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28–023 PDF 2006

H.R. 3186, THE BUILD HOUSES FOR OUR

MILITARY’S ENLISTED SERVICEMEMBERS ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

FEBRUARY 8, 2006

Printed for the use of the Committee on Financial Services

Serial No. 109–71

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice Chairman 

RICHARD H. BAKER, Louisiana 

WALTER B. JONES, JR., North Carolina 

CHRISTOPHER SHAYS, Connecticut 

PATRICK J. TIBERI, Ohio 

GINNY BROWN-WAITE, Florida 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

STEVAN, PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

CAMPBELL, JOHN, California 

MICHAEL G. OXLEY, Ohio 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

BARBARA LEE, California 

MICHAEL E. CAPUANO, Massachusetts 

BERNARD SANDERS, Vermont 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

February 8, 2006 .............................................................................................. 1

Appendix: 

February 8, 2006 .............................................................................................. 19

WITNESSES 

WEDNESDAY, FEBRUARY 8, 2006

Barnes, Rodney D., City Manager, Junction City, Kansas .................................. 6

Bowling, Bobby IV, President, Tropicana Homes, El Paso, Texas, on behalf 

of the National Association of Homebuilders ..................................................... 8

Green, Hon. Al, a U.S. Representative from the State of Texas .......................... 3

Kenny, Timothy R., Executive Director, Nebraska Investment Finance Authority, Lincoln, Nebraska .................................................................................. 9

Ryun, Hon. Jim, a U.S. Representative from the State of Kansas ...................... 2

APPENDIX 

Prepared statements: 

Oxley, Hon. Michael G. .................................................................................... 20

Ney, Hon. Robert .............................................................................................. 22

Brown-Waite, Hon. Ginny ................................................................................ 24

Green, Hon. Al .................................................................................................. 25

Ryun, Hon. Jim ................................................................................................. 28

Barnes, Rodney D. ............................................................................................ 31

Bowling, Bobby IV ............................................................................................ 38

Kenny, Timothy R. ........................................................................................... 45

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hon. Robert Ney: 

Statement of the National Low Income Housing Coalition .......................... 59

Hon. Jim Ryun: 

Letter from Joseph M. Stanton ....................................................................... 62

Letter from Steven B. Nesmith ....................................................................... 63

(1)

H.R. 3186, THE BUILD HOUSES 

FOR OUR MILITARY’S ENLISTED 

SERVICEMEMBERS ACT 

Wednesday, February 8, 2006

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 11:00 a.m., in room 

2128, Rayburn House Office Building, Hon. Robert Ney [chairman 

of the subcommittee] presiding. 

Present: Representatives Waters, Neugebauer, Ryun, Cleaver, 

and Green. 

Chairman NEY. Good morning. The Housing Subcommittee will 

meet this morning to discuss H.R. 3186, a bill designed to help our 

American servicemen and servicewomen gain access to Affordable 

Housing Now programs. 

It was introduced by Congressman Jim Ryun and Congressman 

Al Green, our two distinguished colleagues who are here today to 

testify on the bill, and we amended the Department of Housing and 

Urban Development Act to exclude basic housing assistance 

amounts received by a member of the Armed Forces from consideration as income for any Federal housing assistance program. 

I look forward to hearing from the panel. 

Today, enlisted military personnel and their families face a 

shortage of quality affordable housing in duty stations across the 

country. This shortage is likely to be further complicated by the 

disappearance of military units as part of the BRAC, the base closings. 

There are several affordable housing programs in existence that 

could assist our military personnel in finding affordable housing, 

such as the Department of Housing and Urban Development Section 8, housing choice voucher programs; however, current regulations make enlisted military personnel ineligible for these types of 

Federal housing programs. 

Currently, HUD’s policy is to include the basic allowance for 

housing as income in its calculation for determining if a military 

household meets the income qualifications for low income Federal 

housing programs. 

I’m not going to dwell on it further, because you two know this 

bill better than I do. 

2

But in closing, and not to distract from today’s hearing, but for 

me to just publicly get this off my chest. It has nothing to do with 

either gentleman or the bill, but I wanted to mention my disappointment over HUD’s recent budget proposal that would cut the 

community development block grant program by over 25 percent. 

My goal as chairman of the Housing Subcommittee is to make 

certain the focus of the Department remains on housing, and that 

it has the tools necessary. We went through this proposal, it was 

going to switch to Commerce last year, but that went bust and it 

wasn’t implemented. 

And I was very vocal in opposition against that, because they 

were changing the whole focus of what CDBG is about. 

And so, it’s not a particularly fine bill, but I needed to get that 

on the record because it’s something that scares me, and I think 

scares my constituents, and worries me about the future ability of 

our communities that have been hard pressed to recover. 

With that, I will yield to Congressman Ryun. 

STATEMENT OF HON. JIM RYUN, A U.S. REPRESENTATIVE 

FROM THE STATE OF KANSAS 

Mr. RYUN. Chairman Ney, thank you. Thank you very much for 

holding this hearing and I appreciate the opportunity to testify. 

The issue which we are discussing today is extremely important 

and in my estimation very urgent. I thank my colleague, Mr. Green 

from Texas, for cosponsoring the Build HOMES Act with me. I look 

forward to his testimony a little later. 

Mr. Chairman, we have a problem. We are discriminating 

against our men and women in uniform. This Congress has a solemn duty to provide high quality of life for the men and women 

of our Armed Forces. 

However, when it comes to obtaining affordable housing, many of 

these servicemembers are currently at an unfair disadvantage. The 

best way for me to demonstrate this discrimination is to give you 

a hypothetical example. 

Suppose two people submit applications to live in affordable 

housing residency. Both are American citizens, both have identical 

qualifying incomes, both have the same number of family members, 

and both are in possession of housing assistance of the same 

amount. 

There is only one difference between these two applications. 

The first is a servicemember with military-issued basic allowance 

for housing, or a BAH, and the second is a civilian with a Section 

8 voucher. 

Currently, HUD rules are such that a civilian is not required to 

count a Section 8 voucher as income, thereby preserving his or her 

eligibility for the affordable housing. 

However, no such exemption exists for BAH, and after factoring 

this assistance into his or her income level, the servicemember in 

a hypothetical situation is rendered ineligible for the housing. 

Mr. Chairman, I find this scenario inexcusable. We have affordable housing programs for a reason, and that is to assist low income Americans with obtaining quality housing. 

That should be no less true for our men and women who put 

their lives are on the line for us. Frankly, Mr. Chairman, I was 

3

surprised when I discovered that this was the current policy. There 

simply wasn’t any way I could let this go unchallenged. And I am 

confident that my colleagues will agree with this. 

Fortunately, a solution is relatively simple. HUD must simply be 

directed to treat BAH assistance as it does Section 8 housing 

vouchers. 

The bill I have introduced would statutorily direct HUD to do 

just that, thereby ending the discrimination. 

A secondary benefit would be a greater incentive for builders to 

construct additional affordable housing in areas surrounding military bases. This would be especially important around bases that 

are getting more troops as a result of the BRAC process. 

I thank the Members on both sides of the aisle who have agreed 

with me by cosponsoring the Build HOMES Act. I am pleased 

about the bipartisan make-up of the cosponsor list, and I look forward to obtaining broader support, even more as we proceed along. 

Let me close with a brief word on why this change must be made 

quickly. As a result of the recent round of BRAC, hundreds of thousands of soldiers are currently in the process of relocating to a new 

housing area around a base. 

During this process, many bases, including Ft. Riley, which is in 

my district, are dramatically increasing in population. This is causing a significant shortage of quality housing in the surrounding 

areas. The Ft. Riley area is not alone in this problem; far from it. 

Bases across the Nation are in a similar situation. The bill we 

are discussing today is a small part of alleviating that problem. 

Thank you again for considering this important legislation. I 

hope that my colleagues on the subcommittee will see fit to act favorably on the Build HOMES Act. I look forward to the testimony 

from my colleague, as well as the next panel, and I am happy to 

answer any questions. 

Thank you for this time. 

[The prepared statement of Hon. Jim Ryun can be found on page 

28 of the appendix.] 

Chairman NEY. We all thank the gentleman. 

The gentleman from Texas, Mr. Green. 

STATEMENT OF HON. AL GREEN, A U.S. REPRESENTATIVE 

FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, and I want to thank our 

ranking member, Maxine Waters. The two of you and I had the 

great opportunity to visit Louisiana together, to look at some of the 

devastation caused by Hurricane Katrina. 

And while visiting there with you, I drew some conclusions about 

the two of you. You both care about people. You both want to make 

sure that we have quality, affordable housing for every person who 

needs it in this country. 

And if I may, there is something that I would like to devote or 

dedicate to the two of you. The author of this is unknown to me: 

‘‘Some measure their lives by days and years. Others by heart 

throbs, passions and tears. But the surest measure under God’s 

sun is what for others in your lifetime have you done.’’ 

I want to thank you for what you and our ranking member have 

done to help others in need of housing. 

4

Because this is my first time testifying before Congress as a 

Member, I also would like to thank all of those who made it possible for me to have this opportunity to serve in the United States 

Congress. I consider it a great privilege and a great honor. 

I have a great staff working with me, so I must thank them for 

the work that they’ve done to help me with this piece of legislation. 

And finally, I would like to thank all of the Members who support H.R. 3186. 

I especially thank Congressman Jim Ryun for allowing me to act 

as an original cosponsor of this legislation. I am honored to do this 

because he has demonstrated a willingness to work with others 

across the aisle and to reach out, and I am honored to reach back. 

Mr. Chairman, there is a need for more quality, low-income housing. Right now, there is a 1.6 million unit deficit in extremely lowincome housing units. Nationally, there are 43 affordable and 

available units per 100 extremely low-income renter households. 

And the majority of those who qualify for affordable housing cannot 

find it. 

It is my opinion, and I believe it is the opinion of Congressman 

Ryun, that some things transcend politics. Some things transcend 

party affiliation. There are some things that transcend political 

persuasion. Eliminating invidious discrimination is one. And supporting our soldiers is another. 

H.R. 3186 does both by eliminating what I call added income discrimination. 

An example. There is a maximum income at which a person can 

receive and qualify for low-income housing. My colleague has made 

it very clear by way of example as to how this can impact one’s 

ability to acquire low-income housing if you exceed that income. 

I want to try now to make it conspicuously clear. Take the case 

of the civilian on one hand, who is at the maximum level, depending on the locality, who receives a Section 8 voucher. That Section 

8 voucher will not be considered income and therefore, will not 

cause the civilian to go over the allowable amount and not receive 

the affordable housing. 

Take the soldier, who receives an income at the maximum level. 

That soldier receives also the basic housing allowance. That allowance, while comparable to the voucher, will cause the soldier to exceed the maximum income by virtue of that allowance being considered income, whereas the voucher was not. 

This clearly is a form of discrimination against the people who 

serve this Nation so well on a daily basis. 

As a result of the Base Realignment and Closure Act, we in 

Texas will have 9,700 new military persons. Many of them will 

qualify for low-income housing. There will be others who will not 

qualify because of what we call the added income discrimination. 

We need to eliminate the added income discrimination. It is invidious. It transcends politics. It transcends political affiliation and 

political persuasion. I am honored to join with my colleague in this 

effort. 

And finally, I would like to quote Father Dennis O’Brien, who reminds us that the ultimate protector of freedom is the soldier. And 

I want to quote him because we should protect the protectors. 

5

But here’s what he says: ‘‘It’s not the reporter who causes us to 

have freedom of the press, it’s the soldier. It’s not the poet who 

grants us freedom of speech, it’s the soldier. It’s not the activist 

who accords us freedom to demonstrate. It’s the soldier. It’s the soldier who salutes the flag. The soldier who serves beneath the flag. 

The soldier whose coffin is draped by the flag. It’s the soldier who 

allows the protester to burn the flag.’’ 

I believe the soldiers deserve a debt of gratitude from us in the 

form of the elimination of this added-on discrimination. We ought 

to protect the soldier. 

I thank you for the time, Mr. Chairman. 

[The prepared statement of Hon. Al Green can be found on page 

25 of the appendix.] 

Chairman NEY. I want to thank both gentlemen, and I want to 

thank the gentleman from Texas for his kind comments. I also 

would note that the gentleman was there with our ranking member, Maxine Waters, and the staff of the House in New Orleans and 

down in Gulfport, and I have already asked the gentleman if I can 

use and somewhat plagiarize him, but it is also about looking and 

taking care of the least, the lost, and the last. 

And when you go down there, you can realize there’s a lot of 

least, lost, and last down there. And so I appreciated your participation and also that of our ranking member and the members of 

the committee; the gentleman from Cleveland was also down there. 

And on this bill, I think you make a very good point. Also, if I 

could, for the record, I want to submit the testimony presented to 

us from the National Low Income Housing Coalition. 

Some of the people said well, you know, maybe the Department 

of Defense ought to build in certain housing allowances. 

But I think that both of you made very good points. Also, I think 

Mr. Green makes the point of the IRS issue, and it’s a level playing 

field. 

That’s what this is about. If you look at people and incomes, 

whether on the civilian end or the military end, it’s about a level 

playing field, and what’s a fair application, frankly, of IRS tax in 

a fair way. 

So, I really don’t have any questions about it. 

The gentleman knows the system here. The second panel, I 

would say, there’s not a lot of members, but this constitutes a hearing and therefore this helps progress this bill. And so I appreciate 

it. 

Questions? 

Mr. CLEAVER. Mr. Chairman, I would like to thank my two colleagues for their vision in pushing forward with this legislation. 

And I express appreciation to the Chair for aggressively bringing 

it forward. 

One of the concerns I have, and it may be easy to eliminate, is 

what happens to members—this legislation would affect, impact 

only those who are in the military and have been sent to or 

shipped out to some base someplace, Whiteman Air Force Base, 

just outside my district. 

But what about the Reserve? We are seeing, with what’s going 

on in Iraq, that we are calling up tens of thousands of Reservists, 

6

who may from time to time find themselves in a community before 

they are shipped overseas having this very same problem. 

Mr. RYUN. Let me address that question, if I may. First of all, 

we have looked at the bill very carefully and crafted it in such a 

way that we are trying to help as many as possible, but the Reserve aspect of it, because they don’t have the basic allowance for 

housing, would not be considered for this particular bill. 

Mr. CLEAVER. I know, but what happens when a Reservist ends 

up in active duty for 1 or 2 years? That is what is happening now. 

I have a parent in my district who came to me crying and protesting because her son was scheduled to leave his active duty, and 

he was called back. 

So there is very little difference between him and someone who 

is in the regular Army. What if somebody is called up from Salina, 

Kansas, and they end up somewhere for a year? 2 years? 

Mr. RYUN. Let me just say this. We’ll have to get back to you on 

that particular issue again when you are dealing with the Reservist 

aspect. It’s a little different. At the same time, we do want to do 

what we can to help our active duty personnel, and I will be happy 

to get back to you on that. 

Mr. CLEAVER. Thank you. 

Mr. GREEN. I would like to respond as well. Congressman Cleaver and I are classmates, and his brilliance is always something that 

astounds me. And once again, you have come through. 

Clearly, you have raised a question that should be addressed. 

This bill, however, may not address that question. And we would 

hope that we could at least gain this much and then consider moving another inch, another mile, as we progress. 

But I think it is an excellent point for us to consider. 

Mr. CLEAVER. Thank you. Thank you, Mr. Chairman. 

Chairman NEY. Thank you. Well, thank you both, gentlemen, for 

your dedication to this issue, and for bringing the bill to us. Thank 

you. 

The last panel consists of Mr. Rod Barnes, city manager, Junction City, Kansas; Mr. Bobby Bowling IV, president, Tropicana 

Homes, El Paso, Texas, testifying on behalf of the National Association of Home Builders; and Mr. Timothy R. Kenny, executive director, Nebraska Investment Finance Authority, Lincoln, Nebraska. 

Also, without objection, the written statements will be made part 

of the record. You will each be recognized for a 5-minute summary 

of your testimony. 

We will start with Mr. Barnes. 

STATEMENT OF ROD BARNES, CITY MANAGER, JUNCTION 

CITY, KANSAS 

Mr. BARNES. Chairman Ney, thank you very much for this opportunity to be before you today, to talk about this important issue. 

I am the city manager for Junction City, Kansas. I have with me 

also Sam Robinson, our military affairs director for that area. 

We are right outside the gates of Ft. Riley, Kansas, and we are 

very proud to be the hometown of what’s going to be the Big Red 

One. 

We are growing rapidly due to the increase in force strength and 

growth at Ft. Riley. We currently anticipate receiving approxiVerDate 0ct 09 2002 10:51 Oct 19, 2006 Jkt 028023 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\DOCS\28023.TXT HFIN PsN: TERRIE
7

mately 30,000 people in the next 3 years in our region, and need 

to have 9,000 additional housing units. 

However, we do have a big problem with the Section 42 tax credit program. Military families simply cannot meet the income guidelines when their base housing allowance is included as income. 

That means a large segment of our population is being excluded, 

as Congressman Green and Congressman Ryun so eloquently outlined. 

Some of the newest, highest quality affordable housing units in 

our community and the City of Manhattan, just 15 miles away, are 

Section 42 tax credit units. The City of Junction City currently has 

264 units, 112 of those units constructed after 1999. The balance 

has all been completely remodeled. 

Manhattan has 108 brand new units which opened last year, constructing 112 units, but because of the way that the base housing 

allowance is calculated, the only military folks who can live in 

these units would be an E–1, with various numbers of dependents. 

In our community, it means an E–1 with three dependents. In 

Manhattan, it means an E–1 with two dependents. So it makes it 

very difficult for those units to be available for that large segment 

of our population. 

We provided you in my written testimony with some information 

on Investment Resources, Inc., that owns the units in both Junction City and Manhattan. Ten percent of their units are leased to 

military families. Three years ago, that was 40 percent. 

Since the military housing allowance increases, these families 

are squeezed out of their affordable income bracket and forced to 

pay higher rents. Sometimes it’s inferior housing, and soldiers are 

forced to live in units that are not inspected and approved by post 

housing. 

We need affordable housing in our region. The tax credit units 

provide a wonderful opportunity to help reduce the risk to developers associated with military deployments. The State of Kansas 

has set aside millions of dollars to assist with the development of 

housing units. However, they are not going to take that risk if a 

large segment of our population cannot live in that housing once 

it is constructed. 

We would like to have that as a tool again for an opportunity to 

build affordable housing in our community. 

We provided you today with color pictures of the units that are 

in Junction City, and I think you’ll see that they are something you 

yourself would want to live in and be proud to live there. 

I will be happy to answer any questions a little bit later on. We 

believe this is an important issue that needs to move rapidly. We 

think that it is a tool that we need to have available to us as we 

continue to grow housing units in our community to help meet the 

growing demand for not only our military folks, but our civilian 

personnel and folks who also need quality affordable housing. 

Thank you. 

[The prepared statement of Mr. Barnes can be found on page 31 

of the appendix.] 

Chairman NEY. Thank you very much. 

Chairman NEY. Mr. Bowling. 

8

STATEMENT OF BOBBY BOWLING, IV, PRESIDENT, TROPICANA 

HOMES, EL PASO, TEXAS, ON BEHALF OF THE NATIONAL ASSOCIATION OF HOMEBUILDERS 

Mr. BOWLING. Chairman Ney, members of the subcommittee, 

thank you for the opportunity to testify today. 

My name is Bobby Bowling, and I am a third generation home 

builder and the president of Tropicana Homes in El Paso, Texas. 

My family has been building homes in El Paso for 50 years, and 

we currently build about 400 single family homes, and about 225 

affordable multifamily units every year. 

I am pleased to be here today on behalf of the 225,000 members 

of the National Association of Home Builders to testify in support 

of H.R. 3186, the Build HOMES Act. 

This important legislation increases access to affordable housing 

for enlisted military personnel, specifically through the housing tax 

credit program. It does this by excluding the military’s housing 

subsidy, the basic allowance for housing, or BAH, from income 

when qualifying residents for low-income housing tax credit properties. 

This would be especially helpful at Ft. Bliss in El Paso, where 

there is a tremendous shortage of decent, affordable housing for enlisted military personnel and their families. 

I am here today instead of before the Ways and Means Committee because the Housing Tax Credit Program takes its guidance 

on calculating income from the Department of Housing and Urban 

Development Section 8 guidelines. 

These guidelines provide for a number of exclusions from income, 

such as hazard duty pay for military personnel, but do not exclude 

the BAH. 

Curiously, Section 8, the primary housing subsidy for non-military individuals and families, is not included as income for the purposes of qualifying for housing tax credit properties. 

Further, neither Section 8 nor the BAH are considered income 

for Federal income tax purposes. 

The first concern we have is one of equity. Imagine, as the examples that Congressman Ryun and Congressman Green gave, two 

potential residents of a housing tax credit property. One is a civilian and the other a military servicemember who each received a 

subsidy for housing. 

The civilian’s housing subsidy is in the form of Section 8 assistance, and the servicemember’s is in the form of the BAH. Both residents meet the housing tax credit income restrictions, in the absence of these housing subsidies. When a leasing agent is qualifying each of the potential residents for that property, he or she excludes the Section 8 assistance for the civilian, but must include 

the servicemember’s BAH in that income calculation. 

This often results in the rejection of the servicemember because 

they are over-income, but by only a small amount, in many cases. 

The end result is that enlisted military personnel are disqualified 

for no other reason than the form of their housing subsidy. 

Another concern is the practical impact on enlisted military personnel and their families in markets with high housing costs, or 

where there is a shortage of affordable housing. This is a trend in 

9

many military duty stations around the country, including Ft. Bliss 

in El Paso. 

The Department of Defense is straining to renovate and modernize its existing on-base housing at Ft. Bliss, and there are no 

plans to add substantial numbers of new on-base units. As a result, 

the private market will continue to provide the bulk of housing for 

troops stationed at Ft. Bliss. 

However, El Paso’s primary source of rental housing is through 

Federal housing programs, like the housing tax credit, and 

servicemembers cannot qualify for these properties, which are also 

the best rental housing available in our market. 

There is tremendous competition for the remaining rental units, 

which will only get worse, once troops start relocating at Ft. Bliss, 

as part of the BRAC process. Ft. Bliss is scheduled to receive nearly 21,000 new troops and their families over the next 5 years as 

part of BRAC, and demand in the private housing market is going 

to skyrocket. 

Servicemembers will have to search for affordable housing at a 

substantial distance from Ft. Bliss. Enabling enlisted troops to access housing tax credit properties would be a great help in addressing this problem. 

But even further, H.R. 3186 would create incentives for new construction of affordable housing units or rehabilitation of existing affordable housing stock. This would be especially helpful in communities where the low- and moderate-income civilian population 

alone cannot currently sustain housing credit properties. 

Also, States will have more options for helping low- and moderate-income civilian and enlisted military personnel, especially as 

the BRAC process moves forward. 

H.R. 3186 is an important piece of legislation that will help increase access to affordable housing for America’s enlisted military 

servicemembers and their families. 

Thank you for the opportunity to share my views on this legislation and I would love to entertain any questions that you or the 

members might have, Mr. Chairman. 

[The prepared statement of Mr. Bowling can be found on page 38 

of the appendix.] 

Chairman NEY. Thank you. 

Mr. Kenny. 

STATEMENT OF TIMOTHY R. KENNY, EXECUTIVE DIRECTOR, 

NEBRASKA INVESTMENT FINANCE AUTHORITY, LINCOLN, 

NEBRASKA 

Mr. KENNY. Mr. Chairman and members, thank you for the opportunity to testify before the committee today. My name is Timothy Kenny, and I am the executive director of the Nebraska Investment Finance Authority, located in Lincoln, Nebraska. We are 

the State authority that administers the Section 42 housing tax 

credit program. I have had the honor of doing that for the last 12 

years, and then also did that in two other States. 

I have been asked to testify today in support of H.R. 3186 in 

light of my recent experiences with the regulatory conflicts that the 

bill seeks to correct. 

10

The first experience was when I was on a tour with a civilian 

support group in San Antonio, Texas, at Ft. Sam Houston. And I 

was talking with our young tour guide, a sergeant, an E–4, and I 

asked him what life was like in the Army. 

I was surprised when that young soldier told me that he loved 

the military and he loved his job, but he was going to have to quit. 

And when I asked him why, he said because I can’t find a safe 

place around here for my wife and kids, where I can afford to live. 

His problem struck me as quite strange, and I decided to do some 

research. And that opportunity came not much later when into my 

office in Nebraska came my tax credit program administrator, who 

informed me that two important multifamily rehab projects that we 

had going on in Bellevue, Nebraska, just adjacent to our own Offutt 

Air Force Base, were having a hard time achieving tax credit eligible occupancy. 

What I discovered at that time was that military personnel, as 

you have learned today, who have a housing voucher from the Department of Defense are not treated in the same way as a client 

of our local housing authority with a Section 8 voucher. 

Unfortunately, when the Section 42 rules are applied through 

Section 8 to determine if a low income service person is eligible to 

live in a tax credit project, the test penalizes that servicemember. 

Simply stated, the HUD voucher is not included in income, but 

the BAH amount from the Department of Defense is included in income for tax credit unit occupancy qualification. 

The result is that the low-income serviceman or servicewoman, 

and their family, is often denied occupancy. This unfortunate result 

certainly does not seem equitable or appropriate, and furthermore, 

the designation of BAH as income for purposes of testing occupancy 

eligibility, is, as you have heard before, inconsistent with the treatment of the BAH for Federal income tax purposes. 

This exclusion, I believe, is simply the unintended consequence 

of the conflicting regulatory provisions. I have attached some 

graphics to my testimony that show the impact in Omaha, Nebraska, which is the location of Nebraska’s only large military 

base. 

The first graphic shows that for a single enlisted person, E–1 to 

E–5, there is a problem at the E–4 and E–5 level in Nebraska, our 

very highly technically trained sergeants and sergeants first class. 

The second graph shows that for a married person with no outside income, E–5’s are excluded because the rates change slightly. 

The third graph, which is very interesting, for married personnel, 

and assuming that there might be a little outside income, and a 

minimum wage job for, say, half a year—shows that the problem 

begins at the E–1 level. Married military personnel at the E–1 

level, that’s the basic recruit level. 

Essentially enlisted personnel and noncommissioned officers with 

dependents E–1’s through E–5’s, the lowest paid but the highly 

trained technical working portion of our military services, are excluded from this excellent housing resource simply because their 

voucher comes from the Department of Defense, as opposed to 

HUD. 

Is this a temporary problem? Even after the major privatization 

effort across the United States, it is estimated by the Pentagon’s 

11

privatization manager that the military bases will still count on the 

local communities to provide up to 60 percent of the necessary 

housing for the base. The surrounding communities will be expected, or counted upon, to provide up to 60 percent of the necessary housing for the military personnel. 

And that responsibility will continue after the completion of the 

current excellent privatization and improvement efforts. 

One other issue. Could the proposed voucher change or could the 

proposed change make military personnel with BAH allowances eligible for Section 8 vouchers? I am certain that is not the intent of 

H.R. 3186, and I believe that the HUD regulators can insert the 

appropriate language to avoid that circumstance. 

Let me note at this time that we have had great support from 

other members in the community talking about this particular 

issue. Many of your colleagues have supported us. Members of the 

National Council of State Housing Agencies have also given us 

their input, and I understand that they favor improvements to the 

tax credit program, and they support the concept proposed by H.R. 

3186, with the understanding that State HFA’s, like myself, would 

be able to use their discretion, as they do currently, in their qualified allocation plans, to introduce this opportunity into their States 

in a manner that is consistent with their State’s housing needs in 

the existing inventories. 

This change, however, needs legislative action because in our correspondence and conversations with HUD, they have indicated to 

us that they cannot make this regulatory change without evidence 

of Congressional intent. 

So, members of the committee, I close by asking you to consider 

this low-cost opportunity to improve the lot of all military personnel and housers like myself, in trying to provide affordable 

housing for our deserving military personnel and their families. 

Thank you. 

[The prepared statement of Mr. Kenny can be found on page 45 

of the appendix.] 

Chairman NEY. Thank you. I note our current general counsel, 

Clinton Jones, over here to my left, was raised from the ages of 2 

to 16 in Junction City. His dad was deployed on Big Red One to 

Vietnam, and as far as I know, in his teen years he didn’t cause 

any trouble in Junction City. 

So here’s old history. 

Mr. RYUN. We don’t have his picture up on the hall of fame in 

the police department, so I think that’s a good sign. 

Chairman NEY. There you go. I’ve got one quick question. Anybody is free to answer. In 1996, Congress created the privatization 

program initiative or MHPI, Military Housing Privatization Initiative. That was supposed to, at the time, be able to do construction 

a little bit quicker, some incentives, tax credits, than military construction would do. That was supposed to help. 

Do you see any way this bill is a duplicative effort of that original intent in 1996? 

Mr. KENNY. Mr. Chairman, I have had conversations with the 

people in the privatization effort, and they actually see this as an 

enhancement to the overall challenge of housing military personnel. Again, when the whole privatization process is completed, 

12

the Defense Department managers of that privatization process 

have told me that they still are intending for the surrounding communities on the average across the United States to provide housing. 

They are relying on the surrounding communities to provide offbase housing for up to 60 percent of the military personnel. It varies from community to community, depending on branch and mission, but for the most part, they still, after all of the privatization 

is completed, are looking to the private sector and this particular 

resource to provide that housing. 

Chairman NEY. So this is more of an enhancement? 

Mr. KENNY. Right. 

Mr. BOWLING. Yes, I could address, too, Mr. Chairman, your 

question specific to the part of the country where I live, in El Paso, 

Texas, with Ft. Bliss. We are scheduled to get, as I said in my testimony, over 20,000 new troops over the next 5 years. In discussions that we have had with the director of base housing, through 

our chamber of commerce, and through our home builders association, we understand that most of the privatization projects that 

they are undertaking right now at Ft. Bliss are designed to renovate and rehabilitate their existing housing stock. 

They really have come to us as an industry in our local community and tried to emphasize to us that they are relying on us in 

a big way to house these new troops who are coming to our city 

in El Paso. 

So this will be a tool that we want to have all the options available to the troops when they come to El Paso to live in a variety 

of different types of housing. 

Right now, even as low as an E–1 with a BAH added in, in El 

Paso, it’s really hard to serve any military and tax credits right 

now. 

Chairman NEY. Thank you. Mr. Cleaver? 

Mr. CLEAVER. Thank you, Mr. Chairman. Let me preface my 

comments by saying I am going to support this strongly. I think 

our troops deserve the very best housing that we can provide them 

as they are in some cases waiting to hoist themselves in harm’s 

way, thousands of miles from home. 

With regard to legislative intent, I don’t know if anybody is here 

from HUD or not, but Section 202 was initially, with regard to legislative intent, designed for elderly housing. I am sure that Omaha 

has a number of 202 projects. I am not sure about Junction City 

and El Paso. It was intended for elderly housing. Over time, somehow, the project also began to include the disabled. 

This bill is so important that if there is a way for HUD to do 

this, without having us go through fire and water to get it approved, then I’d rather see that happen. If we can do what is intended by this legislation, the same thing we did with 202, or 

somebody did, that would help us solve the problem. 

Is anyone here from HUD? 

[No response.] 

Mr. BOWLING. Congressman, I can’t speak for HUD, but there 

was a copy in my testimony, the letter we received from HUD on 

this issue, I believe in early 2004, signed by the then Deputy Assistant Secretary for Multifamily Housing Programs, Tillman 

13

Knight, and he articulated HUD’s interest in the problem, but indicated that they were hesitant to move forward without evidence of 

Congressional intent, and I think that was a clear signal that they 

understood the issue, but they weren’t clear as to which way they 

could go. 

Mr. CLEAVER. Thank you. We may want to get a response from 

HUD. We have had controversy in my community when the elderly 

felt invaded because they were bringing in more and more disabled, 

and the buildings were not even adequately built for the elderly. 

So, if we can solve this problem, we ought to try to solve it. And 

sometimes, the bureaucrats, they don’t mean to be obstructionists, 

but sometimes they are. 

Mr. BOWLING. Right now we are asking Congress for some Congressional action on this issue, because we have gone to HUD and 

tried to address this with regulations, so it’s our understanding 

that right now, in order to move this particular issue forward, we 

do need some Congressional action. 

Mr. CLEAVER. I’m not certain that HUD said that. Please understand, I am not questioning at all what HUD said. I’m questioning 

the necessity of it. 

Thank you. 

Chairman NEY. What the committee can do, gentlemen, is pose 

this question to HUD concerning 202, and then we would ask HUD 

to respond back, provide the gentleman with an answer, and then 

inform the committee. So we will do that formally. 

Thank you. Mr. Ryun? 

Mr. RYUN. Mr. Chairman, if I could sort of pick up a little bit 

on the question asked by my colleague. When we went to HUD 

about this particular issue, they came back and said that they 

would like a statutory change from Congress. This is the letter. 

You are welcome to see that. 

And that’s really what we are attempting to do, to move the ball 

around the field to help our service personnel. And so the intent 

of this legislation is to eliminate the inequality that exists now, 

and to help our service personnel. So you are welcome to copy this 

as well. 

If I could take just a moment and put the question to Mr. 

Barnes, I am well aware that Ft. Riley is indicative of other military installations that are going through the BRAC process with 

the adjustments. There’s a lot of construction going on, but there 

is still much to do because it’s just really beginning. 

But if you could just draw a little comparison between the quality of the units that are in the area and those that would be built. 

I know I have seen pictures, but perhaps you could provide a little 

visual word picture for us of some of the comparisons. 

Mr. BARNES. Thank you, Congressman Ryun. I appreciate that 

opportunity. We view the affordable units that are being built 

through the Section 42 program as some of the nicest apartment 

units in the area. The good thing about these particular units is—

you saw the pictures that you have here. They are two and three 

bedroom. They have all of the amenities that you could expect to 

have in an apartment complex with a club house, with playgrounds, equipment, their landscape, their grounds are maintained 

by the property managers operating these facilities. 

14

So we see in our area, both in Manhattan and Junction City, 

very affordable, high quality apartment units that anyone would be 

proud to live in, and not necessarily connected to something that 

was identified as low-income, but merely affordable. And we think 

that is very, very important. 

Chairman NEY. Mr. Green. 

Mr. GREEN. Thank you again, Mr. Chairman. And for fear that 

I will forget, I have some additional testimony that I would like to 

submit for the record, if there is no objection. 

Chairman NEY. No objection. 

Mr. GREEN. Mr. Chairman, you have been more than generous 

with your time as it relates to me today, so I can only say thank 

you a thousand times. 

I want to thank Congressman Ryun again, for allowing me to 

work with him on this valuable piece of legislation, and would like 

to address a question to Mr. Kenny, but anyone may respond. 

You touched a nerve, Mr. Kenny, when you indicated that some 

of our servicepersons have families and they are trying to locate 

not only themselves, but their families. 

And I think too often when we think of military people, we only 

think of the soldier himself and we think that soldiers are tough, 

and that they can handle it. But they have families that have to 

be considered as well. 

Explain a little bit more, if you can, please, about the impact 

that this has on the families. Where do they end up locating sometimes, and how does this impact the persons in that family, children in schools, and that sort of thing? 

Mr. KENNY. Congressman, the first thing that caught my attention, when I was first aware of this, was on this trip to San Antonio, my home town. I grew up there, and am very familiar with the 

area around Ft. Sam Houston. 

And we had this wonderful young sergeant who was escorting us. 

And Ft. Sam is a great medical training facility, where we have 

very highly technically skilled enlisted personnel in the training, 

both the medical and the dental areas. 

And in just casual conversation with this young man in the 

quadrangle at the Fort, and he said, I just love this job. And I love 

the military, he said. But Mr. Kenny, there is no place that I can 

live in this area, in Ft. Sam, that’s in the heart of San Antonio, 

that’s safe for my family and that I can afford. 

And so he and his family were having to live in substandard 

housing on the far edges of the community, and he said it’s just—

my ability to sustain my family and keep this job are not parallel, 

and so I am going to have to leave the service. 

And I said, two things were kind of sad about that. The first 

thing, which is obvious, is our military has spent a lot of time 

training and investing in these young people to bring them to this 

skill level. And certainly retention is a big issue in the military 

services, particularly with the heartbeat of what I call the military 

are our noncommissioned officers. 

But the second thing was that issue in the family. We, as Mr. 

Barnes said, from the administrative side, have excellent housing 

in the Section 42 program. Well supervised by both the State agencies and the investors. High quality housing. 

15

What happens around military bases, and I can’t say this happens in Omaha, because we only have one base, but around the 

United States, and it might happen in your communities, is the 

basic allowance for housing typically often puts people into substandard housing that is unregulated and unsupervised, and curiously, the rent always seems to equal the BAH. So, whatever the 

BAH is in that area, that’s what the rent is. 

In the Section 42 program, which is, again, excellent units, well 

supervised and well reviewed, the rent is a function of the actual 

cost of the housing in the area. It is a function of the area median 

income. 

So it really, I think, is to the advantage in the long term of the 

soldier and the Department of Defense to have their individuals 

have the opportunity to this, the well supervised, well maintained 

units as opposed to substandard units where it’s just an opportunity for people to take advantage of them. 

Mr. GREEN. Thank you. And I just have a parting comment, and 

it is that, clearly, we desire to see every person have decent housing. And I wish that this could address the needs of persons in 

need across the length and breadth of the country. I really wish 

that it could. 

It’s been my experience, however, since I have been in Congress 

that you have to try to do what we can, when you can, where you 

can. 

So right now, here, we have an opportunity to be of service, and 

I think we should do what we can to help our military personnel, 

not to the exclusion of any other, but with the understanding that 

we do want to help all others. 

Thank you again, Mr. Chairman. 

Chairman NEY. Thank you. The gentleman from Texas, Mr. 

Neugebauer. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. I also want to 

thank Mr. Ryun and Mr. Green for bringing forth this very important legislation and I am proud to be a cosponsor of H.R. 3186. 

I also want to extend a welcome to my good friend, Bobby Bowling, from El Paso, Texas. Bobby’s a longtime friend and a great 

member of that community, but also very knowledgeable in housing. So it’s good to have you here today. 

Mr. BOWLING. Thank you, Congressman. 

Mr. NEUGEBAUER. You know, I know the members on the dais 

have had an opportunity to go over to Iraq and Afghanistan and 

other parts of the world to watch our young men and women do 

unbelievable things to defend freedom and democracy. 

And when they go off and serve our country, they leave behind 

families. And those families serve right alongside those young men 

and women that are serving over in harm’s way. 

And as I have a major B–1 bomber based in my district, Dyess 

Air Force Base, we have a wait list for housing. So we’ve got young 

airmen who can’t get on base and are having to drive sometimes 

20 to 30 miles to go find an affordable place for them to be able 

to live. 

And if we are going to keep the kind of force that we have in 

place today, which I believe is one of the finest forces that we have 

16

ever put on the planet, this is an all-volunteer force. Let me repeat 

that. This is an all-volunteer force. 

If we are going to get young men and women to volunteer to 

serve our Nation, for not the highest-paying job in the world, but 

many of them are dedicated and love to do it, we have to make 

sure that there is a quality of life that meets at least their subsistence. 

So I think this is a great plan. We are not reinventing the wheel. 

We are just making some changes here so that we can encourage 

the development of housing, to make sure that our young men and 

women have the housing that they deserve. 

So I again want to compliment the two gentlemen that brought 

this bill forward. 

And, Mr. Chairman, I hope that we will act quickly on this bill 

and get this out of the committee, and let’s get this to the House 

Floor, and let’s give those young men and women who are in 

harm’s way the kind of housing that they deserve. 

Thank you, and I yield back. 

Chairman NEY. Well, thank you, gentlemen. Also, Congressman 

Ryun has asked for another moment. 

Mr. RYUN. If I may, I would just like to make a point, and actually, ask Mr. Bowling a question. 

For the record, we are really dealing with as many as 50 bases 

across this country. So it is a significant number and amount of 

housing. 

And, as it has been said earlier, what we are trying to do is 

make sure they have affordable and good housing. 

I know, for example, in my area of Ft. Riley, we can have long 

drives, which means less time for our servicemembers to have with 

their families. And it doesn’t necessarily mean that they have better housing with that drive. 

So, if we are able to move this legislation forward and eliminate 

the inequity, Mr. Bowling, could you comment on the fact, or have 

your comments on, would this eliminate some of the risk and encourage builders to move forward with more housing, if we can 

eliminate this inequity? 

Mr. BOWLING. Yes, sir, Mr. Ryun. 

Our city has made a very concerted effort for the part of our 

city—if you look at, geographically, where Ft. Bliss is located in relation to El Paso, the northeast part of our city, northeast El Paso, 

is where predominately the base entrances are and where the base 

military families prefer to live. 

Our city owns a lot of acreage in that part of El Paso. And they 

have done a very good job of trying to promote that, and make that 

available to us in the private sector to develop and build on. 

The problem is the amounts of rent that are there in the market. 

In our world of low income being on the border and being in west 

Texas, the numbers don’t really work for private sector non-subsidized, multifamily housing to be developed. I mean, our rent levels would almost have to double to make those numbers work. 

In the Section 42 housing tax credit program, however, the numbers work very well. So, a lot of what the city is trying to do, in 

making this land available to us as builders and developers, is 

being hampered by this process and this interpretation from HUD 

17

that we can’t include the military families in the formula because 

of the BAH. 

And let me just add, we’re around the border, and being in west 

Texas, we have very low median family incomes. The soldiers have 

the same income levels, pretty much, around the country. And in 

relation to our area median family income, they will qualify up to 

like E–5’s, and I have provided some charts in our written testimony. But it’s as low as like E–1’s and E–2’s, Congressman, and 

they can’t even get into low-income housing making $15,000 to 

$20,000 a year. That’s a severe inequity, I think. 

Mr. RYUN. Let me take that a step further. You would not, then, 

say this is an isolated situation, your situation, but it’s characteristic of many other facilities as well? 

Mr. BOWLING. Oh, yes, sir. I can only speak to El Paso, that’s the 

location I build in, but in talking to my colleagues and working 

with the National Association of Home Builders, I think that this 

problem is pretty commonplace around the country with relation to 

where bases are. 

I was looking at some of Mr. Barnes’ numbers. His rent numbers 

are pretty much what ours are in El Paso. So I would imagine his 

incomes are pretty close to what we are in El Paso. So, it will affect 

the whole country, where those military bases are located. 

Mr. BARNES. Congressman Ryun, if I may. Investment Resources 

is the largest provider of Section 42 housing in Manhattan/Junction 

City. They did a survey and they found the problem to be at Ft. 

Bliss in El Paso. They found it at Ft. Bragg in Fayetteville. They 

found it at Ft. Benning in Columbus, Georgia. 

So, it is prevalent, not just in smaller communities and not just 

in, for instance, near El Paso, where the median income is an 

issue. 

We have developers who are ready to build housing in Junction 

City using the Section 42 program, but they are not going to do 

that as long as a large segment of the population is excluded from 

being able to rent their units. 

Mr. RYUN. Very good. Thank you. Mr. Chairman? 

Chairman NEY. Any other questions? 

[No response.] 

Chairman NEY. No? Well, thank you. Often members have additional questions, so without objection, we will keep the record open 

for 30 days, so that members can submit in writing any additional 

questions, and also the record will be kept open for additions to the 

record itself. 

Thank you for your time on an important issue, and for traveling 

all the way here to Washington, DC. 

Thank you. 

Mr. BOWLING. Thank you, Mr. Chairman. 

[Whereupon, at 11:53 a.m., the subcommittee was adjourned.] 

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A P P E N D I X

February 8, 2006

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