Good morning Chairman Mack, Senator Kerry and members of the Committee. I am Deepak Bhargava, Director of Public Policy at the Center for Community Change. I appreciate the opportunity to testify on S. 462, the Public Housing Reform and Responsibility Act of 1997.
The Center for Community Change is a national non-profit organization that provides technical assistance to community-based organizations working in low-income neighborhoods in urban and rural areas. Our Public Housing Initiative provides technical support to resident controlled organizations in dozens of sites around the country.
My testimony today makes the following 10 points:
While my organization cannot support S. 462 in its current form, I wish to commend Chairman Mack for taking a balanced, reasonable approach to public housing reform that is far superior to the radical overhaul contemplated in H.R. 2. We are especially pleased that S. 462 preserves critical rent protections for residents of public housing while creating significant flexibility for PHAs to establish rent structures that reward work.
With the amendments suggested below, S. 462 could potentially be passed as consensus legislation. We remain concerned, however, that there are vast differences between the approaches taken in the House and Senate bills, and would be compelled to oppose legislation emerging from conference that included any of many objectionable provisions in H.R. 2.
One general caution I have for members of the Committee is the need to be aware of the implications of the welfare reform process now underway in the states and proposed reforms to the public and assisted housing programs. Many families living in public and assisted housing are beginning to experience profound changes in their lives, due to new work requirements, and changes or cuts in a variety of other programs, including TANF, food stamps, SSI, Medicaid, child care and others. It is important that changes made to the federal housing programs support increased opportunities for poor families, and that they don't add to the tremendous burdens now being placed on low-income communities.
A second caution is that the Committee ought to proceed very carefully with respect to the issue of repeal of the 1937 Housing Act, which is proposed by H.R. 2. Although this may seem at first to be a technical issue, the '37 Act is referenced in many other federal statutes, and a body of regulations and interpretations have grown up around it that might be dangerous to overturn wholesale. No one can be confident that repeal will not have profound and serious consequences. Substantive and far-reaching changes can be made to the public housing programs without repealing the cornerstone of federal housing policy. The symbolic value of repealing the Act to some members of Congress is simply not worth the risks to millions of low-income families.
Finally, I wish to caution the Committee that while the Senate bill can be amended to win support from resident and advocacy organizations, the House bill is not within the realm of acceptability. Conference legislation that is 'between' the House and Senate bills win be unacceptable to us. We urge you to stand fast with respect to the approach taken in the Senate bill, and to urge your House colleagues to moderate their stance on a variety of key issues. Otherwise, I fear we will once again find ourselves at the end of a Congress without any authorization of the public housing and tenant-based Section 8 programs.
The Center and other national advocacy organizations are completing work on a lengthy and detailed briefing paper comparing the House and Senate bills. The paper lays out our collective position on all the critical issues before the Committee. My testimony today discusses only some of the most important issues that you must consider.
There are eight (8) key areas I will discuss in my testimony today
We strongly support the treatment of rents in S. 462. The legislation preserves a 30% cap on residents' rental payments, but gives housing authorities susbstantial flexibility to create rent structures that reward work. We are particularly supportive of provisions allowing for the creation of ceiling rents and for earned income disregards. These provisions, if fully funded by the appropriators and implemented by housing authorities, will go a long way toward eliminating any real or perceived disincentives to work under the current rent structure,
The approach taken in S. 462 is preferable to the complex and unworkable scheme outlined in H. R. 2. By allowing residents to choose between a flat rent scheme and the 30% rental formula, but not to switch between them except at specified intervals and with the approval of housing authorities, H. R. 2 would almost certainly create an administratively burdensome, inconsistent, and arbitrary system that would put some residents in a financially untenable position.
With respect to minimum rents, we again support the Senate approach which is to allow housing authorities to charge between $0 and $25 per month. The House bill, which requires a minimum rent payment of between $25 and $50 win potentially result in financial hardship for extremely poor residents, particularly for those residing in low welfare benefit states. In some cases, a $50 minimum rent will consume nearly half of a family's TANF grant.
It is also critical to understand that the minimum rent issue first arose before the enactment of welfare reform legislation. Welfare reform already imposes stringent work requirements on poor families, making a mandatory minimum rent unnecessary and punitive. Finally, mandatory minimum rents simply do not result in significant financial gains for PHAs, and are therefore unjustified in light of the potentially devastating costs to very poor families.
In our view, neither S. 462 nor H.R. 2 adequately targets increasingly scarce housing resources to families in need, though again S. 462 is significantly better in this respect.
Targeting Should Reflect Distribution of Housing Need
HUD data demonstrates that worst case housing needs are concentrated among families with incomes below 30% of Area Median Income. 72% of households with severe housing needs have incomes below 30% of ANH and 43% have incomes below 201/o of AMI. Neither bill's targeting requirements reflect this distribution of housing needs.
Public Housing Targeting
We understand that many parties are interested in promoting income mixing in public housing. This can be done without opening up scarce units to families earning 80% of AMI --which amounts to over $40,000 in the Washington, D.C. area, for example. If the real issue is to increase the portion of families in public housing that are working that can be accomplished by targeting housing assistance to working poor families at or around the poverty line --around 30% of AMI. We believe that not more than 15% of available units should be made available to families earning between 60% and 80% of AMI.
We do strongly support language in the House bill that requires that provides that poor families may not be concentrated in a few developments, but rather must be dispersed throughout all the developments managed by the PHA
Section 8 Targeting
For tenant-based Section 8, there are not the same issues with respect to geographic concentration of poor families. If properly administered, in fact, Section 8 can be a powerful deconcentration tool. We therefore believe that 75% of newly available vouchers and certificates --rather than only 50% as provided in the S. 462-- should be given to fan-filies earning less than 30% of AMI.
Profile v. New Admissions Targeting
Another critical issue with respect to targeting is how the targets are applied. The House bill proposes to apply the targets to the entire profile of public housing units. The Senate. bill would apply them to new admissions. Because the average income of public housing residents is so low, PHAs would be essentially free to admit no very low-income families to public housing for years under the House bill. The Senate language making clear that the targets apply to new admissions is therefore essential to make any targets established meaningful.
Local Preferences
Neither bill establishes adequate conditions with respect to the establishment of local preferences by PHAs. The legislation should be amended to require that the preferences be consistent with housing need as outlined in the local CHAS.
S. 462 does not provide sufficient opportunity for residents to participate in decisions about demolitions, and also substantially weakens a range of tenant protections by exempting demolitions from the provisions of the Uniform Relocation Act. The legislation should be amended to require PHAs to negotiate in good faith with resident organizations regarding proposed demolitions of their homes, and HUD should be allowed to consider resident objections to demolitions in considering demolition applications submitted by PHAs.
The Uniform Relocation Act ensures that residents are not displaced if there is insufficient relocation housing for residents, requires that relocation housing be reasonably close to residents' jobs, provides for minimum notice requirements, and provides that residents receive appropriate financial assistance with respect to relocation. These are reasonable and fair standards and the Senate bill should be amended to provide that it will continue to apply to all demolitions.
S. 462 creates a requirement that public housing residents engage in volunteer work for eight hours per month. We believe that this provision should be revised or eliminated, particularly in light of changes that have recently been made in the welfare programs.
You can't coerce volunteerism
Based on our experience working with resident councils throughout the country, there is already substantial volunteer activity by thousands of poor individuals who are in difficult circumstances working to improve the quality of life in their community. These efforts should be supported and nurtured by policy-makers, but they cannot be imposed from Washington. Indeed, the notion of requiring "volunteerism" is on its face oxymoronic.
If the point of this provision is to support greater resident initiatives, it should be amended to make participation voluntary, and include funds to assist groups of residents working to improve the quality of life in their communities.
The work requirements are made obsolete by recently enacted welfare reform legislation.
The recently enacted welfare bill imposed strict work requirements for all recipients receiving assistance under the Temporary Assistance for Needy Families (TANF) block grant. In addition, the bill requires childless, non-disabled food stamp recipients between 18 and 50 years old to work as a condition of reciept of food stamps. Finally, many jurisdictions that provide General Assistance to poor, single adults require them to work as a condition of receiving assistance. Frankly, therefore, it is unclear who precisely would be affected by the work requirements of S. 462. In my view, it would be duplicative and punitive to impose yet another complex work requirement on poor families who are already subject to a myriad of other work requirements under other anti-poverty programs. Any families or individuals not already covered by these extensive other requirements are in all likelihood exempt from them for good reasons.
The provision represents an unfunded mandate on PHAs that would likely not help families make the transition to self-sufficiency
Because the work requirement comes with no new funds, already financially hardpressed PHAs will realistically have one of two choices: (a) they will have to create "make work" --picking up trash and the like-- that is relatively inexpensive to administer, but doesn't impart any real skills to participants. Indeed, residents of public housing would be better off using their eight hours a month engaged in meaningful training that supports their efforts to move into the labor force- or (b) faced with an expensive new mandate, many PHAs will simply look the other way, effectively encouraging non-compliance with an unworkable law.
If Congress wants to require work by everyone who receives public subsidies, why stop with public housing residents?
All of us, regardless of whether we live in public housing or not, are the beneficiaries of a variety of public subsidies. Indeed, those getting the mortgage interest deduction get a far higher per capita subsidy than do public housing residents. If this "volunteer" requirement is to be applied to public housing residents, it ought to be equally applied to all recipients of all types of housing assistance.
There are effective alternatives to the eight hours work requirement that would more effectively promote volunteerism and self-sufficiency
If the Committee is genuinely interested in promoting volunteerism and self- sufficiency, it could drop this provision in favor of a combination of the following: (1) a study of effective local programs promoting volunteer initiatives in public housing which could inform further policy-making in this area; (2) a small grant program to support innovative self-sufficiency or volunteer programs established by PHAs or resident organizations; (3) amend Section 3 and require HUD to aggressively enforce it to create real work opportunities for public housing residents; (4) require PHAs to work with public housing residents to meet their needs for supportive services so that they can make the transition to work; and (5) incorporate a measure for effective encouragement of volunteerism into the PHMAP system.
This provision was first considered by the Committee before the enactment of the welfare law, the most sweeping anti-poverty legislation in 60 years. The Committee ought to give the provision another look in light of the profound changes being brought about momentous changes in other areas of anti-poverty law.
I should note that we are strongly opposed to the provision in the House bill which essentially 'time limits' housing assistance by requiring residents to sign 'self-sufficiency contracts.' The House provision creates a bureaucratic nightmare for PHAs, and inappropriately punishes residents both for failure to meet their goals and for meeting the goals of the contracts. It fails to recognize that many poor families with earned incomes still don't earn enough to afford unsubsidized housing in their communities. A plan to evict families from public housing who move from welfare to work also contradicts the goal of promoting greater income mixing. Finally, PHAs are primarily property and building managers. They are poorly suited to administer a plan to help residents manage the transition to work. We support instead collaboration between PHAs and welfare agencies to assist residents to make this transition.
At a time of increasing devolution of power and authority to housing authorities, it is more critical than ever that residents have the needed statutory and financial support to participate effectively in the decision-making about critical issues like demolitions, rent-setting, targeting, and self-sufficiency policies. Neither the Senate nor the House bill adequately provides for a meaningful resident voice, though again the Senate bill is superior in most, though not all, respects.
Resident Membership on Governing Boards of PHA s
As a modest first step, we support the House bill's provision for membership of at least one duly elected resident on PHA Boards. We oppose, however, the overly sweeping exemptions from this requirement in the House bill. We would prefer, however, a provision requiring that at least one third of the seats on governing boards be reserved for duly elected resident commissioners, which could include one Section 8 holder. As the primary stakeholders of public and assisted housing, residents must have significantly more power in the decisions that affect their fives. We support an electoral rather than appointive procedure for selection of the Board members because that will ensure the independence and accountability of the resident members. Although this may result in minor costs associated with running elections, we believe the benefits resulting from meaningful resident empowerment far outweigh the costs.
Public Housing Agency Plans
We commend Senator Mack for the inclusion of resident advisory boards as a component in the establishment of public housing agency plans. We suggest that this provision could be made more meaningful by: (1) requiring the PHA to negotiate, rather than simply consult, with the board on the plan after an open process of mandatory public hearings; (2) allowing any resident organization, not just the officially sanctioned board, to appeal to HUD if they believe their views were not adequately solicited or considered, or if they believe implementation of the plan would result in significant and material harm to residents; and (3) allowing HUD to disapprove plans if any group of residents makes a substantive case that the plan was developed without sufficient resident input or if residents make a substantive case that the plan would result in harm to residents.
Resident Opportunity Program
We strongly support the broader range of eligible activities, the more inclusive list of eligible organizations, and higher funding authorized for resident organizations in the Senate bill. Significant financial support for resident organizations' efforts to empower residents to allow them to participate meaningfully in decision making should be a pre-condition for devolution.
We are opposed to paternalistic provisions in the House bill authorizing HUD to require resident organizations to use PHAs or other entities as contract administrators. This provision would seriously compromise resident autonomy.
Demolition and Disposition
Both bills significantly weaken residents' role with respect to demolitions. Current law requires PHAs to "consult", not merely "confer" or "notify" residents with respect to proposed demolitions. Even this limited protection has arguably been too weak, resulting in an untrammelled stampede by HUD and housing authorities to demolish even sound public housing developments. As incremental housing assistance has now for all practical purposes gone by the boards, it is more important than ever that we preserve and protect as a critical resource those public housing developments that provide safe and decent housing for low-income Americans.
We are strongly opposed to provisions in the Senate bill preventing PHAs from engaging in redevelopment that results in "net new" public housing units. There has been a precipitous drop in the number of public housing units in the last few years, and given HUD's ambitious demolition schedule and the defunding of development activities, there is no sound rationale for the anxiety which motivated inclusion of this provision. Moreover, there may be certain instances where a shortage of units that Section 8 holders may use or other factors make public housing development the only viable option. In many communities, public housing remains the only alternative to sub-standard, overcrowded housing or to homelessness. The Committee should not prevent well managed, innovative housing authorities from developing additional units to meet the desperate housing needs of poor Americans in the event that they are able to find funds to do so.
One key conceptual problem with S. 462 and H.R. 2 is that they seek to remedy management deficiencies in the system by deregulating the managers, without increasing the power of residents or addressing the fundamental problem in the public housing system --the virtual monopoly status of PHAs as presumptive managers of the public housing stock.
Residents confronting poor managers have few options under the current system. Former HUD Secretary Jack Kemp proposed a "Choice in Management" program to address this underlying problem that, with revision, could form the basis of more comprehensive reform of the system. We would suggest that residents be empowered to vote to reject the current manager of their development(s) in favor of one of a range of options --including non-profits, PHAs from other jursidictions with a better record of performance, or a Resident Management Corporation.
The mere threat that a PHA could lose jurisdiction over a portion or all of the inventory would act as a powerful stimulant to better performance, The introduction of market mechanisms into the public housing system, by vesting ultimate control in the primary stakeholders, would help to ensure that deregulation does not simply result in more freedom on the part of PHAs to implement bad ideas and bad policies.
S. 462 requires voucherization of certain d istressed public housing developments, and provides for voluntary conversion in other instances. We believe that important decisions regarding conversion should be discretionary in every case, that resident consultation should be a required part of the process, and that the criteria for conversion must include analysis of the ability of the housing market to absorb vouchers. Finally, assessment of the cost effectiveness of conversion should include an analysis of the long-term cost of conversion, and an assessment of the extent to which deterioration of the public housing stock is due to a conscious policy of not expending modernization funds or to inept management by PHAs.
There are six (6) other issues that I wish to touch on briefly, though most of them are related to issues raised by the House, rather than the Senate, legislation.
The issue of whether Congress should mandate a federal occupancy standard for all --not just public or assisted-- housing will almost certainly surface again in the debate over S. 462. We are absolutely opposed to federal action in this arena, which would amount a rollback of the federal Fair Housing Act, and would increase the housing crisis for millions of Americans, particularly racial and ethnic minorities.
The Senate bill contains a provision that nullifies the entire corpus of regulations that has grown up around the 1937 Housing Act, as amended. While we are sympathetic to the notion that the regulatory framework for public housing needs review, a repeal of all regulations is a draconian solution to this perceived problem. We suggest a mandate that HUD conduct an exhaustive review of existing regulations to identify obsolete or unnecessary ones. A total elimination of existing regulations, while a dramatic gesture, will undoubtedly result in the inadvertent loss of important regulations that provide protections for residents.
The House bill contains a highly objectionable provision that excludes all eviction cases -not just those due to drug or criminal activity - from the grievance procedure. We are strongly opposed to this provision. Congress has already acted to expedite evictions due to drug and criminal activity. The grievance procedure provides an important extra-judicial opportunity for PHAs and residents to resolve disputes, and should be preserved.
While we are supportive of efforts to expand housing choices for poor families, we are opposed to the House provision enabling PHAs to create site-based waiting lists because it exempts the creation of these lists from the Fair Housing Act. Without the protections of the Fair Housing Act, the creation of site-based waiting lists will almost certainly reinforce patterns of discrimination and residential segregation.
We are strongly opposed to the provision of the House bill that allows local jurisdictions to take public housing funds in the form of a block grant, for which no federal rent, targeting, or other rules would apply. This provision is a backdoor repeal of the Brooke Amendment and many other critical protections for poor families. We urge the Senate to insist on its deletion from a final conference product. I should emphasize that we are supportive of the notion of expanding the range of management options available for public housing, but this is best accomplished through the alternative management process we describe above.
The House bill contains provisions that effectively weaken income targeting for the CDBG and HOME programs. Under the House bills, families earning over $69,000 in Stamford Connecticut, $56,000 in San Jose, CA, and $51,000 in Chicago could benefit from CDBG and HOME funds. At a time of declining resources for affordable housing, this is precisely the wrong direction to go.
Although we think the Senate bill should be amended in significant respects, it is clearly within striking distance of winning support from residents and advocacy organizations. We are appreciative of the thoughtful and balanced approach taken by the Chairman, and his receptiveness to the concerns of residents. We remain concerned, however, that the approach taken by the House may not be easily reconcilable with that taken by the Senate, and hope that the Senate will remain firm with respect to provisions retaining important protections for poor families. We urge you to proceed deliberately on this legislation, which will have tremendous implications for the lives of millions of very poor Americans.
We are eager to work with the Chairman, the Ranking Minority Member and others to
craft legislation that results in real reform of the public housing system. We appreciate the
opportunity to testify.
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