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S. HRG. 114–511 

OVERSIGHT OF THE HUD INSPECTION PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING, TRANSPORTATION, AND COMMUNITY 

DEVELOPMENT 

OF THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

ON 

EXPLORING THE HUD INSPECTION PROCESS, FOCUSING SPECIFICALLY 

ON PROJECT-BASED SECTION 8 HOUSING INSPECTIONS, IN WHICH 

RESIDENTS’ DEPLORABLE LIVING CONDITIONS HAVE BEEN EXPOSED 

IN FLORIDA AND OTHER STATES, AND EXPLORING SOLUTIONS FOR 

THESE ISSUES 

SEPTEMBER 22, 2016 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

RICHARD C. SHELBY, Alabama, Chairman 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JERRY MORAN, Kansas 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

WILLIAM D. DUHNKE III, Staff Director and Counsel 

MARK POWDEN, Democratic Staff Director 

DAWN RATLIFF, Chief Clerk 

TROY CORNELL, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

SUBCOMMITTEE ON HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT

TIM SCOTT, South Carolina, Chairman 

ROBERT MENENDEZ, New Jersey, Ranking Democratic Member 

MIKE CRAPO, Idaho 

DEAN HELLER, Nevada 

JERRY MORAN, Kansas 

BOB CORKER, Tennessee 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

DAVID VITTER, Louisiana 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

JON TESTER, Montana 

JEFF MERKLEY, Oregon 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

WILLIAM GARDNER, Subcommittee Staff Director 

REBECCA SCHATZ, Democratic Subcommittee Staff Director 

(II)

C O N T E N T S 

THURSDAY, SEPTEMBER 22, 2016 

Page 

Opening statement of Chairman Scott .................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Menendez ............................................................................................ 2 

Senator Corker .................................................................................................. 3 

Senator Tester .................................................................................................. 4 

WITNESSES 

Bill Nelson, a U.S. Senator from the State of Florida .......................................... 4 

Prepared statement .......................................................................................... 23 

Marco Rubio, a U.S. Senator from the State of Florida ....................................... 5 

Prepared statement .......................................................................................... 24 

Edgar Olsen, Professor of Economics and Public Policy, University of Virginia 

Batten School of Leadership and Public Policy ................................................. 8 

Prepared statement .......................................................................................... 25 

Tracy Grant, President, Eureka Gardens Tenants’ Association, Jacksonville, 

Florida ................................................................................................................... 10 

Prepared statement .......................................................................................... 34 

Major Josh Lewis, Riviera Beach Police Department, Riviera Beach, Florida ... 11 

Prepared statement .......................................................................................... 36 

Vincent F. O’Donnell, Affordable Housing Consultant ......................................... 13 

Prepared statement .......................................................................................... 38 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Pictures of damage at HUD Section 8 properties, Global Mission Foundation 

and Windsor Cove, submitted by Chairman Scott ............................................ 43 

(III)

(1) 

OVERSIGHT OF THE HUD INSPECTION 

PROCESS 

THURSDAY, SEPTEMBER 22, 2016 

U.S. SENATE, COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, SUBCOMMITTEE ON HOUSING, TRANSPORTATION, AND

COMMUNITY DEVELOPMENT

Washington, DC. 

The Subcommittee met at 10 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Tim Scott, Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF CHAIRMAN TIM SCOTT 

Senator SCOTT. Good morning to everyone. Thanks for being 

here. This Committee will come to order. 

Today we will learn about the HUD inspection process, specifically at project-based Section 8 housing. Witnesses will testify 

about their experiences with the HUD inspection process and, 

hopefully, suggest solutions to prevent these types of deplorable living conditions for residents in the future. 

We have two very special guests with us this morning. One is 

here, actually. Both of them are here. We have my colleagues from 

the State of Florida, Senator Bill Nelson and Senator Marco Rubio, 

who both represent the State of Florida here in the U.S. Senate. 

Our second panel will have witnesses including Ms. Tracy Grant, 

President of The Eureka Garden Tenants’ Association in Jacksonville, Florida, also, I think, a home girl from Charleston, South 

Carolina. Go St. Andrews Rocks, who I used to play in football. I 

will not say the outcome, just to save her the embarrassment. 

Ms. Grant is here to give testimony on her first-hand experience 

as a resident of Global Mission Foundation-owned properties. 

We will also hear from Major Josh Lewis of the Riviera Beach 

Police Department—thank you for being here, sir—in Riviera 

Beach, Florida. Major Lewis is in charge of code enforcement for 

the GMF property in Riviera Beach. 

Finally, we will receive testimony from Dr. Edgar Olsen, who is 

also here with us. Dr. Olsen is a Professor of Economics and Public 

Policy at the Frank Batten School of Leadership and Public Policy 

at the University of Virginia. He has been a postdoctoral fellow at 

Indiana University, an economist at the RAND Corporation, a 

project associate in the Institute for Research on Poverty, and a 

visiting scholar at the U.S. Department of Housing and Urban 

Development. Dr. Olsen has been a consultant to HUD during six 

Administrations. 

2 

It deserves being pointed out that the title of today’s hearing is 

‘‘Oversight of the HUD Inspection Process,’’ yet clearly missing is 

anyone from HUD. Not a single employee of HUD could make the 

time to come inform and educate us on why these deplorable conditions are the way they are. After several attempts from my office, 

after weeks of asking them to come, out of their 8,400 employees, 

they cannot spare a single individual to be here this morning. A 

$32 billion budget, located—many of those employees located here 

in DC, not a single one of them could make it. I actually have 

email confirmation of the conversation that my staff had, asking 

them to come, giving them time to figure it out, but they are not 

here. 

I first learned about the issues at Eureka Gardens Apartments 

when my friend, Marco Rubio, sent a letter to the Chair and the 

Ranking Member of the Senate Banking Committee, requesting a 

hearing on the matter. After digging into the issue, I learned that 

there was widespread neglect at these properties and that many 

residents were living in unsafe conditions. Residents had to be hospitalized at some units. Frankly, this is unacceptable. 

I want to show a quick video of the definition of deplorable conditions. 

[Video played.] 

Senator SCOTT. Here is my question. How can we allow these living conditions to persist? How is it that not a single employee at 

HUD would make the time to come out and explain what is not 

happening? Should we not care about the living conditions of poor 

folks in this Nation? Should we not take greater advantage of the 

opportunity to help all of us understand and appreciate what is 

happening or what is not happening? Thank goodness Senator Nelson and Senator Rubio have brought a big, bright light to these deplorable conditions. 

I am disappointed in HUD. I cannot believe the conditions that 

Global Ministries allows at their properties, but I am thankful for 

Senators who care enough about every one of their citizens to be 

here this morning. 

STATEMENT OF SENATOR ROBERT MENENDEZ 

Senator MENENDEZ. Thank you, Mr. Chairman, for holding this 

hearing. I want to thank our two distinguished colleagues for 

bringing this to light and driving the opportunity for the Committee to look at the issues affecting not only this particular housing community in Florida but across the country, and I appreciate 

the witnesses who have come to join us today. 

In my home State of New Jersey, like many other States across 

the country, it is facing a two-fold problem of an aging housing inventory and an incredibly tight rental market that leaves far too 

many families without an affordable place to call home. In fact, 

nearly 65 percent of New Jersey’s housing stock was built before 

1975. Add to that the fact that a minimum-wage earner in New 

Jersey, at $8.38 per hour, would have to work an astounding 105 

hours per week to simply afford a modest, one-bedroom apartment 

at fair market rent, and you have got the making of an affordability crisis on your hands. 

3 

Our affordable housing stock is one of the most valuable 

resources, and for the approximately 1.2 million households that 

benefit from project-based rental assistance—who are merely seniors, families with children, and people with disabilities—these 

units can be opportunity creators. We know that when we see better outcomes for low-income and extremely low-income families, the 

elderly, people with disabilities, when they have sustained access 

to safe and affordable housing in areas rich with employment opportunities, educational centers, and transportation hubs, and 

project-based assistance is a critical element of this equation. As 

such, we must be thoughtful in how we address issues impacting 

tenants and in the steps we take to preserve affordable housing inventory. 

Now let me take a step back for a moment and address the 

issues in Florida, which initially brought this hearing to the Committee. Let me be clear. There should be no place in our affordable 

housing programs for dishonest and duplicitous landlords who fail 

to meet the most basic duty to their residents—providing them 

with decent, safe, and sanitary homes. Homes, after all, are the 

place that we go to when we are born, it is where we are nurtured 

as we grow up, it is where we spend good and bad times, it is when 

we ultimately leave, when we move on in life and then start a new 

home. And so the very essence of home, whether it be by ownership 

or whether it be by rent, is an incredibly important concept in our 

country, and that home should be nurturing and the environment 

should be safe, clean, and affordable. 

So, Ms. Grant, I want to thank you for your willingness to share 

your difficult story with us here today, and those of other tenants. 

It is critical for the Committee to hear experiences of tenants, and 

believe when I say that it informs our work. It has, for me, as a 

Member of this Committee for quite some time. 

As the saying goes, when Members of Congress feel the heat at 

home, we see the light in Washington. So Congress relies on our 

constituents—so, too, should HUD—and landlords rely on their 

tenants to bring issues to light and inform solutions. 

So today as we are confronting this issue, and hopefully putting 

a garish light on it, and by doing so improving the lives of the tenants in this particular location, I hope that it can broaden that 

light as it relates to the processes that we engage, to ensure that 

the type of housing we want to see is realized. 

I look forward to hearing from Ms. Grant on her experience, from 

Mr. O’Donnell on how landlords and HUD can be better equipped 

to effectively respond to tenant and property needs, and I think, in 

addition, it is critical that we examine HUD’s role in responding to 

troubled properties, how we can ensure tenants have access to 

high-opportunity neighborhoods, and are not displaced when landlords do not hold up their end of the bargain, and how best to preserve our units of affordable housing. 

I look forward to the testimony. Thank you, Mr. Chairman. 

Senator SCOTT. Thank you. Senator Corker. 

STATEMENT OF SENATOR BOB CORKER 

Senator CORKER. I will be very brief. I know we have distinguished panels before us. 

4 

I want to thank you, Senator Scott, and Senator Menendez for 

causing this hearing to take place. I know each of us are so busy 

here that many times we do not know much about each other’s 

paths, but I likely would not be a United States Senator today had 

I not been aware of these types of problems in my own community, 

and as a private citizen led a very large effort to try to make sure 

that Chattanoogans had decent, fit, and affordable housing. 

And I have seen, as you have, as all of us have, some of the 

deplorable conditions that people live in, and Senator Menendez, 

your comments about home, it is when you look at yourself and 

maybe the way you were able to go through your own high school 

years, and others, and you see other young people living in conditions that really are not fit for human beings, it causes you to rise 

up and want to do something about it, and again, I thank you for 

putting a light on this issue. 

I especially thank Senators Nelson and Rubio for highlighting 

this to the Nation, and I think you know the landlord in concern 

also had some facilities in Tennessee, and even though HUD has 

been nonresponsive today, in having a witness, I will say they responded fairly quickly to some of the conditions that we had there 

that would not have been known, really, publicly, without the efforts of the two of you. So I thank you very much. 

It actually caused us to personally go inspect some other units 

that we have been concerned about in other places in the State. 

And so, therefore, again I thank you. I appreciate you guys really 

shining the light, as has been mentioned by the Chairman, on this 

issue, and I look forward to reviewing the legislation that you are 

proposing. 

So, again, thank you so much for bringing this to the Nation’s 

attention and hopefully helping us provide a much better solution 

for oversights, especially with landlords—I mean, some of these 

landlords are—some of them are obviously good, but, you know, so 

many of them are just total absentee, have no regard for the people 

who live in these various facilities, and obviously that has got to 

change. So thank you. 

Senator SCOTT. Thank you, Senator Corker. Senator Tester. 

STATEMENT OF SENATOR JON TESTER 

Senator TESTER. I just echo the remarks of Senator Corker and 

thank you and Senator Menendez for calling this hearing. 

I do not care if you live in Montana or New Jersey or anywhere 

in between, affordable housing is a big, big, big issue, and making 

sure that the housing is livable is critical, and transparency and 

oversight is huge, so thank you for having this hearing. 

Senator SCOTT. Yes, sir. Senator Nelson. 

STATEMENT OF BILL NELSON, A U.S. SENATOR FROM THE 

STATE OF FLORIDA 

Senator NELSON. Mr. Chairman, I appreciate you expressing the 

outrage that both of us feel as we visited these places. I also want 

to say what Senator Corker said, that HUD did respond to us but 

it is totally unacceptable that they would not accept your invitation 

of this Committee, and I think you ought to consider a subpoena 

to haul them in here. 

5 

For example, why was it that in the complex called Windsor 

Cove, that Senator Rubio and I visited, why was it that when we 

saw those conditions that you saw amply displayed in that Channel 

9 clip, as well as the Channel 4 clip in Jacksonville, why was it 

that just a few months earlier they had had an inspector, and out 

of a grade of 100 he gave them 91? And when we raised Cain they 

had another inspector come back and he gave them a grade of 48. 

And then they appealed that, and then it takes more months, so 

that the residents had to wait 10 months for HUD to get it right, 

and then have that new inspection that ultimately got—they got 

some relief, all the time with intimidation that if you go and blow 

the whistle, we are going to evict you from the apartment. 

Now that is the atmosphere, and I am glad the Senator from 

Tennessee is here, because that particular outfit that has apartments in a number of States—they have a good deal of concentration in Florida; they have about 16 of them in Florida—they are 

located in Tennessee. 

Now, the bright break in the clouds is—for this particular situation, is that HUD is facilitating a sale but they are in a 60-day due 

diligence period with an outfit from Ohio that has a lot more apartments, and, therefore, is integrated with their own construction 

company, their own management company, et cetera. 

But what about the inspections? Why did HUD have such a crazy 

system that was not reflective of the reality that we saw when we 

stepped on the squishy, water-filled carpets, and saw the mold on 

the ceiling by the vents? These are not conditions that people ought 

to be living in, and you saw it in those clips. 

Now, what we are doing is introducing the Housing Accountability Act to remove the overdependence on unscrupulous managers and faulty inspections, so that HUD has a better idea of 

what our Federal taxpayer money is doing, to try to help people 

have a decent place to live. I will not go through the legislation. 

You will have it explained in detail. It codifies, in law, what are 

some regulations. It establishes a process for independent contract 

examinations, so that you will not have a 91 out of 100 as a score 

on deplorable living conditions. And it will create a new penalty for 

the owners who fail to maintain the safe and secure environment, 

as Senator Menendez says, that is a home environment that ought 

to be a place for security and safety. 

We certainly appreciate you having this hearing to bring to light 

these things. 

Senator SCOTT. Thank you, Senator Nelson. Senator Rubio. 

STATEMENT OF MARCO RUBIO, A U.S. SENATOR FROM THE 

STATE OF FLORIDA 

Senator RUBIO. Thank you. Thank you, Mr. Chairman. Thank 

you all for holding this hearing on this important issue. 

So the central mission of HUD is to provide safe and sanitary 

conditions for people receiving housing assistance, and so I think 

we are all deeply disturbed to see taxpayer dollars being wasted 

like this, and disappointing that HUD has failed to provide a 

witness here today. I think what you will learn as you look into 

this deeper is, in addition to perhaps some negligence on the part 

of individuals at HUD, and certainly the blame that falls in the 

6 

hands of these slum lords that own and operate these buildings, we 

have a process that is broken, and I will describe that in detail in 

a moment. 

I do, again, want to thank your two witnesses that are going to 

be testifying on the second panel, Ms. Tracy Grant and Major Josh 

Lewis. Both of them have done much to help Florida and the entire 

country through the work—through their work to make these conditions known. We would not be having these hearings here today, 

for example, if Ms. Grant had not come forward, and I want to 

thank them for taking the time to travel here and testify before the 

Committee. 

I became involved in this situation about a year ago, when the 

tenants of Eureka Gardens took their case to the public, and these 

tenants bravely made their voices heard, even as they faced the 

threat of eviction from their landlord, a landlord by the name of 

Global Ministries Foundation. Since then, residents at Global Ministries Foundation properties, and at derelict Section 8 housing 

properties around the State, have also spoken of their troubles. 

And I want to leave this on the record without any doubt. Global 

Ministries Foundation are slum lords. They operate these facilities 

at the bare minimum. They take money from the American taxpayer and they spend as little as possible on maintenance, and I 

invite you to look at their financials so you can see how much 

money they pay themselves and the people that work around them, 

including many family members of the individual at the head of 

this organization. 

When I visited Eureka Gardens in Jacksonville I saw crumbling 

staircases, exposed electrical wires, boarded-up windows that would 

trap a child inside if there was a fire. I saw an apartment that had 

not been painted in 13 years. I saw pieces of wood with exposed 

nails put up in place of a door, in a unit that had small children 

living in it. This was evident even after Global Ministries rushed 

crews to the property to make cosmetic repairs just 48 hours before 

I arrived. The scene was unreal. As we arrived, they had set up 

banners, all these work crews around, just to kind of make it look 

like they were doing things, but in the end, as soon as we left, the 

crews left, and the work they did was largely cosmetic. 

I spoke with tenants who had been through a lot over the last 

few years and heard stories like some of the ones you will hear 

today from Ms. Grant, stories of neglect and crime and bureaucratic indifference from HUD. 

When Senator Nelson and I visited Windsor Cove Apartments in 

Orlando, another GMF property, as he said we saw standing water 

in apartments, and damaged roofs, collapsed ceilings, and we 

breathed air that reeked of mold. We spoke with residents who 

lived there for multiple years now, trapped in a facility whose conditions no one should have to endure. 

A couple of weeks ago I visited Stonybrook Apartments in Riviera Beach, and I want to—this is hard for me to say because the 

other two places were so bad, but what I saw at Stonybrook is even 

worse. In addition to all the other things we just talked about, as 

you walked through the courtyard you will see little nickel bags 

and dime bags of drugs, consumed drugs, all over the place, more 

7 

common than any other garbage that might be laying around, in 

the courtyard of that building. 

And unwillingness to repair these properties is unfortunately par 

for the course for Global Ministries. They willfully neglect the wellbeing of their tenants, as you will hear from Major Lewis testifying 

today. 

These are the three GMF properties I visited in the State of Florida. In each case, I am sad to say that HUD has enabled fraud and 

abuse to continue, all while taxpayer money continues to flow into 

the pockets of these slum lords. Bureaucratic red tape, 

miscommunication, a lack of urgency have plagued the administrative response. 

But nothing displays how broken this program is better than 

HUD’s own inspection process. The passing score for a HUD inspection is 60 out of 100. If a property scores above this threshold, 

HUD gives it the stamp of approval, declaring the conditions are 

decent, safe, and sanitary, an approval that traps tenants at the 

property and keeps money flowing to the landlord. 

What I have discovered in Florida, however, is that HUD has 

compromised the integrity of these standards. Last year, the inspection at Windsor Cove, which we visited, they gave them a passing score of 90 out of 100. The next inspection, which happened to 

occur a week after Senator Nelson and I visited the property, gave 

it a failing score of 48. That inspection found a projected 86 lifethreatening deficiencies on the property. From one score to the 

next, this kind of inconsistency is beyond belief. 

Eureka Gardens received a score of 80 out of 100 during the 

summer inspection that occurred just before the tenants came forward. After months of back-and-forth repairs, hospitalizations from 

gas leaks, alleged lead poisoning, and incessant mold outbreaks, 

HUD came back with a follow-up inspection and still passed them, 

but this time 62 out of 100. Can you imagine—62 out of 100 in the 

facility that you just saw images of a moment ago. 

Right after that inspection, in a letter sent to GMF after visiting 

the property, the Deputy Assistant Secretary for Multifamily Housing wrote that HUD officials do not believe the property would currently pass another REAC inspection, despite the fact that an inspection had just happened barely a month before. 

These slum lords cause the problems but HUD has enabled it, 

and the twin vices that so often afflict massive Federal safety net 

programs, bureaucracy and corruption, have prevented the kind of 

action necessary to protect the tenants and allow this crisis to go 

on for far too long. So that is why we introduced and passed three 

amendments to the HUD legislation that we considered back in 

May, and Senator Nelson and I have also introduced legislation 

that would enact a tenant survey, in order to better identify problems in properties like GMF’s. 

The problems at these properties are not limited to the State of 

Florida. These slum lords, GMF, they own properties in Alabama, 

Indiana, Louisiana, North Carolina, New York, Georgia, and Tennessee, and similarly bad conditions have led to Federal investigations because of those properties. They own over 5,000 

taxpayer-funded units across the Nation. And beyond GMF, if HUD 

is falsely certifying the living conditions at these many properties 

8 

for one organization, then it is probably doing the same for many 

other entities we have yet to hear about. 

So I look forward to hearing from today’s witnesses about the 

effects of GMF’s fraud and HUD’s neglect, and I hope we can continue working together, across party lines—this is not a partisan 

issue—to investigate GMF, and to pass legislation to fix HUD’s 

faulty inspection process. 

Thank you. 

Senator SCOTT. Thank you, Senator Rubio. 

We will now go to the second panel, as our good colleagues clear 

the way. 

[Pause.] 

Senator SCOTT. Dr. Olsen, do you want to start? 

STATEMENT OF EDGAR OLSEN, PROFESSOR OF ECONOMICS 

AND PUBLIC POLICY, UNIVERSITY OF VIRGINIA BATTEN 

SCHOOL OF LEADERSHIP AND PUBLIC POLICY 

Mr. OLSEN. OK. Thank you, Senator Scott. 

I am delighted to be here today to discuss what should be done 

about the poor condition of privately owned, subsidized housing 

projects, like those observed by Senators Rubio and Nelson, and the 

disconnect between their observations and what is reported in 

HUD’s system for monitoring the condition of these units. Although 

I did not observe the units directly until right now, and I am not 

intimately familiar with HUD’s monitoring system, I hope that I 

will be able to contribute a little to the discussion based on my 

knowledge of the programs involved and the evidence on their performance. I have studied low-income housing assistance for more 

than 40 years. 

I will cut to the chase. What Senator Rubio and Senator Nelson 

have uncovered is a perfect illustration of what the systematic evidence shows about the performance of the Section 8 new construction program, and other programs that subsidize the construction 

of privately owned, low-income housing projects. The total cost of 

providing this housing, that is, what the tenants pay and all of the 

public subsidies, greatly exceeds the market rents of the units provided. The ultimate solution to this problem is to phaseout programs of this type. 

However, we also need to deal with the existing projects to ensure that they provide housing that meets the program’s minimum 

standards. The units observed did not meet these standards, obviously, and HUD’s monitoring system said that they did. 

I will describe the program’s incentives for poor maintenance and 

then talk about what should and should not be done about it. 

In exchange for substantial subsidies, the developers of privately 

owned projects agreed to provide housing meeting certain standards, at restricted rents, to eligible households for a specified number of years. HUD has a system for monitoring the condition of 

subsidized units. The Senators’ observations suggest that this system is not working at all well. Senator Rubio has already shown 

that the units in a number of projects owned by a particular organization that operates many projects are in deplorable condition. 

You should not assume that this problem is limited to this one 

owner. 

9 

The structure of the program incentivizes poor maintenance. 

When built, the units tended to be of reasonable quality because 

the projects received development subsidies that were proportional 

to the cost of building them. When new, they were terrific bargains 

for the tenants. However, the landlords have no incentive to maintain them except for dealing with problems that would severely 

damage the structure. It takes many years of poor maintenance for 

units to deteriorate so much that some tenants are unwilling to 

pay the 30 percent of their modest incomes to live in them. Until 

that happens, the owners can retain their tenants, even though 

they spend a little or nothing on maintenance. 

The monthly subsidy that owners get from HUD does not depend 

on the level of maintenance, and it is automatically adjusted upward each year to account for inflation. So owners get the same 

subsidy in real terms, year after year, even though the housing 

provided gets worse and worse. With this setup, the owners maximize profits by skimping on maintenance. 

This problem is exacerbated by the existence of the low-income 

housing tax credit program, that provides large additional subsidies for the renovation of many of these projects. This restarts 

the process of under-maintenance and excessive profits. 

As long as the units meet the program’s minimum housing 

standards, the owners have honored their commitment and are legally entitled to receive the promised subsidies. HUD is responsible 

for the inspection of units in these properties, on a regular basis, 

to ensure that they meet the standards. If violations are detected, 

owners are given a certain amount of time to correct them. If they 

fail to do it, HUD is supposed to terminate the contract, stop sending the monthly subsidy to the owner, and provide the tenants with 

housing vouchers. 

On my understanding of the facts, that did not happen for the 

projects inspected by Senator Rubio, because HUD’s monitoring 

system said that the units met the program’s minimum standards. 

The question is what to do about Senator Rubio’s discovery. The 

first step is obviously to deal promptly with the particular projects 

that have already been observed. The second is to determine 

whether these are isolated incidents or widespread. Given what I 

have said, I would not be surprised if they were widespread. 

Senator Rubio and Senator Nelson have already done, I think, 

what is needed to deal with these particular matters. What should 

not be done, in response to Senator Rubio’s discovery, is to provide 

additional subsidies to the owners of these projects to renovate 

them. The evidence indicates that this is a highly cost-ineffective 

method for delivering housing assistance. 

Indeed, we should go further and not renew the contracts on 

these projects at the end of their use agreements but instead give 

their occupants housing vouchers. The evidence indicates that 

amounts well above market rents are paid when government renews use agreements with owners of privately owned subsidized 

projects. In contrast, market rents are paid for units that are occupied by voucher recipients. If the owners of projects are providing 

good housing for the money at the end of the use agreements, their 

tenant will want to use their vouchers to remain in their current 

10 

units. Otherwise, the owners should not be in the business of providing housing. 

Senator SCOTT. Ms. Grant. 

STATEMENT OF TRACY GRANT, PRESIDENT, EUREKA 

GARDENS TENANTS’ ASSOCIATION, JACKSONVILLE, FLORIDA 

Ms. GRANT. Good morning. Thank you, Chairman Scott and Senator Rubio, for inviting me. 

I came from Charleston, South Carolina, and I moved to Jacksonville, or back to Jacksonville, in 2010—August, 2010. I went to 

apply for an apartment in Eureka Gardens at the beginning of September. I got approved and got my keys on September 24 of 2010. 

In the process of even trying to get the apartment, I went 

through a lot of stumbling blocks. It was—your birth certificate 

was not a proper birth certificate because it was not from Florida 

and it was too small, so it did not have all the information they 

were looking for, like who my mother was, and my father was. And 

they wanted a big copy, and I told them, I said, ‘‘No. this is a legitimate birth certificate,’’ and they had—there was someone else in 

the office that knew what South Carolina birth certificates—the 

smaller version—looked like. 

So I went through that issue with them, and then it was the 

issue—when I told them I did not come in there with any income, 

because I was told it was income-based, so I did not have to pay 

a light bill, I did not have to pay a gas bill, and I did not have 

money to pay rent. And I had to get a letter from my cousin saying 

that, you know, she was helping me pay my rent. 

So those three things, right off, just threw me. I knew something 

was wrong. I knew that there was a problem but I did not know 

how far or how much of a problem it was. 

So I moved in October—the first weekend in October of 2010, 

and that night that I actually moved in there was a gunshot by my 

window, that night. Me and my kids slept on the hard cement floor, 

and this was not what I was looking for. 

Needless to say, it persisted. Things just started to unfold. When 

I really went through my apartment, the walk-through was even 

horrible because the floors had still looked dirty, like they did not 

take up the floors and redo them. They waxed over whatever was 

on the floor. They just waxed over it. When I moved in, the kitchen 

sink, right behind the faucet, was moldy, and in the bathroom 

there was mold. 

Then when my kids and I started to take a bath, water just 

started coming from the bathtub and I could not figure out where 

it was coming from. It was not coming over the bathtub. It was not 

coming from under or over the toilet. It just—water just appeared, 

not realizing that the water was actually going into the bedroom 

that I was sleeping in, in the closet. 

So, over time, that water just started to smell because I did not 

clean it up, meaning I did not know it was there. So when I said 

something about it they just kind of came in. It was like, ‘‘Oh, OK. 

We do not see a problem,’’ and I kept calling and calling, for the 

same issue, until they actually figured out the pipe under the tub 

was broken. Never seen a tub come up. Never seen them take anything out to get moisture or anything. 

11 

The same issue was going on with a lot of the tenants in the 

apartment complex. So with all the mold, then it became the gas 

issue. You were smelling gas, and it was not just inside the apartment. It was outside. So when you smell the gas it is kind of like, 

OK, where is the gas coming from? Somebody needs to turn the gas 

off, somebody needs to check their stove, and not realizing that underneath the ground the pipe was bursting. 

All of this was going on. I have been there for 6 years, and it 

has been persistent. Global Ministries, they did send their people 

out to patch things up, and right now it is a temporary fix. Yes, 

they did come in, and yes, they did do work, but how long will 

those patches stay up? How long will those patches be there, you 

know, to satisfy whatever passing score they have to get? 

I know a lot of my residents in Eureka Gardens. They want to 

move out. They do not want to stay there anymore. They want completely out. They want to be able to live clean, decent. They want 

central air. They want better stoves, they want better refrigerators, 

better everything. They are tired. I have residents there that have 

been there since the apartments opened, and that has been almost 

50 years ago. Some that have been there 20-something years, and 

they do not understand. 

And when you were talking about disability and elderly people, 

most of our elderly people that were there, some of them have 

passed away in those apartments. Were any of those causes due to 

the mold, the gas leaks, and any other problems that were in the 

apartment? I cannot say. But when you start talking about children with lead issues, enough is enough. 

I have a 7-year-old, and when I moved here I had found out that 

she had asthma. I do not know if it was because of the air here 

or anything, but I know that she has asthma. Last year, in November, I found out I had asthma. I found out lately that I have had 

neighbors that are on CPAP machines, that have asthma machines, 

pumps, and not just one of each. Some of them have all of these 

things. 

So we do not want to live like this consistently, but you 

change—— 

Senator SCOTT. Thank you. I will give you 30 seconds to wrap up. 

Ms. GRANT. Oh, OK—you change the way that we live, we will 

be happy. 

Senator SCOTT. Thank you, ma’am, and for all the speakers we 

do have a lighting system there—green, start; red, stop. Thank you. 

Major Lewis. 

STATEMENT OF MAJOR JOSH LEWIS, RIVIERA BEACH POLICE 

DEPARTMENT, RIVIERA BEACH, FLORIDA 

Mr. LEWIS. Good morning. On behalf of the grateful city of Riviera Beach, we thank you for bringing light to this. It was definitely necessary and needed, and it is a pleasure to be here. 

My name is Major Josh Lewis of the Riviera Beach Police Department, which is a municipal police department located in Palm 

Beach County, Florida. I have been in law enforcement for approximately 19.5 years, all with the city of Riviera Beach. My professional highlights include attending the SPI Command Institute 

12 

Academy, along with the FBI National Academy. I currently have 

a master’s degree in critical incident management. 

The Riviera Beach Police Department initiated an investigation 

at Stonybrook, which is located at 1555 Martin Luther King Boulevard in Riviera Beach, in an effort to impact various public safety, 

health, and quality of life issues at the apartment complex. 

Stonybrook, which was constructed in 1972, is an affordable residential development comprised of a mix of two- and three-bedroom, 

two-bath housing units. There is a laundry and maintenance facility and a community center on the property. Fourteen buildings 

house 216 residences. The property sits on approximately 8.67 

acres. 

I would like to discuss a timeline of events that took place at 

Stonybrook, some of the conditions, some of the actions the city has 

taken, and some of the inactions others, to include GMF Management and Property Management, have failed to do. 

Between November 28, 2012, and March 20, 2013, city 

officials held a series of meetings with representatives of the property management company for Stonybrook and the Regional Director for the U.S. Department of Housing and Urban Development, 

HUD. The topics of discussion were the prevalence of criminal activity at the location, along with property maintenance issues. At 

the same time, the property owner was notified about these issues. 

However, the property owner and their agent resisted the attempts 

of city officials to compel them to implement strategies and improvements, and no action took place. 

During this time, there were numerous drug warrants executed, 

which resulted in multiple felony arrests. These arrests satisfy the 

legal standard to declare Stonybrook Apartments as a public nuisance. Property owners and HUD were also notified about these 

findings. Research as early as 2012 indicated that GMF 

Stonybrook, the property owner of Stonybrook, has a history of not 

maintaining the residential units in decent, safe, and sanitary 

manners, more specifically in Memphis, Tennessee, and Jacksonville, Florida, which has lost their Federal funding based on repeated code violations. 

In March 2013, Stonybrook received a notice of violation for accumulation of debris, loose garbage, landscaping overgrowth, and an 

assortment of other miscellaneous code violations. In June 2014, 

Stonybrook was declared a public nuisance again, pursuant to our 

city ordinance. The property owner stipulated to complete the following improvements which were designed to abate the ongoing 

criminal nuisances to include securing access points to the property, providing armed security, installing security cameras, 

installing a controlled access gate, install landscaping, remove loose 

garbage, fix irrigation systems, paint the exterior of the buildings, 

and to add lighting. 

In August 2013, at a code enforcement magistrate hearing, the 

owner was found in violation of all the said items. The magistrate 

allowed the owner 120 days to comply or the fines would commence. The police department continued to monitor the property, 

in reference to the magistrate’s order. 

In May 2014, a nuisance abatement status hearing took place. 

After presenting evidence, the magistrate found the nuisance had 

13 

still not been corrected. As a result, the city and property owners 

agreed to extend the magistrate’s jurisdiction over the property 

until December 2014. 

In November 2014, a notice of hearing to impose fines and claim 

of lien hearing was held. The magistrate found that the property 

owner had still not complied with the order and violations of landscaping and loose garbage remained. In December of 2014, a nuisance abatement status hearing was held. At this hearing, the city 

provided evidence that Stonybrook was still not fully in compliance 

with the nuisance abatement order and their landscaping and loose 

garbage violations had still not been corrected. 

In January 2015, Stonybrook fired the property management 

company. The police department continued to monitor the property 

to ensure compliance with the conditions set forth by the magistrate’s order. 

In October 2015, a new case was heard before the magistrate for 

continued nuisance issues and the property was again declared a 

public nuisance. As such, the owners again stipulated to improving 

the property, to work on the ongoing criminal nuisance, and provide security service onsite, and to deal with some of the perimeter 

security issues on the property, such as a front gate, surveillance 

systems, parking details, towing system, and a tenant 

eviction process. 

These improvements were ordered to be completed within 45 

days. The police department again continued to monitor to ensure 

compliance. In May 2016, a nuisance abatement status hearing 

took place. In the hearing, the magistrate found that the city provided sufficient evidence and testimony establishing Stonybrook as 

a recurring public nuisance. This was based, in part, due to a series of drug deals which had recently taken place on the property. 

In June 2016, with Stonybrook management compliance, the city 

fire department conducted an inspection. Numerous violations were 

located. 

In 2016, we were lucky to be contacted by Senator Rubio’s office 

regarding the inquiry of the violations, and to summarize my testimony today, the property owners have continuously, as I testified 

to, failed to completely correct the nuisance and code issues and do 

not appear to have any inclination to do so. 

Senator SCOTT. Thank you, sir. Mr. O’Donnell. 

STATEMENT OF VINCENT F. O’DONNELL, AFFORDABLE 

HOUSING CONSULTANT 

Mr. O’DONNELL. Thank you, Chairman Scott, Ranking Member 

Menendez, other Members of the Committee, and Senators Rubio 

and Nelson and Ms. Grant for bringing this out for all of us to discuss today and the opportunity to testify. 

My name is Vincent O’Donnell. I am a private affordable housing 

consultant. I have worked for over 40 years with nonprofits, State 

and local governments, and policymakers, and I have worked a lot 

with HUD around the issue of affordable housing preservation. I 

started my career in code enforcement, and it is distressing, really, 

to have to continue to be talking about that but it seems to be an 

issue that is always with us. 

14 

I work with a group called the National Preservation Working 

Group, which is a coalition of organizations, again, similar to what 

I said before, nonprofits and policy organizations, State and local 

governments, that are interested in the preservation of affordable 

housing in the United States, specifically HUD-assisted and USDAassisted housing. This coalition was convened by the National 

Housing Trust and has, for over several decades, worked with Congress and with HUD to try to improve our system of providing affordable rental housing. 

And although it is really distressing to hear what is going on 

with these particular properties, as a perspective, in my opinion, I 

do think that the overall system, writ large, for providing projectbased rental assistance is a sound system, and HUD has very powerful asset management tools and quality control tools. But it is 

clear, from this discussion so far, that better coordination, better 

execution, is needed to ensure that no property ever reaches this 

level of distress. 

In fact, I think the overwhelming majority of HUD-assisted rental housing is in pretty good shape, and it is just unfortunate that 

we have outliers. And it is also clear to me from the discussion that 

when the system for measuring performance, REAC, in particular, 

becomes called into question, then we do not really know exactly 

what the shape of the portfolio is. And so one of the things we need 

to do is to double down on that tool, and make sure that it is executed properly. It is a vital tool and we have to make sure that 

that is well done. 

But in my experience, as I look around and work with other owners, I think the majority of the owners do want to do a good job, 

and are doing a good job, and when they are not, we have to work 

with HUD to make sure that its enforcement tools are properly 

used. 

I want to go back in history just to bring out some basic principles. In the 1970s, HUD was the largest landlord in Boston, 

because of distressed properties being foreclosed with subsidized 

mortgages that HUD controlled. And a group of tenants at an organization—at a property called Methunion Manor, went to Senator 

Edward Brooke and pointed out that their property was up for foreclosure, and under those rules, at the time, foreclosure for them 

meant displacement. And this is a neighborhood that was becoming 

gentrified and revitalized partly due to the Federal investment that 

created their own housing. 

And they went to Senator Brooke and said, ‘‘This is an irony. 

Why should we be displaced when this neighborhood is just now 

improving and the Federal Government’s rules are going to result 

in restoration of funds to the FHA fund but not to us?’’ And Senator Brooke worked with Congress and with HUD to create legislation that gave HUD both a mandate and tools, and it was based 

on three principles: the property should have long-range repairs, 

there should be community engagement in the redevelopment process, and there should be a preservation of project-based rental 

assistance. 

And those three principles have informed all of our other preservation activities since then. When subsidized mortgage prepayment 

became an issue because it allowed the deregulation of properties, 

15 

those were the principles that were applied to create the LIHPRHA 

program, which resulted in the preservation of affordability of 

thousands of units. 

When Section 8 contract—long-term Section 8 contract expirations became an issue, again, those same principles were applied, 

and are still used today. And over time, there has been an increasing market focus on how those tools are applied, but they are 

sound tools and they should continue to be used in any solution to 

this problem of distressed housing. 

So that is the general point I want to make, and I think the focus 

on the long-term, the community engagement, and the preservation 

of project-based rental assistance are the really key things. 

Attached to my testimony is a piece that was written by the 

Preservation Working Group to HUD, to specifically address some 

things that we think HUD can do with the toolkit that it has. I 

think right now I would say—— 

Senator SCOTT. Thirty seconds. 

Mr. O’DONNELL. OK. Thank you. The main point I think I want 

to make is that HUD does have a very powerful toolkit. Sometimes 

what holds HUD back is this kind of what I call an on-off switch, 

that when things get really difficult with a property, the termination of the Section 8 contract is a very powerful tool. But HUD 

has intermediate tools as well, and by working with local communities and with groups like the Preservation Working Group, they 

can tailor and make more fine-grain adjustments and bring owners 

into compliance without losing the subsidy, because—— 

Senator SCOTT. Thank you. 

Mr. O’DONNELL.——if you lose a subsidy, the tenants are going 

to be displaced. 

Senator SCOTT. Thank you. 

Senator Rubio has to preside so I am going to give you my first 

few minutes. 

Senator RUBIO. Well, I thank you for your indulgence. I thank 

you all again for being here today, and I think there will be a 

broader conversation one day about the structure of the program 

in general, but right now we want to make the program we have 

in place work better. 

One of the things that we have learned in this process, and Ms. 

Grant, I am going to ask you about this, is one of the reasons why 

these tenants do not come forward—and we have heard this now 

on the three properties—is there is a level of intimidation and 

threats of eviction. And, in essence, you get hassled. If you start 

showing up in the newspaper and on camera—we have had tenants 

say, ‘‘I do not want to be on camera because, you know, bad things 

happen to people around here that come forward and complain.’’ 

Ms. Grant, could you share with us a little bit about some of 

those impediments that you have faced? And also, related to that— 

some of the threats of eviction, the threats that come from the 

management company about not complaining too much, and also— 

and I do not know if this has been the reality in Eureka Gardens— 

you have also heard that, from time to time, the management 

company will come in and give preferential treatment to certain 

tenants in exchange for them being kind of the voice of the tenants, 

16 

in essence, the owner-sponsored tenant association president, who 

supposedly speaks on behalf of tenants. 

I know that is not the case in Eureka Gardens. We have heard 

about that on other properties, and therefore, they basically selfappoint the person they want to speak on behalf of the tenants, 

and these people think everything is great but they are getting the 

new refrigerator, and they are getting preferential treatment. I do 

not know if you saw any of that in Eureka Gardens beforehand. So 

if you have, we would love to hear about it, but in particular, the 

threats from management to tenants if they complain too much. 

Ms. GRANT. Yes. You have—if you speak out or if you were bold 

enough to just go up there and say, ‘‘Hey, this is my problem. You 

need to fix it or I am going to go to Legal Aid,’’ or ‘‘I am going to 

go to the news media,’’ then it is like, ‘‘OK, well, I will give you 

a 10-day eviction notice so that you can get off the property,’’ or 

it is a 10-day eviction notice for noncompliance, for whatever reason. It may not be for what they are complaining about. They will 

just find something and say, ‘‘I am giving you a 10-day notice.’’ 

We have had residents just say, ‘‘OK, they do not have a legitimate reason for giving me a 10-day notice.’’ Then when they go to 

Legal Aid—because one of the—the management—the manager 

that was there before our new manager that is in place right now, 

she would just say, ‘‘I know the big guy at Legal Aid and he is not 

going to do anything.’’ Later on we found out that she did not know 

him and he does not like her. So when that was found out, then 

everybody went to Legal Aid, and so she got pissed off, you know, 

because now she does not have any leverage over these people. 

And the new manager, she does not say anything. If you feel like, 

you know, the issues that you have, then, you know, she will just 

say, ‘‘OK. Well, this is what I feel is done, you know, that you have 

not complied or whatever, and I will give you a 10-day notice. Now 

you can either work on it or, you know, leave the property.’’ But 

yes, we have had—— 

Senator RUBIO. So, basically, there have been instances and multiple cases at Eureka Gardens where the tenant complained too 

much, the management company would suddenly come up with a 

reason to—— 

Ms. GRANT. Right. 

Senator RUBIO.——evict you, and that got around, everybody 

knew if you complained you were going to get an eviction notice. 

Ms. GRANT. Exactly. 

Senator RUBIO. Thank you. 

Senator SCOTT. Senator Nelson. 

Senator NELSON. Just a quick question. 

Ms. GRANT. Yes, sir. 

Senator NELSON. Ms. Grant, what goes through your mind when 

you get a 10-day eviction notice, and you have got children that you 

have to provide a home for? What goes through your mind? 

Ms. GRANT. Fright. You are frightened. You are scared. You do 

not know what to do next, because now you have to—your mind is 

going a million miles a minute. You are trying to figure out where 

I am going to go, who I am going to go stay with, or do I have any 

relatives to stay with, you know, because you have a lot of families 

that are just coming from out of town and this is the easiest place 

17 

to get into. They do not have any family that lives in Florida. So 

they are trying to rely on people that they know, or maybe go to 

the shelter if one is open, so that they can try to provide a place. 

Or they will figure out a way of calling family and say, ‘‘Hey, I 

need some money,’’ or ‘‘I need this. They are about to put me out.’’ 

Senator NELSON. So to avoid being evicted—— 

Ms. GRANT. Mm-hmm. 

Senator NELSON.——because you have no place to go—— 

Ms. GRANT. Mm-hmm. 

Senator NELSON.——you keep quiet. 

Ms. GRANT. Right. 

Senator NELSON. Thank you, Mr. Chairman. 

Senator SCOTT. Thank you, Senator Nelson, once again, for 

bringing this to light, along with Senator Rubio. 

Let me start my questions with Major Lewis. First, thank you for 

your service to your community as a law enforcement officer. 

Mr. LEWIS. Thank you, sir. 

Senator SCOTT. Yes, sir. I would imagine—how long have you 

been in code enforcement, specifically? 

Mr. LEWIS. I am not over code enforcement but I have participated in code enforcements investigation. 

Senator SCOTT. How long, on and off? 

Mr. LEWIS. In this investigation, since 2012. 

Senator SCOTT. OK. So you have years of experience in this area? 

Mr. LEWIS. Yes, sir. 

Senator SCOTT. What we are hearing today—how often do you 

see these types of situations, do you hear the types of comments 

from residents in different locations? Is this normal or is this an 

outlier? 

Mr. LEWIS. Sir, this is absolutely not normal. In my area of command alone I have probably seven other similar housing areas, 

none of which have the problems that Stonybrook has. 

Senator SCOTT. So none. GMF—— 

Mr. LEWIS. GMF. 

Senator SCOTT.——the land owner, is consistently, it appears, 

finding themselves in precarious positions. Is that—so this seems 

to be a—within a silo, something that is specific to GMF? 

Mr. LEWIS. In my 19.5 years, yes, absolutely. 

Senator SCOTT. That is amazing. Thank you very much. 

Dr. Olsen, based on your expertise, how can Congress better 

structure or regulate HUD to provide assistance to people who find 

themselves in need of housing assistance? How do we improve this 

system? 

Mr. OLSEN. Well, I think, broadly, the evidence indicates that the 

least costly way of providing housing assistance of a given quality 

is the housing voucher program. That is much less costly than 

project-based Section 8 and public housing. What this means is 

that for the amount of money we spend, we can serve many more 

people if we do it with vouchers. So that is what leads me to believe that we should really be trying to phaseout project-based assistance altogether. We should not renew use contracts. We should 

not create new projects. 

Ms. Grant says that the tenants want out. I think they should 

be given vouchers and let out. I think that the landlord will find 

18 

that his property is not so valuable if he does not have government 

subsidies going to it. 

Senator SCOTT. Thank you very much, and I should say to Senator Menendez, thank you for helping with the legislation that you 

and I passed to provide more vouchers for more folks so that they 

can determine where they want to live, as folks find themselves in 

a situation, as does Ms. Grant. 

Ms. Grant, you have been there for 6 years? Five years? 

Ms. GRANT. Six years, come the 24th of this month. 

Senator SCOTT. Yes, ma’am. Thank you for being here this morning as well. 

Ms. GRANT. You are welcome. Thank you. 

Senator SCOTT. Thank you for sharing your story. 

Ms. GRANT. Yes. 

Senator SCOTT. I cannot imagine the pain and the challenges 

that you have faced, and the sense of intimidation that comes your 

way on a consistent basis. 

If you could change just a few things about where you live, can 

you give me a quick list of things that you would like to see better, 

obviously? 

Ms. GRANT. I want to say everything—management, the inside of 

the apartments, because they—those apartments are 50-years old, 

and I found out that the last time they had done anything to them 

was when they were built. So the entire apartment complex needs 

to be redone. 

Instead of having gas right now—because the pipes are old, and 

when I say old, the pipes that you show behind you, nothing compared to what I saw behind my toilet, when they opened my wall. 

Nothing. That is nothing compared to the rust that is peeling off 

of the pipes. And if you peel too much, the pipes may burst. 

Senator SCOTT. Thank you. 

Major Lewis, do you have any specific changes or suggestions 

that you would like to see with the way that HUD works with 

GMF, from your years of experience in code enforcement? 

Mr. LEWIS. I think there needs to be a closer relationship. I think 

there has to be accountability. I think people have to care. I know 

that HUD is aware of the incidents that took place at Stonybrook, 

but yet they somehow were able to continue from 2013 to present 

day. And I think maybe better coordination, more communication, 

I think would be helpful—— 

Senator SCOTT. Thank you, Major. 

Mr. LEWIS.——to start. 

Senator SCOTT. Yes, sir. Thank you. 

I will say that I am certainly pleased that other locations within 

the HUD housing apparatus or umbrella are nothing like this, 

which is really good news. I do wish that HUD was here to explain 

and share with us their success stories as well as their challenges, 

and what they are doing to remedy the situation. Unfortunately, 

with their absence, not only does it fuel my frustration but it also 

brings a negative light unto the HUD agency. 

Thank you very much. 

Mr. LEWIS. Thank you. 

Senator SCOTT. Senator Menendez. 

19 

Senator MENENDEZ. Thank you, Mr. Chairman, and thank you 

all for your testimony. 

Let me ask you, Major Lewis—and again, thank you for your 

service to your community and to the State. Global Ministries—do 

we know who they are? 

Mr. LEWIS. It is a pastor. I believe a pastor—a minister owns it. 

It is a religious group that owns the property. 

Senator MENENDEZ. All right. It suggests so from its name but 

I did not want to presume that. Well, that type of ministry we do 

not need. 

Mr. LEWIS. It is a pastor that owns it. 

Senator MENENDEZ. Well, certainly that type of ministry we do 

not need. 

Let me ask Ms. Grant, Ms. Grant, did you have any knowledge 

that you have the right, as a tenant, and maybe were never told, 

but to engage HUD and to—I do not know if you ever, in your efforts to try to improve your situation, did you know that you could 

engage HUD? Did you try to engage HUD at all? 

Ms. GRANT. Well, not before we formed the Tenant Association. 

I had no idea. I wanted to find out, or at least figure out who I 

can call on to get help, because at this point I have never went 

through anything like this, so to have—to say we need help or say, 

‘‘Hey, can you help me?’’ I did not even know where to start. 

Senator MENENDEZ. Yeah, and that is not unusual, and a matter 

of fact, Mr. O’Donnell, one of the elements of your testimony speaks 

to residents—natural partners in identifying properties with chronic problems, and it specifically, in the letter attached to your testimony made part of the record, it urges HUD to provide residents 

with more opportunity to engage in REAC inspections and management and occupancy reviews. And I have heard from conversations 

myself, with tenant advocates, that residents are often not aware 

of their recourse in such a set of problems, and they do not know 

that they can reach out for the performance-based contract administrator. 

So is not there a better way to engage residents? They should be, 

probably, the best eyes and ears of what is really happening at a 

location. 

Mr. O’DONNELL. Yeah, tenants are the best eyes and ears, and 

I think there are certainly already in place anti-harassment policies, but I think we need to have a better conversation about the 

best way to involve residents in those oversight procedures like 

REAC. 

Senator MENENDEZ. Major Lewis, in the process of your investigations and actions, did you have opportunity to engage HUD at 

a local level? 

Mr. LEWIS. Just the regional level. The Regional Level Director 

came up. 

Senator MENENDEZ. And were they responsive? 

Mr. LEWIS. The problem still exists today. 

Senator MENENDEZ. Uh-huh. 

Mr. LEWIS. They were responsive with their comments regarding 

that they spoke with GMF, and that they were trying to ensure 

compliance. But for whatever reason, the problems exist to this 

day. 

20 

Senator MENENDEZ. So they were responsive without results. 

Mr. LEWIS. Exactly. 

Senator MENENDEZ. OK. Well, that is not responsive. 

Mr. O’Donnell, let me—I am a big advocate, as the Chairman 

said—we joined together to pass some housing reforms that include 

more vouchers. However, I am always thinking, because of—I grew 

up poor, in a tenement, and it was not a tenement with HUD subsidy, so I know what it is to live in a place that stinks, and I do 

not think anybody should have to live like that. But I also understand that preserving affordable housing stock is incredibly important to protect vulnerable families. And I am struck that Dr. Olsen 

proposes, in his testimony, wholesale phase-out of project-based 

rental assistance in favor of a system made up exclusively of 

vouchers. 

Now I have, and always will, support the tenant-based voucher 

programs but I know a lot of parts of this country where that 

voucher does not go very far, and where the very issue of where 

that voucher is taken, in terms of the housing that exists, may 

equally be substandard. 

So the issue here seems to be more of enforcement, and I am 

glad to hear that Major Lewis pointed out that there are many 

other similar locations, but not with the problems of Stonybrook 

here, or of this particular location. Can we rely—people who are elderly, families, people with disabilities—if we, quote, rely only on 

market mechanisms to achieve the social goals of providing affordable housing? 

Mr. O’DONNELL. Well, I could talk all day about that. That is a 

really powerful question. 

Senator MENENDEZ. Well, neither the Chairman or are going to 

give you all day. 

[Laughter.] 

Mr. O’DONNELL. No, I think it is an extremely important question. First of all, the market does not provide for all needs, especially for vulnerable people, and part of the role of government is 

to step in where the market does not satisfy everybody’s needs. 

That said, I am a big fan of vouchers, and respectfully, also do not 

agree that they are the full solution. 

Simple example. Very recently, in this world of Section 8 housing, people say there are two things that will never happen. One 

is that a landlord, in their right mind, would never get rid of a Section 8 contract because it supplies their rental stream, as Dr. Olsen 

is pointing out, especially in a weak market. Second, nobody would 

ever displace elderly tenants. 

Well, in the city of Detroit, recently, an elderly Section 8 property had its Section 8 contract come up for renewal and the owner 

elected to not renew it and to displace all those tenants. You had 

elderly tenants displaced in a weak market, and those folks had a 

really hard time finding a new place to live, and it is very stressful, 

as you know, for any kind of move to be required like that. 

So there is no simple solution for those folks with a voucher 

formula. 

And again, going back to the Methunion example, but it is still 

true today, that neighborhood, in South End of Boston, is one of 

the most desirable neighborhoods in the United States, not just 

21 

Boston, and the only poor people who can afford to live in the 

South End are people who have project-based subsidies, because 

the market rent in South End is too high for a voucher to work. 

So the only Section 8 that works there is a project-based Section 

8 that pays market rent. They do not pay over market, but they 

pay market. 

Senator MENENDEZ. I appreciate that answer, and—— 

Mr. O’DONNELL. And one of the other things is that Section 8 

vouchers are very difficult to use in other communities. We have 

a great problem here in Massachusetts getting communities to 

accept low-income housing of any type, and all around the country 

there is discrimination against people because they hold vouchers. 

In Massachusetts you cannot do that because you cannot discriminate against voucher holders, but in most States you can. There 

are cultural barriers, racial barriers to acceptance of vouchers. It 

is a very difficult problem to rely on that. 

Senator MENENDEZ. Thank you for your answer. 

I will just close by saying, in my own experience, there are 

communities that were, at one time, depressed, in terms of their 

situation, and then they gentrified and became the Gold Cost, as 

we say, along New Jersey. Individuals who sometimes live for long 

times in their lives, many on a Section 8 project-based situation, 

and suddenly—and then those who went to vouchers, found that it 

was impossible to live in the communities where they and their 

families had lived because the housing markets prices rose so dramatically that the voucher, you know, offered them nothing, and 

therefore they were forced out. 

That is not a market mechanism that I think, at the end of the 

day. So it is a mix, in my view, of the vouchers, which I have 

strongly supported, and at the same time, having the appropriate 

enforcement of project-based subsidies that will give us the mix 

that we need for the affordable housing I think we deserve in the 

country. 

Thank you, Mr. Chairman. 

Senator SCOTT. I want to say to all the panelists thank you for 

investing your time this morning, and I certainly am not sure 

that—Dr. Olsen said that vouchers were our panacea, that would 

solve all the problems that we have with HUD. Certainly it is another alternative, another avenue forward, another way forward. 

And Mr. O’Donnell, thank you for your comments this morning, as 

well. Major Lewis, again, thank you for being here. Ms. Grant, you 

can come on back home to Charleston any time you want to. We 

appreciate you being before the panel. 

I will say that there are many issues in the housing footprint 

that we ought to engage in. Growing up in poverty, in a single-parent household myself, the issue of housing is such an important 

foundational issue, so that children who go to school can come 

home and learn in a safe environment, that adults who want to 

continue to improve their lives can see a path forward. 

There is such a project in Spartanburg, South Carolina, called 

the Northside Project, that is helping to reduce gentrification by 

having the current residents be a part of the board of directors and 

create a vision for how to do housing in a new and inventive— 

innovative way. It is a fabulous project that needs more attention, 

22 

and it does, in fact, blend vouchers with places like—hopefully not 

exactly like where you live, Ms. Grant—but places that are for 

apartment-type settings, as well as, then, community housing. So 

a person can stay in the same neighborhood and live the evolution 

of improving their plight. 

Thank you all for bringing light to this issue and doing it in such 

a professional manner. 

Any Member that may want to provide questions for the record 

would have up to 7 days to do so. 

This hearing is adjourned. 

[Whereupon, at 11:18 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

23 

PREPARED STATEMENT OF SENATOR BILL NELSON 

Mr. Chairman, Ranking Member Menendez, and Members of the Committee: 

Thank you for inviting me here today to talk about what Senator Rubio and I saw 

when we visited Windsor Cove, a subsidized housing facility in Orlando, and to talk 

about the bill we filed earlier this year in response to the problems we found at that 

facility and other subsidized properties, like Eureka Gardens and Washington 

Heights in Jacksonville. 

The conditions at these properties are unacceptable. I challenge the owners of 

these properties to spend a week in their own buildings. I doubt any of them will 

take me up on that though. 

When Senator Rubio and I visited Windsor Cove apartments in Orlando, we saw 

evidence of severe water damage. With so much water sitting everywhere, it’s no 

wonder the tenants are constantly battling against instances of mold and roach infestation. 

When I stepped into one of the apartments, the carpeting was so saturated with 

water that it made a squishing sound. Think about that. 

Since that visit, we learned Federal inspectors have cited the property for various 

housing code violations, including broken smoke detectors, exposed electrical wires, 

blocked fire exits, leaky water valves, window cracks, missing floor tiles, and water 

seeping in from roof damage—just to name a few. 

The property was given a failing grade in April, 10 months after receiving a nearly perfect score from a contract inspector working for the Department of Housing 

and Urban Development. HUD invalidated that previous score only after receiving 

a barrage of complaints from tenants at their local office. The contractor was then 

barred from performing further inspections for the agency. 

I appreciate the corrective action taken by HUD, but it’s not enough. 

Residents had to wait 10 months for HUD to get it right and perform a new inspection—and even then they had to wait an extended period for the owner to appeal the new inspection results before HUD could demand remediation. 

HUD clearly needs to do a better job to find these problems before they reach a 

boiling point. And the owners of these properties need to be held accountable for 

their shortcomings. 

This isn’t the case of one housing complex or one property owner. Several properties around the country are falling victim to the problem of lax oversight. 

For example, according to one report, tenants at Goodwill Village in Memphis, 

Tennessee had to deal with an onslaught of snakes—which were attracted to the 

property because of a rat infestation. 

It would take too long for me to talk about every failing property in the country, 

but I think we can all agree that one is too many. 

So I introduced the Housing Accountability Act with Senator Rubio to give tenants a voice and to remove the over dependence on unscrupulous property managers 

and faulty inspections to clue HUD into what’s going on at these properties. 

The bill does four main things: 

• First, it codifies in law—rather than through regulation or contract—that subsidized property owners have to maintain safe and sanitary conditions at their 

properties. This should be common sense, but unfortunately we need to put the 

fear of law into some of these owners. 

• Second, it establishes a process for independent contract administrators to survey tenants twice a year in order to identify persistent problems relating to the 

physical condition of the properties or the performance of the building’s management. 

Currently, HUD requires tenants to file complaints with the building’s management—who may not be responsive or may use the threat of eviction to intimidate tenants. The survey would act as a check on management, as well as on 

the property owners. 

• Third, the bill would create a new penalty for owners that fail to maintain safe 

and sanitary conditions, or are repeatedly referred to HUD for remediation 

under the tenant survey previously mentioned. 

• Last, the bill requires HUD to issue a report examining the capitalization of all 

subsidized properties in the country, particularly with regard to the use of taxpayer funds for purposes unrelated to the subsidized housing. 

We’ve heard stories that some of these landlords pocket the subsidy they get 

from HUD, while refusing to make needed repairs. 

24 

We need to know if that’s indeed what’s happening. If it is, then we need to 

tighten the controls on these property owners. Taxpayers fund these programs 

to look out for those in need, not to pad the wallets of real estate companies 

looking to make a quick buck. 

Last—I’ve said this before but it begs repeating—no American should have to live 

in the conditions that we’ve seen at Windsor Cove and Eureka Gardens. We can’t 

let this continue. I thank the Committee for taking the time to discuss this very 

important issue. Thank you. 

PREPARED STATEMENT OF SENATOR MARCO RUBIO 

• Thank you, Chairman Scott, for holding today’s hearing on this important issue. 

• Providing safe and sanitary conditions for people receiving housing assistance 

is central to HUD’s mission, so it’s disturbing to see taxpayer dollars wasted 

like this, and disappointing that HUD failed to provide a witness today. 

• I would like to welcome two witnesses that will be testifying on the second 

panel, Ms. Tracy Grant and Major Josh Lewis. 

• Both of these Floridians have done much to help my State and the entire country through their work to make these conditions known, and I want to thank 

them for taking the time to travel up to Washington to testify before this Committee today. 

• I became involved with this situation about a year ago, when the tenants of Eureka Gardens took their case to the public. These tenants bravely made their 

voices heard while they faced threats of eviction from the landlord, Global Ministries Foundation (GMF). 

• Since then, residents at other GMF properties and at derelict Section 8 properties around the State have spoken of their troubles and I am proud to represent their voices here today. 

• When I visited Eureka Garden Apartments in Jacksonville, I saw crumbling 

staircases, exposed electrical wires, and boarded-up windows that would trap a 

child inside if there was a fire. 

• I saw an apartment that hadn’t been painted in 13 years. I saw pieces of wood 

with exposed nails put up in place of a door, in a unit with small children. 

• This was all evident even after GMF rushed crews to the property to make cosmetic repairs just 48 hours before I arrived. 

• I spoke with tenants who had been through a lot over the last few years and 

heard stories like some of the ones you will hear Ms. Grant tell today—stories 

of neglect, crime, and bureaucratic indifference from HUD. 

• When Senator Nelson and I visited Windsor Cove Apartments in Orlando, we 

saw standing water in apartments, damaged roofs, collapsed ceilings, and 

breathed air that reeked of mold. 

• We spoke with residents who had lived there for multiple years now, trapped 

in a facility with conditions that no one should have to endure. 

• When I visited Stonybrook Apartments in Riviera Beach, I saw even more of 

the same. 

• An unwillingness to repair these properties is unfortunately par-for-the-course 

for GMF. 

• They willfully neglect the well-being of their tenants, as you will hear Major 

Lewis testify. 

• These are the three GMF properties I have visited in the State of Florida. In 

each case, HUD has enabled fraud and abuse to continue, all while taxpayer 

money continues to flow into the pockets of these slumlords. 

• Bureaucratic red tape, miscommunication, and a lack of urgency have plagued 

this Administration’s response. 

• But nothing displays how broken this program is better than HUD’s inspection 

process. 

• The passing score in HUD’s inspection process is a 60 out of 100. 

• If a property scores above this threshold, HUD gives it the stamp of approval, 

declaring that the conditions are ‘‘decent, safe, and sanitary’’—an approval that 

traps tenants at the property and keeps money flowing to the landlord. 

• What I have discovered in Florida, however, is that HUD has compromised the 

integrity of its standards. 

25 

* This paper was submitted for the Hearing on Oversight of the HUD Inspection Process and 

reflects the views of its author. It does not represent the official position of the University of 

Virginia. The University does not have an official position on low-income housing policy. It will 

appear in an American Enterprise Institute volume on means-tested programs Helping the Poor 

Better edited by Robert Doar. 1 Edgar O. Olsen, ‘‘The Effect of Fundamental Housing Policy Reforms on Program Participation,’’ University of Virginia, January 14, 2014, http://eoolsen.weebly.com/uploads/7/7/9/6/ 

7796901/ehpfinaldraftjanuary2014coverabstracttextreferencetablesonlineappendices.pdf. 

• Last year, the inspection of Windsor Cove gave it a passing score of 90 points 

out of 100. 

• The next inspection, which occurred a week after Senator Nelson and I visited 

the property, gave it a failing score of a 48. 

• That inspection found a projected 86 life-threatening deficiencies on the property. From one score to the next, this kind of inconsistency is beyond belief. 

• Eureka Gardens received a score of over 80 out of 100 during the summer inspection that occurred just before the tenants brought forth their complaints. 

• After months of back-and-forth repairs, hospitalizations from gas leaks, alleged 

lead poisoning, and incessant mold outbreaks, HUD’s follow-up inspection gave 

the property a score of 62 out of 100. 

• Just barely passing, if you can imagine that. 

• Right after that inspection, in a letter sent to GMF after visiting the property, 

the Deputy Assistant Secretary for Multifamily Housing wrote that ‘‘HUD officials do not believe the property would currently pass another REAC inspection,’’ despite the fact that an inspection had just happened barely a month before. 

• The slumlords at Global Ministries Foundation caused this problem, but HUD 

enabled it. 

• And the twin vices that so often afflict massive Federal welfare programs—bureaucracy and corruption—have prevented the kind of action necessary to protect the tenants, and allowed this crisis to go on for far too long. 

• This is why I introduced and passed three amendments to the HUD appropriations legislation the Senate considered back in May. 

• These amendments would enact a clear, 15-day deadline for property owners to 

respond to physical deficiencies, make tenant protection vouchers available to 

residents living at properties with imminent health and safety risks like GMF’s 

properties, and order a nationwide audit of HUD’s inspection process. 

• Senator Nelson and I have also introduced legislation that would enact a tenant 

survey in order to better identify problem properties like GMF’s. 

• The problems found at these properties are not limited to the State of Florida. 

GMF owns properties in Alabama, Indiana, Louisiana, North Carolina, New 

York, Georgia, and Tennessee—where similarly bad conditions have led to Federal investigations. 

• GMF owns over 5,000 taxpayer-funded units across the Nation. 

• And beyond GMF, if HUD is falsely certifying the living conditions at this many 

properties for one organization, then it is probably doing the same thing for 

many other entities. 

• I look forward to hearing from today’s witnesses about the effects of GMF’s 

fraud and HUD’s neglect, and hope we can continue working together to investigate GMF and pass legislation to fix HUD’s faulty inspection process. 

PREPARED STATEMENT OF EDGAR OLSEN 

PROFESSOR, ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF VIRGINIA * 

SEPTEMBER 18, 2016 

Reducing Poverty by Reforming Housing Policy 

Low-income housing assistance is fertile ground for reforms that would provide 

better outcomes with less public spending. The majority of current recipients are 

served by programs whose cost is enormously excessive for the housing provided. 

Phasing out these programs in favor of the system’s most cost-effective program 

would ultimately free up the resources to provide housing assistance to millions of 

additional people and reduce taxes.1

26 

2For a detailed overview of the current system of low-income housing assistance and a summary of the evidence, see Edgar O. Olsen, ‘‘Housing Programs for Low-Income Households,’’ in 

Means-Tested Transfer Programs in the U.S., ed. Robert Moffitt (Chicago: University of Chicago 

Press, 2003); and John C. Weicher, Housing Policy at a Crossroads: The Why, How, and Who 

of Assistance Programs (Washington, DC: AEI Press, 2012). For a more detailed account of the 

evidence, see Edgar O. Olsen and Jeff Zabel, ‘‘U.S. Housing Policy,’’ in Handbook of Regional 

and Urban Economics, ed. Giles Duranton, J. Vernon Henderson, and William Strange, vol. 5 

(Amsterdam: North-Holland, 2015). 

Furthermore, the current system of low-income housing assistance provides enormous subsidies to some households while offering none to others that are equally 

poor, and it provides subsidies to many people who are not poor while offering none 

to many of the poorest. Avoiding these excessive subsidies and focusing assistance 

on the poorest families will contribute further to poverty alleviation. Well-designed 

reforms of the current system of low-income housing assistance would substantially 

alleviate poverty with less public spending. 

Overview of Current System 

To appreciate the potential for alleviating poverty through housing policy reforms, 

it is essential to know the nature of current programs and the evidence about their 

performance.2 The bulk of low-income housing assistance in the United States is 

funded by the Federal Government through a large number of programs with a combined cost of more than $50 billion a year. Unlike other major means-tested transfer 

programs in the United States, low-income housing programs do not offer assistance 

to many of the poorest families that are eligible for them. Eligible families that 

want assistance must get on a waiting list. 

Most low-income housing assistance in the United States is for renting a unit, and 

the most important distinction among rental housing programs is whether the subsidy is attached to the dwelling unit (project-based assistance) or the assisted household (tenant-based assistance). If the subsidy is attached to a rental dwelling unit, 

families must accept the particular unit offered to receive assistance and lose the 

subsidy if they move, unless they obtain alternative housing assistance before moving. 

Each family offered tenant-based assistance is free to occupy any unit that meets 

the program’s minimum housing standards, that rents for less than the program’s 

ceiling, that is affordable with the help of the subsidy, and whose owner is willing 

to participate in the program. Families retain the subsidy if they move to another 

unit meeting these conditions. Figure 1 indicates the percentage of households that 

receive rental assistance of various types. 

Figure 1. Percentage of Households That Receive Each Type of Rental 

Assistance 

Source: Author’s calculations based on 2013 American Housing Survey. 

Note: Includes assistance from U.S. Department of Housing and Urban Development and other sources. 

The Department of Housing and Urban Development (HUD) housing voucher program is the only significant program that provides tenant-based assistance. It is the 

second-largest low-income housing program, serving about 2 million households and 


23011001.eps
27 

3Olsen and Zabel, ‘‘U.S. Housing Policy.’’ 

4For a detailed summary of the evidence on the cost-effectiveness of low-income housing programs, see Edgar O. Olsen, ‘‘Getting More from Low-Income Housing Assistance,’’ Brookings Institution, September 2008, http://www.brookings.edu/papers/2008/09llowlincomelhousing 

lolsen.aspx. 

5 James E. Wallace et al., Participation and Benefits in the Urban Section 8 Program: New 

Construction and Existing Housing, vol. 1 and 2 (Cambridge, MA: Abt Associates, 1981). 

accounting for about 32 percent of all households that receive low-income rental assistance. 

There are two broad types of project-based rental assistance: public housing and 

privately owned subsidized projects. Both types have usually involved constructing 

new projects. In almost all other cases, they have required substantial rehabilitation 

of existing buildings. Many of these programs no longer subsidize the construction 

of projects, but most projects built under them still house low-income households 

with the help of subsidies for their operation and renovation. Overall, project-based 

assistance accounts for about 68 percent of all households that receive low-income 

rental assistance. 

Public housing projects are developed and operated by local public housing 

authorities established by local governments, albeit with substantial Federal subsidies and regulations that restrict their choices. For example, regulations limit the 

circumstances under which housing projects can be sold and what can be done with 

the proceeds. In the public housing program, government employees make most of 

the decisions that unsubsidized for-profit firms would make in the private market— 

what to build, how to maintain it, and when to tear it down. Decisions about where 

to build projects have been heavily influenced by local political bodies. The public 

housing stock has declined by about 400,000 units since its peak in 1991. About 1 

million households live in public housing projects. 

Government agencies also contract with private parties to provide housing in subsidized projects. Most are for-profit firms, but not-for-profits have a significant presence. The largest programs of this type are the IRS’s Low-Income Housing Tax 

Credit, HUD’s Section 8 New Construction and Substantial Rehabilitation and Section 236 Rental and Cooperative Housing for Lower-Income Families programs, and 

the U.S. Department of Agriculture’s Section 515 and 521 programs. Under these 

programs, in exchange for certain subsidies, private parties agree to provide rental 

housing meeting certain standards at restricted rents to eligible households for a 

specified number of years. 

None of these programs provide subsidies to all suppliers who would like to participate. This is highly relevant for their performance. In general, subsidies to selected sellers of a good have very different effects than subsidies to all sellers. Subsidies to selected sellers lead to excessive profits and much greater wasteful rent 

seeking. About 4 million households live in projects of this type. 

Performance of U.S. Low-Income Housing Programs 

Many aspects of the performance of low-income housing programs have been studied, such as their effects on recipients’ labor earnings and the types of neighborhoods occupied by them.3 We certainly do not have evidence on all aspects of performance for all programs, and the evidence leaves much to be desired in many 

cases. However, we cannot avoid making a decision about reforms until we have excellent evidence on all aspects of performance for all programs. Enough evidence exists to give policymakers confidence that certain changes would move the program 

in the right direction. Making no change in current policies is a decision. 

Of all the differences in the performance of various methods for delivering housing 

assistance to low-income families, differences in cost-effectiveness are by far the 

most consequential for poverty alleviation. Evidence on housing programs’ performance indicates that project-based assistance is much more costly than tenant-based 

assistance when it provides equally good housing. These studies define equally good 

housing to be housing that would rent for the same amount in the same locality 

in the unsubsidized market. This measure accounts for the desirability of the neighborhood and the housing itself. In the best studies, the estimated magnitude of the 

excess cost is enormous.4

The best study of Section 8 New Construction and Substantial Rehabilitation, 

HUD’s largest program that subsidized the construction of privately owned projects, 

found an excess total cost of at least 44 percent.5 That is, the total cost of providing 

housing under this program was at least 44 percent greater than the total cost of 

providing equally good housing under the housing voucher program. This translates 

into excessive taxpayer cost of at least 72 percent for the same outcome. It implies 

that housing vouchers could have served all the people served by this program 

28 

6Stephen K. Mayo et al., Housing Allowances and Other Rental Assistance Programs—A Comparison Based on the Housing Allowance Demand Experiment, Part 2: Costs and Efficiency, Abt 

Associates Inc., 1980. 7Meryl Finkel et al., Status of HUD–Insured (or Held) Multifamily Rental Housing in 1995: 

Final Report, Abt Associates Inc., May 1999, Exhibit 5–1; Mark Shroder and Arthur Reiger, 

‘‘Vouchers Versus Production Revisited,’’ Journal of Housing Research 11, no. 1 (2000): 91–107; 

U.S. General Accounting Office, Federal Housing Programs: What They Cost and What They 

Provide, GAO–01–901R, July 18, 2001, http://www.gao.gov/products/GAO-01-901R; and U.S. 

General Accounting Office, Federal Housing Assistance: Comparing the Characteristics and Costs 

of Housing Programs, GAO–02–76, January 31, 2002, http://www.gao.gov/products/GAO-02- 

76. 8Mayo et al., Housing Allowances and Other Rental Assistance Programs—A Comparison 

Based on the Housing Allowance Demand Experiment, Part 2: Costs and Efficiency; Wallace et al., Participation and Benefits in the Urban Section 8 Program: New Construction and Existing 

Housing; Mireille L. Leger and Stephen D. Kennedy, Final Comprehensive Report of the Freestanding Housing Voucher Demonstration, vol. 1 and 2 (Cambridge, MA: Abt Associates Inc., 

1990); and ORC Macro, Quality Control for Rental Assistance Subsidies Determination, U.S. Department of Housing and Urban Development, Office of Policy Development and Research, 2001, 

chap. 5. 9For a summary of the evidence, see Olsen, ‘‘Getting More from Low-Income Housing Assistance.’’ 14. 10 Aaron C. Davis and Jonathan O’Connell, ‘‘Shelter Plan May Benefit Mayor’s Backers,’’ 

Washington Post, March 17, 2016; and Fenit Nirappil, ‘‘Shelters’ Cost Stun Some DC Lawmakers,’’ Washington Post, March 18, 2016. 

equally well and served at least 72 percent more people with the same characteristics without any increase in public spending. 

The best study indicates even larger excess costs for public housing.6 More recent 

evidence has confirmed the large excess cost of the Section 8 New Construction and 

Substantial Rehabilitation Program, and U.S. General Accounting Office (GAO) 

studies have produced similar results for the major active construction programs: 

LIHTC, HOPE VI, Section 202, Section 515, and Section 811.7 In contrast, a succession of studies over the years have found that the total cost of various types of tenant-based housing assistance have exceeded the market rent of the units involved 

by no more than the modest cost of administering the program.8

The preceding evidence on the cost-effectiveness of project-based assistance applies to units built or substantially rehabilitated under a subsidized construction 

program and still under their initial use agreement. Evidence from the Mark-toMarket program indicates the excessive cost of renewing use agreements for privately owned subsidized projects. In most cases, owners are paid substantially more 

than market rents for their units.9

The results concerning the cost-effectiveness of different housing programs illustrate the virtue of substantially relying on market mechanisms to achieve social 

goals, especially the virtue of forcing sellers to compete for business. Under a program of tenant-based assistance, only suppliers who provide housing at the lowest 

cost given its features can remain in the program. If the property owner attempts 

to charge a voucher recipient a rent in excess of the market rent, the tenant will 

not remain in the unit indefinitely because he or she can move to a better unit without paying more for it. Under programs of project-based assistance, suppliers who 

receive payments in excess of market rents for their housing can remain in the program indefinitely because their tenants would lose their subsidies if they moved. 

These suppliers have a captive audience. 

Recent events in Washington, DC, vividly illustrate the pitfalls of providing subsidies to selected suppliers.10 The mayor has proposed spending about $4,500 per 

month per apartment to lease units in buildings owned mainly by contributors to 

her campaign. This cost does not include services to these families, and most units 

are dormitory style. It has been estimated that these agreements would increase the 

market value of the properties tenfold. At the same time, families with HUD’s Section 8 housing vouchers have been able to find regular two-bedroom apartments for 

rents around $1,600 a month. These are better than average rental units that meet 

HUD’s housing standards. The median rent of two-bedroom units in DC is about 

$1,400. 

The evidence on cost-effectiveness argues strongly for phasing out project-based 

assistance in favor of tenant-based assistance. This would contribute greatly to poverty alleviation without spending more money by increasing the number of poor 

families that receive housing assistance. 

Phasing out project-based assistance will contribute to poverty alleviation for another reason. Under the current system, the best units in new projects in the best 

locations have very high market rents. They are much more desirable than the average rental unit. The worst units in the oldest projects in the worst locations have 

29 

11PBS NewsHour, aired October 9, 2013 (New York, MGM Television). 12Peter Korn, ‘‘Police threaten complaint as calls mount at the commons,’’ Portland Tribune, 

January 9, 2014. 13Scott Susin, ‘‘Longitudinal Outcomes of Subsidized Housing Recipients in Matched Survey 

and Administrative Data,’’ Cityscape 8, no. 2 (2005): 207. 14Michael C. Lens, Ingrid Gould Ellen, and Katherine O’Regan, ‘‘Do Vouchers Help Low-Income Households Live in Safer Neighborhoods? Evidence on the Housing Choice Voucher Program,’’ Cityscape 13, no. 3 (2011): 135–59. 15 Raj Chetty, Nathaniel Hendren, and Lawrence F. Katz, ‘‘The Effects of Exposure to Better 

Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment,’’ American Economic Review 106, no, 4 (2016): 855–907. 

very low market rents. Identical families living in the best and worst projects pay 

the same rent. Therefore, the current system provides enormous subsidies to some 

families and small subsidies to others in the same economic circumstances. 

Equalizing these subsidies would contribute to poverty alleviation. Under the 

housing voucher program, identical households within the same housing market are 

offered the same assistance on the same conditions. Therefore, providing incremental housing assistance in the form of housing vouchers rather than subsidized 

housing projects would contribute to poverty alleviation by giving larger subsidies 

to the families that would have received the smallest subsidies in the absence of 

reform and smaller subsidies to similar families that would have received the largest subsidies. 

These inequities have not been carefully documented but are obvious to all knowledgeable observers. A recent segment on PBS NewsHour revealed that $500,000 had 

been spent per apartment to build a housing project for the homeless in San Francisco.11 This is expensive even by Bay Area standards. The median value of owneroccupied houses in the San Francisco metro area was $558,000, and the median 

household income of their occupants was $104,000. So this government program provided apartments to the poorest families that were almost as expensive as the 

houses occupied by the average homeowner. 

Ensuring that the homeless occupy housing meeting reasonable minimum standards does not require anything like the amount of money spent on these units. More 

than 20 percent of owner-occupied houses in the San Francisco area sell for less 

than $300,000. Furthermore, almost half of the families in the area are renters 

whose median income is about $50,000. They live in much less expensive units than 

homeowners. 

We do not need to build new units to house the homeless. They can be housed 

in satisfactory existing units at a much lower taxpayer cost. More than 6 percent 

of the dwelling units in the area were vacant at the time. 

In Portland, Oregon, where the median value of owner-occupied houses was 

$249,000, $360,000 per apartment was spent to build another housing project for 

the homeless.12 These cases are not anomalies. The HUD website is filled with photographs of such housing. The desire of the people involved in the current system 

to provide the best possible housing for their clients is understandable. However, 

this is not costless. Dollars spent on these high-cost projects are dollars not spent 

providing housing to more people. 

Tenant-based assistance has other important advantages in addition to its greater 

equity and its much lower cost for providing equally desirable housing. For example, 

it allows recipients to choose housing that better suits their preferences and circumstances, such as living close to their jobs. This increases their well-being without increasing taxpayer cost. 

In contrast to occupants of subsidized housing projects, voucher recipients have 

chosen to live in neighborhoods with lower poverty and crime rates. Susin found 

that public housing tenants live in census tracts with poverty rates 8.8 percentage 

points higher than in the absence of assistance, tenants in HUD-subsidized privately owned projects live in tracts with poverty rates 2.6 percentage points higher; 

and voucher recipients live in tracts with poverty rates 2.3 percentage points 

lower.13 Michael C. Lens, Ingrid Gould Ellen, and Katherine O’Regan found that occupants of tax-credit projects live in neighborhoods with crime rates about 30 percent higher than voucher recipients and only slightly lower than the crime rates in 

public housing neighborhoods.14 Because voucher recipients have much more choice 

concerning the location of their housing, this suggests that subsidized housing 

projects are poorly located from the viewpoint of recipient preferences. 

Voucher recipients have exercised this choice in a way that benefits their children. 

A widely cited, recent paper shows that better neighborhood environments lead to 

better adult outcomes for children in recipient households.15 They have higher college attendance rates and labor earnings and are less likely to be single parents. 

30 

16Todd Sinai and Joel Waldfogel, ‘‘Do Low-Income Housing Subsidies Increase the Occupied 

Housing Stock?’’ Journal of Public Economics 89, no. 11–12 (2005): 2137–64. 17 Jean L. Cummings and Denise DiPasquale, ‘‘The Low-Income Housing Tax Credit: An Analysis of the First Ten Years,’’ Housing Policy Debate 10, no. 1 (1999): 299. 18 U.S. General Accounting Office, Tax Credits: Opportunities to Improve Oversight of the LowIncome Housing Program, GGD/RCED–97–55, 1997, 40. 

Before considering reforms of low-income housing policy, it is important to address 

a bit of folklore that has been influential in housing policy debates: that construction programs perform better than housing vouchers in tight housing markets. Todd 

Sinai and Joel Waldfogel show that additional housing vouchers result in a larger 

housing stock than the same number of newly built units in subsidized, privately 

owned housing projects.16

In light of other evidence, the most plausible explanations are that subsidized construction crowds out unsubsidized construction considerably and that the housing 

voucher program induces more recipients to live independently. The voucher program serves poorer households that are more likely to be doubled up in the absence 

of housing assistance. Crowding out is surely greatest in the tightest housing markets. In the absence of subsidized construction in these markets, unsubsidized construction would be high, and unemployment among construction workers would be 

low. Subsidized construction would divert workers from unsubsidized construction. 

Furthermore, it is reasonable to believe tenant-based vouchers get families into 

satisfactory housing much faster than any construction program, even in the 

tightest housing markets. For example, the amount of time from when new vouchers 

are allocated to housing authorities to when they are used by voucher recipients is 

surely less than the amount of time from when new tax credits are allocated to 

State housing agencies to when tax-credit units are occupied. 

Even though some households do not use the vouchers offered, housing authorities 

can put all, or almost all, their vouchers to use in less than a year in any market 

condition. They can fully utilize available vouchers by over-issuing vouchers early 

in the year and then adjusting the recycling of the vouchers that are returned by 

families that leave the program late in the year. No production program can hope 

to match this speed in providing housing assistance to low-income households. 

Proposed Reforms of Low-Income Housing Policies To Alleviate Poverty 

The available evidence on program performance has clear implications for housing 

policy reform. To serve the interests of taxpayers who want to help low-income families with their housing and the poorest families that have not been offered housing 

assistance, Congress should shift the budget for low-income housing assistance from 

project-based to tenant-based housing assistance as soon as current contractual commitments permit and phaseout active construction programs. 

This section describes proposals for reform of low-income assistance that will alleviate poverty without spending more money. The reforms deal with all parts of 

the current system—active construction programs, existing privately owned housing 

projects, public housing, and the housing voucher program. 

Active Subsidized Construction Programs. The Low-Income Housing Tax 

Credit (LIHTC) is the largest active construction program. It subsidizes the construction of more units each year than all other programs combined. LIHTC recently 

became the Nation’s largest low-income housing program, serving 2.4 million households, and it is the fastest growing. The tax credits themselves involved a tax expenditure of about $6 billion in 2015. However, these projects received additional 

development subsidies from State and local governments, usually funded through 

Federal intergovernmental grants, accounting for one-third of total development 

subsidies.17 Therefore, the total development subsidies were about $9 billion a year. 

Furthermore, the GAO found that owners of tax-credit projects received subsidies 

in the form of project-based or tenant-based Section 8 assistance on behalf of 40 percent of their tenants.18 The magnitude of these subsidies has never been documented. If their per-unit cost were equal to the per-unit cost of tenant-based housing vouchers in 2015, they would have added more than $8 billion a year to the cost 

of the tax-credit program. If so, the full cost of housing people in tax-credit projects 

would have been about $17 billion in 2015. 

Unlike HUD’s programs, the LIHTC is poorly targeted to the poorest households. 

Some tax credits are used to rehabilitate older housing projects built under HUD 

and U.S. Department of Agriculture programs that continue to provide deep subsidies to their occupants. Other tax-credit units are occupied by families with portable Section 8 housing vouchers. The families in these units typically have very low 

earnings. However, the majority of occupants of tax-credit projects do not receive 

these deep subsidies related to their income. Their average income is more than 

31 

19 Ibid., 146. 20 In determining a household’s real income, this calculation adds an imputed return on home 

equity to the income of homeowners and accounts for differences in family size and composition 

and price levels across locations. Edgar O. Olsen, ‘‘Promoting Homeownership Among Low-Income Households,’’ Urban Institute, August 20, 2007, Table 1, http://www.urban.org/ 

UploadedPDF/411523lpromotinglhomeownership.pdf. 21 Edgar O. Olsen and Jens Ludwig, ‘‘The Performance and Legacy of Housing Policies,’’ in 

The Legacies of the War on Poverty, ed. Martha Bailey and Sheldon Danziger (New York: Russell 

Sage Foundation, 2013), 218–21. 

twice the average for the occupants who receive the deep subsidies, and they are 

well above poverty thresholds.19

The poor targeting of its subsidies and the evidence on its cost-ineffectiveness 

argue strongly for the cessation of subsidies for additional LIHTC projects. Reducing 

new authorizations under the program by 10 to 20 percent each year would achieve 

this outcome in an orderly fashion. The money spent on this program would be better spent on expanding HUD’s well-targeted and cost-effective Section 8 Housing 

Choice Voucher Program. 

Because the congressional committees that oversee the two programs are different, this transfer of funds would be difficult to arrange. However, the committees 

that oversee the LIHTC could divert the reduced tax expenditures on the LIHTC 

to a refundable tax credit for the poorest low-income homeowners, thereby offsetting 

to some extent the anti-homeownership bias of the current system of low-income 

housing assistance. About 25 percent of all unassisted households in the lowest realincome decile are homeowners.20 To avoid excess profits to sellers, it is extremely 

important that buyers are able to purchase from any seller.21

Existing Privately Owned Subsidized Projects. The second broad proposal to 

reform low-income housing policy in the interest of poverty alleviation is to not 

renew contracts with the owners of private subsidized projects. The initial agreements that led to building or substantially rehabilitating these projects called for 

their owners to provide housing that meets certain standards to households with 

particular characteristics at certain rents for a specified number of years. At the end 

of the use agreement, the government must decide on the terms of the new agreement, and the private parties must decide whether to participate on these terms. 

A substantial number of projects end their use agreements each year. When use 

agreements are not renewed, current occupants are provided with other housing assistance, almost always tenant-based vouchers. 

Up to this point, housing policy has leaned heavily in the direction of providing 

owners with a sufficient subsidy to induce them to continue to serve the low-income 

households in their projects. We should not repeat these mistakes. Instead we 

should give their tenants portable vouchers and force the owners to compete for 

their business. The evidence on the cost-effectiveness of renewing use agreements 

versus tenant-based housing vouchers indicates that offering such vouchers would 

reduce the taxpayer cost of assisting these families. The savings could be used to 

assist additional families. 

It is important to realize that for-profit sponsors will not agree to extend the use 

agreement unless this provides at least as much profit as operating in the unsubsidized market. Because these subsidies are provided to selected private suppliers, 

the market mechanism does not ensure that rents paid for the units will be driven 

down to market levels. If this is to be achieved at all, administrative mechanisms 

must be used. Administrative mechanisms can err in only one direction—providing 

excess profits. If the owner is offered a lower profit than in the unsubsidized market, the owner will leave the program. We should leave the job of getting value for 

the money spent to the people who have the greatest incentive to do so: namely, 

the recipients of housing assistance. 

It is often argued that giving families that live in privately owned subsidized 

housing projects portable housing vouchers at the end of the use agreement will 

force them to move. This would not be the case if tenants are offered the same options as they are offered under the current system when the project’s owner opts 

to leave the program. HUD will pay the market rent for the unit as long as the 

tenant wants to remain in it but offers the tenant the option of a regular housing 

voucher. This would enable the family to continue to live in its current unit without 

devoting more income to rent, and it would offer the family other options that it 

might prefer. 

It is also argued that the failure to renew use agreements on privately owned subsidized projects reduces the number of affordable housing units. If the occupants of 

these projects are offered portable vouchers, this could not be further from the 

truth. When use agreements are extended, the only unit that is made affordable to 

an assisted family living in the project is its own unit. If that family is offered a 

32 

portable voucher, many units become affordable to the family. Contrary to the arguments of lobbyists for project-based housing assistance, failing to renew use agreements on subsidized housing projects increases rather than decreases the stock of 

housing that is affordable to low-income households. 

Public Housing. The public housing reform proposals are proposals to better use 

the funds and assets currently available to public housing authorities. They are 

designed to alleviate poverty by delivering better housing to tenants who remain in 

public housing, providing current public housing tenants with more choice concerning their housing, assisting additional households, and reducing the concentration of the poorest families in public housing projects. The proposals would require 

congressional action to change the restrictions on housing authorities, except possibly for those participating in HUD’s Moving to Work Demonstration. Currently, HUD provides public housing authorities with more than $6 billion 

each year in operating and modernization subsidies for their public housing projects. 

My proposal would give each housing authority the same amount of Federal money 

as it would have gotten with the old system, so no authority would be able to object 

on the grounds that it would have less to spend on its clients. However, the proposal 

would alter greatly the restrictions on the use of this money and increase the total 

revenue of housing authorities. 

The proposal requires every public housing authority to offer current tenants the 

option of a portable housing voucher or remaining in their current unit on the previous terms, unless the housing authority decides to demolish or sell its project. To 

ensure that housing authorities can pay for these vouchers with the money available, the generosity of the voucher subsidy would be set to use the housing 

authority’s entire Federal subsidy in the highly unlikely event that all public housing tenants accepted the vouchers. The generosity of these vouchers would almost 

always differ from the generosity of regular Section 8 vouchers, although the difference would be small in most cases. 

Housing authorities would be allowed to sell any of their projects to the highest 

bidder with no restrictions on its future use. This would provide additional revenue 

to improve their remaining projects or provide vouchers to additional households. 

The requirement that these projects must be sold to the highest bidder maximizes 

the money available to help low-income families with their housing. It also avoids 

scandals associated with sweetheart deals. 

Many housing authorities would surely choose to sell their worst projects. With 

uniform vouchers offered to families living in all of a housing authority’s projects, 

it is reasonable to expect that the vouchers will be accepted by more tenants in the 

worst projects. These are the projects that would be the most expensive to renovate 

up to a specified quality level. They are the types of projects that have been demolished under the HOPE VI program and that Congress intended to voucher out 

under the 1998 Housing Act. By selling the public housing projects on which they 

would have spent the most money and providing their occupants with vouchers that 

have the same cost as the authority’s average net expenditure on public housing 

units, the public housing authority would free up money to better maintain its remaining units or provide vouchers to additional households. 

When a project is sold, the remaining tenants in that project would be offered the 

choice between vacant units in other public housing projects or a housing voucher, 

the standard procedure when projects are demolished or substantially rehabilitated. 

When public housing units are vacated by families that accept vouchers, the housing 

authority would offer the next family on the waiting list the option of occupying the 

unit or a portable housing voucher. If the family takes the voucher, the housing authority would be allowed to charge whatever rent the market will bear for the vacant unit. This would provide additional revenue to housing authorities without 

additional government subsidies. 

To reduce poverty concentrations in public housing projects, Congress might want 

to eliminate the income-targeting rules for families that pay market rents for public 

housing units. Indeed, it might want to eliminate upper-income limits for these families. Under current regulations, at least 40 percent of new occupants must have 

extremely low incomes. Under the proposal, the new occupants will receive no public 

subsidy, and so income targeting would serve no public purpose. 

Each year some former public housing tenants who had used the proposed vouchers to leave their public housing units would give up these vouchers for a variety 

of reasons. The money saved from their departure should be used to offer similar 

vouchers to other families eligible for housing assistance. The recycling of voucher 

funds would ensure that the tax money spent on public housing will continue to 

support at least the same number of families. 

The preceding proposals would benefit many current public housing tenants without increasing taxpayer cost. The public housing tenants who accept vouchers would 

33 

22Olsen, ‘‘The Effect of Fundamental Housing Policy Reforms on Program Participation.’’ 

obviously be better off because they could have stayed in their current units on the 

old terms. They would move to housing meeting HUD’s housing standards that better suits their preferences. Tenants who remain in public housing would benefit 

from better maintenance of their units. 

The only public housing tenants who might be hurt by the proposal are tenants 

who want to remain in the projects that housing authorities decide to sell. Since it 

is impossible to justify renovating structures that reach a certain level of obsolescence and dilapidation, the initial opposition of a small minority of public housing 

tenants should not prevent benefits to the majority. Generally, public housing redevelopment has not required occupants’ consent. 

Given the difficulty of predicting all of the consequences of such far-reaching 

changes, we should start with a controlled experiment involving innovative public 

housing authorities willing to implement these proposals for a randomly selected 

subset of their public housing projects. This experiment would produce evidence on 

the effects of the proposals, and it would provide useful information for modifying 

them to avoid unforeseen negative consequences and achieve better outcomes. 

Housing Voucher Program. Even though HUD’s Housing Choice Voucher Program is the country’s most cost-effective and equitable low-income housing program, 

it too offers opportunities for reform in the interest of poverty alleviation. The Housing Choice Voucher Program provides very large subsidies to its recipients while offering nothing to other families in similar circumstances. 

In 2015, the national mean subsidy for a household with one adult, two children, 

and no countable income was almost $12,000. The poverty threshold for this family 

was about $20,000. A voucher subsidy of this magnitude enables its recipient to 

occupy a rental unit of about average desirability among two-bedroom units, that 

is, a unit with about the median market rent. 

From the viewpoint of poverty alleviation correctly conceived, it is surely better 

to provide somewhat more modest housing to more of the poorest households rather 

than housing of this quality to a fortunate few. The current welfare system provides 

recipients of housing vouchers with resources well above the relevant poverty 

threshold, while leaving others without housing assistance well below it. 

In the interest of ameliorating this inequity and reducing poverty without harming current recipients, new recipients could be offered less generous subsidies so 

that more households could be served with a given budget, and current voucher recipients could receive the generous subsidies that are offered by the current program. Because more than 10 percent of voucher recipients exit the program each 

year, this initiative will allow more families to be served each year without spending 

more money and will improve the program’s equity. Eventually, all participants in 

the same economic circumstances would receive the same lower subsidy. 

The new subsidy level could be chosen so that the voucher program could serve 

all of the poorest households that asked for assistance. At current subsidy levels, 

many more people want to participate than can be served with the existing budget. 

Reducing the voucher subsidy by the same amount for households at all income 

levels would make families currently eligible for subsidies less than this amount ineligible for voucher assistance. These are the currently eligible households with the 

largest incomes. This would free up money to provide vouchers to needier households that would not have been served by the current system. 

By reducing the subsidies sufficiently, we would reach a point where all of the 

poorest households that ask for assistance would get it. Olsen analyzes the effect 

of alternative reforms of this type on who is served by the voucher program.22 This 

reform would surely reduce evictions and homelessness, although these effects have 

not been studied. 

Conclusion 

The rapid growth of spending on entitlement programs for the elderly that will 

occur until they are substantially reformed will create pressure to reduce spending 

on programs such as low-income housing programs whose budgets are decided each 

year by Congress. In this situation, we should be focusing on how to get more from 

the money currently allocated to these programs. 

Building new units is an extremely expensive way to provide better housing to 

low-income households, and subsidizing selected suppliers is especially expensive. 

Renting existing units that meet minimum standards is much cheaper. This also 

avoids providing recipients of low-income housing assistance with better housing 

than the poorest families ineligible for assistance. The proposed reforms will gradually move the system of low-income assistance toward more cost-effective approaches 

34 

and enable us to provide housing assistance to millions of additional people without 

spending more money. 

It is often argued that a shortage of affordable housing calls for subsidizing the 

construction of new units. This argument is seriously flawed. Almost all people are 

currently housed. If we think that their housing is too expensive (commonly called 

unaffordable), the cheapest solution is for the government to pay a part of the rent. 

The housing voucher program does that. This program also ensures that its participants live in units that meet minimum standards. Building new units is a much 

more expensive solution to the affordability problem. 

Furthermore, it is not necessary or desirable to construct new units to house the 

homeless. The number of people who are homeless is far less than the number of 

vacant units—indeed, far less than the number of vacant units renting for less than 

the median. In the entire country, there are only about 600,000 homeless people on 

a single night and more than 3.6 million vacant units available for rent. Even if 

all homeless people were single, they could be easily accommodated in vacant existing units, and that would be much less expensive than building new units for them. 

Furthermore, most of the 600,000 people who are homeless each night already have 

roofs over their heads in homeless shelters, which are also subsidized. The best provide good housing. 

Reducing the substantial differences in subsidies across identical households that 

characterize the current system would contribute further to poverty alleviation. It 

would help fill the gap between poverty thresholds and the resources of the poorest 

households. The current system provides substantial subsidies to recipients while 

failing to offer housing assistance to many others who are equally poor. Even among 

the fortunate minority who are offered assistance, the variation in the subsidy 

across identical households living in subsidized housing projects is enormous. The 

best housing projects offered by a particular program are much more desirable than 

the worst, but tenants with the same characteristics pay the same rent for units 

in either. Because the most cost-effective program offers the same subsidy to identical recipients, the shift away from other programs toward it will focus more of the 

system’s resources on the poorest families. 

PREPARED STATEMENT OF TRACY GRANT 

PRESIDENT, EUREKA GARDENS TENANTS’ ASSOCIATION

SEPTEMBER 22, 2016 

I would like to thank Chairman Scott and Senator Rubio for inviting me to testify 

today. Almost exactly a year ago, I worked with the community of tenants that I 

lead as the President of the Eureka Gardens Tenants’ Association to publicize the 

conditions that we have to live in every day. I would have scarcely imagined then 

that today, 1 year later, I would be testifying before this Committee today in Washington, DC. In the time I have spent at Eureka Gardens, I have seen and experienced both hardships and triumphs, and I would like to share some of those stories 

with you today. 

My story begins in September 2010, when I applied for the apartment, signed my 

lease, got my keys and did the walk through. Even early on in my time at Eureka 

Gardens, I had to deal with mold in the kitchen and bathroom. Some days I would 

come home and the bathroom was flooded. This bathroom flooding was not done by 

me or my children, it just happened all by itself. The water even began coming into 

my room. 

That wasn’t everything, either. There wasn’t an air conditioning unit in my apartment, like with many others. I had to pay the front office manager’s husband $50 

to put an air conditioning unit in the window. Now, I don’t know how many people 

in this room have had to endure a Florida summer without air conditioning, but it’s 

not a fun experience, and it felt ridiculous to me that I had to pay off the manager’s 

husband in order to have a necessity like AC in my home. 

But the problems at Eureka Gardens didn’t stop once I walked out the door. 

Crime is prevalent in and around Eureka Gardens. There was even a shooting in 

the area that occurred not long after I moved there. It was then that I realized this 

was not an environment that I wanted my children to have to grow up in and I 

wanted to do something about it. 

When another young man was shot in October 2014, a lot of the residents were 

fed up with the poor conditions created by the owner’s neglect of the property and 

the crime it attracted, so we had a resident meeting. There, I realized that I wasn’t 

the only resident that felt this way about Eureka Gardens, and at the next resident 

meeting I was elected Tenants’ Association President. 

35 

The nationwide attention that Eureka Gardens has received for gas leaks, persistent mold, and lead poisoning has all occurred during my tenure as President. 

In September 2015—just over a year ago—there was a meeting with the Tenants’ 

Association and the owner and management teams where we were supposed to talk 

about bringing new programs to the neighborhood. But at this meeting, everyone 

was so frustrated that it turned into a discussion of the conditions they were forcing 

us to live in. 

We were so frustrated by the lack of changes at Eureka Gardens that on September 29, 2015, I wrote a letter outlining our issues and concerns and sent it to 

our local officials, including the HUD office. On October 2, 2015, I received a response back, and before you knew it we had Mayor Lenny Curry, Councilman Garrett Dennis, Pastor Mark Griffin, the fire marshal, the sheriff lined up in our support. I want to thank our local government officials for their strong support and 

commitment to our community during this time. 

Even with all of this support, conditions did not significantly improve. Gas leaks 

sent some of our residents to the hospital, and persistent mold made it hard to 

breathe sometimes. Repair crews often did more harm than good, like when they 

had to shut off the heat in November. There was even a case where a child had 

a case of lead poisoning. Crime is still a problem. About a month ago, seven people 

were shot at Eureka Garden, including a 20-year-old mother of two. 

The residents of Eureka Gardens have had to endure conditions like this for 

years, but now we are speaking together as one voice so that people can know what 

it’s like to live there. I’m grateful for the public attention that our situation has received, but I know I speak for all of the residents when I say that what matters 

most to us are some real changes. Changes that help us live our lives without fear 

of crime or sickness. Changes that give our children a safe place to come home to 

after school. 

I am here today because I want to make sure that we have better living conditions. I pray that if we are able to get a new owner, they will rebuild the apartments and make it better for the residents. Thank you for this opportunity. 

PREPARED STATEMENT OF MAJOR JOSH LEWIS 

RIVIERA BEACH POLICE DEPARTMENT, PALM BEACH COUNTY, FLORIDA

SEPTEMBER 22, 2016 

Good morning, 

My name is Major Josh Lewis of the Riviera Beach Police Department, a municipal police department located in Palm Beach County, Florida. I have been a law 

enforcement for almost 19 1⁄2 years, all with the Riviera Beach Police Department. 

My professional training highlights include having attended the Southern Police 

Institute Command Officers Development Academy and the FBI National Academy. 

I also possess a Master’s Degree in Criminal Justice, with a Major in Critical Incident Management. 

The Riviera Beach Police Department initiated an investigation at the Stonybrook 

Apartment Complex, located at 1555 Martin Luther King Boulevard, Riviera Beach, 

Florida, in an effort to impact the various public safety, health, and quality of life 

issues at this apartment complex. Stonybrook, which was constructed in 1972, is an 

affordable residential development comprised of a mix of two- and three-bedroom, 

two-bath housing units. There is a laundry/maintenance facility and a community 

center on the property. Fourteen buildings house 216 residential rental units. The 

property sits on 8.67 acres. 

Between November 28, 2012 and March 20, 2013, city officials held a series of 

meeting with representatives of MiamiMar, the property management company for 

Stonybrook, and Armando Fana, the Regional Director for the U.S. Department of 

Housing and Urban Development (HUD). The topics of discussion were the prevalence of criminal activity and property maintenance issues at this property. 

Simultaneously, the property owner was notified of the existence of public nuisance conditions of the property; however, the property owner and their agent have 

resisted the attempts of city officials to compel them to implement strategies and 

improvements at their property and the public and other conditions continued to 

exist. 

During this time, there were numerous drug warrants executed which resulted in 

numerous felony arrests. These arrests satisfied the legal standard to declare 

Stonybrook Apartments as a public nuisance. Property owners and HUD were notified of these findings. Research as early as 2012 revealed that GMF Stonybrook 

LLC, the property owner of Stonybrook, has a history of not maintaining the 

36 

residential units in decent, safe and sanitary manners; more specifically, in Memphis, Tennessee, and Jacksonville, Florida, where it has lost its Federal funding 

based on repeated code violations. 

In March 2013, Stonybrook received a Notice of Violation for accumulation of debris, loose garbage, landscaping, and overgrowth, along with an assortment of other 

miscellaneous code violations. In June 2014, Stonybrook was declared to be a public 

nuisance pursuant to Chapter 11, Section 11–183 (1). The property owners stipulated to complete the following improvements which were designed to abate the 

ongoing criminal nuisances, to include securing access points of the property, to provide armed security, install security cameras, install a sliding access controlled gate, 

install landscaping, remove loose garbage, fix irrigation systems, paint exterior of 

the buildings, and add lighting. 

In August 2013, at a Code Enforcement Magistrate Hearing, the owner was found 

in violation of accumulation of debris, loose garbage, landscaping, and overgrowth, 

along with an assortment of other miscellaneous code violations. The Magistrate allowed the owner 120 days to comply or fines would commence. The police department continued to monitor the property to ensure compliance with the Magistrate’s 

order. 

In May 2014, a Nuisance Abatement Status Hearing took place; after presenting 

evidence, the Magistrate found that the nuisance had not been corrected. As a result, the city and property owners agreed to extend the Magistrate’s jurisdiction 

over the property until December 2014. 

In November 2014, a Notice of Hearing to impose Fines and Claim of Lien hearing 

was held. The Magistrate found that the property owner had not complied with the 

order and the violations of landscaping and loose garbage remained. 

In December 2014, a Nuisance Abatement Status hearing was held. At this hearing, the city provided evidence that Stonybrook was still not fully in compliance 

with the Nuisance Abatement Order, and that the landscaping and loose garbage 

violations were not corrected. 

In January 2015, Stonybrook fired their property management company. The police department continued to monitor this property to ensure compliance with the 

conditions of the Nuisance Abatement and Code Enforcement cases. 

In October 2015, a new case was heard before the Magistrate for continued public 

nuisance issues and again, the property was declared to be a public nuisance pursuant to Chapter 11, Section 11–183 (1). As such, the owners stipulated to improvements designed to abate the ongoing criminal nuisance, to include providing security 

services onsite, perimeter integrity to secure the entire property (front gate), surveillance systems, parking decal and towing system, and removal and/or eviction procedures. These improvements were ordered to be completed within 45 days. The police 

department continued to monitor the property to ensure compliance with the Magistrate’s order. 

In May 2016, a Nuisance Abatement Status Hearing took place. In this hearing, 

the Magistrate found the city provided sufficient evidence and testimony establishing Stonybrook as a recurring public nuisance. This was based in part through 

a series of drug sales which had taken place on the property. 

In June 2016, with Stonybrook management compliance, city fire department personnel completed a detailed fire safety inspection of Stonybrook Apartments. In this 

inspection, numerous violations were identified pertaining to smoke detectors, 

sounders, lighting, and other life safety issues. 

In May 2016, the city was contacted by Senator Rubio’s office regarding an inquiry into violations at Stonybrook owner property for possible Department of Justice involvement. The city will continue to work hand and hand with HUD to 

address these matters, but diligent oversight and stringent monitoring will be paramount. The property owners have continuously failed to completely correct the 

Nuisance and Code issues present and show no inclination to do so. 

PREPARED STATEMENT OF VINCENT F. O’DONNELL 

AFFORDABLE HOUSING CONSULTANT

SEPTEMBER 22, 2016 

Good morning, Chairman Scott, Ranking Member Menendez, and distinguished 

Members of the Committee. Thank you for the opportunity to testify regarding the 

process of HUD oversight of federally assisted multifamily housing. 

I am Vincent O’Donnell, and am currently a private affordable housing consultant 

who has worked for over 40 years with State and local government, nonprofit developers, Local Initiatives Support Corporation, the Nation’s largest nonprofit 

37 

community development intermediary, and resident organizations. My primary mission has been, and is, to promote the creation and preservation of safe, affordable 

multifamily housing. In many of these capacities, I have worked closely with HUD 

at the local and Headquarters leadership level on issues specifically related to assisted multifamily housing that has become distressed. 

Today, I speak for myself, but want to note that I am a co-author of an August 

1, 2016, letter from the National Preservation Working Group to HUD regarding the 

recent challenges that the U.S. Department of Housing and Urban Development 

(HUD) has been confronting regarding HUD-assisted properties experiencing conditions of distress and unsuitable living conditions for residents. The PWG is a broad 

coalition of organizations that have advocated for the preservation of federally assisted affordable rental housing. Its members include local and national nonprofit 

developers, policy organizations, tenant advocates, and State and local government. 

The PWG is convened by the National Housing Trust, a national nonprofit engaged 

in housing preservation through public policy advocacy, nonprofit real estate development and lending. This letter is attached to my testimony. In this testimony, I 

will summarize the PWG letter, while also attempting to put the current situation 

into a larger context. In my opinion, the overall system of providing project-based 

rental assistance is sound, and HUD has powerful asset management and quality 

control tools, but better coordination is needed to ensure that no property reaches 

the severe level of distress that has prompted the need for this hearing. 

I think it is important to note that the overwhelming majority of project-based 

rental assistance properties are in good physical condition. The portfolio of properties that have brought us here today are unfortunate and unacceptable outliers, 

but were distressed when transferred to the current ownership. 

Best practices for stabilizing and preserving distressed properties have been 

developed over several decades and are effective and vitally important in today’s 

high-cost housing market. In the late 1970s, HUD was on its way to becoming the 

largest landlord in Boston, as a result of large scale foreclosure of properties with 

HUD-subsidized mortgages. One of those properties was Methunion Manor, in Boston’s South End. This property’s tenant association pointed out to then-Senator Edward Brooke that HUD’s policies of ensuring a market return to the FHA Insurance 

Fund would result in their displacement from a neighborhood that was beginning 

to gentrify, in part because they and the Federal investment has helped to stabilize 

a previously distressed neighborhood. With the Senator’s leadership, Congress gave 

HUD both a mandate and a set of tools to enable them to remain in this neighborhood, based on mutually reinforcing principles: 

• long-range repairs, 

• community engagement; and 

• preservation of project-based rental assistance. 

The result was the restoration to physical and financial health of Methunion 

Manor [as a housing cooperative], and thousands of other units in Boston. Since 

then, there have been other challenges to the retention of this affordable housing 

stock: prepayment of subsidized mortgages and resulting deregulation, and expiration of project-based Section 8 contracts, but those core principles have continued 

to be observed. 

Resident and community engagement ensures that the property’s physical and 

social needs are identified; adequate project-based rental assistance ensures the 

availability of financing for capital repairs and also retains a stock of units restricted as affordable housing. 

Over the years, a toolkit has been developed for HUD portfolio oversight based 

on the preservation principles I mentioned. This toolkit also provides flexibility to 

tailor solutions to local needs. Some of what we’ve learned includes: 

Most assisted properties are good physical condition. The National Housing Trust 

has reported that, according to HUD, 96 percent of its 23,198 multifamily properties 

have passing scores of 60 or higher on REAC inspections. The average passing score 

is 86.7 percent. Only 0.1 percent of properties score below 30, 3.5 percent score between 31 and 59 percent. In other words, although we must double-down on problem properties and their causes, this inventory is mostly successful. 

• Early identification of problems and intervention are essential. HUD has now 

restored its Management and Occupancy Review process, which will enable 

HUD to look more deeply into issues affecting the property’s operations than 

a REAC score alone can do. REAC itself can be a blunt instrument, not always 

revealing serious problems. Further, it would be of great value to be able to 

mine the REAC and MOR data to detect multiple problems associated with 

common ownership or management. 

38 

• HUD has recently redesigned its entire multifamily portfolio oversight function 

to align better with private sector asset management techniques and create 

more accountability, but it needs more careful allocation of resources for its 

oversight to reach its full potential. 

• Mature properties undergo ownership transfers as a result of normal market 

processes. HUD’s purchaser review process is an opportunity to ensure not only 

a strong owner committed to affordability, but a sound ownership and management plan that also reflects the property’s true physical needs. The preservation 

community stands ready to support HUD in improving its existing tools for this 

essential process. 

• HUD has many intervention strategies, but their implementation works best if 

there are clear thresholds for classifying properties as distressed, after consultation with local stakeholders. The experience of the Commonwealth of Massachusetts, the city of Boston and the local HUD office provide good examples of the 

positive outcomes of this approach. 

• If a property has become distressed, remediation is urgent, both for resident 

health and safety, and also for long-term preservation. For this, resources are 

needed, and termination of assistance contracts should be a remedy of last resort: it displaces current residents from their homes and their social support 

systems, removes the long-term affordability from the property, and usually 

leaves a troubled asset to blight the community. Intermediate steps can be 

taken and, in the worst case where the current location is unsuitable, subsidies 

can be transferred to a new neighborhood with better opportunities. 

• When a new owner takes over a distressed property, a combination of forbearance of enforcement and strong accountability is needed. Several years ago, in 

a different property in Jacksonville, where Eureka Gardens is located, a coalition of local stakeholders working with HUD and LISC was able to effect such 

a balance and that provided a window of time to make both immediate urgent 

repairs and to restore this major property to being a healthy community asset. 

• Some of HUD’s intervention tools require cooperation from other governmental 

agencies. For example, Congress has given HUD authority to seek a 

Federal receiver when it lacks mortgage enforcement rights, but this depends 

on the U.S. Attorney’s willingness to participate. In addition to greater interagency cooperation, the powers and duties of such a Federal receiver should be 

clarified. For example, it is not clear whether such a receiver can require the 

sale of a property if that is found to be the only path to correction of problems. 

Now we also have to recognize that best practices don’t always work, since no system is perfect, which is why we’re here today. Those of us in the affordable housing 

preservation community continue to work with HUD, residents and owners to 

ensure that these valuable Federal investments in our communities aren’t lost. 

Now, more than ever, as our cities undergo recovery, assisted housing is now located 

in places that are on their way back to being neighborhoods of opportunity, and only 

place-based subsidies enable them to stay there. 

Many Federal investments in affordable housing were sited based on economic 

considerations, with developers basically going where land prices fit budgetary constraints of the programs. 

Many of those neighborhoods are now rising markets in which current subsidized 

housing residents have for decades helped stabilize these neighborhoods. These 

same residents now could not afford to live there, with or without a voucher, but 

place-based rental assistance enables them to remain in their community. On Monday, at a convening about neighborhood change, displacement and equitable development organized by the Federal Reserve Bank of New York, LISC and the New 

York University Furman Center, the constant refrain from around the country was 

that preservation of the existing affordable housing stock is integral to mitigating 

the negative effects on current residents of otherwise desirable rising neighborhood 

property values. 

In conclusion, the portfolio of HUD-assisted affordable multifamily is an increasingly valuable asset that needs strong oversight as well as preservation. HUD has 

a powerful set of tools, and should be supported and held accountable in its robust 

application of these measures. Preservation of place-based subsidies is often the only 

way that low-income residents can afford to remain in vibrant urban communities 

or in rural communities where there is no other decent rental stock and one of few 

tools to ensure a stock of well-maintained affordable units. This point of view is 

complementary to recent efforts at promoting utilization of portable Section 8 vouchers in neighborhoods of opportunity. These efforts are not mutually exclusive. 

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Priya Jayachandran 

PRESERVATION 

WORKING GROUP 

Deputy Assistant Secretary, Office of Multifamily Housing 

U.S. Department of Housing and Urban Development 

451 Seventh Street SW 

Room 6106 

Washington, DC 20410 

Dear Priya: 

August I, 2016 

The undersigned members of the national Preservation Working Group (PWG) are writing in regard to 

the recent challenges that the U.S. Department of Housing and Urban Development (HUD) has been 

confronting regarding HUD-assisted properties experiencing conditions of distress and creating unsuitable 

living conditions for residents. This is an important topic and one that our organizations have raised over 

many years with HUD. We believe that these issues are best addressed by broader utilization and more 

consistent application and coordination of existing property monitoring and enforcement tools. In fact, 

we believe that more effective oversight and management of HUD's assets may require more focused 

attention from a smaller number of offices and individuals within HUD, rather than creating new tools 

and supervisory roles that overlay the existing system, which is often redundant, uncoordinated, and 

lacking in clear authority. 

We propose a four-part strategy to immediately strengthen HUD's tools to enforce requirements to keep 

properties with federal project-based rental assistance safe and in good repair for residents. We have long 

advocated for strategies to maintain the quality and sustainability of the assisted multifamily housing 

stock, as well as a long-tenn commitment to its affordability. These comments and recommendations are 

based on our decades-long dialogue with HUD about preventive strategies, early detection of problems, 

and effective remediation. Notwithstanding the fact that truly distressed situations are the exception, our 

position is that every property in this valuable stock must be owned and managed to a high standard of 

excellence. 

Intervention Strategies 

HUD's recent document titled Industry Standard Repairs (July 5, 2016) is an important clarification, but 

we believe the Department can do much more with existing tools and authority and we welcome an 

opportunity to engage in dialogne with HUD leadership about our shared goals. 

HUD should define a clear threshold for classifying properties as troubled, after consultation with 

stakeholders. Potential problems should be referred to an action team convened by the HUD Secretary to 

review conditions and recommend action. This could include representatives from field and Headquarters 

Asset Management, the Real Estate Assessment Center, the Department Enforcement Center, and the 

Office of General Counsel. The team should consult with state and local government, housing finance 

agencies, and other appropriate local stakeholders, including the tenants and their representatives. This 

team should be authori:red to recommend remedial actions, commit resources, and take other actions to 

address conditions that are causing distress at HUJ)..assisted properties. 
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If the Secretary determines that an owner is in default on the assistance contract and/or the use agreement, 

HUD should impose an immediate prohibition on the owner taking distributions from the property where 

it has the authority to do so. HUD also should use its authority to seek civil money penalties, if 

appropriate, from defaulting owners. 

Unfortunately, some properties have proven to have problems that HUD cannot resolve through 

negotiations with existing owners, and past efforts to put properties with chronic problems into 

receivership have not received the necessary timely attention. We urge the Secretary to work with the 

U.S. Attorney General to prioritize Justice Depattment resources to bring prompt legal action where 

necessary to protect taxpayer investtnents and living conditions for residents. 

Where HUD believes that current ownership is unable or unlikely to correct deficiencies at the property 

within an appropriate timeframe, HUD should seek to place the property in receivership, as authorized by 

the contract and Section 225 of the Fiscal Year (FY) 2016 Appropriations Act or its successors. 

Designated receivers of troubled properties must have strong and clear tools to turn properties around, 

including: 

• The ability to abate and/or renegotiate contracts, including management contracts; 

• The ability to entertain offers to purchase the property by new owners, subject to HUD screening 

criteria; 

• The ability to require a minimum level of capital repairs required to correct deficiencies and 

stabilize the property for sustainable operation; and 

• The ability to fund required repairs by incurring debt secured by the property, or by requiring a 

sale to a qualified owner able to carry out necessary repairs. 

In addition, HUD should work with local governments when appropriate to file for or otherwise support 

receivership in state courts. 

In any action to change ownership, HUD should work with preservation stakeholders to establish a 

purchaser review process that is thorough (including underwriting of both the purchaser and the 

transaction), timely, and practical, including an expedited process for urgent situations. HUD should 

consider pre-qualifying potential purchasers as patt of an expediting process. 

Where properties also have FHA-insured mortgages, HUD has additional tools to improve performance or 

replace non performing ownership and management, all of which should be fully explored and utilized. 

Remediation 

The goal of these actions should be to arrest further deterioration, preserve affordable housing, and ensure 

decent living conditions for residents. Termination of assistance contracts should be a remedy of last 

resort, since it displaces current residents from their homes and their social support systems, removes the 

long-term affordability from the property, and usually leaves a troubled asset to blight the community. 

Properties that have suffered chronic under-investtnent and poor managemen~ sometimes for several 

years, require time for high-capacity, experienced owners to improve conditions. While resident health 

and safety must always receive immediate attention, HUD must provide appropriate forbearance to new 

owners of distressed properties so that they are not punished for the acts and omissions of the previous 

owners while seeking new resources for redevelopment. HUD should hold new owners accountable for 

clear timelines and milestones for short- and long-term improvements at the property, but should avoid 

the application of standards that discourage new owners from taking on troubled assets. HUD's past use 

2 
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of Compliance, Disposition and Enforcement Plans (CEDP) is an existing tool that has achieved good 

results when applied consistently. 

While termination is a last resort, both HUD's Notice H 2015-02 and the underlying statutes specify that 

contract abatement of assistance, in whole or in part, is a potential remedy that HUD should consider 

exercising under certain conditions. The threat of withholding of assistance until issues are resolved is 

potentially a powerful preventive strategy that HUD should employ more often when appropriate, 

although care needs to be taken before depriving properties of needed resources for repairs. All 

remediation strategies should carefully consider the impact of temporary or permanent relocations on 

tenants, in active consultation with local stakeholders, and with the need for rapid remediation. 

Enhanced Screening 

In recent years there has been increased interest by investors in purchasing HUD-assisted properties. We 

urge the Department to strengthen and standardize review of the transfer of Section 8 properties to 

potential new owners. HUD should uniformly apply screening criteria so that assignments of Section 8 

contracts are reviewed in a similar manner as Transfers of Physical Assets (TPA), and that potential 

purchasers are reviewed to verify their experience with assisted properties; their track record; their 

commitment to fulfilling all use restrictions at the property; and their financial resources to address 

known physical needs of the property at the time of transfer. We recommend that HUD review the TPA 

process and solicit comments from stakeholders, including the undersigned, on appropriate changes for 

screening of HAP contract transfers. 

Early Identification of Problems 

Residents of HUD-assisted properties and local governments are natural partners in identifying properties 

with chronic problems with property conditions. Local governments have a direct interest through 

enforcement of code violations, and can coordinate actions with HUD, including early warning regarding 

problems. HUD should review and consider recommendations from stakeholders, including but not 

limited to the National Alliance of HUD Tenants, as a potential resource for identifying properties with 

emerging problems. For example, HUD should provide residents with opportunities to engage in both 

REAC inspections and Management and Occupancy Reviews (MORs). HUD's revisions of Chapter 

4350.1 ofthe Section 8 Renewal Guide should reflectthese opportunities as well. 

In addition, REAC standards in some cases are outdated and in need of revision. Specifically, REAC 

inspectors should be tasked with identifying conditions including lead paint, toxic mold, and bed bugs. 

REAC inspections should be designed to trigger testing for environmental concerns when necessary. 

The Office of Asset Management and Portfolio Oversight (OAMPO) should have the lead role in early 

identification and intervention with properties in distress or showing early signs of possible problems. 

OAMPO cannot succeed in this effort unless it is provided with adequate resources and authority to fill 

vacant positions, provide adequate training and travel funding, and take appropriate management and 

enforcement actions. Other oversight and enforcement entities at HUD should coordinate with OAMPO 

to inform and support this function. 

We are eager to assist HUD in strengthening efforts to identify and address problems early. We share 

HUD's goals of ensuring the long-term affordability and quality of assisted housing. 
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Sincerely, 

California Housing Partnership 

Coalition on Homelessness and Housing in Ohio 

Florida Housing Coalition 

Housing Partnership Network 

LeadingAge 

Local Initiatives Support Corporation 

Minnesota Housing 

National Alliance ofHUD Tenants 

National Housing Law Project 

National Housing Trust 

Preservation of Affordable Housing 

Rental Housing Infonnation Network in Ohio 

Stewards of Affordable Housing for the Future 

The Community Builders 

cc: Edward L. Golding. Asst. Secretary for Housing and FHA Commissioner 
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