Date: 2006-09-27
Speaker: GARY G. MILLER (republican)
Chamber: H
State: California

Madam Speaker. I yield myself such time as I may consume. This legislation is critical to increasing the availability of affordable rental housing in this country. I would like to thank my good friend BARNEY FRANK. He has worked with me to introduce this important bill. And I really want to thank the Financial Services Committee chairman. MIKE OXLEY. He has worked diligently through this process to get the process completed in. committee so that the bill could be heard tonight. When it comes to highcost markets where land and construction costs are significantly higher than other areas of the country. there is no question that the FHA multifamily mortgage insurance limits are not keeping pace. The slowdown in affordable rental housing production has resulted in a significant gap between the demand and supply of affordable rental housing. This is a problem we have come together to solve tonight. Through its numerous multifamily housing programs. HUD is a primary partner in the development of affordable rental housing. FHA provides mortgage insurance to HUDapproved lenders to facilitate the construction. substantial rehabilitation. purbhase. and refinancing of multifamily housing projects and. health care facilities. Mortgage insurance covers a lender if a borrower defaults on the insured loan. The FHA multifamily program is particularly important in serving the housing needs of low- and moderateincome families. In our most expensive cities. it is very difficult for these families to find affordable rental housing in the communities where they work. Today. many public servants throughout this country. police officers. firefighters. and teachers. are not able to live in the communities in which they serve. Some commute an hour or more to get to work every day. What happens if there is a natural disaster? How will the first responders get to those in need in time if they live an hour or more away from where they work? If Congress does not act to promote the development of affordable rental units. the housing situation in highcost areas will continue to worsen and the housing needs for those who sdrve our communities and keep them safe will continue to be overlooked. Developers are simply unable to provide affordable housing units in highcost areas because the current statutory limits for FHA mortgage insurance are unrealistically low. While Congress increased the limits of 2003. construction costs have accelerated to such heights in highcost areas that the limits need to be increased again in order to allow affordable. low- and moderateincome rental units to be built in places like California and New York and cities such as Boston. While FHA multifamily loan limits were increased in 2003. there were only a total of six FHAinsured multifamily loans for new construction or substantial rehabilitation approved in California in fiscal years 2004 and 2005 because of the loan limit. For the same time frame in the State of New York. only eight multifamily projects .were approved by FHA. In Massachusetts only five projects were approved. and in New Jersey not a single new construction or rehabilitation project was approved through FHA. This bill establishes a mechanism for addressing the need for new construction or substantial rehabilitation of rental units in extremely highcost areas throughout this country. Under this bill. the multifamily loan limits in highcost areas would increase to 170 percent above the base limit. The Secretary of HUD would have the discretion to increase the limits to 215 percent on a casebycase or projectbyproject basis: It is important to point out that there is no private sector alternative to this program. The market served by FHA multifamily insurance does not overlap the competitive private interests. The FHA multifamily mortgage insurance program has worked with private sector partners to expand the supply of rental housing for over 65 years. This public/private partnership has leveraged more than $100 billion of private sector investment to provide rental housing for working families and elderly throughout this country. In addition. the FRA program and this increase pays for itself. In fact. the program actually has a positive budgetary impact. That means this project actually makes money for the Federal Government. For example. according to CBO. in 2002 FHA insured about $5 billion in loans for multifamily projects. The budgetary impact of these guarantees was accorded as discretionary savings of about $20 million.. That means that the Federal Government made $20 million just by insuring these loans. CBO estimates that this bill would bring in $15 million in 2007 and $75 million between the 20072011 period: That means in those years alone. the Federal Government will make $75 million just by working on these programs. Further. let me point out that if we do not pass legislation to promote the availability of affordable rental housing. our waiting lists for public housing will continue to grow. Despite drastic funding increases in section 8. waiting lists continue to grow across this Nation. In some cities. such as those in Southern California. families who sign up on a waiting list today will not receive an apartment for another 10 years. This bill is a step in the direction of reducing dependency on government programs by providing a moveup market for affordable rental units. In closing. it is important to note that we are not giving grants. We are not doing something that is going to lose money for any congressional district. because this bill does not take away money from lowcost areas. This bill. basically with the FHA mortgage insurance program. provides a critically needed financing source for affordable rental housing. It is important that this program be usable in areas that are experiencing a severe shortage of affordable units and rising development costs. I want to conclude by saying this is not a giveaway program. This is a program that is an assistance to the private sector and a program that actually makes money for the private sector and through the government. Madam Speaker. I reserve the balance of my time.