On October 13, the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity held a hearing on a new discussion draft of the Section Eight Savings Act of 2011 (SESA) and a discussion draft for the Moving to Work Improvement, Expansion, and Permanency Act of 2011 (see Memo, 10/7). Neither bill has been introduced.
Subcommittee Chair Judy Biggert (R-IL) opened the hearing, saying her goals for SESA include cutting red tape, improving services, and helping people stand on their own two feet so that others on housing waiting lists can access assistance.
Subcommittee Ranking Member Luis Gutierrez (D-IL) said that he has concerns about some provisions in the draft SESA bill that could undermine some of the bill’s other efforts, particularly those that increase minimum rents and make access by public housing agencies to reduced administrative duties contingent on their operating self-sufficiency programming.
While portions of the hearing focused on new provisions of the SESA draft bill, much of the hearing centered on the Moving to Work demonstration program and the draft bill from Representative Gary Miller (R-CA), which would expand the MTW demonstration to all public housing agencies (PHAs) and make the demonstration permanent.
NLIHC submitted written testimony on both proposals. NLIHC stated its opposition to the new provision in the draft SESA bill that would allow PHAs to set minimum rents to the greater of $75 or 12% of Fair Market Rent (FMR). Currently, PHAs are allowed to set minimum rents at up to $50 and the Secretary can set minimum rents for project-based housing, which today is set at $25. The draft SESA bill would allow private owners to set rents to the new minimum rent standard, with the approval of the Secretary.
“The lowest income HUD-assisted households, particularly those in the highest-cost areas, would be faced with significant cost burdens by such an increase to minimum rents. We are equally concerned that the metric for determining rent would shift for many households from the Brooke standard to a percent of FMR. The Brooke standard is of tremendous importance to NLIHC. Shifting the calculation of a household’s rent from a percent of a household’s income, as Brooke provides to ensure affordability for each household, to a percent of an area’s FMR, undermines the stability Brooke provides today to millions of HUD assisted households,” NLIHC wrote in its testimony.
Will Fischer, Center on Budget and Policy Priorities, testified that rents would increase for more than 350,000 households under the draft SESA proposal. He said “raising minimum rents could significantly harm some of the poorest housing assistance recipients.”
Mr. Fischer, like other witnesses and members of the Subcommittee, discussed Mr. Miller’s draft bill to expand the MTW program to potentially all PHAs and make it permanent. Unlike other witnesses, Mr. Fischer, advised the Subcommittee against expanding MTW, saying such a move “would very likely result in significant adverse consequences, and there is no persuasive rationale to support it.” Written testimony from NLIHC also opposes any expansion of the MTW program.
The MTW demonstration was authorized in 1996 and is limited today to 33 PHAs. PHAs in the MTW demonstration can merge their voucher and public housing funds, giving them nearly unlimited flexibility as to how they spend, or not spend, their federal funding. MTW agencies do not have to comply with key tenets of federal affordable housing programs, including deep income targeting and rent affordability. MTW agencies can institute time limits, restrict portability, and tie work requirements to a household’s housing assistance.
Mr. Fischer’s testimony criticized the design of the MTW demonstration, which has prevented the demonstration from being evaluated. He said that MTW agencies assisted about nine families per $100,000 in public housing and voucher funding in 2009, compared to 15 families in non-MTW agencies.
Mr. Gutierrez also stated his serious concerns about the draft MTW bill, recognizing that the Chicago Housing Authority and others may have had some successes with MTW, but that there is “little evidence to justify a wholesale expansion.” Mr. Gutierrez questioned HUD’s capacity to manage a large expansion of MTW agencies.
Representative Mel Watt (D-NC), noting that some MTW innovations in the services area have been very original, said that “you can’t expect the housing authority to solve all of a community’s problems.” Greg Russ, Cambridge Housing Authority, and Kris Warren, Chicago Housing Authority, both MTW agencies, as well as Hope Bolden from the Integral Group, which has conducted supportive services for the Atlanta Housing Authority, an MTW site, testified in support of expanding the MTW program.
Representative Steve Stivers (R-OH) questioned Mr. Russ on Cambridge’s ability to use its MTW flexibilities to expand its project-basing of housing choice vouchers to serve specialized populations, including veterans, people who are currently homeless, and seniors. Mr. Stivers said that one of the reasons housing authorities in his district would like MTW status is so they can remove the current 20% cap on the number of vouchers it can project-base. Mr. Russ stated that Cambridge has used its MTW authority to remove this cap on project-basing.
Previous versions of the Section 8 voucher reform bill included ways PHAs could expand their use of project-based vouchers, including language that would base the existing 20% cap on the number of vouchers or on the PHA’s voucher budget authority. These previous bills also included language authorizing an additional 5% of vouchers or voucher funds to be project-based when housing homeless families, for supportive housing for persons with disabilities, or for units in tight rental markets. By putting project-based voucher improvements into the SESA bill, as NLIHC and others advocate, all PHAs would have access to these reforms, not just those operating MTW programs.
Representatives from these three MTW agencies described services that encourage resident accountability and progress toward economic independence, comprehensive case management, transportation, child care, counseling, wellness and substance abuse treatment, and financial assistance for college. Mr. Gutierrez wondered why some of his Subcommittee colleagues oppose opportunities to increase spending on Pell Grants, increase the minimum wage, increase child care and transit, but support MTW. “We vote against these tools to achieve self-sufficiency but then we ask the housing authorities to do these same tasks,” Mr. Gutierrez said.
Representative Robert Dold (R-IL) said he believes that most Democrats and Republicans can agree on several fundamental housing principles. First is that we must have a basic safety net to provide housing to those who cannot provide for themselves. Second, the ultimate goal is to move as many people to self-sufficiency as quickly as possible. Third, the viewpoints of PHAs must be carefully considered and they must be provided adequate flexibility. Finally, there must be adequate checks and balances to ensure taxpayers’ resources are used efficiently and wisely. Failing to do these things, Mr. Dold said, will harm program beneficiaries the most, because resources will be diverted as taxpayers will become less willing and less able to fund these necessary programs.
Mr. Miller stated that any SESA bill must include MTW expansion. Representative Steve Chabot (R-OH) said that any legislation must include enforceable time limits on housing assistance.
NLIHC’s testimony is available at: http://nlihc.org/doc/NLIHC_SESA_Testimony_10-13-11.pdf
Witness testimony and an archived webcast of the hearing are available at