Financial Services Subcommittee Considers Private Sector Participation in Affordable Housing
On April 16, the House Financial Services Subcommittee on Housing and Insurance held a hearing on “The Future of Housing in America: Increasing Private Sector Participation in Affordable Housing”. The hearing focused broadly on HUD programs that have the potential to leverage private dollars and featured four witnesses: Adriane Todman, Executive Director at the District of Columbia Housing Authority (DCHA); Brad Fennell, Senior Vice President of Washington, DC area property management company WC Smith; James Evans, Director at Quadel Consulting Services; and Sheila Crowley, President and CEO at the National Low-Income Housing Coalition (NLIHC).
Subcommittee Chairman Blaine Luetkemeyer (R-MO) opened the hearing saying that despite HUD receiving more than $500 billion since 2002, the agency “has a mixed record with few metrics.” Pointing to the long public housing waiting lists across the country, he observed “these are not signs of successful programs; they are signs that reforms are desperately needed” adding “the funding situation is not going to get better, so simply asking for more federal dollars is not going to work.”
In his opening remarks, Subcommittee Ranking Member Emanuel Cleaver (D-MO) noted that the hearing was especially topical given how the shift in recent years from demand for homeownership to demand for rental housing has put an additional strain on the availability of housing for low-income renters. Cleaver also discussed the important role the federal government plays in affordable housing production, highlighting the HOME Investment Partnerships Program and applauding Federal Housing Finance Agency Director Mel Watt for directing Fannie Mae and Freddie Mac to start contributing to the Housing Trust Fund.
Each witness spoke of the importance of public sector commitment to spur private sector investment in affordable housing. Representative Michael Capuano (D-MA) asked WC Smith’s Brad Fennel and Quadel’s Jim Evans if the private sector would invest in affordable housing if there were no federal resources. Both responded, “No.” Sheila Crowley added that “without public commitment there is no motivation for private sector investment” in affordable housing.
The Housing Credit featured prominently during the hearing despite not being under the jurisdiction of the Financial Services Committee. WC Smith’s Brad Fennel testified that the Housing Credit is a critical component to producing affordable housing but noted that the floating rate system complicates administration. He called on Congress to establish a fixed Credit rate, stating that this “would allow the private sector to have more predictability in financing, and will certainly make more projects workable.” Fennell also recommended allowing income averaging within Housing Credit properties, discussed the need to streamline the approval process, and noted the impact of increased construction costs due to Davis-Bacon requirements.
Quadel’s Jim Evans testified about the importance of a fully-funded national housing policy based on market principles. Evans said that fair market rents allowed under the Housing Choice Voucher program have not kept pace with increases in market rents, resulting in more private landlords refusing to accept Vouchers than in years past. Evans also called for an expansion of the Moving to Work program and discussed the importance of increasing the Housing Credit authority, especially in light of increased demand from the Rental Assistance Demonstration program.
Financial Services Committee Ranking Member Maxine Waters (D-CA) told the witnesses that she was very focused on increasing the stock of affordable housing and ending homelessness. She expressed concern about non-housing uses of Community Development Block Grant (CDBG) program funding, saying “ I’m looking at the way it is spent… we ought to consolidate that HOME money, that CDBG money, and put it all into housing, and all into low income housing.” Ranking Member Waters asked Crowley her thoughts on this proposal. Crowley responded that she personally would be pleased to see more resources targeted toward the very poor. “The problem with HOME is that it’s not deeply targeted. The tax credit is not deeply targeted. CDBG is hardly targeted at all.”
Subcommittee Chairman Luetkemeyer concluded the hearing by asking witnesses to send suggestions on how to make housing programs more innovative and flexible, and how to help more people with the same dollar amount.
Prior to the hearing, NCSHA submitted a letter to Committee leaders outlining how HFAs partner with the private sector to provide affordable housing for low-income households using programs such as the HOME Investment Partnerships Program (HOME), the Housing Credit, and tax exempt private activity Housing Bonds. NCSHA maintained that private sector participation in affordable housing depends on public sector investment. In addition, the ACTION Campaign, which NCSHA co-chairs with Enterprise Community Partners, submitted a statement for the record highlighting the Housing Credit’s strong track record in leveraging private sector investment for the development of affordable housing. Representative Pat Tiberi (R-Ohio-12) submitted a statement as well, calling on the committee to support his legislation to enact Housing Credit minimum rates (H.R. 1142) and encouraging members to visit Housing Credit developments.