October 16, 2017

Secretary Carson Appears Before the House Financial Services Committee

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On October 12, HUD Secretary Ben Carson testified before the House Financial Services Committee in a hearing titled “The Future of Housing in America: Oversight of the Department of Housing and Urban Development.” The broad scope of the hearing included a general overview of Secretary Carson’s vision and priorities for policy and program reform at HUD; the impact of the Budget Request and previous budget cuts on housing and communities; several charged lines of questioning about the appropriateness of the President and Administration’s response to the crisis caused by Hurricane Maria in Puerto Rico.

Recurring topics from Republicans throughout the hearing included how to make HUD programs more cost-efficient, reforming FHA to expand homeownership and reduce taxpayer liability, and creating new metrics to measure success of HUD programs and policies. Democrats repeatedly asked the appropriateness of the President’s recent comments and actions regarding hurricane disaster victims in Puerto Rico as well as the impact of proposed budget cuts and rental assistance program reform on low-income families and communities. Themes in Secretary Carson’s testimony included thinking about housing in the context of a whole person; expanding engagement in Public Private Partnerships (PPP), including Rental Assistance Demonstration (RAD), to attract private capital to renovate and construct affordable housing; and repealing burdensome regulations.

Disaster Recovery

Secretary Carson began the hearing by promoting HUD’s leadership in the disaster response and long-term recovery after recent hurricanes affecting Texas, Louisiana, Georgia, Puerto Rico, and the U.S. Virgin Islands. He expressed pleasure in Deputy Secretary Pam Patenaude’s confirmation, citing her expertise in dealing with disaster recovery following Hurricanes Katrina and Rita. Currently, HUD is providing FHA Section 203(h) mortgage insurance to people who lost their homes, as well as a 90-day moratorium on foreclosures and 90-day forbearance on foreclosures of FHA-insured mortgages.

In response to questioning from Rep. Ann Wagner (R-MO), Secretary Carson explained that the Community Development Block Grant Disaster Recovery Program (CDBG-DR) is vital in disaster situations and that the program has largely done great work but that some uses of funds have been questionable, without providing any specifics. In the hearing, he mentioned that HUD will use FEMA damage assessment data to determine where and what the unmet needs are, but he did not provide further details on CDBG-DR regulations.

Opening Remarks

In his testimony, Secretary Carson highlighted his vision for HUD, including a plan for institutional and program reform called the FORWARD initiative which involves: reimagining how HUD works, restoring the American Dream, and rethinking American communities. The Secretary argued that: 1) housing assistance must help beneficiaries reach self-sufficiency and that it must be aligned with job training; 2) FHA should open condominium rules to consider expanding assistance for more first-time homebuyers in order to promote responsible homeownership; and 3) HUD should expand public-private partnerships to attract more private capital in affordable housing construction and preservation. The Secretary also expressed a special and personal commitment to removing lead and other hazardous substance from American homes. 

Committee Questioning

Chairman Jeb Hensarling (R-TX) expressed concern that HUD programs have failed in their mission to reduce poverty and provide opportunity to low-income Americans. In his opening statement, Chairman Hensarling heralded a growing economy as the single best way to provide housing opportunity for Americans and that tax cuts that allow Americans to keep more of their money is the best way to stimulate the economy. Chairman Hensarling lauded Secretary Carson’s approach to leading HUD as a business and expressed appreciation for new ideas that would improve program efficiencies. He also noted that the Secretary’s journey out of childhood poverty and into a distinguished career as a pediatric neurosurgeon is representative of the American Dream.

During the hearing, the Chairman asked if HUD is developing alternative metrics that measure how many people HUD programs have helped escape poverty. The Secretary responded that he believes that HUD should consider people holistically and view housing as a component of developing people. Later in the hearing, the Secretary stated that HUD’s success is measured by how many people leave HUD programs and become self-sufficient.

In her opening statement, Ranking Member Maxine Waters (D-CA) questioned Secretary Carson’s commitment to HUD’s mission. Citing data that there is a nationwide shortage of 7.2 million rental units affordable to low-income households, Rep. Waters stated that the Secretary is failing to stand at the forefront of expanding access to safe, decent, and affordable housing. She argued that housing is a platform for economic mobility and well-being as well as a necessary human right and criticized the Secretary for supporting a Budget Request that would have cut the HUD budget by over $6 billion.

During the hearing, Rep. Waters asked pointed questions regarding the appropriateness of the President’s comments about the disaster and humanitarian crisis in Puerto Rico and the U.S. Virgin Islands in addition to the President’s conflicts of interest. She also expressed alarm that proposed rental assistance reforms would harm tenants of HUD-assisted properties. When Secretary Carson responded that elderly and disabled people can be given hardship exemptions that would exclude them from rent increases, Rep Waters stated that hardship exemptions, such as those included the HUD’s proposals, historically have failed to help people.

Rep. Meeks expressed alarm the Distressed Asset Stabilization (DAS) program is selling assets to private equity firms that do not have an interest in keeping families in their homes. Secretary Carson agreed with Rep. Meeks’ argument that HUD should allow nonprofits that are committed to keeping people in their homes to buy DAS properties.

When Rep. Leutkemeyer asked about the innovative ways that HUD is expanding access to housing, Secretary Carson cited how the RAD program attracts private capital and Low-Income Housing Tax Credit (Housing Credit) financing to rehabilitate and construct new units. The Secretary lauded how RAD has brought in $4.3 billion of private capital to address public housing capital needs largely through Housing Credit financing and noted that the new Republican tax plan recognizes the importance of the Housing Credit for new affordable housing creation. To learn amount about the Housing Credit, visit the ACTION Campaign website.

Policy Solutions

During the hearing, Secretary Carson’s statement included additional policy solutions, including:

  • Expanding the Family Self-Sufficiency (FSS) program. As part of the program, families can put money into an escrow account that can be used for monthly maintenance. If the family leaves public housing within 5-10 years, then the escrow can be used for a down payment on a house.
  • Making housing vouchers more portable so that more people can more quickly get off of waitlists and into housing. He argued that vouchers need be able to follow where there are jobs. (Note: there was a voucher mobility demonstration proposed in the FY17 Senate THUD Appropriations bill, which was ultimately not included in the omnibus and was not included in the FY18 bill).
  • Permanently authorizing Moving to Work (MTW) as more than a demonstration. He complained that as families start climbing the ladder, HUD discontinues assistance.
  • Removing the regulatory burdens of AFFH’s disparate impact rule for small municipalities, while still supporting the Fair Housing Act of 1968
  • Supporting for the Housing First model of combatting homelessness, while also protecting the transitional housing model where it is working
  • Eliminating the RAD cap completely

Throughout the hearing, Secretary Carson appreciated the support for and importance of HUD programs, such as CDBG and HOME, and seeks to build on what works in existing programs. However, he is also eager to find ways of cutting costs associated with these programs and believes that states and localities should play a larger role in providing housing for their residents. 

 

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