THOMAS LAURIN, DIRECTOR OF ECONOMIC AND COMMUNITY DEVELOPMENT
SAN BERNARDINO COUNTY, CA and PRESIDENT OF THE NATIONAL ASSOCIATION
FOR COUNTY, COMMUNITY AND ECONOMIC DEVELOPMENT (NACCED)
CONCERNING FY2000 APPROPRIATIONS FOR THE DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT (HUD)
ON BEHALF OF THE U.S. CONFERENCE OF MAYORS NATIONAL ASSOCIATION OF COUNTIES
ASSOCIATION OF LOCAL HOUSING FINANCE AGENCIES NATIONAL COMMUNITY
DEVELOPMENT ASSOCIATION NATIONAL ASSOCIATION FOR COUNTY
COMMUNITY AND ECONOMIC DEVELOPMENT
BEFORE THE VA, HUD AND INDEPENDENT AGENCIES APPROPRIATIONS
SUBCOMMITTEE U.S. HOUSE OF REPRESENTATIVES
APRIL 28, 1999
Mr. Chairman and Members of the Subcommittee:
My name is Thomas Laurin. I am Director of Economic and Community Development for San
Bernardino County, California, and President of the National Association for County Community
and Economic Development (NACCED). In addition to NACCED, I am testifying on behalf of
The U.S. Conference of Mayors, The National Association of Counties, The Association of Local
Housing Finance Agencies and the National Community Development Association.
We appreciate the opportunity to present our views on FY2000 appropriations for the
Department of Housing and Urban Development, and in particular, the two priority programs of
local governments --Community Development Block Grants (CDBG) andHOME.
We thank you, Mr. Chairman and Members of the Subcommittee for your continuing support for
priority local government programs. We are especially pleased by your increase of CDBG in
FY99 by $75 million to $4.750 billion and increasing HOME funding by $100 million to $1.6
billion.
As we stated in our testimony last year before this Subcommittee, local officials are concerned
about setting aside funds out of CDBG to fund special purpose grants. We particularly oppose
set-asides that are unrelated to the core purpose of CDBG. As a result of set-asides and an
increase in the number of entitlement communities, formula grants to urban counties and central
cities have been cut. Between FY95 CDBG set-asides rose from $95 million to $533 million in
FY99 and are now more than 10% of the program's funding.
Mr. Chairman, local government officials urge you to increase CDBG formula grants to
entitlement jurisdictions by increasing the overall appropriation for CDBG in FY 2000 to at least
$5 billion and by scaling back funds set-aside under CDBG for special purpose grants.
WHY CDBG IS EFFECTIVE AND CRITICALLY NEEDED
Celebrating its 25th year, having been signed into law by President Gerald Ford in 1974,
CDBG is the Federal government's most successful domestic program. The CDBG program's
success stems from its utility, i.e., providing cities and counties with an annual, predictable level of
funding which can be used with maximum flexibility to address their unique neighborhood
revitalization needs. Based on HUD's most recent annual report to Congress, between FY1993
and FY1996 an estimated 14-17 million households benefited from the CDBG program. During
that same period an estimated 114,799 jobs were created through CDBG-funded economic
development activities. In FY 1993, entitlement communities spent funds in the following manner:
housing rehabilitation, assisting over 200,000 households (35.8 percent), public works and
infrastructure (22.7 percent), planning, monitoring and program administration(l4 percent), public
services(l2 percent), acquisition and clearance of property (7 3 percent), preventing or eliminating
slums and blight (6 percent), and economic development (6 percent).
REGIONAL CONNECTIONS INITIATIVE
Mr. Chairman, local officials strongly support the Regional Connections Initiative proposed by
HUD. This program will assist localities to work together in developing strategic plans that
address issues affecting an entire metropolitan region. We know that the source of and solution to
many of the current problems and opportunities faced by communities extend beyond the
geographic boundaries associated with local jurisdictions. To address these problems in a
long-term, comprehensive way, local government officials are finding it necessary to work
together through multi-jurisdictional or regional approaches to problem solving. Funding for the
Regional Connections Initiative as a separate program will help us achieve our goal of pursuing
more effective regional approaches to metropolitan problems.
IMPACT OF HOME
Like CDBG, the HOME program is producing very positive results in expanding the supply of
affordable housing. Enacted as the centerpiece of the 1990 National Affordable Housing Act and
signed into law by President Bush, the program was initially mired by many legislative provisions
that thwarted its effective implementation. After a series of legislative changes designed to
facilitate effective implementation in 1992, and regulatory actions by former Secretary Cisneros
and his staff, the program really took off in January 1993.
Since then the progress in using the funds, and the uses to which they are being put, is most
impressive. In fact, the Committee Report accompanying the House version of the FY 1999
appropriations billpraised the HOME program and gave it additional funding "because it can
document results." The report said that "the program tracks the performance of its grantees and
measures their performance to determine whether the federal investment is worth while."
According to HUD data, since HOME was created in 1990, it has helped to develop or
rehabilitate over 346,000 affordable homes for low- and very-low income families. Ninety percent
of the HOME funds used for rental housing must be targeted to families with incomes at or
below 60 percent of the area median. The balance may assist those with incomes up to XO
percent of the median income.
Targeting is very deep in the HOME program. The majority of HOME funds have been
committed to housing that will be occupied by very low-income people and a substantial amount
will assist families with incomes no greater than 30 percent of median. At the end of September
1998, 81 percent of all home-assisted rental housing (including tenant-based rental assistance) was
helping families with incomes at or below 30 percent of area median income. More than 96
percent of home assisted rental housing was benefiting families at or below 50 percent of area
median income.
HOME funds help low- and very-low income families realize the dream of homeownership by
providing for construction and rehabilitation of housing as well as providing the down payment
and or closing cost assistance in the form of second mortgages necessary to bridge the gap. Since
1990, HOME funds have been committed to 132,848 homeowner units. All HOME funds used
for homeownership must be targeted to households with incomes at or below 80 percent of area
median.
HOME is cost effective and provides the gap financing necessary to attract private loans and
investments to projects. For each HOME dollar, $ 1 .80 of private and other funds has been
leveraged since the program's inception. This clearly illustrates the effective and judicious use of
HOME funds by participating jurisdictions. Local officials urge you to fund the HOME program
in FY 2000 at a level of at least $1.8 billion.
BELOW MARKET EXPIRING SECTION 8 PROPERTIES
Mr. Chairman, we commend you on your co-sponsorship of H.R. 13 36, the "Emerging Resident Protection Act of 1999," that addresses the loss of affordable housing created by the conversion of below-market expiring Section 8 properties. To date over 500,000 federally assisted units have been lost across the nation through termination of low-income affordability requirements and more than 250,000 additional units are at risk. Your bill requires HUD to issue market rate vouchers to protect elderly and handicapped residents when owners opt out of their Section 8 assistance contracts, and permits comparable vouchers protection for families in low vacancy areas. Your bill is an essential first step. We would recommend that H.R.425, proposed by Rep. Bruce Vento, be combined with your bill. The inclusion ofH.R.425, which would authorize HUD to supplement state and local government assistance for the preservation of federally assisted affordable housing. We further urge the Subcommittee to appropriate $100 million in FY 2000 to provide for the marking up to market the rents on this vulnerable housing stock.
Mr. Chairman, local government officials believe that a strong Federal role in housing and community development programs must continue. Since the Housing Act of 1937, Congress has enunciated, and repeated in subsequent housing acts, that, as a matter of national policy, the Federal government has an obligation to assist states and local government in providing decent, safe and sanitary housing for lower income households. Perhaps, Congress said it best in a "Declaration of National Housing Policy" included in Section 2 of the Housing Act of 1949:
The Congress hereby declares that the general welfare and security of the nation, and the
health and living standards of its people, require housing production and related
community development sufficient to remedy the serious housing shortage, the elimination
of substandard and other inadequate housing through the clearance of slums and blighted
areas, and the realization as soon as feasible, of the goal of a decent home and suitable
living environment for every American family.
We submit to you that, while progress has been made toward this goal, it has not been fully
achieved. The Federal government must make a commitment to this National Housing Policy,
backed up with resources with which to continue the battle against neighborhood deterioration
and a decaying housing stock.
Mr. Chairman, we look forward to working with you and the Subcommittee in securing adequate
funding HUD's Housing and Community Development Programs.
Thank you.
