2. CAPITOL HILL PERSPECTIVEWilliam Simpson
Democratic Staff Member
Senate Appropriations Committee
Washington, D.C. I want to thank CARH. CARH has been important to me for over a decade now, to help from a practitioner’s point of view to see that the things we do make any sense at all.
There are three things I want to talk about today. I’m going to outline Rural Housing Service’s proposal; I want to outline Senator Kohl’s proposal (D-WI); and then I want to outline your role in this process and how you can help as practitioners and experts to see if what we’re doing makes any sense and if it’ll truly have an impact.
I, too, want to commend RHS for getting in the $214 million due to the CPA report; I thought it was excellent. As you heard from Jack Gleason, authorizing language has not been transmitted, so the House provided zero. We need to address that. Even if the legislation were submitted today, the Banking Committee and Financial Services in the House are tied up with the GSE legislation. I think we need to move ahead and do something. As my father would say, we don’t need to be loitering in a public place, we need to get something done.
For Senator Kohl’s proposal for 2006, we drafted a very, very rough draft and had been working with CARH on a modest Voucher program. It is different from HUD’s entirely; it is not an enhanced Voucher. It is subject to annual appropriations, it is not going to be a five year term. We even tried to be somewhat creative so it could be shifted back to unit-based as an extra incentive, but it was pretty complicated and we dropped that provision. We had something in place with the Voucher that we will try to put forward with your help.
Demonstration We want to do a Demonstration, kind of like a mini-OMHAR, similar I believe (we haven’t seen the legislation) to what the Administration wants to do, which will allow the Secretary to restructure existing 515 loans as the Secretary deems appropriate, including reduction or elimination of interest, deferral of loan payments, subordination, reduction and reamortization of loan debt, and other financial assistance including advances, required by the Secretary for the purposes of ensuring the project has sufficient resources to provide safe and affordable housing.
Hire experts That’s something we would like to do in the Demonstration because I think the time is right to move ahead. When the Administration’s legislation does come forward and get acted on, at least we can get it started in representative spots around the country to see how this is working. This is similar to what HUD did; it’s different of course. But a lot of this stuff is not new. We also have a provision in there where a project prepays, the Rental Assistance associated with the project is deobligated, but put back in for preservation purposes. So you can actually keep track of it and to limit the costs. Our proposal does have a minimum rent of $50, which I admit will not be popular with some folks.
We also want to give the Rural Housing Service the authority to go outside and hire experts, similar to what HUD did. With people with expertise in market analysis, management, mortgage restructuring, housing and finance, taxation — a lot of expertise that all of you have, the Rural Housing Service can go outside and really get the talent that’s needed for complicated deals, not the simple restructuring, but the really complicated deals that all of you have to do when you piece together these long, complicated multi-family projects, especially with limited Federal resources; where you have to borrow and beg Tax Credits and every other source.
We want to go forward with that. We hope we can have your support. The Banking Committee and Financial Services are wrapped up in the GSEs; I don’t think they’ll have time to review this.
On the HUD front, one of our major concerns is the hole in the Bill — you have this brand-new subcommittee: now HUD is with Transportation. That’s pretty tough; you’re competing with a house and a bridge. Before it was a NASA competition. Bridges and highways are pretty hard to compete with, too. The Senators on both sides of the aisle have gone around saying don’t worry about AMTRAK, we’ll take care of it; the Administration says let it go into bankruptcy, it’ll cost from $1.2 to $1.8 Billion to fix it. You have contracting issues with the airports. The House has a rule that they can’t accept the savings — there’s a Billion plus hole there. CDBG has a little hole in it — $1.7 Billion.
So when reality hits this fall, actually this summer when we actually have to write the Bills, it’s going to be extremely difficult. I don’t have much experience with HUD; I used to deal with it years ago. Just the $2.5 Billion recission that the Administration has in their Bill, it’s common for HUD recissions, going back to the HUD Secretary Cuomo days and even before that. However, as you know, HUD went to a budget-based way of appropriating money for Section 8. All the low-hanging fruit in the other extra money legally is gone. Is the $2.5 Billion there? Chairman Bond (D?-MO) asked HUD Secretary Jackson point-blank to show us where the money comes from; they sent up a letter that said, historically the money has always been there, and we think it will be there this year — the language says under the Section 8 certificate or any other heading, so that means anything within HUD. That is a serious concern.
You have competing interests. The good people, overwhelmingly the Members of Congress are very good people, come up here for a purpose: public service. They have to balance this in a common good.
Thank you.
Next: 3. Capitol Hill Perspectives
Remarks by Jeff Riley, Esq.