Statement of Administration Policy: H.R. 2406 - United States Housing Act of 1996

(House)
(Lazio (R) NY and 18 cosponsors)

The Administration supports the objectives of H.R. 2406, to streamline and strengthen public housing and to give local communities more flexibility to administer housing assistance in accord with local needs and conditions. The bill would codify and make permanent much of the Administration's agenda for transforming the Nation's public housing system by: (1) facilitating the demolition and replacement of severely distressed projects; (2) improving the most troubled public housing authorities (PHAs); (3) encouraging work; (4) getting tougher on crime; and (5) requiring the replacement of public housing assistance for certain distressed projects with portable, section 8 rental subsidies.

The Administration understands a manager's amendment will be offered that will make a number of improvements in the bill. For example, the amendment will: (1) address some of the Administration's concerns regarding rent caps and income targeting; (2) restore the essential portability feature of tenant-based section 8 rental assistance; (3) establish two public.housing funds, rather than just one; (4) provide the Secretary with more oversight of public housing plans; and (5) retain a program that enhances economic opportunities for low- and very low- income persons.

While pleased with these improvements, the Administration remains opposed to H.R. 2406 unless it is amended to:

• Retain the Brooke amendment, which requires that public housing and section 8 residents pay no more than 30 percent of their income for rent, arid make permanent certain PHA rent-setting flexibilities enacted in the 9th Continuing Resolution for 1996, Public Law 10499. As reported, H.R. 2406 would repeal the Brooke amendment under the guise that it inappropriately restricts the ability of PHAs to adjust rent requirements. The Administration believes that provisions in the Balanced Budget Downpayment Act I already provide PHAs with adequate rent-setting flexibility to create work incentives for residents while protecting the most vulnerable very low-income tenants against unwarranted rent increases.
  
  
• Cap the minimum rent requirement at no more than $25 per month for the poorest families in public housing and allow waivers of this requirement in particular hardship cases. By placing no upper limit on the minimum rent that PHAs can charge, H.R. 2406 as reported could result in many very low-income individuals paying an extremely high percentage of their income for rent. This would effectively repeal the Brooke amendment for these households.
  
  
• Maintain the income eligibility level for section 8 portable housing assistance at 50 percent of area median income and further target 75 percent of the subsidies to households with incomes below 30 percent of the area median income. By setting income eligibility at 80 percent of area median income, H.R. 2406 as reported would change the focus of this program from one that is currently well targeted to very low- income families to one that largely serves families with minimal need for assistance.
  
  
• Establish an income limit for admission to public housing that is no more than 60 percent of the area median income and require that at least 40 percent of new residents in a particular public housing development have incomes below 30 percent of the area median income. These eligibility requirements would encourage PHAs to achieve a mix of incomes in their developments, while maintaining the fundamental mission of public housing — to serve low-income Americans unable to afford decent and safe housing in the private sector. In contrast, H.R. 2406 as reported would loosen eligibility requirements to the point that the most desirable public housing developments could be rented exclusively to households with moderate-to-middle incomes.
  
  
• Continue HUD's authority to ensure accountability of Federal public housing expenditures. The Administration is open to the establishment of a task force to evaluate the need for an outside entity to accredit PHAs. H.R. 2406, however, would inappropriately establish a new Federal agency for this purpose without determining whether this approach would ensure that Federal tax dollars would be spent accountably.
  
  
• Revise the volunteer provisions to eliminate conflicts with the Fair Labor Standards Act (FLSA). H.R. 2406 as reported would create potential conflicts with the volunteer provisions of the FLSA by: (1) incorporating an overly broad definition of volunteers that includes individuals who receive expenses, benefits, and fees; and (2) removing protections for certain public agency employees by allowing such employees to be classified as volunteers when performing services for which they generally receive compensation.

The Administration understands that the Native American Housing Assistance and Self-Determination Act of 1996 (the Act) will be offered as an amendment to H.R. 2406. The Administration supports the objectives of the Act, which would establish a new block grant program to provide affordable housing for Native Americans. The new program would provide increased flexibility for Indian tribes and their tribally designated housing entities (TDHEs).

The Administration, however, has certain concerns with the Act and recommends that it be amended to:

• Eliminate waiver from Davis-Bacon Act requirements for contracts for construction or rehabilitation financed bv grant hinds provided by the Act. The Administration strongly opposes repeal of the Davis-Bacon Act, including proposals such as this that would result in piecemeal repeal of its basic coverage.
  
  
• Structure loan guarantee programs to conform with the Federal Credit Reform Act and existing OMB guidance for Federal credit programs. As drafted, certain aspects of the loan guarantee programs are contrary to Federal credit policy. For example, the Act includes a prohibition against Federal Financing Bank financing when 100 percent Federal loan guarantees would be extended to obligations issued by Indian tribes to finance authorized housing activities.
  
  
• Clarify that the Brooke Amendment applies to very low-income Native American families in rental units covered bv this Act. As mentioned earlier, the Administration strongly supports the Brooke Amendment and believes that the Act's expanded flexibility for Indian tribes and TDHEs could result in very low-income Native American families being required to pay higher percentages of their incomes for rent.