI is but a social
experiment that provides housing for single parents on land
that could better be utilized for other purposes? And that it
will be housing that will be maintained anyway because the
housing that would have been torn down was not well maintained
and everybody knows it is going to go back the same way, and
that it will not be housing that will attract mixed-income
residents anyway because they do not really want to stay there.
If they do, it will only be friction between the two groups.
And won't we be sending a bad message to two-parent households
that we are doing all of these things for single parents, and
what does that say about our values? And in the final analysis,
this won't be managed well, and perhaps there is a better way
to think about doing this. Maybe we should not be doing this at
all.
Could you help him respond in some way?
Ms. Glover. I would be delighted. First of all, going back
to actual experience. It is interesting, when we first got
started one of the most frequently asked questions was, who is
going to want to live next door to those people? So the key and
the success is creating true market-rate housing with an
affordable component seamlessly inside of it, so that the
affordable component does not overwhelm the market rate nature
and quality of the community. Temporary poverty does not mean a
lack of values. It is really creating a community of
opportunity. The mixed income communities have maintained on
average a 95 percent occupancy across the market-rate units,
the tax credit assisted units, and the public housing units, in
all of the 11 communities and by the way, even during the
downturn in the economy. The great thing about it is that all
of the families take great pride in these communities. Everyone
is thrilled with the elimination of the public housing stigma.
Too often, we punish the assisted families for bad
outcomes. Bad policy creates bad and unacceptable results. So
what I am saying to the critics of the Hope VI program is that
you really have to be on the ground to see what is going on,
because we have seen some extraordinarily positive results
coming out of the program. I would urge this committee that no
federal dollars should be spent expecting positive outcomes and
great expectations. The worst thing that you can do with any
program is lower the expectations such that you expect no one
to be successful. In our new mixed income coummunities the
employment has increased by 400 percent. That is tangible. We
have seen the incomes increase substantially and we are not
talking about just running out the old crowd and bringing in a
new crowd. We are talking about working with the families, but
in a positive environment.
By the way, mixed-income communities is going back to some
basics. I grew up in Jacksonville, Florida, and the communities
were mixed-income communities at that point. I think it
happened only in the late 1980s and 1990s that we started
running to the suburbs to have houses line up with our
perception of ourselves based on the incomes that we were
earning. Mixed income communities have strengthened public
schools, which are performing off the charts. We have had such
tremendous results. I really urge this Committee to look at the
testimony and also the supplement to the testimony which shows,
by the way, that we have moved the real estate to an improved
use by following market principles, and not creating a
concentrated poverty situation which in fact devalued not only
that piece of property, but the surrounding neighborhoods.
Ms. Waters. I would like to ask Mr. Howard Husock, does
that answer some of the questions that you raised with us? Does
that help you at all?
Mr. Husock. The question is going to be answered over time.
Whether mixed-income developments are going to be sustainable
as mixed-income developments, we do not know whether that is
going to be proven over time. As for whether the impact on the
surrounding areas--do we know that if a private commercial
development had built it on that same site we would not have
had similar positive effects on the surrounding areas? It is
quite possible.
As far as the mixed-income question specifically, as I
said, I have visited with developers of HOPE VI in Chicago who
are concerned, doubtful that they will be able to attract
higher income households to those new developments in the State
Street corridor of Chicago. We do not know whether that is
going to work out in the long run. And remember, if you go to
somebody and you say, look, I am going to give you a new house.
It is a better house than you could afford on the private
market. It is a brand new development. It is kind of like, I am
going to give you hamburger for 59 cents a pound. You are going
to get a long line of people at first. Let's see how those
developments stand up over time, and whether those households
will remain. Sure, they will come for the good deal. Will they
stay? Because communities maintain themselves over time.
Ms. Waters. What would your alternative be for helping to
revive safe, secure housing and environments for poor people?
How would you do it?
Mr. Husock. I think we need to take advantage of the
existing stock of public housing, and to deploy it in a
different way. This really diverges from the theme of this
panel, so I don't know if you want me to go off that way.
Ms. Waters. Yes, I am asking you. I want you to go off.
[Laughter.]
Mr. Husock. We have a large number of public housing units
already in this country. I think we ought to make use of that
resource as a time-limited resource. In other words, as people
move in, say this is temporary assistance to needy families,
just as we do with public assistance.
Ms. Waters. Say, give them a year or two, and then say you
are out of here, you have to get out?
Mr. Husock. I believe the public welfare law is a longer
period of time than that. I was suggesting it might be longer
than that.
Ms. Waters. Oh, three years, four years, five years--
something like that?
Mr. Husock. Five years might be----
Ms. Waters. Without regard to----
Mr. Husock. Since you suggested it, five years seems like a
good figure.
Ms. Waters. What if the income has not changed?
Mr. Husock. Well, as you know, before the Welfare Reform
Act of 1996, there was great concern that it was going to lead
to homelessness, based on the premise that if everything stays
the same, conditions are going to be terrible. Why do we want
to be that pessimistic?
Ms. Waters. No, that is not what I asked. I asked what was
your alternative for providing housing for poor people--safe
housing, better environments? And if you believe that you
provide it for a limited period of time, be it two years or
three years or four years, my follow up question was, what if
the income has not changed? What if five years after or three
years after they are into the housing that may be subsidized or
public housing, they work every day, they do the very best they
can, but not only did the income not change, but they lost
their health benefits and on and on and on. What would you do
for that family?
Mr. Husock. I think the emphasis ought to be on encouraging
the path towards self-sufficiency during that interim. I do not
really want to speculate about a pessimistic scenario in which
people are not going to, and in which we will not trust people
to improve their prospects.
Ms. Waters. You don't want to talk about pessimism?
Mr. Husock. I believe in their capacity to make life
changes that will improve their prospects and I hope that that
would be the outcome. I would be interested in knowing, for
instance, in the Atlanta situation how many of the HOPE VI
tenants have graduated from HOPE VI? How many of them said,
well, this is a great apartment; I would like to stay here. Or
how many have graduated and moved out? Is that a goal, to move
them out? If not, why not?
Ms. Waters. The chairman has been very, very generous in
the amount of time he has given us, and I would love for this
discussion to go on, but we cannot do that. Let me just wrap it
up by saying that my family lived in public housing for many
years. I know this subject very, very well--not from a
theoretical Harvard point of view, but from a very personal
point of view. I am a great defender of public housing and HOPE
VI falls right in that category. So I am pleased that you are
here today. I am not so sure what you came here to say. You
raised some questions. I asked someone with great experience
and knowledge to help you, but of course you dismiss the
information that she shared with you, and began to wonder about
what would happen 20 or 30 years from now. But I am glad that
you are here. It keeps me focused. Thank you very much.
Chairman Ney. I want to thank the gentlelady.
I just want to make a point of observation, because I think
this is very interesting. I think that you can have low-income
individuals who have just as good focus and family values and
are very good people, and maybe you are living next to somebody
of a middle income that does not have the same good values.
However, I think you have to realize the fact that if somebody
is in a middle-income community, they are going to tend to have
better services, better opportunity. So I am not sure that some
of the middle income can learn some family values from some of
the low income, but I think it is just a fact of life that if
you are in a middle-income community, that middle-income
community is going to tend to have better services, more
access. I just think that is just a way of life. That is a
personal observation.
Mr. Scott?
Mr. Scott. Yes, thank you very much, Mr. Chairman.
I would like to ask a two-part question and stay on this
for a moment. First of all, I just think it is very important,
as Mr. Husock said--you raise some points that we have to
refute. The purpose of this hearing is of course to get and
glean information. The other part of it is particularly for
those of us who are sponsoring legislation to save HOPE VI. So
when you come with your statements that ask hypothetical
questions, they have to be answered, they have to be responded
to.
I want to take your points, for example, over time. Over
time means that within an amount of time we will come to a
conclusion. What we are asking for in this extension of HOPE VI
is to get the time to make those conclusions. In Atlanta, for
example, we have had enough money to deal with maybe 13
projects in one phase or another, but there are 33 on the
drawing boards. Each one of these cases have proven your point
on a point-by-point basis. Will they be well-maintained? In
Atlanta, we have one of our projects in a place called Eastlake
Meadows. Eastlake Meadows was the site two years ago of the
United States PGA Golf Classic, which was won by Tiger Woods.
Because of where it was, it attracted international attention
and comments on television about how well the project was
maintained; how well it looked; the attractiveness of it.
Centennial Place--right in Centennial Center, right in the
heart of where we had the Olympics; right next door to the
headquarters of the Coca-Cola Company, the most famous image in
the world--mixed income, being successful. And then you get to
the point of the single-headed households of females, who are
single-family heads. A part of the major purpose of this
program is to take that very targeted group and give them hope,
to sustain them. The program is doing its duty and its good.
Your other point--best use of the land. Not only is it the
best use of the land, but the land surrounding that area has
increased in Atlanta to a value of over $2 billion in the worth
of the land surrounding it, and has proven to be the most
effective, valuable economic generators in the Atlanta
community, and in some measures in the state.
The point that I am trying to make here is that we have got
to discount every point that you have made. Ms. Glover from
Atlanta has done an excellent job of that. That is not to be in
any way disrespectful to you. I believe that your comments were
probably made and certainly in fair interest, your points
certainly needed to be raised, because it gives us a change to
refute them point by point and build the case for this program.
So I wanted to do that, because we could not let those
points go unanswered as we move. As you can see, from my
distinguished colleague Mr. Watt's questions, we are getting
mixed signals from the Administration. To me, when we get mixed
signals from the Administration, that gives us hope, because
they are not fixed in their position on this issue. So we are
scrapping here to save a program, and we need the help to do
that.
In that regard, let me go to you, Ms. Glover, if I may. We
have legislation that as you can see from this committee has
great broad bipartisan support. We feel very confident we can
get that bill. Hopefully we can get it passed, hopefully we can
turn the Administration around in its desire. We do feel
confident, but there are some very serious issues that need to
be corrected. We could use, and will be using the Atlanta
situation as a model. The two primary concerns it appears to me
that we have got to correct to build the momentum to revitalize
HOPE VI is in the area of timeliness, the slowness with the
process of trying to get these projects up and running, and the
accountability of the money. The other area is in the cost,
particularly comparative cost.
What suggestions would you give us, one, that would help
our legislation to be responsive to this, and how would we deal
with these two areas specifically?
Ms. Glover. Thank you for the question. In terms of
timeliness of expenditure, we have to put this in context. The
mixed-income model was not developed until 1996 when the first
financial closing for the revitalization of Techwood/Clare
Howell was approved by HUD. The grant was originally authorized
and funded in 1992, so there was no legal, regulatory or
financial ability to do mixed-income development until 1996. If
you took a measurement of how long it has taken to redevelop
the properties since 1996, you really are not talking about a
long time frame. What HUD unfortunately has done is they are
applying modernization timetables to a development process. We
are not just going out to bid for new roofs and new building
envelope systems. We are talking about, and the young lady has
her huge bound volume, we are in fact engaged in a community-
building process. There are tax credit schedules every year.
For example, in the State of Georgia they come out once a year
with an offering of low-income housing tax credits. There are
no set-asides for public housing development, but the policy
certainly supports it, but there are also limits on how many
tax credits get awarded to any one deal.
Because we are doing market-rate development, there also is
the question of absorption of units into the marketplace. You
never want to flood the marketplace with too many units,
because indeed you will not have the market-rate families. So I
think if we can present to this committee a thoughtful analysis
about the timeliness of obligation and expenditure, I think you
will find that what is happening is that we are measuring it
against the wrong benchmarks. Real estate development is
fundamentally different than a modernization program I think if
there are capacity issues, I think we need to be addressing
those specifically, but we should not create the impression
that there is a crisis here.
By the way, the pipeline issue--these dollars have already
been committed to specific projects. So that is dealing with
what is on the table, but it does not deal with all of the
literally hundreds of projects that need funding to do a better
job and to have a more positive impact on the families and the
communities.
Chairman Ney. If I could, the time has expired. Let me get
to Mr. Watt, and then if you want to come back.
Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman.
Let me just do several things. First of all, I think we
would be remiss if we did not thank the chair for convening
this hearing today. It has been an exceptionally good hearing.
This panel in particular I think has shown us the wealth and
breadth of opinions, problems, challenges and opportunities
that are in front of us. I want to say to Ms. Frasier and Ms.
Glover, despite the fact that I was out of the room when you
testified, I was watching you in the back room. I just had to
get something to eat, so I apologize to you. I thought both of
your testimonies were outstanding. Ms. Frasier, you brought
some very thoughtful things that a number of us have been
exploring, of trying to figure out ways to make the HOPE VI
program, if it does continue, a more effective program that
does not end up displacing disproportionately or even
displacing at all. I think there are communities in which a
better job has been done on displacement and readiness and
moving forward than other communities. We have seen that from
this testimony.
This has just been a great panel, including Mr. Husock. I
am not going to beat up on him, because I really think he
raised some questions that need to be raised. They need to be
raised in academia, where he sits, and he needs to keep raising
these questions with the students, and we need to raise them
here, but he needs to understand that these were the same
questions that were raised 10 years ago at the inception of
HOPE VI. We have been answering these questions over and over
and over again throughout this process. His notion that they
will be answered over time I think is a sound notion, because
we are answering them over time.
Ms. Glover certainly has answered them in a comprehensive
way in Atlanta. I hope that my friend Mr. Tracey will invite
you to Charlotte to see the First Ward Place development so
that you can see how the questions that you legitimately
raised, that you ought to be raising in academia, have been
anticipated and addressed in a real community. I was thinking
about, one, you talked about these stresses that exist between
low-income and higher-income people when you put them in the
same community. We are answering that question, too. I
remember, and Mr. Tracey probably can remember this, as soon as
we got this wonderful community up and running, some of the
upper-income residents wanted to close a sidewalk that ran
through the community because the sidewalk went through this
revitalized community over to the next, what I hope will be the
next HOPE VI revitalization community. They did not want those
people. Those people, they say, are walking through our
neighborhood.
So there was a stress between the higher-income people in
that community and the lower-income people in that community
who had to do a reality check with those folks. They set them
down in a meeting. It was a classic meeting, and they said,
well, you know, this was our community before you all ever got
here, first of all. But second of all, those people that you
are talking about are us. We just happen to be your neighbors
now. They are not bad people; they just happen to live in a
public housing complex over here, just like we did before this
HOPE VI revitalization.
Now, that is a creative tension that took place in that
community. So I am not minimizing even your testimony, Mr.
Husock. This has been a great panel to demonstrate how vital
this program has been and how it has been used. I just wanted
to finally, because I know the red light is on, I want to quote
from HUD's February, 2000 report, since this is educating Mr.
Husock day, in which HUD in February of 2000 found that the
HOPE VI program represents the most dramatic change in public
housing in the last 60 years and is transforming the nation's
most distressed public housing projects. The report found, one,
that HOPE VI is achieving its goals of community building--not
just putting some houses there--community building. Two, HOPE
VI is showing impressive results in helping residents move from
welfare to work. Three, HOPE VI is helping residents move into
the economic mainstream. Four, HOPE VI is dramatically reducing
crime and violence in public housing. Five, HOPE VI is reducing
the isolation of public housing residents. And six, HOPE VI is
leveraging significant investments in community improvements.
Those are some of the questions that you asked that we have
been addressing over the last 10 years under HOPE VI. It was
not because we ignored the question you asked, they are
important questions. We have tried to address them, but this
notion that we should take a breather--this ain't no breather
that the president is talking about. This is a termination. It
is an assassination of the program. It is not a breather. You
will never resuscitate this program if you do not reauthorize
it this time, because if it is ever terminated, it will not
ever come back. So if you think this was about taking a
breather, you obviously did not hear the first panel today.
This is a termination of the program--a program which
coincidentally was a Republican program that was based on
assumptions to every question that you raised which we have
been answering for the last 10, now 11 years, and getting good
positive answers to.
So I will leave that alone. I want to thank Mr. Guzman for
being here. I think HUD was right. Mainstreet ain't got much to
do with the original purpose of HOPE VI, but I am a big
supporter of Mr. Leach and I am on his bill. If that is the
price we have got to pay to keep HOPE VI going, I am all for
it.
And then, I want to thank Ms. Waters and Mr. Leach and all
the other members who have made this a truly bipartisan effort
because this should not be partisan. This should be about
building America's communities and building the hope of
America. One of my colleagues said this is about keeping HOPE
VI alive, not keeping hope alive--keep HOPE VI alive. So if we
end this hearing today, we can just chant, ``Keep HOPE VI
alive, keep HOPE VI alive.''
I yield back.
Chairman Ney. Thank you.
The gentlelady from California?
Ms. Waters. Mr. Chairman, I just wanted to thank you,
because I do not think the people out there realize that as the
chair of this subcommittee, you did not have to hold this
hearing, particularly when the Administration is sending you
another kind of signal. So I am very pleased that you have held
this meeting today and given all of these fine people an
opportunity to come here and share with us their experiences,
and to raise questions.
Mr. Watt is a little bit more generous in his praise than I
tend to be, however, I am appreciative not about--not more
generous in his praise about holding the hearing, but about
some of the directions of some of our panelists. But I am very,
very pleased that we have done this, despite the fact that the
Administration has sent the signal of discontinuing the
program.
I do believe there is hope for HOPE VI, and I do think that
we need to do a little bit more research to help our position.
For example, I really do want to know how much of that money is
committed and in the pipeline, and whether or not money that is
in the pipeline is being considered unspent as the case is
being made for not reauthorizing this program. So I think
following this hearing, we have the opportunity for our staffs
to answer some of these questions through a little bit more
work, and then we need to everything that we can to try and
keep this program going.
Let me just say to Mr. Guzman that I have been talking with
the chairman part of today about the need for rural housing,
and I believe that we can have a great bipartisan effort with a
real rural-urban renaissance, as I call it. I do think that
many of the needs of the rural community have been unmet, un-
thought about. There is a reason for that. Some of us come here
knowing and understanding what our jobs are. We get called tax
and spend liberals, whatever you want to call it, because we
understand what the needs are and we have a lot of rural
communities that are just not properly represented in terms of
the poverty that those communities experience. I am hoping to
develop a relationship with legislators who represent rural
poverty who have not seen a need to really work and speak up on
behalf of those communities. I think together we can do an
awful lot.
Again, I want to thank the chairman because he has done a
yeoman's job in helping to eliminate some of the issues related
to HOPE VI. I am very pleased that you all came, and I thank
you for your time and your effort.
Chairman Ney. I thank the gentlelady from California for
her remarks.
The gentleman has a closing comment?
Mr. Scott. Yes, thank you very much.
I, too, would like to echo the words of compliments that
were offered by my colleagues, especially for taking the time
and coming up. It has been very, very helpful. This has been a
very, very worthwhile meeting, and it has opened my eyes up to
the enormity of the problem we are facing and the challenge
ahead. I think those of you here realize that we do have this
challenge ahead. We have got to save this program. Hundreds of
thousands of people all across this country are counting on us
to save this very worthwhile program. It is my hope that as the
president and the Administration turns a great deal of its
attention to domestic issues and what is happening here in this
country, that they will begin to really focus on this program
as one of the cornerstones of what we have got to do in the
future to make this country what we want it to be.
There is nothing greater that we can do than to provide
people with housing, a home. This is a process that we start.
It is very important that we keep the trend moving of mixed
income. It is very important that we build upon the successes
that we have had. Certainly, Ms. Glover, you have certainly as
all of you have done, but as we point to you, Ms. Glover, and
we look at the success, let us hope that the Administration
will look at the success of what we have done in Atlanta and
other cities--in Los Angeles and North Carolina, in Miami,
Pittsburgh. There are cities all across this country with
sterling success stories, and let the successes rule the day--
not the one or two areas of failure. You are going to have
those areas, but we have got to build this country on success,
not on failures.
Let us give it time to work, and let us put the
measurements and the internal controls in to fix the problem.
If the timeliness and the costliness is a problem, we can look
to Atlanta to see how they did it and other cities, and make
sure that we have this in this program. I am just delighted to
be a part of working with both my colleagues Mr. Watt and Mr.
Leach on their bills. I appreciate them giving me the
opportunity to work on it. It is a very, very high priority
with me, in no small measure because I know the economic,
social and cultural impact and the positive thrust it has done
in my home state of Georgia. Just as surely as it has done that
in Georgia, done the right way, it can be that kind of success
all across the nation. It has been said before, but there is no
better way of saying it, let us not throw the baby out with the
bath water. And as I said before, let's not cut somebody's legs
off at the knees, and then condemn them for being a cripple.
Let us save this program and let us let it be the shining light
that this country is looking for.
Thank you, Mr. Ney. I appreciate this opportunity, and
thank you all for coming and sharing with us.
Chairman Ney. I thank the members for their indulgence
today and their time, and I want to thank all the witnesses for
being here today. The chair notes that some members have
additional questions for the panel which they can submit in
writing. Without objection, the hearing record will remain open
for 30 days for members to submit written questions to these
witnesses and to place the response in the record.
Thank you.
[Whereupon, at 4:56 p.m., the subcommittee was adjourned.]
A P P E N D I X
April 29, 2003
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