Minimum Rents, MTW Under Consideration in House Hearing

The House Financial Services Subcommittee on Insurance, Housing and Community Opportunity passed the discussion draft of the Affordable Housing and Self-Sufficiency Improvement Act (AHSSIA) by voice vote on February 7. Full Committee consideration of the bill is scheduled for February 28.

In his opening statement, Subcommittee Ranking Member Luis Gutierrez (D-IL) said he cannot support some of ASSHIA in its current form. Mr. Gutierrez expressed hope that members could reach agreement on these aspects. Specifically, Mr. Gutierrez said the bill would increase minimum rents for 490,000 HUD assisted households. “Raising rents for the poorest of the poor. I just don’t know how this makes sense,” Mr. Gutierrez said. The bill would require the HUD Secretary to increase monthly minimum rents to $69.45 for all public housing, voucher and project-based Section 8 households and also give the Secretary the authority to increase the minimum rent for inflation. Today, public housing agencies (PHAs) can set minimum rents of up to $50 a month. HUD sets a single, minimum rent of $25 for all project-based tenants.

Mr. Gutierrez also said that protections needed to be included in the draft bill’s language expanding the Moving to Work (MTW) demonstration program. The bill would allow unlimited expansion of the MTW program, which gives participating PHAs the ability to divorce rents from incomes and charge rents that are unaffordable to residents, serve higher income residents even as the lowest income households have the greatest need, merge voucher and public housing accounts, eliminate portability rights, and gives other freedoms from basic programmatic mainstays and protections. There are currently 35 PHAs in the MTW demonstration, each of which has used its freedoms in different ways and to different extents. The demonstration has never been evaluated to measure overall impact on the lowest income residents, their housing choices, and their housing stability.

Mr. Gutierrez offered an amendment during subcommittee consideration to allow PHAs to increase the value of a voucher to 110% to 120% of Fair Market Rent, which they can do now only with approval from HUD, in order to provide a reasonable accommodation for persons with disabilities. Subcommittee Chair Judy Biggert (R-IL) said support was likely but asked Mr. Gutierrez to submit some analysis of the amendment’s costs. Mr. Gutierrez replied that the amendment was cost neutral and merely represented a procedural streamlining between PHAs and HUD, one which serves to benefit people with disabilities. Chair Biggert again said she would appreciate some analysis of cost. Mr. Gutierrez withdrew his amendment and said that he would work to demonstrate that the amendment comes with no cost.

Representative Lynn Westmoreland (R-GA) expressed concern that the bill does “not adequately address the cost explosion in the Section 8 program.” He said “this Committee needs to find more savings in this program,” adding that he is also concerned about the geographic concentration of Section 8 voucher holders.

Mr. Gutierrez offered a second amendment to eliminate the bill’s provision to increase minimum monthly rents. Again, Mr. Gutierrez said that the poorest individuals will be the ones most impacted by the proposal. Mr. Gutierrez also noted that 27% of all PHAs do not impose a $50 minimum rent and under the proposal, they would be required to have minimum rents of $69.45. “We should let [PHAs] keep that choice,” Mr. Gutierrez said. Representative Gary Miller (R-CA) countered, saying that no one has ever been evicted because they could not meet the minimum rent set by the PHA. Mr. Gutierrez said that there are people who have been brought into eviction proceedings due to failure to pay a minimum rent. Representative Mel Watt (D-NC) also spoke in strong opposition to the minimum rent increase proposal. NLIHC has collected examples of residents faced with eviction by a PHA, the root cause of which was failure to pay an unaffordable minimum rent; these same residents were not aware of their potential eligibility for a hardship exemption.

Any PHA that establishes a minimum rent above $0 must also establish hardship exemption policies. But PHAs are required to do little beyond establishing them. For example, there are no provisions in statute that require the PHA to make residents aware of these exemptions. Mr. Gutierrez withdrew his amendment, reiterating his hope that the proposal can be worked out as the bill moves forward.

Representative Maxine Waters (D-CA) said that there may be a time when it is reasonable to raise rents, but now is not that time, given the nation is still recovering from an unprecedented recession and many peoples’ wages are frozen.

Representative Brad Sherman (D-CA) offered an amendment that would allow a housing choice voucher to cover costs beyond the rental of the land underneath a manufactured home, including helping the manufactured homeowner pay for the cost of their home, its insurance and property taxes. After discussion with members, most notably with Mr. Gutierrez, who raised concerns about having a voucher potentially help pay for “what many would consider to be predatory loans,” Mr. Sherman withdrew his amendment and stated his intention to revisit the issue at full Committee consideration.

Ms. Waters then offered an amendment to substitute the bill’s MTW title for her own version of MTW, called the Housing Improvement Program (HIP). Ms. Waters introduced a voucher reform bill in 2011 that includes a title on HIP (see Memo, 3/18/2011).  Ms. Waters noted that both majority and minority staff have been meeting to work out issues and that there are many complexities in these negotiations.

Ms. Waters said she does not want a blanket expansion of MTW and that HIP includes much stronger resident protections that a PHA could not waive, including income targeting, portability, resident participation, and resident procedural rights.  Ms. Waters also said it is important the program does not allow for any reduction in the number of families served. As was the case with all amendments, Ms. Waters withdrew her amendment. “I’d love to work with my friend on this,” said Mr. Miller, whose MTW expansion bill became AHSSIA’s MTW title.

Each of the issues represented by the withdrawn amendments will be raised again during full Committee consideration, which will take place tentatively on February 28, “but we’re going to have to do a lot of work before then,” said Chair Biggert.

Mr. Gutierrez said the success of the full committee markup will depend on working out MTW. Representative Nydia Velazquez (D-NY) said, “We should not rush into a program that will be problematic later on,” and that doing so would create an opportunity for more money to be wasted rather than saved. Ms. Velazquez said this could result in less housing being available and families being harmed, noting that the underlying bill does not provide safeguards and oversight to assure otherwise.