Statement of Administration Policy: H.R. 2 - Housing Opportunity and Responsibility Act of 1997

STATEMENT OF ADMINISTRATION POLICY

(House)

(Lazio (R) NY and 3 cosponsors)

The Administration supports many of the objectives of H.R. 2, and appreciates the passage of several amendments that improve the bill as well as the determination to enact long overdue program reforms. However, the Administration remains opposed to passage of H.R. 2 unless it is amended to address the concerns summarized below (and explained in more detail in the attachment).

H.R. 2 would codify much of the Administration's agenda for transforming the Nation's public housing system by: (1) facilitating the demolition and replacement of severely distressed housing developments, including replacement with mixed-income housing through partnerships with the private sector; (2) demanding prompt improvement of troubled public housing agencies (PHAs) or replacing their management; (3) promoting rent policies and coordination with supportive service efforts that encourage work; and (4) getting tougher on crime.

Administration Concerns. Although the Administration appreciates the purposes of H.R. 2 and the improvements in the bill, the Administration remains opposed to H.R. 2 unless it is amended to:

• Provide more targeting of scarce housing assistance to the neediest families;
• Set the payment standard at no higher than the Fair Market Rent;
• Set the minimum rent at $25 per month for public housing and tenant-based assistance and allow HUD to grant hardship exemptions;
• Address the serious flaws in the home rule flexible grant option;
• Delete the "Housing Evaluation and Accreditation Board";
• Delete the "self-sufficiency agreement" between PHAs and public housing residents or recipients of tenant-based assistance;
• Delete Community Development Block Grant (CDBG) sanctions against local governments contributing to the troubled status of a PHA; and
• Delete the apparent requirement that private owners of federally assisted housing be provided with information regarding the criminal conviction records of adult applicants for, or tenants of, that housing.

Pay-As-You-Go Scoring. H.R. 2 would affect direct spending; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. OMB's preliminary scoring estimate of this bill is under development.

ATTACHMENT-STATEMENT OF ADMINISTRATION POLICY ON H.R. 2

Objectives of HR 2. The Administration supports many of the objectives of H.R. 2: to promote safe, decent, and affordable housing, to streamline and strengthen the publichousing and tenant-based assistance programs, and to give well-run public housing agencies ("PHAs") more flexibility to administer housing assistance in accordance with local needs and conditions.

Committee Amendments. The Administration appreciates the passage of several amendments that improve H.R. 2, including a bipartisan amendment ensuring that excess Section 8 reserves are available to renew Section 8 contracts and adding physical conditions as an indicator of PHA performance. The Administration looks forward to working with Congress to further streamline the program in a responsible manner, such as by reducing the reporting and review requirements in the PHA plan along the lines of the proposal contained in the Administration's bill.

Administration Concerns. Although the Administration appreciates the purposes of H.R. 2 and the improvements recently made to the bill, as well as the determination to enact program reforms that are long overdue, the Administration remains opposed to H.R. 2 unless it is amended to:

• Provide more targeting of scarce housing assistance to the neediest families by:
  1. Retaining the income eligibility level for tenant-based assistance at 50 percent of median income; further targeting 75 percent of such assistance to families with incomes not exceeding 30 percent of median income; and deleting the fungibility provision. H.R. 2 would require that 40 percent of new recipients of tenant-based assistance be families with incomes not exceeding 30 percent of median income. The remaining new recipients could be families with incomes up to 80 percent of median income. Further, H.R. 2 would allow a PHA to treat the public housing and tenant-based targeting requirements fungibly, so that if the PHA exceeded H.R. 2's targeting requirement for public housing, then it would be permitted to fall short of the targeting for tenant-based assistance by a proportional amount. These provisions could change the focus of the tenant-based program from one that is currently targeted to very low-income families to one that largely serves families with much less need for housing assistance. Instead, tenant-based assistance should continue to be more targeted than public housing because it effectively integrates families into mixed-income settings.
  2. Improving the income targeting requirements for public housing so that: (1) of the families that a PHA admits to public housing in a given year, at least 90 percent have incomes not exceeding 60 percent of median income and at least 40 percent have incomes not exceeding 30 percent of median income; and (2) at least 40 percent of families in occupancy at each PHA housing development have incomes not exceeding 30 percent of median income. H.R. 2 would only require that 35 percent of the families a PHA admits to public housing in a given year have incomes below 30 percent of median income, and even that requirement could be avoided under the bill's fungibility provision. All other families could have incomes up to 80 percent of median income. H.R. 2 also contains only general language prohibiting the concentration of the poorest families in particular developments. Both the PHA-wide and development targeting provisions of H.R. 2 must be amended to increase the number of very low-income families served by the program and to ensure access by those families to all developments.
  3. Establishing an income limit for Section 8 project-based assistance requiring that 40 percent of new admissions must have incomes at or below 30 percent of median income, and 90 percent must have incomes at or below 60 percent of median income. H.R. 2 contains no income limits for Section 8 project-based assistance.
• Set the payment standard at no higher than the Fair Market Rent. H.R. 2 would permit PHAs to establish payment standards up to 120 percent of the Fair Market Rent (FMR) established by HUD. Under the current voucher program, PHAs have the discretion to set payment standards no higher than the FMR, with HUD approved exception rents. The national average FMR for a two-bedroom unit will be about $600 in FY 1998. H.R. 2 would allow the average PHA to set a payment standard up to $720. The Administration is opposed to these more generous subsidy payments that would work against the national goal of assisting more families in need.
• Set the minimum rent at $25 per month for public housing and tenant-based assistance and allow HUD to grant hardship exemptions. H.R. 2 would allow PHAs to set minimum rents of between $25 and $50 per month and would allow only PHAs to set hardship exemptions. The Administration believes minimum rents above $25 per month would pose a genuine economic hardship to some families and that HUD must have the authority to grant appropriate relief through hardship exemptions when PHAs do not do so.
• The Home Rule Flexible Grant Option is seriously flawed. This provision of H.R. 2 does not adequately ensure that housing assistance will be targeted to those with very substantial housing needs. In addition, it provides for insufficient guarantees that residents will be charged reasonable rents and that housing assistance will be administered by experienced entities.
• Delete the "Housing Evaluation and Accreditation Board". H.R. 2 would create a new Executive branch agency that would largely replace HUD in overseeing PHAs and administering the public housing and tenant-based programs. Although H.R. 2 requires that a study of alternative PHA evaluation methods (including accreditation) be done first, it presumes the results of the study and creates an accreditation board. The Administration is opposed to creating a new permanent Federal agency prior to receiving the results of a study to determine whether this step is necessary, advisable, or the best approach.
• Delete the "self-sufficiency agreement" between PHAs and public housing residents or recipients of tenant-based assistance. The Administration supports the purpose of this provision, but does not believe that PHAs have the capacity or resources to implement self-sufficiency agreements with every covered individual. The Administration's proposal clarifies that it would be t he PHA's job to assist State welfare agencies in their self-sufficiency efforts.
• Delete Community Development Block Grant (CDBG) sanctions against local governments contributing to the troubled status of a PHA. H.R. 2 would authorize the Secretary to withhold or redirect the CDBG funds of any local government whose actions or inactions have substantially contributed to the troubled status of a PHA. Current law coupled with new sanctions included in H.R. 2 will provide HUD with sufficient authority to deal with the problems of a troubled PHA, including receivership if the troubled status continues for over a year. The proposed CDBG sanction could lead to substantial charges, countercharges, and litigation without resulting in the improvement of troubled PHAs.
• Delete the apparent requirement that private owners of federally assisted housing be provided with information regarding the criminal conviction records of adult applicants for or tenants of that housing. The Administration opposes allowing any private citizens or entities, including the private owners of federally assisted housing, to obtain such information about other individuals. The provision of such sensitive information to private individuals and entities raises significant privacy concerns. The Administration will work with Congress to identify other means of bolstering security efforts in privately owned, federally assisted housing.