The House Transportation-HUD (THUD) Appropriations Subcommittee held a hearing on March 7 where stakeholders provided their perspectives on the production and preservation of affordable housing. Witnesses testified about the critical importance of HUD programs and of Low Income Housing Tax Credits (LIHTCs) in preserving the nation’s affordable housing stock and the great need to increase those resources. Witnesses also discussed how the Rental Assistance Demonstration (RAD) is being utilized to convert public housing and preserve it as affordable housing by enabling public housing agencies to leverage Section 8 rental assistance contracts to raise private debt and equity for capital improvements.
Ellen Lurie Hoffman, the federal policy director of the National Housing Trust, testified that while the LIHTC program is important in preserving affordable housing, it often is insufficient, and other resources are needed. She explained that HUD’s HOME and project-based rental assistance (PBRA) programs help leverage other funding streams. In particular, PBRA is able to attract investors based on a consistent flow of funding from the federal government, giving investors security from risk. She also spoke about how the recent government shutdown, the longest in U.S. history, impacted the affordable housing community since PBRA contracts were not being renewed and some owners had to dip into reserves to cover their expenses for an undefined period of time. She said that on-time payments to these owners is critically important not only to help them run their business but also to allow them to attract needed investments to better preserve their properties.
Citing NLIHC’s data, Representative Pete Aguilar (D-CA) asked the witnesses about the large shortage of affordable and available homes in his home state of California. Ms. Hoffman responded that there is a shortage of affordable homes in every community, urban, suburban and rural. She said that while we must preserve the existing affordable housing stock, we must build new units as well, and that it comes down to how we prioritize federal funding and the tax code to do so. She urged Congress to increase resources and pointed out that federal lawmakers had not funded new PBRA development for years.
All the witnesses opposed President Trump’s budget proposal to cut affordable housing benefits and resources by increasing rents and eliminating programs. Ms. Hoffman said raising rents on the poorest Americans would be devastating, while Scott Farmer, the executive director of the North Carolina Housing Finance Agency, said that the elimination of HOME and CDBG would force his agency to serve people with higher incomes since they would not have the resources necessary to serve the lowest-income people. Anthony Scott, the CEO of the Durham Housing Authority, said President Trump’s budget request would increase homelessness, force his agency to cut needed staff, and lead to the loss of public housing units.
Subcommittee Chair David Price (D-NC) and Representative Katherine Clark (D-MA) asked how the preservation of affordable housing and accompanying wrap-around services can help lead to greater economic mobility and support for low-income residents. Ms. Hoffman explained that 43% of PBRA developments are in low-poverty communities and said we must ensure PBRA properties in transitioning neighborhoods are preserved to allow the tenants to benefit from the new investments in their communities. She also spoke about the benefits of the Family Self-Sufficiency (FSS) program, which helps residents improve their job skills, learn financial literacy, and save money to improve their lives. She said that since Congress has permanently authorized the program for PBRA owners last year, the subcommittee should increase FSS funding. Without funding, PBRA owners have had to pay for the program out of their own pockets.
Chairman Price also asked about the RAD program and its potential pitfalls. Mr. Scott testified that there has been misinformation and, hence, misunderstandings about the program. He said, for example, that there are tenant protections built into the program that many are not aware of. He said the program requires developments maintain long-term affordability and one-for-one replacement of units being converted from public housing to Section 8 rental assistance contracts. He also encouraged advocate- and tenant-participation when PHAs undergo RAD conversions. He said the program helps PHAs create financial stability over the long haul since it allows them to leverage new resources they previously did not have access to. He advocated for the complete elimination of the RAD cap and said the program could be improved by requiring a set-aside of 9% LIHTCs for RAD projects.
Learn more about the hearing at: https://bit.ly/2Eu5xZZ