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REAUTHORIZATION OF 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 TENTH CONGRESS FIRST SESSION JUNE 21, 2007 Printed for the use of the Committee on Financial Services Serial No. 110–44 ( U.S. GOVERNMENT PRINTING OFFICE WASHINGTON 37–561 PDF : 2007 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\37561.TXT HFIN PsN: TERRIE HOUSE COMMITTEE ON FINANCIAL SERVICES BARNEY FRANK, Massachusetts, Chairman PAUL E. KANJORSKI, Pennsylvania MAXINE WATERS, California CAROLYN B. MALONEY, New York LUIS V. GUTIERREZ, Illinois NYDIA M. VELÁZQUEZ, New York MELVIN L. WATT, North Carolina GARY L. ACKERMAN, New York JULIA CARSON, Indiana BRAD SHERMAN, California GREGORY W. MEEKS, New York DENNIS MOORE, Kansas MICHAEL E. CAPUANO, Massachusetts RUBÉN HINOJOSA, Texas WM. LACY CLAY, Missouri CAROLYN MCCARTHY, New York JOE BACA, California STEPHEN F. LYNCH, Massachusetts BRAD MILLER, North Carolina DAVID SCOTT, Georgia AL GREEN, Texas EMANUEL CLEAVER, Missouri MELISSA L. BEAN, Illinois GWEN MOORE, Wisconsin, LINCOLN DAVIS, Tennessee ALBIO SIRES, New Jersey PAUL W. HODES, New Hampshire KEITH ELLISON, Minnesota RON KLEIN, Florida TIM MAHONEY, Florida CHARLES A. WILSON, Ohio ED PERLMUTTER, Colorado CHRISTOPHER S. MURPHY, Connecticut JOE DONNELLY, Indiana ROBERT WEXLER, Florida JIM MARSHALL, Georgia DAN BOREN, Oklahoma SPENCER BACHUS, Alabama RICHARD H. BAKER, Louisiana DEBORAH PRYCE, Ohio MICHAEL N. CASTLE, Delaware PETER T. KING, New York EDWARD R. ROYCE, California FRANK D. LUCAS, Oklahoma RON PAUL, Texas PAUL E. GILLMOR, Ohio STEVEN C. LATOURETTE, Ohio DONALD A. MANZULLO, Illinois WALTER B. JONES, JR., North Carolina JUDY BIGGERT, Illinois CHRISTOPHER SHAYS, Connecticut GARY G. MILLER, California SHELLEY MOORE CAPITO, West Virginia TOM FEENEY, Florida JEB HENSARLING, Texas SCOTT GARRETT, New Jersey GINNY BROWN-WAITE, Florida J. GRESHAM BARRETT, South Carolina JIM GERLACH, Pennsylvania STEVAN PEARCE, New Mexico RANDY NEUGEBAUER, Texas TOM PRICE, Georgia GEOFF DAVIS, Kentucky PATRICK T. MCHENRY, North Carolina JOHN CAMPBELL, California ADAM PUTNAM, Florida MICHELE BACHMANN, Minnesota PETER J. ROSKAM, Illinois THADDEUS G. McCOTTER, Michigan JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel (II) VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\37561.TXT HFIN PsN: TERRIE SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY MAXINE WATERS, California, Chairwoman NYDIA M. VELÁZQUEZ, New York JULIA CARSON, Indiana STEPHEN F. LYNCH, Massachusetts EMANUEL CLEAVER, Missouri AL GREEN, Texas WM. LACY CLAY, Missouri CAROLYN B. MALONEY, New York GWEN MOORE, Wisconsin, ALBIO SIRES, New Jersey KEITH ELLISON, Minnesota CHARLES A. WILSON, Ohio CHRISTOPHER S. MURPHY, Connecticut JOE DONNELLY, Indiana BARNEY FRANK, Massachusetts JUDY BIGGERT, Illinois STEVAN PEARCE, New Mexico PETER T. KING, New York PAUL E. GILLMOR, Ohio CHRISTOPHER SHAYS, Connecticut GARY G. MILLER, California SHELLEY MOORE CAPITO, West Virginia SCOTT GARRETT, New Jersey RANDY NEUGEBAUER, Texas GEOFF DAVIS, Kentucky JOHN CAMPBELL, California THADDEUS G. McCOTTER, Michigan (III) VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\37561.TXT HFIN PsN: TERRIE VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\37561.TXT HFIN PsN: TERRIE CONTENTS Page Hearing held on: June 21, 2007 .................................................................................................... Appendix: June 21, 2007 .................................................................................................... 1 43 WITNESSES THURSDAY, JUNE 21, 2007 Cabrera, Hon. Orlando J., Assistant Secretary for Public and Indian Housing, U.S. Department of Housing and Urban Development ..................................... Fox, Richard, Executive Director, Stamford Housing Authority ......................... Kelly, Michael P., Executive Director, District of Columbia Housing Authority .......................................................................................................................... Koo, Doris W., President and Chief Executive Officer, Enterprise Community Partners, Inc. ........................................................................................................ Montiel, Rudolf C., Executive Director, Housing Authority of the City of Los Angeles ........................................................................................................... Moses, George, Chairman, Board of Directors, National Low Income Housing Coalition ................................................................................................................ Popkin, Dr. Susan J., Principal Research Associate, The Urban Institute ........ Stratford, Yvonne, former resident of Scott/Carver Homes, Miami, Florida ...... Woodyard, Charles, Executive Director, Charlotte Housing Authority .............. 7 24 25 39 21 37 35 36 22 APPENDIX Prepared statements: Cabrera, Hon. Orlando J. ................................................................................. Fox, Richard ...................................................................................................... Kelly, Michael P. .............................................................................................. Koo, Doris W. .................................................................................................... Montiel, Rudolf C. ............................................................................................ Moses, George ................................................................................................... Popkin, Dr. Susan J. ........................................................................................ Stratford, Yvonne ............................................................................................. Woodyard, Charles ........................................................................................... ADDITIONAL MATERIAL SUBMITTED FOR THE 44 54 58 72 80 83 89 112 116 RECORD Waters, Hon. Maxine: Statement of the National Association of Home Builders ............................. NAHRO insert .................................................................................................. Statement of the National Association of Realtors ........................................ Pearce, Hon. Stevan: Response to question submitted to Hon. Orlando Cabrera ........................... 134 136 142 144 (V) VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\37561.TXT HFIN PsN: TERRIE VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\37561.TXT HFIN PsN: TERRIE REAUTHORIZATION OF THE HOPE VI PROGRAM Thursday, June 21, 2007 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The subcommittee met, pursuant to notice, at 2 p.m., in room 2128, Rayburn House Office Building, Hon. Maxine Waters [chairwoman of the subcommittee] presiding. Present: Representatives Waters, Cleaver, Green, Clay, Sires; Biggert, Pearce, Shays, and Miller. Ex Officio: Chairman Frank. Also present: Representative Watt. Chairwoman WATERS. This hearing of the Subcommittee on Housing and Community Opportunity will come to order. Good morning, ladies and gentlemen. I would like to thank the ranking member, Mrs. Judy Biggert, and the members of the Subcommittee on Housing and Community Opportunity for joining me for today’s hearing on Reauthorization of the HOPE VI Program. And I would like to start by noting that without objection, Mr. Watt will be considered a member of the subcommittee for the duration of this hearing. He is not here yet, but I expect he will be shortly. Also without objection, all members’ opening statements will be made a part of the record. I am looking forward to hearing from our three panels of witnesses on the important issues related to the reauthorization of the HOPE VI Program, including one-for-one replacement, the right of residents to return to the new public housing development, monitoring of displaced residents, and the use of green building standards in revitalization efforts. Each of these are important issues for the communities where HOPE VI projects are envisioned. In 1989, the National Commission on Severely Depressed Housing found that 6 percent, or 86,000 units, of the Nation’s public housing units were severely distressed. Residents of these units also experienced higher rates of crime, high levels of unemployment, and lacked programs and services to help them obtain selfsufficiency. In response to these findings, Congress created the HOPE VI Program in late 1992. To date, 237 revitalization and 285 demolition-only grants have been awarded through the program. With these grants, public housing authorities have demolished over (1) VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 2 130,000 of the Nation’s most severely distressed public housing units. Given the limited tools available to the Nation’s public housing authorities to create quality affordable housing, HOPE VI has provided resources for Housing Authorities to revitalize public housing units that are desperately needed by America’s poor families, including the elderly and persons with disabilities. HOPE VI has also been an important tool for Housing Authorities to provide much needed services to support residents. In many places, HOPE VI resources have been used to provide job training, GED classes, and after school programs. It is clear that HOPE VI is a major Federal housing program that needs to be revitalized simply because of its potential for good and for transforming lives and communities. However, HOPE VI has had mixed results on the face of the Nation’s public housing. As severely distressed public housing developments are replaced with valuable mixed income communities, residents have been displaced, public housing units have been lost, and those units that are newly constructed have been restricted to a limited group of public housing residents. Therefore, in reauthorizing this program, we need to consider the following facts of the HOPE VI dynamic. First, the HOPE VI Program has directly contributed to the loss of over 30,000 public housing units. This is because the program does not now require one-for-one replacement of hard public housing units. The HOPE VI Program should maintain our stock of public housing units, not deplete it. As we consider one-for-one replacement of these public housing units, let us be clear that it is not the intention of this subcommittee to resegregate or to reisolate public housing residents into areas with high concentrations of poverty or areas that have suffered from historic racial segregation or isolation. We are sensitive to this concern and are open to ways of making sure that public housing units are rebuilt on a one-for-one basis, and that residents have the right to return to those units in a way that does not lead to an increase in the area’s poverty, segregation, or isolation. Second, because of the lack of available units and sometimes too strict screening criteria, families who want to return to the revitalized site are often unable to go back to the communities that they called home. Even though these families are living in substantially better housing in safer neighborhoods, those who are now using Housing Choice Vouchers to rent their housing are having difficulty in making ends meet. We must carefully consider the impact of HOPE VI on these residents, especially those with poor health and those who are hard to house. Third, in some cases Housing Authorities have not properly monitored and tracked the whereabouts of their displaced residents. I am pleased that Ms. Yvonne Stratford is here to personally testify about her experience with this most troubling issue. Fourth, another important factor to consider in any reauthorization of HOPE VI is the need for green building standards in future HOPE VI projects. As energy prices and utility costs rise, we need to all do our part to be more aware of the impact we have on the VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 3 environment. It is only prudent that these new developments meet these environmentally friendly standards. Finally, any reauthorization of the HOPE VI Program must take into account the underfunding of the Public Housing Capital Fund, the recent underfunding of the HOPE VI Program, and the resulting increase in the number of severely distressed public housing units. This is a program that should be reauthorized in an amount sufficient to address the growing backlog in much-needed capital improvements and to provide for one-for-one replacement of occupied public housing units. The Department of Housing and Urban Development has asserted that the HOPE VI Program is too costly and too slow. However, my colleagues and I continue to believe that—in spite of this and other issues—this program is worth reauthorizing. Again, I look forward to hearing the witnesses’ views on this very important program. And now I would like to recognize Ranking Member Biggert for her opening statement. Mrs. BIGGERT. Thank you very much, Madam Chairwoman, and thank you so much for scheduling this hearing on the reauthorization of the HOPE VI Program. I think since 1993 there has been a lot of progress that has been made in being able to replace some of the most dangerous and dilapidated public housing in the country with what would be the mixed income communities. And while I don’t think that there is any in my district, certainly Chicago is a place that this has really been helped. I have to say that in one of my former lives, or several of my former lives, having been in the public housing in Chicago, for one, I was chairman of the Visiting Nurse Association of Chicago, and one of the things that we did was to have—the visiting nurses did a lot of work in some of the public housing, like Robert Taylor Homes. One of the things that we—the way that we got board members was to have our board members go out with these visiting nurses to visit with them where they were. And so many of us spent time in the Robert Taylor Homes, in particular Cabrini-Green, the Rockwell Gardens. And I think to have seen the changes that have taken place in those communities has been astounding with the mixed level, and taking away the huge building that was just the public housing, but to have the mixed units. And I look forward to seeing that happen in New Orleans, for example, where we have been down with our field hearing to see how that could work, and how HOPE VI can really bring a revitalization to those communities. It works in Chicago, and I think it can work a lot of other places. And it has worked. So I look forward to the hearing and to moving forward with the reauthorization of the HOPE VI Program, and with that I yield back my time. Chairwoman WATERS. I thank you very much, Ranking Member Biggert. I understand that you may have to leave for another hearing. Mrs. BIGGERT. That is correct. I do have a markup. Chairwoman WATERS. A markup, which is really more important, so if you have to leave, we understand. And if there are other members who are present, they will have an opportunity to have opening statements prior to going to our witnesses. So thank you very much. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 4 At this time I would like to recognize the chairman of our Committee on Financial Services, Mr. Frank. The CHAIRMAN. Thank you, Madam Chairwoman. I am pleased, once again, to be working with you, and I appreciate your leadership on important housing matters. I really believe that one result of this Congress is going to be some very significant improvements in the housing area, and your work has really been exemplary. It is good that we are here reporting the bipartisan support for HOPE VI. This Administration has kept trying to kill HOPE VI, and I appreciate the fact that in a bipartisan way we have kept it going. And not just kept it going, but we are going to be improving it and working together. We even had an unusual degree, as you know, Madam Chairwoman, of cooperation with the Senate. We met with our colleague, Senator Mikulski. We know, too, that the chairman of the Appropriations Subcommittee, my colleague, Mr. Olver of Massachusetts, is interested in this, so we are determined to go forward. I do want to note that one of the things we are determined to do is to correct a long-standing bipartisan, bicameral mistake— tearing down more housing for poor people than we build. That is something that began with the original urban renewal program, and there has been this notion that is bizarre, but took root, that if people are living in housing, people of low income are living in housing that the rest of us don’t like, well, one of the nice things we can do for them is to tear it down. And it is as if people thought there were a lot of poor people who said, ‘‘You know what, I think I will go live in a lousy house, because I don’t want to live in a nice one.’’ What ought to be obvious to most rational people is that people will want to live in the best housing they can find and afford. And if you are tearing down the housing they are currently living in because it is not good enough for them, you are sending them to worse housing, not better, because they have not voluntarily given up better housing for where they are. That is why starting with the hurricane bill, when the chairwoman took very important and very decisive action, and I was glad to be supportive, we have set the rule that you should not, through the government, tear down more housing than you are going to build. Now that has to be done with sophistication. Part of the point of HOPE VI is to avoid excessive concentrations of people, and we don’t want to recreate that. But it is clearly within our ability to replace housing without recreating ‘‘ghettoization.’’ And that is an important job, and that is very much reflected in the hard work that is going on in this bill. We are committed to a HOPE VI Program, and people have said, well, you know, the HOPE VI Program is better for the communities. That is true. But I think again, we have had this error in the past where some people have been allowed to say that we are going to improve the community without focusing on improving the lives of all of the individuals. I think we are going to show that those two are perfectly compatible. So I appreciate, Madam Chairwoman, the work you are doing here, as in other bills. We are going to show that it is not preordained that we have to reduce the amount of housing for people with lower incomes. In fact, we need to increase that, and this bill, VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 5 I think, is going to accomplish that. So I am very glad that we are going to be able to move on this, and people should know that this is a serious effort. We are having this hearing, and a lot of important drafting is going on. I would think that we would be ready to vote on this bill in committee in the month of July when we come back before we adjourn for August. We know the Senate is eager to do it, and I think we will be able to have a bill on the President’s desk by the end of this year given the interest that is there. We also have an assurance from at least the Appropriations Committee on this side, but also Senator Mikulski, who is on the Appropriations Committee on the Senate side. People should know that this is no idle exercise; I believe this is a bill that is going to be passed and be funded. Thank you. Chairwoman WATERS. I would like to thank you, Mr. Chairman, for all of your leadership and your support and the work that you have done to bring us to the point where we are definitely talking about one-for-one replacement. You have been very, very clear on that and very strong on that, and I appreciate it. I now recognize Mr. Cleaver for 3 minutes. Mr. CLEAVER. Thank you, Madam Chairwoman. One of the things I had planned to do today for this hearing, which you and our ranking member are very visionary in calling, is the picture of the housing unit, 405B Bailey, which I lived in. And the relevancy of the picture of the housing project that I lived in is to demonstrate the value of HOPE VI, which I wish had been in existence when I lived in public housing. One of the early mistakes was Pruitt-Igoe right down the street from Kansas City, which you are very familiar with, Madam Chairwoman, in St. Louis. It was a mistake because we piled poor people on top of poor people. And that in my experiences just won’t work. I think we went past what HUD had set as a goal, which was demolishing 100,000 units; I think we had gone toward 150,000 units. And I think with the one-for-one replacement that you support, which I think many of the members on this committee support, it is going to be critically important. I think when people move out of public housing units, for us to make sure that we know where they are going and that we follow them, keep up with them and report on it. Because sometimes if we don’t do that, we are going to lose track of people, and sometimes they fall through the cracks. We have to be able, I think, to say that we know what happened to the people who moved. And the other thing is that I think one of the most controversial things that I experienced as mayor is whenever we started—and we did one of the first projects, one of the first 15 projects done in this Nation, Guinotte Manor, you can see it from city hall, and one of the problems is of course people organize in various parts of the city to say we don’t want any HOPE VI projects coming into our community. And I do think that there is a tiny piece of legitimacy. I do think they ought to be dispersed all over the city. And I think it ought to be done with great intentionality. And I think the direction we are going in is the right direction; I think there are a lot of little nuances that we have to consider. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 6 And I appreciate the opportunity to be a part of this committee and to follow your leadership. Thank you. Chairwoman WATERS. Thank you very much. I recognize Mr. Sires for 3 minutes. Mr. SIRES. Thank you, Chairwoman Waters. I am happy to be here to listen to the witnesses today on this program. I am somewhat familiar with this program, having been a local mayor, so I have a unique perspective on this program. Its impact on the community is real and it is positive. Beyond the obvious impact of cleaning up distressed public housing units and providing people with housing, HOPE VI generates economic activity in the community, which I have seen firsthand. New housing brings new residents, brings new infrastructure, and business needs for those people. They shop and they dine and they invest in the community. These new businesses hire employees from the area, who also have a positive impact on the economy. The benefits of this program do not impair. Research indicates HOPE VI increases the per capita income of residents and decreases the unemployment rate. The same research shows that this program decreases the number of households receiving public assistance and decreases violent crime in the surrounding community. I do not dismiss concerns that the program could be better run or more efficiently, but I believe strongly that the program should be reauthorized and strengthened, not cut. I look forward to hearing from today’s witnesses, and I thank the chairwoman for holding this hearing. Thank you. Chairwoman WATERS. Thank you very much. I recognize Mr. Green for 3 minutes. Mr. GREEN. Thank you, Madam Chairwoman. I greatly appreciate your calling this most important hearing, and I also thank the chairman of the full committee for his participation. The two of you have absolutely made housing a priority for all of us, and I thank God that you have done so. I am excited about the possibilities. I am excited knowing that we will have an opportunity to extend HOPE VI for a significant amount of time. I am excited because I understand that HOPE VI brings hope to communities. It does more than bring infrastructure, and buildings. It causes communities to have better employment rates. Crime seems to be impacted by virtue of HOPE VI. Persons seem to have a better sense of community, and greater pride in the area. HOPE VI really does provide hope. So I am interested in HOPE VI and excited about it. I would add, as I close, that replacement is important to me, right-of-return is important to me, and tracking is important to me. I yield back the balance of my time. Chairwoman WATERS. Thank you very much. Mr. Watt, do you have an opening statement? Mr. WATT. Madam Chairwoman, I am just honored to be here, and to be allowed to sit in with your subcommittee. Unfortunately, I didn’t have the opportunity to get on the subcommittee this time, but it is not because of a lack of interest in these issues. And certainly I have a very, very heavy interest in the HOPE VI Program, and I have always wondered why, when everybody has acknowledged the success of the program, that the President and this Administration have continuously tried to terminate it, when it is VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 7 clear that the original goals of replacing and revitalizing communities in which distressed public housing was situated, the list was made originally, and we are not anywhere close to being through with completing that list. So I never have accepted the proposition that the Administration has tried to advance that HOPE VI has accomplished its mission. It can’t be accomplished until those identified public housing communities that were in distressed condition are replaced and revitalized. So I am just thankful to be here, and I thank the chairwoman of the subcommittee, and the chairman of the full committee, for their leadership on this issue, and I look forward to working with them to come out with a good reauthorization bill and, as importantly, to keep the pressure on the appropriators to find the money to actually fund the programs at a level that will have significant impacts in the local communities. Thank you. I yield back. Chairwoman WATERS. Thank you very much, Mr. Watt. And I would like to thank you for all of the work that you have done on HOPE VI. I know that it is a priority interest that you have worked on for quite some time, and I appreciative your getting us to this point where we can have a reauthorization bill that takes into consideration all of the things that you have learned needed to be addressed. With that, now I would like to introduce our first panel, which consists of the Assistant Secretary for Public and Indian Housing for the U.S. Department of Housing and Urban Development, Mr. Orlando Cabrera. Assistant Secretary Cabrera, I would like to thank you for appearing before the subcommittee today. And without objection, your written statement will be made part of the record. You will now be recognized for a 5-minute summary of your testimony. STATEMENT OF THE HONORABLE ORLANDO J. CABRERA, ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Mr. CABRERA. Thank you, Madam Chairwoman, Ranking Member Biggert, and members of the subcommittee. Madam Chairwoman, I ask that my written testimony be accepted and entered into the record. Chairwoman WATERS. Without objection. Mr. CABRERA. Thank you. My name is Orlando Cabrera, and I am Assistant Secretary for Public and Indian Housing at the Department of Housing and Urban Development. Thank you for inviting HUD to present its views on issues relating to the HOPE VI Program. Our written statement sets forth many of our thoughts on the HOPE VI Program. This oral statement will focus on hope for HOPE VI. No HOPE VI deal gets done simply on its own as a Federal grant. Many other levels of financing need to be brought into the HOPE VI transaction for that transaction to work and to produce housing. We believe that HOPE VI is hard enough to use and, if the program would be reauthorized by Congress, that the path to success is greater simplicity and not additional complexity. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 8 For example, many States struggled in their policy decision on how to treat HOPE VI deals because of the complexity of HOPE VI deals that prolong the development process, causing the low income housing tax credit to go stale, if you will, thereby hurting States in two ways. First is lost opportunity; namely, HOPE VI transactions historically demand a lot of tax credits, and so other low income housing tax credit units were not built because a tax credit was committed to the HOPE VI transaction. And second, often, and particularly early on, the HOPE VI Program applicant was a PHA with scant or no development experience, meaning that the allocation would go unutilized or underutilized because of capacity issues. The good news is the second prong has been remedied in many instances. PHAs have become better applicants and better economic partners. Unfortunately, the first prong has not progressed much. One reason for that is that HOPE VI deals are very complex. As was previously noted, no HOPE VI deal can be funded on its own. One thought we would suggest in the process of your consideration of the HOPE VI legislation is that simplicity, wherever possible, be the mantra, and to remember that every time something outside of a housing context is added to a HOPE VI deal that deal’s viability decreases because its costs are increasing. We would suggest that encouraging certain policy prerogatives would make sense, but that such policy prerogatives be accompanied by answering the following questions. If we add this requirement, will it make a HOPE VI transaction less viable because it has added costs? And has adding the policy prerogative made the HOPE VI transaction less competitive when it is postured for competition for tax credits, private activity bonds, and/or, if one would want to delve this far down, other State subsidy? This is what we suggest would help the viability of HOPE VI. My written statement sets forth many of the issues that have most hampered HOPE VI. If and when Congress acts to reauthorize HOPE VI, we believe the approach proffered in this testimony would add value to the program, and accordingly offer it respectfully. Thank you once again for your invitation to testify before the committee. I would be happy to answer any questions you may have. [The prepared statement of Assistant Secretary Cabrera can be found on page 44 of the appendix.] Chairwoman WATERS. Thank you very much. Members, we are going to go right to the questioning. I understand that votes will be taken up on the Floor very shortly, and when we finish this round of questioning, there may be time to break. Did I hear that they had called the vote? So how many minutes do we have? We have 10 minutes left? I think I will start with my questions, and then we will break and go to the Floor following that. Mr. Secretary, I would like some discussion from you on one-forone replacement. What do you really think about it? What has been your experience in the past? What difficulty do you see with oneon-one replacement? And do you support it? VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 9 Mr. CABRERA. I do not support one-for-one replacement of public housing units for the reasons already articulated. It would actually be counterproductive in terms of the original legislative intent of HOPE VI. The original legislative intent of HOPE VI was to avoid concentration, and that might produce concentration. That said, one-for-one replacement of affordable units, I think, is a viable thing. What does affordable units mean? Affordable units is something that I believe in this industry, and those who produce units for low income Americans, they would categorize in the following way: Units that are produced using low income housing tax credit that serve the bandwidth between 0 and 60 percent of area median income, units that are produced by the private activity bond program that do the same thing, and units that are produced by State programs that do the same thing. That would broaden the pool, and preserve the original intent of the legislation. But I don’t believe that would be the only thing. One of the things that I think would help would be—and this is not the subject matter of this committee, but I offer it just as a thought; I testified to this 2 weeks ago—would be to create a different indicia of ownership for units that are market rate in nature than those that are affordable in nature. And the reason is because at that point you can better strip away and attract capital into HOPE VI deals, and frankly into other affordable deals in order to make them more viable. The big challenge with HOPE VI comes when you deal with units that are public housing in nature, and for those that develop, that means those that are subject to an annual contributions contract, is that it requires a deep operating subsidy. Just building those units is not enough. You have to also figure out how all of the moving parts are going to function. They don’t function well if they are all ACC units for a variety of reasons. So our suggestion would be to amplify the term not one-for-one replacement of public housing units, but one-for-one replacement of affordable units, which from a policy perspective largely accomplishes the same thing. Chairwoman WATERS. And I want to be clear about the affordable units that you are alluding to, that would come under the definition of one-for-one replacement. You are talking about affordable units that are built by other entities, State housing agencies, etc., who would be considered providing units for one-on-one replacement, but they would not be public housing units? Mr. CABRERA. No, let me clarify it another way. Chairwoman WATERS. Okay. Mr. CABRERA. A public housing authority, when it undertakes a HOPE VI, with or without a partner, is essentially acting as a developer. So the first presumption in the statement that I made is that the public housing authority is the developer or a co-developer. They are the owner. The next presumption is that the unit that is developed is being developed with some kind of pot of money. It is either being developed with capital fund money, HOPE VI money, with low income housing tax credit, or private activity bonds, or some State money, or HOME, if that were possible in this deal. And so the developer, the public housing authority, would automatically under statute be obligated to offer those units for a period of time. The period of time under the tax program is 15 years VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 10 for those folks at 0 to 60 percent of AMI. Most folks undertaking development under those circumstances don’t usually get a 15-year affordability period in this climate. Those resources are very scarce. They are very valuable. And most housing finance agencies that allocate the low income housing tax credit are demanding much longer periods of affordability. So what you are doing is preserving units that are affordable that meet the spectrum of affordability that I think we are all concerned about, accomplishing the objective of HOPE VI, and making sure—and this is for those who develop the most critical part— making sure the units actually get built. Chairwoman WATERS. And then these units would be managed and supervised by the housing authority? Mr. CABRERA. Or whoever the housing authority contracts with, yes. Housing Authorities also contract with private— Chairwoman WATERS. I know, but the idea is that they would still be under the supervision of the housing authority, with all of the services that go along with them. Mr. CABRERA. Yes. They would be the owner. Chairwoman WATERS. All right. Thank you very much. At this time I think what we are going to do is we are going to break. I would like to ask you, Mr. Secretary, if you have about another half hour? Mr. CABRERA. Yes. Chairwoman WATERS. Thank you very much. We will come back as quickly as we complete this set of votes on the Floor, and complete your panel. We have members here who have some questions for you. And then we will move onto the second and third panels. I appreciate your patience. Mr. CABRERA. My pleasure, Madam Chairwoman. Chairwoman WATERS. Thank you very much. [Recess] Chairwoman WATERS. The subcommittee will come to order. I would like to thank you, Mr. Cabrera, for remaining. We were a little bit longer than we thought we would be. I have completed my questions, and I would now like to go to Mr. Shays, who is going to serve as our ranking member. Mr. SHAYS. Madam Chairwoman, I am happy to wait, because I think some of my colleagues have been here and have heard the testimony. So I am more than happy to wait and it will give me a chance to catch up, so if one of your colleagues wants to go. Chairwoman WATERS. That is fine. We will go right down to Mr. Cleaver for questions. Mr. CLEAVER. Thank you, Madam Chairwoman. Mr. Cabrera, thank you for being here. There are a number of issues I would like to raise, but let us focus on the unspent funds. The question of whether or not those unspent funds should be made available has been the subject of a great deal of discussion. What is the most recent figure for the amount of HOPE VI unspent funds? And what are the plans for those funds that HUD has put forth or made— perhaps I am begging the question—has HUD made any plans for the unspent money? Mr. CABRERA. Of the $5.8 billion that has been granted through the HOPE VI process, as of June 9th of this year, $1.4 billion re- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 11 mains unspent. And of the $1.4 billion, approximately $500 million, in fact, over $500 million—almost $600 million—are for grants that were issued between 1994 and 2001. When I was confirmed, that number was actually $2.4 billion. And so in the last approximately 18 months, the focus for the Office of Public Housing Investment, which is essentially the body within Public and Indian Housing that deals with HOPE VI, has been encouraging grantees to move forward as quickly and as efficiently as possible. That will continue. The act does not provide much room for HUD to do what one might want to be done. I have been asked previously by this committee on this issue why, for example, we couldn’t recapture, and the issue is we don’t have the authority to recapture, and that might be one of the things that the committee may want to think about. Mr. CLEAVER. Well, that was one of the questions that I have for you was whether or not this committee needs to reprogram those dollars, those unspent dollars, and reprogram in terms of complying with what I think the spirit of this committee is in terms of one-for-one replacement. Mr. CABRERA. I think my visceral reaction would be sure, you can do that. Here is the problem. There are grants currently, and there is always—each grant you have to deal with individually. There are some grants, for example, that have been the subject of a lot of litigation, and they tend to slow up the development process. So trying to say you are going to recapture them is kind of tough. For those grants where there has been no movement at all and there has been no litigation, I would say sure. For those that have actually had pretty valid reasons not to move forward, I would say absolutely that this committee should probably think about giving the Secretary the authority to revisit that, and I mean, one of the things that we would propose, I suppose, or one that could be proposed that could be recaptured and put back into a pot and then be reallocated. Mr. CLEAVER. What is your best estimate, and I will conclude, your best estimate, Mr. Secretary, of the dollars that are not being contested or in litigation? Mr. CABRERA. Congressman, I can’t give you that information right now because I don’t know it. But I am happy to have that research and provide that answer to you for the record. Mr. CLEAVER. Well, the total would be, I think, important if this committee is going to take some kind of action. Mr. CABRERA. No. I agree but I just don’t know, can’t answer the question. Mr. CLEAVER. If you could get that— Mr. CABRERA. Absolutely. Mr. CLEAVER. Thank you. Chairwoman WATERS. Thank you. Mr. Pearce, for 5 minutes. Mr. PEARCE. Thank you, Madam Chairwoman. Mr. Cabrera, I would like to focus not on the unspent funds but on the spent funds. If we get a sense—on your testimony, page 2, you are talking about $10 billion over the life of the project and $5.8 billion as of June 9th. What is the difference in those two figures? What is— Mr. CABRERA. Congressman, may I have a moment? I am trying to refresh my recollection. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 12 Mr. PEARCE. The note probably just says, amount and type of financial assistance. You were awarded $5.8 billion in HOPE VI revitalization funds, and then HOPE VI grants received $10.3 billion. Tell me a little bit about the difference in those. Which means what? Mr. CABRERA. ‘‘Other sources’’ is a reference to any and all subsidy that was used in order to develop, so that could include private activity bonds, and low income housing tax credits. Mr. PEARCE. Excuse me. So $10.3 billion is actually the figure of dollars cost? Mr. CABRERA. The leverage number, yes, that is the leverage number of what was drawn in. Mr. PEARCE. Now when I am looking at what we got for that, these numbers up in the top paragraph on the second page, 63,885 households that relocated, 87,000 adult supportive services, 62,000 employment preparation, is that correct? Is that— Mr. CABRERA. The original legislative intent of HOPE VI was the demolition of public housing. Mr. PEARCE. I just want to know about your numbers, not the law. I want to know if these numbers are what occurred for $10 billion. These numbers. Mr. CABRERA. Congressman, yes. This is one of the things that occurred. Mr. PEARCE. So if we were to go back to page 1, and we read that the four areas are household relocation, units demolished, units completed, and units occupied. If those are the four areas that you are basically dealing with, then we have a summation, that it cost us $10 billion to get 63,885 households relocated, 87,235 support services, 62,000 employment preparation placement programs, 11,600 enrolled in homeownership counseling. Did we get anything else for the money that we have spent? Mr. CABRERA. Well, I don’t think it is $10.3 billion. Mr. PEARCE. Okay. Fine. Let’s just use $5.8 billion then. I don’t care what number we use. I want to see what we get for what we have spent. That figure seems to be dismally small. Mr. CABRERA. I don’t know if I was unclear. But the $5.8 billion, it was leveraged to be $10.3 billion inclusive of all that. Mr. PEARCE. So $5.8 billion is the— Mr. CABRERA. $5.8 billion, excuse me. Mr. PEARCE. That is still a very large expenditure to counsel 11,600. Is that the period of 10 years? How long did we counsel them? Mr. CABRERA. That depends on the grant agreement in terms of— Mr. PEARCE. This is a summation of the whole program, right? Mr. CABRERA. It is a summation of the general parameters of the program. Mr. PEARCE. How many years of counseling are involved to get 11,600 homeowners counseled? Mr. CABRERA. It would depend on the grant agreement. Not all components of HOPE VI include homeownership counseling. Mr. PEARCE. You don’t think that is an accountability that you probably ought to know? Mr. CABRERA. Well, I am sure we can answer the question. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 13 Mr. PEARCE. But you as a manager, you don’t care how many people get counseled? We have 300 million people in the country and we counsel 11,000. I don’t know how many poor people we have, but we have a significant number. And we counsel 11,600 people. We are spending billions of dollars here. I am not sure what we are getting. If you would like to tell me what we are getting that substantiates—I think we appropriate money and we expect to get things out that are valuable. We offer services. Mr. CABRERA. Well, Congressman, you said I could use my metrics. $5.8 billion essentially demolished 150,000 public housing units and rebuilt approximately— Mr. PEARCE. If I do the math, 5 million divided by 78,000, divided by 64,000, and I know that it is not the only thing it is used for, but let’s just take it if it were, that is $78,000 to demolish each one, which is a very high figure. I know the $5.8 billion— Mr. CABRERA. We also built 503,000 units. Mr. PEARCE. Thank you, Madam Chairwoman. Chairwoman WATERS. Thank you. Mr. Clay for 5 minutes. Mr. CLAY. Thank you, Madam Chairwoman. And Mr. Cabrera, welcome back to the committee. Mr. CABRERA. Thank you. Mr. CLAY. Let me say that HOPE VI has been a slow vehicle for revitalizing public housing. I do not agree, however, with the notion that the program should be abolished. The HOPE VI program has yielded many positive results in redeveloping communities. St. Louis is one example. I do have questions about the implementation of the program, and my first pertains to the City of New Orleans. My understanding is that funds are disallowed for community and supportive services or human capital services in New Orleans. We have kids walking around with guns in their belts, and their parents are working and living in Houston or Dallas or some other city. These same kids saw the system fail them and were traumatized watching deaths occur all around them during the terrible storm and the tragedy there. Do you not agree that counseling is needed for these kids? Mr. CABRERA. Congressman, I think the amounts or the moneys that you are referring to are Community Development Block Grant moneys and not HOPE VI moneys. Those moneys that are being allocated—I hate giving this answer but it is the only one I can legitimately give. I don’t have an idea of what the parameter is for the allocation of that money or the use. So within the context of the Community Development Act of 1974, if that is what it requires, I really can’t speak to that. I don’t think that is HOPE VI grant money though. Mr. CLAY. But not asking you to do anything that is not consistent with the law, but also looking at what the immediate needs of a community are. Mr. CABRERA. Congressman, I don’t maintain that you are telling me to or asking me to. What I am saying is I can’t answer the question because it is a wholly different program that is not under the public— Mr. CLAY. The funds are allowed for services in cities other than New Orleans. And without these services, don’t you think that VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 14 these efforts are doomed for failure in a couple of years because of the lawlessness and crimes that are committed? Mr. CABRERA. In the case of HOPE VI, there is a CSS component, which is community supportive services, and that basically deals with many of the issues that you were just talking about, homeownership counseling, other elements that go with the HOPE VI grant, in the HOPE VI program. That already happens. That happens nationwide. That has not been disallowed in the case of New Orleans. New Orleans has a HOPE VI, and it wasn’t disallowed then. So the reason that I am answering in the way that I am answering is because the funds that you are alluding to are funds that are outside of Public and Indian Housing, and I honestly just don’t have knowledge of those programs to give you any kind of indication one way or the other. Mr. CLAY. Okay. Hypothetically then, if the HOPE VI is approved to revitalize the destroyed areas, then those funds can also be used— Mr. CABRERA. That is already the case. That is the case nationwide now. It was the case in New Orleans and Florida. Mr. CLAY. Right now? Mr. CABRERA. Yes. That is already happening. It has been happening for quite a while. Mr. CLAY. Okay. Thank you. I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you very much. Mr. Miller. Mr. MILLER. Thank you, Madam Chairwoman. Mr. Cabrera, I enjoyed your talk. And when you said the authority—you don’t have the authority to recapture many units, to guarantee one-for-one. I looked at your statement and you say that the Department is open to suggestions on how to redefine public housing revitalization in a matter that is cost effective and efficient in terms of producing units. And I think a lot of times we put ourselves in a box. Now I admit my colleagues—I think HOPE VI has worked, but it has taken a long time to bring very few units on the marketplace. And if you look at the situation, we understood that there are a whole lot of nonprofits out there that are building public housing, and there is a growing role of these nonprofit developers because they can leverage private money into communities either as well or better than PHAs, but PHAs are the only ones who are currently competing for HOPE VI funds. Don’t you think there, instead of only using HOPE VI rehabilitated parts of the community owned by PHA, can’t we take and look on as an integrated approach where cities, nonprofit housing developers can include a larger area around those PHAs to bring more units online, that we don’t have a displacement problem as we do when we are trying to tear down units that a PHA owns and put people out and then bring them back when it is completed. We can do better than a one-to-one. We could actually come back with a two-to-one because you bring additional units in by using HOPE VI dollars to supplement what they can leverage in the private sector, guaranteed units to be served for the same purpose as the PHA. What is your opinion on that? VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 15 Mr. CABRERA. Congressman, to a large degree that is what happens now. What happens within the context of a HOPE VI is there is a HOPE VI component and generally there are other phases to it where you have other subsidies that folks use to develop units. Mr. MILLER. But only with PHAs. Mr. CABRERA. I think if I understand your question correctly, and please correct me if I am wrong, what you are saying is why are PHAs the only applicants for HOPE VI grants? Mr. MILLER. Why can’t a nonprofit come in and compete for those HOPE VI dollars on a competitive basis? One could look and say yes, it is a reasonable approach, and they could use those dollars and use private funds that they borrow or that they have to create more units. Mr. CABRERA. I think the reason is because public housing authorities are State creatures, they are not Federal creatures, and they own their own real property. They actually own title to them. Most PHAs that compete for HOPE VI grants, whatever the grant might be, whether it is demo only and demo and construction, they are usually now these days joint venturing with someone, and that joint venture usually does contain either a nonprofit or for profit. Some PHAs are developing on their own, but at the end of the day the net result I think that you seek is actually already occurring, and that has mostly occurred since 2002. So I think there is another reason for that, and that is that PHAs are property managers on the whole. They are not, as I call them, natural developers. That sounds more organic than it is intended. But at the end of the day, what we are beginning to see is PHAs are in many cases developing development capacity. So the short answer is, anything that could be done to encourage development by PHAs in conjunction with the private sector, I think, would be a good thing. Mr. MILLER. But what would be wrong with a nonprofit that builds and retains housing for the same purpose a PHA does—and you know these are not the same individuals—that I have seen some in the marketplace out there do phenomenal amounts of housing with very few Federal dollars invested, yet those units are restricted for a certain purpose, and the nonprofit manages those units. Mr. CABRERA. The distinction would be in the case of those units, usually they are single asset entities owned by a nonprofit for a for profit. And that is the exact distinction here. These are public housing-owned—public housing authority-owned property using public housing money that is going to support the units that are being built. Mr. MILLER. But if you could do the same things on properties contiguous to PHAs in the same neighborhoods that need revitalization, then you could have a nonprofit come in to compete for the same dollars and generate additional units, in many cases rapid fashion. I see people behind you going like this and panicking because it is a new thought that takes it out of government directly. But there is a guarantee on those units that they are going to be serving the people we need to serve. Why wouldn’t we do that? Mr. CABRERA. My sense is that the people who are doing that are doing it for a reason, and it is not an issue of government and pri- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 16 vate sector. The issue is that once those units are built, there is an ACC placed on them, or there is an affordability component to them. In the case of those units that have an ACC placed on them, it means they are receiving operating funds under section 9 of the Housing Act of 1937. Those aren’t funds that nonprofits can compete. Mr. MILLER. But you can do that without receiving those operating funds the private sector is doing today. Madam Chairwoman, I think we should look at opportunities to help people in need in these neighborhoods. We need to bring additional units on, too. I think this is a viable opportunity for us to at least research it and check it out and debate it further. Mr. CABRERA. Madam Chairwoman, may I be indulged for a minute to explain something really quickly? The Congressman wasn’t here when we addressed this. One of the things I mentioned earlier, Congressman, was that the issue for anybody trying to develop affordable units is to define affordable units. So for purposes of this, what you are thinking is exactly correct in our view, which is, you want to create a wider menu of what affordable units are. So they are going to be units that are going to be financed on the operating side, not the construction side, with annual contribution contracts and those that won’t. Those that do tend to serve folks of 0 to 30 percent—usually really a little more—of area median income. And those that don’t, those tend to be low income housing tax credit units, and those are the units that you were referring to that are around the development. The issue becomes as part of the development plan when you are doing phased development, that that be married well. And as I understand you, that is what you are proposing. Mr. MILLER. I propose that we can do what a PHA does through the private sector, and I will talk to the chairwoman later when I have more time. Thank you. Chairwoman WATERS. Thank you. Mr. Green. Mr. GREEN. Mr. Miller, would you like for me to yield a minute to you? Mr. MILLER. I appreciate that. I have heard this debate so often, and I have heard members on my side say that HOPE VI didn’t work. I think HOPE VI worked. I think we just were not creative enough with the concept of HOPE VI to make it work today. And if we look at what has happened with the HOPE VI Program, so few units are developed and many of them are developed so slowly that people on both sides are saying, something is wrong here. We have to—we have an opportunity with the program that we have seen benefit from but the benefit is not being created as rapidly as we should be. In some cases it is because we have restricted what we have before us to so few people rather than going out and being creative because I have watched this industry change with the nonprofits in recent years, and I have seen more and more nonprofits being started by good people trying to serve the same people that PHAs are trying to serve, and they are doing it with far less government dollars than we ever dreamt about doing it with, and they are managing these units, they are keeping these units online and they are maintaining these units, and it is working. And all I am saying is from our perspective, if we are looking at a HOPE VI Pro- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 17 gram, we are trying to create opportunity for depressed areas and for people to have affordable housing in these areas like PHAs do, why not look at options available around those PHAs that the private sector would love to get involved with, and let’s see if there is some way that we can do a situation where it is a partnership, you know, HOPE VI coming into some funds, lenders are coming in with some funds but we are creating lenders out there that are serving the people we would like to serve. Mr. GREEN. I reclaim my time. Mr. MILLER. I would be happy to yield back. Thank you, sir. Mr. GREEN. Let’s go to the right to return, Mr. Secretary. What is your opinion with reference to the right to return in terms of persons having to have employment? Mr. CABRERA. Again, Congressman, it already exists. The right of return for someone who is in public housing already exists for those who are relocated subject to Federal law. And Federal law says if something happens in the interim, if you are a convicted felon between the time that you were relocated and the time you come back, then you cannot relocate. But aside from that, the opportunity to relocate for those who choose to relocate exists, and in fact in most cases folks do relocate back to the HOPE VI developed unit. Mr. GREEN. My understanding is that in some units persons are not allowed to return unless they have employment. You can leave without employment but you can’t come back unless you have employment. Mr. CABRERA. I don’t recall that being a component, and I am not going to say that is not the case, but that is not my understanding. If it is the case, I am happy to answer that as being a possibility. But I don’t recall that being the case. Mr. GREEN. Finally, with reference to the demolition only grants. Mr. CABRERA. Congressman, you mean the community service component? Or do you mean actual employment? Mr. GREEN. No. No. Actual employment. Mr. CABRERA. Okay. Mr. GREEN. But let’s come to the demolition only grants. Your thoughts on those, please. Mr. CABRERA. Most PHAs that are undertaking a HOPE VI grant I believe would say that—and you will have one PHA come up in just a little bit. I think they would say that demolition only is an indispensable part of HOPE VI because very often they can— all they really need is help demolishing an obsolete development, and they will use other pots of money to develop units there, not necessarily HOPE VI money. And the reason that they think that or they want that is because it is a much faster development for them. HOPE VI and marrying HOPE VI with different pots of money tends to add time to development. Time, adding time to development is what kills developments. That is what makes developments not go up. So essentially limiting or actually prohibiting demo only would be an imposition to public housing authorities trying to develop affordable units generally. Mr. GREEN. Thank you. I think my time has expired. I yield back. Chairwoman WATERS. Thank you very much. Mr. Shays. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 18 Mr. SHAYS. Thank you. Mr. Green, you were so generous with my colleague. I am not going to use my full 5 minutes. Would you like to ask another question? Mr. GREEN. I thank the gentleman, but I yield back. Mr. SHAYS. Thank you for your graciousness. I just wrestle with one thing. I understand it takes a long amount of time with the HOPE VI grant. But in the end, isn’t the product pretty impressive? Mr. CABRERA. When it gets built. Mr. SHAYS. So what is the negative of it taking long? Is money getting wasted? Mr. CABRERA. No. People are unwilling to invest. The negative is that when you have a HOPE VI grant and then you have a PHA compete for tax credits, because of the rules in section 42 of the Internal Revenue Code, you only have so much time to get your last unit, not your first unit, your last unit placed in service. You only have so much time to get your first takedown. It is a very time constrained system. So most housing finance agencies really don’t have a lot—they don’t have the warm fuzzies about HOPE VI because they consume a lot of tax credit and they don’t get product, which means they have lost the opportunity to develop a unit somewhere else. And what winds up happening if you don’t use your tax credits is they wind up in a national pool, and they can be distributed to all the other States except you. Mr. SHAYS. The people who are putting out, if they don’t want it, no one makes someone apply for a HOPE VI. So if it takes longer and they risk losing tax credits, it is still, you know, as grownups their decision. But it gives them an option. Mr. CABRERA. The party that is losing—the party that is losing most there isn’t—well, it is the PHA that doesn’t get the unit, and it is also the folks in the community who don’t get a unit. That is who loses really the most. But one important part— Mr. SHAYS. Somebody is getting it. It is not like from a national. Mr. CABRERA. No, no. Someone is getting it somewhere else. Mr. SHAYS. Yes. But they are. And the community is willing to take the risk because the payback is so significant. I mean, for me, I have seen—and admittedly, maybe some communities benefit more than others. But we have seen part of Stamford, Connecticut, transformed by Federal dollars and private dollars. We are seeing kids basically—and when they see someone driving a Mercedes or BMW for a deal, it is not a drug deal. It is they are going to UBS. We are having young kids be in a facility that has not just moderate income or upper moderate income or—we are seeing some pretty wealthy people staying at an exact same unit. We are seeing kids in swimming pools who are swimming right next to someone who is paying market rent, and making a significant sum of money. So I look at the result and I say, this is awesome. You are telling me it takes time. Then I respond and say, yes. It takes time. And then some lose, and the community, and it goes somewhere else. But the community is willing to take that risk. Mr. CABRERA. No, not the HOPE VI goes somewhere else. The other resources that are married to the HOPE VI. Mr. SHAYS. I understand. That is their decision. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 19 Mr. CABRERA. No, Congressman. But that is the problem. If you have one area of Connecticut that absorbs an enormous amount of tax credits, that means someone else in the State of Connecticut— Mr. SHAYS. You are talking about a different issue. You are talking about it takes a lot of tax credits. That is a different issue than saying that—I think it is a different issue, isn’t it? Mr. CABRERA. No. I think that is one of the issues. I think one of the things that I suggested earlier when I provided my oral statement was, the issue here would be simplicity and ease of marriage with the other— Mr. SHAYS. Well, let me just with the remaining time I have, let’s deal with simplicity, let’s deal with making this program better. But I would tell you on a scale of 1 to 10, these HOPE VI grants have been a 10 for the community. I have been in public life for 32 years, and it is one of the best programs I have seen, despite the fact it may take longer than what you or I want. Mr. CLEAVER. Mr. Shays, would you yield for a moment? Mr. SHAYS. Absolutely. Mr. CLEAVER. I know that you didn’t mean to imply that drug dealing and public housing are synonymous. But as a resident of public housing who can stand up, you know, on national TV and say I have never used drugs and never worried about being— Mr. SHAYS. Let me be clear, and if you would indulge me, because I want to be very clear. In our public housing, we basically had poor folks. We didn’t have people who worked, they were basically not working, and kids were being raised by parents who did not have regular jobs. So no, I said pretty much what I meant, at least in our area. But we have transformed it, and we have public housing integrated with market-rate housing and it has made a world of difference. Chairwoman WATERS. Thank you very much. Mr. Watt? Mr. WATT. Madam Chairwoman, I have one question. Is the Department planning to support the reauthorization of HOPE VI? Mr. CABRERA. No. Congressman, when I started the oral statement, I essentially said that the Administration does not support the reauthorization of HOPE VI. But in light of the fact that this Congress is considering it, these would be some thoughts that we had. Mr. WATT. I yield back. Thank you. Chairwoman WATERS. Thank you very much. Mr. Secretary, we would like to thank you for your patience and for your presence and for your participation. The Chair notes that some members may have additional questions for you, which they may submit in writing. Without objection, the hearing record will remain open for 30 days for members to submit written questions to this witness and to place responses in the record. This panel is now dismissed, and I would like to welcome our second panel. Thank you very much. Mr. CABRERA. Thank you very much. Chairwoman WATERS. I would like to introduce our distinguished second panel, and I will start with our first witness, someone whom I know, Mr. Rudy Montiel, executive director of the Housing Authority of the City of Los Angeles. Since his appointment as execu- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 20 tive director at the end of 2004, Mr. Montiel’s leadership has been instrumental in the financial turnaround of the Housing Authority of the City of Los Angeles. Under his guidance, the Housing Authority has turned a $25 million operating loss at the end of 2004 into net operating income in 2005. Prior to coming to Los Angeles, he successfully led the Housing Authority of the City of El Paso for 3 years. His strong private sector experience includes engagements with Fortune 500 companies such as General Motors, Delphi, and the IT group. He is a licensed professional engineer in Texas and sits on the boards of the Housing Authority Insurance Group, the Public Housing Authority Directors Association, the Council of Large Public Housing Authorities, and the Hispanic Engineers National Achievement Awards Corporation. Thank you, and welcome, Mr. Montiel. Mr. MONTIEL. Thank you, Madam Chairwoman. Chairwoman WATERS. Mr. Watt, I see there is someone here you may want to introduce, Mr. Woodyard. Mr. WATT. Thank you, Madam Chairwoman. I am pleased to be able to introduce Charles Woodyard, who is the CEO of the Charlotte Housing Authority, which is in my congressional district. I am hesitant to say all of the good things I could say about him for fear it will expose him on a national basis, and he will be secreted away from us to some other part of the country. But I will say that he has his bachelor of arts degree in political science and his master’s degree of public administration from the University of North Carolina at Chapel Hill. He has been in public service for 20 years: 13 of years with the City of Charlotte; 2 years prior to that with the City of Greensburg, which is also in my congressional district on the northern end. And he has been with the Charlotte Housing Authority for 7 years, first as vice president for planning and development, and then as chief operating officer in November of 2000, acting chief executive officer in April of 2002, and finally, chief executive officer since October of 2002. We are honored to have him. He has done a great job, and been an important part of my congressional district and our local community, and we welcome him here. I appreciate the chairwoman allowing me the honor of introducing him. Chairwoman WATERS. Thank you very much. And now Mr. Shays, I understand that you have someone that you would like to introduce. Mr. SHAYS. Thank you, Madam Chairwoman. I would just like to welcome Richard Fox, who is the executive director of the Stamford Housing Authority. He was the assistant executive director in Trenton, New Jersey, the executive director in Carteret, New Jersey, and the executive director in Plainfield. Since 1980, he has been in this business and was educated at my alma mater at New York University Grad School of Public Administration and Rider College and he has just been a wonderful addition to the Fourth Congressional District in Stamford. He has made me a real believer, he and his team, in HOPE VI grants. I am delighted, Madam Chairwoman, that you invited him to testify. Chairwoman WATERS. Thank you very much. And the next gentleman on our panel with us today is Mr. Kelly, who is executive director of the District of Columbia Housing Authority, and I do VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 21 know that he is a member of the same organization as Mr. Montiel, the Council of Large Public Housing Authorities, and I have had an opportunity to interact with him, and had the opportunity to speak before that group not so long ago, and I welcome him here today. Thank you very much. All right, Mr. Montiel. We will start with you. You may proceed with your testimony for 5 minutes. STATEMENT OF RUDOLF C. MONTIEL, EXECUTIVE DIRECTOR, HOUSING AUTHORITY OF THE CITY OF LOS ANGELES Mr. MONTIEL. Madam Chairwoman, Ranking Member Biggert, and members of the committee, thank you for the invitation to speak before this House subcommittee on such an important issue as HOPE VI reauthorization. What I would like to do first of all is sketch a broad vision of the affordable housing crisis that we have in Los Angeles today, and then lead into how HOPE VI reauthorization, and the activities that we would like to pursue in Los Angeles, would help address that situation. First, some general remarks about Los Angeles and the affordable housing crisis; it is arguably the most challenging in the United States. Skyrocketing rental costs—a majority of Angelenos families today spend more than 40 percent of their income for rent. Increasing population—whereas many cities in the Nation have actually reduced in size in the last decade, Los Angeles continues to grow. Today, there are over 4 million people living within the City limits. Lengthy commutes—Los Angeles is known for traffic, and those lengthy commutes have impact not only on quality of life but on quality of life for the people who live in the City, vis-a-vis pollution and other aspects. Occupancy rates—the recent USC Casden forecast on the multifamily situation in Los Angeles shows us that today in Los Angeles, the City is occupied at 97.5 percent in every submarket. That means that Los Angeles is full from a rental housing market, whether it is Brentwood to Boyle Heights and from Westwood to Watts. Against this backdrop, the City of Los Angeles has 8,000 public housing units, a very small public housing inventory when compared to much smaller cities throughout the country. And we have those in primarily 16 large family sites, although we also have some senior units. Interestingly, the situation, the physical condition of our public housing stock shows that we have about a $500 million backlog in deferred capital needs. But this only speaks to the easy part of resolving our public housing situation, and that is fixing the buildings, fixing the real estate. That is really the easy part. The much tougher problem is how do we transform the lives of the roughly 8,000 families who live in public housing today? Our occupancy rate is 99 percent plus. And we are talking about the opportunity for HOPE VI to represent filling that vital self-sufficiency gap for those families trying to fight their way out of poverty against incredible obstacles. Let the numbers tell the story. Residents of public housing in Los Angeles make on average about 18 percent of area median income in one of the wealthiest cities in the country. Some public housing communities have an unemployment rate of 85 percent. Graduation rates from high school are less than 50 percent, and the children VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 22 who live in public housing face some of the most daunting challenges when it comes to their personal safety. There is inadequate health care, inadequate child care, and inadequate elder care, in our public housing. But there is hope. And we believe that we have a window of opportunity today in Los Angeles to begin a citywide redevelopment effort, but we will definitely need HOPE VI to make it a success. Our mayor, Antonio Villaraigosa, is an ardent proponent of transforming public housing. The councilmen and women with large public housing developments in their districts are very supportive of redevelopment. And even our congressional representatives will support redevelopment if it is done right. And what does that mean? In Los Angeles it means that we redevelop with mixed income and mixed use. It means a one-to-one public housing replacement. Yes, this is challenging. Yes, this will require additional subsidy and additional capital moneys. But it is the only right thing to do in a city that has only 8,000 public housing units to serve a population of 4 million. Transit-oriented where possible. We have public housing developments that are within walking distance, of very short walking distances of the green line, the blue line, these are Metro lines, and would be ideal places for transit-oriented development. What does right mean? It means that residents in general will not face forced relocation and will have the right to return after redevelopment. It means significant investment in jobs. Yes, you may have local hiring agreements. You want to have the opportunity to hire as many local residents as you can, working closely with the unions to get these young men and women into apprenticeship programs. It means family self-sufficiency and homeownership opportunities. It means partnering with educational organizations to improve the educational quality as well. And finally, it means for our City, redeveloping not just on the south side but also on the east side. The leadership of our board of commissioners and Chairperson Bea Stotzer, the board has set the bar high. Chairwoman WATERS. I am sorry. Your time is up. Mr. MONTIEL. Thank you. Mr. SHAYS. She is tough. Chairwoman WATERS. Not really. [The prepared statement of Mr. Montiel can be found on page 80 of the appendix.] STATEMENT OF CHARLES WOODYARD, EXECUTIVE DIRECTOR, CHARLOTTE HOUSING AUTHORITY Mr. WOODYARD. Good afternoon, Chairwoman Waters, Ranking Member Biggert, and members of the subcommittee. First, allow me to thank you for the opportunity to give testimony on the benefits of the HOPE VI Program and to present compelling reasons why the Program, with some refinement, should continue. The HOPE VI Program’s original mandate of eliminating distressed units of public housing across the Nation and replacing them with mixed income communities represents a formidable task. Add to that task the additional goal of deconcentrating poverty, plus eliminating urban blight, and you have a complicated VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 23 public policy goal that impacts real people and the health of American cities. To the extent that cities are a collection of people and commercial economies that thrive or suffer as a result of market forces and government intervention, HOPE VI can be seen as an attempt to grow and stabilize America’s economy. To the extent that cities are a collection of diverse people, diverse cultures, and children who are the foundation of the country’s future, HOPE VI can be seen as an attempt to raise the minimum standard of living for more Americans. Whatever your take on HOPE VI as a public policy might be, it is important to understand that the public policy must also have a measurable impact on the lives of Americans and the health of American cities. With this in mind, it would be helpful to understand the nature of Charlotte, North Carolina and how HOPE VI is used as a growth strategy, a community building strategy, a way to impact the self-sufficiency efforts of very low income families. Charlotte’s real estate market is one of the most vibrant in the country. Unemployment is low, home prices are rising rapidly despite the national trend, but income increases are not quite keeping pace with housing and energy cost increases. The result is that over 11,000 very low income families in the community either live in substandard housing or pay more than 30 percent of their income for housing. In short, Charlotte is suffering from growing pains. A major catalyst for the idea of a new way of providing affordable housing as a growth strategy was the City’s first HOPE VI grant. Earle Village was a 400-plus unit public housing complex in the heart of uptown Charlotte. This low income housing community dominated the entire quadrant of the uptown area and was a major source of crime, the perception of crime, the lack of housing development in uptown and the suppression of property values in uptown. The award of the City’s first HOPE VI grant meant that mixed income housing and mixed use development would be the norm for development in our City. The HOPE VI site was transformed into a diverse community with different housing types and incomes nearly along the entire spectrum of incomes. The next logical question then is what happened to all those families in Earle Village and the other families in HOPE VI communities? The Charlotte Housing Authority has received four HOPE VI revitalization grants and one demolition grant for a total of over $122 million. The five communities directly impacted by the HOPE VI grants total over 1,500 units of severely distressed crime-ridden apartment homes that were breeding grounds for social disorder. The HOPE VI grants eliminated those distressed communities and replaced them with 13 mixed income family communities, 5 public housing senior communities and 474 Section 8 vouchers. These new communities contain 1,366 public housing units, 974 affordable moderate income units, and 978 market-rate rental units, along with 85 homeownership units that were developed on the original HOPE VI sites for former public housing families. All told—and this is the transformation summary—1,531 housing opportunities for 30 percent AMI and below families were transformed into 1,729 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 24 housing opportunities in mixed income environments or Section 8 vouchers in neighborhoods of the family’s choice. I mentioned earlier that Charlotte was experiencing growing pains. And according to our own local research, the affordable housing problem in Charlotte impacts low income families more than any other income level. The need for 11,000 additional units in Charlotte for families earning at or below 30 percent of AMI is the only income level in the City that demonstrates a shortage of units. In a city with this demography, one-for-one replacement is essential public policy. Charlotte’s Housing Authority is subjected to tremendous local pressure to commit one-for-one replacement when vitalizing our community under HOPE VI. And as a part of the community’s initiative, we are replacing more than one-for-one. [The prepared statement of Mr. Woodyard can be found on page 116 of the appendix.] Chairwoman WATERS. Thank you very much. Mr. Fox. STATEMENT OF RICHARD FOX, EXECUTIVE DIRECTOR, STAMFORD HOUSING AUTHORITY Mr. FOX. Thank you, Madam Chairwoman. My name is Richard Fox, and I serve as the executive director of the Stamford Housing Authority. My testimony today is in support of the renewal of the HOPE VI Program. I would like to thank Chairman Barney Frank and Chairwoman Maxine Waters as well as Ranking Members Baucus and Biggert for the opportunity to speak today. I would also like to thank and commend Representative Christopher Shays for his commitment to the HOPE VI Program and for the actions he has taken to ensure its continued success. Stamford Housing Authority is a progressive medium sized public housing authority located in a city of 120,000 residents in southwestern Connecticut. In its evolution as a successful sponsor and developer of mixed income housing, the Stamford Housing Authority and the community that it serves have benefited substantially from the HOPE VI Program. This program has enabled the authority to create various development models that are uniquely suited to the needs of the City. Based upon my experience with the program, I would like to offer comments on two features of the proposed reauthorization, the right of return provision and one-for-one replacement provision. The Stamford Housing Authority believes that the right of return for residents of the original site is an important program element. However, returning residents should have a one-time opportunity to reoccupy the development, providing they meet locally established rehousing criteria. Once a resident has selected his/her housing option, a person on the waiting list who does not have housing should be offered the opportunity to move into the subject property. In addition, it is important to recognize that residents often wish to make other housing choices which may be of benefit to them, as well as to the broader community. The Stamford Housing Authority has achieved success with assisting public housing residents to become first-time home buyers. We anticipate placing more than 150 working families into their own permanent homes. This transition serves a dual benefit by also VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 25 making the rental unit available to a new family, thus freeing up a unit of affordable housing. Stamford’s landmark one-for-one replacement ordinance, passed in 2001, grew in large part out of a local affordable housing crisis and was precipitated by resident fears of displacement. The Stamford Housing Authority helped to craft this ordinance, and by standing alongside residents successfully promoted its passage. The Stamford one-for-one replacement initiative was instrumental in building essential trust and cooperation between public housing residents and the Stamford Housing Authority, enabling us to become a successful HOPE VI practitioner. We feel that the provision of one-for-one replacement should receive consideration in any proposed bill. However, it should not be required of every HOPE VI development. A community may not support a HOPE VI development that must have one-for-one replacement, thus foregoing an opportunity for the residents. This provision should be fully vetted in the community. A one-for-one replacement requirement on all HOPE VI developments will mean that individual HOPE VI grant amounts need to be significantly increased in order to maintain the desired mixed income nature. While increasing the number of public housing replacement units, we would need to add market-rate units. This will require more land and financial resources. The need to acquire property for offsite development will add complications and potential delays to already complex projects. In any event, a requirement to increase the number of replacement units must include the ability to deliver them through nonACC funding mechanisms such as project-based Section 8 units. Replacement units should further the objective of deconcentrating poverty consistent with fair housing laws. The overwhelming success of the HOPE VI Program has been to promote mixed income communities wherever practical. The Stamford Housing Authority is in support of the reauthorization of HOPE VI through 2015. It is perhaps the best program in the Nation for addressing the accumulated capital needs of the public housing program, which was estimated at $20 billion in a study commissioned by HUD. By leveraging Federal funds with private and other public capital, usually on a four-to-one basis, HOPE VI has proven to be an effective catalyst in the redevelopment process. Thank you. [The prepared statement of Mr. Fox can be found on page 54 of the appendix.] Chairwoman WATERS. Thank you very much. Mr. Kelly. STATEMENT OF MICHAEL P. KELLY, EXECUTIVE DIRECTOR, DISTRICT OF COLUMBIA HOUSING AUTHORITY Mr. KELLY. Good afternoon, Chairwoman Waters, Ranking Member Biggert, and other members of this very important subcommittee. My name is Michael Kelly, and I am executive director of the District of Columbia Housing Authority. I am also the vice president of the Council of Large Public Housing Authorities, the vice chairman of the National Organization of African Americans in Housing, and I serve on the Housing Committee of the National Association of Housing and Redevelopment Officials. I am honored VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 26 to have an opportunity to join you today to discuss the housing authority here in the District’s HOPE VI efforts. As a housing authority, our core mission is to care for and manage 8,000 units of public housing and administer over 12,000 vouchers. We carry out this mandate with the quiet confidence that only skill and the many years of collective experience bring. Given the substantial funding cuts to the National Public Housing Program, the District of Columbia has to struggle to maintain basic property management services to our clients. We are most thankful to your leadership and the leadership of Congress for securing additional resources for public housing this year, and I ask for that support to continue. The housing authority is fortunate to have six HOPE VI grants totaling over $160 million. These grants have leveraged an additional $695 million in other public and private funding. These sites, combined with our other redevelopment efforts, have generated about $2 billion worth of economic development, and we have increased the number of low income families served at these sites from about 2,400 in 1995 to over 4,000 today. Of our six HOPE VI sites, two are complete, one is 50 percent complete and occupied, and three are in various stages of construction. Every HOPE VI plan includes a community of support of service program designed to meet the unique needs of our households. Our approach to supportive services had a real impact on the economic and social well-being of our families. Many have received job training and job opportunities, some are now homeowners, and families now live in a safer, more livable environment. There is one common thread that runs throughout each of our sites, and it is the fundamental reason for our success in the District in HOPE VI, and that is the participatory approach to redevelopment. From the first days of our planning process, the housing authority places a premium on the input and realtime feedback of our residents and the community. For example, before submitting our HOPE VI application for East Capitol, we held over 100 community meetings and resident training sessions. Our process is transparent and inclusive. We encourage thoughtful discourse and we are responsive to the needs of the community. Our residents also play a role in determining the re-entry criteria at each of our sites. Each HOPE VI site has a government steering committee composed of key stakeholders, including the residents. This committee opines on many policy issues, including the re-entry criteria. This criteria covers areas such as credit, criminal activities, and basic tenant activities, such as the payment of rent and housekeeping habits. While the criteria has been slightly different for each site, the common goal has been creating parameters that will promote the return of former residents, while still cultivating a healthy and vibrant community. Several years ago, the District Housing Authority decided to build back every unit of low income housing we demolished. This commitment to one-for-one replacement was first manifested in our Capper/Carrollsburg site, which is near the new baseball stadium here. We will be able to achieve the one-for-one there because of the value of the land, given its location, the City’s aggressive housing market, and our capacity to greatly expand the density of the VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 27 site which we need to truly create a truly mixed income community. The HOPE VI grant will pay for the replacement of the public housing units. We are fortunate to bring these units back, but it is important to note that this policy may not be possible at other HOPE VI sites throughout the country, given the potential weaker market conditions, impediments to replacement of housing, and HOPE VI grant amounts. Our job is far from over, though. The housing authority has embarked on an aggressive plan to reposition our developments to be viable into the future. We secured over $80 million 2 years ago in bond funding to address the long-term maintenance and system needs at 31 of our sites. But despite our successful HOPE VI efforts and this bond modernization work, there are at least 14 sites, 14 developments that still have comprehensive physical and social needs. We simply do not have the money to revitalize these sites, so the need for HOPE VI continues. Madam Chairwoman, I am sure you have seen HOPE VI sites throughout the country, particularly those piloted by my able colleague from Los Angeles, who is here today. But I invite you and your staff and other members of this committee to tour the housing authority sites right here in the District as you consider the reauthorization program that has changed the landscape of urban America. Thank you again for this tremendous opportunity to testify before you. I request that my written testimony be submitted for the record, and I am available to respond to any questions that the committee may have. [The prepared statement of Mr. Kelly can be found on page 58 of the appendix.] Chairwoman WATERS. Thank you very much. I would like to begin the questioning by first stating—rather than starting with a question, I would like to state that resident involvement is very, very important to me and to a number of other members of this committee. And I am very pleased to hear Mr. Kelly talk about the 100 meetings or so that they held prior to your development of the HOPE VI project. I would like to ask each of you about resident involvement. Do all of you feel the same way? Do you have other ways by which you have accomplished making sure the residents are involved? If so—Mr. Fox, what do you do? Mr. FOX. We started with, of course, a series of hearings prior to the application in the neighborhood, and soliciting residents who live in the complex—neighbors and also the political representation of the neighborhood—and we actually had them participate in committees that helped in the design of HOPE VI, consultation about the architectural aspect, consultation about the management plan, and consultation about how we would effectively also lobby together for funds, State funds to help the HOPE VI Program. We have State funds in it. Chairwoman WATERS. Thank you very much. Let me just get to Mr. Woodyard before my time is up. Mr. WOODYARD. Thank you. We do all of those things, Madam Chairwoman. And we also have the residents participate in the de- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 28 sign charrette, where they have given us great ideas on how to design the community from a public safety standpoint, child care standpoint, a transportation standpoint, and an economic development standpoint. We also have currently on our board—our resident representative is a member of our latest HOPE VI community, and she has been invaluable in giving us feedback about our revitalization efforts. Chairwoman WATERS. All right. Let me just quickly ask about some of these local requirements for getting back into the HOPE VI developments. What is this about credit checks? Is that true? Mr. WOODYARD. That is one of our requirements. Chairwoman WATERS. Why do you require a credit check? Mr. WOODYARD. We have a requirement for a family self-sufficiency program in our HOPE VI sites, and we actually repair a family’s credit. We help repair the credit if they do not meet the credit requirements initially. So typically what we do is put the person in a credit repair program, and before they get back into our communities—it could take a year or two, and we may have to relocate the family more than one time, but we get them ready to get back into the community. Chairwoman WATERS. Why is it important for you to do that? Mr. WOODYARD. We believe that public housing is transitional. And one of the things that we found out about our private partners is that the mixed income approach works better when we have families actively engaged in self-sufficiency activities. As a matter of fact, we have had a good success rate with repairing credit, and we have— Chairwoman WATERS. Do you think that you are keeping people out who may not be able to get in for a year or two while you do the repair? Mr. WOODYARD. They will be living in public housing. Chairwoman WATERS. Let me just ask you this. There are people who perhaps, you know, lose their jobs— Mr. WOODYARD. Yes. Chairwoman WATERS. —and they may have been working, they may have been middle class. They fall on hard times. They need public housing because they have fallen on hard times, and usually when you fall on hard times, you can’t pay your bills— Mr. WOODYARD. Right. Chairwoman WATERS. —and you have to, you know, get yourself back together. So they need public housing. How is it that someone who may be in difficulty, who has fallen on hard times, can’t pay their bills, needs to get into public housing, how is it you keep them out because they can’t pay their bills right now? Mr. WOODYARD. We don’t keep them out of public housing. They are in public housing or have a Section 8 voucher, but in order to return to a mixed income HOPE VI community, we attempt to help them repair their credit. Chairwoman WATERS. Does anyone else do that? Mr. FOX. We do something different. Chairwoman WATERS. What do you do? VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 29 Mr. FOX. What we designed with the residents association is a Family First Program which—a key component of it is education, where we let residents know all of the educational facilities. Chairwoman WATERS. But do you let them in with bad credit? Do you check their credit first? Mr. FOX. No. They are already residents. They are already residents. Chairwoman WATERS. Well, that is the right of return. But what I am hearing is, in this so-called ‘‘right of return’’ they may be stopped in your project, Mr. Woodyard, because they don’t have good credit. Is that true with you, Mr. Fox? Mr. FOX. No. They are not stopped from coming in, but we do have an educational program— Chairwoman WATERS. Okay. Mr. FOX. —to try to improve it. Also to make the family aware of what educational facilities are available for children. Chairwoman WATERS. That is good. Mr. Kelly, in your project, if someone who is sitting on the panel to determine whether or not the people can get back in the HOPE VI, do they all have good credit? Or what happens if they fall on hard times and their credit is bad? They are sitting in judgment. How do they do that? Mr. KELLY. Well, the credit repair effort begins on day one. It actually begins early on. Much as there is the participatory approach in the design effort, the community supportive service component begins long prior to the actual building being done. So the timeframe is such that we recognize—we tell everybody on the front end, this is a new dawn. We are really looking for folks to take advantage of the convenience and supportive service component of it, and credit repair is an important component of it. No one is displaced by bad credit. And the credit standard that we have here is actually lower than the credit standard that our private partners have in the same development. Chairwoman WATERS. All right. I am going to have to cut you off now. My time is up. And I am going to go to Mr. Shays. Mr. SHAYS. I am happy to yield to one of my colleagues, and then I will be happy to go. Chairwoman WATERS. All right. Would you like to go, Mr. Cleaver? Mr. CLEAVER. Thank you, Madam Chairwoman. Mr. Cabrera is gone, but maybe your expertise can assist me. I looked at the HOPE VI statute, and it says if a guarantee under this section does not proceed within a reasonable timeframe, and there is a determination of the Secretary, the Secretary shall withdraw any grant amount under this section. It goes on and says, the Secretary shall redistribute any withdrawn amounts to one or more other applicants eligible for assistance under this section. And my understanding from the Assistant Secretary was that wasn’t possible. Maybe I just didn’t read this in a way that wouldn’t confuse me. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 30 So I am wondering, in your PHAs, have you spent all of your HOPE VI money that was allocated? And if not, do you have any idea of what has happened to it? Mr. WOODYARD. Congressman, we have spent all of our original grant, which was a 1993 grant. The other three grants that are revitalization grants are on schedule, and our funds are being expended according to the schedule that we agreed to with HUD. So we are not in danger of having any funds recaptured. Our latest grant, the latest guidelines say that you have 4 years, and we are on schedule and actually a little under budget in our expenditures right now. Mr. KELLY. If I can, sir, a recognition: I think it is important for the committee to note that from the time of appropriations to the time of award to the time the housing authority is actually getting the dollars, there is quite a bit of time that runs where the authority doesn’t even have the dollars to deal with it. So I just want to add that to the discussion, the research, when you talk about the timeframe of it. And if I can, one other important note for the committee’s consideration, the District of Columbia Housing Authority was under some criticism for not meeting a timeline benchmark at one of our sites. And our position was, that is okay, because we were dealing with a very humanistic approach to relocation. And if we were to be dinged by HUD because of an arbitrary benchmark on time, it was something—we felt it was something worthy. Because, I tell you, at the end of the day, there were no lawsuits. We had an opportunity for folks who wanted to return to express that opportunity, for the community buying into it; and at the end of the day, that is much more valuable than arbitrary timeframes. Mr. FOX. Let me mention that we are meeting all of our benchmarks, and meeting them on time. However, it is a substantial challenge to meet them because we are juggling about five grants at one time. You bring on the HOPE VI Program, you have to get the tax credit within the cycle of the State tax credits. You also have to apply for debt with your housing finance agency. You are working with the city to bring on grants, and they have timetables. And you are also working with homeownership programs and with syndicators. All those items have to be balanced—and deliver the construction on time, and still facilitate excellent communications with the neighborhood; and that sometimes—by having those excellent communications and not going faster than the people are ready for, for the next phase, that can slow you down. But even with all of that, we have been able to meet our benchmarks, stay on time, expend the money, and be in the correct phases. But it is a challenge in the HOPE VI Program, because you are leveraging the HOPE VI money, which may be around $20 million, two, three and four times which, in private industry that isn’t always done. But we in public housing, remarkably, are quite often able to leverage our money three and four times in the real estate community at large. That is excellent. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 31 Mr. MONTIEL. Congressman, in Los Angeles we only have one open grant, and we are about halfway done with that. The other grants have been closed, finished out. Mr. CLEAVER. Mr. Miller is not here now, but he had mentioned or suggested that there were private developers who would be anxious to do this. We did four HOPE VI projects in Kansas City when I was mayor, and maybe I overlooked the private developers who were beating on the door to get in. Are you finding that the private developers are hounding you about participation? Mr. FOX. We have found that we have had excellent participation with private developers where we have been the asset manager, and also where we have jointly been co-developer. And I want to say that we have also had nonprofits actually put proposals in to us to do a certain phase of the development where, under our asset management, they will manage the property and receive certain fundings; so that there is a partnership already in the public housing program with private developers and with nonprofits. Chairwoman WATERS. Thank you very much. Mr. Shays? Mr. SHAYS. Thank you. I would like to ask each of you to add to the Secretary’s testimony any response to any questions, anything that each of you would like to just highlight as something you agree or disagree with, to start. Mr. MONTIEL. I think what I agree with, Congressman, is that in Los Angeles, we will have nonprofit and for-profit partners, and we will seek to triple the number of units by adding a workforce and market rate component to our public housing component. Mr. WOODYARD. The only thing I would add is a partial answer to Congressman Cleaver’s question, and that is that there are not private developers clamoring to do HOPE VI without a public housing authority partner. And that is a segue to this comment: that the body of regulations and bureaucracy associated with the HOPE VI grant process is extremely complicated. It is not just the financial mechanism. So the idea of jumping through the regulatory hoops is something that most private sector partners do not want to do, and we would suggest that the program be simplified. Mr. SHAYS. Thank you. Mr. FOX. I heard the Secretary say that this program should not be funded. I find that hard to understand. With HUD’s own study of a $20 billion backlog of modernization needs in the public housing of America and HUD’s own study, out of the 80 million renters in America, 5.9 million, as reported in the New York Times the other day, are distressed in that they live in substandard housing or housing where they pay more than 50 percent of their income. This is an excellent model to go forward and have a housing production program in America. Could I point out to the Congressmen and Congresswomen today that we don’t have a production—a housing production program for affordable housing in America other than the tax credit program. Mr. SHAYS. Thank you. Mr. Kelly. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 32 Mr. KELLY. If I can echo my colleague’s comments of a moment ago, it is worth it. The Secretary talked of simplicity, and I totally concur. The Secretary also referenced the community-supported service component of it. That is critically needed, especially in light of the loss of the Public Housing Drug Elimination Program funding. And here in the District and, I think, across the country, the capital grant dollars—not enough; the development program—not in existence. Without this program, there is still very much a gap between what we have done and what we still need to do. And I think— the colleagues that I have across the country have now developed the expertise, we have developed the relationships with the private development community in terms of respect and the ability to do this stuff. And we really just need to have a program like HOPE VI reauthorized to get it done. Mr. SHAYS. The thing that just kind of confuses me a bit is that my Republican colleagues talk about how we should have the private sector, and we don’t want a government program running things. And this is this magnificent program that marries everyone together and eliminates what I think is the worst part of the traditional public housing, where we just warehouse the poor. And so at every level it would seem to me that instinctively my Republican colleagues would be the most enthusiastic about this program. Besides that, they are not saying the program doesn’t run well, they are not saying there is a lot of waste; they are just saying that it takes too long. That is their one criticism. So I appreciate all of you staying with it, and I yield back my time. Chairwoman WATERS. Thank you very much. Mr. Green? Mr. GREEN. Thank you, Madam Chairwoman. It seems to me that the Administration doesn’t want a HOPE VI Program. They would like to have a Hope Zero Program, because zero is the amount of money that they proposed to allocate for the program. And that is very unfortunate, it really is, because I think by most standards this program has been a success. And most of the people who are where the rubber meets the road would like to see the program continue and expand upon the program. I question where the Administration acquires its intelligence such that it concludes that this program is not worthy of continuation. It really is something that baffles me. But the good news is, we have a chairman who believes in the program, and we have a subcommittee chairwoman who believes in the program. I am just grateful that these persons are in place, and hopefully, with them, we will move forward in a positive direction. Now, having said that, Mr. Woodyard, and I appeal to you, because when the Chair addressed the question of credit, I too was baffled as to how is it that a person can be creditworthy for a Section 8 voucher, but not creditworthy for a HOPE VI dwelling. I don’t see the connectivity. I don’t see the nexus between the credit and living in the HOPE VI project. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 33 Mr. WOODYARD. For Charlotte, HOPE VI is synonymous with an effort to move towards self-sufficiency. So by its very nature, in our City, once you become a nonsenior resident of a HOPE VI community, you have made a commitment to, in 5 to 7 years, move up and out of public housing. So it really is a push to move people toward self-sufficiency. Now, if the credit ratio doesn’t meet our standards, or whatever the index is for credit doesn’t meet our standards, we work with them strongly for credit repair. So their credit may be okay for public housing in a 100 percent public housing community or a voucher community, but you have not committed to, in those cases, a movement toward self-sufficiency. So we work with you, because at the end of the day, we have a Homeownership Institute for our families; and we have a success rate that we are very proud of—when people graduate from our institute, and are living in a HOPE VI community, they are mortgage-ready and going to buy homes. So that is our goal, not just to house them, but also to move them out of public assistance. Mr. GREEN. And you have statistical information to validate a success ratio that you— Mr. WOODYARD. I do. It is not in my written testimony, but I can provide that. Mr. GREEN. I would be interested in seeing your statistical information, the empirical data that supports your contentions. Mr. WOODYARD. Yes. Mr. GREEN. Now one more thing. I understand that some housing projects require persons to be employed before you can re-enter as well. If you have such a requirement, would you kindly extend your hand into the air? Mr. Woodyard, let us talk about the employment facet. Mr. WOODYARD. It is actually the same answer as the credit repair answer. Mr. GREEN. All right. Thank you, Madam Chairwoman. I yield back. Chairwoman WATERS. I am sorry, we were back here commenting on the credit problem. So I am going to move to Mr. Watt now for 5 minutes. Mr. WATT. Thank you, Madam Chairwoman. And I really would like not to take 5 minutes, but I do want to explore one aspect of what we are trying to do, something that Mr. Fox and Mr. Kelly touched upon in their comments; and I know that it is an issue that all of us are wrestling with. That is the issue of one-for-one replacement. I think Mr. Fox and Mr. Kelly both indicated that it may not be possible in every one of these to provide for one-for-one replacement. I am not sure that I think that is an option. But I do want to assure them that we are very seriously concerned about how this one-for-one replacement issue plays out. We know that, for example, in Charlotte, if we play it out in the way that would require constructing the one-for-one low-income replacement unit in every community that is a HOPE VI community we would run afoul of some litigation that has taken place there, because the courts have prohibited—because of concentrations of public housing, they have prohibited constructing more public VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 34 housing in some sections of our city until that is spread around, which is consistent with our public policy to spread poverty and public housing around to other parts of the community. It is not because people don’t want it in their backyard, it is because we know that we have to force some people on the opposite side of town to take it in their backyard, whether they want it or not. We know that, as either Mr. Fox or Mr. Kelly indicated, it is also a function of the amount of the HOPE VI grant and the size of the project, because if you are taking out 100 public housing units, it may be easier to put 100 public housing units back in a 500- or 400-unit development, HOPE VI development. But if you are able to put back in only 100 units, all you have done is reconcentrated poverty, and that undermines the original objective. So I am not sure we can get where Mr. Fox and Mr. Kelly said we might need to get on this as a public policy issue, where you don’t require one-for-one replacement. I think a number of us are absolutely unequivocally committed to that. But it may be possible to define one-for-one replacement in different ways, not necessarily in the HOPE VI redevelopment itself, in a larger community context, maybe some consideration of Section 8 vouchers in appropriate circumstances. But the wording of that has to be very carefully crafted, and maybe, in some extreme circumstances where a housing authority could justify not doing one-for-one replacement, some kind of waiver system that once they demonstrated that it is entirely impossible or inconceivable to do one-for-one replacement in a reasonable timeframe. But the bottom line is, I have invited a number of people to try to craft language that encapsulates all of those things. And I hope you will be actively encouraging people within the next day or so to give us that language, because we are at a critical juncture in this process now. And it gets more difficult to change the language once it is in a bill and the bill has been introduced than it is to try to get it right in the original bill. So I hope you all will aggressively push to come up with some language that would meet all of the considerations that I have just outlined to you here, and invite you to do that. I thank the chairwoman and I yield back. Chairwoman WATERS. I thank you very much, Mr. Watt. And I would like to thank our panel for coming today and providing us with such valuable information. I want to thank you for your patience also. And I think Mr. Watt’s advice about getting information to us that you think would be important to make this a stronger bill is very important. Let me just add a little bit of a warning on this; and that is that one-for-one, as Mr. Watt said, is extremely important to many of us. And number two, I don’t think that I am working hard on HOPE VI just for people who are employed and have good credit. So be careful with that. Thank you. Some members may have additional questions for this panel which they wish to 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 their responses in the record. And thank you again. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 35 On our next panel, we will have Dr. Susan Popkin, principal research associate at the Urban Institute; Ms. Yvonne Stratford of Miami, Florida—Ms. Stratford is the leader of Low Income Families Fighting Together, and a former resident of the Scott/Carver Homes Public Housing Development, a HOPE VI grant site—Mr. George Moses, chair of the board of directors of the National Low Income Housing Coalition; and Ms. Doris Koo, president and CEO of Enterprise Community Partners. So, without objection, your written statements will be made a part of the record, and you will now be recognized for a 5-minute summary of your testimony. With that, we will go to our first witness, Dr. Susan Popkin. STATEMENT OF DR. SUSAN J. POPKIN, PRINCIPAL RESEARCH ASSOCIATE, THE URBAN INSTITUTE Dr. POPKIN. Chairwoman Waters, and members of the committee, thank you for inviting me to testify at this hearing on the proposed reauthorization of the HOPE VI Program. My remarks today are based on findings from the Urban Institute’s HOPE VI Panel Study. This research is the only national study of outcomes for HOPE VI families, and addresses basic questions about where residents move and how HOPE VI affects their wellbeing overall. This study has tracked the experiences of a sample of about 900 residents from five developments across the country that were slated for redevelopment in 1999 and 2000; I am going to give you some of the highlights. First, most of the residents in our study have not yet moved back. The largest number, 43 percent, have received Housing Choice Vouchers. Another third have moved to traditional public housing developments. Some of those are still in their original development. And only 5 percent are living in mixed income communities. These sites are not yet complete, and the number of returning residents will likely increase over time. But there are simply fewer public housing units for them to return to, and some sites have imposed screening criteria that exclude some former residents. On the positive side, many of the residents who have moved on are satisfied with their new housing, and are not interested in returning. Voucher movers and those in mixed income communities report substantial improvements in housing quality and are living in lower poverty neighborhoods. They are living in conditions that are far safer than their original developments. Nearly all of them reported big problems with crime and drug trafficking before they moved; only 16 percent of them report such problems now. These improvements in safety have had a profound impact on their quality of life. They can let their children play outside, they are sleeping better, and are feeling less worried and anxious overall. There is no question that the enormous improvement in safety and reduction in fear of crime has been the biggest benefit for most moves. Children who have moved to these safer neighborhoods are also doing better in important ways. However, those who have been left behind in traditional public housing, especially teenage girls, are struggling and increasingly likely to be involved in delinquent behavior. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 36 While residents who have moved with vouchers are doing well overall, many are having trouble making ends meet, and are struggling to pay their utilities. Poor health is an extremely serious problem for these residents. They suffer conditions like hypertension, diabetes, and depression at rates more than twice the average for black women nationally. And the death rate of HOPE VI residents far exceeds the national average for black women, with the gap increasing dramatically at older ages. Residents’ health problems impede their ability to work. Because of these barriers, we find HOPE VI had no impact on employment rates overall. Indeed, helping residents manage their health challenges could be a more effective self-sufficiency strategy than job training or job placement alone. Hope IV did not increase homelessness. Less than 2 percent of these residents experienced homelessness at some point during the 4 years that we tracked them. Another 5 percent were precariously housed, which means they were doubled up with friends or family. These figures are comparable to those from other studies of public housing populations. And, finally, HOPE VI is not a solution for the hard-to-house— families who are coping with problems such as mental illness, severe physical illness, substance abuse, poor work histories, and criminal records. Hard-to-house families are more likely to end up in traditional public housing than the private market, and so are little better off than they were before HOPE VI revitalization. Housing authorities should offer meaningful relocation counseling to help residents make informed choices and should provide long-term support to help more families succeed in the private market or return to mixed income housing. Housing authorities should provide effective case management and better supportive services for the most vulnerable residents—children, the elderly, and those with health problems—during and after relocation. In conclusion, HOPE VI has done much to improve the living condition of many former residents, but there are still tens of thousands of public housing units that are severely distressed. The families who live in these developments face the same daily fears and threats as those in the Hope VI Panel Study who have not been able to move on. These findings clearly indicate the need to continue to fund revitalization of the remaining stock of distressed public housing. [The prepared statement of Dr. Popkin can be found on page 89 of the appendix.] Chairwoman WATERS. Thank you very much. Ms. Stratford? STATEMENT OF YVONNE STRATFORD, FORMER RESIDENT OF SCOTT/CARVER HOMES, MIAMI, FLORIDA Ms. STRATFORD. I would like to thank Chairwoman Maxine Waters, Ranking Member Biggert, and the other members of the subcommittee for inviting me to testify on HOPE VI. My name is Yvonne Stratford, and I am a resident of Annie Coleman’s Public Housing Project in Miami, Florida. I have been living there for 5 years. I am here as a LIFFT member—Low Income Families Fighting Together—a nonprofit organization and grass- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 37 roots organization of public housing and other low-income residents in Miami. LIFFT members have a very personal experience with HOPE VI. I am one of many members who lived in Scott/Carver Public Housing Project, an 850-unit project that was demolished in 2003 as part of a HOPE VI project. My family was one of the first ones to be forced out. As a result of our experience with the Scott/Carver HOPE VI Project, we have very serious concerns with the program. Our HOPE VI Project is supposed to better our lives, but it has failed us. It failed the 1,178 families who were moved out. Many were made homeless, and no new public housing has been built. I have still have not been able to return home. After all of us were relocated in 2002 and 2003, the building was demolished, and nothing was built for years. The Scott/Carver HOPE VI Project is only going to replace 80 of 850 units of public housing, so many people cannot go back. As you can see, the HOPE VI Program did not work for us. But the new leaders of the Miami-Dade Housing have changed. They have agreed with LIFFT’s suggestions. I am glad that they are working with us, with the former Scott/Carver residents. They are putting the people back into houses. What we learned from HOPE VI in Miami allowed us to make suggestions for a better HOPE VI around the United States. First, LIFFT believes that HOPE VI must require replacement of all public housing units with new public housing. Second, we believe that the residents who lived there before should be able to return without new requirements. Third, we believe that the homes should be rebuilt in phases, and people should be able to move back in over time. Also, replacement houses should be built before all housing is torn down, so that families are not lost while they are waiting to return to their neighborhoods. Finally, we believe that the residents who do take Section 8 should get a lot of help in relocation. We understand that the committee is considering these requirements, and we want to thank you and urge you to include them. Thank you again for inviting me to testify, and I would be happy to answer any questions that you have. [The prepared statement of Ms. Stratford can be found on page 112 of the appendix.] Chairwoman WATERS. Thank you very, very much. Next we will hear from Mr. Moses. STATEMENT OF GEORGE MOSES, CHAIRMAN, BOARD OF DIRECTORS, NATIONAL LOW INCOME HOUSING COALITION Mr. MOSES. Good afternoon. I would like to thank Chairwoman Waters, Ranking Member Biggert, and the rest of the subcommittee for inviting me here today. My name is George Moses, and I am chairman of the board of directors for the National Low Income Housing Coalition. The Coalition is dedicated solely to ending the affordable housing crisis. I have served as board chairman since 2006. I am also on the board of directors of the Housing Alliance of Pennsylvania, which is a statewide housing organization dedicated to homes within reach for all Pennsylvanians, and I am a member of the Southwestern Penn- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 38 sylvania Alliance of HUD Tenants. That is a tenant organization that provides good information to project-based housing coalitions and also public housing communities. I am here today to talk about the HOPE VI Program in Pittsburgh, Pennsylvania. There are three HOPE VI Projects in Pittsburgh. The two I will reference are called Aliquippa Terrace, now known as Oak Hill, and Bedford Dwellings, now known as Bedford Hill, both located in the historic Hill District of the City of Pittsburgh. The residents at the beginning were not engaged in the planning process. The housing authority already brought a plan to them and said, let’s do this plan. They were told that there would be no onefor-one replacement, and if they took a Section 8 voucher, they would not be able to return to the property. In the case of Aliquippa Terrace, now known as Oak Hill, 400—let me say that again—400 persons vanished. They don’t even know where they are to this day. And furthermore, the Oak Hill Resident Council had just sued the Housing Authority of the City of Pittsburgh to complete the HOPE VI deal that was promised in 2000. Therefore, we approached the possibility of reauthorization of the HOPE VI with considerable caution. We very much appreciate the subcommittee’s intentions to improve the HOPE VI Program, and we will work with you to make that happen. I lived in project-based Section 8 housing on and off from 1990 until last year. One of the places I lived was Federal American Properties, located in the East Liberty section of Pittsburgh. The owners of these properties were from Fort Lauderdale, Florida. We called them absentee landowners. After being frustrated in attempts to organize those residents to stand up and fight for their rights, I moved. That hurt, and it was a big mistake. We were viewed by many officials—property owners, managers, and local HUD—as a bunch of complainers. When the property eventually fell into complete disrepair, HUD foreclosed and sold to a nonprofit. The nonprofit they sold it to was not the nonprofit that the residents had selected to buy the property and be their partners. When this project is completed, there will be a number of units rebuilt, but not in the amount that were there when the project was foreclosed upon. There is a shortage of over 10,000 housing units in the City of Pittsburgh, as I speak. People in public housing have experienced the same things that these people have experienced, not being part of the process, not being given good information about housing choices, no one-for-one replacement, and not being able to return to the development. The National Low Income Housing Coalition urges a major reform to the HOPE VI Program, and I have outlined those in my recommendations and the testimony I submitted. We believe that resident participation is crucial to the process, and it must begin at the beginning, before the plan is even submitted. We believe that there should be one-for-one replacements, because if you take a Section 8 voucher in Pittsburgh and you try to move to a nonracial-impacted neighborhood, you can’t. You are therefore forced to move back to another racial-impacted neighbor- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 39 hood, limiting your choices, and the ability of your kids to move on to a better life. Overall, public housing is in desperate need of additional funding. I originally came here yesterday to participate in a rally for more capital and operating funds for public housing authorities, and many people came from the State of Pennsylvania, as well as all over. The rally was intended to urge and gather more funding for public housing operating and capital funding. I thank you for giving me the opportunity to speak to you today, and I will be available for questions afterwards. Thank you. [The prepared statement of Mr. Moses can be found on page 83 of the appendix.] Chairwoman WATERS. Thank you very much. Ms. Doris Koo. STATEMENT OF DORIS W. KOO, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ENTERPRISE COMMUNITY PARTNERS, INC. Ms. KOO. Thank you, Chairwoman Waters, and distinguished members of the House Financial Services Committee for the opportunity to speak before you today. My name is Doris Koo, and I am president and CEO of Enterprise Community Partners. We are a national nonprofit that brings development capital and expertise into helping build low-income housing. In the last 25 years, we have built 215,000 units of housing, investing about $8 billion in grants, loans, and equity. Our investment portfolio includes more than 20 HOPE VI developments across the country. Before I joined Enterprise, I was deputy director of the Seattle Housing Authority, and we took on four HOPE VI developments of our public housing complexes. Seattle Housing Authority was unique in the sense that we were one of the few housing authorities that voluntarily committed to one-for-one replacement housing and full residents opportunities to return. We replaced all of the housing that had been torn down since 1994. Every one of them had been replaced, both on and off-site, in scattered sites, in partnership with the private sector, nonprofit sector, and faith-based developers. We leveraged $135 million in HOPE VI dollars into $600 million in private investment. We are now trying to do the same and replicate these principles and best practices in New Orleans with a partner to rebuild the Lafitte Public Housing. As you have heard, HOPE VI is a principle, but the implementation is subject to the skill set and the commitment of housing authorities all around the country. So it will be advisable to have in the reauthorization some stronger policy guidance on four principles, and I can sum them up as follows: equity; opportunity; sustainability; and preservation. The first principle has to be ensuring equity and fairness in the redevelopment. Residents must be full partners in the HOPE VI process before, during, and after. They must have access to adequate and appropriate support services, from relocation counseling, health care, job training, child care. They be must be apprised of their choices, housing options, and provided an opportunity to return if they so choose. And to the greatest extent possible, residents must be given the assurance that they have the ability to VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 40 come back to a vibrant community, as opposed to in those situations that we heard, scattered to other impacted communities. Secondly, opportunity. We feel that from our experience that schools serving these communities’ children must be of high quality. We know that better schools attract families to neighborhoods and boost property values. But better schools are needed for our own public housing residents, who need that opportunity to get up and out of poverty by accessing quality education. Again, in some of the HOPE VI projects that we have taken on, we have included an alignment with local public housing and local school systems so that you work in sync to support both improved schools as well as improved communities. Third is the question of sustainability. HOPE VI promises to create mixed income viable and sustainable communities. They provide the best possibility for incorporating design, support services, as well as long-term green building practices. Energy costs rise very high and fast, especially for low-income households, who spend a disproportionate amount of their income on paying energy bills, and also suffer disproportionately illnesses such as asthma and lead poisoning. If you think of HUD’s energy budget, it is $4 billion in utility allowances every year; 10 percent of its budget is spent on utility allowance. If we can just save 5 percent of that spending, in 5 years we would have saved a billion dollars of new investment for onefor-one replacement housing. I can talk more about those examples that we have, but we have at least two HOPE VI projects that are done, fully compliant with green standards. Finally, the whole question of preservation and one-for-one. Onefor-one must not be done to further impact concentration of poverty. So the principle of one-for-one is to preserve affordability as opposed to just the physical location of units. We have good examples that we can share with the committee how to replace affordable units in partnership with others throughout the city and in different developments. So, in conclusion, these four principles—equity, opportunity, sustainability, and preservation—must be embedded in policy recommendations and strictly adhered to as we reauthorize the HOPE VI Program. And we strongly recommend full reauthorization of the HOPE VI Program with these principles embedded. Thank you very much. [The prepared statement of Ms. Koo can be found on page 72 of the appendix.] Chairwoman WATERS. Thank you very much. I appreciate the time that you have put in today and your patience. Let me begin again with a statement. It has taken me some years to basically believe that HOPE VI was going to be the kind of program that I could support. I have always been worried about HOPE VI, and at times I thought that it was a program that was designed to get rid of so-called ‘‘problems’’ in public housing, to thin out public housing and to basically have a development that is problem free and would make life a lot better for the public housing authorities. I have since come to believe that we can make HOPE VI work. And it is not simply the way I thought of HOPE VI in the begin- VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 41 ning. I am committed to the proposition that we can have HOPE VI, and it can be the kind of a program and development that should do what was intended for people who are low-income, people who are in need of support from their government, people who may not be working, people who may have had some problems in the past, people who want to get their lives together. And I think that whether we are talking about public housing as we know it, or HOPE VI, we should not lose sight of the mission for public housing. I think that none of it works without the support services, and we have not had the support services in public housing that are needed traditionally. And HOPE VI certainly holds out great possibilities for having that kind of support. But again, I am going to reiterate—and my public housing directors, I really want them to hear this—I am not about to work to develop letter-perfect HOPE VI Programs that house employed people and people with good credit and people with no problems, because maybe they don’t need public housing in the way that people who are unemployed, who have had some problems, and who have bad credit may need public housing. So I have some real problems with what appear to be regulations or policies that are being developed at the local level about who can and who cannot live in HOPE VI projects. And I am wondering whether or not we are going to have to spend some more time writing into our bill some protections against some of the policies and practices that I am hearing. One of the things I am sure I am going to try and do is to write more specificity into resident involvement. It seems to differ all over the place. And some people think resident involvement is a public meeting where you have as many people as you can get to come out, and you kind of tell them what you are going to do, and then you just go about your business and do it. Other people believe that it is a series of meetings, with as much involvement as you can get, that it is not a one-time thing, that it is really involving people in design and other kinds of policies, and I tend to believe that. I am not one who is fooled by hand-picked resident councils or boards that are the favorites of the directors who do what they are told. I am really, really—I know the difference. I have worked with public housing long enough to know that. So I am really thinking about what we can do to develop some guidelines for some real resident involvement. And of course I will be talking with my colleagues about the elimination of some of the policies that others will argue that the residents would like to have. I just think that requiring good credit before you can live in HOPE VI projects flies in the face of trying to help people when they need you most. So I just want to say, so that word will get out that Maxine Waters said some things, and that some people may not like it, and there are going to be problems, and all of that. But I do wish to be as honest and as frank as I can possibly be about my very strong feelings about some of that. And having said that, I have gone way over my time, and I will call on Mr. Cleaver. VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE 42 Mr. CLEAVER. Madam Chairwoman, thank you. The hour is late, and I know some of you have better things to do than to talk to me, and it won’t hurt my feelings. But if we had sufficient time—and I think we are going to have a vote in few minutes—Ms. Koo, I would really like to have some discussion with you about the greening of HOPE VI. And actually—I mean, we need to—I hope PHA chairs will start becoming intentional about hiring green PHA directors. If we don’t do that— I mean, one of the criteria ought to be, you know, in the qualifications ‘‘green thumb.’’ I mean, if we don’t have a green thumb director in 2007, it means that the poorest people are going to live in the most costly units for energy, and the Federal Government is a participant. So I thank all of you for all of the time and effort you put into coming here to be with us. It is very helpful as we are trying to formulate this legislation. And I will, for good or bad, be with Chairwoman Waters in this legislation. Thank you. Ms. KOO. Thank you, sir. Chairwoman WATERS. I would like to thank you very much. And I thank again this panel for being here. I know that some members may have additional questions for this panel that they will submit in writing. And without objection, the hearing record will remain open for 30 days for members to submit written questions to the witnesses and to place their responses in the record. I would like to now say to you, please feel free to contact me, or to contact our staff. We want to work with you. We want your ideas. We want your input. And let’s see if we cannot work together to get a bill that will help satisfy the concerns from different ones of us. I thank you very much for being here. We need unanimous consent to submit all of the written statements into the record. With that, the panel is dismissed. And thank you very much. Ms. STRATFORD. Excuse me. Could I give you this? Because there is some stuff that I did leave out of here. Because as of now we are still finding people. We found the people, my organization. They lost 116 people— Chairwoman WATERS. Okay. Ms. STRATFORD. —the county. And we had to go in the street and find those people. Chairwoman WATERS. Well, that is exactly what we want to prevent. And we don’t want the kind of policies, like I said, that are designed to lose people, to thin it out, or to get rid of people. So, yes, leave your statement with us, and we will put it in the official record. Thank you very much. [Whereupon, at 5:31 p.m., the hearing was adjourned.] VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 K:\DOCS\37561.TXT HFIN PsN: TERRIE APPENDIX June 21, 2007 (43) VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00049 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00050 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE 37561.001 44 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00051 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE 37561.002 45 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00052 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE 37561.003 46 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00053 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE 37561.004 47 VerDate 0ct 09 2002 18:26 Oct 05, 2007 Jkt 037561 PO 00000 Frm 00054 Fmt 6601 Sfmt 6601 K:\DOCS\37561.TXT HFIN PsN: TERRIE 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@FedFRASER