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THE FUTURE OF HOUSING IN AMERICA: 

GOVERNMENT REGULATIONS AND THE 

HIGH COST OF HOUSING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND INSURANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MARCH 22, 2016 

Printed for the use of the Committee on Financial Services 

Serial No. 114–81 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND INSURANCE

BLAINE LUETKEMEYER, Missouri, Chairman 

LYNN A. WESTMORELAND, Georgia, Vice 

Chairman 

EDWARD R. ROYCE, California 

SCOTT GARRETT, New Jersey 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

DENNIS A. ROSS, Florida 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

ROGER WILLIAMS, Texas 

EMANUEL CLEAVER, Missouri, Ranking 

Member 

NYDIA M. VELA ́ ZQUEZ, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

AL GREEN, Texas 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

JOYCE BEATTY, Ohio 

DANIEL T. KILDEE, Michigan 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

March 22, 2016 ................................................................................................. 1 

Appendix: 

March 22, 2016 ................................................................................................. 33 

WITNESSES 

TUESDAY, MARCH 22, 2016 

Been, Vicki, Commissioner, New York City Department of Housing Preservation and Development .......................................................................................... 7 

Daily, F.R. Jayar, Chief Operations Officer, American Homestar Corporation, 

on behalf of the Manufactured Housing Institute (MHI) ................................. 6 

Dickerson, A. Mechele, Professor, The University of Texas at Austin School 

of Law .................................................................................................................... 11 

Holland, Clyde, Chairman and Chief Executive Officer, Holland Partner 

Group, on behalf of the National Multifamily Housing Council (NMHC) 

and the National Apartment Association (NAA) ............................................... 4 

MacDonald, Granger, President, MacDonald Companies, on behalf of the National Association of Home Builders (NAHB) .................................................... 9 

APPENDIX 

Prepared statements: 

Been, Vicki ........................................................................................................ 34 

Daily, F.R. Jayar .............................................................................................. 42 

Dickerson, A. Mechele ...................................................................................... 55 

Holland, Clyde .................................................................................................. 68 

MacDonald, Granger ........................................................................................ 85 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Luetkemeyer, Hon. Blaine: 

Written statement of the Mortgage Bankers Association with attachment, 

‘‘Affordable Rental Housing and Public Policy Toward Greater Housing 

Security and Stability,’’ MBA Affordable Rental Housing Task Force, 

December 2015 .............................................................................................. 96 

Written statement of Steve PonTell, President and CEO, National Community Renaissance (National CORE) ........................................................ 118 

Cleaver, Hon. Emanuel: 

Written statement of Enterprise Community Partners ................................ 127 

Ellison, Hon. Keith: 

Letter to Hon. Richard Cordray, Director, CFPB, and Hon. Loretta Lynch, 

Attorney General of the United States, dated January 12, 2016 ............. 134 

Response letter from Hon. Richard Cordray, Director, CFPB, dated February 9, 2016 ................................................................................................. 137 

CFPB report entitled, ‘‘Manufactured-housing consumer finance in the 

United States,’’ dated September 2014 ....................................................... 140 

Representative Ellison’s statement on H.R. 650, the Preserving Access 

to Manufactured Housing Act ...................................................................... 195 

Various newspaper articles alleging bad behavior ........................................ 198 

MacDonald, Granger: 

Written responses to questions for the record submitted by Representative Royce ....................................................................................................... 241 

(1) 

THE FUTURE OF HOUSING IN AMERICA: 

GOVERNMENT REGULATIONS AND THE 

HIGH COST OF HOUSING 

Tuesday, March 22, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING

AND INSURANCE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:02 p.m., in room 

2128, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Luetkemeyer, Westmoreland, 

Garrett, Pearce, Rothfus, Williams; Cleaver, Velazquez, and Clay. 

Chairman LUETKEMEYER. The Subcommittee on Housing and Insurance will come to order. Without objection, the Chair is authorized to declare a recess of the subcommittee at any time. 

Today’s hearing is entitled, ‘‘The Future of Housing in America: 

Government Regulations and the High Cost of Housing.’’ 

Before we begin, I would like to thank the witnesses for appearing before the subcommittee today. We look forward to your testimony. I now recognize myself for 5 minutes to give an opening 

statement. 

Last year, I joined several of my colleagues in New Orleans to 

examine the state of housing 10 years after Hurricane Katrina. 

While in New Orleans, we visited public housing sites and met 

with residents. My colleagues will remember meeting a woman who 

had lived in public housing her entire life. 

Like so many people across the Nation, she told us her goal was 

to escape public housing and have her own home. This resident 

told the story of her son, who had achieved that dream and purchased his own home. He broke the cycle his mother aimed to shatter as well. 

He was able to do that because he had opportunity. He had options. He found a house to call a home. So today we ask ourselves, 

where do people go when they reach self-sufficiency? 

Is the stock of affordable market rate housing plentiful enough 

to support the people seeking it? The unfortunate answer is no. According to a recent study by NYU and Capital One, the renter population is growing while affordable housing options, those that consume less than 30 percent of household income, are shrinking. 

The study also found that in cities across America, the average 

renter can afford fewer than 25 percent of rental units. Imagine 

2 

that daunting landscape through the eyes of a single mother looking to graduate from public housing. 

Today, we will examine some of the root causes behind rising 

housing costs in the Nation, with specific focus on the government’s 

contribution to the price tag. Federal, State, and local rules and 

regulations, including Davis-Bacon wage rates and zoning laws, are 

proving to be barriers to the development of affordable housing. 

According to the New York City Independent Budget Office, the 

requirement to pay prevailing wages translates to a per-unit cost 

increase of nearly $45,000. That is an additional $2.8 billion in 

labor cost to meet the mayor’s affordable housing goal. 

Manufactured housing rules and regulations from the Department of Housing and Urban Development (HUD), the Federal 

Housing Administration (FHA), and the Consumer Financial Protection Bureau (CFPB) have stifled the availability of an affordable 

alternative to site-built homes. 

This subcommittee will continue to dedicate its time and energy 

to examining different methods to lift people from poverty and ensure that people don’t have just a place to live, but a place to have 

a life. 

This is an important conversation. In the words of one of our witnesses, Professor Mechele Dickerson, ‘‘For the first time since possibly the Great Depression, the lack of affordable housing is being 

viewed as a crisis that affects Americans of all ages, races, and income groups.’’ 

Government has inserted itself into the business of housing by 

mandating affordable housing and community reinvestment while 

simultaneously shifting creation of affordable housing and community reinvestment. It is time to promote the development and availability of housing for low- and middle-income Americans, not restrict it. 

I want to thank our witnesses for appearing today. We look forward to your testimony. 

The Chair now recognizes the ranking member of the subcommittee, the gentleman from Missouri, Mr. Cleaver, for 5 minutes for an opening statement. 

Mr. CLEAVER. Chairman Luetkemeyer, members of the subcommittee, good afternoon. Thank you again for giving us your 

time to help us focus on this important issue. 

When you consider the fact that there are approximately 12 million Americans who spend more than 50 percent of their income on 

housing, I don’t think that it is a far-fetched notion to say that we 

are in the throes of a crisis in the future of housing in America, 

government regulations, and the high cost of housing. 

It has been about 8 years since the economic meltdown of 2008. 

And as we all know, not only did the Great Recession devastate individual household wealth, but it also eviscerated our housing market. 

Recovery has been slow, and in the time our housing trends have 

shifted with more Americans renting than purchasing new homes. 

Today’s hearing gives us an opportunity to learn from your ideas 

in which we can put in place to turn this unfortunate turn of 

events around. 

3 

According to the Joint Center for Housing Studies at Harvard 

University, the number of U.S. households that rent their housing 

rose to a 20-year high of 35.5 percent in 2014. And at the same 

time, the national rental vacancy fill as rents soar. 

Wages have also stagnated leaving more Americans rent-burdened. Simply put, many of our constituents are facing a housing 

crisis where need outweighs availability. And because of this, it is 

crucial that we provide robust funding for our Federal housing programs. 

For example, recently I joined with Ranking Member Waters and 

69 other Members to request that our appropriations, or the appropriators, provide strong funding for Section 8 rental assistance as 

well as for housing programs that provide dedicated funding for the 

elderly and the disabled. 

I also urge our appropriators to fully fund the HOME Investment 

Partnership Program and the Community Development Block 

Grant program. Both programs effectively leverage private capital 

through Federal investment to encourage the development of housing, though both have been cut in recent years. 

We thank you for your participation. I look forward to hearing 

from you in your testimony. 

Chairman LUETKEMEYER. The gentleman yields back. 

Today, we welcome the testimony of Mr. Clyde Holland, chairman and chief executive officer, Holland Partner Group, on behalf 

of the National Multifamily Housing Council and the National 

Apartment Association; Mr. F.R. Jayar Daily, chief operations officer, American Homestar Corporation, on behalf of the Manufactured Housing Institute; Ms. Vicki Been, commissioner, New York 

City Department of Housing Preservation and Development; Mr. 

Granger MacDonald, president, MacDonald Companies, on behalf 

of the National Association of Home Builders; and Professor 

Mechele Dickerson, professor at the University of Texas at Austin 

School of Law. 

Each of you will be recognized for 5 minutes to give an oral presentation of your testimony. And without objection, your written 

statements will be made a part of the record. 

Before we proceed, I want to seek unanimous consent to yield 

time to the gentleman from Texas, Mr. Williams, for the purpose 

of introducing not one but two of today’s witnesses. So without objection, the gentleman is recognized. 

Mr. WILLIAMS. Thank you, Mr. Chairman. It is a great honor to 

introduce two great Texans. Of course, everybody in Texas is great, 

but we are proud of our State. 

First of all, is it is an honor and a privilege to introduce this 

morning Granger MacDonald, who is not only a fellow Texan but 

has been a dear friend of mine for many years. Granger is a second 

generation builder and developer from Kerrville, Texas, one of the 

most beautiful cities in America, with more than 40 years of experience in the home-building industry. 

He sits on the board of the National Association of Home Builders as first vice president and as chairman and CEO of the MacDonald Companies, as we have heard. As you will hear from him 

this afternoon, housing is one of the most regulated industries in 

the Nation. 

4 

Mr. MacDonald is uniquely qualified to speak about the regulatory barriers to affordable housing, and we look forward to hearing his testimony today. And Granger, welcome. It is good to see 

you. 

Next, it is another great honor to introduce Mechele Dickerson. 

I am happy to introduce her this afternoon, another fellow Texan 

and a professor of law, who teaches at one of the finest universities 

in the country, one that I just happen to represent in the United 

States Congress. 

Ms. Dickerson is a nationally recognized bankruptcy law scholar 

in addition to being a professor at the University of Texas Law 

School. In addition to her teaching responsibilities, Professor 

Dickerson has published numerous books and articles that should 

be relevant to our hearing today. 

So I look forward to her testimony and that of Granger’s. 

And Mr. Chairman, I yield back. 

Chairman LUETKEMEYER. I thank the gentleman. Just a couple 

of quick notes—excuse me. I have a little allergy problem today, so 

forgive my voice here. You have a lighting systems in front of you: 

green means go; yellow means you have 1 minute left; and then 

when it hits red, you need to wrap it up. 

Also, we do have votes here shortly, and as I talked to all of you 

a while ago, we are going to try and get as far down the road as 

we can with testimony before we stop. We will take the time out 

then at that point, do our duty of going to vote on the different 

issues that are before us today, and then come back and complete 

the hearing. So let us see how far we can get. 

Mr. Holland, we now recognize you for the first 5 minutes. 

STATEMENT OF CLYDE HOLLAND, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, HOLLAND PARTNER GROUP, ON BEHALF 

OF THE NATIONAL MULTIFAMILY HOUSING COUNCIL 

(NMHC) AND THE NATIONAL APARTMENT ASSOCIATION 

(NAA) 

Mr. HOLLAND. Thank you, Chairman Luetkemeyer, Ranking 

Member Cleaver, and members of the subcommittee. It is my privilege to appear before you today on behalf of the National Multifamily Housing Council and the National Apartment Association to 

discuss the challenges of meeting the increasing demands for multifamily homes for millions of working Americans. 

I am the chairman and chief executive officer of the Holland 

Partner Group based in Vancouver, Washington. We are a fully integrated real estate investment firm in the western United States 

with experience developing approximately $7.5 billion in assets representing 30,000 apartment homes. 

The lack of affordable workforce housing is placing increased financial pressure on middle-income Americans. According to a 2013 

report by Harvard’s Joint Center for Housing Studies, more than 

one in four renter households, or approximately 11.2 million individuals, paid more than half of their income for rental housing. 

Without your leadership and effective policy enactment, meeting 

the affordability challenge will become increasingly difficult. 

Changing demographics and housing preferences drive more people 

toward renting. 

5 

Almost 75 million young adults are entering the housing market 

as renters. At the same time, Baby Boomers and empty nesters are 

trading single family houses for rental apartments. This combination of factors is forecast to lead to 4 million new renter households 

over the next decade. 

There are several reasons why Americans are facing high rents 

and finding too few affordable options. First, while the cost to develop and operate rental housing increases annually, the median 

renter household income is virtually unchanged since 1981. In 

many markets, even if developers agree to take no profit, the cost 

to build still exceeds what people can afford to pay. 

Second, there is an enormous mismatch between the supply and 

demand for apartments. As my first slide illustrates the NMHC 

and the NAA estimate that between 300,000 and 400,000 apartments must be constructed annually to simply keep pace with demand. Yet on average, just 208,000 were delivered annually in the 

4-year period from 2011 to 2015. 

While completions of 310,000 units in 2015 was an improvement, 

the stock of available entitled land is diminishing. Future development will be constrained, making it more difficult to fulfill the 

housing needs. 

Lastly, development of new apartment homes is exceptionally difficult. In many markets, it is simply impossible. We have been developing and rehabilitating apartments for over 30 years, and the 

current environment is by far the most challenging. 

There are many hurdles and regulations that can impede the 

process. Community resistance to renters or ‘‘NIMBYism’’—not in 

my backyard—is frequent, but rarely based on legitimate concerns. 

Before a project can break ground, the entitlement process can take 

2 to 10 years and require an up-front investment of $1 million or 

more. 

Even in communities that want and desperately need new multifamily developments, the numerous hurdles that must be overcome 

include entitlement expenditures, zoning rules, environmental site 

assessments, impact fees, mandates like inclusionary zoning or 

rent control, and labor expenses and building code requirements. 

One thing I will point out on the slide that is before you is in 

2007 when the financial meltdown happened, there were many individuals and firms involved with land entitlement. They lost everything, and today the funding for new entitlements is nearly nonexistent. 

And so the raw material necessary, particularly in high-barrier 

entry markets, of zoned land that can be utilized is falling at a 

rapid clip. 

All of the costs add up. Point Loma Nazarene University studied 

the San Diego housing market and found that regulations increased the cost of housing by a staggering 40 percent. 

The White House Council of Economic Advisers Chairman Jason 

Furman recently noted that multifamily housing units are the form 

of housing supply that is most often a target of regulation. We 

could not agree more. 

The bottom line is that workforce housing development requires 

a partnership between the government and the private sector. 

Local governments can do this by bringing down barriers to develVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
6 

opment and incentivizing for-profit entities to build apartments at 

a price that is affordable for the community. 

When both the public and private sectors bring all their tools and 

assets to play, there is a greater likelihood of finding solutions to 

our housing challenges. Specific proposals to accomplish these objectives are included in our written testimony. 

Americans work hard and deserve quality housing at a price they 

can afford. As a Nation, we are falling far short of our goal. What 

is needed is a bold, fresh vision that sets aside historic approaches. 

We recommend a task force challenged with developing effective solutions to today’s housing challenges. Thank you. 

[The prepared statement of Mr. Holland can be found on page 68 

of the appendix.] 

Chairman LUETKEMEYER. I thank the gentleman for his testimony. 

Next, Mr. Daily is recognized for 5 minutes. You may begin. 

STATEMENT OF F.R. JAYAR DAILY, CHIEF OPERATIONS OFFICER, AMERICAN HOMESTAR CORPORATION, ON BEHALF OF 

THE MANUFACTURED HOUSING INSTITUTE (MHI) 

Mr. DAILY. Good afternoon, Chairman Luetkemeyer, Ranking 

Member Cleaver, and members of the subcommittee. My name is 

Jayar Daily. I am the chief operating officer of American Homestar 

Corporation, which designs and produces manufactured housing. 

Thank you for the invitation to serve as a witness at this important hearing about regulatory barriers to affordable housing. I am 

pleased to testify on behalf of the Manufactured Housing Institute, 

of which I serve on the board of directors, and I am the immediate 

past Chair of the Manufacturer’s Division and the chairman of the 

National Modular Housing Council Division. 

Twenty-two million Americans call manufactured housing their 

home. It is simply the most affordable home ownership option for 

families who live in non-metropolitan and rural areas. 

Median income per manufactured homeowners is just over 

$26,000 each year. Last year, the industry produced over 70,000 

homes, roughly 9 percent of the new single family home starts. 

I am pleased to testify on the regulatory barriers facing manufactured housing, a critical source of available housing which in so 

many parts is in short supply. 

While much progress has been made in achieving economics of 

scale in delivering high-quality affordable homes under a robust 

Federal housing code, there are three strong headwinds that keep 

the industry from fully meeting the critical need for affordable 

housing in this country. 

First, we have a housing financing system that does not adequately meet the needs of borrowers looking to finance and purchase manufactured housing. 

CFPB regulations pertaining to the definition of loan originators 

as well as HOEPA provisions governing small balance loans have 

prompted a decline in smaller loans, shutting out many customers. 

We applaud this committee and the House for passing H.R. 650, 

the Preserving Access to Manufactured Housing Act, this past year. 

In addition, FHA’s Title I program for title lending simply does 

not work as evidenced by the fact that there are only 80 certified 

7 

appraisers in the entire country, and the fact there was only $24 

million of endorsements in 2014. 

Finally, despite the 2008 Housing and Economic Recovery Act’s 

duty-to-serve requirements for manufactured housing, Freddie Mac 

and Fannie Mae have largely stayed away from participating in the 

chattel home-only market, which represents 70 percent of the total 

homes that are sold. With the recently proposed Duty-to-Serve rule, 

we see the opportunity for development of a secondary mark for 

chattel loans. 

The second headwind is that manufactured housing production is 

regulated by the HUD code, a comprehensive set of guidelines that 

touches virtually everything in the assembly and site process. 

While the industry works well with HUD, there are several areas 

where improvements are needed: greater attention to economic impact concerns as HUD finances its regulations; exercising its preemption authority with States and localities as we are pre-empted 

out of zoning by some communities; and ensuring greater coordination among Federal agencies that impact housing, such as the Department of Energy’s energy efficient standards. 

We support H.R. 3135, which would ensure that HUD remains 

as the prime regulator in the partnership with the DOE. 

Finally, the third strong headwind is the 1974 legislation that 

brought the industry into the modern era, the Manufactured Housing and Construction Safety Standards Act. It is antiquated. 

For example, the Act puts the industry under Federal lemon 

laws, even though we are not an automobile business, and if otherwise robust quality assurance and dispute resolution tools under 

the HUD code. And the Act requires that homes be built on a steel 

chassis, which stifles design innovation. 

We believe, in conclusion, through partnership with this committee and our work with HUD and other agencies, we will make 

progress in these critical areas and will continue to expand the 

supply of affordable housing. Thank you for the opportunity to testify. 

[The prepared statement of Mr. Daily can be found on page 42 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Daily. You came in a 

minute under the bell there. Well done. 

Ms. Been, you may proceed. You are recognized for 5 minutes. 

STATEMENT OF VICKI BEEN, COMMISSIONER, NEW YORK CITY 

DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT 

Ms. BEEN. Thank you. Chairman Luetkemeyer, Ranking Member 

Cleaver, and members of the subcommittee, thank you for the opportunity to testify today. I am Vicki Been, the commissioner of the 

New York City Department of Housing Preservation and Development (HPD). 

HPD is responsible for carrying out Mayor Bill de Blasio’s initiative to build 80,000 new affordable homes and preserve the quality 

and affordability of another 120,000 homes over the next 10 years. 

Let me highlight a couple of key initiatives we have undertaken 

in the City to help address the critical need for affordable housing. 

And I will then explain why that need, despite the City’s Herculean 

8 

efforts, requires both greeter Federal commitment to fund the construction and preservation of affordable housing and more flexibility in Federal programs. 

First, the City has doubled the capital funding that the City is 

providing to create and preserve affordable housing to $8.2 billion 

over 10 years. Funding from the Federal Government is absolutely 

crucial to address the affordable housing crisis. But while we are 

asking Washington for support, we are committing a huge amount 

of our own resources to build new and preserve existing affordable 

housing. 

Second, our City Council is voting as we speak on two very significant changes to our local regulations to provide new tools to 

achieve affordable housing for a broad range of families and to remove inefficient regulations that raise the cost of housing. 

The first change will implement mandatory inclusionary housing. 

Our program will broaden the income levels that we serve so that 

we can provide homes to families who are at poverty level, far 

below the 50 percent to 60 percent AMI of tax credit properties, as 

well as all the way up to moderate-income workers earning 80 percent of AMI, for example, who increasingly are being priced out of 

the city. 

We have also made major updates to our 1961 zoning text to encourage more senior affordable housing and remove unnecessary 

parking requirements and other regulatory barriers to the production of affordable housing. 

Much has been made of the burdens that regulation imposes on 

construction, and our update to the zoning text removed many inefficient regulations. 

But many of the regulations that folks claim are unnecessary or 

unduly burdensome are critical to making our neighborhoods safe 

and to ensuring that growth doesn’t outpace the supply of essential 

infrastructure and services. 

Sadly, we saw this illustrated in the East Village last year where 

construction and gas connections that were not in compliance with 

the building code leveled multiple buildings, killed two people, and 

displaced dozens from their homes. 

Let me turn to a few areas where I believe Congress could be 

enormously helpful in addressing the housing needs of people all 

across the country. 

First, the low-income housing tax credit could be even more successful if the program were amended to allow-income averaging. 

The developer could offer units affordable to tenants earning between 40 percent and 80 percent of AMI. 

The higher-income units could then cross-subsidize the lower-income units and communities would be able to serve lower-income 

households without any additional cost to taxpayers or to the developer, and would be able to meet the needs of a far broader group 

of families. 

Next, day in and day out we hear from local elected officials and 

community organizations about the dire need for senior housing. 

Historically, the HUD Section 202 program spurred the production 

of affordable senior housing. But it has been completely defunded 

since 2011. 

9 

We desperately need Congress to restore funding for the Section 

202 program. In New York City, alone we have 200,000 seniors on 

wait lists for affordable housing in the City. Without Section 202 

funding, we are unable to meet those needs. 

Finally, there are many critical HUD programs that we use locally, including HOME, public housing capital and operating funds, 

RAD, but I must stress the paramount importance of the Section 

8 voucher program. I know that Congress is very concerned about 

the growth of this program as a percentage of the overall HUD 

budget, but I can’t emphasize enough how critical it is. 

We use those vouchers to allow us to rehab dilapidated housing, 

where residents could not afford the increased rent that would otherwise be necessary to support the rehab. We use vouchers to help 

prevent and to end homelessness. We project-base Section 8 vouchers to develop new affordable housing, especially for seniors. 

I am hopeful that our sustained local commitment to preserve 

our existing affordable housing and build much-needed new affordable housing will stabilize our neighborhoods. But we can’t do it 

alone. Our local efforts must be paired with a renewed Federal 

commitment to fund affordable housing and support local government’s efforts to provide better homes and stronger neighborhoods 

for our low-income families. 

I am grateful for the subcommittee’s attention to affordable housing and for calling today’s hearing. And I am happy to answer any 

of your questions. 

[The prepared statement of Commissioner Been can be found on 

page 34 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Ms. Been. 

Mr. MacDonald, you are recognized for 5 minutes. 

STATEMENT OF GRANGER MACDONALD, PRESIDENT, MACDONALD COMPANIES, ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME BUILDERS (NAHB) 

Mr. MACDONALD. Chairman Luetkemeyer, Ranking Member 

Cleaver, and members of the subcommittee, thank you for the opportunity to testify today. My name is Granger MacDonald. I am 

the chief executive officer of the MacDonald Companies and a home 

builder and multifamily developer from Kerrville, Texas. I also 

serve as NAHB’s first vice chairman. 

Mr. Chairman, we appreciate the opportunity to testify as the 

home-building business is the most regulated industry in America. 

Regulatory burdens impose costs on the development of land and 

construction of single family and multifamily homes. These added 

costs are passed along to homeowners and renters through higher 

prices and rents. 

On average, 25 percent of the price of a single family home is attributed to regulation. Regulation is pushing up the price of housing beyond the means of many middle-class working families. 

On a national basis, a 1,000 increase in home prices leads to 

pricing out slightly more than 206,000 individuals from home purchase. Over 110,000 renter households will become burdened by 

rising rates if he cost of producing rental housing units increases 

by .1000. 

10 

The construction trade is constantly the focus of regulations from 

OSHA, EPA, DOE, FEMA, and other agencies. Specifically, regulations on energy codes, EPA’s Waters of the United States, OSHA’s 

crystalline silica, the Department of Labor’s persuader rule and 

joint employer standards, and the ADA compliance are only a few 

of the myriad of regulatory issues that my industry faces on a daily 

basis. 

All of these regulations factor in the cost of housing as cost increases and access to capital remains tight. Home buyers and renters will have fewer safe, decent, affordable housing options. 

While regulatory reform will help us lower the development costs 

to reach lower-income households, it is financially infeasible to construct new, unsubsidized, affordable housing units without Federal 

assistance. It is important to remember that the regulatory reforms 

are not a substitute for programs like the low-income housing tax 

credit and housing choice vouchers. 

Let me expand on a number of barriers that directly affect housing affordability. NAHB has serious concerns regarding the decreased housing affordability that will result along the Nation’s rivers and coast once HUD begins to implement the Administration’s 

flood Executive Order. 

This order expands the floodplain management requirements far 

beyond the long-established 100-year floodplain. HUD has indicated it will apply the order to all Federal projects such as HOME, 

CDBG, and federally-insured multifamily projects, such as FHAbacked loans. 

The major concern is that HUD has not mapped the geographical 

limits of the expanded floodplain or analyzed the costs and benefits 

of implementing new standards. 

Additionally, the home-building industry is experiencing a major 

labor shortage, with 41 percent of the builders identifying this as 

their top concern. I have seen how labor shortages have delayed 

construction projects and made them more costly. Projects that 

should have taken 14 months and $100,000 per unit to construct, 

now take 18 months and $115,000 per unit to construct. 

It is impossible to build rental units without reluctantly passing 

on the increased cost to the consumer. To address this labor shortage in our industry, we should work to encourage careers in construction. And the trades in the residential building and modeling 

are good, family-supporting jobs. Carpenters, for example, earn an 

average of $45,000 per year, while electricians and plumbers earn 

an average of $54,000 a year. 

The Davis-Bacon Act can substantially increase the cost of constructing affordable housing. Smaller builders and subcontractors 

are ill-equipped to deal with the compliance burdens and the reporting mandates that are required on a weekly basis. 

These burdens are disproportionately affecting small businesses 

who cannot afford to hire the compliance staff or consultants. This 

negatively impacts the goals of the government’s housing program 

by unnecessarily creating additional layers of bureaucracy and cost. 

Lastly, the ability of the home-building industry to address affordable housing needs that can contribute significantly to the Nation’s economic growth is dependent upon the housing finance system that provides adequate, reliable credit. At present, home buyVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
11 

ers and builders continue to confront challenging credit conditions, 

weighed down with overzealous regulatory response to the Great 

Recession. 

Lingering doubts and uncertainty of the market participants has 

resulted in undue restrictions on availability of mortgage credit to 

many creditworthy homeowners. It is essential that all levels of 

government work together to remove the unnecessary red tape that 

delays and prevents development. 

I would like to thank the subcommittee for the opportunity to 

testify today. We look forward to working with you to achieve the 

necessary reforms and expand the availability of affordable housing. 

[The prepared statement of Mr. MacDonald can be found on page 

85 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. MacDonald, for your 

testimony. 

And Professor Dickerson, you are recognized for 5 minutes. 

STATEMENT OF A. MECHELE DICKERSON, PROFESSOR, THE 

UNIVERSITY OF TEXAS AT AUSTIN SCHOOL OF LAW 

Ms. DICKERSON. Good afternoon, Chairman Luetkemeyer, Ranking Member Cleaver, and members of the subcommittee. My name 

is Mechele Dickerson and I teach both law students and freshmen 

at the University of Texas at Austin. 

Thank you for giving me the opportunity to participate in this 

hearing on the housing unaffordability crisis and how it is affecting 

middle-class, middle-income families throughout our country. You 

have asked me to specifically address how overall housing trends 

and recent changes in the U.S. housing market should inform housing policies. 

Middle-class and working-class Americans who work hard, play 

by the rules, and are not leading extravagant lifestyles are struggling to find affordable housing to buy or to rent. And this has now 

become a national crisis. 

There are two things I will stress about the current housing 

unaffordability crisis. The first is that the crisis involves more than 

just sluggish home sales. 

It is certainly true that soaring single family home prices have 

now made it harder for middle-income Americans to become homeowners. The 2015 overall homeownership rate of 63.4 percent was 

the lowest rate in this country in almost 50 years. 

But the crisis is having a devastating effect on people who are 

and likely will always be renters. Since the recession, the number 

of renters in the United States increased by double digits and 

renter households are now the majority in 9 of the 11 largest U.S. 

metropolitan areas. 

Unfortunately, affordable rental units are not being built at a 

rate that is keeping pace with the heightened demand for these 

units. The housing affordability crisis is not limited to the home 

buying market, so solutions to the crisis should not be narrowly focused on ways to make it easier for people to buy single family 

homes. 

We saw during the recent housing crash and recession that it is 

not enough to just relax regulations in lending standards to qualify 

12 

borrowers for a mortgage loan. Homeowners won’t remain in their 

homes if they don’t have the financial means to do so. 

The second point I will make is that the housing unaffordability 

crisis involves more than just poor people, although certainly housing unaffordability is a problem for the poor. Even full-time workers are now struggling to find affordable housing. 

The harm to the middle-class is striking. Approximately 75 per- cent of renters who earn between $30,000 and $45,000 each year, 

and almost 50 percent of rental households who earn between 

$45,000 and $75,000 each year, pay more than 30 percent of their 

income on housing. That is the core of our middle-class and they 

are paying a disproportionate amount of their annual income on 

housing. 

Young adults in particular are struggling. Our Millennials, between the ages of 25 and 34, the ones who should be first renting 

and then buying homes, are unable to do so. Their homeownership 

rates are the lowest they have been in more than 20 years. 

Young workers who have good-paying jobs are finding it hard to 

buy homes or even to pay rent. Many have returned home to live 

with their parents because they can’t afford to both repay their student loans and also to pay rent or to save enough to buy a home. 

Housing policies should continue to support developers who want 

to build and Americans who have the means to purchase large single family homes. However, if we as a Nation are serious about 

solving the housing unaffordability problem, everything needs to be 

on the table and up for re-examination. 

All current land use laws and policies should be re-examined to 

ensure that the policies reflect the new economic realities middleclass families are facing. Cities and states need to rethink their 

zoning laws and policies and consider whether things like 

inclusionary zoning can help ease the affordable housing crisis. 

As a Nation, we must reject the antiquated view that large single 

family homes are preferable to all other forms of housing. And finally, we need to consider whether one of the largest tax expenditures, the mortgage interest deduction, which disproportionately favors high-income taxpayers, needs to be reviewed or revised because there are so many middle-income households that are struggling to even find an affordable place to rent. 

Mr. Chairman, I commend you for convening this hearing, and 

I thank you. And I will be happy to answer any questions you 

might have. 

[The prepared statement of Professor Dickerson can be found on 

page 55 of the appendix.] 

Chairman LUETKEMEYER. We thank the panel for their testimony. And I now recognize myself for 5 minutes to begin the questioning. Hopefully, we can get through a couple of groups before we 

have to go vote. 

Mr. Holland, you had some interesting testimony and you represent the multifamily housing group. What do you see as the biggest barrier or the most burdensome rule, the most burdensome 

regulation to being able to build affordable housing, multifamily 

housing? 

Mr. HOLLAND. Mr. Chairman, thank you very much. That is a 

very good question. What I can say is the biggest concern for proVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
13 

viding housing really differs. In the middle of America, you have 

a very different environment, if you will, than you have at the 

coasts. 

In your high-population areas, the biggest impact to providing affordable housing is the lack of zoned land or land that is entitled 

for high-density housing. 

The nature of the housing demand has shifted. You have 

Millennials that are about 75 million. They want to live downtown. 

They want to walk to work. They don’t want to be involved in commuting. So the competition for urban infill housing is extreme in 

your rising Gen Y workforce markets. 

With respect to the open areas and areas essentially in the middle of America, you have a different set of elements. Mr. Granger 

and Mr. MacDonald talked about the regulation and aspects of 

that. And one of our studies showed that 40 percent of the cost of 

a rental apartment has to do with regulation. 

And so within the confines, if you will, of where we are at, that 

lack of entitled zoning and land and the increasing burdens of costs 

associated with that are really the center of that. 

Chairman LUETKEMEYER. Okay. You said 40 percent of the cost 

of producing a rental unit is due to the rules and regulations? 

Mr. HOLLAND. Yes, sir. 

Chairman LUETKEMEYER. Holy smokes. Okay. 

Professor Dickerson, quick question for you. You made a comment a minute ago about the percentage of income people are able 

to pay. Would you give me a figure of what you think would be adequate for somebody to be able to pay a certain percentage of your 

income for rent and/or house payment? 

Ms. DICKERSON. Historically, 20 to 25 percent was the number. 

The problem is that 30 percent is now seen as the floor and it goes 

as high as 50 percent. 

Chairman LUETKEMEYER. Okay. And I assume that sometimes 

people can afford 30 percent more than they can afford 50 percent 

because they have a higher income. So 30 percent of a high income 

is a lot less than 50 percent of a small income. So it depends on 

how much income you make I would assume, depending on what 

percentage you can pay. Is that right? 

Ms. DICKERSON. I’m sorry. I misunderstood your question. I 

thought you were referring just to the middle-class. 

Chairman LUETKEMEYER. Okay. Well, that is a good place to 

start. So I appreciate that. Very good. 

Mr. MacDonald, you had some interesting comments with regards to the different problems that you see with regards to building homes and providing adequate housing for folks. And you 

talked about floodplain problems. Can you explain that just a little 

bit? 

Mr. MACDONALD. Yes, sir. The new rule, the Executive Order 

that is coming down that HUD is looking at, changes the 100-year 

floodplain to a new undefined amount of floodplain. And the problem that we have with it, and we are not saying that we are opposed to the Executive Order at this point until it—but we are opposed until it is better defined. 

And HUD itself has done none of the modeling to determine 

what that floodplain would be. So we don’t know for every foot you 

14 

go up, how many feet you go out laterally, and so until there is 

modeling done to prove what that is, we can’t even determine the 

cost or the real effect of it. 

And we would appreciate HUD suspending any action on the Executive Order until they actually know the full extent of it, and the 

unintended consequences. 

Chairman LUETKEMEYER. Ms. Been, on the 80,000 new affordable housing units that the mayor is proposing, are those for seniors, disabled, other folks, mixed? 

Ms. BEEN. They are available— 

Chairman LUETKEMEYER. Or is it mixed-use of everybody or is it 

just subsidized housing or can you explain what is in the 80,000? 

Ms. BEEN. So the 80,000 is subsidized housing and it is available 

for a wide variety of people at a wide variety of incomes. We do 

provide housing that is only for seniors. So for example, in the last 

2 years we have provided about 3,000 new units just for seniors, 

but seniors can enter the lottery for any of our new units as well. 

Chairman LUETKEMEYER. Okay. These are all subsidized units. 

Ms. BEEN. Yes. 

Chairman LUETKEMEYER. That is not a mixed-use structure 

where you have individual private pay and/or a commercial use 

within a building and then subsidizes rent. This is only for subsidized folks? 

Ms. BEEN. This is only for the subsidized units. Often, they are 

in mixed-income building and serve a range of incomes. 

Chairman LUETKEMEYER. Okay. I thank you. My time has expired. 

With that, I will go to the gentleman from Missouri, the ranking 

member of the subcommittee, Mr. Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. I want to focus on lowincome housing tax credits. And since this is the largest driver of 

private sector investment, what can we do? Only about 10 percent 

of those tax credits are used. What can we do to attract a greater 

number of corporations, individuals who are interested in some 

kind of a housing development? 

Ms. Been? 

Ms. BEEN. I am happy to jump in there. I am happy to say that 

we use every low-income housing tax credit available to us in the 

City. And the way that we do that is by using those tax credits to 

leverage other resources, both private resources and other subsidies 

from the City. 

We also work very hard to provide greater flexibility. As you 

know, one of the critical issues with the tax credit program is that 

because it targets 50 percent and 60 percent AMI then you are not 

serving many of the poorest families and you are not serving a lot 

of the working and middle-class that Professor Dickerson mentioned. 

By allowing averaging you provide a lot more flexibility and also, 

you give the developers a flexibility that makes the risk of the 

property less intense. If they have a family who earns income that 

is now at 65 percent that can be averaged out so that they don’t 

have to evict that family in order to stay compliant with the lowincome housing tax credit rules. So greater flexibility is the key. 

Mr. CLEAVER. Is the dollar for dollar sufficient as a magnet? 

15 

Ms. BEEN. Is it sufficient? Well, it is necessary. There are probably other things that are required as well. A great deal of flexibility about both the zoning entitlements, all kinds of flexibility is 

required in order to attract people to those developments. 

Mr. CLEAVER. Mr. MacDonald? 

Mr. MACDONALD. In the State of Texas, we are about five to one 

oversubscribed for the credits. In the allocation process there are 

five projects for every one that gets funded. So we could use more 

credits. Right now it is based on 2 per capita for every citizen in 

the State. 

Mr. CLEAVER. You all would expect that from Texas. 

Mr. MACDONALD. Yes. 

[laughter] 

And it is hard in Texas right now to get a deal obviously because 

there are so many people fighting for them. And part of the scoring 

process and the qualified allocation process is deeper skewing and 

you get more points for deeper skewing. 

For example in Texas, if you are going to be successful in getting 

a tax credit for your project now, you have to go to 30 percent or 

40 percent median income for a percentage of your tenants or you 

are not going to score high enough to win the deal. 

Mr. CLEAVER. So do either of you, Ms. Been or Mr. MacDonald, 

believe that we are already operating at optimum level in order to 

attract private investment? 

Mr. MACDONALD. I would love to see more funds put into tax 

credits. I’m sure that would be a hard fight. It is hard every time 

we try to get anything in the tax credit program done for increasing the amount of credits. 

But they are one of the finest investments for private sector governmental sector partnership that has ever been designed because 

you have a government hand in helping facilitate getting something done that is run in the private sector. So it is the best of both 

worlds. 

Mr. CLEAVER. Ms. Been? 

Ms. BEEN. I would agree with that. Not only are our tax credits 

vastly oversubscribed, but we allocate our tax credit properties 

through a lottery. We are now getting 1,000 applications for every 

single unit of affordable housing that we are putting on that lottery. 

So the need is vast and we need even more tax credit money. It 

leverages a huge amount of private investment. So it is well worth 

the expenditure. 

Mr. CLEAVER. Mr. Holland? 

Mr. HOLLAND. Yes, sir. One of the things that is overlooked 

many times is the 4 percent tax credits with 80/20 bonds. If you 

look at the success of the 80/20 bond program, it creates the single 

largest number of units both market rate and affordable housing 

that has been available. 

However, since the meltdown, and with Fannie and Freddie 

being put into conservatorship, the cost of credit enhancement of 

those bonds for many of the last 5 or 6 years, has not been available. And the cost of rollover credits is now up 300 percent. 

And so with effective credit enhancement for the 80/20 bond program it will unlock the use of 4 percent tax credits, which have 

16 

largely been wasted. And they are not being utilized. And so with 

the oversubscription of the 9 percent credits, if we had effective 

credit enhancement for the low floater bond program we would be 

there. 

We also support income averaging because it is a much more effective outcome. 

Mr. CLEAVER. Right. Thank you. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

Votes have been called, so I think we are going to try and get 

one more Member in, and then we will move to recess. 

And with that, we go to the the vice chairman of the subcommittee, the gentleman from Georgia, Mr. Westmoreland, for 5 

minutes. 

Mr. WESTMORELAND. Thank you. I am a recovering builder, so I 

have some interest in this. 

Mr. MacDonald, on the flood insurance, this committee is very 

concerned about flood insurance and the cost of it. Is it true that 

you still, even though just a corner of your property would be in 

a flood plain and the elevation of your house could be 6 feet above 

that, could you still have to have flood insurance with an FHA 

loan? 

Mr. MACDONALD. That is correct, sir. 

Mr. WESTMORELAND. We are going to hopefully try to get that to 

where there is some type of elevation that you would no longer 

have to have it, but I am assuming that the reason they are requiring them to have flood insurance is knowing they would never flood 

and help offset somebody else’s. 

The other question I have for you is on OSHA. Since OSHA, if 

I understand it correctly, has gone to a policy much like the IRS 

where if somebody turns in a safety violation they get a certain 

amount of that fine, have you seen an increase in the OSHA violations in the last couple of years? 

Mr. MACDONALD. We have. We have seen a large increase in 

OSHA inspections in all forms of the construction industry. And I 

wouldn’t want to speculate as to what caused it, but I certainly 

wouldn’t tell you you were wrong. 

Mr. WESTMORELAND. I think that is probably a big cause of it. 

Mr. Holland, did you do a project in Griffin, Georgia? 

Mr. HOLLAND. No, sir. 

Mr. WESTMORELAND. Okay. The preowned homes—the sales were 

down about 8 percent. 

Mr. HOLLAND. Yes, sir. 

Mr. WESTMORELAND. Have you seen a rise in the rental? I know 

you talked about how many units were going to be short. Have you 

seen an increase in your rental occupancy that would kind of counterbalance what the preowned homes have been? 

Mr. HOLLAND. Yes. What we have seen, particularly in our urban 

environments, is that the demand for housing is far outstripping 

our ability to build supply. And that the cost, it is really there are 

three parts of the triangle. 

One part of the triangle is the cost of the actual housing. The 

second part which families have to deal with is the cost of transportation of where the housing is built compared to where their job 

is. And the third part of that deal is really how you handle the inVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
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frastructure costs and who gets essentially tagged with those infrastructure costs. 

And so yes, we have seen a significant increase in the demand 

for rental housing, which is pushing prices up very significantly. 

Mr. WESTMORELAND. Is the impact cost basically sewer, water, 

police protection, or do they just kind of make up some stuff? 

Mr. HOLLAND. Well, how did you say it? I wouldn’t want to dissuade that aspect of things, but it has been noted that many cities 

which are suffering financial burdens because of the meltdown 

have looked to new development and significantly increased their 

impact fees to try and make up for lack of funding in other areas, 

which has pushed up the cost of the new housing. 

And because of the Basel III regulations and the banking regulations an appraisal has to justify those rents. So the entire market 

has to bear that increase before you can qualify for your financing 

to move forward. 

Mr. WESTMORELAND. Thank you. 

Ms. Been, you mentioned 80,000 new affordable homes. Are those 

single family homes or— 

Ms. BEEN. Some are single family. Most are multifamily. New 

York is a multifamily— 

Mr. WESTMORELAND. And then another 120,000? You talk about 

how HPD is leading the mayor’s charge in partnership with your 

sister agencies, developers, tenants, community organizers, elected 

officials, and financial institutions. 

You don’t have time to go through and tell me what each one of 

those do, but being from a rural area of the south, we don’t see 

much of this. What part would the elected officials have in this? 

Would it be zoning, waiving the fees, or what would it be? 

Ms. BEEN. The elected officials in New York, if there is a rezoning required, actually New York is mostly an as of right town. We 

don’t do rezonings for every development. But if there is a rezoning 

required, the elected officials will weigh in as to what that rezoning 

should look like. 

They will weigh in with specific concerns. You need a school to 

offset the people who are coming into this building, those kinds of 

things. So they will express the concerns about, is the infrastructure there to support the development? 

Mr. WESTMORELAND. So does this organization have to pay the 

impact fees as well? 

Ms. BEEN. We don’t have impact fees in New York City. 

Mr. WESTMORELAND. Wow. Well, I am sorry I am out of time, but 

thank you all. 

Chairman LUETKEMEYER. The gentleman’s time has expired. We 

are going to try and squeeze in one more Member quickly so we 

can—not too many people have voted yet, so I think we have 

enough time. 

The gentlelady from New York, Ms. Velazquez, is recognized for 

5 minutes. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Ms. Been, welcome to the committee. In your experience with 

housing development, especially with high-cost cities like New 

York, is it possible to build affordable housing without Federal 

rental subsidies like project-based rental assistance or fair conVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
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struction subsidies like the low-income housing tax credit? Would 

the mayor be able to fulfill his promise of building all these units 

of housing without a Federal involvement? 

Ms. BEEN. No. The Federal contribution is absolutely critical. It 

is critical in two ways. One is that to reach the very lowest-income 

families, the families who are at poverty level making 30 percent 

of AMI, we need a form of rental assistance. 

The rent that those families can pay won’t even keep the lights 

on, truthfully. So we have to have a form of rental assistance and 

that is critical from the Federal Government. 

We do sometimes get cross-subsidies from the very high value 

neighborhoods, but the other place that Federal dollars are so critical is in the poorest neighborhoods where housing is not only providing affordable housing, but it is revitalizing the neighborhood. 

It is stabilizing it. It is providing jobs. And in those poorest neighborhoods, Federal dollars are absolutely essential. 

Ms. VELAZQUEZ. Thank you. 

Mr. Holland, in your testimony you stated that, ‘‘Congress should 

play a key role in addressing housing affordability.’’ I agree with 

you. Can you discuss the importance of Congress increasing funding for affordable housing programs like the Section 8 program? 

Mr. HOLLAND. Yes, absolutely. From the National Multi-Housing 

Council and the National Apartment Association’s standpoint, we 

support full funding for these programs. 

And looking at, again, you have a 9 percent tax credit program 

which has been very successful, but on the tax-exempt bond side 

the 4 percent tax credits have largely gone unused because of the 

lack of credit enhancement given Fannie and Freddie’s situation. 

And so effective separation of the rules, if you will, that are being 

put in place were being put in place because of issues in the single 

family mortgage lending areas. 

The multi-family did not contribute to the financial meltdown. In 

fact, the losses at Fannie and Freddie from the apartment credit 

enhancements or the apartment lending were less than 1 percent 

of their portfolio. 

So almost nothing. But yet the costs to credit enhance the 80/20 

bond program under the current conservatorship are up 300 percent, which has limited our ability to use that tax credit program 

effectively. 

Ms. VELAZQUEZ. Sure. Thank you. 

Mr. MacDonald, almost 2 million households did not form during 

the recession. As the economy improves and hiring returns to normal, how will this pent-up demand affect affordability? 

Mr. MACDONALD. The problem is the pent-up demand hasn’t 

been met because of many reasons. A lot of folks have wanted to 

either move up to a nicer home, buy their own home, or even have 

their own apartment, and they just haven’t been able to for many 

reasons. 

The new mortgage requirements that are being required now are 

so stringent that it is the credit scores have to be so high to qualify 

for a mortgage that it is very hard for the first-time homebuyer 

and the move-up homebuyer. They can’t get to the next level. 

So consequently they are not moving up, and then that has created a backlog, so that when people can’t get the move up homeVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
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buyer then they don’t go to the next level or the next level. And 

you end up with people who are fairly stagnant in place, whether 

they want to be or not. 

And then we all have people in the renter market. There are a 

lot of us who still have our children, grown children living in the 

basement because they can’t figure out how to get their own place. 

And that is not something they want or we want, but— 

Ms. VELAZQUEZ. Thank you. I yield back. 

Chairman LUETKEMEYER. The gentlelady yields back. With that, 

we are going to recess. They tell me it will be somewhere around 

30, 35 minutes, so we appreciate everybody’s patience. 

[recess] 

Chairman LUETKEMEYER. Okay. We will gavel ourselves back 

into session here. I know we have a number of Members who are 

either here or on the way, so we will begin our questioning again. 

And I thank the panel for their indulgence. 

With that, we will recognize the gentleman from Texas, Mr. Williams, who was also an introducer a while ago. Mr. Williams is recognized for 5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

And Mr. MacDonald, thanks again for being here. I appreciate it. 

In your testimony you say that 25 percent of the cost of a new single family home is attributable to government regulation. Why is 

that so important or noteworthy? 

Mr. MACDONALD. That cost has to be passed on to the consumer. 

As a result it directly affects the affordability of the housing. And 

nationally, as I said earlier, 1,000 increases the price of 206,000 

households; 1,000 increases the burden to 110,000 renters. 

And in Texas, with the most significant price out effect, more 

than 18,000 households are pushed out of the market with a 1,000 

increase. 

Mr. WILLIAMS. I have a couple of questions here, and we will just 

go through them quickly. Do you believe that certain building constructions regulations at the local level are required? 

Mr. MACDONALD. Yes, sir. 

Mr. WILLIAMS. On page seven of your written testimony, you 

state that the collective force of the actions taken by these agencies, i.e., CFPB, HFA, regulators implementing the Dodd-Frank 

Act, has also resulted in undue restrictions on the availability of 

mortgage credit to many creditworthy borrowers. That is true, isn’t 

it? 

Mr. MACDONALD. Yes, sir. 

Mr. WILLIAMS. Based on your written testimony, does the National Association of Home Builders believe that the Dodd-Frank 

Act was a mistake? 

Mr. MACDONALD. Yes, sir. There are parts of it that the problem 

is we don’t even have all the parts of it— 

Mr. WILLIAMS. Right. 

Mr. MACDONALD. —written yet. 

Mr. WILLIAMS. But it would be good if we could let competition 

work. That would be the best thing, wouldn’t it? Let the consumers 

decide? 

Mr. MACDONALD. Fair market. 

20 

Mr. WILLIAMS. Mr. Daily, another great Texan I might add, 

right? 

Mr. DAILY. Thank you for the recognition. 

Mr. WILLIAMS. There you go. What makes manufactured housing 

an attractive option for affordable home ownership for consumers? 

Mr. DAILY. The basic availability of manufactured housing is that 

on a cost per foot, it is about half the cost of site-built housing. It 

is built in a controlled environment. And it is primarily delivered 

to rural markets where production builders do not operate because 

they don’t have scale. 

Mr. WILLIAMS. It is a good option for consumers. Describe today’s 

manufactured housing. How does it compare to site-built housing 

or traditional apartments in terms of quality and value? 

Mr. DAILY. The traditional manufactured housing is built to the 

HUD code. And that is a pre-emptive code in the country that has 

been in place since 1974. And it is primarily a performance code 

that works across the country. Modular houses are built basically 

to the same code of the site-built homes. 

Mr. WILLIAMS. You said that the CFPB regulations are harmful 

to consumers, as a lot of us believe. What evidence do you have of 

this harm? 

Mr. DAILY. I think the primary piece of evidence that we have 

is that when we look at the home data, sales of homes less than 

$75,000 2014 to 2013 are down double-digits while other portions 

of the market are doing very well. So what it basically says is those 

people who are the first tranche of buyers really struggle to meet 

all the regulations. 

Mr. WILLIAMS. In other words, another case of those people wanting to help people, but they end up hurting those people. 

The House last year passed a bill that I believe will not only help 

the manufactured housing industry, but also consumers. How will 

the change in H.R. 650 help consumers? 

Mr. DAILY. I think that if the bill ultimately passes, there are 

two components that will be very helpful. The first is the trigger 

rate being raised will allow more lenders to participate in the market because right now there are very few HOEPA loans that are 

being written simply because the lenders didn’t don’t want to touch 

them. 

And then the second is the loan origination, where a lot of our 

buyers are new buyers or older people who have not purchased 

homes in a very long period of time. 

Mr. WILLIAMS. I’m sorry? 

Mr. DAILY. And by allowing our salespeople, who can operate 

under the Dodd-Frank regulations, be more helpful to these people 

I think it can help them to learn more about buying homes and the 

home-buying process. 

Mr. WILLIAMS. And finally, if H.R. 650 becomes law, will consumers lose protections and will they be vulnerable to predatory 

lending, do you think? 

Mr. DAILY. No. I don’t believe any of those things will happen. 

Basically what we are asking for is some slight modifications to the 

current law that we believe will open the market, especially to that 

first tranche of buyers. 

21 

Mr. WILLIAMS. Thank you. And I might add too, Mr. Holland is 

also a Texan. You went to school in Texas, didn’t you? 

Mr. HOLLAND. No. I was born just outside of San Antonio. 

Mr. WILLIAMS. There you go. 

Mr. Chairman, I yield my time back. 

Chairman LUETKEMEYER. The gentleman yields back. 

We now go to the gentleman from Pennsylvania, Mr. Rothfus, for 

5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. And again, I thank the 

panel for bearing with us during our break for the votes. I want 

to touch base, Mr. Holland, go back to what you were talking about 

earlier in response to some of the questions about the regulation. 

And I think you said that 40 percent of the cost of multifamily 

is attributable to rules and regulations? Do you recall that? 

Mr. HOLLAND. Yes, sir. 

Mr. ROTHFUS. We are here looking at things from a Federal perspective. I am wondering if you can identify perhaps a Federal regulation that is responsible for driving up cost or alternatively what 

would be the single greatest Federal barrier to development? 

Mr. HOLLAND. The greatest? 

Mr. ROTHFUS. Either a Federal regulation—again, I am trying to 

look at things that we can be addressing from a Federal perspective. A lot of it—you mentioned zoning as an issue for, I think, the 

coastal cities. That is pretty much a local. 

Mr. HOLLAND. If you look at effective housing, there are three 

parts of the triangle. One part is actually the cost of the building 

of the housing unit. The second aspect is how far that housing unit 

is from someone’s job and their activities, so that is transit. The 

third portion of that is infrastructure. 

And so we have to solve all three aspects in order to build because the local jurisdictions add the infrastructure costs in forms 

of impacts to our requirements. So we have to get active zoning. 

Then we have to pay for the infrastructure. And then we have to 

look at what the cost of transportation is for our consumer. 

And so one of the things we would love to have an opportunity 

to do is to have a task force to look at all three because the cost 

of building, for instance, another freeway to the next subdivision on 

the edge of town is dramatically more than the cost to increase the 

density, if you will, to build a high rise in an urban environment 

where people can walk to work, or around the light rail or transit 

node where they can use public transportation. 

And so we are looking for an effective voice, if you will, so that 

we can look at the whole part of the housing criteria. 

In the Federal question, one of the things that I cited earlier was 

the lack of credit enhancement for the tax exempt bond program 

and the tripling of that cost with Freddie and Fannie in conservatorship. 

The number of apartments that were built after the 80/20 bond 

program was launched in the early 1980s, which was a very difficult time, took starts from 200,000 units to 600,000 units over 3 

years. 

That is the kind of solution-based outcome that we feel like a 

task force that looked at all three of these components could help 

with and could make a very significant difference in. 

22 

Mr. ROTHFUS. If I could go to Mr. Daily, you had talked a little 

bit about the HUD code that was enacted in 1974, last amended 

15 years ago. It would seem that addressing these rules which 

apply to all manufactured homes nationwide would go a long way 

towards improving the affordability of manufactured homes. 

Which specific aspects of the HUD code are most harmful to your 

business as well as consumers? 

Mr. DAILY. I think the first aspect is that we really need to get 

HUD to cooperatively work with our consensus committee before 

they issue governance because every time they issue governance 

and we really haven’t had full discussion or conversation with 

them, it usually adversely impacts the cost of our homes. And in 

our business, every 100 makes a significant difference. 

I think that the next opportunity is to really work on the HUD 

code and modernize it and that in itself will allow us to change the 

way the elevations of our homes appear if we can take them off the 

chassis ultimately and will also help the perception of the homes. 

Mr. ROTHFUS. Mr. MacDonald, you list in your testimony some 

Federal agencies that have besieged the home-building industry, 

namely the Occupational Safety and Health Administration, the 

EPA, FEMA, and the Department of Labor. 

You also specifically mentioned the Waters of the U.S. rule as an 

especially damning regulation that could increase housing cost. 

Could you explain your concerns about the impact of the Waters of 

the U.S. on home builders and your customers? 

Mr. MACDONALD. Surely. The way the Waters of the U.S. is described is it takes every mud puddle, creek, the soil out in front of 

your driveway, and makes it a tributary of the waters of the 

United States, which would require you every time you develop a 

lot or a single family house you will have to get a LOMR–CLOMR 

review, engineering review by the Corps of Engineers to build on 

every single individual lot. It would be simply devastating in both 

time and money. 

Mr. ROTHFUS. I yield back, Mr. Chairman. 

Chairman LUETKEMEYER. Mr. Holland, would you like to answer 

that? 

Mr. HOLLAND. I can speak to that. We had one project that was 

a great example of that in Hillsboro, Oregon, where we had water 

flowing out of a culvert and into a culvert across a two-acre parcel. 

And the Corps took the position that it was a navigable waterway. 

And that entire 21⁄2 acre parcel became unbuildable because of 

that. 

We would have put 250 apartments on that parcel had that regulation, coming out of a culvert and into a culvert. If they hadn’t 

taken the position that those were waters of the USA and that was 

a navigable waterway. And it only had water in it during the 3 or 

4 wettest months of the winter. 

Chairman LUETKEMEYER. Could you not enclose that area? 

Mr. HOLLAND. Excuse me, sir? 

Chairman LUETKEMEYER. Could you have enclosed the area? Go 

from culvert to culvert and put a pipe in there that covered that 

entire area? 

Mr. HOLLAND. Then we would have been locked up. 

Chairman LUETKEMEYER. Okay. 

23 

Mr. HOLLAND. Because we would have been building in a—or we 

would have unauthorized deal of wetlands and devastating work in 

the Waters of the USA. I would be wearing stripes. I don’t look 

good in stripes. 

Chairman LUETKEMEYER. Okay. I thought maybe you could work 

with the EPA, but evidently you couldn’t, no? 

Mr. HOLLAND. The application process takes a year-and-a-half. 

Chairman LUETKEMEYER. Okay. Thank you. 

The gentleman from Kentucky, Mr. Barr, is recognized for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

Mr. Holland, I will start with you. I appreciated your testimony 

about Section 8 reform, and I am particularly interested in how we 

can effectively deliver Section 8 vouchers in a more cost-effective 

way based on the existing allocations that we have. 

And you talked about three-way leases and repetitive unit inspections, resident eligibility certification and other regulatory paperwork. 

Can you amplify with specificity on the reforms that you would 

suggest to us on how to stretch those Section 8 dollars so that we 

don’t have the waiting list that we have? 

Mr. HOLLAND. Yes, absolutely. One is clearly streamlining the 

process, but another key aspect is confidence in the process. From 

a private sector standpoint, if you are going to count on a revenue 

stream, you need to know it is funded. 

And notwithstanding the financial challenges that happened in 

2008 to 2012 but sequestration and whether they were going to be 

extended or not extended, all of that uncertainty for owners who 

have to rely on making their payment on the first is really challenging. 

And so one is confidence that the program you are going to sign 

up for is going to be there so that you can allow those units to be 

rented. Because if you don’t have that confidence and that revenue 

stream gets interrupted, you will lose your property. 

Mr. BARR. Yes, and I think that goes without saying, but I am 

particularly interested in the regulatory issues. So what are the— 

because we all know that the reliability and certainty is— 

Mr. HOLLAND. Yes, sir. 

Mr. BARR. —an impediment, but what about the, for example, 

the streamlining of the inspection process, the paperwork, the 

three-way lease? 

Mr. HOLLAND. We support all of that, but for instance one is if 

you had a HUD inspection over the last 24 months, we think that 

you should allow somebody to move in right away without having 

to wait and re-inspect every unit every time, et cetera. 

And so, a very thoughtful business-like approach to if it has been 

inspected, if there is a record of compliance, et cetera, allowing 

those to move forward without having very significant delays in 

those processes, which just reduces the income for everybody in the 

process. 

Mr. BARR. Again, we do have limited resources so that makes 

sense. 

And let me move now to Mr. Daily. I am a proud co-sponsor and 

supporter of H.R. 650, and I think it makes a lot of sense, particuVerDate Nov 24 2008 17:08 Jun 23, 2017 Jkt 023889 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\23889.TXT TERI
24 

larly for my constituents in rural Kentucky and access to credit for 

an excellent affordable housing option for them, manufactured 

housing. 

Can you describe for those colleagues of mine who couldn’t bring 

themselves to support this effort, explain to them and on the record 

why it is inappropriate to classify manufactured housing small 

loans as high cost under HOEPA? 

Mr. DAILY. The fact of the matter is that a lot of the people who 

want to buy a manufactured house, number one, they live in a 

rural area. Number two, their incomes are modest. 

Their incomes can fluctuate based on what they do for a living. 

They work in agriculture. They work in a plant. So it is very difficult for them to check all the boxes to get a loan. 

Mr. BARR. So when the Bureau says that your industry is predatory, what is your response? 

Mr. DAILY. I would say we are not predatory at all. Basically, 

what we are trying to do is match people up with houses that make 

sense for them that they can afford. 

Mr. BARR. Yes. And one of the things I have said is that they 

are going to protect people right out of their homes. This is an affordable housing option, and as you noted that the decline in manufactured home loan origination— 

Mr. DAILY. Right. 

Mr. BARR. —is evident as a result of these one-size-fits-all regulations. So I think that the mission of consumer protection is being 

turned around on its head here. 

Mr. DAILY. I think there is an opportunity to be more flexible 

and for us to follow the rules with some more flexibility. And I 

think that the consumer will ultimately benefit if we can do that. 

Mr. BARR. And if manufactured housing sellers are deemed loan 

originators, even though they are not receiving any compensation 

for the sale, other than just for selling the home and not for financing the loan, explain the appropriateness of that? 

Mr. DAILY. The concern that we have with regards to origination 

is that the industry is committed to follow the law, number one. 

And by being committed to follow the law it is most appropriate 

that we really understand what our customers need in terms of 

size of house and what they can afford. 

And the way that the law reads today, we basically can show 

them the home and then what we have to do is give them a list 

of possible lenders. And they are not experienced homebuyers so 

what happens is we lose customers that become disenfranchised. 

The process is just too difficult for them. 

We believe that we can follow the law that will not be steering 

and it is up to the government to regulate to make sure that people 

aren’t steering. 

Mr. BARR. And these are fixed-rate, fully amortized, no balloons? 

These are pretty standard— 

Mr. DAILY. Yes, these are typically chattel loans, right. 

Mr. BARR. Right. Exactly. Well, I encourage you to stick with it 

and hopefully our friends in the Senate are listening to your testimony. 

Mr. DAILY. Thank you. 

Mr. BARR. I yield back. 

25 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we will go to round two. 

And the ranking member, Mr. Cleaver, has some additional questions, so he is recognized for 5 minutes. 

Mr. CLEAVER. Thank you. Mr. Barr, the Senate does not listen 

to anybody. 

[laughter] 

I move that we close the Senate and give— 

[laughter] 

Professor Dickerson, one of the concerns—this is somewhat personal—with children, young adults aged 24 to 35 are not buying 

homes at the same level they did when I was in that same age 

bracket. Actually, I owned a home when I was 26. 

And I know there are a lot of factors in probably the student loan 

payments and so forth. I am interested in any other factors that 

you believe are inhibiting the purchase of homes by the 

Millennials. And the second part of it, maybe for everyone, is what 

can we do to remedy this? 

Ms. DICKERSON. Another thing that inhibits it are stagnant 

wages. I don’t know that there is necessarily any regulation that 

you all have in place or could pass that would deal with the issue 

of stagnant wages, but this is a problem that has been going on for 

30 years where the income for the, whether you want to say top 

1 percent or top 5 percent has been going up and income for pretty 

much everybody else has remained stagnant or has declined. 

The other thing that has happened with Millennials is they are 

not forming households at the same rate that Boomers did. They 

are delaying marriage. They are delaying having children. 

And the primary trigger for a young couple to decide they want 

to become a homeowner is, well, first they move out of the parents’ 

basement. They marry. They have children and then they want to 

buy a home. And in many instances it is because of the school, the 

schooling issue. 

Mr. CLEAVER. How do you get them out of the basement? 

[laughter] 

I’m sorry. I won’t go there. But that is troublesome. There probably isn’t one legislative thing we could probably do and drop the 

interest rates. I think it is almost a sin that we are making money, 

the Federal Government is making money off of our college students after graduation. 

The rental housing that is being created, or much of it, is luxury 

units. And I am assuming that there is some kind of trickle-down 

theory that would take care of the luxury apartments and eventually will take care of the low to moderate-income. 

Mr. Daily, do you have any— 

Mr. DAILY. Specifically on rental? 

Mr. CLEAVER. Yes. 

Mr. DAILY. There is some rental activity that takes place in manufactured housing communities today. And it is just perking along. 

There have been some increases that I think seniors feel some 

pressure on, but generally speaking, I think it is operating quite 

well. 

Mr. CLEAVER. Is it easier to do low- to moderate-income or luxury? 

26 

Mr. DAILY. As an industry, we typically do not build rental properties, luxury rental properties. We are primarily single family 

homes. 

Mr. CLEAVER. Mr. MacDonald? 

Mr. MACDONALD. My company typically builds workforce housing 

in smaller communities. We utilize the low-income housing tax 

credit program for a good amount of that. And then we also build 

conventional apartments, but we just do a very good job of trying 

to keep our costs in line so that we can function in those markets. 

But I will tell you it is increasingly hard to do. And many of the 

problems that we encounter are the problems with Fannie and 

Freddie being basically out of the business, being slow to be able 

to react. 

So we end up having to go to getting HUD-insured mortgages in 

the Section 221(b)(4) program and try to work through that. Then 

we encounter other issues with HUD that layer on more expenses 

on top of that. 

So it is kind of a Catch-22 that we keep running into. We think 

we get one place fixed and then another one pops up. It is like 

whack-a-mole. It is just you can’t quite get your arms around all 

of it at the same time. 

But I think there is probably a trend to do more workforce-type 

housing than luxury housing. I am seeing that in the marketplaces 

now. It is not happening in the big cities. I am talking about in the 

smaller communities, mid-sized cities and the smaller cities. 

Mr. CLEAVER. Ms. Been? 

Ms. BEEN. Can I weigh in on that? We see actually a lot of the 

opposite. We see the trickle up that homes are built for really 

workforce, middle-income folks and then because the demand for 

housing, especially in urban areas is so great, we see that housing 

actually being rented by wealthier renters rather than the renters 

that it was intended for. 

So and the trickle-down theory, at least in New York City, really 

hasn’t panned out because the homes that are built for—on the luxury market have all kinds of restrictions in terms of how much income you have to have in order even to rent that apartment that 

it becomes very difficult for it to sift down in any way except over 

decades. 

Mr. CLEAVER. Yes, my time has expired. My assumption was just 

that if we are leaving low-income tax credits—if we are leaving 

money on the table, if builders are leaving money on the table instead of going through low-income tax credits, the assumption is 

that they would automatically try to—they are moving towards luxury. 

I yield back, Mr. Chairman. 

Chairman LUETKEMEYER. The gentleman yields back. 

Mr. Barr from Kentucky is recognized for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

And back to Mr. Holland really quickly. You spent a good bit of 

time in your testimony talking about ‘‘not in my backyard’’ the 

‘‘NIMBY’’ issue and local zoning and land use laws. And Mr. 

Rothfus was touching on this a little bit, but if you could expand 

on what Federal role there is, if any, to encourage reforms to local 

27 

zoning laws that would help facilitate the construction or rehab of 

affordable housing? 

Mr. HOLLAND. Let me just touch on the NIMBY question, which 

is if you imprint—in the West Coast cities, for instance, I am going 

to—let me just take a step back. 

We have 10 gateway cities in the United States where particularly in the areas—Austin, Texas, would be one, Portland, Oregon, 

Southlake Union in Seattle where you have very significant increases in technology-related jobs. 

And what is happening is the kickback to it building more density is that people are using the zoning land use deal to tie up sites 

from 5 to 10 years. We are building one site in downtown Los Angeles where it took 5 years to get the zoning. They were sued because it was too dense. That took 2 years to resolve. 

Then they were sued because it wasn’t dense enough. That took 

another 2 years to resolve. And the gentleman who was a 30-year 

land developer said, ‘‘I am done.’’ And we are finished. We just got 

that project finished. So from a Federal standpoint this is I-73, and 

the question is, will 23 be enough? 

Now, if you took a small fraction of those transportation dollars 

and you said we are going to build a light rail or we are going to 

build transit hubs or we are going to provide access to the urban 

core, but it came with a requirement that said if you are going to 

take these transportation dollars you need to be able to have as of 

right zoning so you can put residential density around the transportation nodes and in the urban core. 

That triangle between infrastructure, transportation, and housing has to be all three. And many cities want to do the right thing, 

but the local politicians are concerned about getting kickback from 

their constituents. 

But in order to get transportation dollars, if you had to have as 

of right zoning around 5 percent of the land, the urban core and 

around the transit corridor, we could build significant amounts of 

housing that would then provide an adequate supply so you are not 

creating economic dislocation. 

Because in those job centers in those gateway cities, those new 

jobs pay a hundred grand or thereabouts, very top, and they economically dislocate everybody else within that sphere. And that 

ripple down happens because we are not building the density of 

housing and a quantity of housing in those key submarkets. 

Mr. BARR. Thank you. 

And Mr. MacDonald, I didn’t get a chance to talk to you, but I 

always enjoy talking to Bob Weiss in Kentucky and the Home 

Builders— 

Mr. MACDONALD. Good man. 

Mr. BARR. —Association in Kentucky and in Lexington, the largest City in my district, Todd Johnson. They do a great job representing our home builders. They talk about that labor shortage 

a lot. 

In fact, the Home Builders Association of Lexington had to start 

their own privately funded building institute for workforce development. And so we know that is a big issue. So if you want to amplify 

that testimony a little bit, and tell us if there is anything that Congress can do to help there? 

28 

And secondly, talk a little bit more about Davis-Bacon and also 

Waters of the United States and any other regulations and the 

added cost to the home purchaser as a result of those regulations? 

Mr. MACDONALD. Yes. So we have a huge problem with labor 

right now. In Texas, for example, the average age of an electrician 

is 61 years old. The average age of a plumber is 59 years old. A 

framing carpenter is 57 years old. So what we are doing is we are 

aging out of all the trades. 

We have made a mistake in the country in that we have somehow told everybody that you are a failure if you don’t go to college. 

And you are a failure if you don’t end up with large student debt. 

Mr. BARR. And these can be really good jobs. These can be— 

Mr. MACDONALD. And— 

Mr. BARR. —well-paying jobs. 

Mr. MACDONALD. And what ends up— 

Mr. BARR. And the demand is there. 

Mr. MACDONALD. And we are talking about $50, $60 an hour 

jobs. We are not talking about jobs that—and that is not what happened. And that is not accounting for the guy who may start his 

own company and even do better than that. We are talking about 

someone who just works the trades. 

And that is an extreme issue in the country that we need to figure out how to overcome. The Home Builders Institute, we are the 

largest trainer of people in trades. We work in prisons, everywhere 

else trying to get people to understand better about the trades 

issue. 

Back over to Davis-Bacon for just a second. The problems of 

Davis-Bacon there, for example, are like the new electronic reporting program that Davis-Bacon uses. It is new and it is very difficult. 

I have a subcontractor who has been working with me. He is a 

stone mason, Jose Guerrero. He is from Lytle, Texas. He has been 

with me for 12 years. He did the masonry work on my personal residence, and does all of our projects all over the State of Texas. 

He travels great lengths sometimes to get to these projects. It is 

him, his brothers, and some of their sons. They do beautiful work. 

They are craftsmen in the first order. 

I am building a project 30 miles away from his home in Seguin, 

Texas, and I can’t use him because we are doing a (d)(4) DavisBacon property there. 

And Jose is a wonderful guy, but he doesn’t understand computers well enough to get online and follow the Davis-Bacon reporting systems required by HUD. And so he has been pushed out of 

the market. It is a gigantic unintended consequence for a minority 

contractor to lose business. 

Mr. BARR. And my time has expired, but lead paint is also something that I hear about from my remodelers. 

Mr. MACDONALD. Yes, sir. 

Mr. BARR. I yield back. Thanks for your indulgence, Mr. Chairman. 

Chairman LUETKEMEYER. Great questions. The gentleman yields 

back. 

Let me just wrap up with a couple of questions for everybody. 

One of the questions I started out with a while ago was what is 

29 

the most burdensome rule or regulation? Our hearing today is on 

future housing, government regulations and the high cost of housing. 

Can each one of you give me the one rule or regulation that is 

most burdensome to you that you think could help alleviate or help 

improve or streamline or whatever it might be, housing general? 

Professor Dickerson, do you want to—we were busy on the other 

end over here. That may not be your area of expertise, but I am 

sure you have a lot of background on that as well. 

Ms. DICKERSON. Well, I guess I would. And it is not a Federal 

rule— 

Chairman LUETKEMEYER. Yes, Federal. Yes. 

Ms. DICKERSON. —or regulation but it does relate to the zoning 

issue. And I will respond to your question by mentioning that in 

1926 the Supreme Court said that it is okay to segregate single 

family housing and apartments and keep them completely apart. 

In that opinion, and I think that opinion now controls a lot of 

both State and local zoning theories, apartments and renters were 

referred to as ‘‘parasites.’’ 

And I think that as a country we have to get to the point that 

we recognize that if we are going to resolve the affordable housing 

crisis it is going to be a mixture of high end, mid-end, housing for 

the poor, and that we have to be willing to accept that in some instances people aren’t going to be happy that certain types of affordable housing may be in their areas. 

Chairman LUETKEMEYER. I think it is important, and I asked the 

question I think of Ms. Been a while ago when I was talking also, 

but I viewed the Hurricane Katrina rebuild, and a lot of their rebuilding is done in mixed-use. 

You have a lot of folks who are renting who are able to pay it. 

You have commercial users in the building. You have subsidized 

renters. So by using that sort of a model it enables builders to do 

a better job of building and you can actually build communities 

around that versus just apartment after apartment after apartment. 

And it seems like it works better. I don’t know what your 

thought process is. You see in a little bit different spectrum perhaps what is going on. 

Ms. DICKERSON. It not only works better but it is sort of consistent with the point I have been making that we have to think 

outside the box. 

So simply because it is not a form of affordable housing that we 

have always used, simply because it may require us to think differently about what the Millennials want for housing? What do we 

need for working families? What do we need for people who live in 

a rural community? 

One example that I will use is the City of Memphis, and I am 

only familiar with it because first, I am from Memphis, and second, 

I was there last week for a conference on urban blight. Most of the 

affordable housing units that have been created in the City of 

Memphis have been mixed-use and mixed-income. 

And so I think that is a great way for a lot of cities to sort of 

deal with the issue of affordable housing and also to respond to 

some of the needs of Millennials who want to have everything 

30 

around them. They don’t want to have to get in the car to drive 

to get everything. 

Chairman LUETKEMEYER. Very good. 

Mr. MacDonald, would you like to answer the question that I 

originally posed here? We kind of got off— 

Mr. MACDONALD. Certainly. 

Chairman LUETKEMEYER. —but I appreciate that, Professor 

Dickerson. 

What is the one rule that—whatever the spectrum that could 

help you be able to better provide housing for especially low- and 

middle-income folks? 

Mr. MACDONALD. The problem is it is a bundle of sticks. It is the 

straw that broke the camel’s back. 

Chairman LUETKEMEYER. Okay. 

Mr. MACDONALD. And it is just one on top of another on top of 

another on top of another. And yes, we could go and we could pull 

off one. We could say we could fix the Waters of the U.S. issue. We 

could fix the 100-year floodplain issue with HUD. I could go 

through the crystal silicon sand issue with the EPA. 

All of those are wonderful things for us to be able to unload, but 

if you take one and all the rest of them stay, you haven’t fixed the 

problem, sir. We have to address all of them. 

I would love to be able to give you a silver bullet and say get that 

one, and I can’t do it because it is the whole bundle of sticks. 

Chairman LUETKEMEYER. What we are looking at doing is trying 

to find that bundle of sticks. We did H.R. 3700, which was a good 

step. 

And I think it addressed—somebody had a question a while ago, 

I think Mr. Holland. You made a comment. We actually fixed your 

problem with regards to— 

Mr. HOLLAND. Fix the dwelling re-inspections. 

Chairman LUETKEMEYER. Dwelling inspections, yes, that is what 

it was. And then we actually fixed that problem with H.R. 3700. 

So we are listening and that is why we are having the hearings 

here today. 

Ms. Been? 

Ms. BEEN. I really appreciate what you did in H.R. 3700, which 

is a huge step forward for those of us in cities. But I would say 

that, again, one of the major barriers that we have to provide affordable housing is the rigidity of the tax credit rules. Having income averaging, which would allow us—it would reduce costs because we go through a lot of tenants to find the ones in the haystack who exactly fit to the income level. 

We limit the ability of the City to use the tax credit program for 

preservation because you have existing tenants. And if one of them 

is at 65 percent of AMI, then you have problems in using the tax 

credit for preservation. 

So that alone could make a huge difference in the way in which 

we could leverage the tax credit program to really provide exactly 

the mixed-income housing that we want. 

We don’t want everything at 50 to 60. We want that range because it is better for the neighborhood. It is better for the families. 

So having that flexibility would make a huge difference. 

31 

Chairman LUETKEMEYER. Great suggestion. Thank you very 

much. 

Mr. Daily? 

Mr. DAILY. I mentioned to Representative Barr about DoddFrank, HOEPA and the origination. Those are two of the primary 

obstacles we have today. But I think the bigger obstacle is secondary funding so that more people can enter the market, because 

we are the form of housing that is not subsidized. 

And so we are truly trying to serve working Americans who need 

a new home. And if we had availability of more funds, I think we 

could do a much better job. 

And the other fact is that we primarily serve rural markets. And 

when you go through rural America today, you see the state of 

housing, and it has deteriorated significantly. And I happen to go 

across the country on a regular basis on rural roads and so it is 

real. And those people deserve better. 

Chairman LUETKEMEYER. When I left home and went off to college, my first housing rental was a mobile home. Then after I got 

out of school, my first home was a mobile home. And once I got 

married, my first home was a mobile home. 

And my wife decided we needed to go someplace else, to do something else. So we moved again. But I have had interesting experiences with it, so thank you. 

Mr. Holland? 

Mr. HOLLAND. Yes, sir. Thank you. 

Chairman LUETKEMEYER. How would you address that question? 

Mr. HOLLAND. Yes, sir. Thank you very much. I would address 

that much like Mr. MacDonald did. We look at Davis-Bacon wages. 

In wood frame construction, they add about 25 percent of the cost 

of the buildable cost from that standpoint. 

You look at some of the new energy regulations and the energy 

regulations don’t have a payback for 30 years. It is hard to say that 

you shouldn’t have an energy-efficient house. 

But if it is a 30-year payback, and it raises the effective cost to 

the consumer, is it really something that is going to add to from 

that standpoint? 

The question of Waters of the USA, et cetera, all of those, the 

regulations under Dodd-Frank for apartments, we weren’t part of 

the problem. And so you didn’t have the losses that Freddie and 

Fannie in the apartment sector, but because of the regulations of 

Dodd-Frank and the requirements in the risk-based capital, it is 

significantly increasing the cost of our construction loans. And also 

Freddie and Fannie spreads are increasing because of Dodd-Frank 

and Basel III from that standpoint. 

The one thing I would throw out to you is in the western United 

States, particularly in California, the discrimination of many cities 

against apartments is one of the things that is significantly increasing the cost. 

Cities want office buildings because they have the jobs and they 

get the property taxes they want; retail because they collect the 

sales tax. But they play a game of beggar thy neighbor where we 

don’t want those people living in our town. 

And it is really a problem because you have to add the transportation and getting approvals in those cities to be able to build 

32 

apartments and to be able to allow the workforce who is working 

in that town to be able to live in that town at all. Just getting permission to build would be a dramatic improvement. 

And so one of the things we would love to see is some type of 

guidelines where cities needed to have as of right zoning or zoning 

availability for their workforce so this game of pushing the apartments in some other place wouldn’t be able to do that. 

Chairman LUETKEMEYER. So are you advocating, say, would a 

mixed-use— 

Mr. HOLLAND. Absolutely. 

Chairman LUETKEMEYER. —structure work there? You are looking to try and appease the city fathers so you come in and say, we 

will build a mixed-use building where we can have some apartments as well as commercial use stuff in there? 

Mr. HOLLAND. If we were to have a regime where we could build 

mixed-use around transit, because then families with limited 

means wouldn’t need a second car. That would save them on average $9,000 a year to be able to use public transportation. 

We would produce the housing. We would allow them to use effective use of the infrastructure or the transit. And the only reason 

most people need a second car is so that the second spouse can get 

to work. 

So if you can have the density around the transit or in the urban 

core, it is going to significantly improve the choices and the cost 

from a development standpoint. 

Chairman LUETKEMEYER. Very good. Well, I think we have exhausted all of the questions that we have for you. And I certainly 

appreciate everything that you have presented to us today. You 

have been fantastic witnesses. We certainly appreciate your patience with us. 

Mr. CLEAVER. Mr. Chairman? 

Chairman LUETKEMEYER. Do you have another one? 

Mr. CLEAVER. No. I would like to enter into the record this document entitled, ‘‘Enterprise Community Partners Statement for the 

Future of Housing in America.’’ 

Chairman LUETKEMEYER. Without objection, it is so ordered. 

Anything else? 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

And with that, this hearing is adjourned. 

[Whereupon, at 4:27 p.m., the hearing was adjourned.] 

(33) 

A P P E N D I X 

March 22, 2016 

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