U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

24–066 PDF 2018

THE FUTURE OF HOUSING IN 

AMERICA: A COMPARISON OF 

THE UNITED KINGDOM AND UNITED 

STATES MODELS OF AFFORDABLE 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 

MAY 12, 2016 

Printed for the use of the Committee on Financial Services 

Serial No. 114–86 

( 

(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: 

May 12, 2016 ..................................................................................................... 1 

Appendix: 

May 12, 2016 ..................................................................................................... 37 

WITNESSES 

THURSDAY, MAY 12, 2016 

Beider, Harris, Professor, Community Cohesion, Centre for Trust, Peace and 

Social Relations, Coventry University, United Kingdom .................................. 6 

Bledsoe, Thomas A., President and Chief Executive Officer, Housing Partnership Network ........................................................................................................ 4 

Gentry, Richard C., President and Chief Executive Officer, San Diego Housing 

Commission ........................................................................................................... 11 

Lee, Jaime Alison, Assistant Professor of Law, and Director, Community 

Development Clinic, University of Baltimore School of Law ............................ 10 

Popkin, Susan J., Senior Fellow, and Director, Neighborhoods and Youth 

Development Initiative, Metropolitan Housing and Communities Policy 

Center, Urban Institute ....................................................................................... 8 

Russ, Gregory P., Executive Director, Cambridge Housing Authority ................ 13 

APPENDIX 

Prepared statements: 

Beider, Harris ................................................................................................... 38 

Bledsoe, Thomas A. .......................................................................................... 52 

Gentry, Richard C. ........................................................................................... 61 

Lee, Jaime Alison ............................................................................................. 82 

Popkin, Susan J. ............................................................................................... 98 

Russ, Gregory P. ............................................................................................... 110 

(1) 

THE FUTURE OF HOUSING IN 

AMERICA: A COMPARISON OF 

THE UNITED KINGDOM AND UNITED 

STATES MODELS OF AFFORDABLE HOUSING 

Thursday, May 12, 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 10:02 a.m., in room 

2128, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Luetkemeyer, Royce, Garrett, 

Pearce, Posey, Stivers, Barr, Rothfus, Williams; Cleaver, Velazquez, Clay, Green, Beatty, and Kildee. 

Ex officio present: Representative Waters. 

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: 

A Comparison of the United Kingdom and United States Models of 

Affordable 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. 

We have spent a great deal of time over the last year-and-a-half 

looking at the state of housing in America, examining the current 

environment and attempting to identify opportunities to serve more 

people in need. 

From a 30,000 foot level, we need to assess whether or not our 

system is equipped to address needed reforms. Can we enhance the 

quality of services delivered? And can we improve the outcomes 

and livelihoods of residents? 

These aren’t new conversations. And the affordable housing crisis 

isn’t unique to the United States. Today we will look outward beyond our borders to examine innovative methods and programs 

that aim to help more people and attract greater private and nonprofit sector participation. 

2 

Under the bold leadership of Prime Minister Margaret Thatcher, 

the U.K. was able to pursue transformative housing policies that 

altered the course of their nation’s welfare state. Prime Minister 

Thatcher, and Prime Minister Blair after her, envisioned a system 

that would facilitate a greater role for the private sector and affordable housing, including a right-to-buy policy which would give 

housing tenants the opportunity to purchase their homes over time. 

The U.K. housing model also focused on the transfer of government-owned housing to nonprofit organizations, which in turn 

helped to expand the capacity of nonprofits to serve communities 

across Great Britain. 

There are pros and cons to each aspect of these and other policies 

instituted in the United Kingdom. And we will use today’s hearing 

as an opportunity to examine which aspects, if any, might work in 

the United States. 

As a participating subcommittee of Speaker Ryan’s Task Force 

on Poverty, Opportunity and Upward Mobility, we have been 

charged with exploring innovative solutions to combat poverty in 

America specifically regarding housing. 

It is my hope that today’s assessment of an alternative housing 

model will serve as a means of self-reflection on how our own Nation can approach affordable housing and, more importantly, how 

the United States can do better. 

The topic for today’s hearing is one of great interest and great 

complexity. To ensure that as clear a picture as possible be painted 

we have two public housing authority executives from different 

markets, two academics with extensive backgrounds of housing in 

both nations, and two researchers whose efforts to produce quality 

reports helped to inspire today’s hearing. 

The subcommittee thanks you all for participating today. 

While all six witnesses before us represent varying perspectives, 

we all believe in the human desire for self-sufficiency, the pursuit 

of a better life, and a place to call home. 

This hearing is not intended to provide us with a complete picture of what the future of public housing could or should look like 

in America, but it is our hope that today’s conversation will help 

to spur additional discussions on potential solutions to the current 

state of housing in America. 

I look forward to what promises to be a robust conversation. 

And 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. Thank you, Mr. Chairman. 

And I would like to thank the witnesses for contributing your 

valuable time to us today. 

This hearing, I think, provides us with a unique opportunity to 

compare the housing system of the U.K. with our own. 

With a rental affordability crisis looming, it seems to me that we 

must take a look at everything possible to look at innovative ways 

in which we can move housing into the 21st century for the American public. And I think that it is crucial that this subcommittee 

continue to assess ways to ensure that our constituencies have access to safe and affordable homes. 

3 

This hearing focuses on two reports: one entitled, ‘‘Lessons of the 

International Housing Partnership,’’ published by the Housing 

Partnership Network (HPN); and the other entitled, ‘‘Atlantic Exchange: Case Studies of Housing and Community Redevelopment 

in the United States and the United Kingdom,’’ published by the 

Urban Institute. 

We have witnesses from both of these organizations as well as 

other interested stakeholders. 

Now, here in the United States, many of us encourage home 

ownership opportunities for Americans of all walks of life. We also 

provide public housing and vouchers for our most economically vulnerable populations. 

And I would like to thank the chairman, Chairman Luetkemeyer. 

On our recent trip to London we did meet with officials from the 

public housing sector of their government. It was a very good meeting and provided us with some stark contrasts between the U.S. 

and the U.K. 

The HPN explores two Margaret Thatcher-era policies: the right 

to buy, which gave tenants the chance to purchase their units at 

a reduced rate; and the large-scale volunteer transfer program 

which transferred public housing, or what those in the United 

Kingdom call council housing, to nonprofit associations. 

Both of these programs had a remarkable impact on the housing 

landscape of the United Kingdom as council housing was sold and 

transferred to the private sector. Much like the U.K., this country 

is struggling with the best way to preserve and create affordability 

with regard to housing units. 

As we undertake this process, it is important to remember that 

much of our public housing is targeted to the most vulnerable: the 

elderly; the disabled; and the extremely low income. 

It is also important to emphasize the significance of tenant protections, including the long-term preservation of affordable rent, 

one-to-one replacement, and strong tenant engagement. 

I look forward to hearing from the witnesses and becoming dialogical as we proceed with the hearing. 

Chairman LUETKEMEYER. Thank you, Mr. Cleaver. 

And with that, we will begin our testimony. Today, we welcome 

the testimony of Mr. Thomas Bledsoe, president and CEO, Housing 

Partnership Network; Dr. Harris Beider, professor of community 

cohesion at Coventry University in the United Kingdom; Ms. Susan 

Popkin, senior fellow, and director of the Neighborhoods and Youth 

Development Initiative, Metropolitan Housing and Communities 

Policy Center at the Urban Institute; Ms. Jaime Allison Lee, assistant professor of law and director of the Community Development 

Clinic at the University of Baltimore School of Law; Mr. Richard 

Gentry, president and CEO, San Diego Housing Commission; and 

Mr. Greg Russ, executive director, Cambridge Housing Authority. 

Each of you will be recognized for 5 minutes to give your oral 

presentation. And without objection, your written statements will 

be made a part of the record. 

Mr. Bledsoe, you are recognized for 5 minutes. Welcome. 

4 

STATEMENT OF THOMAS A. BLEDSOE, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, HOUSING PARTNERSHIP NETWORK 

Mr. BLEDSOE. Thank you very much. Good morning, Chairman 

Luetkemeyer, Ranking Member Cleaver, and other members of the 

subcommittee. It is a great pleasure to be here and I appreciate the 

opportunity to submit not just the testimony, but also the report 

that we provided to Congress. 

I am Tom Bledsoe, the president and CEO of the Housing Partnership Network. We are a membership organization of a hundred 

of some of the top nonprofits in the United States. 

I am not going to go into the great depth that I went into in my 

testimony given the time, but I did want to make five points that 

I think would be kind of helpful and important. 

First, a little bit of background on myself and the kind of organization that I run and that I represent. I started in local and State 

Government, was the head of the Mayor’s Office on Neighborhood 

Services in Boston, and then the Deputy Secretary of the State Office of Communities and Development. I learned a lot about government, what government can do, the important role it plays. 

I also learned what it had a hard time doing. And I think the 

adage goes that government is—it is best to steer and not to row. 

I moved from government to run a public/private partnership, a 

nonprofit called the Metropolitan Boston Housing Partnership. It 

was created really as a new style of nonprofit. It used a social mission, kind of the public mission that I knew very well from government, but it worked very closely with the private sector. And we 

used private sector business models to try to bring flexibility and 

to be able to bring private capital to bear to accomplish a public 

and social mission. 

This particular organization I ran was formed in partnership 

with the City of Boston and the private sector. Bill Edgerly, chairman of State Street Bank, was the chairman. We had very strong 

private sector, community, and governmental involvement. It was 

really a partnership-style organization. 

It hadn’t existed before. And I think that model was really embraced in a lot of other cities around the country. 

We then played a role in helping form a network of these organizations. They exist in a lot of your districts: Bridge Housing out in 

California; Mercy Housing out in California; Abode in Los Angeles; 

National Church Residences in Columbus, Ohio; Homeport in my 

own City of Boston; and the Planning Office of Urban Affairs, Community Builders, and Atlanta Neighborhood Development Partnership in the South. 

These organizations really embraced what I would call a social 

enterprise model. Again, a social and sort of public mission first 

that was driven by mission, but would very much use private sector business models, and would operate at scale. 

These organizations can partner with government to do things 

that the public sector wants to get accomplished, but it has a hard 

time leveraging the kind of capital and the flexibility that we can 

do in the private sector. 

So private sector, nonprofit organizations, but very different than 

the small neighborhood CDCs and certainly a little bit different 

than sort of public agencies. 

5 

The second point I would like to make is, why did we go to the 

U.K.? We were having a lot of progress in the United States growing these organizations, but we saw in the United Kingdom a scale 

that we hadn’t accomplished here. So we took a very large group 

of our CEOs, our board is made up of our CEOs, we brought them 

to the U.K. to explore the U.K. system. And we found a number 

of important things. 

We found a system that was much more scaled, where the government invested in this delivery system and recognized it as a 

counterparty that can get things done that it couldn’t do itself. 

It had a model that allowed for portfolio flexibility, bringing 

much more management efficiencies to bear and a way of raising 

private capital that our project-based system, where you are really 

focusing on the project rather than the portfolio or the sponsor, had 

a harder time doing. 

And the third thing is that they were very resident-focused. Residents were central to their model. Decisions to transfer stock, 

which you have referenced, Congressman Cleaver, which was a 

very large way that they grew to scale, those decisions were made 

by the residents themselves about whether or not they wanted the 

housing transferred, and to whom they wanted to transfer it. 

And we found that our British colleagues, with whom we had so 

much in common, focused more on the residents honestly than we 

did because we were so caught up in assembling financing. 

That said, we found real peers there and we built over 15 years 

a collaboration that has been very rich and enduring. 

The network, in addition to doing these peer changes, is a business itself. We have a set of companies that we run. We have created an insurance company to insure 70,000 units of our members’ 

properties, which leverages capital from the private sector. We now 

insure $7 billion worth of property. 

We created a REIT using some of the portfolio models that we 

saw in the U.K., which has now raised $140 million and is assembling capital from major financial institutions and foundations. 

We created a procurement company creating a joint venture with 

a British firm that had more expertise. 

Now, why were the Brits interested in us? Well, they found that 

in the United States because we didn’t have this more top-down, 

government-driven system, that we were much more entrepreneurial. We worked with the private sector, we knew how to leverage capital from the private sector. We were forced to because the 

only way to assemble, as you know, resources in the United States 

is to raise capital from all sorts of sources. So they liked our entrepreneurship. 

We have now taken some of those models and have made some 

progress in the United States. I know you have seen some of the 

work that the British have done. We have built portfolio models in 

the United States that have been successful. We would like to advance that further. 

We think there are lessons that can be adopted from the British, 

but there are also things that we do very well. And so our view is 

that it is really a combination of the two systems that makes the 

most sense. There is a convergence going on. 

6 

We look forward to working with you and figuring out what best 

lessons to take. We have a set of policy recommendations, I won’t 

get into them now, but in questions and answers, if you would like 

to talk about them, I would be glad to go into more detail. 

Thank you very, very much. 

[The prepared statement of Mr. Bledsoe can be found on page 52 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Bledsoe. 

Dr. Beider, you are recognized for 5 minutes. 

STATEMENT OF HARRIS BEIDER, PROFESSOR, COMMUNITY 

COHESION, CENTRE FOR TRUST, PEACE AND SOCIAL RELATIONS, COVENTRY UNIVERSITY, UNITED KINGDOM 

Mr. BEIDER. Mr. Chairman and members of the subcommittee, 

thank you for inviting me to appear here today for this hearing. 

For the past 15 years, I have been conducting research on housing community engagement and change, lately at Coventry University, but also at Columbia University in New York City. 

Previously, I led two national organizations in the U.K. In addition, I have conducted two research projects comparing housing 

and redevelopment initiatives in the U.S. and the U.K. 

Affordable housing in the U.K. springs from the ethos of the welfare state. Housing organizations have used their anchor position 

with a city and neighborhood to organize training programs to provide tenants with the skills necessary to compete in the job market, 

have created social enterprises, and have attracted private sector 

investment support and renewal. 

These activities that focus on social investment have sometimes 

been viewed as added value or housing-plus initiative. 

Private housing tenure and creating a property-owning democracy have become key and shared political objectives both in the 

U.S. and the U.K. Public housing has become stigmatized in both 

countries, with the worst housing stock being demolished and replaced with mixed-income and mixed-tenure housing, while the national or Federal Governments have encouraged housing organizations to become more efficient and deliver a wider range of housing 

products with fewer resources. 

There is prior significant research comparing affordable housing 

in the U.K. and the U.S. Most notably, the public and assisted 

housing sector in the U.S. is just under 2 percent of total housing 

stock, while in the U.K. that figure is 16 percent. 

In the U.S., public sector housing is characterized by segregation 

in both race and income, while in the U.K. it is characterized by 

income rather than race. In the U.K., living in public housing is not 

as stigmatized as it is in the U.S. And while mobility is guaranteed 

in the U.S. by a housing voucher, in the U.K. mobility is characterized by credits paid to individuals to use towards rental payments 

and programs such as the right to buy which allow for the purchase of council housing at deep discounts. 

The right-to-buy policy was a concerted attempt to deregulate 

and privatize the affordable housing sector. For those who were 

successful, increasing levels of home ownership led to capital accumulation. That was part of the ‘‘Thatcherite’’ revolution of the 

1980s. However, it contributed to a housing crisis when housing 

7 

units were not replaced and consequentially rents increased exponentially. 

A few years before the HOPE VI program began in the U.S., the 

1988 housing act was passed in the U.K. and was transformative. 

In addition to introducing the concept of borrowing to support the 

development and management of affordable housing, local authorities now had an opportunity to repair and renew their housing 

stock through a process of large-scale voluntary transfer. 

The process was underpinned by a number of factors, including 

securing the support of the majority of tenants in a secret ballot, 

transferring stock from the private local authority to a private albeit not-for-profit housing association, and attracting investment 

from capital markets to repair stock. 

By 2008, 1.3 million homes had been transferred from local authorities to housing associations, 14 billion pounds had been invested to repairing housing, and more than 2 million residents had 

benefited from the process. 

This process has reshaped social housing in the U.K. By 2015 

there had been 300 stock transfers involving more than 200 local 

authorities, shifting over 1 million properties from the public to the 

private sector. These new organizations now account for 44 percent 

of the 2.7 million housing association homes in the U.K. 

Some housing advocates have criticized the policy as being backdoor privatization of government assets and point out that the 

focus of housing associations has shifted to working more with finances than tenants, with the latter facing the prospect of eroding 

housing rights, higher rents and less accountability. 

If you now turn to the housing and planning building conclusion, 

the topic of housing in a general election and affordable housing 

specifically was given a high profile during the campaign. This led 

to debates about who should have access to social housing and 

whether reliance on social housing led to welfare dependency. 

Some have suggested that the new government proposal contained in the bill could lead to the death of affordable housing. And 

indeed, the next leader of the housing association lamented that 

the housing bill signals the end of the road for truly affordable 

housing in England. 

In conclusion, affordable housing continues to be an important 

part of the housing equation in the United Kingdom. Looking to 

the future, there is a risk that affordable housing, as it has been 

known in the U.K., will cease to exist. 

It should not be overlooked or underestimated how important affordable housing can be to the stability of a person, a family or a 

community, particularly as it relates to sustaining employment. 

Continued investment in affordable housing should be an important component of a national housing policy alongside other housing choices favored by many consumers and lenders. 

Thank you. 

[The prepared statement of Dr. Beider can be found on page 38 

of the appendix] 

Chairman LUETKEMEYER. Thank you, Dr. Beider. 

Dr. Popkin, you are now recognized for 5 minutes. 

8 

STATEMENT OF SUSAN J. POPKIN, SENIOR FELLOW, AND DIRECTOR, NEIGHBORHOODS AND YOUTH DEVELOPMENT INITIATIVE, METROPOLITAN HOUSING AND COMMUNITIES 

POLICY CENTER, URBAN INSTITUTE 

Ms. POPKIN. Thank you. Mr. Chairman and members of the subcommittee, thank you for inviting me here today. 

For the past 30 years, I have been researching how Federal and 

local programs affect the lives of the most vulnerable public housing residents. My testimony will focus on the United States housing system. 

The U.S. and the U.K. face similar challenges: rising rents; and 

an aging stock of subsidized housing. Both countries have gradually shifted toward more engagement with the private sector. 

In the United States, the Housing Choice Voucher provides subsidies for tenants to rent units in the private market. Private organizations own and manage deeply subsidized properties through 

the Project-Based Section 8 program. And private developers use 

low-income housing tax credit, LIHTC, to build new, affordable 

housing. 

However, there are fundamental differences. First, housing in 

the U.K. is an entitlement and an essential part of the safety net, 

and a far larger proportion of the low-income households in the 

U.K. receive housing benefits and live in social housing. 

Second, the U.K. does not have the same legacy of racial segregation and discrimination as the U.S. Because of this legacy, much 

federally subsidized housing stock is located in predominantly minority, chronically disadvantaged, high-crime neighborhoods. 

Federal housing assistance has evolved over the past 50 years, 

but substantial challenges remain to effectively serving low-income 

families. The Housing Choice Voucher or Section 8 program was 

explicitly designed to shift housing provision to the private sector. 

Those lucky enough to receive this assistance clearly benefit from 

lower housing costs. 

Living in decent, affordable housing and paying a lower rent 

yields other important benefits as well. There is evidence that poor 

families who receive vouchers are less likely to double up or experience homelessness. They are also less likely to face food insecurity 

and are able to spend more on their children’s educational enrichment. 

But availability of U.S. Federal rental assistance falls far short 

of needs. For every 100 low-income households receiving Federal 

rental assistance, another 298 are eligible, but are waiting for help. 

The fundamental problem in the U.S. is that nationwide rents 

have risen faster than incomes for a growing segment of the workforce. This is primarily the result of widening income inequality, 

with incomes rising much more slowly for low- and moderate-wage 

workers than those in high-skill, high-wage jobs. 

The gap between the ability to pay and rents in the marketplace 

is particularly acute for the poorest households. 

The Project-Based Section 8 program has also seen its stock 

shrink over time. Almost no units have been added since the early 

1980s and units are being removed from this inventory as owners 

opt out of the program. 

9 

LIHTC properties are developed by private sector housing developers akin to the housing associations in the U.K., but the LIHTC 

program does not require, nor does it provide sufficient subsidies 

to allow rents to be capped at 30 percent of a resident’s income, so 

these units do not generally serve the same deeply poor population 

as depend on public housing or Federal housing subsidies. 

The U.S. and the U.K. have also used similar approaches to revitalizing their aging housing stock, but they differ significantly in 

the level of government investment. 

HOPE VI was the largest public housing transformation effort in 

the United States. My research shows that it produced important 

improvements in housing quality, community conditions, and resident well-being, and produced fewer new public housing units than 

were torn down. 

In the U.K., the government provided much more generous funding for the comprehensive redevelopments that occurred there. 

In the U.S., HOPE VI and now Choice Neighborhoods sites, 

served only extremely low-income tenants and didn’t have the diversity of incomes that they had in the U.K. Funding for resident 

services was relatively limited. And because of the legacy of segregation and discrimination, U.S. developments are located in more 

disadvantaged neighborhoods, meaning the challenges to revitalization are higher. 

Finally, RAD will bring new money into the system, but it is too 

early to say how effective it will be in generating new housing 

units or protecting the affordable housing stock. 

Another question before us today is whether a home ownership 

model, like the U.K.’s right to buy, could succeed in the U.S. and 

help subsidized tenants move toward self-sufficiency or help bridge 

the affordable housing gap. 

The evidence from our research suggests that this approach will 

not work well here, does not help build wealth, and in fact could 

place low-income households at greater risk for instability. 

Right to buy in the U.K. has taken some of the highest-quality 

units out of the supply of housing stock. It seems likely the same 

could happen in the United States. 

Privatization will not solve the fundamental challenge in the 

United States. Rising inequality and rising rents mean the need for 

affordable housing far exceeds the demand, leaving too many 

households at risk for severe housing cost burdens, instability, and 

homelessness. 

Many of HUD’s programs have proven their potential to help address these challenges, but their scale and capacity falls woefully 

short of what will inevitably be needed. Ongoing improvements in 

program implementation and expanded scale would be welcome. 

An even more ambitious idea for eliminating homelessness and 

housing hardship and advancing the potential of assisted housing 

policy to improve the long-term life chances of poor and vulnerable 

populations would take us closer to the U.K. system, treating housing as an entitlement and an essential part of the safety net. 

I recognize that implementing these ideas would both be costly 

and politically challenging, but I offer them as conversation starters for HUD’s next 50 years. 

Thank you very much. 

10 

[The prepared statement of Dr. Popkin can be found on page 98 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Dr. Popkin. That was very 

close to 5 minutes, so thank you very much. 

Ms. Lee, you are now recognized for 5 minutes. 

STATEMENT OF JAIME ALISON LEE, ASSISTANT PROFESSOR 

OF LAW, AND DIRECTOR, COMMUNITY DEVELOPMENT CLINIC, UNIVERSITY OF BALTIMORE SCHOOL OF LAW 

Ms. LEE. Chairman Luetkemeyer, Ranking Member Cleaver, and 

members of the subcommittee, thank you for inviting me here 

today. 

I am Jaime Lee, assistant professor of law at the University of 

Baltimore, and I published an article last year entitled, ‘‘Rights at 

Risk in Privatized Public Housing.’’ And before becoming an academic, I practiced in a private law firm representing public housing 

authorities across the country who were engaged in HOPE VI and 

other redevelopment activities. 

So I appreciate your inquiry today about how to creatively solve 

our affordable housing crisis. I do have concerns that public housing rights are at risk in privatization and that stronger enforcement is needed to carry out Congress’ intent to uphold constitutional values. 

I am also concerned that there are certain legal tools that can 

be used in privatization that can harm affordability and also restrict access to public housing. 

I will first discuss the rights. Public housing has some very 

unique and important rights that are derived from the Constitution 

and especially from due process. These include the right to remain 

in one’s housing as long as you abide by the rules, the right to challenge harmful acts by your landlord against you without having to 

go to court—you can do this through an internal grievance process—and there is also the right to participate, so to know about 

and to give input about things that affect your housing, like, for example, privatization. 

So these rights I do think are at risk, and not at all intentionally. 

To the contrary, Congress has actually mandated that these rights 

be preserved in privatized public housing. 

But reports from the field are that in instances across the country these rights are being violated. So for instance, there are—no 

one is supposed to lose housing under the RAD program. But there 

are instances being reported of tenants being re-screened under the 

RAD program. 

In addition, information-sharing is also minimal in many places. 

So people are finding it necessary to file local FOIA requests in 

order just to get information, basic information about what is happening under RAD, who the new owner is, are rents going up, who 

is going to be required to move and when. 

So I think one of the main problems is that legal enforcement 

and monitoring is extremely weak for rights. And no one is checking on whether these rights are being preserved. 

In addition, legal penalties are very challenging to exercise in the 

privatized context and so they have little teeth. 

11 

And there is no market-like system for weeding out poor performers for rights. Because low-income tenants don’t have any consumer power, don’t walk away when there is a poor performer. 

Some ideas for better protecting rights might be an explicit legislative mandate for HUD to enforce these rights, more monitoring 

and transparency about how landlords perform, and Congress can 

also give tenants the legal power to sue in court for rights violations. 

A second concern is that certain legal rules may lessen affordability, especially if operating subsidies are inadequate. So rents 

can be raised using certain legal waiver authority, and affordability 

restrictions are actually lightened considerably under RAD when a 

project performs poorly. So both of these things could jeopardize affordability, especially if funding is not enough to sustain a project. 

A third concern is about who can access public housing. We have 

seen a rise in things like stricter screening for new tenants and 

stricter house rules which can be used to exclude people who may 

be more challenging to house. But these may be the people who are 

most in need of public housing. 

So in sum, I respectfully encourage the consideration of legislative changes to preserve constitutional values, to preserve affordability, and to protect access to public housing by those in need. 

Thank you. 

[The prepared statement of Ms. Lee can be found on page 82 of 

the appendix] 

Chairman LUETKEMEYER. Thank you, Ms. Lee. 

Mr. Gentry, you are recognized for 5 minutes. 

STATEMENT OF RICHARD C. GENTRY, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, SAN DIEGO HOUSING COMMISSION 

Mr. GENTRY. Good morning, Mr. Chairman, and members of the 

subcommittee. 

My name is Rick Gentry. I am the president and CEO of the San 

Diego Housing Commission. And thank you for asking me to participate in this panel this morning. 

I am in my 8th year as the CEO in San Diego, but I am in my 

44th year in this industry, having begun as a HUD intern in 1972, 

and having included stints as the CEO of agencies in Austin, 

Texas, and Richmond, Virginia. 

My experience also includes 10 years in the private sector with 

the Local Initiatives Support Corporation, and a LISC subsidiary, 

the National Equity Fund in Chicago, which is the Nation’s largest 

syndicator of low-income housing tax credits. My position there was 

to head up the asset management of our inventory across the country. 

I will also point out that I have done some extensive travel, visits 

and work in the U.K. beginning in 1994, and have spent some time 

in London, Liverpool, Manchester, Edinburgh, and most recently 

delivering a paper on the San Diego model at a national conference 

in Brighton, England in March of 2013. 

So the mileage is there, and I appreciate being able to participate 

with you this morning. 

My experience and observation is that there are a number of 

similarities, in thought at least, between the U.K. model and the 

12 

U.S. model. That similarity has much to do with the values represented in the long-term tradition, that came down through the 

Anglo-Saxon history from the U.K. to the U.S., of the importance 

of the freedom of the individual and making sure that the programs that are governmental reinforce individual opportunities in 

both countries. And I think, to a great extent, over the years that 

has been the case. 

I also have pointed out in the paper that I delivered to this committee for this meeting that I think there are a number of differences between the two countries, particularly over the past 60 

years or so, that should be taken into account in looking at similarities. 

I would submit that following World War II, under the government of Clement Attlee, the U.K. basically diverged from its historical approach, and beginning in the 1980s began coming back to 

more of an individual approach to the way social housing services 

were delivered to the population. 

And I will point out that in the 1980s, over 40 percent of the population in the U.K. lived in council housing, their version of public 

housing. In this country, never more than 1 percent of the population has ever lived in the formal public housing program. Now, 

you add another 3 percent or so who live in the current Section 8 

Housing Choice Voucher program, another 2 to 3 percent who live 

under the low-income housing tax credit program, and another percentage or two under various other programs, you still get a much 

smaller percentage of the population in this country who have lived 

under formal, subsidized programs like this. 

The United States, following World War II, used FHA insurance, 

a secondary mortgage market, namely Fannie Mae, the VA insurance program, and other methods to create a great home ownership 

network. And there were also other incentives that encouraged and 

developed a private sector rental industry in this country that is 

much, much smaller in the U.K. 

And I would submit that the U.K.’s movement back to a more individualized, local product fits in with the values of both countries. 

I will also point out that, as I noted in my paper, the nonprofit 

housing industry in this country does have some notably strong 

players. I pointed out in particular what is going on in San Francisco right now with help for that agency utilizing the private sector and nonprofit industry in the Bay Area. 

However, I would also point out that in most parts of the country 

the public housing agencies are strong, operate good, effective programs, and are good delivery systems. And my contention would be 

that it is not the players of the game frequently that are as important as the rules of the game are. And if the rules are the same 

in the private sector and the public sector, the public sector can 

compete and do well. That is the case in San Diego. 

I have pointed out in my paper a number of examples of the San 

Diego model. I am not going to try to go into those here today. It 

would be another probably 50 minutes rather than 5. But I will 

point out that I think that the keys are latitude and flexibility to 

make decisions on the local level. 

And I will point out in closing a term that is in great use now, 

not only in the U.K., but in the European Union, and that is the 

13 

principle of subsidiarity. And basically what subsidiarity means is 

the decision should be made as close to the local situation as possible and not remote from just a centralized governmental point of 

view. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Gentry can be found on page 61 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Gentry. 

And Mr. Russ, you are recognized for 5 minutes. 

STATEMENT OF GREGORY P. RUSS, EXECUTIVE DIRECTOR, 

CAMBRIDGE HOUSING AUTHORITY 

Mr. RUSS. Thank you, Mr. Chairman. And thanks to the subcommittee for inviting me to speak today. 

My name is Gregory Russ. I am executive director of the Cambridge Housing Authority in Cambridge, Massachusetts. And my 

spoken comments this morning I am going to divide into two parts, 

a little bit of the technical geography of public housing in the 

United States and items that do impact on how we think about the 

system as a whole. And in the spirit of self-reflection, looking at 

some of the things that we might be able to do to make some fundamental changes there should that opportunity arise. 

One thing I want to point out to begin with, having read the 

HPN report that was part of the committee materials, is there are 

many ideas in that report that we really feel are worth exploring. 

And I would suggest to the committee that our only concern from 

the housing authority side is, whatever ideas are tried be entityneutral so that funding or other opportunities are crossing platforms and we are not relying necessarily on the type of tax entity 

that the land holder is. 

In our case, we are a public agency and we are currently highperforming and entrepreneurial. We are doing a complete RAD 

portfolio conversion made possible, in large part, by another program, Moving to Work. That is 2,500 public housing units are 

being shifted off the public housing into the RAD demonstration. 

We have raised about $240 million in our first phase at about a 

16–to–1 leverage ratio of private equity contribution to public 

money. We are using the low-income housing tax credit program 

and have adapted that to our needs in Cambridge. 

The reason we are doing this, and this is the first part of the geography, is that the public housing program—and it is no secret— 

is starved for capital. There is no strong means of capital investment in this country now other than the low-income housing tax 

credit. 

In 2010, the need for capital was adequately documented in a 

study that was presented to HUD, which estimated somewhere between $26 billion to $30 billion in backlog need for public housing. 

That is an enormous amount of money. And we have a limited pool 

of tax credit equity available. And the competition for that is heating up, especially in markets where units are threatened and we 

need to preserve units. That is our only source of capital, perhaps 

aside from some local money. 

Two other things are important to remember when we talk about 

reform that is fundamental to our system. The first of those is that 

14 

public housing authorities are State agencies; they are created by 

State Governments. We spend Federal money, but the enabling legislation belongs to the State of Massachusetts or the State of Ohio, 

or pick one. And there are significant powers invested in housing 

authorities in those State-enabling legislations. And if there is to 

be deeper reform, that will have to be considered by Congress as 

you go forward. 

The second item I want to mention is that all public housing 

property is protected, in a sense, it is use-protected, by a document 

called the declaration of trust. This is attached to the land. And 

this protects the use, but also restricts the financing. 

One of our recommendations is, looking at the RAD model it is 

possible to craft a strong and reasonably balanced use agreement 

and replace the declaration of trust that allows us to tap the assets’ 

equity, if you will, and liberate the asset while protecting the families that are there. This is precisely what we have done in Cambridge. 

We are using the RAD model to release the declaration of trust. 

But we have embedded in our RAD program the lease, the grievance procedure, the resident protections, and the rent structures 

that are most familiar to public housing. And in fact, when we filed 

our RAD application we did not have a single resident or advocate 

objection to that and still do not. 

And we think with care we could craft a use agreement that 

would release the capital potential in any public housing property. 

There are a number of recommendations in the HPN report that 

I found really interesting and intriguing: expanding the capital 

magnet fund, which we would endorse, provided public housing authorities could receive access to it as well, and the creation of largescale, voluntary transfers. We are doing a portfolio shift with our 

RAD. There are ways to also allow that to happen and still protect 

the underlying use of the property for low-income families. 

There are a number of other comments in my written testimony 

that I have made to the committee, but I wanted to thank you for 

this opportunity to speak to you today and I look forward to a discussion on how we might advance public housing as a platform in 

this country as well. 

Thank you. 

[The prepared statement of Mr. Russ can be found on page 110 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Russ. 

With that, we will begin the questioning. And I will recognize 

myself for 5 minutes. 

Mr. Gentry, you had a statement in your written testimony that 

said, ‘‘I believe the United States traditional public housing program is no longer viable in its current form to continue serving the 

needs of low-income Americans. America’s traditional public housing program has been, since its inception, a top-down, one-size-fitsall, centralized, command and control program operated out of D.C. 

that is intended for implementation uniformly across the country. 

The program as structured is flawed and needs to be changed and 

a more efficient use of taxpayer dollars to serve the housing needs 

of low-income Americans.’’ 

15 

Can you give us some ideas on how you came up with that and 

what we can do to fix it? 

Mr. GENTRY. I would be glad to. And it is a result of 44 years 

of observation of the program. 

The public housing program is a one-size-fits-all program. And 

my belief, having worked in this program literally all across the 

country from Greensboro, North Carolina, to San Diego, California, 

is you cannot make one program work the same way in every locality, you probably cannot even from, say, Columbia to Kansas City 

in Missouri. 

And the San Diego model, I think, is one that bears observation. 

We received approval from HUD in 2007 to convert our public 

housing to a Section 8 Housing Choice Voucher delivery system, 

from Section 9 of the Housing Act to Section 8. 

We then promised HUD that if HUD were to approve that action, 

we would keep the properties, we would dispose of no properties at 

all, we would allow families to vote with their feet and choose to 

remain in our properties or to move out. 

About half of the families over the past 9 years have moved out. 

We have replaced those families with other families below 80 percent of median income, elderly below 50 percent, and we have 

made sure that the rent was an affordable rent that would fit the 

marketplace. 

We also utilized the equity in the ground in those properties to create another $95 million in debt that we have used to create an 

additional 810 units of housing. 

So I think that what we have done in San Diego, a precursor to 

RAD, if you will, has worked very well based on the San Diego 

model. Would I implement it exactly the same way if I were back 

in Richmond, Virginia? Probably not, I would do something different, but I would do something that would fit the locality. 

Chairman LUETKEMEYER. So basically what you are saying is, if 

we give you more flexibility, you can probably design programs to 

be able to help whatever locale you are in to be able to do a better 

job of addressing housing needs. Is that a fair statement? 

Mr. GENTRY. Yes, sir. And I would also add the flexibility and accountability to make sure that the residents and the taxpayers’ resources are properly utilized. 

Chairman LUETKEMEYER. Very good. 

Mr. Bledsoe, you were listening very intently whenever Ms. Lee 

was talking about tenants having some problems. I noticed in your 

testimony you were talking about the model that you were looking 

at in Britain with the sort of transitioning from the public sector 

or the private sector. There were boards that were created within 

the housing authorities to be able to put the tenants in charge of 

the building, so to speak, and that would seem to address a lot of 

her concerns. Is that kind of roughly what you were thinking? 

Mr. BLEDSOE. Yes, Congressman. I think in the U.K. they will 

engage residents in making the decisions about what kind of 

changes are appropriate. And if there is a desire to change the 

management and the ownership, I wouldn’t call it privatization because it is not putting it into for-profit entities that are driven 

more by profit, it is really focused on the public mission still. But 

if you can put it into more of a mixed entity, like the housing assoVerDate Nov 24 2008 17:18 Feb 21, 2018 Jkt 024066 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\24066.TXT TERI
16 

ciations, like some of our members really like San Francisco is 

doing, that decision is made by the residents. 

In the U.S. in the RAD program, that is not really the case. So 

the residents aren’t making that call. The U.K. has done that and 

they have ensured that every resident who is in their unit, at the 

existing model, council housing, gets to stay in the new one. 

Now, I think San Francisco has done some very interesting 

things there with its RAD demonstration. It is guaranteeing all the 

residents a right to come back and to stay in the homes that are 

going to be revitalized. It has done a very engaged tenant process 

to involve them in kind of the planning and the design. 

And they have also used a portfolio financing model that I think 

reflects a lot of the approaches that we are arguing for. Now, three 

of our members are partners in San Francisco doing that RAD program. 

So I think with some of the previous programs there are concerns 

about whether residents have been able to come back. I think the 

San Francisco model has sort of addressed that. But we would certainly argue for as strong a resident engagement and protection as 

possible in any of these programs. 

Chairman LUETKEMEYER. Very good, thank you. 

My time has expired. With that, we go to the gentlelady from 

New York, Ms. Velazquez, for 5 minutes. 

Ms. VELAZQUEZ. Thank you. 

And I want to thank the ranking member for yielding. 

Ms. Lee, in your testimony you indicate that privatization programs raise long-term affordability. How can RAD and other privatization programs be strengthened to ensure housing will remain 

accessible for those individuals and families who need them the 

most? 

And I would like Mr. Russ to also comment on that question. 

Ms. LEE. Thank you, Congresswoman, for the question. 

So long-term affordability can certainly be strengthened by first 

of all just making sure that there is enough funding in these programs. I think some of the major pressure to raise rents and make 

things less affordable comes from insufficient funding. 

And we see there are legal options, under the RAD program for 

example, that if a program is not doing well or out of compliance 

that affordability restrictions could actually be lifted or a significant number of them could be. 

And so making sure there is funding and then making sure that 

some of those legal rules that would allow rents to rise and higherincome folks to be admitted into public housing, some of those rules 

could be tightened. 

Ms. VELAZQUEZ. Mr. Russ? 

Mr. RUSS. Thank you, Congresswoman. 

The first observation is that in the current version of RAD there 

are some pretty strong protections already baked in. One observation we would have is that the use restrictions, the use agreements 

run co-terminus with the housing assistance payments contract. 

This is what you are paying the subsidy for. And those contracts, 

in effect, compel the owner to renew. 

So there is in effect a longer vision perhaps than the 15-year tax 

credit period or 20 years, whatever, that is in the current program. 

17 

In our program, we did two things, I think. We assured the residents that the system of policies that they are familiar with and 

their options through due process in our current lease were carried 

into the RAD units. So if you are a resident in a RAD unit you 

have a grievance procedure, that did not go away. 

And I think the other thing is we spent a lot of time engaging 

the community at large and our residents on the capital deficits 

that we had at our properties. Once we explained what those 

looked like and how we had to raise the money, how we had to use 

the tax credits, we got folks used to the idea that in order to raise 

this much capital we do have to form a temporary partnership, not 

a permanent one with our tax credit investor. 

Ms. VELAZQUEZ. So we don’t know, we don’t have any report as 

of yet of any of the demonstration projects that are in place today, 

right? 

Mr. RUSS. I can only tell you about ours. 

Ms. VELAZQUEZ. Yes. 

Mr. RUSS. But I know that HUD is doing an evaluation of the 

program. 

Ms. VELAZQUEZ. Okay. 

Dr. Beider, while there are similarities, the experiences with developing public housing in the U.S. and the U.K. are different in 

significant ways. 

In the U.K., as Mr. Bledsoe said, residents have been more actively engaged in the redevelopment process and in decisions about 

supportive services. What lessons can we in the United States 

learn about the U.K.’s resident engagement methods that might be 

applied here? 

Mr. BEIDER. Thank you, Congresswoman. I think the U.K. housing sector and certainly the affordable housing sector and housing 

associations have had a long history of community engagement. 

And that has been part of the vision and purpose of social housing 

in the U.K. because it has been based on the welfare state. 

One of the things that has been really, really successful in terms 

of the way that housing providers have engaged with tenants is not 

just in terms of community engagement and having tenants on the 

boards of housing associations, but the very active ways that housing associations have engaged with both local councils and the private sector to support social enterprises in the U.K., therefore creating jobs and employment opportunities, increasing people’s confidence and esteem in themselves as part of the staircase into better outcomes. 

So I think creating social enterprises, engaging with trained providers to skill-up housing tenants, who after all 70 percent of housing association tenants until recently have been in receipt of some 

form of benefit, so they are low-income communities. And a housing 

association, because it has fixed assets, because it is embedded 

within a neighborhood, because it has access to private finance and 

also because it can reach out to other local stakeholders, has a big, 

convening role in that. 

Ms. VELAZQUEZ. Thank you. 

I yield back. Thank you. 

18 

Chairman LUETKEMEYER. The gentlelady’s time has expired. The 

gentleman from New Mexico, Mr. Pearce, is recognized for 5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. 

And with all due respect to our friends from the U.K., I would 

remind the chairman that the last time the British took this much 

interest in American housing in Washington they burned the place 

down in the War of 1812. So I would have us watch carefully. 

But I really appreciate you being here, Dr. Beider. 

My first question is in fact for you. So when I am looking at page 

two— 

Chairman LUETKEMEYER. I remind him, this is a preemptive 

strike, try and make sure it doesn’t happen again. 

[laughter] 

Mr. PEARCE. On page two, we have Ms. Lee saying in her testimony that the government oversight of tenants’ rights has greatly 

diminished. But then also insufficient funding for privatized programs is a significant concern for U.K. providers. 

That is sort of in contrast to your testimony in several places. 

You mentioned the access to private capital, and especially on page 

nine you are talking about being very successful in raising private 

finances to support social aims. 

Would you address the concerns that were raised by Ms. Lee? 

Mr. BEIDER. Thank you, Congressman. I think Ms. Lee’s testimony is absolutely very interesting and there is a great deal of 

truth in it. 

I think one of the points I was raising in my testimony is the 

way that housing associations as being not-for-profit organizations 

have been very, very successful in raising private investment. And 

that has to be set in the context of a reduced government subsidy 

for housing associations. 

To be frank, housing associations have had to have recourse to 

private finance markets to do the job of building and managing 

housing stock. The most important thing, I think, for housing associations is that they are not-for-profit social businesses. So even 

though they run on very much business terms, they are not for 

profit, they are as much social as well as businesses. 

And I think that is one of the protections that housing associations have in terms of veering too much into the private sector. 

The other thing I would just finally add on the importance of the 

private sector is this. One of the big debates that is happening in 

the U.K. at the moment is, to what extent should housing associations continue to veer towards the private sector? 

There have been some concerns raised by tenants as well as advocacy organizations that the balance is tilting too much to the private sector as opposed to the not-for-profit sector. The housing associations have or are regulated by the homes and communitie’s 

agency to make sure that they do fulfill their aims. 

Mr. PEARCE. Okay. 

Dr. Popkin, you had raised concerns about the viability of the 

privatization. You have done probably as much study as anyone on 

the panel, and so I am wondering if you have looked at the privatization of military housing. That was something that we did here 

19 

in this country, some people say very successfully, and other people 

don’t have such high regard for it. 

Have you conducted research on that project? They replaced 

maybe 80 percent of the world’s military housing, U.S. military 

housing, in a very short period of time. Some of the people who are 

living in them are in my district and they are very highly pleased 

with it. But have you had a study of the real processes from a 

backdoor view? 

Ms. POPKIN. Thank you, Congressman. No, I have not, but I am 

familiar with the research that was done on it. I don’t think I am 

expert enough to offer an opinion about it. I am not concerned that 

we have private sector involvement. I think, as similar in the U.K., 

we need more funding for the system, as everybody is saying on the 

panel. 

I am concerned about making sure that we protect the housing 

for the very lowest-income tenants and that the private sector tools 

we have don’t serve them well. 

Mr. PEARCE. Okay, all right. 

Mr. Russ, you have a lot of experience in kind of the transition. 

Can you tell me sort of what rates of return that investors are looking at in this market? 

And the reason I am asking that is because there is a lot of cash 

out there, a lot of money sits idle and it desperately looks for 1 and 

2 and 3 percent rate of return. So I am wondering, as we are talking about this access to capital, what sorts of rates of return do 

your privatization projects bring? 

Mr. RUSS. Congressman, let me frame it a little bit differently, 

if I could, because the bargain we have struck in order to make investments in low-income housing, we are asking a private investor 

to put equity into these real estate transactions. In exchange, they 

get a tax credit on the back end of that they can then use to reduce 

their tax bill. 

Mr. PEARCE. I understand that, but— 

Mr. RUSS. So in their equity contribution, their return is the 

credit. 

Mr. PEARCE. And what does that draw them? In other words, 

what is— 

Mr. RUSS. We are getting really good pricing on the credit because companies that are investing in this that are paying taxes, 

our partner in the tax credit side is Wells Fargo. They are the 

third-largest taxpayer in the country. So they told us they would 

buy as many credits as they could. 

Mr. PEARCE. Yes, I am just wondering what sort of rate of return— 

Mr. RUSS. I don’t know their rate of return. 

Mr. PEARCE. Yes, it is— 

Mr. RUSS. Yes, but the second part of it is we have lenders for 

both construction and permanent debt and they are getting standard loan rates for that. 

Mr. PEARCE. Okay. 

Thank you, Mr. Chairman. I see my time has expired. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

20 

With that, we will go to the gentlelady from California, Ms. 

Waters, the ranking member of the Full Financial Services Committee, for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman, for holding 

this meeting. 

This is a very needed discussion. And I am very grateful for the 

panel that is participating here today. And I am very grateful for 

those who are helping us, who are here to help us understand what 

is happening in the U.K. where access to public housing is an entitlement. 

Many of us have grappled with this issue for many years now. 

I have lived through the HOPE VI program that was so touted. 

And for those of you who remember Jake Kemp, this was his number-one issue. 

But let me just tell you and tell our panel, even though you may 

have said it already, that HOPE VI demolished 98,000 units and 

brought back only 48,348. I have asked my staff repeatedly, what 

happened to those people? Where did they go? We don’t have that 

information, but we know that homelessness has steadily increased 

in this country and in places like Atlanta where I think we had 

6,418 original public housing units and now I think we have about 

2,256 public housing households. So I think these numbers are correct. 

But I guess what I am saying is this: Public housing is absolutely 

needed in this country, as it is in the U.K. and other places. 

When we talk about privatization, whether we are talking about 

HOPE VI or RAD or other ways by which privatization takes place, 

privatization is there for one reason. People invest money because 

they want to make money, they want to make a profit from privatization. 

When we talk about public housing, we know that along with the 

actual, physical units you must have social services to go along 

with it. And that cost is what the private sector does not want to 

assume. Because when you provide the social services, it reduces 

the amount of profit that the private entities will be able to 

achieve. 

And so entitlement is extremely important. The need is extraordinary. In Los Angeles County, for example, last year, at least 

2015, homelessness had increased by 20 percent and in Los Angeles by 12 percent. I don’t know what the recent figures are. But the 

complaints throughout our caucus are just astronomical. 

And so I believe that governments have to realize that this is a 

real need and they are either going to assume the need and responsibility for public housing or they are not going to do it. 

And I just want to tell you, the waiting list for Section 8, I believe right here in this area in Washington, D.C., is a decade long. 

It is a 10-year waiting list here and all over the country. 

Now, I have heard a lot about privatization, I guess in the U.K., 

that the residents have the opportunity to participate and to influence and make decisions. That is not true here. That is not true 

at all. 

As a matter of fact, in L.A. County, they want not one resident 

to serve on the County Board of Supervisors because they control 

public housing. And they come to the Congress of the United States 

21 

to deny that one resident to sit with the County Board of Supervisors, and the alternative is an advisory board with no power. 

This is unbelievable. In many other places, they patronize the 

residents a bit, many of them handpicked by the mayor, the politicians, what have you, and they will give them a trip to Washington, D.C., and they put them up in a hotel and they treat them 

nice and they take them home and they don’t give them a chance 

to vote on any policy at all. 

So this is a serious issue. And we have been dealing with it for 

many, many years. 

And I am pleased to hear and I am just delighted to have this 

hearing today because this is going to shed more light on what we 

need to do in this country. And we either have to step up to the 

plate or not. And for those people who think you can get it on the 

cheap, or that somehow these waiting lists are going to evaporate, 

this hearing helps us to understand that is not going to happen. 

The need is there. And until we recognize this and we are prepared to deal with it, it is going to get worse and homelessness is 

going to continue to increase. 

I yield back the balance of my time. 

Chairman LUETKEMEYER. The gentlelady’s time has expired. 

The gentleman from Pennsylvania, Mr. Rothfus, is recognized for 

5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Mr. Gentry, I want to touch again on your top-down, one-sizefits-all, centralized command and control criticism of our public 

housing programs. 

As you may know, I recently joined Majority Leader McCarthy 

and several members of this committee in introducing the Moving 

to Work Reform and Expansion Act. This bill would expand Moving 

to Work by allowing any public housing agency in good standing 

to take part in the program. It also includes crucial reforms to improve accountability and facilitate better analysis. 

Your testimony credits Moving to Work with providing SDHC 

with the flexibility necessary to implement transformative programs that have improved outcomes. 

Do you support the idea of expanding Moving to Work? 

Mr. GENTRY. The short answer is yes, sir. The longer answer is 

I will support that bill with some technical changes to it. 

Mr. ROTHFUS. Which outcomes do you consider when evaluating 

the effectiveness of Moving to Work initiatives? 

Mr. GENTRY. Serving the needs of the community. I will give you 

a good example that will tie back in with Ms. Waters’ comments 

a few minutes ago as well. 

San Diego has in whole numbers the fourth-worst homeless problem in the country, behind New York City, Los Angeles and Seattle. And that is in whole numbers, not proportionate to the population. And what we have been able to do with our Moving to Work 

program is to exercise a great deal of local flexibility with local discretion to address the needs of the homeless greater than we would 

have absent Moving to Work authority. 

So my belief is that Moving to Work should be available eventually to every local housing agency in the country that is not in trouVerDate Nov 24 2008 17:18 Feb 21, 2018 Jkt 024066 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\24066.TXT TERI
22 

bled status, that it gives the kind of flexibility where local decisions 

can be made. 

Mr. ROTHFUS. One of the key themes of Moving to Work is increased self-sufficiency. How do you measure self-sufficiency? And 

how successful have you been in achieving it? 

Mr. GENTRY. As you note, in my paper I point out that we established an organization called the Achievement Academy within the 

San Diego Housing Commission, and we have utilized the Achievement Academy to encourage work, work-related habits, acculturation if you will, to increase greater degree of self-sufficiency among 

our residents. 

We believe that, as in all real estate operators, you have amenities and the amenity that we try to offer our population that is not 

elderly or disabled, of course, is the ability to move into the economic mainstream. 

We have been targeting not only residents, but the adult children 

of residents and also the homeless population that we serve as 

well. 

Mr. ROTHFUS. Thank you. 

Mr. Bledsoe, my district in western Pennsylvania is home to a 

number of historically manufacturing and mining communities, 

like Johnstown and Aliquippa, that continue to face significant economic challenges, not unlike those of the north of England and 

Scotland. 

One of my major priorities as we look at housing reform is to 

work with communities like these and provide them with the policy 

tools necessary for self-empowerment and a return to growth. 

Considering lessons gained from the U.K.’s experience, which 

policies are especially effective in addressing housing affordability 

in communities where the industrial base has contracted? 

Mr. BLEDSOE. Thank you, Congressman. We have a very active 

organization in your district, Action Housing, based in Pittsburgh. 

And actually, the CEO of that is our board chair. So we are very 

familiar with that market and the challenges. And the distressed 

communities still face a lot of economic distress. 

I think there are tools. A lot of the tools that we have built in 

this country are really designed for stronger markets. Weaker markets honestly need more equity, more patient capital. 

One of the priorities of our organization is to develop strategies 

that work in more depressed markets. We are doing work in Cleveland, we are doing work in Detroit, places that face different challenges. 

One of the big issues obviously that has faced our country has 

been foreclosure. And you know, one of the recommendations we 

have in our report is around home ownership strategies. We think 

there should be a greater reliance on organizations that have more 

of a public mission, some of the nonprofits in our network who 

have done a lot of work to address the foreclosure crisis, instead 

of relying as much on Wall Street and firms that are looking to flip 

properties, rather than to provide long-term, stable housing opportunities for families. 

The foreclosure crisis devastated a lot of communities. It is still 

with us. Unfortunately, I think there is a backlog now of properties 

23 

that have been acquired by institutions that are now going to come 

back onto the streets with some of the same challenges. 

So I know there has been real concern on this committee about 

how to deal with some of those properties and some of the communities devastated by foreclosure. I think there are some lessons 

around the models that we have articulated in relying on stronger, 

mission-driven organizations to acquire and to do kind of long-term 

support for families living in those homes to either preserve their 

homes or to kind of create opportunities for lease purchase. 

The British actually have some very interesting models around 

shared ownership and strategies that are really designed for weaker markets. So I think there are some things actually we can learn 

from this experience. 

But in particular, I think we have to look at different delivery 

systems to address this than we have been relying on more recently. 

Mr. ROTHFUS. I see my time has expired. I yield back, thank you. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

The ranking member of the subcommittee, the gentleman from 

Missouri, Mr. Cleaver, is recognized for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

The HOPE VI project, which the ranking member talked about 

it, is very interesting. I was a mayor when we did the HOPE VI 

project, the first actual program HOPE VI was in Kansas City. The 

first pilot project I think was in Atlanta. 

But Mr. Bledsoe, it was based, in many ways, on a public housing project in Columbia Point. I am assuming that is also part of 

the Boston public housing. So, the way HOPE VI was supposed to 

work, we would tear down the worst housing and then replace it 

with mixed-income housing. 

I am not sure that—well, we tore down Wayne Miner, which was 

one of the notorious first housing projects in the country. It is not 

dissimilar to Pruitt-Igoe in Mr. Clay’s district. 

And so the same issue that the ranking member raised is one 

that still sits in Kansas City as a negative toward the HOPE VI, 

which was, where are the people? Because if you tear down Wayne 

Miner, you build these very nice—these are, if any of you have seen 

the HOPE VI project in Kansas City, absolutely beautiful. But then 

many of the residents of Wayne Miner never moved into this 

mixed-income area. 

I am curious about Columbia Point and where is it today? 

Mr. BLEDSOE. Columbia Point is now Harbor Point. I drove by 

that on my bicycle. There is a beautiful little bike trail that goes 

all around the harbor there and I drove by the Harbor Point probably about a month ago. And it is a beautiful community. So as a 

mixed-income development it has worked and it has worked in a 

way that I think created a model for how mixed income can be a 

better, more sustainable model for residents and can create opportunities both for the community as well as the residents. 

I do agree with you, however, that in a lot of these developments 

not all of the residents who lived there initially are now enjoying 

that splendor. And so I think that is a challenge for us. 

The communities that have been built are beautiful, they work 

for everybody who lives there, and I think they have proven that 

24 

mixed income, a range of incomes can live in the same community 

and that kind of economic diversity is a strength, not a weakness. 

But there are folks who used to live in those homes who haven’t 

benefited. And I think that is a real challenge we face. 

And I agree with you, Congresswoman Waters, that is a challenge in the HOPE VI programs. 

I think that is something that, again, the lessons can be learned 

from the British model because they have not done that. And I 

think in some of the newer RAD examples, I believe in San Francisco, there is much more of a commitment to making sure that everybody who lives there now gets an opportunity to remain and to 

be able to take advantage of sort of the new community that is 

built. 

I think that is fundamentally important. I think it is a lesson 

that we have learned the hard way. And we have to take stock of 

it. 

It doesn’t, to me, argue that we should not do mixed-income 

housing because I think that is a very powerful model and it is a 

strong model. 

The one other thing I would say about Harbor Point and going 

back to my friends at the end of the podium here who are from the 

housing authority world, there are a lot of great operators. There 

are for-profit operators that do a wonderful job and that embody 

a lot of the same principles that are sort of nonprofit, sort of social 

enterprise nonprofits incorporate, and I believe actually that San 

Diego and Cambridge really represent the same ethos that we 

have. 

So there is a bit of a convergence going on in the system between 

entrepreneurial housing authorities, like San Diego and Cambridge, and the organizations in our network. I think we are going 

to learn from that. 

I don’t think these are two different worlds. I think we are converging and moving towards a model that can work better. They 

are using nonprofits in the same way we are. We want to use some 

of the models that they have demonstrated. 

I do, though, believe that mixed income is a critical component. 

It works better. We have to figure out a way to make that work 

for a community, but to make sure that the residents who are living in the communities that are revitalized get an opportunity to 

move back or get a choice to live somewhere else that might be better for them, but it is their choice, it is not sort of the developer 

who then has to sort of re-certify in the way that Ms. Lee sort of 

has raised concerns about. 

Mr. CLEAVER. I have another question, but maybe I will get a 

chance with Ms. Lee before the hearing is finished. 

Thank you, Mr. Chairman. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Texas, Mr. Williams, for 

5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

And thanks to all of you for being here today. And I want to be 

on record that I believe in the private sector. 

I think it is fair to say that America’s affordable housing system 

is broken. In reading some of the project reports that we received 

25 

before the hearing, the number of Americans who use or are in 

need of public housing are staggering. 

I think we can all agree that the status quo is no longer acceptable and we should strive to want to offer a better product to those 

Americans who most need it. 

So my first question would be to you, Mr. Gentry. You mentioned 

Austin, Texas, and Austin is in my district, by the way. 

The United Kingdom has made a conscious effort to fund programs that transfer ownership and management of public housing 

away from the government entities. Here in the U.S., for example, 

we have 3,000 public housing agencies that manage some 1 million 

public housing units. 

So my first question is, do you believe that the private sector 

could fulfill the role of public housing authorities in serving lowand very-low-income families? 

Mr. GENTRY. In some circumstances, yes, sir; in some, not. I 

think it would depend on the locality, the ability of the local agency 

to perform and what other options are available. 

Mr. WILLIAMS. Okay. And in talking to some of our local housing 

authorities in Texas, I know programs exist that encourage working families or individuals to eventually graduate or leave public 

or assisted housing programs. Do you believe this is a model that 

works well? 

Mr. GENTRY. Yes, sir, I do. I will point out, too, that there is one 

group of individuals who typically are not involved in this discussion, and that is the folks on the waiting list. 

I will point out that in San Diego we have right now in our largest program about 15,500 Housing Choice Vouchers, and we have 

60,000 families on the waiting list for that. And the wait for that 

is close to 10 years to get in, as Ms. Waters pointed out a while 

ago. 

And I think one of the best ways to create a unit of affordable 

housing is to help a family graduate and move out of it, which is 

the reason we try to promote an individual family’s economic selfsufficiency through our Achievement Academy. And I think we 

have had a fair amount of success in accomplishing that. 

Mr. WILLIAMS. Good. What tools do we need to give our local 

housing authorities that will allow them to run programs that encourage residents to eventually graduate from public and assisted 

housing? Because I believe that giving individual programs flexibility and allowing them to innovate is probably a good model. 

Mr. GENTRY. I think the funding that has been available in the 

past for a program called the Family Self-Sufficiency Program, 

money that comes from HUD, has been very useful to us in accomplishing that. 

And I also think that in San Diego the flexibility we have had 

because of our Moving to Work status has allowed us to use relatively more of our funding for training, for acculturation, for job 

training, for job fairs to help people move up and out. 

And I think it is that sort of attitude, if you will, that we need 

to promote. And that is that in some cases families may be in the 

housing for some time, and others we help the family move on, up 

and out as quickly as they are able to. 

Mr. WILLIAMS. Thank you. 

26 

Mr. Russ, you talked about the Moving to Work demonstration 

program that gives participating public housing authorities the 

flexibility to design and test innovative strategies for providing and 

administering housing assistance in their communities. 

How successful have Moving to Work agencies been in attracting 

private sector funding to their projects? 

Mr. RUSS. I think on balance, those of us who are engaged in 

preservation or revitalization have been very successful in attracting private capital. 

I think I mentioned earlier that our leverage rate is about $16 

private to $1 public thanks to the tax credit program. And I believe 

there are probably a number of MTW agencies that, internal to the 

way MTW works, help them negotiate financial arrangements that 

are beneficial in the sense that they can bring more money to their 

units. 

The flexibility that program has across your different budget programs, if I will, allows a housing authority to present itself in a different way to a financial institution or other potential investor if 

you are seeking to attract private capital. 

Mr. WILLIAMS. Real quick, what lessons have been learned from 

Moving to Work efforts to attract more private sector funding in 

public housing that could be replicated more broadly? 

Mr. RUSS. I think being able to demonstrate that you have an 

adequate bottom line and that both in terms of the operating budget that you have, and we often use MTW funds to supplement some 

of our weaker sites. 

But I think the other thing that the private investors are looking 

for is, do you have reserves? And I know that is not a good word 

in a lot of circles here. But properties need a reserve commitment 

and MTW properties or housing authorities are better able to do 

that, I think. 

Mr. WILLIAMS. Thank you for your testimony. 

I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

The gentleman from Missouri, Mr. Clay, is recognized for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. 

And I thank you and the ranking member for holding this hearing. 

Let me ask, maybe Dr. Popkin or someone else on the panel, 

what is the average length of stay of public housing tenants or 

families, what is the average length? 

Ms. POPKIN. Nationally, I think it is 2 to 4 years. 

Mr. CLAY. Two to 4 years. And then they usually transition to— 

Ms. POPKIN. People go on and off. It is harder in tighter markets, 

and where the housing is more distressed you get tenants who 

have been there for 10 or 20 years or more. So it varies a lot. But 

nationally, the figure is 2 to 4 years. I think it is shorter on the 

voucher program than it is in public housing. 

Mr. CLAY. I see. 

And Mr. Bledsoe, one of the recommendations of the Housing 

Partnership Network report is to expand the Family Self-Sufficiency Program which helps provide families with the resources 

27 

they need to build wealth, find employment, pursue education, and 

more. 

It seems that despite the program’s proven success, it has remained limited in scope due to a lack of funding. Would you agree? 

Mr. BLEDSOE. I would. This responds to Mr. Williams’ question 

as well, which I think there has been some expansion of the Family 

Self-Sufficiency Program and project-based rental assistance. It has 

been done on an annual basis by the Appropriations Committee. 

We strongly support making that permanent and would hope this 

committee would consider expanding and making permanent the 

Family Self-Sufficiency Program before project-based rental assistance. 

There are two components of that. One is the service support and 

the service coordinators. The other is the incentive that it creates 

for family to save and the wealth that they can build as they are 

building skills, building education. 

Our proposal has been that we will figure out as charitable organizations how to raise the money for the service coordinators. What 

we want is the mechanism that creates the incentive for residents 

who live in project-based assistance, which will be a lot of the RAD 

programs, as properties convert into project-based rental assistance, that we want those incentives that would encourage individuals to work, encourage them to get training and skills. 

We think that the incentive there and the cash that can be saved 

has really proven a very, very strong incentive. And families who 

come out of that program with $6,000 or $7,000 of wealth building. 

So that started in public housing, it has been expanded, but we 

think that it is now time to make it permanent on the projectbased side, not have it subject to an annual appropriation as it has 

been in the last 2 years. 

But we are willing as nonprofits to try to raise the support that 

the families need for the service coordinators. But we just need the 

mechanism so that as your income goes up, there is not a discouragement to work and a discouragement to get the training. 

Mr. CLAY. Thank you for that. 

Mr. Gentry, in San Diego, homelessness is a major issue that has 

been receiving a lot of attention. Does flexibility under MTW allow 

you to better serve the homeless? 

Mr. GENTRY. Absolutely, it certainly does. And I will give you a 

couple of examples. We have utilized some efficiencies in our Moving to Work program to create capital that we have invested in 

properties, two of them. One is the old Hotel Churchill, which is 

a 101-year-old property that we are completing construction on 

next month which will house 72 homeless veterans. I would invite 

you to come to the dedication ceremony which will be sometime in 

early August. 

Mr. CLAY. San Diego is a wonderful city to visit. 

[laughter] 

Mr. GENTRY. And another property—Greg, you can come, too— 

we were able to acquire is a 130-unit complex for the elderly at a 

price of about $15 million for 130 units. We have set aside 20 percent of those units for elderly homeless folks. 

Ms. WATERS. Will the gentleman yield? 

Mr. CLAY. Yes, I yield. 

28 

Ms. WATERS. Thank you very much. In San Diego, you have a 

population of 1.356 million. You privatized 1,366 public housing 

units, and in all of San Diego you have 189 units left. 

Mr. GENTRY. That is accurate with one correction. We privatized 

nothing. Those 1,366 units that were formerly subsidized under 

Section 9 of the housing act, the housing commission continues to 

own, still have vouchers in them. 

The other families have made their choice to live elsewhere with 

the vouchers. We have actually created more affordable housing by 

changing our subsidy system than we had before. Nothing got 

privatized, respectfully. 

Mr. CLAY. I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

With that, we go to the gentleman from Kentucky, Mr. Barr, for 

5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

And thanks to our witnesses for your testimony. I appreciate 

hearing about the potential opportunities for studying the model 

for affordable housing in the United Kingdom and seeing whether 

or not a transfer away from government-owned public housing to 

a model that invites more private capital could actually expand access to affordable housing opportunities for many low-income and 

poor Americans. 

We know that what we have been doing in the past 50 years has 

failed. Because over the last 50 years, HUD has spent over, gosh, 

$1.6 trillion plus, Congress has appropriated over $1.6 trillion to 

support public funding housing programs, and yet we still hear 

from both sides of the aisle about the waiting lists for Section 8 

vouchers within our communities. 

We know the statistics of 46 million Americans who are struggling in poverty today without access to the best housing opportunities. And so we know that throwing money at this problem, from 

the taxpayer, has not been a policy that has resulted in optimal 

outcomes. 

Let me just anybody on the panel who might know the answer 

to this question, what is the backlog of unfunded capital needs, 

maintenance, repairs, rehabilitation that is needed for all public 

housing in the United States today? 

Mr. Russ? 

Mr. RUSS. In 2010, HUD had a private contractor conduct a 

study that sampled, I believe, close to a million units. And their estimate in 2010 was that number was around $26 billion. 

Mr. BARR. Right. So $26 billion of unfunded liabilities within existing public housing stock in the United States. What is the appetite within the private sector for and what is the capacity within 

the private sector to address that existing shortfall? 

Mr. RUSS. Let us think about what the vehicle is. The vehicle is 

the tax credit program. That is it. You have a modest amount of 

capital funding that the Congress appropriates each year, but that 

number is just completely inadequate for the need that we have described. 

So that number, the $26 billion or $30 billion it might be now, 

that is constrained by the amount of tax credits that any public 

housing entity could obtain to preserve its housing. 

29 

And we are using tax credits extensively in Cambridge and we 

have managed to raise a good bit of money with it. But I still have 

half to do. So that pool is really the single-largest pool of equity investment for these kinds of units that we have. 

Mr. BARR. So to Mr. Bledsoe and Mr. Beider, in addition to 

maybe expanding, updating the low-income housing tax credit, explain a little bit more, amplify your testimony as to how a more 

mission-driven, non-profit, social enterprise organization model 

really built on the voluntary transfer-type programs that we saw 

in the United Kingdom could supplement the invitation of private 

capital back into the affordable housing space? 

Mr. BLEDSOE. It is an enormous challenge. And I think Mr. Russ 

is correct that the low-income housing tax credit as the exclusive 

vehicle for this is going to come up woefully short. There is not 

enough tax credit to do the work that we want to do without addressing the public housing stock. And this is a really priority 

need, so there is a shortage, there is a shortfall. 

One of the examples I would give is I mentioned that we have 

created a real estate investment trust, or REIT. It is the first REIT 

that is actually owned by nonprofits, a social purpose REIT. 

We have now raised $140 million of equity from the private sector. There was a question of what kind of returns should be given. 

We are providing preferred equity opportunities to investors and 

we are giving them a 41⁄2 percent preferred return. So that is new 

capital that has come into the system. 

They are investing in it honestly because of the capacity of our 

organizations. 

Mr. BARR. And my time is expiring, so if I could just quickly rotate to Mr. Gentry. 

What would be the impact on public housing authorities to have 

to compete for allocations of Section 8 or public housing dollars 

with private, not-for-profit, faith-based or mission-driven organizations? 

Mr. GENTRY. I think the key is the economic driver. As Ms. 

Waters pointed out a while ago, in the U.K. there is a housing benefit which is an entitlement. And you take money, you put it with 

need, that turns the need into demand and the marketplace meets 

it. 

I think the issue is that the public sector has been starved for 

money and has had rules and regulations that have added more 

duties onto it. 

I think that with the rules being the same in both sides, you see 

an equivalence of ability. 

Mr. BARR. My time has expired. But I think the idea of competition will help both the public housing and authorities and these social entrepreneurship opportunities as well to provide affordable 

housing. 

Thanks for your testimony, and I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

The gentleman from Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank the ranking member as well. 

30 

And I would like to thank Mr. Russ for your latest commentary. 

I haven’t heard all of your message today. I have been attending 

to other things. I had a Floor message to give. 

But I thank you for what you said about the underfunding of 

public housing because this gets to the heart of the issue, the lack 

of a commitment from Congress. 

I literally am very reluctant to say that the system is in need of 

repair, that it is in a broken condition, because my fear is that the 

cure may be worse than the condition. My fear is that what we 

may do as a result of this hearing will ultimately cause us to find 

less public housing available than what we have today because of 

the lack of commitment. 

I was with the ranking member when we went to Louisiana after 

the hurricane. And I remember her hue and cry was a constant 

one. It was, will there be a one-for-one replacement of units as they 

are demolished and as better units are put on the market? Will 

there be a one-for-one replacement? That has always been the 

issue. 

And then the issue also becomes, why don’t we track those who 

don’t get back into these new facilities? Why don’t we track them? 

Why don’t we know what happened to them? 

We can track a person across the globe without that person 

knowing it. We were able to find Osama bin Laden without him 

knowing it, without the Pakistani government knowing it. We can 

track people if we want to, the technology is there, the system is 

there, the methodology is available to us. We choose not to track 

because then we would find out the truth. And the truth is something we don’t want to face, the lack of commitment to public housing. 

If we had the same commitment to public housing that we have 

to carried interest, to protecting carried interest, I assure you we 

wouldn’t be having this hearing. 

If we had the same commitment to public housing that we have 

to the yield spread premium, or had to it, we had to eliminate it 

in Dodd-Frank, but if we had the same commitment, we wouldn’t 

be having this hearing. 

If we had the same commitment that we have to protecting those 

who invest my money when I am a pensioner and allow the investor to decide that he will invest my money in something that costs 

more when a similar product is available for less, no fiduciary rule, 

if we had the same commitment to this public housing as we have 

to elimination of the fiduciary rule, we wouldn’t be having this 

hearing. 

There is a lack of commitment. And it doesn’t matter how great 

the plan is. If you are not committed to the plan, the plan becomes 

another plan that did not work. 

There are countries with greater constitutions than the United 

States. Ours is a great Constitution. But on paper there are other 

countries that have constitutions that are greater. But they are not 

committed to their constitution. This is the greatness of the American Constitution. The people are committed to our Constitution. 

And until we on this committee become committed, all we will 

do is find clever ways to rearrange the chairs on the deck of the 

31 

sinking Titanic, find clever ways to demolish, eliminate, and improve neighborhoods, but in the process put people into the streets. 

The greatness of this country will never be measured by how we 

treat people who live in the suites of life. The greatness of any 

country is measured by how you treat people who live in the 

streets of life. How do you treat people who are homeless, not how 

you treat those who live in the penthouses, who want all the 

breaks, not how you work hard to make sure they continue to get 

all of the advantages in life. 

There are people who are suffering and we choose to spend our 

time making sure billionaires have better opportunities. 

That is the flaw and the fallacy in all of this. And until we decide 

we are going to commit ourselves to people who don’t necessarily 

vote and who don’t make big campaign contributions, all of this 

will continue to be an exercise in futility. 

But I am going to be a part of the exercise and I am going to 

fight for those people who are homeless and locked out and left out 

and left behind. 

I yield back. 

Chairman LUETKEMEYER. The gentleman’s time has expired. 

The gentleman from California, Mr. Royce, is recognized for 5 

minutes. 

Mr. ROYCE. Thank you very much, Mr. Chairman. I appreciate 

that. 

And I thank the witnesses for being with us today. 

The success of the affordable housing program should be judged, 

I think, on outcomes and how it is helping Americans get back on 

their feet, not necessarily by the amount of taxpayer dollars spent. 

HUD has a program, Moving to Work. It is a pilot program, and 

I think it fits the bill of a success in this regard. 

And in my district, the housing authority of the County of San 

Bernardino oversaw an annual 24.6 percent reduction of unemployed household heads and a 52.4 percent average income jump 

for those participating in the MTW program there. 

So Mr. Gentry, the difficulties facing those seeking affordable 

housing in southern California—what has the San Diego housing 

commission’s track record with MTW been? And how does localized 

control of funding allocation, as is more commonplace in the United 

Kingdom, contribute to efficiency? 

Mr. GENTRY. I think the Moving to Work program has been essential to what San Diego’s success has been. As I indicated a few 

minutes ago, we have been able to utilize savings from efficiencies 

in the Moving to Work program to better address homeless services. We have been able to focus on our families to increase the 

level and degree and type of work the families do. 

It is Moving to Work. One of our successes is getting more families to work. It has been absolutely essential. 

It is also the public housing transformation that we have done 

has helped, as well. Because I think that part of what we need to 

do is to make sure that our residents, as much as possible, have 

the same choices in life as those who are not residents of public 

housing or in a Section 8 program, and that is live where they 

want to live and work where they want to work and associate with 

whom they want to associate. 

32 

So we think that our program has been very useful in helping 

people increase their choices and to increase their economic station 

in life as well. 

Mr. ROYCE. Thank you. 

And I will go to Mr. Russ, too. Because Mr. Russ, you testified 

to both the success of the Moving to Work program, but also how, 

and I will quote here, ‘‘The current public housing system, including HUD itself, rationalizes structure and process over social outcomes.’’ 

Is the reluctance of HUD to expand the Moving to Work program 

an example of this philosophy? 

Mr. RUSS. I guess I will start by saying I think that this is a 

really good program and I have a bias towards MTW since we are 

an MTW agency. And I would say there are a couple of factors at 

work. 

The first is, when you receive an MTW designation, the relationship you have with the department is fundamentally altered. You 

have an agreement and that agreement has value and meaning in 

the sense of a contract. And in that relationship, there is more of 

a peer relationship with the department than not. And frankly, 

that doesn’t always sit well in terms of how the department’s rules 

and regulations and many of those things are promulgated. 

And at times, in my own view, there is a lack of understanding 

of the MTW agreement itself. It is a very powerful document. 

Mr. ROYCE. I think it is a win-win. 

Mr. RUSS. I would agree with you. But the reluctance is that you 

have this fear that somehow by giving a locality this designation— 

Mr. ROYCE. Yes. 

Mr. RUSS. —it would turn in the wrong direction. 

Mr. ROYCE. It is decentralized. 

Mr. RUSS. Yes. 

Mr. ROYCE. And there might be some concern of the decentralization. It is, of course, flexible. But I think at the end of the day it 

is time to advance this from a pilot program to a more expansive. 

We have had 20 years of demonstrations, but we have communities obviously that could really utilize the program. 

I have lent my support to H.R. 5137, which is the Majority Leader Kevin McCarthy’s bill, the Moving to Work Reform and Expansion Act. And I would hope that the agency itself could get behind 

this concept and we would have a bipartisan support for it for the 

reasons that I cited earlier. The percentages that I have seen on 

this indicate it is very, very effective. 

But I thank the witnesses very much. 

And Mr. Chairman, thank you for holding the hearing. 

Chairman LUETKEMEYER. I thank the gentleman from California. 

The gentleman from Michigan, Mr. Kildee, is recognized for 5 

minutes. 

Mr. KILDEE. Thank you, Mr. Chairman. I thank you, I thank the 

ranking member for holding this hearing, and I thank the witnesses for your attendance. 

And I wonder if I could perhaps start with Mr. Bledsoe. I would 

like to pose a couple of questions that maybe you would all comment on. 

33 

But in your testimony, you refer to some of HPN’s recommendations and particularly around the Family Self-Sufficiency Program. 

The reason I ask that, and I would like you to couch this, perhaps 

any of you who would like to comment, in the context of weak markets. 

I come from Flint, Michigan, but I am not going to go too far into 

describing Flint. I think the story sort of tells itself. 

The concern that I have and what I would like you to address 

in that context is that a lot of the discussion when it comes to 

housing deals with housing in its form as a commodity or on a 

transactional basis, trying to figure out how to make the transactions work better, where a subsidy should go, what form it 

should take, et cetera, et cetera. 

The context, I think, is very often lost. The context in the sense 

that the individuals accessing housing need more than housing in 

order to become successful, the self-sufficiency efforts, I think, are 

woefully inadequate in order to deal with it from a family perspective. 

And of course, the larger context of community is often lost. 

Something that looks like it can work in a transactional basis 

might not work for the family. And when we see especially in distressed communities, and I am thinking of the north of England 

where you have had significant population loss, or places like my 

hometown, or Detroit, where frankly, a one-for-one replacement on 

demolition doesn’t make any sense at all because we are building 

in an oversupplied market. 

If you could comment on the lack of support for holistic community development efforts so that the context around whatever form 

publicly supported housing takes is more successful and the need 

for more specific support for families. 

And if we could start with Mr. Bledsoe, but I would open it up 

to others, particularly Mr. Beider, who might want to comment in 

terms of the distressed communities particularly in the north of 

England that have had population loss. 

Mr. BLEDSOE. Thank you very much, Mr. Kildee. And we have 

admired your work prior to Congress, your work in Congress as 

well, but in leading the Land Bank. We are very familiar with the 

challenges in Flint. 

I mentioned earlier that we have now launched a nonprofit development company in Detroit called Develop Detroit because that is 

a market that has a real need for redevelopment, but organizations 

that have grown up in other parts of the country that are like our 

members never really thrived in Detroit. And we are taking some 

of the models that exist in other places and working with the city 

to build a nonprofit development company there that can address 

some of the unique challenges. 

I say unique, but they are not. The scale in Detroit is unique, but 

the challenges in weak markets are similar and they are very different than strong markets. 

I think one of the lessons we have certainly learned working with 

groups in St. Louis and Cleveland and markets, parts of Chicago, 

Detroit, is that housing by itself is not the answer. Housing in 

those markets is important, but you need a comprehensive apVerDate Nov 24 2008 17:18 Feb 21, 2018 Jkt 024066 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\24066.TXT TERI
34 

proach that deals with the schools, that deals with safety, that 

deals with health and education, deals with jobs. 

So I think in weaker-market communities, you need a comprehensive approach. If you are in San Francisco, there is just an 

acute affordable housing shortage and you can kind of focus on 

that. 

Now, they have school challenges, they have other challenges, I 

am not saying they don’t but you can think of it a little bit more 

as a transaction. 

Though I think fundamentally, housing is a platform that helps 

families succeed and it is a way to connect them into community 

and give them access to health and education, jobs. But that is particularly the case in communities like Flint, and St. Louis, places 

that—it is a comprehensive problem. 

So I think family self-sufficiency is just one way of thinking 

about not just the housing itself, but the people who live there and 

how you can connect them into other services and opportunities 

kind of in the neighborhood. 

You need to be addressing the school challenges, you need to be 

addressing the whole comprehensive needs for it. So I think you 

are spot on. It is a different problem. It is something that is apparent everywhere, but it is just striking in a community like Flint, 

that you can’t just be thinking about doing a housing transaction 

and you think that is going to solve it. 

Housing, I think, there still is a foundation there, but you need 

to be thinking about ways to connect that family into other supports in that community. And that is why I think things like family 

self-sufficiency can be so important. 

Mr. KILDEE. Thank you. 

Thank you, I see my time may have expired. So thank you, Mr. 

Chairman. 

Chairman LUETKEMEYER. I thank the gentleman from Michigan. 

The gentleman from New Jersey, Mr. Garrett, is recognized for 

5 minutes. 

Mr. GARRETT. Thank you, Mr. Chairman. I may not use the entire 5 minutes. 

Let me begin by thanking the chairman for holding this hearing, 

for this discussion that we have had, and I know you are one of 

the most knowledgeable guys here on this topic and I look forward 

to your legislation proposals coming out of this. 

I think, Mr. Bledsoe, your point is where I was just going to tee 

off on. What we can do to address the issue of housing is fundamental to the issue of the strength of a community? 

If someone is being compassionate for another individual, it is by 

them showing concern for that other individual, whether they have 

a roof over their head, that old saying of someplace to hang your 

hat. But it is so much more than simply where you are hanging 

your hat. It is where you are able to live, marry, raise your family, 

and have roots in the community. It goes to the points of the other 

gentlemen and you sort of capsulized it well. Send your kids to 

school and have a sense of community. 

That all begins, not ends, in saying, well, this is my home, 

whether that is a house I buy or that is a house that I am renting, 

35 

but realizing I have protections and the wherewithal to be able to 

be in that house as well. It all begins there. 

To facilitate that then, you have to look—and to realizing we 

have problems in this area, you have to look to say, well, what are 

some of the problems that we need to address? I have heard a couple of them, I agree with some, I disagree with others. 

I have heard we need to address income inequality, funding the 

model, which is the appropriate model, some models that we have 

in the United States versus models overseas, and the third point, 

third or fourth, however you are counting, no one has addressed 

and that is the regulatory side. And I will get into that in a 

minute. 

Dr. Popkin raised the issue that one of the fundamental problems is income inequality. I have said this before in this committee, 

we can end income inequality in this country today if we just pass 

a law that says the top 1 percent in this country has to leave tomorrow. You would see the charts again show income inequality 

has been erased. 

But that has done absolutely nothing for the middle-income and 

the lower-income people. They will still not be able to afford that 

house just because you got rid of the top 1 percent or the top 5 percent income earners or wealthiest people in this country. They will 

still have the problem of trying to afford and the daily costs of the 

upkeep and what have you. So it is not income inequality. 

If you had said tomorrow that the builders and the investors who 

see there is a profit margin in building the 3,000, 5,000, 10,000 

square-foot home, because there is a larger profit, is there not, in 

those homes that they can’t do that, will that force them all then 

to build low- and moderate-income housing? No, not necessarily, 

they will just look to see whether there are other, better investment vehicles for their avenues. 

So I think Mr. Russ was addressing some of those needs that you 

need to do to help entice and tax changes and what have you in 

order to say this is an investment vehicle that you can actually 

make a profit, and profit is not a dirty word, and still provide a 

benefit to the community, as Mr. Bledsoe and others have said, 

which is housing. So it is not income inequality. 

Funding and lack of investment, I think, is where the—and different models, I think, is where the chairman wants to go on this. 

The third or fourth point which no one really talks about is, why 

is housing so expensive in the first place? And when I talk to builders, they tell me, well, there are a couple of things there, Congressman. One is the cost of land and that is tied to trying to actually 

find a place where you can build low- and moderate-income housing 

or any housing and the cost of land as regulatory size pushes that 

up. 

The other is basically the cost of regulation for building these 

houses in the first place. And I know in my State, I remember a 

study done years ago, and they said around 30-plus percentage of 

the cost of building some of these places is the regulatory side of 

the equation. 

So I only have a few seconds left. Has anyone looked into that 

equation, whether it is on a State or the Federal level, as to whethVerDate Nov 24 2008 17:18 Feb 21, 2018 Jkt 024066 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\24066.TXT TERI
36 

er the regulatory side is driving up the cost and, therefore, making 

the low- and moderate-income? 

Mr. Gentry seems to be nodding his head. 

Mr. GENTRY. Yes, sir. Let me refer you to the housing commission’s website, which is sdhc.org. We have conducted a study that 

is posted on that website, that we delivered to a city council committee in December— 

Mr. GARRETT. Yes. 

Mr. GENTRY. —that posted 11 drivers of high costs for affordable 

housing. 

Mr. GARRETT. Okay, good. 

Mr. GENTRY. Eight were city-focused, two were focused in Sacramento, and one here nationally. I would refer you to that, sir. I 

would be glad to speak with you about it anytime you want to. 

Mr. GARRETT. I appreciate that. 

And my time up, I guess, Mr. Chairman. 

Chairman LUETKEMEYER. I thank the gentleman. 

With that, our hearing is at an end. 

I thank all of the witnesses for being here today, for your testimony, and for your answers to some difficult questions. You have 

given us a lot of food for thought and we appreciate your expertise 

and your knowledge and willingness to share it with us. 

We will continue to work with each one of you to hopefully craft 

some things, some solutions to look at ideas, to perhaps add flexibility to existing rules and regulations or put together a pilot 

project of some kind. Who knows, wherever we can find ways to improve the housing situation in this country, I think that is what we 

need to be taking a look at. 

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 11:55 a.m., the hearing was adjourned.] 

(37) 

A P P E N D I X 

May 12, 2016 

38 


24066.001

Testimony prepared for the hearing. "The Future of Housing in America: A Comparison of the 

United Kingdom and the United States Models of Affordable Housing" on May 12, 2016. 

U.S. House of Representatives 

Subcommittee on Housing and Insurance 

Professor Harris Beider 

Visiting Professor, School of International and Public Affairs, 

Columbia University in the City of New York 

Professor in Community Cohesion, Coventry University, England, UK. 

Additional support provided by Kusminder Chahal, Coventry University, England, UK 

and Arlene Conn, Baltimore, USA. 

The views expressed are those of the author and should not be attributed to Columbia University 

or Coventry University, trustees, or funders. 

1 
39 


24066.002

Mr. Chairman and members of the Committee, thank you for inviting me to appear here today 

for this hearing on "The Future of Housing in America: A Comparison of the United Kingdom 

and the United States." For the past 15 years, I have been conducting research on housing, 

community engagement and change. Previously, I led two national housing organizations in the 

UK. The first of showcased how social housing investment could be used as a catalyst for 

neighborhood regeneration, whilst the second organization I led was focused on promoting the 

housing needs of communities of color in the affordable housing sector. In particular, my 

research on housing has considered the issues of race and community engagement and promoting 

models of good practice related to both the US and the UK. 1 In addition, with my colleagues, Dr. 

Susan Popkin and Diane Levy from The Urban Institute, I have conducted two research projects 

comparing housing and redevelopment initiatives in the US and the UK. 2 

CONTEXT 

1 Beider, H. (2008) Neighbourhood Renewal & Housing Markets: Community Engagement in the US and UK. 

Oxford, Blackwell Publishing 2 Beider, H., Levy, D., and Popkin. S. (2009). Community Revitalization in the United States and the United 

Kingdom. Washington, DC, The Urban Institute; Levy, D., Beider, H., Popkin, S., and Price, D. (2010)Atlantic 

F~change: Case Studies of Housing and Redevelopment in the United States and United Kingdom. Washington, 

DC., The Urban Institute. 

2 
40 


24066.003

Political debates on affordable housing in the United Kingdom and the United States have been 

at the forefront of public policy for decades. In the last thirty years, both countries have seen 

substantial changes to national and local approaches to affordable housing. The processes of 

privatization, de-regulation and the changing nature of cities and regions, together with 

interventions to prevent the most severe impacts of economic turbulence, have moved forward 

the debate considerably. In this written statement, the objective will be to compare and contrast 

approaches to affordable housing policies in the UK and US before reflecting on key policy 

interventions and considering future prospects. 

There is prior significant research comparing affordable housing in the UK and US, notably the 

account provided by Karn and Wolman (1992). 3 While somewhat dated, the key issues are 

relevant to some of the contemporary issues that this Committee seeks to address. In short, the 

US approach was based on a complex system of tax deductions to encourage homeownership 

with a small and marginal affordable housing sector when compared to the more widely 

supported social housing4 promoted by local authorities5 and housing associations6 in the UK. 

Table I compares US and UK public assisted housing systems. 

Table I Comparing affordable housing in the US and UK 

3 Wolman, H. (1975) Housing and Housing policy in the U.S. and the U.K. Lexington, Lexington 

University Press.; Karn, V. and Wolman, H. (1992) Comparing Housing Systems: Housing Performance 

and Policy in the United States and Britain. Oxford, Clarendon Press; Katz, B. (2004) Neighbourhoods of 

Choice and Connection: The Evolution of American Housing Policy and What it Means for the United 

Kingdom. York, Joseph Rowntree Foundation; Beider, H. (2008) Neighbourhood Renewal & Housing 

Markets: Community Engagement in the US and UK. Oxford, Blackwell Publishing 4 Affordable housing at below market rates 5 City government 6 Not for profit, charitable organizations that develop and manage affordable housing 

3 
41 


24066.004

United States United Kingdom 

Public housing authorities and not for profit Local authorities and housing associations 

organizations build and manage housing for build and manage housing for low income 

low income communities communities; since 2015 need to consider 

using resources for 'starter homes' as part of 

home ownership push by government 

Stigmatized social housing sector Stigmatized social housing sector but much 

less so than the US 

Public and assisted housing sector is about Public and assisted housing sector is about 

2% of total housing stock 16% of total housing stock 

Public housing demolition by programs such Public housing transfer by Large Scale 

as HOPE VI Voluntary Transfer Program 

Public sector housing characterized by Public sector housing characterized by 

segregation by race and income segregation by income rather than race 

Voucher program allow tenants to move out No voucher program but universal credit has 

from public housing been paid direct to individual since 2015 

allowing transfer to private rented sector; 

"Right to Buy" public housing at deep 

discounts 

Source: amended from Beider (20()8} 

From a review of the data in Table 1, are we to conclude that approaches to affordable housing 

are similar? Private housing tenure, and creating a "property owning democracy," has become a 

key and shared political objective in the US and UK. Public housing has become stigmatized in 

both countries with the worst stock being demolished and replaced with mixed income and 

mixed tenure housing stock while national or federal government has encouraged housing 

organizations to become more efficient and deliver a wider range of housing products with fewer 

resources. 

This Committee intends to look at lessons learned from policies and practices in the UK housing 

sector. In order to do so, the origins of the current system need to be considered. Affordable 

housing has been widely viewed as being the responsibility of government. Indeed this has been 

embodied since 1919 when the British Prime Minister David Lloyd-George made local 

authorities responsible for building social housing, or "Homes Fit for Heroes" for those soldiers 

who were returning to slum like conditions after military service in World War I. However, it 

was only after World War II that large scale council house building was undertaken by local 

authorities responding to a pressing need to rebuild British cities that had been destroyed or 

heavily damaged by bombings. As was the case in 1919, government also had to meet the 

4 
42 


24066.005

expectations of the population following the deprivations of conflict. As noted by the BBC, 

increasing the supply, access and above all the quality of new homes was a priority: 

"A generation was introduced to the joys of indoor toilets, front and rear gardens, and 

landscaped housing estates where, as the town planners boasted, a tree could be seen 

from every window." 7 

It was the public sector rather than private sector that took the lead in building housing on a mass 

scale. In 1945, the new Labour government worked with local authorities to build over a million 

new homes. 8 In this way, social housing in the UK has been embedded as part of the welfare 

state. This idea was first developed by the Beveridge Report of 1942, which identified 'five 

evils' in British society: squalor, ignorance, want, idleness and disease. The creation of the 

National Health Service in 1948, National Insurance, Unemployment Benefit and a program of 

Public Housing was a vision of"the living tapestry of the mixed community," in which "the 

doctor the b>rocer, the butcher and the farm labourer all lived in the same street."9 

Affordable housing in the UK springs from the ethos of the welfare state. Local authorities and 

housing associations have been concerned with much more than the construction and 

management of housing with the engagement and wellbeing of tenants being an important 

concern. Housing organizations have used their anchor position within a city and neighborhood 

to organize training programs so that tenants have the skills to compete in the job market, created 

social enterprises that have been led by tenants or have a community benefit and attracted private 

sector investment supporting renewal. These activities that focus on social investment have 

sometimes been viewed as "added value" or "housing plus" initiatives. 10 

Moving away from the principles of affordable housing could lead to a very different social 

housing sector that downplays community engagement and social investment and regards it as 

bringing a low return for investment in a sector that is more about managing the bottom line 

rather than the double bottom line. Affordable housing providers need to balancer social and 

economic outcomes during a period of considerable transformation. 

7 BBC, (2015) A History o_{Socia/ Housing http://www.bbc.cominews/uk-14380936. Accessed 6'h May 2015. 8 Gregory, J. and Mullins, D (2015) The Future of Social Housing. Webb Memorial Trust, London 9 lbid 

10 Slatter, P. ( ed.) (200 l) After the crossroads: Housing associations as community investors. York, Joseph 

Rowntree Foundation. 

5 
43 


24066.006

POLICY DRIVERS 

The preceding discussion shows the strong historical and political roots of the affordable housing 

movement in an expansive and progressive welfare state. Affordable housing has been described 

as the "wobbly pillar" of the welfare state. 11 • This is indicative of how affordable housing is 

becoming increasingly separated from the goal of providing decent government subsidized 

housing to lower income households in need. In this section our attention will focus on four key 

policy interventions which have transformed affordable housing in the UK: Right to Buy, the 

1988 Housing Act, Large Scale Voluntary Transfer and the 2016 Housing and Planning Bill. 

Right to Buy 

Britain in the 1970s was characterized by political discord and economic breakdown. The 

Keynesian economic boom had come to an end as a result of increasing commodity prices such 

as petroleum, severe underinvestment in infrastructure and manufacturing. The poor state of the 

economy was underscored by a deteriorating political climate characterized by labor disputes 

between government and unions, riots on the streets and coalition government. 

In this context, the 1979 victory by the Conservative Party, led by Margaret Thatcher, was seen 

as a break with the previous political consensus of supporting the welfare state. The new 

government initiated a series of reforms based on de-regulation and privatization. Affordable 

housing, previously supported by both Labour and Conservative Parties, was seen as leading to 

welfare dependency and preventing people from achieving the aspiration of home ownership and 

a consequent property owning democracy. 

"The Right to Buy" policy, which gave existing local authority tenants the right to buy their 

property with deep discounts, was a flagship of the Conservative government's 1980 Housing 

11 Malpass, P. (2008) Housing and the New Welfare State: Wobbly Pillar or Cornerstone? Housing Studies, Vol23, 

I, pp 1·19. 

6 
44 


24066.007

Act. The premise of the policy was based on personal freedom and increased consumption, both 

of which appealed to voters. Home sales increased rapidly in 1981 (66,321 sold) and 1982 

(174,697 sold) and continued for the rest of the 1980s. 12 Local authority housing was a state 

asset and "Right to Buy" was viewed as consumer capitalism. On closer inspection, the policy 

was unbalanced. The best properties in the inventory sold- typically houses rather than 

apartments, in smaller housing developments and in the economically vibrant South rather than 

stagnant North. The beneficiaries were tenants working in middle income jobs who were 

familiar with homeowners and viewed homeownership as attainable. The average discount 

provided by the government for council homes sold between 1980 and 1985 was a staggering 

44%. 13 While "Right to Buy" was conceived as expanding a property owning class, the 

resultant benefits were limited to higher income local authority tenants. 

Initially, discussions in the Conservative government deemed that the receipts from the sale of 

properties would be returned to local authorities to replace lost housing stock. In reality this did 

not occur; instead the size of the affordable housing sector was reduced considerably. As Table 2 

shows, in 1981, 31.6% of the housing stock was social rental housing and by 2014 this had 

declined to 17.3%. The consequence for local authority tenants was equally dramatic as demand 

exceeded supply, which led to increases in rent and challenged the concept of affordable 

housing. In 1991, ten years after the first "Right to Buy" sales and rents had increased by 55% in 

relation to average earnings. 14 In a seminal study on "Right to Buy," Jones and Murie state "{fit 

were not for the right /o buy ... the council housing sector as a whole would have generated huge 

surpluses {from rental income J and the rise in real rents ... would not have been necessary." 15 

Table 2. Tenure split in England 

Thousands of 1981 2000 2013-14 

households 

Owner Occupier 9,860 14,340 14,319 

Private rental 1,910 2,028 4,377 

Social rental 5,460 3,953 3,920 

12 The Guardian (2015) The right to buy: the housing crisis that Thatcher built 

http://w\VW. the guard ian .com/society/20 15/aug/26/right -to-buy-mamaret -thatcher-david-cameron-housing-crisis. 

Accessed 9'h May 2016. 

nJones, C. and Murie, A. (2006) The right to buy: analysis & evaluation of'a housing policy. Oxford, Blackwell. 14 The Guardian ibid 15 Jones and Murie. Ibid 

7 
45 


24066.008

All dwellings 17,230 20,320 22,617 

%of total 

Owner Occupier 57% 70.5% 63.3% 

Private rental II% 10% 19.3% 

Social rental 31.6% 19.5 17.3% 

Source: Annex Table 1.1: Trends in tenure, 1980 to 2013-14, English Housing Survey 

In conclusion, the "Right to Buy" policy was a concerted attempt to de-regulate and privatize the 

affordable housing sector. For those who were successful, increasing levels of homeownership 

led to capital accumulation. This was part ofthe Thatcherite Revolution of the 1980s. However, 

it contributed to a housing crisis when housing units were not replaced and, consequentially, 

rents increased exponentially. 

Housing Act 1988 

A second significant reform introduced by the Conservative government was the 1988 Housing 

Act. This enabled housing associations to access investment from private financial markets to 

undertake repairs of existing housing stock and develop new housing stock. In the early 1990s, 

social housing development was underwritten by government subsidy of75% of building new 

homes. This fell to 39% by 2010 and 14% by 2015. 16 

As noted earlier, the business of housing associations was to provide affordable rental housing 

for low income communities. Declining levels of government subsidy and the provisions of the 

1988 Housing Act resulted in increased loan financing by many housing associations. Before 

looking at the levels of investment into the sector, it is important to understand how housing 

associations were viewed as secure businesses. There are approximately I, 700 housing 

associations in England managing over 2 million homes. 17 Assets are fixed and long term 

stability is demonstrated through rental income that provides 85% of the revenue stream. 

Employees have an ethos of professionalism combined with dedicated public service. Agencies 

are perceived as social enterprises regulated by the government through an arm's length 

16 Chapman Taylor (2015) http://www.chapmantavlor.com/enlinsightslarticlelresidential-the-future-of-housingassociation-devclopment/enl. Accessed 71

h May 2016. 

" Heywood, A. (20 13) Investing in Social Housing: A Guide to the Development of the Affordable Housing 

Sector. London, The Housing Finance Corporation. 

8 
46 


24066.009

approach that protects against defaults. In short, housing associations appear to be an attractive 

option for lenders as low risk and high yield enterprises. 

"The housing association sector is a diverse sector dedicated to meeting the needs of 

communities across the length and breadth of the United Kingdom. Although HAs are 

private bodies, independent of government, their range of activity represents perhaps the 

most successful public private partnership in the UK ... Crucially, lenders to the sector 

are able to take full security in the form affixed or floating charges against the housing 

assets, utilizing a conservative valuation methodology ... they represent a low risk 

investment opportunity that has already attracted an estimated £62 billion of bank and 

capital markets finance across the UK as a whole, over £58 billion of that in England 

alone. "18 

Since 1988, housing associations have been very successful in raising private finance to support 

social aims. By 2012, housing associations secured more in private finance to cover operations-

£4 7.9 billion -than government grant - £43.8 billion- for the first time, marking a dramatic shift 

in the support for social housing. 19 In total, housing associations have raised over £70 billion 

from financial markets. 20 This is against a total valuation of housing association assets of £118 

billion in 2012/13.21 

The scale of private lending is impressive and takes into account the 2008 economic crash. 

Indeed, housing associations access £6 of private finance for every £1 of government subsidy. 

There have been surprisingly few housing associations that have run into financial difficulties 

and this good credit history has enabled significant lending. In 2014, Notting Hill Housing Trust 

secured £250 million on the bond market to finance the building of 1,400 homes each year until 

2020. 22 However, housing associations negotiating with bond dealers in the City of London are 

far from meeting the needs of low income communities. 

There is concern that the mixed funding structure introduced by the 1988 Housing Act has 

compromised the ethos and guiding principles of housing associations. Is meeting the need of 

financiers more important than that of low income communities? To what extent can housing 

18 Ibid 19 Ibid 20 Whitehead C. and Williams, P. (2014) Looking Back, Looking Forward: Finance for Social Housing (from 

Guarantee to Guarantee). Presentation made to the Private Finance Seminar, London School of Economics, 15'h 

September 2014. 

" Heywood, Ibid. 22 Chapman Taylor, Ibid. 

9 
47 


24066.010

association staff understand the real world experiences of tenants whose conditions may be 

markedly different from their own? And despite the close regulation of housing associations, 

how resilient is the sector to another economic crash? Addressing these points is complex but 

supports a more nuanced understanding of affordable housing in the UK. 

Large Scale Voluntary Transfer 

The 1988 Housing Act was transformative. Jn addition to introducing the concept of borrowing 

to support the development and management of affordable housing, local authorities now had an 

opportunity to repair and renew their housing stock through the process of large scale voluntary 

transfer. 23 The process was underpinned by a number of factors, including securing the support 

of a majority of tenants in a secret ballot, transferring stock from the public local authority to a 

private, albeit not for profit, housing association, and attracting investment from capital markets 

to repair housing stock. 

Twenty years after the first stock transfer, a study by the Joseph Rowntree Foundation reviewed 

the impact of the policy. By 2008, 1.3 million homes had been transferred from local authorities 

to housing associations,24 £14 billion had been invested into repairing housing and more than 2 

million residents had benefited from the process. 25 Much of the impetus for the policy was 

supported by the new Labour government, elected in 1997 and determined to address social and 

economic disadvantage through working with the public and private sectors. Importantly, a 

"Decent Home Standard" stipulated that all affordable housing, either in local authority 

controlled or let by housing associations, must meet specific criteria in order to be deemed stable 

by 2010. Many local authorities did not have the necessary levels of funding to meet the criteria 

and had no choice but move in the direction of large scale voluntary transfer. 

The process of large scale voluntary transfer has reshaped the social housing sector in the UK. 

By 2015 there had been 300 stock transfers involving more than 200 local authorities shifting 

23 International Partnership Network (2016) Lessons of the International Partnership Network. Boston, HIP. 24 Pawson, H., Davidson, E., Morgan, J .• Smith, R., ~d Edwards, R. (2009) The Impacts of Housing Stock Transfers 

in Urban Britain. York, Joseph Rowntree Foundation 25 The Guardian (2008) Voluntary transfer for social housing celebrates 10 years 

http://www.theguardian.com/society/2008/deciiO/housing-voluntarv-transfer. Accessed 7"' May 2016. 

10 
48 


24066.011

over one million properties from the public to the private sector. 26 These new organizations 

account for 44% of the 2. 7 million housing association homes. 

Some housing advocates have criticized the policy as being back door privatization of 

government assets. One of the leading organizations, Defend Council Housing, has been 

vociferous in its opposition to large scale housing transfer pointing out that tenants face the 

prospect of eroded housing rights, higher rents and less accountability. 

"Councils pushing privatization always tries and make out stock transfer is the best thing 

since sliced bread. They launch an expensive and glossy PR Campaign- usually only 

promoting one side of the argument and often break what most people would think are 

basic democratic procedures to try and prevent or make it hard for anyone to put the 

case against. Don't be bullied and blackmailed. Make sure that there is a full and 

balanced debate in your area so that tenants hear both sides of the argument."27 

The advocates also point out that the focus of housing associations has shifted to working more 

with financiers than tenants. They are also concerned with what they perceive to be excessive 

salaries paid to executive and senior staff in the housing association sector and see these 

increases as far from the public service ethos that shaped council housing in the 20th century. 

These are important counter arguments to the dominant direction towards increased privatization. 

Housing and Planning Bil/2016 

26 Social Housing (20 15) Consultation into stock transfer borrowing capacity gets underway 

http:l/www.socialhousing.co.uk/consultation-into-stock-transfer-boJTOWing-capacity-gets-underway/7008785.article. 

Accessed 7'' May 2016. 

"Defend Council Housing IU!P.:!i!'!:':"':"c<l_efen<).£Q~!l.cij_h_Q!l1in.&Ql:J!.,Ukidch/dch inf()J1'!_g~.cf!Jlll\WQJ:d=t11!Q>.fur. 

Accessed 7'' May 2016. 

11 
49 


24066.012

In May 2015, the Conservatives secured an unlikely victory in the British General Election. The 

topic of housing generally and affordable housing specifically was given a high profile during 

the campaign, with stories of young people paying high levels of rent in an unregulated private 

sector and often priced out of cities. This led to debates about who should have access to social 

housing and whether reliance on social housing led to welfare dependency. 

Some have suggested that the new government proposals contained in the Housing and Planning 

Bill could lead to the death of affordable housing. The focus is to increase home ownership rates 

with new measures that include: fixed term council tenancies limited to 10 years; "pay to stay" 

charges for council tenants earning more than £30,000 per year (£40,000 in London); extending 

the "Right to Buy" to housing association tenants; and forcing Councils to sell their remaining 

high value properties to fund new starter homes for people under the age of 40. 

The focus on home ownership means that affordable housing will become even more marginal as 

we noted in Table 2. As the Chief Executive of Chartered Institute of Housing, one of the 

leading professional housing organizations in the UK, stated: 

"Our fear is that some of the proposed measures in the housing and planning bill will 

make it incredibly difficult for councils to build new homes and that vital council 

housing could be lost ... According to our analysis, almost 7,000 council homes a year 

could be lost when right to buy is extended to housing associations if no extra funding is 

provided. We also have serious concerns about pay to stay, which we believe could 

discourage social housing tenants from increasing their earnings or finding work, as well 

as pushing people into housing benefit entitlement. "28 

Indeed, an ex-leader of a housing association lamented that "The housing bill signals the end of 

the road for truly affordable housing in England. " 29 

CONCLUSIONS 

Death of social housing? 

28 The Guardian (2016) Experts say housing bill signals end of the road for affordable housing 

http://www.theguardian.com/housing-network/20 16/jan/05/expert-views-housinQ-bil l-end-affordable-housing. 

Accessed 7"' May 2016. 29 Ibid 

12 
50 


24066.013

Affordable housing continues to be an important part of the housing equation for many living in 

the UK. It was conceived as an integral component of the welfare state and ensured that many 

people could have a firm footing in society through the solid foundation of decent and stable 

housing. 

Since the birth of the welfare state debates on affordable housing have focused on the who 

should have access to this limited resource when demand far exceeds supply. In short, who are 

the deserving and undeserving of a shrinking welfare state? The debate has been transformed by 

policy discussions related to "The Right to Buy," the access to private finance to build affordable 

homes under the 1988 Housing Act, and the radical provisions in the current Housing and 

Planning Bill. During this period there has been a rapid decline in social housing tenure as well 

as a rise in home ownership and private sector rentals. 

Looking to the future, there is a risk that affordable housing, as it has been known in the UK, will 

cease to exist. The government target to increase home ownership in the UK is currently not 

been born out in practice (see Table 2). 

It should not be overlooked or underestimated how important affordable housing can be to the 

stability of a person or family or indeed a community, particularly as it relates to sustaining 

employment, being a productive member of society and building a stable community. 

Continued investment in affordable housing should be an important component of a national 

housing policy, alongside other housing choices favored by many consumers and lenders. 

REFERENCES 

13 
51 


24066.014

Beider, H. (2008) Neighbourhood Renewal & Housing Markets: Community Engagement in the 

US and UK. Oxford, Blackwell Publishing 

Beider, H., Levy, D., and Popkin. S. (2009). Community Revitalization in the United States and 

the United Kingdom. Washington, DC., The Urban Institute: 

http://www.urban.org/research!pub!ication/community-revitalization-united-states-and-unitedkingdom 

Gregory, J. and Mullins, D (2015) The Future of Social Housing. Webb Memorial Trust, London 

Heywood, A. (2013) Investing in Social Housing: A Guide to the Development of the Affordable 

Housing Sector. London, The Housing Finance Corporation. 

Jones, C. and Murie, A. (2006) The right to buy: analysis & evaluation of a housing policy. 

Oxford, Blackwell 

Karn, V. and Wolman, H. (I 992) Comparing Housing Systems: Housing Performance and 

Policy in the United States and Britain. Oxford, Clarendon Press 

Katz, B. (2004) Neighbourhoods of Choice and Connection: The Evolution of American Housing 

Policy and What it Means for the United Kingdom. York, Joseph Rowntree Foundation 

Levy, D., Beider, H., Popkin, S., and Price, D. (201 0) Atlantic &change: Case Studies of 

Housing and Redevelopment in the United States and United Kingdom. Washington, DC: The 

Urban Institute. http://www.urban.org/research/publication/atlantic-exchange-case-studieshousing-and-community-rcdevelopment-us-and-uk 

Malpass, P. (2008) Housing and the New Welfare State: Wobbly Pillar or Cornerstone? Housing 

Studies, Vol23, 1, pp 1-19. 

Pawson, H., Davidson, E., Morgan, J., Smith, R., and Edwards, R. (2009) The Impacts of 

Housing Stock Transfers in Urban Britain. York, Joseph Rowntree Foundation 

Wolman, H. (1975) Housing and Housing policy in the US. and the UK. Lexington, Lexington 

University Press. 

14 
52 


24066.015

~~Housing 

•• Partnership ,.,,... Network 

Testimony of Thomas A. Bledsoe 

President and CEO, 

Housing Partnership Network 

Before 

Subcommittee on Housing and Insurance 

House Financial Services Committee 

May12, 2016 

Good morning, Chairman Luetkemeyer and Ranking Member Cleaver, I am Tom Bledsoe, 

President and CEO of the Housing Partnership Network (HPN), a business collaborative of highperforming nonprofits that develop, own, manage and finance affordable housing and 

community development. Creating private sector partnerships and enterprises that achieve 

ambitious social missions, HPN and its member organizations work together to scale innovation 

and impact, helping more than a million people gain access to affordable homes and thriving 

communities that offer economic opportunity and an enhanced quality of life. In 2013, HPN 

received a MacArthur Foundation Award for Creative and Effective Institutions, and a Wells 

Fargo NEXT Opportunity Award in recognition of its ongoing leadership and innovation in 

affordable housing and community development. HPN operates businesses that help improve 

the efficiency and impact of our members, such as property and casualty insurance company 

that insures their apartments, a group buying business that helps them purchase the supplies 

and materials they need to build and renovate housing, and a social purpose Real Estate 

Investment Trust that purchases naturally occurring affordable housing. HPN is a social 

enterprise- we use private sector business practices to create and preserve stable homes and 

vibrant communities that offer an improved quality of life for residents. 

Housing Partnership Network's search for innovative social enterprise models that can better 

leverage private sector resources have led us to explore international examples as well as 

domestic, particularly from the United Kingdom. In April 2003, HPN, with support from the 

MacArthur Foundation, expanded its peer exchange network by organizing a visit by 15 HPN 

leaders to social housing organizations in the Netherlands and England. The trip concluded in a 

day-long forum at the Rowntree Foundation in London attended by housing leaders from the 

three countries. Discussions ensued over the next three years, chiefly with British colleagues, 

and culminated with a summit meeting in April 2007 in Washington, DC, that effectively 

launched the International Housing Partnership (IHP), which HPN coordinates. Since the 2007 

summit, IHP has held annual meetings and formed an ongoing partnership among housing 

leaders in the United States, Great Britain, Canada, and Australia. The top nonprofit housing 

leaders in each of these countries has replicated the HPN model by building peer-based 

networks Housing Partnership UK, Housing Partnership Canada and PowerHousing Australia -

that have joined with HPN to constitute the International Housing Partnership. It is through this 

partnership that we have gained insight into the strengths and challenges facing our peers 
53 


24066.016

2 

abroad. These insights are the foundation of HPN's policy proposals, which are premised on the 

core principle that high-performing, mission-driven actors can be effective developers of 

affordable housing. 

Social Enterprise Model 

Safe, decent, affordable housing plays a key role in helping improve lives and communities in 

the U.S. and around the globe. The ongoing shortage of affordable housing has opened the 

door to new ideas and thinking here and abroad on ways to manage, preserve, and develop 

affordable housing that are more sustainable and cost-effective, while also guaranteeing the 

best possible living situation for residents. The international exchanges have deepened our 

thinking on how the combination of social mission with private enterprise is the most effective 

way to develop and manage affordable housing and improve communities. We believe that 

housing policy in the US would benefit from an emphasis on institutions that combine deep 

social mission and strong business acumen. This is why after Hurricane Katrina, HPN created 

the Gulf Coast Housing Partnership to rebuild affordable housing in the region and why we have 

launched Develop Detroit, a social enterprise that is working to revitalize Detroit. 

HPN members and our international colleagues share an approach to developing communities 

that combines the best features of mission-driven non profits with the entrepreneurship of the 

for-profit sector. The IHP has shown us that housing non profits that have a fundamental focus 

on public purpose and a commitment to reinvesting any financial return into their work but are 

structured to efficiently raise private capital and create partnerships with the private sector can 

deliver the best outcomes for people and communities while effectively leveraging limited 

public resources. 

The materials circulated before the hearing include a paper that HPN issued this winter about 

the lessons that we have learned working with the International Housing Partnership, 

particularly from the United Kingdom. HPN's 10 years of hosting peer exchanges between 

domestic and global industry leaders has helped us understand how the growth of social 

enterprises that develop housing in both countries has strengthened both systems. As the 

affordable housing systems in both countries change and evolve, we encourage the thoughtful 

adaptation of British practices that have worked well, while respecting successes of our own 

system and understanding the need for consistent resources. 

large Scale Voluntary Transfers in Great Britain 

Starting in 1988, Britain has had a policy of large Scale Voluntary Transfer (lSVT) which 

intended to address the growing capital needs of the aging council housing stock by transferring 

council housing to nonprofit housing associations. Conversations with our British colleagues 

about how the British policy of lSVT worked clarified our thinking about how a social enterprise 

model can improve the delivery of affordable housing. The policy was premised on the idea 

that the new nonprofit owners of the housing would be able to access private capital and 

reduce demands on public funds, which would help to recapitalize the housing stock and fund 

ongoing maintenance and management. A similar challenge has motivated policies like the 

Rental Assistance Demonstration (RAD) in the US. 

One fundamental observation is that transferring council housing to nonprofit housing 

associations expanded the role of mission-oriented private housing providers in the U.K. The 
54 


24066.017

Large Scale Voluntary Transfer drove a broad shift in responsibility for affordable housing 

management in the U.K. away from public sector local councils (the British version of public 

housing) and toward nonprofit housing associations. This caused housing associations to grow 

in scale and prominence within the U.K. housing system. Today, housing associations manage 

almost half of the country's social housing stock and nearly a quarter of its total rental stock, 

with the largest associations managing more than 100,000 units. Housing associations have 

adopted sophisticated property and asset management operations to manage this scale, 

including asset management systems that allow for pooling of revenues and costs across a 

portfolio of properties. This structure strengthens housing associations' balance sheets, which 

helps leverage private capital that can be used to finance development or recapitalize existing 

properties. 

3 

The first large stock transfer happened under Conservatives, though almost 75 percent of all 

transfers have taken place since 1997 under labour governments. The modern transfer process 

involves several phases of planning and approval. First, a local authority sponsors a competitive 

process where tenants get to vote whether they want to transfer the ownership and 

management responsibilities. If so, they choose from alternative ownership and management 

proposals- which can include an existing nonprofit housing association in the area or the 

transformation and spin off of the public council management itself into an independent 

nonprofit. At least 50% of the council tenants must approve a transfer and the selection of the 

receiving entity. Once approved, the housing association is tasked with drafting a 30 year 

business plan for the council properties that includes how they will assemble the private funds 

to rehabilitate the homes. 1 Since 1988 over one million units transferred ownership from local 

authorities to housing associations. 

Investment in Housing Associations and Residents 

It is important to emphasize that housing policy in the UK has directed significant capital grants 

to housing associations that have put them in the position today to use this collateral to raise 

private financing. Unlike the US system which typically allocates grants to individual projects 

(regardless of whether it has a nonprofit or for profit sponsor), the UK has invested their public 

grants in non profits at the enterprise level and encouraged housing associations to own real 

estate on a portfolio basis. Although this public funding has been substantially reduced due to 

budget limitations, the historic level of investment has enabled nonprofits to build substantial 

balance sheets which today they use to leverage private investment. 

In addition, the UK used to provide a shallow but universal housing benefit to all eligible tenants 

which provides support to help them afford their homes. This benefit also created a rental 

income stream to the housing associations which they can flexibly use at the enterprise level to 

raise private financing. Project-based rental assistance in the U.S. provides a much deeper 

subsidy but this rental income is restricted to an individual project. While it can help an owner 

secure or finance a mortgage on the specific property, this approach does not allow the 

efficient leverage of private capital on a portfolio or enterprise basis as in the UK. This has 

greatly expanded the capacity of British housing associations to raise funds to rehabilitate stock 

transfer apartments. 

1 The Impacts of Housing Stock Transfers in Urban Britain. joseph Rowntree Foundation, 2009. 

ttp:/ /www.jrf.org.ukjsitesjfilesjjrf/britain-housing-urbanFULL.pdf 
55 


24066.018

4 

The UK housing system has undergone dramatic change over the last thirty years, and has 

accelerated significantly since HPN began working with British housing associations in 2003. 

The deep reductions in the housing grants have encouraged nonprofits in the UK to pursue a 

more entrepreneurial model which relies on greater private financing. This shift has generated 

strong interest in the UK nonprofit sector in learning more about the US system which has 

always relied on a greater mix of private funds. The British have also sought to learn about 

and incorporate a second aspect of the US approach- our focus on individual assets. While the 

British portfolio model facilitates greater leveraging of private debt financing, the US asset 

based approach has generated more knowledge and investment discipline in individual 

properties. We believe there is enormous value in incorporating the strengths and aspects of 

both systems. 

Social Enterprise in the U.S. 

Social enterprises in the U.S. represent a smaller proportion of the country's total rental 

housing stock, but are still critical to preserving and developing affordable housing. As capital 

subsidies to develop new public housing were cut off in the 1980s, for profit and nonprofit 

housing developers filled the gap, using the low Income Housing Tax Credit (Housing Credit.) 

The Housing Credit gives investors a credit on their taxes for investments in affordable housing, 

and today it is responsible for nearly all new affordable housing development in the U.S. 

The Housing Credit also spurred the growth of the social enterprise sector in the U.S. because it 

required business discipline and expertise to attract investors, but it was aligned with the social 

purpose of creating affordable housing. The growth of social enterprises like HPN members in 

the U.S. has been helpful in the drive to preserve affordable housing for the future. Social 

enterprises leverage public funds to access private and philanthropic capital to finance housing 

and key services for residents, and use private-sector approaches to increase the impact of 

each dollar of subsidy. The entrepreneurship inherent in the U.S. system- which has been a 

byproduct of our more patchwork, partnership based approach has been a key driver for the 

innovation and impact achieved by the leading non profits in the United States. 

During the IHP exchange process, HPN and our members began looking to the British system for 

ideas that could help strengthen our own policies, programs, and resources to help us become 

more effective and efficient stewards of affordable housing. We saw potential to build on our 

existing capacity through programs that created access to entity-level capital and provided 

greater regulatory flexibility to manage resources across a portfolio of properties, particularly 

to facilitate deals that preserve legacy senior housing and Housing Credit properties reaching 

the end of their 15-year affordability contracts. We were especially interested in LSVT as way to 

recapitalize and preserve the aging affordable housing stock and the British system's emphasis 

on well-capitalized, mission-oriented housing providers as central to its housing strategy. 

British housing associations are currently facing declines in government funding for their 

system, which is in turn spurring them to become more entrepreneurial and commercially 

engaged in the private markets. U.S. nonprofits face many of these same challenges, and as a 

result have been pursuing more market based transactions which use private equity to acquire 

naturally occurring affordable or workforce housing. HPN launched the Housing Partnership 

Equity Trust, a social purpose REIT, to raise equity on a portfolio basis to help twelve non profits 

acquire and rehabilitate more than 2000 apartments with $140 million of equity investments 

from the MacArthur and Ford Foundations, Prudential, Citibank and Morgan Stanley. The HPN 
56 


24066.019

REIT combines the portfolio flexibility of the British system with the asset based ownership and 

management structures utilized in the United States. 

5 

Although there are profound differences between the two systems in terms of the extent of the 

government role, there are also growing convergences. British practices that bolster the social 

enterprise model could be adapted to the American context, while maintaining the strong U.S. 

asset based focus. We believe this integrated approach which leverages the strengths of both 

models can enable non profits in the United States to significantly scale their impact, particularly 

in preserving naturally occurring affordable housing and in helping to revitalize public housing. 

In the following section, we outline HPN's policy priorities that evolved from our consideration 

of the British affordable housing model and its applications to American programs, policies, and 

resources. 

Five policy recommendations that aim to expand the role of social enterprises in the US 

affordable housing system 

The following recommendations emphasize policies that increase the scale and reach of social 

enterprises so that we can create more affordable housing efficiently and improve 

communities. Our recommendations all build on features of the U.S. system that are working 

well now. 

1: Expand the Capital Magnet Fund 

The Capital Magnet Fund allows nonprofit housing developers and Community Development 

Financial Institutions (CDFis) to raise capital at the entity level, as the British housing 

associations do. This has proven to be one of the most efficient and effective ways to use public 

funds to attract private investments for housing in low-income families and underserved 

communities. Through the Capital Magnet Fund, the US Treasury's CDFI Fund provides 

competitively awarded grants to CDFis and qualified nonprofit housing organizations. CMF 

awards may finance affordable housing activities, as well as related economic development 

activities and community service facilities. Unlike traditional housing programs, which fund 

individual projects and developments, CMF grants are awarded at the entity level, and 

awardees must commit to leveraging grant dollars with other private and public funds at a ratio 

of at least 10:1. 

Even after just one funding round, it is clear that Capital Magnet Fund grants are spurring 

innovation and production among nonprofit housing providers. The average leverage ratio for 

the first round of awards in 2010 was 16:1, substantially higher than the mandated 10:1 

leverage ratio. CMF grants supported the creation of 7,000 new units of affordable housing. 

CMF awardees used this flexible funding source in variety of ways including to capitalize 

revolving loan funds, provide bridge financing and extend their reach into hard to serve 

markets .. The success of the Capital Magnet Fund, even after a relatively limited $80 million 

dollar grant round, is a demonstration of the effectiveness of entity-level investments in highcapacity, mission-driven non profits. The funding for the Capital Magnet Fund should be 

increased to at least $500 million to improve the scale and efficiency of mission driven housing 

providers. 
57 


24066.020

6 

2: Prioritize Preservation 

Preserving the existing stock of subsidized housing is a necessary component of a forwardlooking national affordable housing strategy. The U.S. stock of subsidized housing provides over 

three million units of critical affordable housing for low-income people. This stock is under 

threat, however, by an overwhelming backlog of deferred maintenance and capital needs, with 

no prospect of additional funding to address them. In recent years, we've seen successes with 

nonprofit social enterprises that acquire, rehabilitate and recapitalize HUD-assisted housing 

stock, much of which was nearing the end of contracted affordability periods or at risk of 

obsolescence without substantial reinvestment. Social enterprises are uniquely qualified to do 

this work because they have the business skills to structure complex preservation transactions, 

but social mission keeps them focused on preserving affordability for the long term. 

Preservation is also a key challenge with public housing properties. Years of deferred 

maintenance have put thousands of public housing units at risk of demolition or sale into the 

private market; since 1990, more than 200,000 units of public housing have been lost from the 

affordable housing stock. 2 HUD's Rental Assistance Demonstration (RAD) permits public 

housing authorities to convert public housing and a small number of legacy HUD project-based 

subsidy programs to long-term project-based subsidy contracts. In some cases, this process 

essentially transfers property operations to social enterprises, which can leverage private 

capital and other public funds to rehabilitate and recapitalize the properties. 

RAD has some elements in common with the LSVT, particularly the motivating principle of 

transferring public-owned stock to private entities for preservation, but there are some 

differences. For instance in many RAD transactions, the public housing authorities may retain 

ownership in the partnerships managing the housing stock after conversion to project-based 

Section 8. In contrast, the LVST involved a full transfer of title and ownership to housing 

associations- which can be either existing nonprofits or councils that have transitioned their 

housing operations to nonprofit status and have become part of an augmented housing 

association sector. In this new configuration, the council maintains its role in setting overall 

local housing strategy and priorities, referring tenants to the associations for lease up and, in 

many cases, funding services for residents. 

The city of San Francisco is pursuing a broad-based RAD public housing initiative that is 

intended to revitalize and preserve its public housing. San Francisco transferred ownership of 

public housing developments to high performing housing developers, including some HPN 

members. San Francisco used local funds, project based vouchers, HUD funds and tax credits to 

pay for redevelopment and preservation of the public housing. The city retained ownership of 

the land below the buildings as a safeguard to preserve affordability and public purpose over 

the long term. HPN supports lifting the current cap on the number of units that can be 

transformed under RAD and suggests that after RAD has been evaluated, a broader program of 

stock transfer should be considered. We also support providing a stronger decision making 

role for public housing residents in selecting and approving plans for this transformation, 

including selection of the new ownership and management entity. This will insure that 

2 CBPP, "Expanding Rental Assistance Demonstration Would Help Low-Income Families, Seniors, and People with 

Disabilities". November 2014. 
58 


24066.021

revitalized former public housing developments serve existing low income residents and 

become vibrant mixed income communities. 

3: Use a portfolio model for multifamily housing preservation 

7 

The Rental Assistance Demonstration aims to preserve public housing and some legacy projectbased subsidy programs, but this still leaves thousands of aging subsidized properties in need of 

preservation, lest they fall out of the affordable housing stock. In particular, older HUD Section 

202 housing for the elderly and Housing Credit properties approaching the end of their 15-year 

contracted affordability periods are at significant risk. 

A key difference between the British and American systems is that the system of private sector 

capital invested in affordable housing in the U.S. through the Housing Credit requires properties 

to be managed separately, which means American developers manage their assets at the 

property level, rather than with a view to their entire portfolio of assets and their balance 

sheet. We do not propose changing the compliance structure for the 9% Housing Credit for new 

development, but HPN has long advocated for reforms to legacy HUD multifamily programs and 

the 4% Housing Credit that could create opportunities for portfolio acquisition and 

management models. 

U.K. housing associations have demonstrated the potential for portfolio asset management 

models to unlock new revenue sources, streamline operations and compliance, and drive scale 

and performance for nonprofit housing providers. In the U.S., at the end of the initial 

investment period of fifteen years for Housing Credit developments, there would be efficiencies 

in allowing this housing to be managed as a portfolio, as in the U.K. Similarly, aging HUDfunded housing would be more efficiently maintained as part of larger portfolios. 

A shift in orientation from project-level finance to enterprise-level finance for aging properties 

would empower social enterprises to more flexibly manage their housing portfolios, increasing 

their efficiency and lowering the cost of deals to acquire and preserve several affordable 

housing properties. A portfolio approach also would allow these organizations to take better 

advantage of economies of scale, facilitate new approaches to managing stock to strengthen 

property performance, and help scale their capacity to acquire and preserve more affordable 

housing. 

This portfolio approach can also be used to preserve and rehabilitate the large inventory of 

naturally occurring affordable housing which is home to millions of low- and moderate-income 

Americans. This stock, which is typically non-subsidized and not rent restricted, is generally 

owned by for profit developers who often reposition properties for more upscale rental when 

market conditions allow. This forces out many lower income families -leaving cities and metro 

areas with an acute shortage of work force housing that is an essential component of a 

sustainable community and economy. The Housing Partnership Equity Trust, a social purpose 

REIT created by HPN, demonstrates the important role that social enterprise nonprofits can 

play in preserving and revitalizing this stock using a portfolio financing model. These properties 

can also serve the housing needs of extremely low income families because they will accept 

tenants with vouchers. 
59 


24066.022

4: Make housing a platform for improving communities and building assets for residents 

High-performing housing non profits are well suited to link affordable housing development to 

broader programs of community and individual improvement. These organizations can 

advance opportunity for low-income people because they combine skill in housing 

development with an extensive network of relationships with social service providers. Policies 

connecting housing with opportunity can help to expand housing providers' capacity to do this 

critical work of linking affordable housing with residents' economic well- being. 

8 

The Family Self-Sufficiency Program (FSS) is one example of a policy that, at scale and with 

effective management, could help residents of subsidized housing access economic opportunity 

and reduce their reliance on public programs. FSS combines an innovative savings program with 

financial coaching and counseling, with the goal of helping residents of public and project-based 

Section 8 housing accumulate savings over time. The best FSS programs help residents build 

assets and achieve financial goals. HPN members have been among the first private owners of 

properties with project-based subsidies to use FSS, and have adopted innovative methods and 

partnerships to maximize the program's effectiveness for residents. This committee should 

permanently expand FSS to the project-based rental assistance inventory. 

There are many examples besides FSS of HPN members expanding their reach beyond housing 

to improve the communities where their residents live. Holistic community development 

initiatives through programs like Promise Neighborhoods and Choice Neighborhoods make it 

possible to address the problems facing neighborhoods of concentrated poverty. These efforts 

help residents who choose to remain in their communities avoid displacement due to 

disinvestment or gentrification. HPN members are able to do this difficult community 

transformation work because they combine the business acumen necessary to do affordable 

housing redevelopment with a focus on resident needs. They can address job training, 

education, transportation and other needs directly or through partnerships. 

5: Improve Access to Affordable Homeownership 

The aftermath of the Great Recession has driven the U.S. homeownership rate down. Young 

people and families still strive for the goal of homeownership, but many do not have the 

savings, income, or credit history to access a mortgage. A dramatic increase in the stock of 

single-family renters reflects a broad shift to renting across household types, even households 

that would typically be homeowners. 3 

A similar phenomenon has been taking place in the U.K. which has witnessed a steep drop in 

homeownership rates in the past several years. Young people in particular are feeling the 

impact of lower ownership rates, to the extent that people under 3S years old are referred to 

as "generation rent." The key issue in the U.K. is a steep rise in homeownership costs, coupled 

with- and often driven by- a dearth of housing supply. The British system has developed some 

variations of homeownership that somewhat mitigate the problem. These include shared 

ownership models, in which a household owns a portion of their home on which they pay a 

mortgage, and pay rent to the housing association that owns the balance. As a household's 

income increases, it can purchase a larger share of the home's value, and if their financial 

circumstances deteriorate they can sell back a portion of the unit- thereby avoiding 

foreclosure or more serious economic hardship. 

3 State of the Nation's Housing 2015, Joint Center for Housing Studies 
60 


24066.023

U.K. affordable housing providers also have managed to scale single-family rental models as a 

viable alternative to homeownership where this makes more market sense, using highly 

effective property management systems and portfolio financing. In the U.S., these models are 

being piloted in some areas, but the private equity to support acquisition and ownership is so 

expensively priced that it undermines the long term stability of the housing for low and 

moderate income families. Instead, investors seek to generate high yields and short term 

profits from flipping or reselling properties. Government support for more cost effective and 

efficient financing- possibly provided through the GSEs- would enable social enterprise 

9 

non profits to acquire and serve as long term stewards of these homes while incorporate rent to 

own or lease purchase agreements to promote eventual homeownership. 

American social enterprises are pioneering other innovative homeownership programs aimed 

at new homebuyers and underserved communities that have much in common with the 

innovative shared ownership and single-family rental models adopted in the U.K. These 

programs often combine homebuyer education, affordable credit products or down-payment 

assistance, and access to an ongoing relationship with a housing counselor. Homeownership 

can also be part of a strategy to revitalize communities hit hard by the economic downturn, 

acquiring and rehabbing vacant or abandoned properties. After renovation, housing providers 

help first-time homebuyers purchase these properties with affordable credit products or 

through rent-to-own programs that help families transition to homeownership over time. 

HPN and its members have used existing housing program such as the Low Income Housing Tax 

Credit and the HOME program in imaginative way to create a bridge between renting and 

owning a home. Policymakers should build on these successes to support products and 

programs focused on innovation and scale, such as government-backed credit products that 

incorporate high-quality homebuyer education and counseling, and comprehensive 

neighborhood revitalization programs that emphasize homeownership as a tool for spurring 

community investment. 

Conclusion 

The U.S. needs to serve more people with decent, affordable housing in safe neighborhoods 

because three quarters of Americans income eligible for housing assistance don't receive it. 

Our reflections on the differences between the U.S. and British systems come at a critical 

moment in U.S. housing policy, as affordable housing providers face growing pressure to 

combat a mounting affordable housing crisis with declining resources. The lessons of the 

growth of British housing associations due to Large Scale Voluntary Transfer as well as portfolio 

flexibility and financing should be used to expand the role of social enterprises in the U.S. so 

that innovative, effective solutions to housing challenges facing society's most vulnerable 

people and communities are scaled up. I encourage you to look for ways to combine the best 

features of the British system with the best aspects of what is working well here. Expanding the 

role of social enterprise to take advantage of the combination of social purpose and business 

discipline will help the U.S. system for affordable housing stay resilient, sustainable, and 

dynamic for years to come. 
61 


24066.024

SAN DIEGO 

HOUSING 

COMMISSION 

TESTIMONY BY 

RICHARD C. GENTRY 

PRESIDENT & CEO OF THE SAN DIEGO HOUSING COMMISSION 

U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON FINANCIAL SERVICES 

SUBCOMMITTEE ON HOUSING AND INSURANCE 

HEARING ON THE FUTURE OF HOUSING IN AMERICA: A 

COMPARISON OF THE UNITED KINGDOM AND UNITED STATES 

MODELS FOR AFFORDABLE HOUSING 

MAY 12,2016 

INTRODUCTION 

Good morning, Chairman Luetkemeyer, Ranking Member Cleaver, and members of the 

subcommittee. I am Richard C. Gentry, the President and Chief Executive Officer of the San 

Diego Housing Commission, which serves low-income residents in the city of San Diego-the 

eighth largest city in the nation and second largest city in California. I am honored to be here 

today to testify about the affordable housing models in the United Kingdom and the United 

States and how they impact the future of housing in America. 

I began working in San Diego in 2008; however, my experience in affordable housing spans 44 

years-beginning with the U.S. Department of Housing and Urban Development (HUD) in 

1972. I have served as the CEO ofthe public housing authorities in Austin, Texas, and 

Richmond, Virginia, as well as working in the private sector as the Senior Vice President of 

Asset Management for the National Equity Fund in Chicago, Illinois, the nation's largest 

nonprofit Low-Income Housing Tax Credit syndicator, and as the Vice President for Public 

Housing Initiatives at the Local Initiatives Support Corporation (LISC) in Washington, D.C. 

My opinions today reflect the diversity of my background and the breadth of my experience. 

I am also privileged to have collaborated with my housing colleagues in the United Kingdom on 

several occasions, beginning in 1994 and followed by a number of visits over the years, 

including London, Liverpool, Manchester, Edinburgh, and most recently, Brighton in 2013. 
62 


24066.025

I have come to appreciate the collegial relationship I have with my colleagues across the 

Atlantic. 

The United States and the United Kingdom share a deep history in which similarities in their 

approaches to affordable housing are rooted. And we can learn from each other. 

However, variations in our approaches that are based on culture and history also should be 

recognized. 

Similarities between tbe United States and tbe United Kingdom- History 

The United States and the United Kingdom support the same objective of empowering 

individuals and families to realize their potential, while providing a safety net for those who are 

in need or who require assistance in a competitive world. 

This shared perspective is based upon a common philosophical viewpoint of the economy. Both 

nations espouse individual liberty, freedom of opportunity, and enabling citizens to realize their 

full potential. 

The philosophy at the foundation of the economy in both the United States and the United 

Kingdom dates back more than three centuries at least to 1688, when William and Mary 

ascended to power as the King and Queen of Britain and brought with them an economic system 

that merged the freedom ofthe individual with collective needs. This philosophy offree market 

economic principles was further reinforced by the Scottish enlightenment of the mid-1700s, in 

particular the principles of Adam Smith, a Scottish philosopher and economist. In addition, this 

free market philosophy also influenced the principles of the Founding Fathers of the United 

States. 

With this economic foundation, both the United States and the United Kingdom developed 

policies to help individuals and families achieve as much as possible in a competitive economy. 

However, by the mid-20th century, after two World Wars and the Great Depression, and with the 

growing need to provide opportunities to those who had been left out of economic well-being 

during the first half of the century, the United States and the United Kingdom began to pursue 

different directions. 

In particular, after World War II, there was a significant housing expansion that arrived in both 

the United States and the United Kingdom, but utilizing far different models for low-, moderate-, 

and middle-income residents. 

2 
63 


24066.026

Federally funded public housing in the United States dates back to the Housing Act of 1937, 

which provided Federal funds to public housing for low-income working class families. 

However, public housing proliferated after the Housing Act of 1949, which began applying 

income limits so that public housing served low-income residents, while working class families 

were supported in their access to private sector housing. 

HUD was created by legislation in 1965 to oversee Federal housing programs for vulnerable 

low-income households, such as seniors, individuals with disabilities, and families. As this 

subcommittee is assessing HUD programs 50 years later that serve our most vulnerable families, 

it is important to note, however, that private sector rental housing today continues to provide the 

majority of the rental housing opportunities for both Americans who receive Federal housing 

assistance and those who do not. 

According to HUD, approximately 1.2 million American households live in public housing, 

which is I percent of the approximately 116 million households in the United States, based on 

U.S. Census Bureau data. In addition, approximately 5 million households, or 4 percent of all 

households in the United States, receive Federal Housing Choice Voucher rental assistance, 

according to the Center on Budget Policy and Priorities, based on HUD data obtained through a 

research agreement. In addition, the highly successful Federal Low-Income Housing Tax Credit 

program, created in 1986, which assists the development of affordable housing, has financed 

nearly 3 million apartments for low-income families, seniors, Veterans, and individuals with 

special needs since its inception 30 years ago, according to the National Council of State 

Housing Agencies. 

The primary government-sponsored resources for the development of housing options for 

moderate- and middle-income Americans after World War II were Federal Housing 

Administration (FHA) insurance, authorized in 1935, and the secondary mortgage market, 

known as the Federal National Mortgage Association, or Fannie Mac, authorized by Congress in 

1938. These two programs created a vast expansion of home ownership rates after World War II. 

In addition, there was substantial growth of private sector rental housing, which provided the 

housing basis for enhanced economic mobility for many Americans. 

However, after World War II, during the time that the United States was developing private 

market housing programs for moderate- and middle-income Americans and public rental housing 

for low-income Americans, the United Kingdom developed large swaths of government-owned 

housing controlled by city and county councils, called "council housing." By the 1980s, more 

than 40 percent of the population lived in rental "council housing," including both low-income 

and middle-income workforce families. 

I would contend that this post-World War II approach by the United Kingdom was counter to the 

long-term British economic tradition and was not matched by the United States. 

3 
64 


24066.027

In the 1980s, the United Kingdom began to return to what I believe is its more traditional 

economic perspective by providing greater and more varied housing options, particularly for 

middle-income workforce families. Policies were developed to reduce the large percentage of 

British residents living in council housing. This included the Right to Buy under certain 

circumstances, and in 1988, the beginning of the transfer of"council housing" to nonprofit 

associations. 

However it is important to note that the transfer of affordable housing stock to nonprofit 

associations was the result of broad fiscal responsibilities that do not apply to the United States. 

By European Union edicts, the debt from "council housing" added to the United Kingdom's 

national debt and impacted the ratio of debt to Gross Domestic Product, a critical European 

Union metric. The transfer of"council housing" to nonprofit associations was primarily 

motivated by the objective of moving the debt off of the government's balance sheet. 

Lesson Learned from the United Kingdom 

As I noted previously, the debt issue that the United Kingdom has taken steps to correct by 

transferring council housing is not a problem that is replicated in the United States. We should be 

careful not to try to solve a problem that does not exist here. 

What does apply to both the United States and the United Kingdom is the focus on: 

I) A set of values that creates multiple opportunities for individuals to achieve and become 

more financially self-reliant; and 

2) The need to employ private sector discipline insofar as it is possible in the public sector 

to provide housing for low-income Americans. 

With that said, I believe that the United States' traditional public housing program is no longer 

viable in its current form to continue serving the needs of low-income Americans. America's 

traditional public housing program has been, since its inception, a top-down, one-size-fits-all, 

centralized, command-and-control program operated in Washington, D.C., that is intended for 

implementation uniformly across the country. In a country as large and diverse as the United 

States, a public housing program with centralized mandated rules does not work. 

This is not criticism or denigration of the low-income individuals and families who live in public 

housing or those who operate the program. However, the program's structure is flawed and needs 

to be changed to more efficiently usc taxpayer resources to serve the housing needs oflowincome Americans. To identify and implement needed changes, and ultimately for the good of 

the residents and taxpayers, we can learn from the intent of the British model, which is providing 

more housing options now than under the "council housing" system, more than from the 

specifics of their programs. 

4 
65 


24066.028

CREATING HOUSING OPPORTUNITIES FOR THE NEXT GENERATION-USING 

THE SAN DIEGO MODEL 

As this subcommittee considers the question, "In the U.S., what will the housing market look 

like for the next generation?" I submit that for affordable housing, it should look much like San 

Diego, where we at the San Diego Housing Commission (SDHC) in recent years have 

implemented innovative approaches that bring together government and the private sector in 

partnerships to create and preserve affordable housing, provide Federal rental assistance, and 

address homelessness. 

This innovation is essential to face the challenge of creating and preserving affordable housing in 

the city of San Diego. 

Private sector renters in the San Diego metropolitan area paid approximately 40 percent of their 

monthly income toward rent at the end of2015-10 percent more than what HUD defines as 

"affordable," no more than 30 percent of income expended on housing. 

According to the San Diego Association of Governments' Regional Housing Needs Assessment 

Plan, the city of San Diego needs 38,680 additional affordable housing units for low- and very 

low-income San Diegans by 2020. 

And to meet this challenge, let me further explain how we are increasing our affordable housing 

stock and what economic tools we are using to ensure our residents have housing opportunities 

available to them: 

Creating and Preserving Affordable Housing Opportunities 

• Public Housing Conversion Enhancing Public-Private Partnerships 

A landmark agreement on September 10,2007, between SDHC and the U.S. Department 

of Housing and Urban Development (HUD) transferred full ownership and operating 

authority for 1,366 public housing units to SDHC-the largest public housing conversion 

at the time. 

In exchange, SDHC committed to leverage the equity lying fallow in these former public 

housing units to create at least 350 additional affordable housing units-a number SDHC 

far surpassed. 

"What the San Diego Housing Commission did was basically say we can't rely on the 

federal taxpayer to continue to maintain units, because it's not serving our residents well. 

5 
66 


24066.029

It's not serving our community well. They essentially took resources, and then they 

created better units with them," said Orlando Cabrera, the fonner HUD Assistant 

Secretary, who approved the landmark agreement with SDHC. 

The SDHC Board of Commissioners and the San Diego City Council approved SDHC's 

application to withdraw from HUD's public housing program, which HUD also 

approved. SDHC then implemented an innovative Finance Plan that was developed in 

2009, which leveraged significant private sector financial investment. 

San Diego City Councilmember Todd Gloria, who served on the SDHC Board of 

Commissioners at the time the agreement with HUD was being negotiated, said: "I think 

the concern that I had was how do we maintain the solvency of the agency as we saw the 

subsidy being reduced. That obviously produced a lot of financial challenges to the 

organization." 

SDHC leveraged the equity from this new real estate portfolio to create or preserve 810 

additional affordable housing in the city of San Diego through direct acquisitions and 

public-private partnerships. All of the units will remain affordable for at least 55 years. 

When the fonner public housing units converted to SDHC ownership, residents were 

provided with Federal Section 8 Housing Choice Vouchers. They could then use the 

vouchers at their existing units or take them with them as rental assistance to another 

rental home of their choice. Approximately 50 percent of the residents chose to stay at 

their existing units. 

The public housing conversion emerged from a growing realization by the SDHC Board 

of Commissioners and executive leadership that SDHC's dependence upon the Federal 

government's historic investment in construction and maintenance of public housing 

could not be sustained under the current Federal model. 

Federal public housing subsidies for operations and maintenance were based on a 

fonnula, were not keeping pace with need, and were counterproductive to good private 

sector management techniques. Across the nation, fewer new public housing units were 

being developed despite a growing demand for workforce and family housing. 

"I think one of the most important things is that it created public-private partnerships, 

gave the Housing Commission the ability to sustain even more affordable housing units 

and to serve more people, to serve more families. And today if you look at the 

environment around us where you see an economic downturn, foreclosures, families who 

are in greater need than they were before, you know it was a really smart thing to do," 

6 
67 


24066.030

California State Assemblymember Toni Atkins, the former Speaker of the California 

State Assembly and a former San Diego City Councilmember, said in 2012 

On October 2, 2012, SDHC published a special multimedia digital report about the 

landmark public housing conversion and SDHC's Finance Plan. The report, "Creating 

Affordable Housing Through Public Housing Conversion," is posted on SDHC's website: 

http:/ /digital.turn-page.com/t/27073-san-diego-housing-commission-public-housingconversion-report 

I also presented SDHC's public housing conversion experience to colleagues in the 

United Kingdom on March 6, 2013, at the Chartered Housing Institute's South East 

Conference & Exhibition in Brighton. 

In addition to SDHC's own particular type of public housing conversion, there is another 

landmark Federal program that provides additional public housing authorities with 

similar opportunities to transform or enhance their public housing: 

Rental Assistance Demonstration 

Nearly four years after SDHC's landmark public housing conversion agreement with 

HUD, the Federal Consolidated and Further Continuing Appropriations Act, 2012, 

was enacted on November 18, 20 II, creating the Rental Assistance Demonstration 

(RAD) program. 

RAD allows public housing to be converted to long-term, Section 8 Housing Choice 

Voucher project-based rental assistance contracts. This conversion under RAD 

enables properties to obtain private financing to perform maintenance that had been 

deferred. 

Although SDHC has not yet participated in RAD, we may utilize RAD in the future 

for our 189 remaining public housing units, and we support the public-private 

principles RAD is based upon. 

• Public-Private Partnerships 

Public-private partnerships are important for the future of affordable housing, as 

noted in both of the reports this subcommittee is reviewing, which compare the 

affordable housing models in the United States and the United Kingdom. 

I acknowledge the value of these reports. However, I will point out that there are 

many options available for the development of affordable housing. The identity of the 

7 
68 


24066.031

participants involved with providing affordable housing is not as critical as the rules 

they are required to follow. The programmatic structure of the Federal public housing 

program is the issue. 

Replacing the public sector with a private sector organization is not a magic answer. 

Rules need to be reformed so there is sufficient capital to support the physical 

structures of public housing and so the housing subsidy system will encourage 

individual financial self-reliance. 

For example, San Francisco recently broke up its public housing and distributed it to 

nonprofit organizations in the Bay Area for management. I applaud this action. In San 

Francisco, it makes sense. There are many first-class housing nonprofits in the Bay 

Area, such as Eden Housing, Mercy Housing California, EAH Housing, BRIDGE 

Housing and other organizations that do outstanding work. 

However, it should be noted that the City of San Francisco is directing additional 

financial resources of its own to supplement the public housing system to make this 

conversion work. Absent the extra City funding, the conversion from public to private 

operations would be much more problematic. 

Even the best private sector nonprofit organization managing public housing will 

experience difficulties under the current structure. As we have shown with the San 

Diego model, with the exception ofSDHC's remaining 189 public housing units, the 

remainder of our programs are financially solvent and fiscally responsible. We are 

serving thousands oflow-income families and are operating as faithful stewards of 

taxpayer resources. 

Since 1981 SDHC has helped to create 16,049 affordable apartments in the city of 

San Diego through these public-private partnerships as a: 

• Development partner; 

• Lender (funding sources include Federal, State of California, City of San 

Diego and SDHC funds); 

• Issuer of Multifamily Housing Revenue Bonds, which are administered by 

the State of California and are paid with project revenues, creating no 

financial liability for government agencies; and 

• Administrator of City of San Diego affordable housing funding, such as 

Inclusionary Housing Fees charged on residential developments and 

Housing Impact Fees applied to commercial developments). 

8 
69 


24066.032

It is important to note that partnerships between SDHC and private nonprofit and forprofit developers continue to successfully create and preserve affordable housing in 

the city of San Diego. 

SDHC partnership developments invested more than $675 million in total 

development costs to create and preserve affordable housing in the City of San Diego 

that was completed or under construction in Fiscal Year 2015 (July 1, 2014- June 30, 

2015). 

The creation or preservation of 897 affordable housing units was completed. The new 

construction or rehabilitation of an additional I ,273 affordable housing units was 

under way in Fiscal Year 2015. 

HUD HOME Investment Partnerships Program Funds 

One of the critical sources of Federal funding for affordable housing development is 

HOME Investment Partnerships Program funds, which are awarded by HUD to the 

City of San Diego and are administered by SDHC. 

Since 1992, SDHC has administered more than $186 million in HOME funds awarded by 

HUD to the City of San Diego, through December 29,2015. Many of these funds have 

been used to create I, 785 affordable rental housing units and help 593 homeowners 

rehabilitate their properties. 

One of the innovative developments constructed with HOME funds administered by 

SDHC is COMM22, a property located at the intersections of Commercial and 22"d 

streets, which celebrated its grand opening on May 8, 2015. 

COMM22 consists of two separate apartment buildings, each four stories high: 

• Victoria at COMM22, 69 affordable srudios and one- and two-bedroom 

apartments for seniors (62+) and one manager's unit. 

• Paseo at COMM22, with 128 affordable units of one-, two- and three-bedroom 

apartments for families and two manager's units. Included are 13 units of 

supportive housing for youth aging out of the foster care system who also have a 

mental illness, who will receive services under the state Mental Health Services 

Act (MHSA) program. 

SDHC invested $4,190,000 from HOME funds toward the total development cost of 

$28,799,000 for Victoria at COMM22, which also received a HUD 202 Capital Advance 

Loan of $4,868,300 for 30 senior units, for which HUD also has awarded federal rental 

assistance for very low-income seniors, who will pay 30 percent of their income toward 

rent, with no minimum income requirement. 

9 
70 


24066.033

Additional partners in the public-private development ofCOMM22 included the 

developers, BRIDGE Housing Corporation and Metropolitan Area Advisory Committee 

on Anti-Poverty (MAAC), in partnership with the San Diego Unified School District. 

In addition, SDHC has utilized HOME funds to create homeownership opportunities 

for 1,891 first-time homebuyers. The HOME program provides the flexibility to 

create opportunities to leverage private sector resources and create homeownership. 

However, Federal funding for the HOME program has been cut in half, from $1.8 

billion in the Federal Fiscal Year 20 I 0 (October l, 2009- September 30, 20 I 0) to 

$950 million in Fiscal Year 2016. 

Federal Low-Income Housing Tax Credit Program 

The Federal Low-Income Housing Tax Credit Program, administered in California by 

the California Tax Credit Allocation Committee, is a successful and critical source of 

financing for affordable housing partnership developments. It is also a good example 

of public-private partnerships leveraging substantial private sector investments in 

affordable housing. 

In the City of San Diego, Low-Income Housing Tax Credits have financed 13,960 

units of affordable rental housing at 130 properties since 1989. 

For example, one recent SDHC public-private partnership that was partially financed 

with Low-Income Housing Tax Credits: 

• Independence Point Apartment Homes (formerly known as Willie 

James Jones Apartments): 31 newly constructed affordable housing 

units, of which 25 are set aside for households with members who have 

developmental disabilities. Units will remain affordable for 55 years. 

Grand Opening: March 25, 2016. 

Independence Point is the first residential complex in Southern California 

to provide affordable housing specifically for families with at least one 

member who has a developmental disability, which includes cerebral 

palsy, epilepsy, autism, and intellectual disabilities. 

Chelsea Investment Corporation developed Independence Point in 

partnership with SDHC and the Southern California Housing 

Collaborative, a San Diego-based a nonprofit organization that locates and 

10 
71 


24066.034

secures affordable housing opportunities for low-income individuals with 

developmental disabilities. 

Chelsea Investment Corporation is one of the top 20 developers of 

affordable multifamily housing across the nation according to the 

Affordable Housing Finance magazine's website, 

www.housingfinance.com. More affordable housing developers like 

Chelsea Investment Corporation under the leadership of Jim Schmid are 

needed. 

Leasing City of San Diego Land to Preserve Affordable Housing 

The preservation of existing affordable housing is critical to meeting housing needs 

today and in the future, a principle also noted in the Housing Partnership Network's 

report, which this subcommittee is reviewing. 

To ensure that affordable apartments will remain affordable for seniors for decades to 

come, the City of San Diego entered into a new lease for the City-owned land on 

which an affordable apartment complex for seniors is built. SDHC renovated the San 

Diego Square Senior Apartments with SDHC's nonprofit affiliate, Housing 

Development Partners (HDP). 

San Diego Square Senior Apartments in Downtown San Diego underwent a top-tobottom overhaul and will continue to provide 154 apartments for low-income seniors 

that will remain affordable for 65 years. 

"What a transfonnation we're seeing right before us. It's a perfect example of the 

innovative ways that San Diego is using to deal with affordable housing," San Diego 

Mayor Kevin Faulconer said at the grand reopening of San Diego Square last month. 

The year-long makeover- which ranged from replacing the building's aging roof to 

installing energy-efficient doors, windows and appliances was the first major 

renovation of San Diego Square since it was built in 1979. 

San Diego Square was purchased on February 13, 2014, through a partnership 

between SDHC, HDP, and USC San Diego, the regional chapter of the Local 

Initiatives Support Corporation, a national nonprofit dedicated to investing in 

affordable housing and community development initiatives. 

Additional financial partners who were essential to the renovation of San Diego 

Square were Citibank and Boston CapitaL Funding included more than $17.8 million 

11 
72 


24066.035

from State Multifamily Housing Revenue Bonds, which were authorized by SDHC 

and approved by the Housing Authority of the City of San Diego, and were sold to 

Citibank to finance the purchase and renovations. Boston Capital provided more than 

$12.1 million in tax credit equity. 

HUD was also an essential partner, administering Project-Based Housing Vouchers 

that provide Federal rental assistance of$1,445 per unit, per month for the !54 

affordable housing units ($2.6 million per year). 

HUD's contract to provide Federal rental assistance to residents at San Diego Square 

would have expired in January 2014. However, with the purchase of San Diego 

Square on February 13, 2014, HUD agreed to a 20-year extension of its Federal rental 

assistance contract, through October 26, 2034. 

"It's more than just bricks and mortar. It's somewhere folks can call home. There is a 

computer lab, there is an exercise room, there is a swimming pool, there's easy access 

to transportation and that says something for the vision of (SDHC) that we're not just 

going to house seniors in an apartment and let them fend for themselves," said Marcie 

Chavez, Director of the U.S. Department of Housing and Urban Development's 

(HUD) Los Angeles Office of Public Housing. 

• Sustainable and Transit-Oriented Development 

The housing market for the next generation should empower individuals to find 

affordable housing near employment opportunities with access to public transportation. 

This continues to be a priority for SDHC, which developed a "Three-Y car Work Plan to 

Facilitate Transit-Oriented Affordable Housing Development" in 2011, and updated the 

plan last year. 

HUD defines transit-oriented development as: "A compact, mixed-use community 

located within an average 2,000-foot walking distance of a transit facility that promotes 

economic prosperity and environmental sustainability by providing people of all ages and 

incomes with improved access to affordable and convenient public transportation 

including travel by transit, foot, or bicycle." 

This promotes sustainable communities by providing people of all ages and incomes with 

improved access to transportation and housing choices. 

12 
73 


24066.036

Sustainable affordable housing that is environmentally friendly is also essential for the 

future, with amenities such as solar heating or photovoltaic power, water-saving fixtures, 

energy-efficient appliances and drought-tolerant landscaping. 

On January 20,2012, the SDHC Board of Commissioners adopted "Sustainable 

Development Guidelines": 

• Educate residents about energy and water conservation and their impact on the 

environment 

• Use efficient landscaping 

• Increase efficiency with building systems and components 

• Adopt standards for new construction 

• Adopt site selection guidelines 

Public and neighborhood groups were consulted as part of the review process for these 

guidelines, as were appointed and elected officials. 

Providing Rental Assistance 

• Section 8 Housing Choice Vouchers 

In addition to public-private partnerships to create and preserve affordable housing units, 

SDHC engages with private sector landlords to establish more affordable housing 

opportunities by providing Federal rental assistance. 

SDHC partners with HUD to provide the most vulnerable San Diegans with rental 

assistance to help them locate housing in the competitive, high-cost San Diego rental 

housing market. 

The Section 8 Housing Choice Voucher rental assistance program is the most useful 

affordable housing program that I have seen the Federal government develop in my 44 

years working with affordable housing, and it is the largest program administered by 

SDHC. It is the most effective option available in the United States today and in the 

future for providing affordable housing for low-income individuals and families. 

In addition, this program allows local agencies, such as SDHC, the flexibility to 

categorize Housing Choice Vouchers in ways that best serve their local communities, 

such as: 

• Project-Based Housing Vouchers: Federal Project-Based Housing Vouchers are 

awarded to specific affordable housing developments to provide rental assistance 

linked to their units. When a tenant moves, the rental housing voucher remains 

13 
74 


24066.037

with the affordable housing unit so that another low-income or homeless San 

Diegan is able to move into the unit and receive rental assistance. 

• Sponsor-Based Housing Vouchers: SDHC awards Federal Sponsor-Based 

Housing Vouchers to nonprofit organizations, or "sponsors," that provide 

supportive services to homeless San Diegans. Sponsor-Based Housing Vouchers 

provide rental assistance that pays up to 100 percent of the tenant's rent, 

depending on their income level. 

More than 15,000 low-income households in the city of San Diego, including homeless 

San Diegans and chronically homeless Veterans, receive Federal Section 8 Housing 

Choice Voucher rental assistance from SDHC. 

These households include more than 37,000 men, women and children. 

Approximately 56 percent of these households are seniors or individuals with disabilities. 

In addition to assisting low-income households to obtain rental housing, SDHC's 

Housing Choice Voucher program invests millions of dollars in the local economy each 

year. 

In Fiscal Year 2015 (July I, 2014- June 30, 2015), SDHC paid $141,953,109 to 5,600 

participating landlords in the city of San Diego, who are essential to providing affordable 

housing to low-income San Diegans. 

• Moving to Work 

The U.S. government's creation of the "Moving to Work" program in 1996 established a 

significant tool to provide affordable housing opportunities, combining the flexibility to 

foster innovation with continuing government oversight from HUD. Public housing 

authorities must submit their proposed new MTW programs to HUD for approval. 

MTW lessens the impact of the top-down approach of the public housing program 

because it provides flexibility and allows local agencies to determine the most effective 

programs for their communities. 

MTW has been especially significant in the expensive housing markets of California, 

including San Diego. 

14 
75 


24066.038

SDHC is one of only 39 public housing agencies, out of 3,400 nationwide, to receive the 

MTW designation from HUD, which allows flexibility to create innovative, cost-effective 

approaches to provide housing assistance to low-income families. 

I want to thank the members of this subcommittee for your efforts to extend the contracts 

ofMTW agencies, such as SDHC, for 10 more years, through 2028, which was approved 

in the Consolidated Appropriations Act of Fiscal Year 2016 on December 18,2015. 

This Congressional action also will expand the MTW program to an additional 100 

public housing agencies across tbe country. I believe that the MTW program should 

eventually apply to all public housing agencies other than those identified by HUD as 

"troubled" to provide them with the structure and flexibility to design programs in their 

communities. 

In San Diego, the MTW program has allowed SDHC to encourage families and reward 

them for productive activities, as you will see in my comments about the SDHC 

Achievement Academy. 

SDHC's MTW initiatives provide: opportunities for Section 8 Housing Choice Voucher 

rental assistance participants and public housing residents to become more financially 

self-reliant; funding toward the creation and preservation of affordable housing for 

homeless San Diegans; and rental housing vouchers to address homelessness. 

SDHC Achievement Academy 

A significant component of SDHC's MTW initiatives is that we want to reward 

households for taking steps to move to work. The SDHC Achievement Academy is a 

critical MTW initiative to help low-income residents break the cycle of poverty and 

become more financially self-reliant. 

On October 4, 2010, SDHC opened the SDHC Achievement Academy, a state-of-theart learning and resource center and computer Jab at SDHC's headquarters in 

Downtown San Diego. The SDHC Achievement Academy provides programs that 

emphasize career planning, job skills and personal financial education-at no cost to 

Section 8 Housing Choice Voucher rental assistance participants and public housing 

residents. 

In Fiscal Year 2015 (July l, 2014- June 30, 20!5), 1,667 participants received 

services at the SDHC Achievement Academy, and 2,000 participants are projected to 

receive services in Fiscal Year 2016 (July I, 2015 --June 30, 2016). 

15 
76 


24066.039

The SDHC Achievement Academy's main program is Family Self-Sufficiency (FSS). 

Heidi, age 39, was a homeless, pregnant teen when she began receiving Federal rental 

assistance from SDHC in 1997. She began participating at the SDHC Achievement 

Academy in 2012 and enrolled in FSS. 

Working as a waitress, she was able to obtain an associate's degree in 2007. Two 

years later, she graduated from California State University, San Marcos with a 

bachelor's degree in criminology and justice studies, and began her doctoral studies 

in sociology at the University of California, San Diego, where she will defend her 

dissertation on May 20, 2016, to obtain her Ph.D. 

"There is absolutely no way that I would have had the opportunity to go to school if I 

didn't have my rent subsidized. I didn't have to work three jobs to support my family. 

I was able to take that time and go to school. I always felt like I had someone in my 

comer, someone that supported me, someone that wanted me to be successful, and 

I'm speaking specifically of FSS," Heidi said. 

Heidi will be looking for work as a professor and plans to phase out of Federal rental 

assistance in two years, making assistance available for another low-income family. 

SDHC utilized MTW flexibility to redesign the SDHC Achievement Academy's FSS, 

program, to provide enhanced opportunities for families to become more financially 

self-reliant. 

As of March of this year, 326 individuals arc participating in the SDHC Achievement 

Academy's FSS program. 

A voluntary, two-year program, FSS provides a variety of courses, including: job 

training, career planning, and financial literacy education, such as budgeting, saving, 

establishing good credit, and income tax preparation. 

Participants are required to follow a career plan and obtain a job working at least 32 

hours per week. FSS is available at no charge to the head of household receiving 

SDHC HCV rental assistance and public housing residents. 

SDHC Achievement Academy FSS participants are able to earn up to $10,000 in an 

interest-bearing escrow account based upon their educational and employment-related 

accomplishments. Funding for these financial incentives is provided by HUD. FSS 

16 
77 


24066.040

program participants may use these funds as they wish when they complete the 

program. 

Choice Communities 

The United States and the United Kingdom have both experienced transitions in their 

affordable housing, with a shift to communities that bring together a combination of 

income levels instead of concentrating low-income housing in one location. 

In San Diego, one of the programs that helps to achieve economic integration through 

more economically diverse, balanced communities is SDHC's Choice Communities 

program (not the Federal Choice Communities program), an MTW initiative that 

began on January I, 2010. 

SDHC's Choice Communities program helps Section 8 Housing Choice Voucher 

rental assistance participants move from high- and medium-poverty areas to lowpoverty neighborhoods in the city of San Diego. 

Since the launch of the program, 288 low-income families in the city of San Diego 

have been able to move to areas with more options for transportation, schools, and 

employment opportunities. 

Leasing a three-bedroom home from a private landlord was possible for Maria and 

her two sons, ages 6 and 12, because ofSDHC's Choice Communities program. A 

no-interest loan through the program helped Maria pay the security deposit for the 

rental home. 

"I would not have been able to do that on my own because that's a lot of money for 

me as a single mom," said Maria, who works in customer service for a local hospital. 

Maria has received Federal HCV rental assistance for the last six years. 

The Choice Communities program: 

• Allows a higher monthly rent subsidy, or "payment standard" 

• Provides no-interest loans of up to $1,450 for security deposits, to be paid to 

the property owner, with low monthly repayments 

• Provides additional resources, information and guidance to families interested 

in moving to one of the specified low-poverty Choice Communities 

Overall, 804 Housing Choice Voucher families live in Choice Communities, 

including families who lived in these neighborhoods before the Choice Communities 

17 
78 


24066.041

program began or who are new to SDHC's Housing Choice Voucher program and 

chose to live in these communities. 

I believe that, as we move forward, many of the programmatic tools already exist to assist lowincome families, as I have shown with the San Diego model. To help low-income families move 

out of poverty, it is essential for local agencies to be provided with the flexibility to choose the 

options that show the greatest success in their communities. 

Addressing Homelessness 

The flexibility to meet local needs is utterly essential to effective affordable housing strategies. 

Challenges are not the same in all cities and counties across the country. A specific challenge for 

affordable housing in San Diego is homelessness. 

The San Diego region ranks fourth in the nation in homeless population, behind New York, Los 

Angeles, and Seattle, according to the Annual Homeless Assessment Report to Congress, 

published in November 2015. 

• Housing First Model 

The future of affordable housing includes providing housing opportunities for 

homeless seniors, Veterans, families, and individuals. 

SDHC is a driving force of the national Housing First model in the city of San Diego 

-to provide homeless individuals with housing as quickly as possible, with 

supportive services as needed. 

As an MTW agency, SDHC on July 1, 2010, became one of the first public housing 

authorities in the nation to receive approval from HUD use Federal rental housing 

voucher funding to provide long-term housing for chronically homeless individuals. 

HUD also approved SDHC's request to utilize its MTW status to invest its Federal 

funds to preserve or build aiTordable housing for homeless San Diegans. 

HOUSING FIRST- SAN DIEGO 

SDHC is applying the power of these Federal resources to address homelessness 

through HOUSING FIRST- SAN DIEGO, SDHC's three-year Homelessness 

Action Plan (2014-17), which was launched on November 12, 2014. 

18 
79 


24066.042

!. Award Development Funds- Up to $30 Million over three years (Up to 

$1 0 million each year) to create permanent supportive housing that will 

remain affordable for 55 years 

In the first year, SDHC awarded $8.2 million in Federal, State, and City of 

San Diego funds administered by SDHC to two developments, which will 

provide a totall2l affordable housing units for homeless individuals. 

2. Commit up to 1,500 Federal Rental Housing Vouchers for Permanent 

Supportive Housing to provide housing to homeless individuals and families 

(Award up to 300 new housing vouchers each year to complement 576 

housing vouchers already awarded) 

SDHC awarded 180 new Federal rental housing vouchers in the first year. 

3. Renovate Hotel Churchill- 72 Units of Permanent Supportive Housing: 

56 units for homeless Veterans; 8 units for youth aging out offoster care; and 

8 units for adults exiting the corrections system who also need supportive 

services 

The renovation of the historical Hotel Churchill is scheduled to be completed 

this summer. SDHC is working with its nonprofit affiliate, Housing 

Development Partners, to rehabilitate Hotel Churchill. SDHC invested $9.2 

million in MTW funds; $2.9 million in HOME Investment Partnerships 

Program funds awarded to the City of San Diego and administered by SDHC; 

and $3.2 million in City of San Diego funds administered by SDHC toward 

the $20.5 million rehabilitation cost. 

4. Invest MTW Federal Funds to Acquire Property that sets aside 20 percent 

of its units for permanent supportive housing for homeless San Diegans. 

SDHC invested $15 million in MTW Federal funds to purchase the 120-unit 

Village North Senior Garden Apartments. Twenty percent of the units 24 

units are set aside for homeless seniors. 

5. Dedicate SDHC-Owned Housing Units- 25 for Homeless San Diegans. 

SDHC is one of the first public housing agencies in the nation to commit 

affordable rental housing that it owns for this purpose. 

19 
80 


24066.043

This is a rapid re-housing component of HOUSING FIRST- SAN DIEGO. 

In the first year, 6 families became financially self-reliant and are now able to 

pay full rent or have moved to another apartment. The program served 132 

individuals, including 85 children and 12 Veterans in the first year. 

SDHC's multimedia digital report about HOUSING FIRST- SAN DIEGO was 

published on November 21,2014, and is posted on SDHC's website: 

http:/ I digital. tum -page.com/i/ 4 28981-sdhc-homelessness-action-p Ian 

New initiatives tor the second year of HOUSING FIRST SAN DIEGO include: 

I. The 1,000 Homeless Veterans Initiative Provide housing opportunities for 

I ,000 homeless Veterans in the city of San Diego within one year 

2. The Guardian Scholars Program at San Diego State University- Rental 

assistance for up to I 00 students who have been homeless or at risk of 

homelessness 

3. The Monarch School Project- Federal housing vouchers for 25 families with 

students impacted by homelessness 

News releases about these new initiatives are available on SDHC's website: 

- March I, 2016: The 1,000 Homeless Veterans Initiative 

http://www.sdhc.org/uploadedFiles/Media Center/News Releases/NR.Vetera 

nslnitiative.Approved.pdf 

- December 3, 2015: The Guardian Scholars Program and The Monarch School 

Project 

CONCLUSION 

http://www.sdhc.org/uploadedFiles/Media Center/News Relcases/NR.SDHC 

-SDSU%20HousingFirstSanDiego.l2.3.15.pdf 

Although programs may vary from one country to the other, the commonality of intent between 

the United States and the United Kingdom remains remarkably consistent. The housing policies 

of both countries continue to evolve, moving toward greater public-private partnerships and 

locally derived options and moving away from uniform, centrally planned, mandated programs. 

In both countries, we collaborate and innovate to achieve the objective I stated at the beginning 

of my testimony today-an objective shared between the United States and the United Kingdom: 

20 
81 


24066.044

to empower individuals and families to realize their potential, while providing a safety net for 

those who are in need or who require assistance in a competitive world. 

As approaches toward affordable housing evolve in the United States and the United Kingdom, I 

encourage all of us to be constantly open to identifying a continuously changing variety of 

solutions and to recognize the importance of both the government and the private sector to 

meeting the housing needs of our unique communities. 

21 
82 


24066.045

Testimony of Jaime Alison Lee, J.D. 

Assistant Professor and Director of the Community Development Clinic 

at the University of Baltimore School of law 

Presented to the Subcommittee on Housing and Insurance, Financial Services Committee, 

United States House of Representatives, 

May 12,2016 

Chairman Luetkemeyer, Ranking Member Cleaver, and other Members of the Subcommittee, 

thank you for inviting me here today. My name is Jaime lee and I am an Assistant Professor at 

the University of Baltimore School of law, where I teach the law of Business Organizations and 

also direct the Community Development Clinic. 

I respectfully submit three key points for your consideration: 

• Public housing rights are at risk under privatization due to extremely weak legal monitoring 

and enforcement. 

• Stronger enforcement is needed to carry out Congressional intent to preserve these rights, 

and to ensure that contractors provide the benefits that they are being paid to provide. 

• Privatization programs raise concerns about long-term affordability and about the potential 

exclusion of those in great need of public housing. 

RELEVANT EXPERIENCE 

I became familiar with public housing privatization as a lawyer in private practice. From 2002-

2009, I represented public housing authorities across the country who partnered with private 

developers under HOPE VI and other programs and assisted them with transactional, financing, 

and regulatory issues. 

After entering academia, I turned my focus to the tenant experience, publishing "Rights at Risk 

in Privatized Public Housing" in the Tulsa law Review in 2015 and "Poverty, Dignity, and Public 

Housing," forthcoming in the Columbia Human Rights law Review. 

The matters presented arise from my research on public housing privatization in the United 

States, and appear to have analogs in the British programs being reviewed by the 

Subcommittee today. 

1 
83 


24066.046

EXECUTIVE SUMMARY 

Public housing rights are at risk, even though Congress has mandated their preservation 

under privatization. These rights are derived from Constitutional norms and include: 

• the right to remain in the housing unless there is legal good cause for eviction; 

• the right to contest harmful acts by a landlord, without requiring the resources to mount a 

formal court action; and 

• the right to participate (to be informed and to be heard) with respect to management 

decisions affecting one's housing. 

These rights are at risk due to an extremely weak legal monitoring and enforcement 

infrastructure. 

• little to no data is collected on whether these rights are being respected, and existing legal 

remedies are ineffective or ill-suited to the privatized context. 

• Low-income tenants also have no consumer power to "walk away," and thus there is no 

market-like system for "weeding out" poor performers. 

• Stronger enforcement is needed to carry out Congress' intent to preserve these rights and to 

ensure that contractors provide the benefits that they are being paid to provide. 

• Options for improved rights enforcement may include stronger transparency requirements; a 

legislative mandate for federal oversight and enforcement; and the dissemination of data 

that may be used to monitor rights compliance. 

Privatization also raises concerns about affordability and about who can access public 

housing. 

• Affordability may be jeopardized if insufficient public funding increases pressure to raise rents 

using legal waivers. 

• legal tools that make it harder to get into and stay in privatized public housing may be used 

to exclude or evict those who may most need public housing. 

My brief review of the large-Scale Volunteer Transfer Program in the United Kingdom appears 

to underscore these concerns in the following ways: 

• Government oversight of tenants' rights under privatization has been greatly diminished in 

the UK, 1 although rights enforcement is necessary, since 47% of tenants reported that 

nonprofit housing providers failed to live up to their promises. 2 

• Insufficient funding for privatized programs is also a significant concern for UK providers. 3 

Access to privatized public housing is viewed as much more restrictive in the US than in the 

UK. 4 

2 
84 


24066.047

DETAILED TESTIMONY 

Tenants' rights are discussed below. Potential effects on affordability and accessibility are discussed 

beginning on page 11. 

THE UNENFORCED CONGRESSIONAL MANDATE 

Since the mid-1990's, federal policy has promoted the privatization of public housing through the 

HOPE VI Program, the Choice Neighborhood Program, and the Rental Assistance Demonstration (RAD) 

Program. 

Throughout these privatization experiments, Congress has largely demanded that private housing 

providers (whether for-profit or non-profit) preserve traditional rights and protections afforded to public 

housing tenants These rights include basic affordability restrictions and other key benefits that make 

public housing especially valuable to low-income tenants. 

These rights also include legal benefits that only governmental actors would be traditionally required 

to provide. These rules derive from the Constitution and from democratic principles promoting an 

engaged citizenry. Congress has mandated, for example, that private landlords abide by Constitutional 

due process and consult with residents before making certain decisions about their housing. 

Congressional intent has been quite clearly stated. All units under the HOPE VI and Choice 

Neighborhoods programs must be "developed, operated, and maintained in accordance with the 

requirements of the Act relating to public housing," 5 and under both RAD programs, "tenants ... shall, 

at a minimum, maintain the same rights ... as those provided under section 6 and 9 of the Act," 6 which 

address certain security-in-tenancy and participation protections. A host of statutory, regulatory, and 

administrative declarations further elaborate upon these protections/ which are in turn made 

applicable to private owners via contract. 8 

Despite Congressional intent, the legal infrastructure to monitor and enforce them is extremely weak. 

It is difficult to provide empirical data on the scope of the problem precisely because there is no 

systematic monitoring or enforcement system. These concerns are documented, however, by 

numerous case studies published in law journals and other fora, as well as by anecdotal research, 

including consultations with lawyers across the nation who represent tenants experiencing privatization 

under the RAD program. 

This research supports concerns that some tenants today are experiencing great difficulty in obtaining 

information about privatization plans and implementation, echoing similar experiences under the HOPE 

VI program. It also reflects concerns that tenants are not benefiting from other rights promised under 

the law. 

3 
85 


24066.048

Rights In Detail: A Sample Story 

Some of the most valuable benefits of public housing include security in tenancy rights, and rights 

to participate in governance and policy-making. A hypothetical narrative offers a backdrop for discussing 

the nature of these benefits, their origins, and their importance. 

Imagine a faded complex of garden-style apartments, one or two stories in height and set around a 

spare courtyard. The building has continuously been owned and operated by the local housing agency as 

public housing since it was built many decades ago. Years offederal funding shortfalls have led to 

deferred maintenance, and the building is in dire need of major capital repairs. 

Assume that this particular community reflects national averages for the public housing population 

at large. Seven out of eight residents are elderly, disabled, and/or responsible for small children! The 

average household income is $13,724, even though wages are a major source of income for 28% of 

households. 10 Only twelve percent of households depend on welfare as a major source of income." 

The residents recently elected representatives to the building's resident council, which under 

federal law has the right to consult with the local agency as to how their housing is run. The residents 

elected Mrs. J to the council, along with other leaders who have been active in complaining to the 

landlord about the building's persistent mice, bedbug, and cockroach infestations. Mrs. J and the other 

council representatives plan to use their positions to advocate for better housing conditions. 

The complex is selected to participate in a privatization program, which means that its federal 

funding stream can be supplemented with other kinds of financing. Agency staff has no expertise in 

complex real estate finance matters, so it hires a private real estate developer (who may be a for-profit 

or a non-profit) to assemble a financing package and oversee renovations. 

The government's interest in the property makes it relatively attractive to private-sector banks and 

investors. The developer successfully arranges for a commercial bank loan to fund capital needs, which 

the bank secures through a mortgage. The company also raises equity through the tax credit program, 

through which investors contribute funds for renovations in exchange for significant tax savings. 

To meet tax credit requirements, title to the building is transferred to a company controlled by the 

real estate developer. To safeguard their investment, the investors and the bank demand that the 

company be run by people with sophisticated knowledge of the tax credit program. Since agency staff 

cannot fill that role, the real estate developer assumes a controlling interest in the company that owns 

the building. It also hires an affiliated company to manage the building's day-to-day operations, such as 

addressing routine maintenance needs, collecting rents, and handling evictions. 

All residents have the opportunity under federal law to return to the building after renovations, 

and all do. They find that the roof leaks less and cosmetic repairs have been done, but also that the 

vermin have returned. Residents continue to lobby for better conditions, and just as the leases of Mrs. J 

and other resident council members are about to expire, each receives a notice that his or her lease will 

not be renewed. 

According to the landlord, Mrs. J. has repeatedly failed to pay her rent on time. Other council 

members are accused of disturbing other residents and failing to keep guests from writing graffiti. 12 Mrs. 

J and the other resident leaders dispute these allegations and believe that the landlord is refusing to 

renew their leases in retaliation for their activism. 

Since Mrs. J is disabled, suffers from a range of health problems, and has limited daily mobility, she 

4 
86 


24066.049

is panicked that she has only thirty days to find alternative housing that is affordable, close to medical, 

transportation, and social services, and close to her daughter, on whom she relies a great deal. 

This brief narrative illustrates a number of concepts. It describes how a public housing complex 

might typically transition from governmental ownership and management to private control under 

either a for-profit or a non-profit. It also illustrates certain protections commonly afforded to public 

housing residents and that are intended to be preserved as the housing becomes privatized. These 

protections can be categorized into two broad groups, referred to as "security-in-tenancy" protections 

and "participation rights." 

Rights to Security-In-Tenancy 

Security-in-tenancy protections are legal assurances that a person may remain in her housing for 

the foreseeable future if she abides by the rules. In short, security in tenancy means that a person 

cannot be forced to vacate her housing unless good cause exists for terminating the tenancy, and these 

protections provide stability and reassurance that the resident will not lose shelter through no fault of 

her own. 

Security in tenancy protections offer both functional and emotional benefits.13 They guard against 

involuntary ejection from one's home and the disruption of one's social networks, daily functions, and 

emotional well-being. 14 

These protections are especially important for those who are disabled, elderly, or have children, 

who collectively make up eighty-seven percent of the public housing population, 15 and for individuals 

who are otherwise "hard to house," who face challenges in finding replacement housing that is 

affordable, accommodates their physical needs, and is convenient to essential medical, educational, and 

social services16 For many who live in public housing, security in their tenancy is not a mere 

convenience, but a critical safeguard against homelessness and against the harshness of private lease 

lawY 

Security-in-tenancy rights come in various forms, including rights to continued occupancy, 

grievance procedures, and the right to return. 

1. Continued Occupancy 

Assume momentarily that Mrs. J lives in a private rental building that does not participate in any 

federal housing program. Mrs. J could go to court to disprove the landlord's allegation that she did not 

pay her rent, since all states require a court hearing prior to eviction. 18 Most states also offer a statutory 

protection against retaliatory eviction. 19 Even if she is successful in the courtroom, however, Mrs. J 

would not secure a right to renew her lease. A tenant in private housing simply has no right to continued 

occupancy; a private landlord may decline to re-let a unit when the lease term ends without cause and 

for any reason that is not illegally discriminatory. 

Fortunately for Mrs. J, because she lives in public housing, she does have a legal right to continued 

occupancy. A public housing landlord must renew the lease to the current resident unless it has good 

cause not to do so. The right to continued occupancy derives from Constitutional due process 

requirements established during the "due process revolution" of the early 1970s. 20 

In Goldberg v. Kelly, the Supreme Court established that welfare benefits could not be terminated 

without due process under the Fourteenth Amendment. 21 Goldberg was explicitly applied to public 

5 
87 


24066.050

housing by the Second Circuit in Escalera v. New York City Housing Authority, 22 which held that under 

the Fourteenth Amendment, public housing benefits could not be terminated without adequate 

procedural safeguards, including good cause. 23 The Fourth Circuit in Caulder v. Durham Housing 

Authority further determined that Goldberg's protections expressly apply to public housing. 24 

Moreover, the Fourth Circuit found that a resident's property interest extends beyond the initial 

term of the lease in Joy v. Daniels, holding that a contractual end to the tenancy is overridden by due 

process requirements, which demand good cause for declining to renew a public housing lease upon 

expiration. 25 Joy's holding is now echoed in federal regulations. 26 

2. Grievance Procedures 

Another security-in-tenancy benefit is the opportunity to grieve nearly any adverse act taken by 

one's landlordn Grievance procedures provide a forum for dispute resolution that is more flexible and 

accessible than judicial proceedings and thus offer public housing residents greater security against 

eviction and other adverse events. 

Grievance procedures offer both informal discussions as well as a more formal hearing. 28 Mrs. J, for 

example, has the legal right to first speak informally with her housing manager about her alleged 

nonpayment of rent. 29 If the landlord does not change course, Mrs. J can then appeal the outcome of 

the meeting through a more formal hearing, 30 administered by an "impartial" person selected in 

accordance with a process approved by the residents. 31 

Mrs. J has the right to have a lawyer or other representative at the hearing, at which she can 

examine the rules and regulations, examine records allegedly showing her nonpayment, cross-examine 

the staff person to whom she handed her check every month, and present her bank records to refute 

the landlord's grounds for eviction. 32 

She could also describe her activism efforts, as well as the landlord's refusal to renew the leases of 

other resident activists and call witnesses to support her theory of retaliation. 33 Both the informal and 

formal processes must be documented in writing, 34 and the decision of the hearing officer is binding on 

the landlord. 35 1f Mrs. J remains unsatisfied, she can still pursue a court action. 36 

As the narrative illustrates, one benefit of grievance procedures is access to convenient, low-cost 

avenues for dispute resolution prior to eviction and other adverse housing actions. The procedures offer 

third-party adjudication in a setting that does not require legal expertise, since rules of evidence, 

standing requirements, and other technical courtroom requirements do not apply37 Grievance 

processes can be used to facilitate dispute resolution without the time, cost, legal expertise, and 

emotional toll of court proceedings, and participants are free to negotiate creative and flexible remedies 

that suit their particular circumstances. 38 

A further benefit is that a resident may confront a manager with a broader range of concerns than 

a court proceeding might entertain. Residents can grieve not only evictions but virtually any adverse 

action or inaction by the landlord. 39 Grievances thus provide a forum for working out a broad array of 

landlord/tenant conflicts, not just those presenting a legally cognizable cause of action. 

Grievance rights derive from Constitutional due process rights articulated during the due process 

revolution. In Thorpe v. Housing Authority, a resident was evicted immediately after being elected as 

president of a resident organization40 Before the U.S. Supreme Court could confront the First 

6 
88 


24066.051

Amendment concern, HUD issued administrative guidance requiring procedural due process hearings 

much like those required in Goldberg, which were then refined through negotiations among HUD, legal 

advocates for residents, and a group of local housing agencies. 41 

The principle that grievance procedures can be invoked with respect to any adverse action, not just 

evictions, also derives from procedural due process. 42 Escalera, applying Goldberg, held that grievance 

procedures are triggered by the assessment of minor fines against residents, 43 establishing residents' 

right to invoke grievances to address a wide range of issues. The principles of Thorpe and Escalera set 

forth the basic infrastructure for today's grievance procedures and are now codified by statute. 44 

3. The Right to Return 

In the hypothetical narrative, Mrs. J also benefited from a security-in-tenancy benefit known as 

"the right to return." 45 The right to return means that residents who are displaced due to renovations 

must be offered an opportunity to move back into the refurbished housing. 46 Unique to public housing, 

this right is one of its most sought-after benefits, and recent privatization programs offer a nearly 

universal right to return. 47 

The right to return resonates strongly among public housing and other low-income communities in 

part because of a long history of their displacement by governmental programs supporting activities 

such as urban renewal and the construction of highway and sports stadia. 48 Early public housing 

privatization initiatives are part of this history. HOPE VI's "mixed-income" policy displaced thousands of 

low-income black residents who could not return to the renovated sites because much of the new 

housing was reserved for higher-income, often white, residents. 49 Private landlords imposed stricter 

screening requirements for the renovated units, further excluding many former residents from 

returningso Those displaced often lacked adequate support in finding replacement housing and 

adjusting to the loss of their homes, social networks, and services such as familiar schools, doctors, and 

transportation lines." With no federally guaranteed right to return, residents at HOPE VI sites around 

the country protested strenuously to secure the right at the local level, 52 and advocates fought for 

decades for a change in federal policy. 

The intensity of these battles reflects the importance of the right to return, as does its 

reinstatement in later privatization programs, namely, the Choice Neighborhoods and RAD programs. 

Participation Rights: Rights To Be Informed and To Be Heard 

Benefits available to public housing residents also include participation rights, or rights to provide 

input to one's landlord on matters that affects one's living conditions." 

Participation rights have roots in principles of due process, although today's participation rights 

extend well beyond Constitutional minimums. For example, Mrs. J's resident council must be 

"recognized" by the public housing agency under federal requirements, 54 which qualifies it for funding 

for education, training, and other activities supporting resident involvement in the governance of their 

housing. 55 Public housing rules also encourage the establishment of formal channels of communication 

with agency officials 56 Residents have formal notice-and-comment rights with respect to plans to sell, 

renovate, or privatize their housing57 and with respect to proposed changes in lease terms, rent 

requirements, and house rules. 58 Residents are also entitled to fill one seat on the local agency's board 

7 
89 


24066.052

of directors. 59 

Mrs. J and her fellow residents might well benefit from these types of participation rights. They 

might use their funding to support community organizing trainings and protests against the evictions of 

the resident leaders. 60 The resident council could employ its federally-mandated channels of 

communication with agency officials to publicize the retaliatory evictions. 61 

Participation rights must be viewed with some skepticism, as they provide only for communication 

between residents and decision-makers, and do not guarantee residents any control or power over 

decisions.6' Residents' bargaining power in such settings is often limited by race, their status as 

beneficiaries, and a lack of traditional markers of credibility such as education. Nevertheless, 

participation rights remain valuable, as they can increase residents' collective negotiating power in 

advocating for better housing conditions. 63 Rights to federal funding and to information disclosure are 

especially useful in facilitating resident mobilization and collective action to promote change. 64 

Rights At Risk: No Effective Monitoring Or Enforcement 

Despite Congressional intent to preserve these rights, and the existence of legislative, regulatory, 

and contractual mandates to do so, there are critical weaknesses in the existing accountability 

framework. 

1. Federal Monitoring Is Inadequate 

Current monitoring schemes seem highly unlikely to uncover potential rights violations simply 

because they do not ask about them. 

HUD possesses broad monitoring authority, yet it collects practically no information about 

security-in-tenancy and participation rights. 65 HUD is statutorily required to evaluate66 whether local 

housing authorities have provided participation opportunities for residents, 67 but HUD's assessment tool 

simply does not evaluate this factor. Security-in-tenancy rights receive even less attention, and are 

simply absent from the statutory list of what HUD must monitor. 68 

In another example, HUD assesses performance under one program with respect to eight 

compliance categories 69 Four categories address financial and administrative concerns, and three assess 

whether the landlord filled out required reports. 70 Of the hundreds of questions asked, not a single one 

inquires into security-in-tenancy or participation rights. At best, these rights might be covered under the 

generic category of "resident complaints" concerning "non-fife-threatening conditions.'m 

HUD's systemic monitoring efforts are supplemented by the administrative complaint process, 72 

which enables residents to initiate complaints, but lacks regulations or guidance explaining how they 

may do so, 73 and leaves it to HUD's discretion whether to respond or not. 74 Even in one program in 

which participation rights are singled out for monitoring and enforcement, HUD's responsiveness to 

complaints is reportedly inconsistent. 75 

2. Federal Enforcement Mechanism Are Inadequate 

HUD can theoretically exercise a range of contractual remedies against private landlords, including 

termination,'• and HUD may generally exercise any permissible remedy against a private owner. 77 

8 
90 


24066.053

However, HUD cannot be compelled to act, 78 and even if it does, significant challenges exist to the 

effective exercise of remedies. 

Three specific remedies are repeatedly emphasized in privatization contracts. 79 One is that HUD 

may petition a court for specific performance or an injunction. Court action is likely to be too costly to 

pursue, however, except where violations are repeated and egregious. 

A second remedy is the reduction or termination of subsidies, which poses obvious risks. Since 

HUD is in a collaborative relationship with private actors and relies on them to provide services, it may 

shy away from enforcing in this manner. Moreover, a landlord penalized by a reduction in subsidy may 

simply further spend less on services rather than sacrifice profit. Severe fiscal sanctions may even 

threaten the project's financially viability, leading to a bankruptcy, workout, or foreclosure process that 

could displace residents and jeopardize long-term affordability. 80 Subsidy-reduction sanctions are so 

risky that residents have occasionally filed suit to prevent HUD from exercising this remedy. 81 

The third contractual remedy is to remove the housing asset from the contractor's control and to 

place it into the hands of either a court-appointed receiver or the enforcing agency itself.82 This remedy 

poses logistical challenges of identifying a receiver capable of both administering a complex array of 

public housing requirements and implementing widespread organizational change that will endure once 

the receivership ends. Receivers have been appointed by HUD over local agencies in the past with 

success,"' although instituting a receivership is exponentially more complicated in a privatized context. 84 

Receivers must be identified who have expertise in both complex real estate financing matters and in 

public housing administration, and investors and lenders may well object to ceding control over their 

investment and seek to block the appointment85 

In sum, strong contractual remedies exist, but face such steep implementation challenges that they 

are likely to be exercised only when violations are especially egregious. In the vast majority of situations, 

these remedies may be too risky or costly. 

Less severe remedies also exist, although they are not explicitly articulated in the contracts. HUD 

commonly employs intermediate-level sanctions against poor-performing local agencies, which it 

conceivably might also apply to private landlords86 For example, HUD might require a local agency to 

increase its reporting, meet certain performance standards within specified timelines, and require 

attendance at trainings. 87 Such soft incentives may spur change at local agencies, since HUD programs 

are often the agency's sole mission and HUD funds are often their sole source of income. Private 

landlords, on the other hand, may be less reliant on HUD and thus less susceptible to indirect HUD 

pressure. 

Other intermediate-level sanctions are equally unlikely to be effective against private landlords. 

For example, when dealing with a poorly-performing local agency, 88 HUD might prohibit the agency 

from taking on new financial commitments, require it to submit any new business contracts with outside 

parties to HUD for approval, and impose third-party oversight of certain aspects of the agency's 

operations. 89 It is unlikely that HUD would inject itself so intrusively into private-sector business 

dealings, however, and equally unlikely that private landlords would readily submit to such intrusions. 

9 
91 


24066.054

3. Resident Enforcement Through Participation Is Inadequate 

While participation rights, if well-enforced, could provide another avenue through which residents 

could force private landlords to respect their rights, their potency is limited in the privatized setting. 

A key benefit of participation rights is that they provide formal channels of communication 

between a local agency and resident representatives, such as through the resident council and the 

residents' seat on the agency's board of directors. If Mrs. J lived in conventional public housing, she 

could potentially use these channels to challenge the manager's systemic eviction of resident leaders, 

using her position on the resident council to make agency supervisors and the board of directors aware 

ofthe manager's actions. The agency, as the manager's employer, would be in a position to terminate or 

sanction the manager for her bad acts. 

Where landlords and managers are employed by private companies, however, agency staff wields 

only attenuated control over their behavior. An agency cannot fire, sanction, or threaten to fire the 

individual, but can only seek to pressure the private company to take action against her. Thus, the lines 

of communication between residents and local agency officials may be significantly less likely, in a 

privatized setting, to improve how residents are treated 90 

Private ownership also dilutes the power of participation rights in other ways. Participation rights 

include legal rights to information, which is frequently useful in catalyzing mobilization efforts, through 

which residents act collectively to exert pressure on the landlord to change its behavior. 91 

Privatization, however, means that control over individual housing projects is no longer centralized 

in the local agency, but dispersed among numerous private landlords. This diversity of ownership may 

make it more challenging to mobilize a sufficient number of residents against any one landlord. Unlike 

government landlords, private landlords are also generally not subject to sunshine laws92 and may shield 

their principals, as private citizens, from becoming the objects of public protests. 93 

Moreover, while community organizing and other mobilization activities may be protected in 

conventional public housing under the First Amendment,S4 such speech rights have not explicitly been 

publicized and may not be protected in privatized public housing. 

4. Market-Like Enforcement Is Inadequate 

Finally, it might be argued that private landlords will voluntarily offer enhanced benefits in order to 

more effectively compete for tenants. 95 In this view, if tenants value the benefits, they will seek out 

landlords who offer them and reject those that do not, and thus the profit-motive will encourage 

landlords to provide public housing benefits. 

The flaw in this argument is that competition for tenant dollars does not exist in the public housing 

sector, since low-income tenants have few or no alternative housing options and little or no ability to 

reject landlords who provide unsatisfactory service. 96 

As Wendy Netter Epstein explains, systemic market failures exist in the realm of public-private 

contracting, including a lack of competition, which lead to contracts that do not internalize the full costs 

of providing public services and causes beneficiaries to bear the excess cost in the form of poor 

service. 97 

10 
92 


24066.055

Potential Avenues for Improved Rights Monitoring and Enforcement 

Potential options for more effectively enforcing rights may include: adding an explicit legislative 

mandate that HUD must monitor and enforce rights; adding transparency requirements for open 

meetings, direct channels of communication with housing providers, and comprehensive disclosure of 

privatization plans and how tenants will be affected; collecting and publishing data that can be used to 

assess whether providers are performing, such as data collected through surveys, site visits, HUD and 

tenant reviews, and records of grievances and administrative complaints; and providing tenants broader 

legal rights to initiate investigations and enforcement actions. 

PRIVATIZATION RAISES AFFORDABILITY CONCERNS 

All housing programs must consider fundamental questions of who should be housed98 and how 

affordable the housing should be. Public housing rent payments have long been capped at 30% of 

income," with all new admissions reserved for people earning 80% or less of area median income and 

40% of admissions further reserved for those earning 30% or less of area median income.'00 Thus, 

federal policy reserves much of public housing for the extremely poor. 101 

Genuine concerns exist, however, about whether privatized housing will remain accessible to those 

least likely to be able to secure other forms of housing. 

First, under RAD, residents may need to pay more of their limited income toward rent. 102 A fastfood cook in Memphis with one child who earns $15,000 annually and pays no taxes might, after paying 

rent for a conventional public housing unit, have approximately $28 dollars per day remaining to cover 

all other living expenses. 103 Even a small rent increase may be too great to bear for residents in such 

circumstances. 

Second, insufficient funding may cause pressure to raise rents, which may be done using legal 

waiver authority available under RAD104 or the Moving to Work Program. 

Third, the longevity of affordability is a concern. In RAD, the affordability period is already shorter 

than that of other public housing, 105 and owners may exit the public housing program once their 

contractual obligations end. They may even deliberately breach their contracts with the goal of 

escaping from their public housing obligations before the contract term expires, 106 which they may be 

tempted to do if converting the property to a market-rate use will be more profitable. Notably, RAD 

imposes significantly lighter affordability restrictions in case of a breach or foreclosure than do the HOPE 

VI or Choice Neighborhoods Programs. 107 

Fourth, other serious concerns exist about whether privatized public housing is as "permanently" 

affordable as conventional public housing. Some measures have been put in place towards this end: for 

example, federal approval is required to sell or close privatized housing and to lift affordability 

restrictions before the contract term expires, 108 and some local agencies also retain property rights 

enabling them to take back possession of the property once the contract with the private landlord 

expires, 109 which provides a potential path to long-term preservation. However, none of these 

measures are meaningful unless the necessary funding is available to sustain the program. 

11 
93 


24066.056

PRIVATIZATION RAISES ACCESS CONCERNS 

In at least some cases, privatization has increased the use of tools that make it harder to get into, 

and stay in, public housing. Private landlords may use their discretion to set admissions criteria that will 

bar many otherwise-eligible individuals from the housing. Owners generally must admit all who qualify 

under federal and local standards, but they also retain the right to screen for such things as credit 

checks, alcohol abuse, "poor housekeeping" skills, prior landlord references, and eviction and rent 

payment history, 110 among other things. 111 

Such standards can bar access to public housing for those are least able to secure other shelter, 

and who therefore are more likely to rely on public housing to avoid homelessness. The Urban Institute 

classified at least 40% of residents at five Chicago sites as "hard to house," meaning that their ability to 

find suitable shelter outside of the public housing program was severely restricted due to low income 

and other factors, such as lack of a high school degree or involvement with the criminal justice 

system. 112 Another study found that Chicago residents reported a "stunning" frequency of health 

problems that turn simple daily living activities into challenges. 113 

The concern is that private landlords may exercise their screening discretion in ways that bar such 

individuals from accessing public housing. Selective admission of "easy" tenants who may consume 

fewer resources, along with the aggressive eviction of residents viewed as more challenging, is popularly 

known as "creaming." 114 Even governmental landlords engage in creaming, 115 and non-profit providers 

may be also be incentivized to cream, especially if funding is scarce. 

Creaming by private landlords under the HOPE VI program drew national criticism. 116 RAD corrects 

some of the problems experienced under HOPE VI by guaranteeing that current residents will not 

undergo heightened screening standards in order to be re-admitted. 117 However, future applicants who 

are hard-to-house are likely to be screened out. Moreover, all suffer a higher risk of eviction. 

A final concern is that these exclusionary tools frequently prioritize reforming personal behavior 

as a primary cure for poverty, 118 and underemphasize the need to address structural causes of poverty. 

Thank you very much for the opportunity to discuss these matters. 

1. NatiOndl Regulatory Framework from 1 Aprt/2012, at 6-10. 

2 Norman Ginsburg, The Pnvatizat10n Polley Ltd 0261-0183 82 Vol. 25(1), at 126. 

3. Housing Partnership Network, Lessons of the International Housing Partnershtp, Issue Brief, at 12 (February 2016); Diane K. Levy, Hams 

Be1der, Susan Popkin, and David Price, The Urban Institute, At!anttc Exchange: Case Studtes of Housmg and Community Redevelopment in the 

United States and the United Kingdom, February 2010, at 21, 28. 

4. Harris Beider, Dlane K. Levy, and Susan Popkm, The Urban Institute, Commumty Revitafizatwn in the United States and the Umted 

Kingdom, at 12-13. 

5. 42 U.S.C. § 1437z-7{c) (2014). The statute further clarifies that any statutory reference to mdudes privately-owned units 

assisted by alternative fmancmg, such as those developed under the low-income housing tax 42 U.S.C. §§ 1437z-7(d){l} & 

ldii2IICJ {1014). 

6. Consol. & Further Continuing Appropriations Act, 2012, Pub. L. No. 112-55, tit. 11, 1 )5 Stat. 552, 675 (2011), available at 

http://portal.hud.gov/hudportal/documents/huddoc?id=HR-2112-RAO-Language.pdf {hereinafter RAD Appropriations}, dt 123. Statutory 

requirements publicized under RAD include grievance procedures, 42 U.S.C. § 1437d(k) (2014), mandatory lease renewal unless there is good 

cause, 42 U.S.C. §§ 1437d{J) & {5) {2014), and fmanoa! support for resident councils. Generally, Section 6 contains many of the substantive 

pubhc housing requirements, 42 U.S. C. § 1437d {20J 4), and Section 9 imposes these and other requirements on housing bwlt w1th public housing 

funds. See. e.g .• 41 U.SC. § 1437g{d){3) {2014) 

7- l-or example, the requirement to renew a lca:sc un!e:ss there for good cause is further explained in detail in a HUD notice concerning the 

RAO program, 10 certain standardized !ease forms drafted by HUD and required to be used by private owners, in regulations, and in agency 

guidance materials. See U.S. 0EP'TOF HOUS. & URBAN OEV., P!H-2012-32 {HA), REt•HAl ASSISTANCE DEMONSTRATION·- FINAL IMPlEMENTATION, REVISION 1, at 

47-48 (July 2, 2013), available at http://porta!.hud.gov/hudporta!/documents/huddoc?id=pih2012-32revl.pdf [hereinafter RAD Nottce}; 24 CF.R 

§§ 966.4(a}(2) & (I) {2014); U.S. DEP'T OF HOUS. & URBAN DEY., PUB. HOUS. OCCUPANCY GUIDEBOOK 118 (June 2003), avmlob!e at 

12 
94 


24066.057

http:/ I portal, h ud .gov /hud po rta!/docum ents/hud doc ?id=DOC _1 0760 .pdf [herei na fter OccuPANCY GuiDEBOOK]. 

8. See, e.g., Dom'mique Custos & John Reitz, Public Private Partnershtps, 58 AM. J. COMP. L 555, 579 {2010}. 

9. Basics: Introduction 10 Public Housmg, CTR. ON BUDGET & Poucy PRIORITIES, http:/fwww.cbpp.org/cms/?fa~view&id,2528 (last 

updated Jan. 2013). 

10. Picture of Subsidized 

(presentmg national averages calculated 

11. !d. 

12 violation of material terms of the lease'' or for "other good cause." See 42 U.S. C. § 

The reasons cited in the hypothetical are grounds for termination pursuant to the 

Reisman, The Right to Remain: Common Law Protectron for Security of Tenure: An Essay m Honor of John Otis Co/more, 

14. !d. (art1culattng the importance of security in tenancy and common-law bases for its extension); Dawn Jourdan & 

Grief: A Proposal to Compensate Relocated Public /lousing Res1dents for Intangibles, 21 U. FLA. J,L. & PUB. POL'Y 182 

to compensate forc1b!y displaced public housing residents for intangible losses, such as the intentional 

BaHard, Legaf Protections for Home Dwellers: Caulkmg the Cracks to Preserve Occupancy, 56 SYRACUSE l. REv. 277, 284-97 

G. McFarlane, The Properties oj lnstabfltty: Markets, Predation, Raciallzed Geography, and Property Law, 2011 Wis. L Rev. 

15. Rice & Barbara Sard, President's to Renew Rental Assistance Fully For Low~lncome Households, Cm. ON 

1 (Mar. 14, 2012), households 31% 

households 

Green, The Public Housing Tenancy: Variations on the Common Law That Give Secunty of Tenure and Control, 43 CATR U. l. REV. 

The Eviction Process, EVICTION RES., http://www.evlctionresources.com/eviction_process.html (last visited Dec. 18, 2014). 

19. Lauren A. Tenant' Enforcing Retaliatory Eviction Laws by Broadening the Residential Tenant's Optwns m 

Summary Eviction 101, 110 (2010). 

20. See generalfy Rebecca E. Zietlow, Giving Substance to Process: Countermg the Due Process Counterrevolution, 75 DENV. U. L Rev. 9 (1997}. 

21. Goldberg v. Kelly, 397 U.S. 254, 261 (1970) 

22. Escalera v. N.Y.C. Hous. Auth., 425 F.2d 853,861 (2d Cir. 1970) 23 ld 

24. Caulder v. Durham Hous. Auth., 433 F.2d 

individual who qualifies for it is guaranteed 

due process. 

25. Joy v. Daniels, 479 F.2d 1236, 1242 (4th Cir. 1973). 

26" 24 CFK § 966A(a)(2)(1) (2014)" 

21. where the 

USC§ 

24 CFR" §§ 966.54-55 (2014)" 

29. 24 C.F.R. § 966.54; 0CCUPANCYGU!DfBOOK, supra note 7, at 2.09~210. 

30" 

Public housing is not an entitlement 

received, however, the benefit cannot 

of others is threatened and where there is vto!ent or drug31. ln consultation with the resident 

boa•d and the USC § 1437d(k)(2)(2014); 24 CF R § 

(2014)" 

32 42 USC §1437d(k)l4) (2014); 24 CF"R" § 96656(b) (2014)" 

H 42 USC§ 24 CF"R" § 966.56(b) (2014)" 

34" 24 CFR" note 7. at 210; 24 CH" 966.56(G) (2014); 42 USC§ 1437d(k)(6) (2014). 

;; 24 CF"K § 966S7(b) (2014) 

36 24 C.F.R. § 966.57\c) {2014). 

37. 24 C.F .R. § 96656\f} (2014). See also Michael Zmora, Note & 

Section 8 Voucher Holders m No-Fault Evictions, 103 Nw. u_ L REV. 1961, 

when unrepresented). 

38. Jody Freeman, Collaborative Governance in the Administrative State, 45 UCLA L. REV. 1, 22-23 

39. THE NATIONAl HOUSING lAW PROJECT, HUD HOUSING PROGRAMS, TENANTS' R!GHTS § 10 2.2.3 (4th 

PROJECT, HUO HOUSING grievance must relate to PHA action or inaction 

regulations, (c1tmg 24 C.F.R. §§ 966.50, 966.53(a) 

40. Thorpe v. Hous. Auth. ot City of Durham, 393 U.S. 268, 271 (1%9). 

~. Geo~ge Lefcoe, HUD's Authority to Mandate 

See Esca!era v. N.Y.C. Hous. Auth., 425 

43. !d. 

44. 42 U.S.C. §1437d(k) (2014); see also 5 U.S.C.A 533(c) (1981)}; Brown v. Hous. Auth. City of Milwaukee, 471 F.3d 63 (7th Cir. 1972}; Public 

Landlords and Private Tenants: The Eviction of "Undesirables" from Pubfic Housing Projects, 77 YALF u. 988, 1002 (1968). 

45. See, e.g., Choice Ne1ghborhoods Docket No. FR-5700-N-25 HUD's Hscal Year {FY) 2013 NOFA for the Choice Neighborhoods Jnitiatwelmpfementation Grants, at 28-29. 

46. !d. at 29. 

47. /d. 

13 
95 


24066.058

Susan Bennett, 'The Possibility of a Beloved Place": Restdents and Placemaking in 

263 {2000); Barbara L Bezdek, To Attam "The Just Rewards of So Much Struggle": Local-n:esiclent 

HorsrRA L REV. 37, 67··73 (2006} the loss of houslng, community, and 

the One Percent: How the Contributes to Economic lnequaltty, 

Taking's Anti-Subordination Insights for Eminent Domam and Redevelopment, 42 IND. L 

and Procedural Protections: The Case for Public Participation in Urban 

McFarlane, The Markets, Predation, 

for Empowerment: 

54. 24 c.F.R. § 964.18(a)(2014). 

55. 42 U.S. C.§§ 1437g{ei{1){E) & 1437g {h){1){2014); 24 c.F.R. § 990.108(c)(2014). 

56. 74 c f R. § 964.105{2014) 

57. Section 18 of the U.S. Housing Act 24 U5.C. § 570 (2014); Marvin Kris!ov, Ensuring Tenant Consultation Before Pubfjc Housing Is 

Demofished or Sold, 97 YALE L.J. 1745, 1747 (1988}. 

58. 42 U.S.C. § 1437c-1(e) (2014). 

59 24 CF.R. § 964.51 5(2014). 60 24 C.F.R § 964.11 {2014). 

61. ld. 

66. 42 u.s.c. § 1437d(j)(1) (2014). 

67. 42 U.S.C. § l437d (J)(1){H)i1i)(2014). 

Acc:oolltOt>Jilty ParticipatiOn, and Responsiveness, 

and d1sempowered communities must overcome a great many challenges in order to 

structures. See Jaime Al1son Lee, "Can You Hear Me Now?": Making Participatory 

40::., 406 (2013). For case studies d1scussmg cha!lengmg situations faced by public housing 

34 FORDHAM URB. LJ. at 

but the reforms may 

68. While HUD may choose to include these ltems ln its monitoring, lt has not done so. See 42 U.S.C. § 1437d (J}(l){K) 

section to include other evaluative factors that it deems appropriate); see also generoffy Pubftc Housing Evaluation & 

(PHAS} and Determinmg and Remedymg Substantial Default, 76 Fed. Reg. 36 (Feb. 23, 

C.F.R. § 24.9 {reports on refocat1on and displacement acttvities can onfy be reqwred every three years unless for good cause). 

69. !d. 

70. !d.; Form f!UD-9834, Management Rewew for MultJfamify Housing ProJects, available at 

http://porta!.hud.gov/hudporta!/documents/huddoc?id:-9834.doc {!ast visited February 26, 2015). 

71. PBRA ACC, §§ 3.1 & 3.5. Ctvi! rights laws that cover similar grounds, but Qre doctrinally distinct, do receive slightly more attention under 

14 
96 


24066.059

the required reports 

72. NATIONAL HOUSING lAW PROJECT, HUD Housing Programs, supra note 39, § 13.2. 

73. !d. 

74. fd. 

75. National Houslng Law Project, HUD Housing Programs, supra note 39, at 447. 

76. As discussed, HUD generally has contractual rights 

the local agency enforce its contracts against the owner. in the text does normsrmg'u1sn 

enforcement, although as a practical matter indirect enforcement would present additional challenges since 

coerce the local agency into action, and the focal agency would also need to coerce the private contractor.. 

77. See, Terms and Conditions Part A Consolidated Annual Contributions Contract Between Housing Authonty and the 

Untted States Form HUD·S3012A 11 available at http://portal.hud.gov/hudportal/documents/huddoc?id=S3012-a.pdf 

law, or available at equity"); U.S. DEP'T OF 

AGREEMENT, art. 6, available at 

78. Directors of The Columbia law Review Association, lnc., Remedtes for Tenants in Substandard Public Housing, 68 CotuM. L REV. 561, 565 

(1968} {arguing that a resident has no means of compelling HUD to exercise its remedies against a non performing government landlord) 

79. For HOPE Vl and Choice Neighborhood proJects, these are contained m the regulatory and operating see, 

Model Form Regulatory and Operatmg Agreement, supra note art. 6. For RAD PBV units, see PBV HAP Contract Part 2, DtP'T OF 

URBAN DEY. 13 (2014), available at http://www.radresource.net/outputcfm?td"'pbvhap2. For RAD PBRA provisions, see PBRA HAP Contract Part 2, 

U.S. DEP'T oF Hous. & URBAN DEV § 2.21, available at http://www.radresource.net/output.cfm ?id"'pbrahap2; 24 CF.R. § 880.505; id. § 880.507. 

80. See Sheryl A. Bankruptcy and Low Income Housing: Where ts the Voice of the Tenants?, 22 EMORY BANKR. DEV. J 261 (2005) (exploring 

the difficulties in tenants of housing in the event of bankruptcy), Anne Marie Smetak, Pnvate 

1, 55 (2014). 

8L National law Project, HUD Housing Programs, supra note 39, at 403-05, § 7.6-4.1; McNeill v. New York City Hous. Auth., 719 F. 

Supp. 233 (S.D.N.Y. 

82. rhe local agency can act against the owner by demanding specific performance or seekmg to recover federal funds 

from the owner; reducing future subsidy payments; or terminating the subsidy contract; and HOPE Vl and Choice Neighborhood 

projects, by taking possession of the project or appoint a receiver to take control of the project. See Model Form Regulatory and Operating 

Agreement, at 16; Mtxed-Finance Amendment, at 15; PBRA ACC, at PBRA HAP Contract Part 2, § 2.21; PBV HAP Contract Part 2, § 15. 

HUD can demand that such actions, and if agency HUO can exercise its own remedies against the local agency, 

passes from HUD to the agency to the owner}, 

the contract between the local agency and the 

possession of a 

OF HOUS. & URBAN DfV., 

83. For positive assessments of court-appointed 

I'Ut•ac liOu>ma Receivership, 9 J. AFFORDABLE HOUS. & (MTY. DEY 

Authority of Kansas City, Missouri fvolved from a 

84. The contractual receivership remedy today is essentially the same as that stated over forty years ago in contracts between HUD and the 

local agendes. See Remedies for Tenants in Substandard Public Houstng, supra note 234. 

85. Receiverships mst1tuted by a lender are not uncommon in commercial real estate 0. May et. aL, 

ReceiVerships: An Additional Tool With Commerctal Real Estate Loan ACC available at 

2004), 

1m posed on a 

89. See, e.g., 24 C.F.R. § 968.335 (reserved by 78 FR 63793). 

90. See generally Kels1 Brown Corkran, Principal-Agent Obstacles to Foster Core Contracting, 2 J. 1 F.CON. & POL'Y 29 (2006). 

91. See, e.g., Pmndexter, supra note 79; Schmidt, supra note 79 

92. When Hope Falls Short, supra note 88, at 1477~98. 

93. Zmora, supra note 33, at 1983-84 

94. See, e.g .. Chnstopher D. Pe!licdoni, Po!itJcaf in the Nonpublic Forum: Can Public Housing Facilities Limit Access to Political 

53 CASE W. REs. L REV. 569, 570-71 (arguing that the First Amendment provides the right of political canvassers, who are 

ne1ther nor guests of residents, to enter housing property); Martin J. Rooney, The Public forum Doctrine and Public Housing 

Authorittes: Can You Say That Here?, 21 BYU J. PUB, L. 323, 323-24 {2007) (advocating for a balanced consideration of the interests of a 

15 
97 


24066.060

governmental landlord, residents, and others tn determining the scope of First Amendment protectJOns in government~owned public housmg) 

95. Wendy Netter Epstein, Contract Theory and the Failures of Public-.Pnvote Contracting, 34 CARDOZO L. REv. 2211, 2244~-46 {2013). 

96. tn 2012, the United States had 11.5 million extremely !ow-income households, but only 3.3 million affordable, available rental umts 

HARVARD The STATE OF THE NATION's HousiNG 2014, at 30 http://www.jchs.harvard.edu/sltes/Jchs.harvard.edu/flles/sonhr14_txt~bw· 

February 26, 2015) 

97. See Epstein, supra note 91, at 2211; see a/so JOEL HANDLER, DOWN fROM BUREAUCRACY: THE AMBIGUITY OF PRIVAT!ZAT!ON AND EMPOWERMENT 11, 

80 {1996) (reviewing both theoretical and emp1rical literature on privat1zat1on through contractll)g and concluding that "the consensus is that. 

contracting fulfills the stated goals of efflclency and accountab!ltty only when there's competition. .{However, b]y and 

to initiate or maintain"); Janna J. Hansen, Urmts of Competition: Accountabrlity in 112 YALE L.J. 

of a true market that promotes the effic1ent achievement of government goals requires an involved 

that government must structure and admmister.''). 

98. Hendrickson, supra note 20, at 39-~43 {discussing frequent shifts in policy over who should l1ve in public housing) 

99. 42 U.S.C. § 1437a(al{l) (2014). 

100. Tenant Selection PollCJes, 74 C F.R. 960.202{bj{1) (2014). 

101. 42 U.SC. § l437n(2) 

purposes. 

104 Congress has authomed the HUD Secretary to waive statutory reqwrements as "necessary" for RAD to be "effective" RAD Appropriations, 

supra note XX. 

105. The RAD affordabillty period is only lS or note 3, at 14-15, although a mandatory one-time contract renewal 

extends the mltial term to thirty or forty years. !d. In contrast, HOPE VI, and Cho1ce umts generally have 50-year terms. 42 U.S. C.§ 

1437gldii31{A) & (el{3){2008). 

106. See Smeta.k, supra note 25, at 55. 

107. RAD Use Agreement, supra note 82, 1]3. 

108. Covenants recorded against the properties may only be lifted with HUD approval. U.S. DEP'T OF Hous. & URBAN DEV., DECLARATION OF 

RESTRICTIVE COVENANTS available at http://portal.hud.gov/hudporta!/documents/huddoc"?id=DOC_9763.doc [hereinafter DtoARATION OF 

~ 9. 

ground !ease option); Wayne Hykan & Eric Zmn, Leases m Affordable Housing 

Transactions, 

110. NATIONAL HOUSING lAW PROJECT, HUD HOUSING PROGRAMS, supra note 39, §§ 2.5.3-·2.5.6. 

111. Latitude to screen m some programs is quite broad, see 42 U.S.C. § H37g{o)(6){B), screening is constrained by 

antidiscrimination laws and notice-and-comment procedures. Current residents, however, have little to object through notice-andcomment procedures to heightened screenmg standards for others, and may in fact have reasons to support them. 

112. K. Cunningham, Susan J. Popkin, & Martha R. Burt, Public Housing Transformation and the "Hard to Bnef No.9 at 3, URBAN 

!NST. Susan J. Popkin, Decade of Hope IV: Research Challenges and Policy Changes, 

113. See Susan J. Popkin & Uza the Biggest Challenge, URBAN INSTITUTE, http://www.urban.org/up!oadedpdf/412257-

114. services. See Bezdek, at 1601; Mary Sigler, Private 

(2010). 

"Them" Out: Crtmmal Record Screening, Public Housing, and the Fight Agamst Racial Caste, 4 GEO. J.l. & Moo. 

focal screenmg out of people who have been arrested, but not convrcted, for minor 

Among Families in Need of Housmg, 77 Nw. U. l REV. 702-03 (1982) (arguing 

117. RADAppropnations, supra note 6. 

118. Harris Bieder, D1ane K Levy, and Susan Popkin, The Urban Institute, Community Revitalization in the United States and the United 

Kingdom, at 12-13. 

16 
98 


24066.061

R 

I M S T I T U T I V 

Testimony of 

Dr. Susan J. Popkin 

Senior Fellow, Urban Institute 

before the 

Committee on Financial Services, Subcommittee on Housing and Insurance 

U.S. House of Representatives 

The Future of Housing in America: A Comparison of the United 

Kingdom and the United States Models for Affordable Housing 

Thursday, May 12, 2016 

The views expressed are those of the author and should not be attributed to the Urban Institute, 

2100 M Street NW 

Washington DC 20037 

urban.org 

its trustees, or its funders. 
99 


24066.062

Mr. Chairman and members of the Committee, thank you for inviting me to appear here today for 

this hearing on "The Future of Housing in America: A Comparison of the United Kingdom and the 

United States." The views I express are my own and should not be attributed to the Urban 

Institute, its trustees, or its funders. 

For the past 30 years, I have been researching how federal and local housing programs affect 

the lives ofthe most vulnerable low-income families. In particular, I have focused on how public 

housing transformation has affected residents, through place-based revitalization efforts like 

HOPE VI and the Choice Neighborhoods Initiative and the expansion of the Housing Choice 

Voucher program. In addition, my colleague Dr. Harris Seider and I have conducted two research 

projects comparing housing and redevelopment initiatives in the United States and the UK (Seider, 

Levy, and Popkin 2009; Levy et al. 2010). My testimony will focus on the US housing system, 

including two major differences from the UK system, a review of some efforts to transform the 

system, and the implications for moving forward with housing policy in the United States. 

The United States and the UK share some similar challenges: rising rental housing prices, rapid 

demographic changes, and aging public-sector housing stock in need of massive and costly 

revitalization and redevelopment. Both countries have tried similar approaches to revitalization: 

replacing distressed, high-crime properties with new mixed-income, mixed-tenure housing that also 

includes some on-site supportive services for residents. And both countries have a nonprofit 

housing sector that has developed new, high-quality affordable housing for low-income households. 

However, there are also fundamental differences between the two countries' housing systems and 

markets. First, housing in the UK is an entitlement and a fundamental part of the safety net; as the 

Housing Partnership Network notes (Ellis and Siglin 2016), this entitlement benefit has provided a 

critical part of the funding for social housing organizations to develop affordable housing. Second, 

the UK does not have the same legacy of racial segregation and discrimination that has meant that so 

much of the US's federally subsidized housing stock is located in predominantly minority, 

chronically disadvantaged high-crime neighborhoods (Turner, Popkin, and Rawlings 2009; HUD 

2015). 

US Housing System 

Because housing is an entitlement in the UK, a far larger proportion of low-income households 

receive housing benefits and live in social housing. In the United States, federal assistance includes 

deeply subsidized rental housing developments, some of which offer an array of supportive services 

for their residents; housing vouchers for very low income renters, along with modest incentives for 

families to use these vouchers to gain access to housing in opportunity-rich neighborhoods; and 

1 
100 


24066.063

funding to support local efforts that provide emergency shelter, transitional housing, rapid 

rehousing, and supportive services to individuals and families who experience homelessness. 

Research indicates that this portfolio of programs yields important benefits for many of the 

households who participate and that the incidence of homeless ness and housing hardship would be 

far higher in HUD's absence. But housing assistance is not an entitlement, and the scale of these 

programs falls woefully short of needs (Turner, Cunningham, and Popkin 2015). Just one in four 

eligible households-about 5 million-receives any assistance (Joint Center for Housing Studies 

2014); as a consequence, growing numbers of low-income households face severe housing 

problems, and family homeless ness is a persistent problem. 

The stock of federally subsidized housing in the United States has shrunk over time for various 

reasons. Beginning in 1992, The HOPE VI program funded the demolition and redevelopment of 

distressed developments. HOPE VI produced important improvements in housing quality, 

community conditions, and resident well-being (Popkin et al. 2004). But generally, it produced 

fewer new public housing units than were torn down (replacing them with portable housing 

vouchers). Other initiatives have allowed the demolition or sale of other deteriorated projects, 

significantly reducing the total stock of public housing units. 

In addition to public housing, the United States has long had privately owned federally 

subsidized housing through the Project-Based Section 8 program, but this housing stock has also 

shrunk over time. Almost no units have been added since the early 1980s, 1 but units are being 

removed from this inventory as owners" opt out" of the program when their subsidy contracts 

expire. Owners may have especially strong financial incentives to let their subsidy commitments 

expire in markets where property values are rising or the surrounding neighborhood is in particular 

demand. 

The Low Income Housing Tax Credit (LIHTC) subsidizes the production of rental housing at 

below-market rent levels. These properties are often developed by nonprofit housing developers, 

akin to the housing associations in the UK (Ellis and Siglin 2016). Rents for these units must be set at 

levels that are deemed affordable for households with moderately low income levels for the local 

area, and the units are set aside for residents at or below this income ceiling. But the LIHTC 

program does not require (nor does it provide sufficient subsidies to allow) rents to be capped at 30 

percent of a particular resident's income, so these units do not generally serve the same deeply poor 

population as depend on federal housing subsidies. 

1 Production under most of these programs was terminated during the early years of the Reagan 

administration. A very small number of projects earmarked for the elderly and disabled has been funded since. 

2 
101 


24066.064

Finally, the US Department of Housing and Urban Development's (HUD's) portfolio includes 

the Housing Choice Voucher program, which allows families to rent homes and apartments on the 

private market. The voucher program (originally called Section 8 certificates) dates back to the 

1970s and was explicitly designed to shift housing provision to the private sector. As in federally 

subsidized rental developments, a family contributes 30 percent of its monthly income toward rent, 

and the federal government pays the rest, up to maximum pegged to local market conditions. 

Vouchers, however, are "tenant based" rather than "project based," allowing the recipient rather 

than the developer to decide where the low-income household will live (Turner, Cunningham, and 

Popkin 2015). 

The low-income households fortunate enough to receive federal rental assistance clearly 

benefit from lower housing costs. Among low-income renter households who do not receive federal 

housing assistance, three-quarters experience one or more housing problems and 42 percent 

experience severe housing problems-paying more than half their income for rent or living in 

severely inadequate housing (HUD 2015). Living in decent, affordable housing and paying a lower 

rent yields other important benefits as well. For example, there is evidence that receipt of housing 

vouchers reduces the likelihood that poor families will double up or experience homeless ness and 

increases family expenditures for food (Mills et al. 2006). Other research confirms thatfamilies 

receiving housing assistance are able to spend more on food and are less likely to face food 

insecurity or poor nutrition (Hart Research Associates 2014).2 And housing cost burdens above 30 

percent of income crowd out spending on children's education enrichment, contributing to lower 

cognitive achievement among children in cost-burdened families (Newman 2014). 

But despite these important benefits, the availability of US federal rental assistance falls far 

short of needs. As Figure 1 illustrates, the total number of unassisted renter households with 

overcrowded, physically deficient, or unaffordable housing rose steadily from 1999 through 2009 

and much more sharply during the Great Recession, while the availability of rental assistance has 

remained essentially flat. In 2013. 26.3 million households (65 percent of all renters) had incomes 

that made them eligible for assistance (below 80 percent of the local median income, adjusted for 

household size). But fewer than one in five (19.8 percent) actually received assistance. For every 

100 low-income households receiving federal rental assistance, another 298 are income-eligible 

and experience one or more housing problems (crowding, substandard housing, or unaffordable 

costs). Even among renters with extremely low incomes (below 30 percent of the local median), only 

33 percent receive housing assistance (Turner, Popkin, and Rawlings 2015; HUD 2015). 

2 Also see Lisa Dubay and Susan J. Popkin, "Can Housing Assistance Help Protect Children From Hunger?" 

Urban Wire (blog), Urban Institute, February 3, 2014, http:/!blog.metrotrends.org/2014/02/housingassistance-protect-children-hunger/. 

3 
102 


24066.065

The fundamental problem is that rents have risen faster than incomes for a growing segment of 

the workforce in almost every part of the country. In 2011, while only 3 percent of renters lived in 

overcrowded housing and 8 percent lived in housing that was structurally inadequate, 24 percent 

were paying from 30 to 50 percent of their income for rent, and another 27 percent were paying 

more than half their income for rent. The problem of housing afford ability is primarily the result of 

widening income inequality, with incomes rising much more slowly for low- and moderate-wage 

workers than for those in high-skill, high-wage jobs. Rising incomes at the top of the wage ladder put 

upward pressure on housing prices and rents, forcing them beyond the reach of workers in lowerwage jobs. The Great Recession exacerbated both the income side and the housing cost side of this 

problem. Rising unemployment weakened earnings for households at or near the bottom of the 

income distribution, while the foreclosure crisis and tightened mortgage underwriting standards 

increased demand for rental housing, forcing rents up in many markets (Joint Center for Housing 

Studies 2014; Turner, Cunningham, and Popkin 2015). 

The gap between ability to pay and rents in the market place is particularly acute for 

households at the bottom of the income distribution. Specifically, for every 100 extremely lowincome renter households in the country (with incomes below 30 percent of the local median), there 

are only 29 affordable and available rental units. Without HUD rental assistance, that number 

would drop to only 1 affordable and available rental unit.3 Matthew Desmond's new book, Evicted, 

documents the crisis for very low income renters, who are too often forced to pay as much as 70 to 

80 percent of their income for substandard units in the worst neighborhoods. The costs for the 

3 Graham MacDonald and Erika Poethig, "We've Mapped America's Rental Housing Crisis," Urban Wire (blog}, 

Urban Institute, March 3, 2014, http://blog.metrotrends.org/2014/03/america-rental-bousing-crisis/. 

4 
103 


24066.066

children growing up in these households are profound: trauma, instability, hunger, and frequent 

school transfers (Desmond 2016). 

Would UK-Style Privatization Address These Challenges? 

As noted above, the biggest difference between the US and UK housing systems is that housing in 

the UK is an entitlement, which affects not only the ability to meet housing need, but also provides a 

financing stream that helps fund the social housing associations. And, as my overview makes clear, 

the private sector is already heavily involved in the US housing system through the Project-Based 

Section 8 program, HOPE VI and Choice Neighborhoods redevelopment initiatives, UHTC 

developments, and, most of all, the Housing Choice Voucher program. The basic problem in the 

United States, then, is not the lack of private-sector involvement, but rather the lack of affordable 

rental housing and the shortage of housing subsidies to help bridge the gap, especially for the 

lowest-income households. 

The United States and the UK have used similar approaches to addressing the challenges of 

aging, distressed properties, but even there, the level of investment and the outcomes have been 

very different (Beider, Levy, and Popkin 2009; Levy et al. 2010). In the United States, the HOPE VI 

program provided funding to replace many severely distressed public housing developments with 

much higher quality housing. Much of this housing, mostly mixed-income and mixed-tenure was 

developed in partnership with private-sector developers, both nonprofit and for-profit In some 

cases, this redevelopment effort appears to have contributed to significant improvements in the 

surrounding neighborhoods, particularly if the new development was located near an area that was 

experiencing broader revitalization (Turner, Cunningham, and Popkin 2015). However, the biggest 

criticism of HOPE VI is that these new developments do not serve the lowest income tenants well; 

the program led to a net loss of deeply subsidized units. Most original residents were relocated to 

better housing in safer neighborhoods, whether in private housing (with the help of a housing 

voucher) or in other public housing developments (Popkin, Levy, and Buren 2009). But relatively 

few original residents returned to the revitalized, mixed-income communities that replaced their 

previous housing, and the jury is still out on how these communities will perform for their lowincome residents over the long term (Crowley 2009; Turner, Popkin, and Rawlings 2009). 

In 2010, when the HOPE VI program was succeeded by the Choice Neighborhoods program, 

the mixed-income redevelopment strategy was extended to privately-owned subsidized 

developments. Like HOPE VI, Choice provides funding for the rehabilitation or demolition and 

replacement of distressed subsidized housing projects with higher quality mixed-income 

developments. And, as in HOPE VI, private-sector developers are using LIHTC funding and other 

5 
104 


24066.067

tools to finance the construction of new, mixed-income housing. Building on lessons learned from 

HOPE VI, Choice places more emphasis on investments in the surrounding neighborhoods (with an 

emphasis on safety and schools) and on supports for the original residents. In most cases, Choice 

also requires one-for-one replacement of subsidized rental housing units and provides stronger 

protections for residents who want to return to the development after it is revitalized (Pend all et al. 

2015). 

The Rental Assistance Demonstration {RAD), represents another move to engage the private 

sector. Launched in 2012, RAD is primarily designed to give public housing agencies new options for 

financing the modernization and upgrading of subsidized properties, and it is similar to some of the 

funding options available to housing associations in the UK. RAD also allows residents greater 

choice about where to live. Specifically, when public housing properties convert to Section 8 subsidy 

contracts, residents have the right to receive a portable housing voucher and use it to move 

elsewhere (Turner, Cunningham, and Popkin 2015). Advocates have raised concerns about how 

RAD will affect the availability of deeply subsidized units over the long term-specifically, whether 

private-sector owners will feel a financial imperative to convert properties to market-rate housing. 

The first RAD-financed redevelopments are just getting under way, and it is too soon to tell whether 

the program will succeed in its aim of preserving affordable housing through increasing access to 

funds for revitalization and redevelopment or whether, as advocates fear, it will lead to a further 

loss of subsidized units. HUD has funded an evaluation of RAD, including tracking outcomes for 

residents, and it will be several years until the results of that research are available. 

Although there are similarities in approach, the US and UK experiences in implementing 

comprehensive redevelopment differs in significant ways. In the UK, the government provided 

much more generous funding for comprehensive redevelopment efforts, and these efforts were 

much more likely to include construction of new schools, health centers, and community centers 

that offered a wide array of supportive services. Residents were more actively engaged in the 

redevelopment process and in decisions about supportive services. The original resident population 

also included a broader range of incomes and levels of need. 

In contrast, communities targeted for HOPE VI and Choice generally serve only extremely lowincome tenants, and funding for resident services is relatively limited. Because of the legacy of 

segregation and discrimination, US developments also are much more disadvantaged, with high 

rates of poverty and violent crime, meaning that residents are also more likely to have deep and 

complex challenges that affect their ability to move toward self-sufficiency (Turner, Popkin and 

Rawlings 2009). 

Not surprisingly, outcomes for residents in the United States have been mixed. The largest 

study on HOPE VI outcomes for original residents found reductions in anxiety and improvements in 

6 
105 


24066.068

overall well-being, but not on employment or educational outcomes (Popkin, levy, and Buron 

2009). A much more intensive model tested in Chicago that coupled relocation with intensive 

counseling and transitional jobs programming did lead to gains in employment and physical and 

mental health for adults, but most sites are not able to offer a comparable service package (Popkin 

etal.2013). 

It is too early to know whether Choice Neighborhoods, which does include an emphasis on 

improving schools and other community services, will have a greater impact on residents' 

socioeconomic outcomes. However, early assessments of implementation suggest that Choice sites, 

particularly those centered around privately owned subsidized developments, are facing challenges 

in delivering services for original residents (Pendall et al. 2015). It is also too early to know how 

successful these new mixed-income properties will be in serving the needs of the lowest-income 

tenants over the long run. Recent research has raised concerns about whether these developments 

will be able to meet the needs of original residents and succeed in building community (Chaskin and 

Joseph 2015). 

Bridge Housing's Trauma-Informed Community Building is a promising approach to addressing 

the challenges of serving chronically disadvantaged communities, and one that should receive 

further attention from low-income housing developers (Weinstein, Wolin and Rose 2014). 

Homeownership 

Another question before us today is whether a homeownership model like the UK's Right-to-Buy 

could succeed in the United States and help subsidized tenants move toward self-sufficiency and/or 

help bridge the housing affordability gap. The available evidence suggests that this approach will 

not work well here and, in fact, could place low-income households at greater risk for instability. 

Right-to-buy in the UK has taken some of the highest-quality units out of the supply of subsidized 

housing stock; it seems likely that the same could happen in the United States. Right-to-buy is also 

likely to serve only the most stable, highest-income tenants, those who are able to successfully save 

funds for a down payment and qualify for financing. 

In addition, there are US-specific challenges that make such a program unlikely to succeed-and 

certainly very unlikely to help low-income families build wealth or move toward self-sufficiency. 

HUD has attempted several programs, including programs that allowed public housing tenants to 

purchase units and the current Section 8 homeownership program. My colleagues and I have done 

the only rigorous study on what happens when participants leave housing assistance (Smith et al. 

2015), using the Moving to Opportunity database to track households over time. Our findings raise 

7 
106 


24066.069

serious cautions about proceeding with a push toward homeownership. We found that subsidized 

tenants who transition to homeownership generally end up buying poor-quality stock in the worst 

neighborhoods, the kinds of places that are unlikely to gain value over time. Many also end up with 

high-interest, subprime mortgages, leaving them heavily indebted rather than building wealth and 

increasing stability. Desmond (2016) reports similar findings in his research on Milwaukee. An 

approach that gradually transitions subsidized tenants to market-rate rents and then possibly 

homeownership is might be more successful. 

Informing US Housing Policy 

The United States and the UK face similar challenges: rising rents and an aging stock of subsidized 

housing. Both countries have gradually shifted toward more engagement with the private sector.ln 

the United States, the Housing Choice Voucher provides subsidies for tenants to rent units in the 

private market; private organizations own and manage deeply subsidized properties through the 

project-based Section 8 program; private developers have used the LIHTC to build affordable 

housing and have taken the lead in construction of new, mixed-income, mixed-tenure housing as 

part of both HOPE VI and Choice Neighborhoods Initiatives. But privatization will not solve the 

fundamental challenge in the United States: rising inequality and rising rents have created a 

situation where the need for affordable housing far exceeds the demand, leaving too many 

households at risk for severe housing cost burdens, instability, and homelessness. 

Although many of HUD's programs have proven their potential to help address these 

challenges, their scale and capacity falls woefully short of what will inevitably be needed. Ongoing 

improvements in program implementation-and expanded scale-would be welcome. A more 

ambitious idea for eliminating homelessness and housing hardship and advancing the potential of 

assisted housing policy to improve the long-term life-chances of poor and vulnerable populations 

would actually take us closer to the UK system-bringing us closer to treating housing as an 

entitlement and an essential part of the safety net. I recognize that implementing these ideas would 

be both costly and politically challenging but offer them as conversation-starters for HUD's next SO 

years. 

Close the affordable housing gap: entitlement housing vouchers plus shallower, time-limited emergency 

assistance. Over the past 50 years, HUD has been instrumental in providing affordable housing for 

vulnerable people. For those who are lucky enough to receive housing assistance, it clearly makes 

housing more affordable and stable. But only one in four households who are eligible receives 

housing assistance. Many refer to federally subsidized rental housing as a lottery system, one that 

8 
107 


24066.070

has clear winners and losers. As a result, the problem of housing affordability is getting worse, not 

better, and homelessness remains a significant problem. 

One way to improve the fairness of federal housing assistance is to target vouchers to 

households at the bottom of the income distribution and create a different strategy for other lowincome renters. The Bipartisan Policy Center's (BPC) Housing Commission recommends expanding 

the Housing Choice Voucher Program to guarantee access to all extremely low-income households 

(incomes below 30 percent of area median; BPC 2013). The BPC estimates that an additiona13.1 

million rental subsidies are needed to reach this goal, 258,000 of which are projected to be made 

available by transitioning families in higher income categories off the program. Extending an 

entitlement voucher program to households with incomes up to 50 percent of median would 

obviously raise the cost substantially.4 

To complement such a proposal, some have recommended testing a flat, shallow subsidy 

program that is either time limited or available based on emergencies for other low-income 

households that would not be eligible for entitlement vouchers (Turner, Cunningham, and Popkin 

2015). Such a program could help reduce housing instability and homelessness, but it probably 

would not enable families to move to high-opportunity neighborhoods. Nonetheless, the 

combination of an entitlement voucher program and an emergency assistance program for other 

low-income households would represent a major improvement over today's assisted housing 

"lottery." 

Over five decades, HUD has implemented an expanding portfolio of programs for poor and 

vulnerable households, responding to changing conditions and emerging evidence about what 

works. Research indicates that this portfolio of programs yields important benefits for many of the 

households who participate and that the incidence of homelessness and housing hardship would be 

far higher in their absence. But the scale of these programs falls far short of needs. Privatization 

alone will not solve these problems; in fact, private developers need resources to be able to 

effectively serve the poorest households. Without fundamental changes in the scale and scope of 

assistance, prevailing demographic, social, and economic trends will widen the gap between needs 

and assistance in the decades ahead. 

4 One possible mechanism for funding such an expansion would be to scale back or reform the federal 

mortgage interest deduction, which effectively subsidizes the housing costs of high-income homeowners 

(Toder 2013). 

9 
108 


24066.071

References 

Beider, Harris, Diane K. Levy, and Susan J. Popkin. 2009. Community Revitalization in the United 

States and the United Kingdom. Washington, DC: Urban Institute. 

http://www.urban.org/research/publication/community-revitalization-united-states-andunited-kingdom. 

BPC (Bipartisan Policy Center). 2013. Housing America's Future: New Directions for National Policy. 

Washington, DC: BPC. http://bi part isanpolicy.org!library /housing-americas-future-newdirections-national-policy/. 

Chaskin, Robert J., and Mark L Joseph. 201S.Integratingthe Inner-City: The Promise and Perils of 

Mixed-Income Public Housing Transformation. Chicago: University of Chicago Press. 

Chetty, Raj, Nathaniel Hendren, and Lawrence F. Katz. 2015. The Effects of Exposure to Better 

Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment. Boston: 

Harvard University and NBER. 

Chyn, Eric. 2016. Moved to Opportunity: The Long-Run Effects of Public Housing Demolition on Labor 

Market Outcomes of Children. Working Paper. Madison: University of Wisconsin. http://wwwpersonal.umich.edu/-ericchyn/Chyn_Moved_to_Opportunity.pdf. 

Crowley, Sheila. 2009. "HOPE VI: What Went Wrong." In From Despair to Hope: HOPE VI and the New 

Promise of Public Housing in America's Cities, edited by Henry G. Cisneros and Lora Engdahl, 229-

48. Washington, DC: Brookings Institution Press. 

Desmond, Matthew. 2016. Evicted: Poverty and Profit in the American City. New York: Penguin 

Random House. 

Ellis, Sarah, and Kristin Siglin. 2016. Lessons of the International Housing Partnership. Boston: Housing 

Partnership Network. http:/ /www.hous ingpartnership.net/ documents/Lessons-! H P-

(Feb2016).pdf. 

Hart Research Associates. 2014. How Housing Matters: The Housing Crisis Continues to Loom Large in 

the Experiences and Attitudes of the American Public. MacArthur Foundation. 

http://www.macfound.org/media/files/How_Housing_Matters_2014_FINAL_REPORT.pdf. 

Joint Center for Housing Studies. 2014.America's Rental Housing: 2014. Cambridge, MA: Joint 

Center for Housing Studies of Harvard University. 

Levy, Diane, Harris Beider, Susan Popkin, and David Price. 2010. Atlantic Exchange: Case Studies of 

Housing and Redevelopment in the United States and United Kingdom. Washington, DC: Urban 

Institute. http:/ /www.urban.org/ research/ pub I ication/atlantic-exchange-case-studies-housingand-community-redevelopment-us-and-uk. 

Mills, Gregory, Daniel Gubits, Larry Orr, David Long, Judie Fe ins, Bulbul Kaul, Michelle Wood, Amy 

Jones & Associates, Cloudburst Consulting, and the QED Group. 2016. Effects of Housing 

Vouchers on Welfare Families. Washington, DC: US Department of Housing and Urban 

Development. https:/ /www.huduser.gov/publications/pdf/hsgvouchers_1_2011.pdf. 

Newman, Sandra. 2014. "Housing Affordability and Investments in Children." Journal of Housing 

Economics 24: 89-100. 

Pend all, Rolf, Leah Hendey, David Greenberg, Kathryn L.S. Pettit, Diane K. Levy, Amy Khare, Megan 

Gallagher, Mark Joseph, Aesha Rasheed Nancy Latham. Audra Brecher, and Chantal Hailey. 

2015. Choice Neighborhoods: Baseline Conditions and Early Progress. Washington, DC: Urban 

10 
109 


24066.072

Institute: http://www.urban.org/research/publication/choice-neighborhoods-baselineconditions-and-early-progress. 

Popkin, Susan J., Bruce Katz, Mary K. Cunningham, Karen D. Brown, Jeremy Gustafson, and 

Margery Austin Turner. 2004. A Decade of HOPE VI :Research Findings and Policy Challenges. 

Washington, DC: Urban Institute. 

Popkin, Susan J., Diane K. levy, and larry Buran. 2009. "Has HOPE VI Transformed Residents' 

lives? New Evidence from the HOPE VI Panel Study." Housing Studies 24 {4): 477-502. 

Popkin, Susan J., Megan Gallagher, Chantal Hailey, Elizabeth Davies, larry Buran, and Christopher 

Hayes. 2013. "CHA Residents and the Plan for Transformation." long-Term Outcomes for CHA 

Residents Brief 2. Washington, DC: Urban Institute. 

http://www.urban.org/publications/412761.html. 

Smith, Robin, Susan Popkin, Taz George, and Jennifer Corney. 2015. "What Happens to Housing 

Assistance leavers?" Cityscape 17 (3): 213-44. 

https:/ /www .huduser.gov /porta l/periodicals/cityscpe/vol17num 3/ article 10.htm I 

Toder, Eric. 2013. "Options to Reform the Home Mortgage Interest Deduction." Testimony before 

the US House of Representatives Committee Ways and Means hearing on tax reform and 

residential real estate, Washington, DC, April23. 

http:/ /www.urban.org/research/publication/options-reform-home-mortgage-interestdeduction. 

Turner, Margery A., Mary K. Cunningham, and Susan J. Popkin. 2015. "Poverty and Vulnerable 

Populations." In HUD at 50: Creating Pathways to Opportunity, 18S-218. Washington, DC: US 

Department of Housing and Urban Development. 

https://www.huduser.gov/hudSoth/commemorativepublication.html. 

Turner, Margery A., Susan J. Popkin, and lynette Rawlings. 2009. Public Housing and the Legacy of 

Segregation. Washington DC: Urban Institute Press. 

US Department of Housing and Urban Development. 201S. HUD at 50: Creating Pathways ta 

Opportunity. Washington, DC: US Department of Housing and Urban Development. 

https://www.huduser.gov/hud50th/commemorativepublication.html. 

Weinstein, Emily, Jessica Wolin, and Sarah Rose. 2014. Trauma-Informed Community Building: A 

Mode/ for Strengthening Community in Trauma Affected Neighborhoods. San Francisco: Bridge 

Housing. http://bridgehousing.com/PDFs/TICB.PaperS.14.pdf 

11 
110 


24066.073

Written Testimony of 

Gregory P. Russ, Executive Director of the Cambridge Housing Authority 

Submitted to the U.S. House of Representatives Committee on Financial Services, 

Subcommittee for Insurance, Housing and Community Opportunity 

May 12, 2016 

Good afternoon Subcommittee Chairman Luetkemeyer and Ranking Member Cleaver, 

and the Members of the Subcommittee. I am Gregory Russ, Executive Director of the 

Cambridge Housing Authority (CHA), and I would like to thank you for the opportunity 

to appear before the committee and testify on affordable housing models in the U.S. 

and U.K. My testimony will focus primarily on the February 2016 Report titled, Lessons 

of the International Partnership, provided by the Housing Partnership Network, as 

referenced in your letter of invitation dated May 4, 2016. (Hereafter the HPN Report.) 

The HPN Report makes five policy recommendations. I will provide comments on the 

policy recommendation from the perspective of a mission oriented, entrepreneurial, 

public housing agency. CHA strongly identifies with the descriptions of the non-profit 

institutions in the HPN Report. Using both the flexibilities in the Moving to Work (MTW) 

and Rental Assistance Demonstrations (RAD), CHA has accelerated its entrepreneurial 

transformation as a public institution while protecting its families, its units, and its 

mission. 

The HPN Report describes a strong non-profit culture referring to " .. .institutions that 

combine deep social mission and strong business acumen" and "a fundamental focus on 

social purpose and a commitment to reinvesting any financial return into their work" 

and "high-performing, mission-driven actors". These statements apply to many Housing 

Authorities around the country and there are some non-profits that might not fit the 

descriptions. The HPN Report also notes, "Tax status is less important than the hybrid 

of public-private nature of these enterprises." We believe that any recommendations 

considered by Congress should be "entity neutral" - there are strengths across both the 

PHA and non-profit worlds. None of the recommendations in this testimony exclude 

PHAs from participation. 

The existing public housing platform is in need of deep reforms because it places heavy 

requirements on public agencies that hinder capacity building and choke innovation, 

this does not mean that it is not a more efficient and effective process than the 

approach suggested by HPN, which proposes radical solutions where more modest 

changes, some of which have been made already through existing demonstration 

programs, could achieve similar results. The current public housing system, including 

HUD itself, rationalizes structure and process over social outcomes, a particularly poor 

set of choices in the face of the budget numbers that are provided for our programs. 

In thinking about the two systems, U.K. and U.S. it seems useful to consider the key 

fundamentals that shape our public housing system in the U.S. 

1 
111 


24066.074

PHAs are State-created Agencies - It is important to note that while the Federal 

government funds public housing the housing authorities are not federal entities, they 

are State created agencies. The housing authorities, not the Federal Government, own 

the land and the property. The State law establishes the governance structure and 

powers of the PHA. None of this is under Federal control. Transferring the assets of 

public housing authorities to non-profits is not something that can be accomplished by 

the federal government, as the property is not federal property. 

The Declaration of Trust limits the use of the assets The Federal government 

originally backed the bonds issued by the local PHA to finance the construction of public 

housing (and eventually paid them off). To protect this Federal interest HUD attaches 

restrictions to the property deed, the declaration of trust, requiring the continued use as 

public housing and limiting debt that can be leveraged by the property. With the 

declaration restrictions in place the value of the assets held by housing authorities is 

difficult to liberate, collateralization is at best difficult and often impossible. This 

approach completely ignores the long-term need for real estate to raise capital to 

reinvest in the units. This is why RAD removes the Declaration of trust and replaces it 

with a use agreement that is much friendlier to the private financing world. This is an 

easy to implement modification to the current system that could provide the means to 

leverage millions of dollars in private capital. 

State enabling legislation already includes significant corporate powers -The contrast 

between non-profits and housing authorities is not as stark as one might think. The 

State legislation, in addition to enumerating the social and real estate missions of the 

Housing Authority, also describes the corporate powers vested by the State in the 

Authority. Sections of the enabling legislation often read like the incorporation papers of 

a private company:" ... to have a seal; to have corporate succession ... to receive loans 

and grants from any other source public or private ... to invest in securities, to ... execute 

and carry out contracts and all other instruments necessary or convenient to exercise 

the powers granted .... " [Massachusetts General Laws Chapter 1218, Sections 11 and 

26] The referenced sections of the Massachusetts enabling legislation lists 37 different 

powers granted to PHAs. 

PHAs have adapted to the Tax Credit private equity system -The CHA has created four 

not-for-profit entities primarily to participate in what is now the only capital investment 

vehicle of scale available for the preservation of public housing, or the potential creation 

of new units of low-income housing -the Low Income Housing Tax Credit (LIHTC). To 

use tax credits, CHA operates through its "wholly owned" non-profit subsidiary entities; 

these non-profits, in turn, become the managing partners, along with the tax credit 

investor, in the ownership LLC for each property that is developed or preserved. Any 

non-profit corporation would also need to implement a similar structure in order to 

participate in the LIHTC program. 

2 
112 


24066.075

PHAs operate with property budgets insufficient to pay much if any debt - This is a key 

point. PHAs are easy to target for not fulfilling expectations and "permitting" their 

assets to deteriorate. One reason the British system worked out reasonably well is the 

universal Housing Benefit provided to the families was calculated to produce enough 

income for the Council (and later the Housing Association) such that they could pay off 

the loan for their part of their development cost that was not covered by the grant from 

the central government. PHA operating budgets and the subsidies received are 

insufficient on their own to allow debt payments. This is why RAD combines capital and 

operating into one source. The slim margins provided by adding the capital to the 

operating subsidy allow for some debt in the operating budget. (This margin, depending 

on the unit rehabilitation needs and market cost creates a "sweet spot" which is why 

RAD works well for some properties but not others.) 

I want to emphasize these basic structural issues to the subcommittee because public 

housing agencies, just like our non-profits friends, have shown great adaptability inside 

this difficult system of funding. This set of structural considerations affects any 

comparison of the U.S. and U.K. systems. Further, any comparison of the U.S. and the 

U.K. must start with the undeniable story that the British central government has been 

a strong and consistent financial supporter of the affordable housing industry for 80 

years. 

HPN Report Recommendations and comments 

1. Expand the Capital Magnet Fund 

2. Prioritize preservation and stock transfer to high capacity non-profits (This 

recommendation also references RAD as sharing some elements with the Large 

Scale Voluntarv Transfers, LSVT, that occurred in the U.K.) 

3. Use a portfolio model for multifamily housing preservation 

4. Make housing a platform for improving communities and building assets for 

residents 

5. Improve access to affordable homeownership 

Expand the Capital Magnet Fund CCMF)- The fund competitively awards grants to nonprofit lenders, Community Development Financial Institutions (CDFI), and may finance 

affordable housing actives. This is great recommendation except ... eligibility for CDFI 

status is limited to non-governmental entities (Tribal governments excluded). Such an 

expansion is welcome if access to the fund is available to PHAs or their non-profit 

affiliates. These funds should be available to PHAs and allowed in combination with 

other sources to preserve or replace public housing units. The mandated leverage ratio 

of the CMF, private to public is 10:1. CHA's ratio is 16:1 for our RAD Phase 1 conversion 

so PHAs can meet this requirement. The expansion with PHA eligibility is highly 

recommended. 

Prioritize preservation and stock transfer to high capacity non-profits - this 

3 
113 


24066.076

recommendation touches on two overlapping issues: (a) expansion of RAD; and (b) the 

suggestion that transfer of public housing to "more cost effective" non-profits (similar to 

the council transfers to associations in the U.K.) is a strong pathway to preservation. 

The discussion of this recommendation in the HPN Report also notes that RAD shares 

common elements with LSVT process in the U.K. 

(a) The expansion of RAD above the current unit cap is an option that Congress 

should consider, but with some qualifiers. Many RAD transfers are platform 

changes with minimal rehabilitation suggesting that PHAs are opting to exit the 

public housing model; this is not unexpected given the heavy regulatory burden 

on PHAs, additionally over the long term the RAD conversion allows better 

positioning for the property to access private capital if the property is 

subsequently re-financed. But for units that need deeper rehabilitation RAD 

seems to fall short because the income stream to support higher debt is not 

there. More financial modeling is required to understand the financing 

weaknesses of RAD in those markets where it is not feasible. (See the 

recommendation on MlW single fund flexibility in the next section.) 

(b) In our view it is undetermined that the transfer of aging public housing stock to 

non-profit social enterprises is the "more cost effective" option. The HPN Report 

suggests that these entities have the " ... business skills to structure complex 

preservation transactions ... " Again our comment on the recommendation is that 

as a matter of policy we must be entity neutral. Some non-profits are very good 

at this but are so are many PHAs. PHAs do retain "public agency" requirements 

that do not apply to non-profits and could add costs; but how all this plays out in 

preservation activity across different markets is unclear. 

Perhaps, of more concern is that all entities, public housing or non-profit, are competing 

for a limited pool of tax credit capital. As preservation needs escalate the demand for 

tax credits increases and in some States the current tax credit equity pool is stretched 

beyond capacity. In traditional public housing there is already a lack of operating 

subsidy to cover debt, and now there is much stiffer competition across the board for 

tax credits, no matter the tax character of the entity pursuing the preservation. 

One point of discussion in the HPN Report, Large Scale Voluntary Transfers (LSVT), 

deserves more attention. For this to work in the U.S. major transactional issues must be 

addressed. To attempt any LSVT three recommendations are offered: 

(1) Beyond RAD, or the existing PH disposition process, there should be a third 

option to release the declaration of trust; specifically, replace the declaration 

with a long-term use restriction. The use restriction can be drafted to keep the 

property as a resource for low-income families but also be much more favorable 

to attracting private capital; this is a change that could be made on a 

demonstration basis and scaled later for all public housing units. The switch to a 

use agreement should be separated from the demands of a complex, 

4 
114 


24066.077

preservation and financial transaction. Over time such an action will give the 

PHA, a non-profit partner, or successor entity immediate flexibility to liberate the 

value of the asset with private financial opportunities similar to a private owner 

who has access to the full value of the asset. 

(2) In conjunction with (1) create a new type of housing preservation fund that, 

unlike the LIHTC, is not linked to a property by property conversion but is 

instead designed to provide funding for portfolio wide repositioning. The fund 

resides, like the CMF, at treasury and allows a private equity investor to receive 

a portfolio tax credit $1 for $1 when private capital is deposited for a specific 

portfolio conversion project. The cost of the credit is covered by a 1/2% 

adjustment in the mortgage interest deduction. (Such an adjustment is worth 

about $345M year.) These two steps together could energize a U.S. version of 

the LSVT targeted at preservation and recapitalization of all affordable units. 

(3) The third recommendation is to use the Moving to Work expansion to test these 

ideas and facilitate the regional MTW agency concept described in last year's 

expansion legislation. (An existing MTW agency can petition the Secretary to 

bring in an adjoining Agency under the in-place MTW agreement.) The single 

fund flexibility provided to MTW agencies would multiply the impact of these 

efforts. The MTW expansion language also calls for 5 agencies to be selected 

with RAD portfolio conversions. The existing RAD demonstration language is 

already flexible enough on it's own to allow this group of agencies use this 

flexibility. 

As with other discussion in this testimony, the LSVT approach should be "entity 

neutral". In any LSVT the PHA, acting through a non-profit subsidiary, may be the 

recipient of such a transfer. All of these LSVT recommendations can easily be tested 

inside the existing MTW/RAD demonstration platform, especially when these two 

powerful demonstration programs work together as a hybrid for innovation. 

Use a portfolio model for multifamily housing preservation 

Elements of this recommendation already exist in the U.S. system and ought to be 

provided to all owners, again in an entity neutral fashion. HUD's current Public Housing 

Asset Management model, often extended by MTW flexibilities, is capable of achieving 

many aspects of the portfolio model discussed in HPN. The public housing operating 

fund regulations at 24 CFR 990 provide for asset management, require property based 

budgeting and reporting and property based management requirements, but also allow 

fungibility across properties (see 24 CFR 990.205 and 990.280) when there is excess 

cash flow. This is good model to transfer across all HUD subsidized properties. 

Excess property income over expenses can be moved across properties (strong 

performers helping weaker ones) or into a central fund that the owner can then provide 

to a specific property that needs help in a particular year. We still need to know what 

percentage of the rent we are collecting, what the vacancy rate is and what the 

5 
115 


24066.078

preventive maintenance performance is at each distinct property. We also need to know 

what transfer subsidies are provided each year to each property, because the year may 

come when we can't do that. This option also creates the possibility of providing a 

resource for services or community improvements as discussed in the next section. 

(One tweak for any property is to change existing HUD requirements around energy 

savings to allow the PHA or non-profit owner to keep all savings earned.) 

Make housing a platform for improving communities and building assets for residents 

We could not agree more. Carefully crafted programs with respect to youth 

engagement and asset building can change the course of many lives. This is another 

recommendation that deserves an opportunity flourish and MTW once again helps U.S. 

get there. In Cambridge, using MTW flexibilities, we have embarked on three asset 

development options for low income families: (1) a MTW modified version of Family Self 

Sufficiency (FSS+ ); (2) as part of our comprehensive after school support program, the 

Workforce, we have embedded a matched savings component for graduating seniors 

(who can exit high school with up to $3000); and (3) we are experimenting with an 

automatic saving program for Public Housing families called Rent to Save where a 

small portion of rent is set aside for the family in an escrow account. Two of these 

programs are operated in conjunction with our non-profit partner, COMPASS 

Community Capital. Other MTW agencies are also experimenting with asset building and 

comprehensive youth engagement opportunities. 

The Cambridge Workforce program starts in the sth grade and runs thought senior year 

of high school. We have sites at the property and one in the high school. Kids in this 

program graduate from high school at a rate of 93%, the majority go on to secondary 

education options, and about 66% are not living in public housing 6 years after high 

school gradation. In the Urban Institute HPN Report, Atlantic Exchange: Case Studies of 

Housing and Communitv Redevelopment in the U.S. and U.K., best practice 

recommendations from both the U.S. and U.K. communities stressed the, " ... 

importance of effective youth engagement to the maintenance of a peaceful 

community, development of future leaders, and the future self-sufficiency of youth. 

Castle Vale (in the U.K.] offers a model of youth programming with dedicated staff 

through on-site community centers. The challenge here is securing sufficient funding 

over time to allow for dedicated staff." [Brackets ours] 

Three recommendations in support of the HPN Report follow: 

(1) To address the funding needed to build assets we recommend expansion of the 

existing FSS program but with much more flexibility for local innovation. 

(2) To fund such programs, we also recommend expanding, to non-MTW agencies, 

limited single fund flexibility. (SFF is the ability to move Section 8 and 9 funds 

without regard to traditional funding restrictions). Single fund use can be 

targeted to both the preservation of units and/or youth and asset building 

6 
116 


24066.079

programs. 

(3) A third use of SFF is to pick up on recent mobility research by Raj Chetty and 

others to cover the cost of a wide range of mobility interventions and balance 

mobility move opportunities with the in-place strategies as described in the 

Urban Institute HPN Report. 

Improve access to affordable homeownership 

CHA does not work in market where homeownership options for low-income families 

are viable. (Cambridge rental and sales markets are typically some of the most 

expensive in the country.) The City of Cambridge estimates that the annual income 

needed for a family of four to take the first step toward self-sufficiency is $108,800. The 

cost to jump from either Section 8 or public housing to a private, non-subsidized, rental 

unit is steep when $7,000 to $10,000 is needed to make the security deposit, first and 

last month's rent. Beyond this entry issue is the question of whether or not the family 

can afford the rent over the long term. In our market for rental we see no chance for 

homeownership. So our response to this recommendation is that access to 

homeownership is market driven. Further, we do not recommend selling off public or 

other affordable units as was done in the U.K. with Right to Buy. About 2.2M units have 

been transferred under Right to Buy but the results are very mixed, especially when 

selling off units in multifamily sites where the owner has not been able to sustain the 

unit over the long term. 

This concludes my written testimony and I want to thank the committee for this 

opportunity, my hope is that you find some of these ideas intriguing enough to take the 

next step. 

I also what to thank the conceptual and editorial support I received from Jim Stockard 

Fulbright U.S. Scholar, 2015-16 currently based at the Glasgow School of Art and the 

Glasgow Urban Lab, Glasgow, Scotland and former Commissioner of the Cambridge 

Housing Authority. 

0 

7