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44–899 PDF 2008

FEDERAL SPENDING REQUIREMENTS IN HOUSING 

AND COMMUNITY DEVELOPMENT PROGRAMS: 

CHALLENGES IN 2008 AND BEYOND 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 9, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–126 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

DON CAZAYOUX, Louisiana 

TRAVIS CHILDERS, Mississippi 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman 

NYDIA M. VELA ́ ZQUEZ, New York 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

CAROLYN B. MALONEY, New York 

GWEN MOORE, Wisconsin, 

KEITH ELLISON, Minnesota 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

MICHAEL E. CAPUANO, Massachusetts 

CHARLES A. WILSON, Ohio 

DON CAZAYOUX, Louisiana 

SHELLEY MOORE CAPITO, West Virginia 

STEVAN PEARCE, New Mexico 

PETER T. KING, New York 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

GEOFF DAVIS, Kentucky 

JOHN CAMPBELL, California 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 9, 2008 ....................................................................................................... 1 

Appendix: 

July 9, 2008 ....................................................................................................... 27 

WITNESSES 

WEDNESDAY, JULY 9, 2008 

Blom, Dominique, Deputy Assistant Secretary, Office of Public Housing Investments, U.S. Department of Housing and Urban Development ................. 4 

Bryant, Vivian, Executive Director, Orlando Housing Authority ........................ 15 

Gamble, Joyours ‘‘Pete,’’ Executive Director, Housing Authority of the City 

of Daytona Beach, Florida ................................................................................... 16 

Keller, Robin, Vice President, Affordable Housing Development, Volunteers 

of America, on behalf of the American Association of Homes and Services 

for the Aging ......................................................................................................... 19 

McGraw, Nancy, Managing Director, Eastern Region, Corporation for Supportive Housing .................................................................................................... 17 

APPENDIX 

Prepared statements: 

Clay, Hon. Wm. Lacy ....................................................................................... 28 

Blom, Dominique .............................................................................................. 29 

Bryant, Vivian .................................................................................................. 32 

Gamble, Joyours ‘‘Pete’’ .................................................................................... 36 

Keller, Robin ..................................................................................................... 40 

McGraw, Nancy ................................................................................................ 52 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Waters, Hon. Maxine: 

Written statement of Jonathan Philips, Senior Director, Cherokee Investment Partners, on behalf of the National Brownfield Association and 

Cherokee ........................................................................................................ 57 

(1) 

FEDERAL SPENDING REQUIREMENTS 

IN HOUSING AND COMMUNITY 

DEVELOPMENT PROGRAMS: CHALLENGES 

IN 2008 AND BEYOND 

Wednesday, July 9, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 9:40 a.m., in room 

2128, Rayburn House Office Building, Hon. Maxine Waters [chairwoman of the subcommittee] presiding. 

Members present: Representatives Waters, Lynch, Cleaver, 

Green, Maloney, Ellison; and Capito. 

Also present: Representatives Hinojosa and Watt. 

Chairwoman WATERS. Good morning. This hearing of the Subcommittee on Housing and Community Opportunity will come to 

order. 

Good morning ladies and gentlemen. I would like to thank Ranking Member Capito, whom I understand will be in just a little bit 

later, and the other members of the Subcommittee on Housing and 

Community Opportunity who will be joining me today for this hearing entitled, ‘‘Federal Spending Requirements in Housing and Community Development Programs: Challenges in 2008 and Beyond.’’ 

In January, the House passed H.R. 3524, the HOPE VI Improvement and Reauthorization Act of 2007, which I introduced with 

Chairman Frank and Representatives Watt and Shays. That bill 

made significant reforms to the HOPE VI program which had 

failed to provide for one-for-one replacement or to protect the rights 

of tenants to return to the new HOPE VI development. 

The bill also address the performance of HOPE VI grantees allowing the Secretary to establish performance benchmarks and to 

extend those benchmarks under certain circumstances such as litigation or natural disasters. 

However, as comprehensive as that legislation is, once enacted it 

will only address problems in the HOPE VI program respectively. 

H.R. 3524 does not address the issues before us today, which are 

the Federal spending requirements for existing HOPE VI grant 

programs, and how strict imposition of those requirements can negatively impact affordable housing developments. 

Beginning in Fiscal Year 2002, Congress began to impose obligation requirements on many grant programs, including the HOPE 

2 

VI program. Grantees were required to obligate their funds within 

1 to 3 years, with the time period for obligation depending on the 

type of grant. Once obligated, another law required the grantees to 

spend their funds within 5 years. Fiscal Year 2008 marks the first 

year that grantees will have to meet the spending deadline. Grantees that fail to spend their funds by September 30th of this year 

will have their funds canceled and returned to the Treasury. 

The HOPE VI program is at risk of losing about $78 million this 

year because of the challenges Fiscal Year 2002 grantees have encountered in spending their funds. Many of these grantees have 

had to contend with natural disasters that have slowed the pace of 

construction or forced them to temporarily divert resources. 

For example, as Ms. Bryant will testify, in 2004 Orlando was 

struck by three hurricanes. As we have seen in the aftermath of 

Hurricane Katrina, recovery of public housing from a natural disaster can be a complicated process. Unfortunately, coping with the 

natural disaster does not exempt a HOPE VI grantee from the 5- 

year spending requirement. In fact, there are no exceptions in Federal law for circumstances under which the 5-year deadline can be 

extended. 

Without an extension of this deadline, communities and residents 

will suffer. The majority of the unspent funds are construction dollars. If these funds are canceled, fewer units will be built, resulting 

in a further loss of public housing units. 

As we are in the middle of an affordable housing crisis, we 

should be working to preserve our public housing stock, not to reduce it further. This is why Representatives Corrinne Brown and 

John Mica introduced H.R. 6347, the HOPE VI Amendment Act of 

2008. This bipartisan bill would extend the expenditure deadline 

from 2008 to 2009 for Fiscal Year 2002 HOPE VI grantees who 

have encountered project delays or cost increases either as the result of a natural disaster or the subprime mortgage crisis. 

While this bill would assist those HOPE VI grantees struggling 

to get their money out the door, we are aware of other programs 

that may be impacted by the 5-year spending requirement. These 

programs include housing opportunities for people with AIDS, 

brownfields, Section 202, Section 811, and homeless assistance 

grants. 

Many of these grantees, such as Section 202 and homeless assistance grantees, routinely encounter project delays that are beyond 

their control. Although Section 202 and homeless assistance grant 

programs are not due to have funds canceled at the end of this fiscal year, the first year for cancellation of any unspent funds from 

these programs as Fiscal Year 2009. 

I am concerned that the special types of problems these programs 

encounter could prevent them from meeting their spending deadline. Cancellation of funds from these programs that are so critical 

to serving our most vulnerable populations is simply unacceptable. 

I am looking forward to hearing from our two panels of witnesses 

on the challenges involved in meeting Federal spending requirements for housing programs. 

I would now like to recognize our subcommittee’s ranking member to make an opening statement. Mrs. Capito? 

3 

Mrs. CAPITO. Thank you, Madam Chairwoman. Excuse me for 

being a couple of minutes late. 

I know that this is an issue in a lot of our fellow members’ districts with the fast approaching September 30th deadline. So in 

lieu of giving an opening statement, I would just like to thank the 

witnesses for coming, and I thank the chairwoman for holding this 

hearing, and hopefully we can meet the challenges that many folks 

are facing across the country, in terms of spending or trying to find 

a way to meet the deadlines that are quickly coming upon them. 

Thank you. 

Chairwoman WATERS. Thank you very much. Also, the gentleman from Missouri, you are recognized for 5 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. I don’t have 

much of a statement. I can’t say Missouri is not subject to the cancellation provision, but nonetheless, I am very concerned about 

this. 

The first HOPE VI project in the Nation was built in Kansas 

City during my term as mayor, and with all of the HOPE VI 

projects it could very easily be in the New York Times or one of 

the housing magazines because of the quality of the housing. It 

converted decrepit housing into affordable and attractive housing 

for low-income residents, and I think that if we have slow spending 

cities, if there is any way to work with them, we need to find it 

because to have any city in the country denied an opportunity to 

participate in the HOPE VI program, I think, is a very tragic possibility considering what that program can do and has done all over 

this country. 

So I am here in support of the Brown/Mica HOPE VI Amendment Act of 2008 in hopes that we can find a way to prevent any 

city in the country from falling victim to the cancellation provision. 

Thank you, Madam Chairwoman, and I look forward to dialogically 

becoming involved in this room. 

Chairwoman WATERS. Thank you very much, and without objection, Representative Hinojosa will be considered a member of the 

subcommittee for the duration of this hearing, and I will recognize 

Representative Hinojosa for his opening statement. 

Mr. HINOJOSA. Thank you, Chairwoman Waters. I am delighted 

to be able to participate for a while here in your subcommittee, and 

I want to personally thank you for your leadership and dedication 

to HOPE VI and for your great leadership and the work that you 

have done to help rural housing, which impacts a big part of my 

congressional district. I also thank you for helping our committee 

authorize the Housing Assistance Council, which is going to make 

a very significant difference and provide help to rural areas that 

I represent in South Texas. I assure you that I will help you authorize your Urban League legislation, because I know how important it is also. 

This hearing today is going to be very helpful to us in areas like 

I represent where we have such a large need for affordable housing, and I am interested in listening to our panels to see just how 

we can be of help to our constituents. And with that, Madam 

Chairwoman, I yield back. 

Chairwoman WATERS. Thank you very much. Mr. Watt, without 

objection, you also will be considered a member of the subVerDate Aug 31 2005 12:17 Oct 23, 2008 Jkt 044899 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\44899.TXT TERRIE
4 

committee for the duration of this hearing, and I recognize you for 

5 minutes. 

Mr. WATT. I thank the Chair for recognizing me, but I think I 

will pass and let you all get on with the hearing. I am interested 

in the subject matter and just came to hear the witnesses. Thank 

you. 

Chairwoman WATERS. Thank you very much. 

I am pleased to welcome our distinguished first panel. Our first 

witness will be Ms. Dominique Blom, Deputy Assistant Secretary, 

Office of Public Housing Investments, U.S. Department of Housing 

and Urban Development. Thank you for your presence here today. 

Without objection, your written statement will be made a part of 

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

your testimony. 

STATEMENT OF DOMINIQUE BLOM, DEPUTY ASSISTANT SECRETARY, OFFICE OF PUBLIC HOUSING INVESTMENTS, U.S. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Ms. BLOM. Thank you. Good morning, Chairwoman Waters, and 

members of the committee. I am Dominique Blom, the Deputy Assistant Secretary for the Office of Public Housing Investments at 

the U.S. Department of Housing and Urban Development. Thank 

you for inviting me to testify today. 

The Department monitors and assists all HOPE VI grantees to 

enable them to implement the revitalization plans and construct 

units in accordance with their development schedules. Grantees 

awarded in Fiscal Year 2002 or later were required by Congress to 

expend their HOPE VI funds within 5 years of HUD’s deadline for 

obligating grant funds. Under this requirement, it is the responsibility of each grantee to establish and implement realistic development schedules that allow them to complete the Federal components of their projects by this deadline or have the unused funds 

recaptured by the Treasury. 

My remarks today will focus on what the Department has done 

to assist the Fiscal Year 2002 HOPE VI grantees in meeting the 

expenditure deadline of September 30, 2008, and the current status 

of funds that remain unexpended as of June 30, 2008. 

The Department has taken numerous steps in notifying Fiscal 

Year 2002 grantees of their responsibility to meet their development schedules and the 5-year expenditure deadline of September 

30th. The grant agreement that codified the funding relationship 

between each grantee and HUD clearly stated that all funds must 

be expended within 5 years of grant award. The letter from HUD 

approving the revitalization plans submitted by each grantee reiterated the language in the grant agreement and encouraged grantees to stay on schedule to meet the expenditure deadline. In site 

visits over the life of each grant, HUD staff also reminded grantees 

of this requirement and the responsibility to stay on schedule. If 

a grantee submitted revisions to the revitalization plan that altered 

the development schedule, HUD staff reviewed the schedule to ensure that the grantee would complete construction ahead of the expenditure deadline before approving the changes. 

On March 20, 2008, HUD issued a letter to all the Fiscal Year 

2002 grantees with unexpended funds. In this letter, grantees were 

5 

again reminded that all HOPE VI funds must be expended by September 30th. In response to this letter, grantees were required to 

state in writing that they would be able to meet the expenditure 

deadline. For those grantees that expressed concern about meeting 

the expenditure deadline, the Department assisted the grantee to 

develop a plan for completing construction and expending HOPE VI 

funds by the deadline. The Department also accelerated review 

processes and expedited approvals to put each of these construction 

and expenditure plans into action. 

Throughout this process, the Department was careful to exercise 

good judgment, not to take unreasonable risk, and to ensure that 

taxpayer dollars were used for eligible and feasible purposes. As of June 30, 2008, there is $78 million in unexpended funds 

across the 28 grantees awarded HOPE VI funding in Fiscal Year 

2002. Based on grantee responses and the Department’s monitoring 

efforts, we currently believe that there are 21 grantees that will expend all their funds; 4 that are likely to expend all their funds; and 

3 that are unlikely to expend all of their funds by the deadline. Of 

the 3 that are unlikely to expend their funds by the deadline, the 

Department estimates that the amount of funds at risk for recapture by the Treasury ranges from $200,000 to $2.3 million for an 

approximate total of $4 million. 

Beyond the Fiscal Year 2002 grantees, the Department is also 

assisting HOPE VI grantees awarded in Fiscal Year 2003 or later 

with their efforts to meet the expenditure deadline set by Congress. 

To this end, HUD issued a letter July 8, 2008, to all Fiscal Year 

2003 grantees with unexpended funds that request information on 

their estimated timeframe for completing construction and expending all HOPE VI funds. If HUD determines that a grantee requires 

additional assistance to meet the expenditure deadline, selected 

Fiscal Year 2003 grantees will also be provided assistance from 

technical assistance contractors. 

Thank you for the opportunity to discuss the status of the Fiscal 

Year 2002 HOPE VI grantees. As I mentioned earlier, the Department monitors and assists all HOPE VI grantees to enable them 

to implement the revitalization plans and construct units in accordance with their development schedules. As part of these efforts, the 

Department will continue to assist the HOPE VI grantees in meeting the expenditure deadlines that are mandated by Congress. 

I am happy to address any questions that you might have. 

[The prepared statement of Deputy Assistant Secretary Blom can 

be found on page 29 of the appendix.] 

Chairwoman WATERS. Thank you very much. I will recognize myself for questions. 

I would like to reconcile the $78 million amount with the $4 million amount that you just indicated represents the three agencies 

that are unlikely to spend. What is the difference in these two figures and where does that come from? 

Ms. BLOM. Based on the information that we have received from 

the housing authorities, as of June 30, 2008, there are $78 million 

of funds that are still remaining. But based on housing authority’s 

responses, most believe they will be able to expend the funds by 

the September 30th deadline, that they already have construction 

under way, and it is just a matter of those housing authorities 

6 

drawing down the funds in order to meet the September 30th deadline. However, there are three grantees who are unlikely to expend 

a maximum, we believe, of $4 million by the September 30th deadline. 

Chairwoman WATERS. Let me just inquire of you, what is HUD’s 

policy about initiating legislation with the Congress when you encounter a problem with the law that we have created? Obviously, 

natural disasters and other kind of unforeseen problems can occur 

which would fly in the face of the law. 

Do you think that you have any responsibility to say to Congress, 

‘‘I think we have a problem, and we would suggest, based on our 

information and our assessment that there needs to be a waiver or 

an extension of some kind given the difficulty that these agencies 

have faced, and we think that it is legitimate difficulty.’’ Have you 

ever envisioned doing something like that? 

Ms. BLOM. The Administration is currently reviewing the bill 

that has been introduced providing the 1-year extension, and that 

is currently under review particularly to assess it from a budget 

impact. 

Having said that, from a programmatic point of view, from the 

office that I sit in that administers the HOPE VI program, there 

is certainly a reality that many of the housing authorities faced 

with regard to natural disasters, with regard to the mortgage crisis, and with regard to unforeseen environmental concerns that 

had developed as part of their implementation of the HOPE VI revitalization plan. These are certainly legitimate concerns and challenges that were faced by the Fiscal Year 2002 housing authorities 

and, I believe, provide extenuating circumstances of why certain 

housing authorities are unable to meet the deadline of September 

30, 2008, for expenditure. 

Chairwoman WATERS. Then the Department would support a 1- 

year extension for funding year 2002 HOPE VI grantees that have 

encountered these cost increases and project delays as a result of 

natural disaster or the subprime mortgage crisis, as envisioned in 

this bill, H.R. 6347? 

Ms. BLOM. The Department and the Administration have not developed a position yet on the bill. However, I can speak from my 

own personal perspective and of the Office of Public Housing Investments, which oversees the HOPE VI program, to certainly say 

that the reasons provided in the bill are legitimate ones for providing an extension for the HOPE VI grantees. 

Chairwoman WATERS. And finally, let me just ask, despite the 

fact that you have done a review, and perhaps even provided technical assistance, and you anticipate that most of these housing authorities will be able to use their funds by the deadline, and you 

only encountered three that may not be able to meet the deadline, 

you do recognize that even with that review, that some that fall 

within the 25 probably will not be able to meet that deadline also, 

so this bill would cover all, not just three that are unlikely. You 

understand that? 

Ms. BLOM. Yes, that the bill would cover those housing authorities that were affected by the mortgage crisis and by natural disasters, and it would certainly cover more than just the three housing 

authorities that we had immediate concerns about, and it would 

7 

provide relief to those housing authorities that were funded in 2002 

that are faced with the circumstances of the mortgage crisis and 

disasters. 

Chairwoman WATERS. Thank you very much. Ms. Capito. 

Mrs. CAPITO. Thank you. Just so I understand here, there were 

originally 28 grantees in Fiscal Year 2002? 

Ms. BLOM. Correct. 

Mrs. CAPITO. Correct. Okay. All of them have not expended all 

of their money by the end of—that is 28, right—21 will, 3 are likely, and 3 are unlikely? 

Ms. BLOM. Four. 

Mrs. CAPITO. So all of them are in this boat. Okay. I have a couple of questions. On the front end, when you grant in 2002, what 

kind of vetting do you do for all of these? If all of these are falling 

within this category of not expending their money before the end 

of September, has there been a thorough vetting of where they are 

going to spend the money, when they are going to spend it, and 

how they are going to spend it? 

Ms. BLOM. Absolutely. In the beginning of the grant process, we 

work with each of the housing authorities to establish a development schedule that is realistic, that will meet the September 30th 

deadline. 

Mrs. CAPITO. Then you keep following that from year to year? 

Ms. BLOM. Absolutely. It is very important at the beginning of 

the grant program to get off to a good start. With that, we have 

onsite visits that are done within a few months of the grant being 

awarded, and we work with the housing authority to establish a 

schedule that is going to carry out for the life of the program. 

We also require the housing authorities to submit their first development proposal that is going to describe their construction 

plans within 12 months of receiving the grant, and then they must 

start construction within 18 months of receiving the grant— 

Mrs. CAPITO. Did they all start construction within 18 months? 

Ms. BLOM. All except for one, which was Fulton County, started 

construction within the 18 months. So we worked very diligently 

with the housing authorities to ensure that the requirements for 

the grant award were implemented and met, and then have been 

following the grants throughout the life of the grant cycle. 

Mrs. CAPITO. Okay. And then my next question is, we are sitting here at June 30th with $78 million unspent. According to your testimony, $74 million will be spent in 3 months. If it is spent, is it 

spent judiciously and on proper things, or is it people filling up the 

paper cabinet with copy paper just so they can have their $74 million spent, if you know what I mean? 

Ms. BLOM. Yes, absolutely. I share your concern. And that is the 

reason why, for some of the grants, the funding will be returned, 

because we do believe that it is vitally important that taxpayers’ 

money is used for feasible and eligible purposes, and that housing 

authorities are not undertaking activities that are high risk. 

As a result of that, we have worked with the housing authorities 

to develop what we think are realistic and feasible plans for expenditure of those funds, that protects those funds and has them 

used for eligible HOPE VI purposes, for construction of public housing units or for affordable homeownership units. 

8 

Mrs. CAPITO. Well, regarding natural disasters, I certainly can 

understand environmental concerns elongating the project and also 

making it more expensive. I mean, that happens every day. 

But I do want to voice some concerns of the $74 million that are 

going to be spent in the next 3 months, and I guess I would be curious, my last question, if you could, without pointing a finger specifically at one project, if you could say in a general sense, where 

is the problem? Is it the problem at the local level that is not moving the projects forward quick enough, is it at the HUD management level, or is it at the beginning, which I was trying to get to 

in the beginning, that the projects were not ripe enough to really 

be ready for a grant in 2002, so consequently running into problems in the year 2008? 

Ms. BLOM. I think that the major impediment to those housing 

authorities that have considerable funds remaining today happened 

in the middle of their grant cycle. It happened with unforeseen 

challenges that were faced, whether that was environmental in nature, you will hear potentially from Pete Gamble who will talk to 

you about eagles coming to the HOPE VI project and therefore 

causing a portion of their land to be unfeasible for construction. 

Another project that had planned to redevelop back onsite, but 

because of an airport expansion, was no longer able to build back 

onsite because of increased noise pollution. 

Certainly you are going to hear about the hurricanes that occurred in 2004 as well as in 2005, which increased construction 

costs and caused housing authorities in the Gulf to redirect their 

energies from building their HOPE VI projects to working on disaster related issues. 

And lastly, the mortgage crisis. Over the last year or so, we have 

had construction lenders that have pulled out of HOPE VI projects, 

making the homeownership phase behind schedule as housing authorities have had to retool, either look for other lenders or look for 

other sources of construction financing to build homeownership— 

Mrs. CAPITO. Of the 28, how many would you say are influenced 

by the housing crisis, the last one you just mentioned, lenders pulling out? 

Ms. BLOM. I know of the seven housing authorities that we have 

concerns about, about half of those are affected by the mortgage 

crisis, and I will be able to follow up with you in writing about an 

assessment about all of the 28 grantees and which ones would be 

affected by the mortgage crisis. 

Mrs. CAPITO. Alright. Thank you. 

Chairwoman WATERS. Mr. Cleaver. 

Mr. CLEAVER. Thank you, Madam Chairwoman. Ms. Blom, thank 

you. 

On page three of your testimony, in the third paragraph, you 

talk about the three housing authorities that you believe to be in 

trouble to the point that they will end up as victims of the cancellation provision. Can you give me the names of the three? 

Ms. BLOM. Yes sir. The three housing authorities are Muncie, Indiana, East Baton Rouge, Louisiana, and Daytona Beach, Florida. 

Mr. CLEAVER. Muncie, Indiana, Baton Rouge, and— 

Ms. BLOM. Daytona Beach, Florida. 

9 

Mr. CLEAVER. Daytona Beach. Those are all class A cities, which, 

as I mentioned earlier, we did the first HOPE VI during my term 

as mayor, and most of these cities on here are class A cities, which 

means they have a housing department, and I am not sure what 

kind of technical assistance would matter to people with a housing 

department, and the problems that you mentioned, I am not sure 

that the technical assistance will clear up a problem of a delay 

based on the subprime lending crisis or even the Hurricane 

Katrina disaster, I am not sure what technical assistance would be 

needed. I mean, what kind of technical assistance do you provide 

somebody who is stumbling because of the lending crisis? 

Ms. BLOM. For these housing authorities, the Muncie, Indiana, 

housing authority may need to return about $800,000 of its funds 

because of the mortgage crisis. They had planned to develop 44 

homeownership units, but because a construction lender had pulled 

out, they had to retool, looking to the City for additional funds in 

the form of home funds, and are now planning on building the 44 

units. However, it is dependent on spending the HOPE VI funds 

for infrastructure and getting City permits in advance of that. 

So in the case of Muncie, it is a question of, can the housing authority and the City work together to issue the permits and for the 

HOPE VI funds to be spent for the infrastructure portion. 

Mr. CLEAVER. I am still not sure about the technical assistance. 

I am not sure in your answer you explained what the technical assistance would do for those cities, but wouldn’t it just be easier to 

support a 1-year extension than to—if I were back in office, we 

have two former mayors here, if I were back in office and someone 

from HUD called and offered technical assistance for a problem 

that technical assistance won’t correct, I am not sure that I would 

be happy. 

I mean, I didn’t understand it. And it would seem to me that a 

more appropriate response would be a 1-year extension as opposed 

to saying, we will give technical assistance. I appreciated the answer you gave, but I still couldn’t hear inside your answer what the 

technical assistance would do. 

Ms. BLOM. The technical assistance that I referred to in my testimony is geared toward Fiscal Year 2003 and later grantees, because we believe that there is enough time with those grantees to 

have the technical assistance be meaningful. 

For those grantees that have their funds expiring at the end of 

September of this year, I agree with you, there is very little time 

left for the housing authorities to expend those funds, and technical 

assistance isn’t the right answer. That is why we have not dedicated our HOPE VI contractor funds that dedicated technical assistance for the Fiscal Year 2002 grantees. Instead, we have dedicated that for Fiscal Year 2003 grantees and later. 

For the 2002 grantees, HUD staff has been working with the 

housing authorities to determine what the schedule can be and to 

revise the plans to create feasible options for expenditure of the 

programs— 

Mr. CLEAVER. Pardon me for interrupting you, but my time is 

about up. It is up. Wouldn’t it be easier to just have a 1-year extension? 

10 

Ms. BLOM. Again, for the 1-year extension, it would provide relief 

to those housing authorities that have faced the crisis of the mortgage subprime crisis, as well as hurricanes and other natural disasters, certainly. 

Chairwoman WATERS. Thank you very much. Mr. Green. 

Mr. GREEN. Thank you. If Mr. Cleaver needs more time, I am 

willing to yield. 

Chairwoman WATERS. Are you yielding time to Mr. Cleaver? 

Mr. GREEN. I will. Mr. Cleaver. 

Mr. CLEAVER. Just one more question. Today my hearing is bad, 

I guess. I am trying to zero in on what—if we have a 1-year extension, it would seem to me that the cities that were named, it would 

be infinitely better off, in terms of completing the HOPE VI application, getting everything here in Washington than having technical assistance offered. Baton Rouge, Louisiana, does have a housing department. They have the capacity to do this. The people in 

Baton Rouge woke up one morning and had their population doubled, with poor people coming in from New Orleans. So it seems 

to me that a year extension would provide them with a better opportunity to deal with this crisis than for HUD to offer technical 

assistance. 

Ms. BLOM. And certainly a 1-year extension would provide those 

housing authorities with more time to be able to finish up their revitalization plans, yes sir. 

Mr. GREEN. Reclaiming my time, Madam Chairwoman, I would 

now yield 1 minute to Mr. Hinojosa, who has another hearing that 

he must attend right away, if I may. 

Chairwoman WATERS. Mr. Hinojosa. 

Mr. HINOJOSA. I thank you, gentleman from Texas. Thank you. 

I am delighted that I stayed to listen to your presentation, and 

I am pleased to hear that there will be help in time for those who 

are impacted directly by natural disasters such as Hurricanes 

Katrina and Rita. I represent counties in the Gulf of Mexico all the 

way to San Antonio and south to Edinburg. 

But what about those who were impacted indirectly? For example, we learned that the San Antonio housing authority, while not 

directly impacted by Hurricane Katrina, took in many Katrina 

evacuees, which affected its ability to focus on the HOPE VI grant. 

Houston and San Antonio, closest to my district, were recipients of 

many of the evacuees, and they stayed there for as much as 2 

years. So what could you do for them? 

Ms. BLOM. Are you asking, sir, in terms of the bill or in terms 

of— 

Mr. HINOJOSA. The bill, in terms of the September 30th deadline. 

Could they have an extension so that they could use up their 

funds? 

Ms. BLOM. The deadline of September 30th is statutorily established by Congress, so unless Congress provides an extension of 

that timeframe, the Department is unable to provide extensions to 

the housing authorities. In the case of San Antonio, we have been 

working with San Antonio for approximately the last 6 months, 

very intensively, to develop a plan for how they could spend the remaining funds, and we believe at this point that we have a viable 

plan for how the housing authority can complete the last remaining 

11 

phases of their program, which includes a homeownership program 

as well as rental development of public housing, and that they will 

be able to expend their funds by September 30th. 

Mr. HINOJOSA. I thank you, and I yield back. Thank you. 

Mr. GREEN. Thank you. I will be as quick as possible. 

Ma’am, thank you for coming this morning. Ms. McGraw, who is 

on the second panel, and if I am incorrect, I am sure she will have 

an opportunity to speak to what I am about to say, has indicated 

that HUD could possibly, through an act of Congress, be granted 

the authority to waive the 5-year rule which would allow for extensions. 

Would you support or oppose, or what is your position or HUD’s 

position on Congress granting this type of authority for a waiver? 

Ms. BLOM. The Administration is still reviewing the bill in terms 

of its impact on the budget. 

Having said that, from a programmatic point of view, and in my 

opinion, the 1-year extension would provide relief to the housing 

authorities to enable them to complete their revitalization plans. 

Mr. GREEN. She also indicates that Congress could consider allowing communities or agencies to use these funds for similar 

projects or similar purposes. What are your comments on this, 

please? 

Ms. BLOM. Unless Congress were to change the use of the funds, 

the remaining funds would still be used for HOPE VI eligible purposes, so it would have to be used for the development of affordable 

homeownership units or for public housing units that would serve 

families under 80 percent of median income. 

Mr. GREEN. My time is up. Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you very much. Mr. Lynch. 

Mr. LYNCH. Thank you, Madam Chairwoman, and thank you for 

holding this hearing. I also thank the ranking member. 

Madam Secretary, we are doing a delicate dance here. We have 

been trying to ask, is it HUD’s position that you support the 1-year 

extension? 

Ms. BLOM. I appreciate very much that you understand that I am 

doing a delicate dance here. The Administration and the Department do not have an official position yet on the bill. But from a 

programmatic point of view, I realize that a 1-year extension granted to the housing authorities would provide them relief. 

Mr. LYNCH. I know you know that it would be helpful if we had 

the 1-year extension. The problem is that the Department hasn’t 

taken that official position, and that is not happening. And you are 

saying Congress has that power. The executive office as well, especially in matters brought to this point by Hurricane Katrina and 

other unforeseen disasters, the President in the immediate days 

following Katrina, suspended the prevailing wage act by executive 

order, stepped in and said the greatest danger to this area of the 

country is that these people are going to make too much money, 

these people who are repairing this housing. So he suspended the 

minimum prevailing wage in that area. 

Certainly there is a great opportunity here for the Administration to provide this 1-year extension. It provides the opportunity for 

HUD to step up and say this is something that we should be doing. 

12 

Are you making those recommendations to the Administration, 

that they should indeed give this 1-year extension? 

Ms. BLOM. I think from a programmatic point of view, the 1-year 

extension makes sense. I think from an Administration’s point of 

view, it is a much larger issue than just HOPE VI, that the statutory requirement for expenditure covers not just the HOPE VI program, but other programs, and the Administration is reviewing the 

bill in the context of all programs and what it would mean for 

there to be extensions provided on expenditure deadlines. 

Mr. LYNCH. Okay, I understand. I am not going to ask you that 

question again because you have been asked it 3 or 4 times already 

and have just not been really helpful with your response. Let’s 

move on. 

There is another area that I am becoming concerned about. I am 

hearing from a lot of our affordable housing developers, and this 

is ancillary to what you do. In the past, a lot of our affordable 

housing projects have been financed by tax credits where we have 

corporations that want to shelter some of their profits, and so by 

buying these affordable housing tax credits, they can make out at 

the end of the year on their taxes. And it is a great incentive and 

I support the program. 

However, unfortunately in this kind of economy, we don’t have 

a lot of corporations that need to acquire losses. They have losses 

of their own. And so the need to shelter profit has diminished 

greatly in this current environment, and so tax credits remain 

unpurchased. 

So we are seeing this across the country, without limitation to 

any region, that tax credits have remained unpurchased and so 

people aren’t able to put that patchwork of deals together to get 

this stuff going. Is there anything that HUD has seen that might 

help us in trying to figure out how to deal with this? Are there 

other alternatives that you have thought of that might help us 

incentivize, re-incentivize the development of affordable housing 

through the tax incentive framework? 

Ms. BLOM. What we are seeing as part of the HOPE VI program, 

in relation to tax credits, is that the tax credits are being still 

bought by large firms through syndications. What we are seeing, 

however, is that the equity raise per tax credit has been reduced. 

So whereas 3 years ago, tax credits were selling at anywhere from 

$.95 to the dollar up to $1 and even over, what we are seeing today 

are tax credit raises in the low 80s, mid 80s cents on the dollar. 

So while we are still able to fund the HOPE VI projects through 

tax credits, the amount of equity that is being raised is less. 

As a result of that, housing authorities have been seeking other 

sources of funds, either through the city or other mechanisms, or 

unfortunately they have had to, at times, reduce the scope of their 

project to now fit the new budget. 

Mr. LYNCH. Okay. Well, that was helpful. Any other strengthening of that framework would be appreciated. Thank you, I yield 

back. 

Chairwoman WATERS. Thank you very much. Mr. Ellison. 

Mr. ELLISON. I will pass, Madam Chairwoman, at this time. 

Chairwoman WATERS. Thank you. Mr. Watt. 

Mr. WATT. Thank you, Madam Chairwoman. 

13 

Let me take one more slightly different swipe at the question you 

have been asked 3 or 4 times and managed to dance around gracefully, I might add. Does the Administration anticipate coming out 

with a position on the proposal? And if so, when? 

Ms. BLOM. My hope is that the Administration does have a position on the bill— 

Mr. WATT. You are dancing on that one now when you say 

‘‘hope.’’ Do you anticipate, is the Department encouraging the Administration, I don’t know who the Administration is, maybe that 

is the Department. Is it the Department, is it the President, is it 

the Vice President, as the world believes that he is controlling everything. I mean, who would make that decision? 

Ms. BLOM. The Department is talking with OMB with regard to 

the bill, and we are formulating a position on that. 

Mr. WATT. And you expect to have a position at some point? 

Ms. BLOM. Yes, sir. 

Mr. WATT. When? 

Ms. BLOM. I was hoping it would be ready by today, so I am 

hopeful it will be ready in the next few weeks. 

Mr. WATT. Alright, enough on that. I am actually interested in 

another, slightly different issue. I assume the law that we passed 

covered only unspent money starting in 2002 and going forward, 

but the last time that we dealt with this subject, we determined 

that there were substantial amounts of unspent HOPE VI money 

prior to the funding year 2002. Is that still the case? 

Ms. BLOM. There are still some funds for the older grantees. There is approximately $900 million of funds across all housing authorities that remains unfunded— 

Mr. WATT. And what is HUD doing about that? How far does it 

go back? 

Ms. BLOM. It goes back to, 1993 was our first year of funding— 

Mr. WATT. So that is from 1993 up to 2002, and then your testimony today is 2002 forward. Is that right? 

Ms. BLOM. That is correct. 

Mr. WATT. Okay. So how much money did you say that is? 

Ms. BLOM. About $900 million remains unfunded, but that also 

includes funds for housing authorities that were funded in 2006 

and 2007. The group of— 

Mr. WATT. Wait, wait, wait. I thought you just said that that cut 

off at 2002? 

Ms. BLOM. I am sorry if I misstated that. The $900 million of 

funds covers grantees funded from 1993 up to the present. 

Mr. WATT. Okay, so what part of that would be prior to 2002? 

I mean you gave us the information. I guess we could subtract out 

what you testified about 2002 forward, but that is not—well, tell 

me what the figure is prior to 2002. 

Ms. BLOM. Certainly. The Director of the program, Sue Wilson, 

is tallying up right now behind me what the totals are from 1993 

through 1999— 

Mr. WATT. It is a lot more money than from 2002 forward 

though, isn’t it? 

Ms. BLOM. We are doing the math— 

Mr. WATT. I guess, let me get the bottom line before my time 

runs out. What is HUD doing about that arrearage, because there 

14 

were a number of us who were substantially concerned about that. 

That is why we wrote this provision into the law, for housing authorities to make prompt disposition of funds from 2002 going forward. And we got a commitment, we thought, from HUD at that 

time that they were going to make an aggressive effort to deal with 

the money that was still in the pipeline prior to 2002. 

In fact, I remember the Secretary promising us in response to a 

question that I asked that we was going to give us details on each 

one of those housing authorities, the amount outstanding, the status of that. I don’t think we ever got that that I am aware of. Are 

you doing anything about that money that is in the pipeline? 

Ms. BLOM. Yes we are. In— 

Mr. WATT. Tell me what you are doing, and I will shut up. 

Ms. BLOM. To answer your first question, the amount of funds 

that is still remaining for those housing authorities that were 

awarded funds in 1993 to 1999 is approximately $500 million. 

Those funds— 

Mr. WATT. You mean to 2002? 

Ms. BLOM. Yes, sir. To 2002. 

Mr. WATT. Not 1999. 

Ms. BLOM. Correct. 

Mr. WATT. From 1993 to 2002. That is the figure you are giving 

me? 

Ms. BLOM. That is correct, sir. I apologize. There is about $80 

million still with the 1994 grantees, and let me tell you a little bit 

about the 1994 grantees. Those group of housing authorities— 

Mr. WATT. My time has actually expired. I think since this is not 

the subject of the day, and I am not even a member of this subcommittee officially except— 

Chairwoman WATERS. Unanimous consent for another minute; I 

am interested in this. 

Mr. WATT. It might be better to get this in writing from HUD 

because—I mean, there was a reason we put this provision in the 

new law, and I think, while I am extremely supportive of extending 

it for one additional year or even longer for those areas that were 

impacted by the hurricanes, there is also a very good reason to be 

more aggressive in pushing housing authorities to use the funds 

that go back historically because if they are not going to use them, 

then somebody else could be using them to provide housing in their 

communities. And from 1993 to now 2008 is, my math is not good, 

but that is a lot of years, so if you could just provide this to us in 

writing as the Department said it was going to do one time before, 

I think that would be really helpful to the committee. 

Ms. BLOM. Yes, we will certainly do that. 

Mr. WATT. Thank you, Madam Chairwoman. 

Chairwoman WATERS. You are certainly welcome, and I would 

like to thank our witness, Ms. Dominique Blom, for appearing here 

today, and let me just say, we see a lot of representatives from 

HUD. Not all are straightforward and have the information at 

hand as you have had, and we thank you for your testimony here 

today. 

The Chair notes that some members may have additional questions for Ms. Blom which they may wish to submit in writing, so 

without objection, the hearing record will remain open for 30 days 

15 

for members to submit written questions to this witness and to 

place the responses in the record. 

This panel is now dismissed and I would like to welcome our second panel. Thank you very much, Ms. Blom. 

Ms. BLOM. Thank you. 

Chairwoman WATERS. I am pleased to welcome our distinguished 

second panel: Ms. Vivian Bryant, executive director, Orlando Housing Authority; Mr. Joyours ‘‘Pete’’ Gamble, executive director, 

Housing Authority of the City of Daytona Beach; Ms. Nancy 

McGraw, managing director, Eastern Region, Corporation for Supportive Housing; and Ms. Robin Keller, vice president of affordable 

housing development, Volunteers of America, testifying on behalf of 

the American Association of Homes and Services for the Aging. 

Without objection, your written statements will be made part of 

the record. 

We will now recognize our first witness, Ms. Vivian Bryant, for 

5 minutes, for a summary of her testimony. 

Thank you very much. 

STATEMENT OF VIVIAN BRYANT, EXECUTIVE DIRECTOR, 

ORLANDO HOUSING AUTHORITY 

Ms BRYANT. Good morning, Chairwoman Waters, and members 

of the committee. Thank you for inviting us to provide this testimony. 

The project that I will discuss is the Carver Court 2002 HOPE 

VI grant. Carver Court was built on a landfill in 1945. It was 160 

units on approximately 17 acres of land. In 1960, approximately 52 

more units were added to the site, which brought the total number 

to 212. 

The buildings started to sink because the ground underneath 

began to settle, and by 2001, we only had 148 units that were still 

available to be occupied. The United States Department of Housing 

and Urban Development authorized us to relocate the tenants and 

to demolish the building in 2001, and by 2002, the building had 

been demolished—there were 35 buildings. 

The 2002 grant was for $18,084,255 and we had a deadline of 

September 30, 2008, to complete the construction. The development 

was phased into seven different phases, the first one being the infrastructure, then offsite improvements, an offsite homeownership 

program, an onsite homeownership program, 64 elderly public 

housing units, 56 family rental units, and a community supportive 

services program. 

The original plan had to be revamped because of the impacts 

that we had from several areas. The first impact was that the Orlando area was impacted by three named hurricanes in 2004— 

Charlie, Jeanne, and Francis. A result of those hurricanes—and 

the three hurricanes were in a 5-week period, and the area was 

considered a total disaster and was declared a disaster by FEMA 

and the President. 

As a result of those hurricanes, we had skyrocketing costs of construction and a decrease in the median incomes for the total area. 

A third impact was that we found we had impacts on the soil. 

As indicated, the property project had been built on a landfill, and 

while we were installing the infrastructure, we found that there 

16 

was some contamination in the soil. It took us 27 months of working with the Florida Department of Environmental Protection to 

get an approved plan for removal of the debris and the impacted 

soil. As a part of that remediation, we removed 38 million pounds 

of soil. We had to put back 18,000 pounds of new soil, and we had 

to add 2 feet of new soil throughout the whole site in order to comply with the plans for the Department of Environmental Protection. 

They did allow us to move forward with the construction, but it 

changed the way we had to look at the site. The remediation cost 

$4.5 million. We received funds from the City of Orlando, which 

gave us $1 million, but we had planned to provide 50 homeownership units offsite for low-income home buyers. Because we needed 

that $2 million in order to overcome the impacts, we had to abandon the offsite plan and just provide the housing onsite. At this point, we have about $11 million still at risk. We had to 

apply for tax credits for the remainder of the property and if we 

are not allowed to—if the money goes away September 30th and 

we don’t spend it, those tax credit dollars will be in jeopardy because the HOPE VI funds were used to leverage the tax credits. 

HUD has been helpful with us in expending the funds, they have 

suggested ways that we could be able to move the project forward, 

and provided assistance with expeditiously approving our waivers—approving budget revisions. 

Thank you. 

[The prepared statement of Ms. Bryant can be found on page 32 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Next we will hear from Mr. Joyours ‘‘Pete’’ Gamble. 

STATEMENT OF JOYOURS ‘‘PETE’’ GAMBLE, EXECUTIVE DIRECTOR, HOUSING AUTHORITY OF THE CITY OF DAYTONA 

BEACH, FLORIDA 

Mr. GAMBLE. Thank you, Madam Chairwoman. 

The Daytona Beach Housing Authority, in the Year 2002, was awarded a grant of $17,242,383. To date, we have expended 

$14,750,317, which leaves us approximately $2,492,066 left. Over 

the course of implementing our HOPE VI we have run into the 

same difficulties as the Orlando Housing Authority. 

We are approximately 50 miles from Orlando, situated right on 

the ocean. Orlando was hit by three hurricanes in 2004. Daytona 

Beach was even luckier; we got four. 

In addition to the four hurricanes that we received in 2004, as 

it turns out, the very next year, 2005, we had an eagle set up on 

one of our sites as we were just beginning construction. Because 

the eagle was declared a endangered species, we had to stop all 

work, which ended up costing the housing authority somewhere between $4.5 million and $5 million in work and costs that had to 

be completely redone. We had to completely re-lay out our site to 

set aside a portion of that property for the eagle. Even though the 

eagle has been taken off the endangered species list, there are 

some laws that are still in place that force the housing authority 

to continue to set aside that property, so we had to go ahead and 

build a site based on the design laid out to set aside property for 

the eagle. 

17 

HUD has been very, very helpful throughout the entire HOPE VI 

effort. I have met with them at least yearly here in Washington 

and we have monthly teleconferences with both the headquarters 

office and our field office in Jacksonville. 

The big thing that hit us, as I mentioned, was the $4.5 million 

to $5 million cost that hit us because of the storms and the eagle, 

was that we had to pull all of our HOPE VI staff to assist our residents during the storm. Our entire administration office was under 

water. 

We had to move—fortunately, the Hearst Argyle family, which 

owns the local network, was able to put us up in their building, 

and so we are currently still there and we had to stop all work on 

HOPE VI to assist those residents who were being affected by the 

storms, the waters, and things of that sort. 

Our specific administration office was under approximately 1 to 

11⁄2 feet of water, and so we had to totally relocate. Many of our 

files were destroyed or damaged from the storm water, the roof was 

ripped off of our administration building, as well as two of our high 

rises that we have, so we had to spend our efforts trying to take 

care of those residents that we already had rather than trying to 

relocate— 

Everything basically came to a standstill on HOPE VI. We had 

to re-lay out our sites and also look at the design. We started out 

with masonry construction and we went to wood because of cost. 

The cost of concrete, for example, went up about 35 percent, which 

caused the cost of our buildings to increase significantly, so even 

though we were able to build the same number of rentals, we were 

unable to use the additional monies that we had originally set 

aside for homeownerships because we had to take those monies and 

put into the rentals to be able to complete those to take care of the 

clients that we were going to be relocating. 

To date, we feel that we have done an excellent job. We have the 

$2.4 million that is left, we have discussed with the headquarters 

assisted, we have submitted an application for an endowment to 

try and meet the deadlines of September 30th. That is approximately $1 million. The endowment would allow for social services, 

if you will, and so we are looking at carrying on those social services for many years after the HOPE VI completes, so that is where 

we stand at this point. 

I will be happy to answer any questions that you might have. 

[The prepared statement of Mr. Gamble can be found on page 36 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Next, we will hear from Ms. Nancy McGraw. 

STATEMENT OF NANCY McGRAW, MANAGING DIRECTOR, 

EASTERN REGION, CORPORATION FOR SUPPORTIVE HOUSING 

Ms. MCGRAW. Chairwoman Waters, Ranking Member Capito, 

and members of the subcommittee, good morning. 

My name is Nancy McGraw, and I am the managing director for 

the Eastern Region for the Corporation for Supportive Housing, 

CSH. I appreciate the opportunity to testify on CSH’s views of and 

experience with Federal spending requirements and housing and 

18 

community development programs, and how it might impact programs beyond HOPE VI. 

CSH has unique experience as a national organization that for 

the last 17 years has helped communities build permanent supportive housing to prevent and end homelessness. 

My testimony today will describe the difficulties homeless assistance grantees typically encounter in spending grant funds and how 

CSH and the providers we work with address these challenges. I 

will describe our industry’s need for flexibility and technical assistance to put together complex projects to benefit people in very precarious life situations. 

Regarding the specific issue of the Federal statute that mandates 

the recapture of funds 5 years after appropriation, I would suggest 

that this limit has both positive and negative aspects. CSH agrees 

that it is good government to ensure that appropriated funds are 

put to use within a reasonable timeframe, and that 5 years of 

availability for obligation is a good expectation that fosters accountability. 

We would also encourage the subcommittee to consider that reasonable and legitimate delays are commonplace and that properly 

applied, flexibility such as granting the Secretary the authority to 

waive the 5-year rule would likely benefit all stakeholders. 

While the supportive housing industry is still relatively young, 

extensive data shows that the combination of permanent supportive housing, permanent housing and services, is an effective 

method for helping hard-to-serve individuals find and keep places 

to live. The bottom line is that we have come a long way in a short 

period of time. 

Nevertheless, creating permanent supportive housing is a very 

complex process. All stakeholders are becoming more comfortable 

with it, but I would suggest that supportive housing production requires even more sophistication than typical affordable housing industry and may therefore be more susceptible to delays in spending 

funds. 

Some of the complicating factors include that supportive housing 

production requires partnerships between housing and service providers. This housing requires not only capital funding but also securing operating and usually scarce service dollars. The number of 

sources can easily reach 7 to 10 or more. 

Financing is often leveraged and layered, yet there are very few 

places where all the financing can be assembled simultaneously. 

This results in needing to cobble together funding sources, often 

over several years. 

Acquiring the proper location for permanent supportive housing 

can be difficult due to zoning and planning board requirements as 

well as NIMBYism. Siting woes can escalate into lengthy review 

processes as well as lengthy legal challenges. 

Based on our experience as a community development financial 

institution through which we have made over $160 million in loans 

and grants, I can offer an example of these challenges. 

In 2001, we made a predevelopment loan to Citizen’s Housing 

Corporation to create a 40-unit project in Marin County, California. 

The project had very complex financing, over a dozen sources, including McKinney Vento homeless assistance grants, involved a 

19 

zoning change, and it was a historic rehabilitation. We stuck with 

the project as it encountered delays and ended up amending the 

term of this loan 5 times based on our assessment that it continued 

to be a viable project worthy of the risk. 

I am happy to report that with some flexibility and perseverance 

we were recently repaid, and the project is in construction. 

My written testimony describes several other ways that CSH has 

worked with the partner agencies and with HUD to overcome some 

of the difficulties in putting together projects in a timely manner. 

I should note that the HUD SNAPS office should be commended 

for proactively identifying grantees that were vulnerable for recapture. HUD has worked with CSH and we have been successful in 

resolving the status of more than 700 unobligated McKinney Vento 

grants, which resulted in 629 grants representing over $270 million 

in funds being obligated before their recapture deadline, and 82 

grants being de-obligated for a total of $19.6 million being recaptured to Treasury. 

I will reiterate that we understand the rationale. We would like 

to request that Secretary have that waiver authority or to allow 

communities or HUD to re-use the recaptured funds. 

Thank you. 

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

52 of the appendix.] 

Chairwoman WATERS. Thank you. 

Next, we will have Ms. Robin Keller. 

STATEMENT OF ROBIN KELLER, VICE PRESIDENT OF AFFORDABLE HOUSING DEVELOPMENT, VOLUNTEERS OF AMERICA, 

ON BEHALF OF THE AMERICAN ASSOCIATION OF HOMES 

AND SERVICES FOR THE AGING 

Ms. KELLER. Chairwoman Waters, Ranking Member Capito, and 

members of the committee, the American Association of Homes and 

Services for the Aged and Volunteers of America would like to 

thank you for the opportunity to testify on the impact of Federal 

spending requirements on HUD supported programs. The members 

of AAHSA serve as many as 2 million people every day through 

mission driven not-for-profit organizations dedicated to providing 

the services people need when they need them in the place they 

call home. 

I am Robin Keller and I am vice president of affordable housing 

at Volunteers of America. I have been actively involved in the section 202 program for more than 20 years. I am also responsible for 

the development of the section 811 program for organization. 

Volunteers of American is a national nonprofit faith-based organization dedicated to helping people rebuild their lives and reach 

their full potential. In addition, we are also one of the Nation’s 

largest providers of affordable housing for elderly, families, and disabled. 

We currently have sections 231, 202, and 811 projects in operation. We have been funded for an additional 13 projects which are 

in various stages of development. The section 202 program, like its 

companion, the section 811 supportive housing for disabled program, are outstanding examples of public/private partnership that 

maximize efficiency and quality in Federal programs. 

20 

When a project opens, the commitment for that unit of housing 

is for 40 years. However, in recent years, the section 202 program 

has come under increased scrutiny for pipeline delays. 

In its annual budget proposals, the Administration has recommended cuts to the program based in part on the argument that 

new programs take too long to move to construction and that funds 

are not expended in a timely manner. HUD’s guidelines propose 

that a project reach initial closing within 18 months. 

However, GAO’s report in 2003 shows that actually 73 percent 

of the projects in 2003 and prior to that year had not reached initial closing in 18 months. Arthur Andersen did an independent report that showed that the number was closer to 25 months, and 

AAHSA did yet another survey of its members showing that timeframe was around 37 months. 

The difficulties that sponsors have in spending the award funds 

are basically two factors, and I am sure it is two factors you hear 

all the time, and that is time and money. 

In the 1970’s, 1980’s, and most of the 1990’s, when HUD funded 

a project, HUD funded the project. There were sufficient funds to 

build that facility. However, funds are increasingly decreasing and 

sponsors are forced to find outside funding to fill that gap. 

In 2003, I testified on behalf of Volunteers of America before the 

Senate Aging Committee and noted that approximately 90 percent 

of our projects were requiring additional money due to insufficient 

funds allocated at the time of award. Today, that number is 100 

percent. 

Like most sponsors, once we receive the award, we have to find 

additional funding sources to fill that gap, and that puts developers 

like Volunteers of America at the mercy of the application 

timelines and funding cycles of other agencies, specifically the two 

major funding outside sources are CDBG and HOME, both of which 

come from HUD, and also Federal Home Loan Grant, Home Loan 

Bank, and other foundations. 

A major problem is that the regional cost that HUD announces 

for the funding cycle isn’t sufficient to build the project. The applications are due tomorrow, and to give you a quick example, I contacted the Los Angeles HUD office yesterday. Because the NOFA 

this year shows that there is $58,300 to build a new unit of housing, plus a high cost factor for Los Angeles of 249 percent. That 

equates to $145,000 a unit to build a housing. 

So I asked HUD yesterday, the last section 202 that you closed, 

what did it cost to build that? They closed a project in March, and 

it cost $149,000 in March, but they are putting $145,000 on the 

table today. So already today, there is a $4,000 per unit shortfall, 

and the project won’t be built for another 3 years. 

So once you add all the increased costs—labor, construction, and 

land on top of that—there is a huge shortfall. That particular 

project had a $1.9 million shortfall. So the amount of time that it 

takes to get through zoning, permitting, building permits, and 

HUD processes adds to the timeframe to get the projects developed. 

If HUD puts sufficient funds on the table, the cost would dramatically decrease because we could develop the projects. We 

wouldn’t be spending our time trying to apply for CDBG and 

HOME funds that all the other agencies are also applying for. 

21 

And my basic recommendations are that HUD should adopt realistic funding levels for the construction of new units and fund the 

projects accordingly. That would eliminate months and months of 

processing and reduce the overall cost for the development of the 

project. 

They should also remove any provisions that cancel funds, except 

for delays that were caused outside the sponsor’s control—excuse 

me, within the sponsor’s control. In the rare case where you have 

to pull funds because the sponsor either gave it back or just 

couldn’t produce, then the money should stay with the section 202 

program and not be returned to Treasury. 

And they should remove any provisions that penalize sponsors 

when you score future applications. If a sponsor has to have 

amendment money or it takes too long, then points are taken off 

for future applications when they go to process for the new funding 

rounds, yet HUD didn’t give you enough money to build the project 

in the first place. 

Our service to the elderly community is based on our expertise 

and excellent partnerships with Federal, State, and local governments, and we look forward to a strong partnership with the U.S. 

Congress and this subcommittee to provide solutions that benefit 

those in need. 

I thank you for the opportunity to testify and I look forward to 

answering any of your questions. 

[The prepared statement of Ms. Keller can be found on page 40 

of the appendix.] 

Chairwoman WATERS. Thank you very much. I now recognize 

myself for 5 minutes for questions. 

I would like to begin with a statement. We held this hearing 

today because of the very, very reasonable and logical request from 

Ms. Bryant and others about the problems that are confronting Orlando and other communities, and I think that the information that 

we have heard today certainly supported by many of us who understand that there are just unavoidable delays in trying to construct 

these projects. As a matter of fact, I have heard some additional 

delays today that I never thought of. I never thought that an eagle 

could cost us so much and create such a delay. 

But I am very, very sympathetic to all of the information that I 

have heard here today, and I am convinced that based on the testimony we heard from HUD, that our witness here today also is sympathetic and is waiting for the bureaucratic response from HUD to 

support this bill, and I just anticipate that we will get that support. 

I may be speaking out of turn, but that is what I anticipate. 

However, I think you have raised additional questions here 

today, not only about extending the length of time to complete 

projects, but you really do raise questions about whether or not 

there should be some flexibility in the law that would allow HUD 

to make decisions based on very real problems without us having 

to go through additional delay in getting the waiver. 

I, too, would question some of what Mr. Cleaver alluded to today 

about technical assistance. We didn’t talk about it a lot, but we will 

address this issue with HUD. 

One of the things some of our members have real problems with 

is spending a lot of money on consultants when it doesn’t make 

22 

good sense to do so, and we don’t know if this is the case or not, 

but we certainly don’t want consultants to substitute for extensions 

that certainly are needed, and we do believe that when the projects 

were initially agreed upon, that evidently you showed the expertise 

and a plan that was acceptable, which shows that you can, in fact, 

complete these projects given you are not interfered with these unavoidable delays. 

So I for one am certainly supportive and would hope that this 

committee would join with me in moving very quickly to take this 

bill to the Floor, and also would hope that we could get the support 

from both sides of the aisle to place it on suspension so that we 

do not delay in getting these waivers. 

With that, I will yield to our ranking member, Mrs. Capito. 

Mrs. CAPITO. Thank you, Madam Chairwoman, and I too would 

support this bill on the Floor and for suspension to help gain the 

flexibility that I think has been demonstrated through your testimony. 

Help me out here with the financing. Ms. McGraw, you mentioned that there is a layer of financing on all these projects, and 

Mr. Gamble, I believe your project was $17.2 million HUD. What 

other funding sources beside HUD sources, because Ms. Keller 

mentioned CDBG and HOME, is there private financing? And Mr. 

Gamble, maybe you could then say how the rest of your project 

was— 

So Ms. McGraw, if you would start talking about the layering, 

and then Mr. Gamble, give me a real life example. 

Ms. MCGRAW. Absolutely. The financing layering for supportive 

housing tends to include McKinney Vento funding— 

Mrs. CAPITO. That is HUD, right? 

Ms. MCGRAW. HUD funding. It will also include some HOME 

being administered locally. Low-income housing tax credits are 

used very often. 

Then on the operating and service side, those funds may come 

from local sources like a department of mental health or AIDS 

services or— 

Mrs. CAPITO. But those can’t be construction funds? 

Ms. MCGRAW. Excuse me? 

Mrs. CAPITO. Those aren’t construction funds. 

Ms. MCGRAW. For service funds, not for the construction. The 

construction funds may also come from a local bond initiative or a 

local housing trust fund. 

Mrs. CAPITO. Generally speaking, are those funds phased in over 

a 5-year period, McKinney Vento or HOME, or are they year to 

year? I am trying to get a feel, is that the reason the Federal funding might be stacked up in the back end, or is it because everything else has to be expended first, and is that the case here? 

Ms. MCGRAW. It is actually an issue of acquiring the funding before you can even start to spend it. So for supportive housing 

projects, they may acquire the McKinney Vento or HUD funds first. 

They may acquire them a little bit later in the process, but in order 

to actually start the project, they will need to have secured funds 

for the majority of the capital before they even get started, so it 

doesn’t even get to the question of which money they spend first. 

Mrs. CAPITO. Okay. 

23 

Ms. MCGRAW. Once they assemble it and then can spend it, they 

can spend those funds simultaneously. 

Mrs. CAPITO. Okay. Mr. Gamble, what was the layering of funding in your project? I know it is ongoing. 

Mr. GAMBLE. Mrs. ‘‘Capito,’’ is that correct? 

Mrs. CAPITO. It is ‘‘Capito,’’ but that is okay. 

Mr. GAMBLE. The 1.7, what we did, we went out and we were 

able to achieve two tax credit awards in 1 year, which is kind of 

unheard of in the State of Florida, and especially for a housing authority to get—somehow, there is this belief that somehow housing 

authorities shouldn’t be in the tax credit business. But we were 

able to get tax credits to supplement the funding for our construction. 

In addition, we were able to get the City of Daytona Beach to 

contribute $1.6 million for all of the infrastructure work. The County of Volusia, which is where Daytona Beach is, also contributed 

funds. 

Things like licensing permits, which can be very expensive costs, 

were being waived or have been waived for the construction, and 

so you add those type things together and it comes to a pretty significant amount of monies that we were able to achieve. 

In addition to just the, I refer to it the sticks and bricks or the 

mortar, we were able to get agencies in the area to provide services, and the number I am going to give is over two HOPE VI programs, so between the two, the total package adds up to close to 

$200 million worth of additional dollars that were able to come into 

the program. 

Mrs. CAPITO. Okay, so just quickly here, on the construction side, 

of the total construction cost, what was that number, of this 

project? Is it $20 million? 

Mr. GAMBLE. The total construction cost is probably closer to 

about $33 million. 

Mrs. CAPITO. So the HUD funds here, the HOPE VI funds, are 

basically about half? 

Mr. GAMBLE. Yes. 

Mrs. CAPITO. Alright, thank you. 

Chairwoman WATERS. Thank you very much. Mr. Cleaver. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Ms. Bryant, on page three of your testimony, you talk about the 

unexpected need for removal and remediation of impacted soil. 

When this project first began, was it designated by HUD as a 

brownfield? 

Ms. BRYANT. No, it wasn’t. 

Mr. CLEAVER. Well, did you have HUD approval to begin construction on this site? 

Ms. BRYANT. Yes, we had done phase one and phase two 

environmentals, and those environmentals showed that there 

wasn’t any concern. In fact we had done a couple of them, and it 

wasn’t until we started to remove the debris underneath that we 

found that there was a problem. We believe that it had, in the 

1920’s, been an oil gasification plant or something near that was 

dumping there, but all of our preliminary and due diligence test 

showed that the site was okay. 

24 

We didn’t qualify for a brownfield, and I don’t recall why right 

now but I know we did look into it, and it was not designated as 

a brownfield. 

Mr. CLEAVER. So it was approved by the State environmental 

protection and HUD? 

Ms. BRYANT. Yes. Our remediation plan was approved. 

Mr. CLEAVER. How much has that cost you? 

Ms. BRYANT. $4.5 million in additional costs. 

Mr. CLEAVER. And those dollars were actually grated by non-governmental entities? 

Ms. BRYANT. Well, the City gave us approximately $1 million 

and— 

Mr. CLEAVER. Of CDBG? 

Ms. BRYANT. I have forgotten which funds they were, but they 

did provide $1 million to assist us. 

And then we had abandoned—we had already begun to implement our offsite strategy of providing second mortgages for homebuyers to purchase homes, and we had nine in the pipeline. We 

had wanted to do 50, but HUD approved for us to use the additional monies, the monies that would have paid for the additional 

homebuyers, to use that onsite, so that gave us an additional $2 

million. And then as fate would have it, the Florida Department of 

Transportation purchased 16 of our units and we received $4 million from them, so we used $1 million from that to make up for the 

difference. 

Mr. CLEAVER. Now, you know what this new legislation that we 

are discussing is aimed to do? 

Ms. BRYANT. Yes. 

Mr. CLEAVER. Do you believe that you can spend your HOPE VI 

dollars by September 30th? 

Ms. BRYANT. If we have complete cooperation—what we had to 

do was, we had to seek tax credits because of the problems that we 

encountered, and the— 

I misstated, it is not $11 million, we spent $11 million, we have 

about $6 million, $6.9 million that we still have to spend. And our 

strategy is to provide a bond redemption for about $4.7 million, 

which is where we would use the HOPE VI funds to pay off the 

bonds, and then we have on another project, phase F, we will spend 

about $1.6 million. 

So what we have in jeopardy, if those strategies work, is 

$579,000. But if we are not able to use those funds to pay down 

the construction and the bonds, then we will have about $6.9 million that we will lose. 

Mr. CLEAVER. Do you need a consultant? 

Ms. BRYANT. No. We have had technical assistance from HUD 

and they have expeditiously worked to try to make this plan work 

for us and— 

Mr. CLEAVER. Okay. Mr. Gamble, do you need a consultant? 

Mr. GAMBLE. At this point, no, we don’t need a consultant. 

Mr. CLEAVER. I have been so frustrated today trying to find out 

why we have put money aside for consultants, and based on the 

fact that I was mayor and did run a housing authority, I can’t understand what we need consultants to do. And so since the two of 

you are directly impacted, I thought maybe you could help us find 

25 

out the value of some technical assistance at this point. Can you 

speculate? 

Ms. BRYANT. A consultant could help us with strategies to spend 

the monies. At this point, we are so close to the deadline that we 

just need some assistance with being able to get these monies expended within the deadline, and to make sure that we are able to 

get the HOPE VI funds spent upfront. And HUD has been working 

with us to do that. In fact, they informed us we have two approvals 

that they have made just yesterday. 

Mr. CLEAVER. Ms. McGraw, are you going to shed some light on 

this? 

Ms. MCGRAW. I would like to. 

Mr. CLEAVER. Thank you. 

Ms. MCGRAW. I do think that when you only have a couple of 

months left, there is not a lot that a consultant could offer that you 

haven’t already thought through, but if you can go back further, 

when we have worked with HUD on the unobligated grants, we 

started about 9 months ahead of time and reached out to those, 

and you will see that we had a tremendous amount of success. 

That work was not extremely elaborate technical assistance, it 

wasn’t very deep technical assistance, but it did enable the groups 

to make sure that they had all of their funding resources lined up 

and that they would be able to obligate and meet the technical submission requirements for HUD. 

I think that going back even further, we have been successful in 

offering technical assistance before grantees even apply. After they 

apply for HUD resources to help them assemble the other financing 

that they would need and understand how much funding they 

need, what do they need to put together, and how to do effective 

project management. 

There are, beyond government agencies, a number of nonprofits 

that are administering and seeking funds, and so I think the nature of the technical assistance certainly varies depending on how 

sophisticated and how much they have worked in that area. 

Mr. CLEAVER. Thank you. We had a section 202 project submitted in my congressional district, and it was turned down, and 

then HUD told the applicant that they needed to hire a consultant 

and gave them a list of three. Needless to say, the following funding cycle, the Harvest Church received the section 202 grant. I am 

just always interested in these consultants and why they are necessary, especially at this short period of time. 

So I do have some other questions, but I appreciate the candor 

that you presented in your comments. Thank you. 

Chairwoman WATERS. Thank you very much. 

There are no other members present who raised questions of this 

panel. 

I would like to thank the panel for being here today, for taking 

time from your schedules to come and place on the record the difficulties that you are having in spending the money in the short 

period of time that you have left. I think that the obstacles that 

you have been confronted with are understood by us, and your reasons for wanting to get our assistance are very logical, and again, 

I think you will get that support from this committee. 

26 

With that, the Chair notes that some members may have additional questions for this panel which they may wish to submit in 

writing. Without objection, the hearing record will remain open for 

30 days for members to submit written questions to these witnesses and to place their responses in the record. 

Thank you, this panel is now dismissed. 

Before we adjourn, without objection, the written statement of 

the Cherokee Investment Fund will be made a part of the record 

of this hearing. 

Thank you. The hearing is adjourned. 

[Whereupon, at 11:13 a.m., the hearing was adjourned.] 

(27) 

A P P E N D I X 

July 9, 2008 

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