HANF Hearing, Act III

It takes a licking, but it is still ticking

Editor's Note: The following article was slated for publication in the July 9 edition of the Advocate. Due to space limitations in that issue, however, the story was not included. It is being run here for the benefit of PHADA members.

The House Financial Services Committee Subcommittee on Housing and Community Opportunity held its third day of public hearings on the administration's HANF proposal on Tuesday, June 17. The first day of public hearings was devoted to testimony by HUD's Assistant Secretary Michael Liu. On June 10, Rep. Ney (R-OH) presided over testimony by industry groups where PHADA was represented by Trustee Neil Malloy of the St. Louis County Housing Authority in Missouri. This last day of hearings was devoted to industry groups, advocacy groups and scholars. The witnesses appeared in two panels, one with six witnesses and one with four witnesses. Testifying in the first panel on June 17 were Conrad Egan of the National Housing Conference, Howard Husock of the Manhattan Institute, Bruce Katz of the Brookings Institute, Jill Khadduri of Abt Associates, Ed Olsen of the University of Virginia, Margorey Turner of the Urban Institute. In the second panel were Sheila Crowley of the National Low Income Housing Coalition, Henry Marrafa of the National League of Cities, Ann O'Hara of the Consortium for Citizens with Disabilities, and John Sidor of The Helix Group.

After Rep. Ney's opening statement introducing the proposed HANF legislation, Rep. Velazquez (D-NY) asked the witnesses rhetorically to tell her about future funding and the possible depth of subsidy. She closed asking whether HANF represents a risk that we want to take. Rep. Clay (D-MO) submitted a prepared statement for the record in which he objected to the HANF proposal on grounds that the need is for additional assistance, the program is successful and HANF only promises to further complicate it, that it offers no benefit to elderly or disabled participants and risks the historical tendency of declining appropriations in the future.

Panel I
Conrad Egan
Mr. Egan's testimony emphasized the Section 8 Program recommendations put forward by the Millennial Housing Commission, which he chaired. The Commission found that the Section 8 Program should be expanded and strengthened to improve extremely low income households' access to decent affordable housing, and that the program was successful and cost effective. Annual appropriations should provide for substantial annual increments.

The Commission also suggested areas in which HCV could be improved, including improving utilization and success rates, increasing landlord participation, linking the HCV program more tightly with self sufficiency efforts and other social support programs, and increasing the flexibility in using project based HCVs.

Mr. Egan concluded by reiterating that the current program design works well, although there is room for improvement and a requirement for substantial increases in annual appropriations. He opposed the approach included in the HANF proposal.

Howard Husock
Mr. Husock found HANF to be a, "promising," alternative that placed the HCV program more clearly in a broader social services context. He argued for closer connections between TANF and the HCV program since there were significant overlaps among HCV holders and TANF recipients. Among non-elderly, non-disabled HCV holders, 28 percent receive TANF benefits, many of whom were also single parent households. Husock argued that the affordability of housing was only a problem for the elderly, the disabled and single parent households. Regarding management entities, Husock argued in favor of state administration. He stated that HAs have a narrow mandate to provide safe and sanitary housing while states have much broader policy concerns appropriate for consideration through HANF. State administration would permit TANF-like experimentation within this housing assistance program, since states have more ability and inclination to innovate than HAs.

Finally, Husock expressed very serious concerns over HCV holder concentrations in less attractive neighborhoods. He claimed that voucher holders tend to concentrate, that those concentrations tend to occur in less attractive neighborhoods, and that the concentrations lead to further deterioration, damaging potential economic opportunities available to neighborhood residents, including the voucher holders.

Bruce Katz
Mr. Katz argued that the HCV program offers more choices to lower income households, offering greater opportunities for mobility than any other housing assistance effort. The program does a good job replicating the range of choice available to middle class households. He pointed to the risks of insufficient future funding for HANF and that the only alternatives available to states would be to shift assistance to wealthier families, to raise families' share of housing costs, or to reduce the beneficial program impact in cities where costs are relatively high. He strongly argued that HCV and TANF are very different, pointing out that only 13 percent of HCV holders receives substantial support from TANF, and over 50 percent of voucher holders are elderly, disabled or working.

Katz pointed to two program improvements he recommended for the HCV Program. First, the provision of information to voucher holders would tend to broaden their choices and increase the likelihood of voucher holders moving to relatively wealthier neighborhoods. Second, the administration of HCV programs on a metropolitan area basis would overcome barriers to mobility between jurisdictions. He concluded by pointing out that the HCV program places power and resources in the hands of the program's customers, and that the program needs measured and responsible reform, not wholesale revision.

Jill Khadduri
Ms. Khadduri began her testimony by pointing out that the HCV program design is not flawed but does demand improvement both in its utilization and success rates, and in its acting as a potential source of conflict in neighborhoods. She found consolidation of the program at the state level attractive, but only under a number of conditions:

• Client choice must be preserved,
• Policy changes such as altered subsidy levels and time limits should only be permitted after they had been tested and outcomes became predictable,
• Current reporting requirements remain in place for monitoring purposes, and
• Funding is adequate to provide for steady program growth as well as keeping pace with general cost increases.

• It rationalizes administration of the program among some 55 administrators
• It overcomes current barriers to client mobility,
• It lends itself well to program coordination with, for example, TANF,
• States are more flexible than federal administration, and states have more resources to assure good outcomes than local administrators.

Ed Olsen
Olsen argued that, since HCVs are cheaper than any project based alternative and get housing assistance on the street faster, all housing assistance should be converted from project based to tenant based assistance. He pointed out that currently there is little or no funding available for expansion of housing assistance in the face of a great deal of need, and that tenant basing all housing assistance could get assistance into the hands of an additional 900,000 families. He argued against any further construction subsidy, and in favor of creating a housing assistance entitlement.

Margery Turner
Turner pointed out that the HCV program has been tremendously successful, and requires some reform rather than a massive overhaul. Vouchers give holders choices to live in healthier neighborhoods, although some research indicates that this choice is less effective for minorities than for other program participants. She advocated three reforms of the program:

1. Assistance should be linked with mobility counseling to maximize the outcomes of socio-economically mixing neighborhoods.
2. HAs should strengthen their landlord outreach to improve choice for participation and broaden the base of housing available for voucher holders.
3. The program requires some mechanism to regionalize its focus and overcome barriers to mobility. A regional approach could involve collaborations among HAs or regional administration, but the current administrative structure confuses both landlords and voucher holders.

Rep. Maxine Waters (D-CA) began questioning Mr. Husock concerning both his testimony and articles he had written that appeared in the Manhattan Institute's journal, City Journal. In particular she questioned his use of, "shopping carts left in the street," "children of voucher homes go unsupervised," and, "boom boxes play late at night," as examples of problems voucher holders bring to neighborhoods. She pursued a line of questioning concerning Mr. Husock's choices and finally told Mr. Husock that she viewed his presentation of HCV program problems as "racist" and "offensive". On several occasions, Mr. Husock stated that he had quoted African American businesspeople and homeowners and that he had no intention of offending Rep. Waters or any other readers of his testimony or his articles. Unfortunately for Mr. Husock, this line of questioning cast the die for substantial subsequent questioning, until Rep. Mel Watt (D-NC) was able to remove Mr. Husock from the hot seat. Waters, Watt, Rep. Scott (D-GA), Rep. Clay (D-MO), Rep. Velazquez (D-NY) and Rep. Davis (D-AL) all expressed serious misgiving our outrage with Mr. Husock's testimony, which may have sufficiently stigmatized the HANF proposal as to make it difficult for members to offer any support at all.

Watt thanked both Katz and Turner for emphasizing the importance of information for voucher holders such as an MLS for rental housing (Katz's characterization). In response to an exchange between Watt and Husock concerning ways Husock claimed the HCV program encourages single parent families, Katz asked how a housing program can serve as a platform for transition to self sufficiency when employed participants still cannot afford market rate housing. Watt finally observed that we should not be experimenting with poor people in this way.

Clay asked Olsen why he thought the HCV program should be changed, and Olsen responded that, although the advantages aren't large, they are present and this approach will serve more families. In response to a question about HUD's authority to implement multi-jurisdictional cooperation, Turner indicated that there was a great deal HUD could do to encourage interagency cooperation. She also said that HUD could launch a demonstration of possible regional models now, and that HANF could be a disaster with untested time limits and subsidy caps. Finally, Clay polled the panel, asking, "Why take a success and send it to the states?" Responses included:

• Egan: The program's success is based locally. There is no value added from state administration.
• Katz: This proposal is what he used to call an, "OMB special." It is designed to cut the budget over time and push the problems to the states.
• Khaddurri: She is willing to take the proposal in good faith. Current administration is a crazy quilt of overlapping administrators. Landlords aren't always sure who to call or what rules to follow and families don't know onto which waiting list to get.

Rep. Davis (D-AL) asked Ms. Turner how she would suggest coping with the stigma that attaches to the HCV program. In her response, she acknowledged the importance of addressing both community (neighborhood and broader) and landlord concerns. She pointed out that the concentration of voucher holders in a neighborhood is exceptional in the program, rather than the rule, and that concentration often occurs as a result of pre-existing discrimination in a community rather than as an outcome of the HCV program. Turner concluded by remarking that solving these stigma and concentration problems requires more than the HCV program, but that the program offers much utility as one component of a solution to the concentration of poor households.

Davis then asked the panel that if the aim is to decentralize the program, to where does it decentralize? He asked whether a reasonable alternative is to help HAs address the program difficulties rather than HANF's wholesale shift in administration. Mr. Husock responded to these questions, pointing out that HANF was the vehicle available and on the agenda now. In a later question, Davis asked the panel whether anyone had asked the National Governors Association for its input and comments on the HANF proposal. The panel's silence led Davis to presume they had not done so.

Rep. Velazquez (D-NY) posed questions concerning time limits in HANF, pointing out that 70 percent of voucher holders are already employed and unable to afford housing. Mr. Husock, responding to Velazquez' general concern with his testimony, as well as his advocacy of time limits, said his major concern was the degree to which the HCV program encourages the formation of single parent households, and that it may be appropriate to implement time limits only to new admissions to the program (a provision already in the HANF language, since current participants would be grandfathered in and covered by existing program rules until 2009, when the HANF authorizing legislation would expire). This testimony represents a modes change on Mr. Husock's part. He was quoted in Delaware's The News Journal as saying that the voucher program was the last non-time-limited income support program.

Panel II
The subcommittee began hearing from witnesses in the second panel very late in the day, and as a result, there were very few questions for these witnesses.

Sheila Crowley
Ms. Crowley described her goal as ending the affordable housing crisis and described the three elements needed to accomplish that as 1) adequate properties, 2) affordability, and 3) subsidies as in the form of HCVs. She is opposed to the HANF proposal as not contributing to the achievement of that goal or those elements. From the Joint Center for Housing Studies' report, 2003 State of the Nation's Housing Crowley cited a 2 million unit gap between affordable housing units needed and those available. Describing the reforms she believes are required as administrative reform, elimination of discrimination and a lack of adequate housing stock, Crowley described HANF as a, "ham handed," approach whose greatest flaw was the absence of any assurance that funding will keep pace with costs. Any utilization problem can be handled currently with reallocation, and the current utilization rate exceeds 95 percent. She suggested some warranted program improvements that included a flexible inspection process, a housing success fund, higher appropriations, testing for discrimination and new investment in housing stock through a National Housing Trust Fund.

Henry Marrafa
Mr. Marrafa testified candidly that radical change to the HCV program will jeopardize its success. It will threaten the programs funding and delivery structure, reduce assets developed through these housing subsidies, lead to less local control than exists today and increase the program's administrative burden. When funding falls short, states will limit housing choices available to HCV holders, reduce individual housing subsidies and add local and state funds to the program. Marrafa feared that HANF will politicize the HCV program.

Ann O'Hara
Ms. O'Hara strongly opposed the HANF proposal because it was likely to cap expenditures, steer assistance away from disabled voucher holders and limit assistance terms, target higher income groups and jeopardize policies opening the HCV program to disabled participants. She argued overall that HANF would disproportionately limit disabled participation in this subsidy program. O'Hara also pointed to the chaos that would be caused during any transition to HANF that would discourage landlord participation. She suggested three reforms for the existing program, including increased program flexibility for locally determined rents, linking vouchers to accessible units and implementing a voucher success fund that would raise the success rate as well as the utilization rate.

John Sidor
In his testimony, Mr. Sidor cited two flaws in what he characterized as a pretty good program. The program has tended to place vouchers and voucher holders in areas where job growth has been slow or non-existent, and HCVs have generally not been used in conjunction with other economic development tools. Although he generally supported state administration of the HCV program, Sidor did not support HANF.

This second panel concluded their prepared remarks very late in the day, so there were few questions or comments. In response to a question to the panel concerning HCV improvements, Ms. Crowley suggested increased administrative efficiency, particularly with small program sponsors. Katz suggested work to develop metropolitan area wide program transparency and said that many options were already available to encourage it. Rep. Waters concluded, commenting that support and encouragement of participating landlords and prospective participants was critical to the program's success.