Date: 2003-10-07
Speaker: GARY G. MILLER (republican)
Chamber: H
State: California

Madam Speaker. I rise in support of H.R. 1985. the FHA Multifamily Loan Limit Adjustment Act of 2003. This legislation Is really critical to make sure we provide affordable rental housing in this country. I applaud the gentleman from Massachusetts . He and I have a passion on thts issue. We have been working on this for a while. and we continue to look for areas that we can impact in this country to make sure that housing is available to those who need housing most. I think our goal is to make sure that everybody in this Nation has an opportunity to own or rent their own home. a place they can call theirs. I would like to commend the chairman of the Committee on Financial Services. the gentleman from Ohio . for his efforts in this. The gentleman from Ohio (Chairman NEY) has been very. very good about making sure that this was diligently processed through the committee. and I want to thank him very much for that. When it comes to highcost markets. where land and construction costs are significantly higher than in other areas in the country. there is no question that FHA multifamily mortgage insurance limits are not keeping pace. The fact is that in highcost areas. the land is continually growing in value. People are actually able to auction it off. and the rates they are getting for it are increasing rapidly. and the construction costs are increasing the same way. The slowdown in affordable rental housing production has resulted in a significant gap between the demand for and the supply of rental housing. This is a problem we have to come together to solve today. The FHA Multifamily Program provides mortgage insurance for multifamily developments. particularly serving 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 in my district. police officers. firefighters and teachers. are not able to live in the community in which they grew up and work today. And if Congress does not act to promote affordable rental housing. things will not get easier for families in my district and the Nation as a whole. Orange County. California. had the third largest rent increases out of 25 of the largest metropolitan areas in 11 Western States. Thirtythree percent of the renters in Orange County sent 35 percent or more of their income to their landlord. The FHA Multifamily Mortgage Insurance Program has operated for over 65 years. working with private sector partners to expand the supply of rental housing. This publicprivate partnership has leveraged more than $100 billion of private sector investments to provide rental housing for more than 4 million families and the elderly throughout this country. The problem is that. according to HUDs data. no multifamily loans were FHA insured in highcost cities such as New York. Philadelphia. Seattle or Los Angeles in 2003. The entire State of California only had one multifamily development that has been built and insured by FHA. These are the same areas of the country in which there exists a wide availability gap of affordable rental housing. The problem is in California and many highcost States. Massachusetts is a great example. you cannot find a rental available. They are just not available. The costs are escalating so rapidly. The developers are simply unable to provide affordable housing units in these areas because the current statutory mortgage limits for FHA mortgage insurance are unrealistically low. We have to get the rates up to keep up with the demand out there. I have a letter from an individual who is a developer in the Boston area. and this gives you an example of what developers are going throigh today in this country. He said. "I am currently in the planning stages of developing 180unit. gardenstyle. walkup apartments located in Burlington. Twenty percent of the units will be affordable to seniors with incomes of 80 percent of the area median. and the rest will be at market rate. The units range in size from 700 square feet. onebedroom units to 1.200 square foot. twobedroom units." He has been planning this for quite a few years. "However. I may not be able to actually obtain the FHAinsured loan. My total development costs are $176.000 per unit. which exceeds the highcost limits. The figure is actually somewhat low because I bought the lands many years ago for $15.000 per unit. The land is currently worth $50.000 per unit." In nexus. what this gentleman is saying is if he cannot get this loan. which is not competing with the private sector. it is a loan for FHA for these income houses. he is likely to have to sell this property off to a developer who will not build it for lowincome people. who will build it for atmarket rates. whether it be multifamily. condos or townhomes. The problem is that does not do anything to remove the problem we face today. but makes it worse. We are not giving grants and that is the key. the gentleman from Massachusetts tried to say. This is not a government giveaway. Whether you are a conservative or a liberal should not impact anybody. This is a loan that is made to an individual that is a very safe loan. In fact. the government makes money off these loans. It is very seldom we can bring a bill to this floor that not only deals with the housing crisis we face in this country. but actually does not cost the government a dime. Nobody is given anything. it is just a conduit between the builder and the people who need a place to live. This is a good bill. I see no objection to It. and I ask for unanimous approval of this.